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Edinburgh Worldwide (EWI), consumer confidence, Reach (RCH), Entain (ENT), Midwich Group (MIDW) and Sanderson Design (SDG)
Edinburgh Worldwide (EWI) has scheduled its showdown with Saba Capital for 14 February, when the activist's proposals will go to a shareholder vote.
EWI is the last of the seven trusts targeted by Saba to hold a vote. The first vote, held by Herald (HRI), takes place on 22 January, with the other five in early February. DB
Find out how you should vote here
Consumer confidence hits 12-month low
Consumer confidence slumped to a 12-month low as the New Year kicked off, with households more nervous about job security and rising levels of debt.
S&P Global’s UK consumer sentiment index plunged to 43.6, from 46.6 in December. A reading above 50 signifies an improvement in confidence, while one below indicates a deterioration.
S&P Global economist Maryam Baluch said the data “hints at downside risks to the economy in the near term”. “Financial wellbeing has deteriorated sharply, plunging households into a more pessimistic outlook for the year ahead.” MF
Read more: Where to find bargains (and growth) among struggling retailers
Reach lifts profit outlook above consensus
Reach (RCH) shares surged more than 26 per cent this morning after the publisher said adjusted operating profits for the full year would come in ahead of market expectations of £97.8mn, thanks to a “strong” fourth quarter.
The trading update from the Daily Mirror and Daily Express owner also revealed a £5mn deficit in a legacy pensions scheme, uncovered during due diligence for the West Ferry Printers Pension Scheme buyout. The shortfall stems from a “historical error” inherited with Reach’s 2018 acquisition of Express Newspapers.
It also said it has also completed a bank refinancing, securing a £145mn revolving credit facility. The company will be reporting its full-year results on 4 March. VM
KPMG investigated for Entain audit
The Financial Reporting Council is investigating KPMG for its audit of gambling group Entain (ENT).
The accountancy watchdog said its probe will cover the 2022 audit of Entain, which owns the Ladbrokes and Coral brands. A KPMG spokesperson said the firm would “cooperate fully with the FRC to conclude this matter as quickly as possible”.
Entain was ordered to pay £615mn under a deferred prosecution agreement brought by the Crown Prosecution Service in 2023 relating to a bribery scandal at its Turkish subsidiary.
Last year, law firm Fox Williams brought a class action suit against the firm, arguing that it had failed to honestly report to investors its knowledge of bribery and corruption at its Turkish subsidiary. MF
Midwich warns on profits again
Shares at Midwich Group (MIDW) fell more than 2 per cent this morning after the audio-visual (AV) technology distributor issued yet another profit warning. The company now expects 2024 adjusted operating profit to fall “slightly below” market consensus of £40.2mn.
The latest warning stems from a lower-than-expected gross margin, which was 17.1 per cent for the full year. While this marked an annual record, it fell short of the 17.3 per cent gross margin recorded in the first half.
Total revenue grew by 2 per cent to just over £1.3bn, in line with guidance issued in October, while organic revenues slipped 1 per cent year-on-year.
Cash generation reached 90 per cent of adjusted Ebitda, ahead of its long-term target range of 70 to 80 per cent. Adjusted net debt at the end of the period stood at around £130mn, up from £83mn at the end of 2023 and equivalent to 2.1 times adjusted Ebitda.
Citing lower growth prospects, Panmure Liberum cut Midwich’s target price from 500p to 300p and downgraded its recommendation to ‘Hold’ from ‘Buy’. VM
Sanderson Design warns on profit
Sanderson Design (SDG) said weaker sales and a poorer mix were likely to have a “significant impact” on profits for the year to the end of January.
Group sales are expected to come in at around £101mn, which is lower than previous guidance and last year’s figure of £109mn. Sales of branded products are expected to be 9 per cent lower, and subdued demand for fabric is also likely to lead to higher levels of stock provisioning at the year end.
The company now expects underlying pre-tax profit to be between £4mn to £4.8mn, well below Investec’s forecast of £7.5mn. The broker also cut its earnings per share forecast by 40 per cent for this year to 5p, and by 38 per cent next year to 5.5p.
The shares slumped by 16 per cent and are down 63 per cent over the past 12 months. MF
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