Business Breakfast RECAP: Filtronic's profits halved after supplier delays impact sales

Everything you need to know...

That’s all for this morning’s Business Breakfast Blog. I’ll be back again tomorrow with more news from across the region.

Until then here are some of our top stories:

Business leaders urged to support North of Tyne devolution deal

Gradon Architecture has designs on further expansion after record year

Newcastle milkmen seeing big demand for glass bottles as people try to use less plastic

Ryanair reaches 'historic' recognition agreement with pilots' union

A “historic” recognition deal has been agreed between Ryanair and the trade union representing pilots.
The British Airline Pilots’ Association (Balpa) said it had signed a voluntary trade union recognition agreement, with its reps involved in future negotiations on pay, hours, rostering and holidays.
Balpa said the move followed Ryanair’s announcement before Christmas that it was changing its stance towards unions and was willing to enter into discussions about recognising pilots’ unions in a number of European countries, including the UK.
Under the agreement, Balpa will be recognised as the sole trade union representing all of Ryanair’s 600 employed pilots based in the UK.
Balpa general secretary Brian Strutton said:

Given Ryanair’s previous hostility towards unions, today’s agreement is an historic one.

While we were initially sceptical about Ryanair’s sincerity in offering recognition to us and other unions, our conversations and meetings with them

have shown that they are genuine in wanting a constructive trade union relationship.

Balpa will be opening our election for five Ryanair Company Council representatives to be chosen from amongst the Balpa members employed by Ryanair.

These reps will lead future negotiations on issues such as pay, hours, rostering and holidays on behalf of all our Ryanair members.

We will also be opening an election for an advisory group for Ryanair contractor pilots who are not employed directly by the company.

I am hopeful that this is the beginning of a strong and mutually beneficial relationship between Balpa and Ryanair and I urge Ryanair to agree deals with pilot unions in other countries and with cabin crew unions.

Ryanair’s chief people officer Eddie Wilson said:

This agreement validates the decision of Ryanair’s Board in December to recognise unions, and the fact that we have delivered pay rises of up to 20% and union recognition for our pilots in our largest market, shows how serious Ryanair is about working constructively with unions that are willing to work constructively with us.

This rapid progress in the UK is in marked contrast to some other EU countries where we are still waiting for a response to our recognition proposals and where some unions have failed to put these substantial pay increases to our pilots.

We now call on these unions to stop wasting time and act quickly to deliver 20% pay increases to our pilots in February, and conclude formal recognition

agreements, which they are presently sitting on.

Ryanair will not allow these unions to delay pay increases to our pilots.

Waterstones enters takeover talks with Elliott Advisors, reports claim

Domino's has the X Factor as pizza chain upgrades profit forecast

Domino’s Pizza expects to serve up higher than expected profits after the X Factor helped it post a strong end to the fourth quarter.
The food chain reported an 18.2% rise in sales across the group to £321.8m in the 13 weeks to December 24, while in the UK revenue increased 10.1% to £294.7m.
UK like-for-like sales were up 6.1% in the period, with Domino’s adding that the start of the X Factor final on December 2 acted as the “catalyst” for its biggest day of sales for the year.
A record 95 new store openings in the UK in 2017 also drove sales, Domino’s said, while also signalling that full year revenues will grow 8.7% in the UK.
Boss David Wild said that as a result, full year underlying pre-tax profit is expected to be “slightly above” the current range of market expectations.

He said:

We are pleased to report a good performance in quarter four, completing another year of significant progress and growth for Domino’s.

With a record year for new store openings and continued like-for-like sales increases, the UK business has demonstrated its resilience in a challenging economic and competitive environment.

Utilitywise suspends share trading and delays publishing accounts again

Shares in North Tyneside energy consultancy business Utilitywise have been suspended due to another delay in the publication of the company’s financial accounts.

Utilitywise said it was unable to publish its accounts for the year ending July 2017, because its auditors were still involved in work looking at its revenue recognition policy.

The work involves reviewing many of the firm’s existing contracts to more accurately forecast turnover under its new accounting methods.

Share trading was temporarily suspended from 7.30am this morning, Monday January 29, and will reopen when the company’s accounts are published.

The firm gave no indication as to when its accounts would be published.

In a statement to shareholders Utilitywise said:

This delay is due to the volume of work still required to be completed by the company and its auditor to cater for the proposed change in the company’s revenue recognition policy, as announced on 17 January 2018.

This work includes amendments to the company’s financial reporting systems in order to analyse energy contract data in accordance with that new policy, alongside associated work by the company’s auditor, for the audit of its results for FY17 to be completed.

