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(Alliance News) - Sports Direct International on Wednesday called for an investigation into Goals Soccer Centres PLC and strongly hinted at the possibility of widespread fraud.
"The behaviour of the Goals board, and its apparent failure to spot and deal with the issues, amounts to incredible incompetence and ignorance, wilful or otherwise, at the very least and potentially far worse," said retailer Sports Direct.
On Monday, 19% Goals shareholder Sports Direct dropped plans to make a 5.0 pence per share takeover offer for Goals - an operator of 5-a-side football pitches - due to what it described as "limited" and "fitful" access and cooperation from the Goals board.
However, a Goals spokesperson responded that same day, saying: "Goals has provided Sports Direct with all of the information they have requested as and when it became available. The board has not frustrated in any way Sports Direct from making an offer for the business."
Sports Direct said it disagrees with that, claiming that "key information including access to forensic accounting reports as well as the ability to engage with the main lender was provided to Sports Direct extremely late in the process".
Moreover, Sports Direct said, "Goals' board was not then willing - or able - to agree to an extension of time for consideration of the potential offer."
Going even further, Sports Direct said it "continues to believe that all relevant matters should be fully investigated, by both the AIM regulators and an independently appointed third party." And moreover, thinks it "would be convenient for those concerned" if Goals' corporate history "disappeared".
Goals was forced to cancel its shares from trading on AIM at the end of September due to what it described as improper behaviour on the part of "a small number of individuals historically within the company", which resulted in accounting errors over value-added tax.
"From the beginning, the attitude of the Goals board made no sense, including proclamations to senior management of Sports Direct that the issues impacting on, and leading to the catastrophic failure of, the business had only been perpetuated by one person," Sports Direct said.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,206.40
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Hang Seng: down 0.8% at 26,566.26
Nikkei 225: closed up 0.3% at 22,625.38
DJIA: closed down 39.54 points, 0.2%, at 26,788.10
S&P 500: closed down 0.4% at 2,995.99
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GBP: sharply down at USD1.2860 (USD1.2958)
EUR: soft at USD1.1119 (USD1.1140)
Gold: up at USD1,490.00 per ounce (USD1,484.14)
Oil (Brent): down at USD59.48 a barrel (USD60.10)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
1600 CEST EU FCCI flash consumer confidence indicator
0700 EDT US MBA weekly mortgage applications survey
0900 EDT US monthly house price index
1030 EDT US EIA weekly petroleum status report
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The UK prime minister has vowed to push for an election if EU leaders sanction a Brexit extension of up to three months. Boris Johnson must now wait to hear from the heads of the EU27 after his plans to fast-track his Withdrawal Agreement Bill through the Commons before the Halloween deadline hit the buffers. There was anger in Downing Street after MPs rejected Johnson's plan, by 322 votes to 308, to push through the legislation approving his deal with the EU in just three days. The development makes Johnson's promise to take Britain out of the EU by October 31 "come what may" difficult to fulfil and means Brexit could be delayed until next year.
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Beijing is drawing up a plan to remove Hong Kong's beleaguered chief executive Carrie Lam, the Financial Times reported, after nearly five months of pro-democracy unrest. The pro-Beijing leader has faced sustained criticism from protesters in the semi-autonomous city.
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The top US diplomat to Ukraine testified that President Donald Trump made military aid to Kiev contingent on investigations of his political rival Joe Biden. The dramatic closed-door testimony by William Taylor, the acting ambassador to Ukraine, is part of the Democrats' impeachment inquiry into whether Trump unduly pressured Ukraine for personal political gain. In a 15-page opening statement published in US media, Taylor outlines a quid-pro-quo pressure campaign he says was orchestrated by Trump's personal lawyer Rudy Giuliani in recent months. Trump, Taylor says, sought to withhold military aid to Kiev unless the Ukrainian President Volodymyr Zelensky publicly announced an investigation into Ukrainian natural gas company Burisma.
