BUSINESS LIVE: Greggs eyes further growth; US rival to buy Spirent; IWG profits soar

As Jeremy Hunt prepares to deliver what could be his final budget as Chancellor this week, Britain’s pub industry remains in tremendous peril.

Closures continue to blight the sector; about 3,000 pubs have shut in the past six years, including 509 in 2023, according to the British Beer & Pub Association.

The battle against HIV received a boost after GSK reported data showing one of its drugs can be taken as little as three times a year.

ViiV Healthcare, the company’s HIV medicine arm, said a clinical trial of a new formulation of its long-acting treatment Cabotegravir had shown it could be taken ‘at least’ once every four months to provide protection against infection.

This is in stark contrast to most HIV prevention treatments, which require users to take tablets every day to protect themselves from the virus.

Lloyd’s of London insurer Hiscox posted a record annual profit, as rising interest rates and strength in its commercial business helped offset claims inflation and the effect of currency swings.

The London-listed company, which underwrites a range of risks from natural catastrophes to cyber attacks to kidnappings and art theft, said on Tuesday profit before tax for 2023 rose to $625.9million from $275.6 million a year earlier.

Net insurance contract written premium for 2023 climbed 10.7 per cent to $3.56 billion.

Hiscox said retail outlook for 2024 was positive.

Matt Britzman, equity analyst, Hargreaves Lansdown:

‘Greggs continues to show why it’s the UK’s leading food-to-go brand (YouGov’s Brand Index). This is a business intent on growing, aiming to surpass 3,000 UK shops while enhancing its multi-channel approach for better service.

‘Digital channels are booming, with delivery sales up 23.6% last year following partnerships with Just Eat and Uber Eats. Greggs is extending hours to capture more of the evening market and bolstering its brand to both deepen loyalty and attract new customers.

‘Greggs is far more than just a treat, and its value offering puts it in a sweet spot with consumers still battling higher living costs. Maintaining that price point is key, and with cost inflation easing Greggs is making sure customers feel the benefit too. That’s likely to be a small drag on sales growth this year compared to last, but there are plenty of other growth avenues to target.

‘Investors don’t have to sit and wait while the growth strategy plays out. Greggs already boast a modest 2.6% forward yield and today’s special dividend is further evidence that the board’s keen to pay investors while it expands.’

Global office rental firm IWG’s annual core profits rocketed 34 per cent last year, buoyed by increased demand for its flexible working spaces and pricing strength.

The London-listed owner of the Spaces and Regus brands said core profit came in at £403million for the year to 31 December, beating market expectations of a £398million return.

‘We enter 2024 continuing our momentum from 2023 as we continue to grow our customer base, our global partnerships and our best-in-class network.

‘While 2023 was a record year for both revenue and network size, we continue to see significant growth potential. With 1.2 billion white-collar workers globally and a potential audience valued at more than $2 trillion, there is substantial room for growth and as a company, we have a laser-like focus on capturing more of this market over the coming months and years.’

Bitcoin and gold raced towards record highs as investors bet on interest rate cuts this summer.

US-based communications equipment firm Viavi Solutions has agreed to buy British telecommunications testing firm Spirent Communications in a deal valued at about £1billion.

Spirent shareholders will get 175p per share, reflecting a 61.4 per cent premium to the firm’s closing share price on Monday.

Eric Updyke, Spirent CEO, said:

‘Spirent has undergone a period of significant transformation and growth over recent years and I am proud of the significant progress we have made, thanks to the efforts and commitment of our people. We have evolved our offering and routes to market to focus more on high-quality, high-growth, software-centric solutions and have become a mission critical partner to our customers in a more complex and digitised world.

‘More recently, however, we have endured significant challenges due to the macro backdrop and the impact of this on our core end markets. These conditions are likely to continue for some time.

‘Combining with the Viavi Group brings together a highly complementary product offering which can be marketed globally. It will enable Spirent to build on the strategic progress we have made to date, with a partner that has the scale and resources to capitalise on the long-term growth opportunities ahead. The combination of the Viavi Group and the Spirent Group creates a stronger business that will be better able to compete in what remains a challenging market environment and we are confident in the opportunities this will bring for many of our stakeholders.’

KPMG has been fined £1.5million over ‘basic failings’ in its audit of advertising firm M&C Saatchi that emerged following an accounting fiasco in 2019.

Adrian Wilcox, a KPMG partner, was also fined £48,750 as a result of an investigation by the Financial Reporting Council (FRC), which regulates the accounting industry.

Greggs expects further earnings growth in 2024 after underlying pre-tax profits came in 13 per cent higher at £168million for last year, lifted by extending its opening hours into the evening and expanding in food delivery.

The group famed for its sausage rolls posted underlying sales growth of 13.7 per cent for the year, and said a five year plan to double sales by 2026 was on track and it continued to target 3,000 outlets.

It opened 220 new stores in 2023 bringing its estate to 2,473.

‘Reflecting on another year of rapid growth, I am so proud of how our teams have risen to the challenge of serving more customers through more channels.

‘Whether in our shops, our manufacturing sites, our distribution network, or in Greggs House, our teams stepped up to make sure that we kept pace with the increased customer demand as we delivered on our strategic growth plan.

‘We are very much on track to deliver our bold five-year growth plan to double sales by 2026 and to have significantly more than 3,000 shops in the UK over the longer term.’