UK markets open modestly on the front foot on Tuesday despite the blow to investors from news that Neil Woodford's Equity Income fund is to be wound up by its administrator and return cash to investors.
The fund, run by the one-time star fund manager, was suspended on 4 June. At its peak, the Woodford Equity Income fund managed £10.2bn worth of assets, such as local authority pension funds but it came unstuck by investing too heavily in privately owned businesses which caused a huge liquidity hole.
The Woodford Patient Capital Trust (WPCT), the investment trust that is listed on the stock market, responded to the news by saying, ‘the board has been undertaking a review of the company's management arrangements and will make a further announcement in due course.’
Shares in Woodford Patient Capital Trust slumped nearly 6% on the news to 35.5p.
CAPEX SLOWDOWN PUTS SQUEEZE ON ENGINEERS
‘Trading conditions are expected to remain challenging through the remainder of this financial year driven by the global macroeconomic environment’, the company said.
This will have a direct impact on full year profits with the company saying that ‘trading profit (EBITA) in 2019 is expected to be between £180m to £190m.’
Consensus estimates had already been pitched at £189m but investors seem to believe that the lower end of this new guidance is more likely, sending the share price spinning 11.5% lower to 368.4p.
Recruitment firms are often the first to feel the pinch from a macroeconomic slowdown and Hays’ comments that the UK and Ireland are ‘increasingly difficult markets’ will do little for investor confidence. Hays employs around 11,500 employees in 265 offices in 33 countries.
But investors are impressed with a still robust performance overall, with the company confirming that it had ‘delivered a solid quarter of stable net fees, despite tougher global macroeconomic conditions and reduced business confidence’.
Hays shares rally more than 5% in early trade on Tuesday to 151.1p.
MODERATE GROWTH HITS HOUSEBUILDER
Shares in housebuilder Bellway (BWY) dropped by more than 7% to £32.35 after the company said it would deliver ‘moderate volume growth’ in the year ahead. Bellway said its housing reservations rate since its year end on 31 July to 29 September was 4% ahead.
Full-year revenue was now expected to be in the range of $750m to $790m, up from a range of $670m to $720m previously indicated, while net income was seen in the range of $160m to $190m, up from previous guidance of $80m to $130m.
That saw the share price soar 13% to 55.9p.
Underlying pre-tax profit for the year through 28 September was seen coming in at around £101m, the company said. Marston's did not provide a comparative figure, though last year it posted an underlying pre-tax profit for the full year of £104m.
The share price slumped nearly 9% to 111.3p.
Bingo company Rank (RNK) said its net gaming revenue rose 9% in the first quarter, led by strong sales at its Grosvenor casino business. On a like-for-like basis, net gaming revenue for the three months through September rose 10%.
Rank shares nudged modestly higher, adding 0.4% to 199.6p.