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Turkey and Russia agreed that they would jointly control a swathe of north-east Syria, near the Turkish border, as Syrian Kurdish militants were obligated to withdraw from the area under a prolonged ceasefire. Turkey has condemned the Syrian Kurdish People's Protection Units as a terrorist organization and launched an offensive into the territory earlier this month as US troops previously protecting the Kurds were abruptly withdrawn. Tuesday's deal was announced after about six hours of talks between Turkish President Recep Tayyip Erdogan and his Russian counterpart, Vladimir Putin, in the Russian resort city of Sochi. The deal extends a days-long, US-brokered ceasefire that had been set to expire within hours on Tuesday night.
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BROKER RATING CHANGES
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DEUTSCHE BANK CUTS PRUDENTIAL TO 'HOLD' (BUY) - PRICE TARGET 1450 PENCE
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RBC INITIATES EXPERIAN WITH 'OUTPERFORM' - TARGET 2700 PENCE
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HSBC CUTS BODYCOTE TO 'HOLD' ('BUY') - TARGET 725 (885) PENCE
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JEFFERIES INITIATES HUNTING WITH 'BUY' - TARGET 540 PENCE
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JEFFERIES RAISES 3I INFRASTRUCTURE TO 'HOLD' ('UNDERPERFORM')
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COMPANIES - FTSE 100
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Rio Tinto said it will conduct a strategic review of its interest in New Zealand's Aluminium Smelter at Tiwai Point. Under current market conditions and with high energy costs, Anglo-Australian Rio Tinto expects the short to medium outlook for the aluminium industry to be "challenging" and this asset to "continue to be unprofitable". The miner intends to hold discussions with the government and energy providers to explore options and identify "economically viable solutions".
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Mexican miner Fresnillo said gold production was down 5.2% quarter-on-quarter to 209,800 ounces, mainly due to lower ore grade at Herradura. Annually, output was down 6.9%. Silver production of 13.3 million ounces was down 7.9% on a sequential basis, largely due to a lower ore grade at Saucito and at San Julian Disseminated Ore Body. Year-on-year, silver output was down 15%. Fresnillo said silver and gold production is likely to be at the lower end of guidance for 2019, though higher volumes of ore processed at Fresnillo combined with higher grades at Saucito and Fresnillo are expected to result in higher overall fourth quarter silver production.
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Antofagasta said it delivered another "strong" quarter in terms of production. Copper output was 197,000 tonnes, down 0.8% on the previous quarter but year-to-date production of 582,000 tonnes was up 16% on last year. Gold production for the year to date was 226,600 ounces, 89% higher than in the same period last year on higher grades, but for the third quarter alone was down 11% sequentially as grades declined at Centinela. Net cash costs were USD1.12 per pound in the quarter, down 1.8% on the previous quarter. The Chilean miner maintained its annual production guidance of 750,000 to 790,000 tonnes of copper. In 2020 production is expected to be to 725,000 to 755,000 tonnes of copper as grades decline at Centinela Concentrates before rising again in 2021.
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COMPANIES - FTSE 250
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IT infrastructure provider Softcat reported a strong set of annual results, with revenue and profit both up. Revenue for the financial year ended July 31 was GBP991.8 million, up 24%, while pretax profit rose to GBP84.8 million from GBP68.1 million. The firm declared a final dividend of 10.4 pence, up 18% on a year ago, and a special dividend of 16.0p, up 6.0% on last year's 15.1p. Softcat said it is in "great health" and "strategically well-positioned". "We think the structural drivers for growth in our industry will continue despite current political and economic uncertainty. The board also remains confident in the company's ability to gain market share and targets further growth during 2020," said Softcat. Softcat added that trading in the first eleven weeks of the new financial year has been on track. "Whilst our key aims of winning new customers and selling more to existing customers remain unchanged, we are doing much to further expand our addressable market and as a result the company enters the new financial year in a strong position and with good momentum" said Softcat Chief Executive Graeme Watt.