The delay is not related to the company’s banking arrangements, nor the trading, cash flows or other underlying economic position of Utilitywise in either FY17 or the current financial year.

Informa set to buy rival UBM

Publisher and events firm Informa has unveiled a £3.9bn deal to buy rival UBM.

The cash-and-stock offer values each UBM share at 971p.

Under the terms of the deal, Informa investors will own 65.5% of the company and UBM shareholders 34.5%.

Stephen Carter, chief executive of Informa, said:

Our recommended offer for UBM promises to create a leading B2B (business to business) information services group with the international reach and market capabilities to take full advantage of these trends.

He added that the tie-up is set to deliver annual cost savings of at least £60m.

Informa confirmed there would be some job losses as it looks to cut out overlapping management roles as part of the tie-up, but stressed this would be a “relatively small number” of the combined 11,000 workforce.

Take a look around Gibson Street baths...

Historic Gibson Street Baths put up for sale again after community bid fails

The historic Gibson Street Baths are back on the market for a third time, following a failed plan by a community group to turn the building into a cultural hub.

The building, one of the oldest public bath houses in England, was originally put up for auction by Newcastle City Council in April 2016, as part of plans to sell off its derelict properties to help tackle budget cuts.

That process was halted when a community campaign was launched to save the 101-year-old building, giving groups the chance to buy the building.

Campaigners with Save Gibson Street Baths for People not Developers – the group which succeeded in getting the building listed as an Asset of Community Value - were given several months to put together a business and funding plan, having said they wanted to turn it into a social enterprise hotel, cafe, bar and community space.

But the project did not come to fruition and the council is once more inviting offers for the landmark building, putting property agents Lambert Smith Hampton (LSH) in charge of marketing the building.

In new marketing materials issued on behalf of the authority, the council’s planning department says it wants to see the building restored and is flexible about future uses, saying the property is potentially suited to offices, residential, care home, health and leisure uses, although any development proposals must take into account the Grade II Listing.

Coun Ged Bell, the council’s cabinet member for inclusive growth, said:

Gibson Street Baths was one of the earliest public baths in the country. We put it on the market and worked closely with a community group when they came forward to ask that it be listed as an asset of community value.

Unfortunately, they were unable to put together a viable business case and we were left with no option but to put it back on the market.

Carillion apprentices face having pay stopped in next few days

Unions have attacked news that apprentices caught up in the collapse of construction giant Carillion will not be paid from later this week.
Skills minister Anne Milton said that affected apprentices would only be paid by the receiver until the end of January.
A written answer to shadow education secretary Angela Rayner said that the Construction Industry Training Board was “utilising their existing employer contracts” and grant incentives to secure employers for apprentices.

The minister said:

Once alternative employment has been secured, it will be the responsibility of these individual employers to determine the frequency of payments to their apprentices.

Rehana Azam, national officer of the GMB union, said:

Once again the Government’s response to the Carillion crisis is inadequate and inept.

These are young people starting out in their careers and they have no idea if they will have apprenticeships this time next week.

It’s simply not good enough - the Government has a duty of care to these people.

They should give a guarantee these people gain the skills to become Britain’s future workforce.

We were told every Carillion apprentice would be contacted. The evidence suggests that is not the case.

FTSE and pound update

The FTSE-100 index opened at 7671.53.

The pound at 8am was 1.3995 dollars compared to 1.4042 dollars at the previous close.

The euro at 8am was 0.8824 pounds compared to 0.8800 pounds at the previous close.

Filtronic's profits halved after supplier delays limit sales

Supplier delays has led to North East antenna manufacturer Filtronic Plc’s operating profit being halved during the first six months of the financial year.

The delays led to Filtronic being unable to produce its first batch of transmit and receive modules for a major defence contract it won last year. As a result the company will now only be able to ship its first volume of deliveries during the second half of the 2017/18 financial year.

The issues led to Filtronic’s revenue falling to £12.8m in the six months leading up to November 2017, down from £21.6m in the same period during 2016.

Operating profit also plummeted from £1.8m to £857,000.

Chairman Reg Gott said:

Whilst the Group continues to make good progress and is delighted to have been selected for key projects on the developing 5G roadmap, we are mindful that until we still further widen our customer base the business will continue to be subject to volume swings.

Due to the lack of current order clarity for our new antenna products we expect trading for the second half of the financial year to be broadly in line with the first half.

As a consequence of this, along with the current supplier delays impacting our defence contracts, it is anticipated that sales and operating profit for the year will be lower than previously indicated.

Filtronic added that it expected to be able to fulfil its defence contract obligations by the end of the financial year.