London’s FTSE 100 finished Monday’s session 1.3% to the good at 6,719.13 points thanks to improving investor sentiment in the US, where worries over the US stimulus programme, inflation and resulting volatility in the bond market appeared to be easing.
PEARSON HOLDS DIVIDEND STEADY DESPITE EARNINGS DROP
Educational publisher Pearson (PSON) rose 6.4% to 808.8p as it posted a rise in annual profit after it benefited from the sale of a stake in publishing group Penguin Random House and lower restructuring charges.
Underlying earnings, however, fell after the pandemic led to school closures and disrupted exam schedules. Pre-tax profit for the year through December increased to £354 million, up from £232 million year-on-year, even as revenue fell 12% to £3.40 billion.
Adjusted operating profit dropped 46% to £313 million, which the company said was in line with revised expectations. Pearson held its annual dividend steady at 19.5p per share.
Looking ahead, Pearson said it expected to achieve year-on-year revenue growth in 2021 with adjusted operating profit in line with current market expectations.
BT DENIES CHAIRMAN ULTIMATUM REPORTS
In company news, telecom giant BT (BT.A) dropped 3% to 137.2p after being forced to deny a Sky News article which reported that its chief executive Philip Jansen gave boardroom colleagues an ultimatum over his own future that led to the departure this week of the company’s chairman, Jan du Plessis.
The article suggested Jansen told fellow directors over a period of several months that he had become frustrated with the speed at which BT was taking key strategic decisions.
But BT said any suggestion the chairman had impeded the transformation of the company is ‘without foundation’, and denied there had been any ‘misalignment’ between the board and executive management over the company’s strategy.
MICRO FOCUS UP FOR $172.5M IN DAMAGES AFTER PATENT SETBACK
Enterprise software group Micro Focus International (MCRO) was marked down 0.4% to 487.5p after a jury ruled against it in a US patent infringement case.
Micro Focus said the decision could see it incur at least $172.5 million in damages. It was planning to appeal any judgement related to the jury’s decision.
‘The matter is awaiting the judge to hand down his judgement and the judge has discretion to increase the total damages awarded,’ Micro Focus said. ‘Micro Focus has received comprehensive and clear advice from its external counsel that it has a very strong case to appeal both the infringement verdict and the amount of the damages.’
DIRECT LINE LINES UP £100M SHARE BUYBACK
Insurer Direct Line (DLG) softened 1.8% to 314.5p despite announcing a £100 million share buyback programme alongside its annual results, in which it reported a fall in profit amid major weather-related claims and one-off costs.
For the year ended 31 December 2020, pre-tax profit fell by £58.3 million to £451.4 million as gross written premiums fell 0.7% to £3.18 billion. Major weather costs increased to £43 million from £6 million. The combined operating ratio rose to 90.3% from 86.9% due to a reduction in prior-year reserve releases.
The final dividend proposed of 14.7p per share represented an increase of 2.1%, and the company announced its share buyback programme of up to £100 million.
‘Turning to the year ahead, we feel confident that we can build on the momentum we’ve created and become a tech and data driven insurance company of the future with our customers at its heart,’ the company said.
Fellow insurer Phoenix (PHNX) gained 3.1% to 749.6p as it posted a large rise in annual profit after higher premium revenue and lower expenses helped offset a fall in investment income.
Phoenix also beat its cash generation targets and declared a 3% rise in its final dividend to 24.1p per share, bringing the full-year payout to 47.5p per share, up 1.5% year-on-year.
Domino’s Pizza (DOM) firmed 0.6% to 310.4p after it sold Swedish assets to fellow shareholder in the assets Eyja fjarfestingafelag. Domino’s would pay the buyer €2 million as part of the deal.
Refractory products supplier RHI Magnesita (RHIM) rose 1.1% to £40.98 despite posting an 79% drop in annual profit, as its sales slumped during the pandemic. RHI Magnesita, however, upped its dividend to €1.50 per share, citing a recovery in demand and its cash position.
Shipping services provider Clarkson (CKN) cheapened 1.9% to £25.70, even as it booked a full-year loss than was nevertheless shallower than feared. Clarkson upped its final dividend by a penny to 54p per share, taking the full year dividend to 79p, up from 78p.
Legal firm DWF (DWF) improved 6.4% to 83p on the news the improvement in trading conditions flagged at the interim stage continued into the third quarter and the group is enjoying a ‘busy start’ to the fourth quarter. DWF now expects full year results will be at least in line with expectations.
Footwear retailer Shoe Zone (SHOE:AIM) dropped 6.4% to 70p, having swung to a full-year loss and scrapped its dividend as the pandemic and associated lockdowns crunched sales.
Shoe Zone also announced the appointment of Terry Boot as finance director following the recent departure of Peter Foot, who had only spent seven months in the role.