Directors’ Deals: BT’s new chief builds stake

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BT Group’s new chief executive, Allison Kirkby, has quite a task on her hands.

Over the past decade, the group has recorded anaemic growth, with sales increasing by a compound annual rate of just 1.2 per cent and cash profit by 2.9 per cent, according to FactSet. What’s more, current analyst consensus forecasts are for things to get worse. 

Revenue growth until March 2027 is expected to slow further, at a compound rate of 0.8 per cent, and cash profit growth to fall below 1 per cent. That is, of course, assuming the status quo is maintained, which seems unlikely. 

Kirkby has a better idea of what she’s getting into than many incumbent chief executives, having been on BT’s board as a non-exec for the past five years. She ran Swedish telco Telia for most of the past four. 

BT faces numerous “tail risks” in 2024, analysts at Berenberg warned in January. An obvious one is that Kirkby’s appointment sparks “a period of broader churn” in its senior leadership. 

Then there’s the threat that BT’s Openreach business could (eventually) lose up to £800mn of business from heavily indebted Talk Talk if the latter agrees to sell its consumer business to Virgin Media O2, with recent reports that the pair are in talks. On top of that, there is a £1.3bn class action claim being brought by law firm Mishcon de Reya, which alleges that BT engaged in “anti-competitive behaviour through excessive pricing” for landlines in the past. BT has said this issue has already been looked at by Ofcom and it “intends to defend itself vigorously”.

Given such uncertainty, it’s little wonder that the shares have fallen by 15 per cent year-to-date and trade at under six times earnings. With Kirkby required to build a shareholding equivalent to 500 per cent of her salary within five years, now seems like as good a time as any to start. She bought £428,000-worth last week.

Pinewood chief cashes in

Pinewood Technologies’ boss has offloaded another £500,000 in shares, meaning he has now sold just shy of £7mn since last October, after a tumultuous six months for the car dealership technology company.

Chief executive Bill Berman sold over 1.46mn shares at 34.9p per share on 19 February having sold 14.1mn shares at 36p each on January 31 and 4.2mn shares at 32p on October 30 last year. Meanwhile, chief financial officer Oliver Mann sold £197,000 worth of shares over two transactions on January 31 and October 30.

The dealings come as the software company officially changed its name to Pinewood Technologies from Pendragon this month, following the completion of the sale of the UK car dealerships arm of its business to Lithia Motors for £397mn. The transaction pushed the share price to a six-year high, making a healthy return for Berman and Mann.

Lithia initially approached Pendragon about buying its car dealership business for £280mn last September. Two days later, it rejected a “highly conditional” counteroffer from its largest shareholder Hedin, which then improved its offer another two days later. The following week, American used-car dealer AutoNation made its own approach.

The frantic counterbidding culminated in Lithia increasing its original offer by £117mn in October, with AutoNation dropping out later that same month. The Lithia deal completed on 1 February.

While this was happening, the company was also dealing with a battle in the High Court with an Asia Pacific software reseller named Pinewood AP over the treatment of a contract. An initial ruling went largely in the UK business’s favour, although Pinewood AP is also now seeking to pursue the matter in the US.