One Year On: Technology Investment Still Growing
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Times
an hour ago
- Times
WH Smith shares drop 40% after US accounting error
Nearly £600 million was wiped off WH Smith's stock market value on Thursday after a multimillion-pound accounting issue in its North American business led the group to cut annual profit guidance. Shares in the British retailer closed down 470p, or 42.3 per cent, at 640p, as investors sold the stock before a Deloitte-led review into the incident. WH Smith, which has transitioned into a pure-play travel business after selling its struggling high street shops, said it had discovered an 'overstatement' of about £30 million on its headline trading profit figure. 'This overstatement is largely due to the accelerated recognition of supplier income in the North America division,' the company said. WH Smith said that it received supplier income in the form of supplier incentives and discounts. This is accounted for as a deduction from the cost of sales on an accrual basis as they are earned for each supplier. The overstatement resulted when some of this income was booked in the current financial year instead of the next one. The FTSE 250 retailer now expects full-year headline trading profit from North America for the year to the end of August to be approximately £25 million, down from previous market expectations of approximately £55 million. • Do WH Smith shares have a long way to go? As a result, WH Smith's annual headline profit before tax and non-underlying items is forecast to be about £110 million, down from market expectations of £140 million. Deloitte, one of the Big Four accountancy firms, has been appointed to conduct an independent and comprehensive review of the accounts of the North American business. WH Smith, founded in London in 1792 by Henry Walton Smith and his wife, Anna, quit the high street after 233 years this year with the sale of its shops to Modella Capital, the owner of Hobbycraft, for £76 million. It also sold its greetings card business, Funky Pigeon, for about £25 million this summer. The company operates more than 1,200 travel shops in airports, railway stations, hospitals and motorway service stations around the world. Fintan Ryan, food and beverage analyst at Goodbody, the investment bank, described the scale of the accounting overstatement as 'quite shocking', with the scale of the impact on profitability as yet unclear. He added he expected the market to 'assume the worst, for now at least'. '2025 was already a year of 'transition' for the group, with the complete exit of the legacy high street retail and online Funkypigeon businesses now complete, but this is likely to materially impact WH Smith's management and financial credibility, which will likely take some time to recover.' JPMorgan analysts said in a note: 'This is clearly a big negative surprise,' adding it raises 'a number of issues around its accounting, which are unlikely to be explained straight away and are likely to be a drag on the shares in the meantime'.
Reuters
an hour ago
- Reuters
Berlin weighs trusteeship extension for Rosneft's German assets, sources say
BERLIN/FRANKFURT, Aug 21 (Reuters) - Berlin is considering extending its trusteeship over the German assets of Russian oil producer Rosneft ( opens new tab for a sixth time, two people familiar with the matter said, as efforts to sell the business drag on. The repeated trusteeship renewals raise pressure on Berlin to come up with a better legal structure for Rosneft's activities in Germany. The situation is emblematic of the challenges Berlin faces in dealing with Russian assets in Germany at a time when efforts to end the war in Ukraine are picking up pace. Rosneft's German assets, including stakes in the Schwedt, MiRo and Bayernoil refineries, were put under government trusteeship in September 2022 in the wake of Russia's full-scale invasion of Ukraine, which sparked an energy crisis due to the collapse of Europe's relations with key supplier Russia. So far, Berlin has shied away from nationalising Rosneft's activities, opting instead to maintain de facto control over them via a trusteeship that still leaves legal ownership in Russian hands. The trusteeship, which has to be renewed every six months, currently runs until September 10 and is being enacted by the German network regulator, the Bundesnetzagentur, on behalf of the economy ministry. A formal decision about the trusteeship extension is still outstanding, the sources said. Rosneft, Russia's biggest oil producer, has sought to sell its German businesses, including a 54.17% stake in the PCK Schwedt refinery, but talks with potential suitors, including Qatar, have proven unsuccessful so far. The first source said talks between Rosneft and Qatar were ongoing. Rosneft also owns a 24% stake in the MiRo and a 28.57% stake in the Bayernoil refineries. The economy ministry said that Berlin was examining various options regarding the group's German assets. "Ensuring security of supply remains the primary goal," a spokesperson for the ministry said, adding that Berlin was not part of the sales negotiations and could not provide information about it. The Qatar Investment Authority and Rosneft did not respond to requests for comment. Gazprom Germania, now operating under the name Sefe, was nationalised by Berlin in 2022 after the group's former Russian parent ditched the division, which is a vital part of Germany's gas supply. "The federal government is locked into its own strategy. For the (conservatives) Christian Democrats, expropriating companies would be against their campaigns ... it would be a major step with a very high threshold," the first source said.
