Investors purr as Pets at Home beats expectations

PETS at Home set tails wagging as performance last year was ahead of expectations.

Profits climbed 6.1pc to £89.7m for the year to March 28, not including the effects of a £40.4m charge related to the restructuring of its vet business.

The pet products retailer said its shops had returned to profit growth faster than expected, and sales were up 5.1pc.

Rather than trying to rake in more money by selling fewer expensive items, it has cut prices to attract more customers.

However this squeezed profits slightly. Profit was also knocked by a decision to buy back some of its vet practices, which it had previously run with individual vets.

The firm admitted some weren’t performing as well as hoped. It has already spent £21.2m buying back 48 locations, and closed 19 of them. Pets at Home has set aside another £19.2m to pay off more of its vet partners, and will review how many need to close.

Shares climbed 13.9pc, or 20.5p, to 168.5p, way off the 245p they floated at in 2014.

There has also long been concern over the company’s £135.2m debt pile. Russ Mould, at AJ Bell, said: ‘It has been all over the place since it was let off the leash at its initial public offering in 2014 – and borrowings which it carried from the outset didn’t help.

‘The joint venture vet practices also aren’t expected to be profitable for a number of years and a shortage of veterinary practitioners is pushing up salaries. The results are a step in the right direction, but there’s more to do.’

The FTSE 100 was up just 0.1pc or 5.27 points at 7334.19.

Exporters boosted the index as sterling slid on Brexit fears, meaning that money they earn in foreign currencies is worth more when transferred into pounds.

Defence firm Babcock was under fire after a year of weak performance. Though the results were generally as expected, analysts were alarmed by a 7pc dip in Babcock’s 2020 earnings forecasts.

It was another disappointment for investors, who are trying to decipher accusations flung at the company by mysterious research firm Boatman Capital.

Christopher Bamberry at Peel Hunt called it ‘another downgrade to estimates in a long series of downgrades’, and said it was difficult to imagine a catalyst that would boost the shares, which fell 9.3pc, or 47.2p, to 460p. For online trading firm IG

Group, the picture was a little rosier. Market volatility, which generally prompts IG’s customers to trade, was relatively low for most of the year.

But in the first few weeks of May, volatility began to pick up. So the full-year revenue is expected to be around £475m, better than investors had been predicting. IG also set out plans to boost revenue by 30pc by 2022. Shares shot up by 12.5pc, or 59.4p, to 534.2p.

Online lender Funding Circle was forced to clarify changes to its executive pay policy, which will be voted on by shareholders in June.

Rather than allowing its bosses’ bonuses to be decided by looking at other FTSE 250 companies’ pay policies, Funding Circle is capping the bonus for its chief executive at £2m per year and for its chief financial officer at £1.1m.

Boss Samir Desai has already decided to waive his bonus as shares are trading 42pc lower than they were when they hit the stock market last September. Shares ended 0.4pc, or 1p, up at 257p.

Property tycoon Nick Candy, who is married to pop star Holly Valance, has upped his stake in podcast maker Audioboom after it ran to investors for cash.

He now owns 25pc himself, and another 24pc through his investment firm Candy Ventures. Audioboom ended the day flat at 1.9p.