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| AA has been a bit of a car crash - can it get back on the road? | AA has been a bit of a car crash - can it get back on the road? |
| (4 months later) | |
| Roadside assistance group stalled a little with the firing of its chairman, but still looks like a good runner | |
| Mon 25 Sep 2017 07.16 BST | |
| First published on Sun 24 Sep 2017 07.00 BST | |
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| The AA has been a bit of a car crash recently, and this week investors will be hoping for signs that it is getting back on the road. | The AA has been a bit of a car crash recently, and this week investors will be hoping for signs that it is getting back on the road. |
| Over the summer the roadside recovery group fired executive chairman Bob Mackenzie for “gross misconduct” after an alleged altercation with another director. However Mackenzie’s son maintains his father left because of ill health. | Over the summer the roadside recovery group fired executive chairman Bob Mackenzie for “gross misconduct” after an alleged altercation with another director. However Mackenzie’s son maintains his father left because of ill health. |
| The dispute reportedly revolved around a possible disposal of the AA’s insurance business, which Mackenzie opposed. It later transpired that there had been early talks between the AA and insurance group Hastings about a deal, but these had now ended. Further partnerships are a possibility, and more details could emerge at Tuesday’s interim figures from acting chief executive Simon Breakwell. | The dispute reportedly revolved around a possible disposal of the AA’s insurance business, which Mackenzie opposed. It later transpired that there had been early talks between the AA and insurance group Hastings about a deal, but these had now ended. Further partnerships are a possibility, and more details could emerge at Tuesday’s interim figures from acting chief executive Simon Breakwell. |
| Analysts at Cenkos said the proposed deal with Hastings “does highlight the value of the AA’s insurance broking business (which has a circa 2% market share in new motor insurance policies and a 3% share in home insurance), but keep in mind that roadside assistance remains the biggest division by far (2017 earnings were £365m from roadside assistance and £76m from insurance) and we continue to think that despite the shambolic headlines around Bob Mackenzie’s dismissal, operating performance remains robust.” | Analysts at Cenkos said the proposed deal with Hastings “does highlight the value of the AA’s insurance broking business (which has a circa 2% market share in new motor insurance policies and a 3% share in home insurance), but keep in mind that roadside assistance remains the biggest division by far (2017 earnings were £365m from roadside assistance and £76m from insurance) and we continue to think that despite the shambolic headlines around Bob Mackenzie’s dismissal, operating performance remains robust.” |
| How to shore up a wobbly Carillion | How to shore up a wobbly Carillion |
| Another company with problems is construction and support services company Carillion. In July, it issued a profit warning, blaming a Brexit-related slowdown in orders, scrapped its dividend and said Richard Howson was stepping down as chief executive but would become chief operating officer. Apart from causing a share price crash of nearly 40%, the news prompted talk in the City that the company could find itself in need of a cash call of around £500m to cut its debt mountain. | Another company with problems is construction and support services company Carillion. In July, it issued a profit warning, blaming a Brexit-related slowdown in orders, scrapped its dividend and said Richard Howson was stepping down as chief executive but would become chief operating officer. Apart from causing a share price crash of nearly 40%, the news prompted talk in the City that the company could find itself in need of a cash call of around £500m to cut its debt mountain. |
| Then, earlier this month, it said finance chief Zafar Khan had left after nine months in the role and Howson was departing the company completely. This also caused surprise, coming as it did not long before next Friday’s half-year results. | Then, earlier this month, it said finance chief Zafar Khan had left after nine months in the role and Howson was departing the company completely. This also caused surprise, coming as it did not long before next Friday’s half-year results. |
| UBS analysts said: “While we think a credible recapitalisation and turnaround requires a new management team, the changes raise some questions: the timing is somewhat odd with results due to be reported on 29 September.” | UBS analysts said: “While we think a credible recapitalisation and turnaround requires a new management team, the changes raise some questions: the timing is somewhat odd with results due to be reported on 29 September.” |
| Analysts believe a restructuring of Carillion’s debt will wait until after Friday’s figures and any news on strategic developments. | Analysts believe a restructuring of Carillion’s debt will wait until after Friday’s figures and any news on strategic developments. |
| The last year has been far from easy for PZ | The last year has been far from easy for PZ |
| PZ Cussons is a strange beast, with a strong presence in various personal care, electricals and food businesses in Africa – particularly in Nigeria – and a number of global brands including Carex and Imperial Leather. | PZ Cussons is a strange beast, with a strong presence in various personal care, electricals and food businesses in Africa – particularly in Nigeria – and a number of global brands including Carex and Imperial Leather. |
| The company is due to give a trading update on Wednesday but it is the annual meeting on the same day that has corporate governance specialist Pirc in a lather. | The company is due to give a trading update on Wednesday but it is the annual meeting on the same day that has corporate governance specialist Pirc in a lather. |
| The advisory group is recommending shareholders vote against the company’s remuneration policy. It says the company’s incentive scheme could give chief executive Alex Kanellis a maximum potential award of 300% of salary, which Pirc describes as “excessive”. It is also unhappy that “upside discretion may be used by the [remuneration] committee when determining severance payments.” | The advisory group is recommending shareholders vote against the company’s remuneration policy. It says the company’s incentive scheme could give chief executive Alex Kanellis a maximum potential award of 300% of salary, which Pirc describes as “excessive”. It is also unhappy that “upside discretion may be used by the [remuneration] committee when determining severance payments.” |
| On the trading front, the company had to cope with foreign exchange problems in its African businesses last year but Investec believes this year should be better: “2017 threw several curve balls at PZ Cussons, but the business coped admirably, delivering a solid pre-tax profit … While we do not believe 2018 will show any significant underlying economic improvement, we do not expect a recurrence of the level of disruption the group had to contend with last year.” | On the trading front, the company had to cope with foreign exchange problems in its African businesses last year but Investec believes this year should be better: “2017 threw several curve balls at PZ Cussons, but the business coped admirably, delivering a solid pre-tax profit … While we do not believe 2018 will show any significant underlying economic improvement, we do not expect a recurrence of the level of disruption the group had to contend with last year.” |
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| PZ Cussons | |
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