Times
an hour ago
- Times
Is this the right time to buy shares in Pagegroup?
The last time this column looked at Pagegroup back in January 2024, the recruiters were coming off the back of a tough 12 months but there was optimism that a rebound was not too far away. Fast-forward 18 months and the market slowdown that began towards the end of 2022 is still here: companies are not hiring and candidates are not moving. This is the longest downturn anyone in the industry can remember. The Tempus advice to avoid Pagegroup was sage: since the start of last year, shares in the company are down 46 per cent. Pagegroup enjoyed a couple of record years after the pandemic during the 'great resignation' as people, after months sitting at home, rethought what they wanted from a job. It helped, too, that in their rush to ready themselves for the post-lockdown economic rebound, companies were offering generous pay increases to rebuild their workforces. That mini-boom came to an end almost three years ago and the intervening period has been marked by rapid inflation, spiralling interest rates, wars and general economic and geopolitical uncertainty. Page's fee income has been falling since the start of 2023 and it is still dropping. Earlier this month it dashed any hopes of an imminent improvement in the market having seen, if anything, a 'slight deterioration in activity levels' in Europe over the summer, particularly in Germany and France, the two largest countries. No one in the industry knows when the market will pick up again, but it almost certainly will not be this calendar year. The timeline for a recovery has been pushed back so many times that recruitment firms have stopped offering their predictions. Page has suffered more than some of its rivals because of its reliance on filling full-time roles for its clients. Permanent hiring still makes up 72 per cent of its fee income, versus 28 per cent for its contracting division. Many of those companies that are still hiring are bringing in workers on fixed-term contracts to oversee specific projects. Page has said that this trend is because companies, faced with uncertainty, are seeking 'more flexible options'. In response to the prolonged downturn, the company has shaved £15 million from its annual cost base, a chunk of which has come from cutting its headcount. In 2022, it had more than 7,000 recruiters but its staff numbers have since been reduced by about a quarter as its fees have dried up over the past couple of years. It now has 5,163 recruiters around the world, having cut a further 207 consultant roles so far in 2025. It has also done away with special dividends, which tripled investors' income in the good years. Due to the sometimes drastic measures, Page is just about keeping its head above water. In the first six months of 2025, it made a profit of £200,000, down from £27.7 million in the same period of 2024. For context, in the first half of 2022, it made a pre-tax profit of £114.5 million. Its shares still look expensive relative to peers though. Its enterprise value-to-underlying profit ratio of 9.4 times compares with 7.4 times at Hays, for example. • Recruiter Hays slashes dividend after 90% drop in profits Analysts at Panmure Liberum expect Page will turn an underlying profit of about £22 million this year — not too dissimilar to what it made in 2009, during the depths of the financial crisis, and in the lockdown-hit 2020. Management's target of achieving an underlying profit of £400 million currently looks unreachable, but they have stuck with it. Even when the recovery does come, there remain long-term doubts not just about Page but the recruitment industry more generally. Advances in artificial intelligence mean companies' internal HR teams can now scan through hundreds of CVs and cover letters and pick out four or five people for an in-person interview. Social media, particularly LinkedIn, has made hunting for jobs or candidates off your own bat that bit easier. Given the shares' performance over the past 12 months, and with Page's focus on permanent hiring making it more exposed to the economic cycle, any sniff of a pick-up in activity will boost its share price. But no one expects that inflection point to arrive soon. There is too much uncertainty, both in the short and long term, to recommend buying shares in Pagegroup — especially at a time when the broader London stock market is hitting fresh records almost daily. Advice Avoid Why Outlook remains uncertain and AI poses a threat