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Quilter said its client assets increased in the third quarter of 2019, but reported outflows in net client cash due to investment manager departures within its Quilter Cheviot unit. For the three months to the end of September, the London and Johannesburg dual-listed wealth management firm reported a net client cash outflow of GBP1.4 billion, compared to an inflow of GBP500 million in the same period the year before. Excluding Quilter Life Assurance, Quilter still reported an outflow of GBP500 million, compared to an inflow of GBP1.1 billion a year ago. However, assets under management and administration as at September 30 edged up 0.5% to GBP118.7 billion from GBP118.1 billion the same date the prior year, driven by a positive market performance. AUMA was up a more substantial 11% from December 31, 2018.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Metro Bank said Vernon Hill has decided to step down from the role of chair with immediate effect, and will remain a non-executive director until the end of the year. The Metro Bank founder has agreed to accept the honorary position of emeritus chair in recognition of the "extraordinary contribution" made to the challenger bank. Michael Snyder has been appointed as interim chair with immediate effect until a permanent successor is appointed.
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COMPANIES - INTERNATIONAL
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French carmaker PSA Group said revenue edged higher in the third quarter after pricing and product mix gains helped offset falling vehicles sales. For the three months ended September, total revenue rose 1.0% to EUR15.58 billion from EUR15.43 the year prior. This was after automotive revenue edged 0.1% higher to EUR11.82 billion and revenue from its majority-owned automotive parts maker Faurecia rising 4.3% to EUR4.19 billion. During the quarter, total car sales fell 4.0% to 674,000 from 702,000 the year prior. This was primarily due to weakness in its core Europe region as well as China & South-East Asia.
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Australian lender Westpac Banking Corp said Wednesday it expects second-half earnings to be held back by AUD377 million in customer remediation and wealth reset costs. For the six months ended September, Westpac expects customer remediation programmes to cost the firm AUD341 million in cash earnings. This is down significantly from the AUD617 million in such costs recorded in the first half of the financial year, however. The provisions follow an Australian government inquiry into the financial services industry within the country. The royal commission revealed extensive corruption in the sector which had seen customers charged fees for no service being delivered. In addition, Westpac will book a further AUD36 million in costs related to the reset of its wealth business which saw it stop providing personal financial advice. This charge also is significantly lower than the AUD136 million charge taken for this purpose in the first six months.
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Netflix said it issued around USD2.2 billion in senior loan notes to fund its general corporate needs, having upsized the offer after its initial announcement. On Monday, the television and film streaming giant had launched an offer for USD2.00 billion in loan notes that would be denominated in both US dollars and euros in an offer to institutional buyers.
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Swiss engineering firm ABB said it continued to expect modest annual growth in 2019 after a "robust" third quarter performance against a tough market backdrop. For the three months ended September, pretax profit narrowed 2.9% to USD564 million from USD581 million the year prior. This was after revenue fell 3.0% to USD6.89 billion from USD7.10 billion the year before, broadly unchanged on a like-for-like basis. Orders taken during the quarter stood at USD6.69 billion, pushing the orders backlog to USD13.36 billion at the end of September. The year prior, the orders backlog stood at USD13.82 billion.
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Boeing replaced the head of its commercial plane division, the most significant executive departure since the 737 MAX grounding plunged the company into crisis seven months ago. Kevin McAllister, head of Boeing Commercial Airplanes since November 2016, will leave the company effective immediately, Boeing said on the eve of a key quarterly earnings announcement. McAllister will be replaced by Stan Deal, who has been chief of Boeing Global Services.
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SoftBank Group agreed to provide a "significant" funding package of USD8 billion to the owner of workspace rental firm WeWork. The Japanese technology investor will provide We Co with USD5 billion in new financing as well as launching a tender offer at USD19.19 per share of up to USD3 billion for existing shareholders in the firm. SoftBank will also be accelerating its existing commitment to fund USD1.5 billion for We Co. Following closure of the tender offer, SoftBank will have an 80% economic ownership of We Co. SoftBank will not, however, have a majority of the voting rights and thus We Co will not become a subsidiary of the Tokyo-based firm.
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Wednesday's Shareholder Meetings
Stanley Gibbons
Standard Life UK Smaller Companies
Hayes Publishing
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By Tom Waite; thomaslwaite@alliancenews.com
London Briefing is available to subscribers as an email newsletter. Contact info@alliancenews.com
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