Morning Financial Press Review 14/08/19
Paul Kettle
AM Press Round-Up -3 min read
07:01, 14th August 2019

Below are the key morning press headlines, featuring the The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

The feared American law firm that won Enron investors a record £6billion is targeting BT Group (BT.A) FOLLOW  over its Italian accounting scandal. Robbins Geller Rudman & Dowd is set to file a case against the telecoms giant within days on behalf of US shareholders, the Mail understands. The defendants named in the lawsuit include BT as well as former chief executives Gavin Patterson and Lord Livingston. The law firm is seeking to recover damages shareholders suffered when BT disclosed a massive fraud at its Italian business. The announcement two years ago – and an accompanying £530million writedown – sent the shares crashing by a fifth and wiped almost £8billion off its market value. BT accused staff and bosses at the foreign division of cooking the books to artificially inflate earnings, behind the backs of UK bosses. But the lawsuit brought on behalf of US investors takes aim at BT executives in London as well. It disputes claims they were ‘kept in the dark’ about problems in Italy and accuses them of withholding crucial information from the market.

The under-fire bosses of Burford Capital (BUR) FOLLOW  scooped almost £120million selling shares last year – 15 times the amount they have since spent buying stock back as they attempt to shore up investor confidence. Chief executive Chris Bogart sold 4.4million shares for £59.4million in March 2018, while chief investment officer Jonathan Molot raked in £57.8million, offloading 4.3million shares. The American pair were still left with stakes worth £117million and £115million respectively, underlining the fortunes they have made since founding the litigation funding firm a decade ago. Having listed at 100p each in 2009, the shares peaked at 2045p in August last year, just months after Bogart and Molet sold a third of their stakes at 1350p a share. But the shares tumbled 56% in just two days last week following an attack from US hedge fund Muddy Waters. Bogart, who is married to Burford’s finance director Elizabeth O’Connell, and Molot have taken advantage of the rout to buy up stock, paying between 663p and 856p a share.

Sports Direct International (SPD)  FOLLOW boss Mike Ashley has handed his future son-in-law another £5.35million for his work at the business. Michael Murray is engaged to Anna, Ashley’s eldest daughter, and was paid through his firm MM Prop Consultancy. It comes after the 29-year-old was tasked with delivering Ashley’s ‘elevation’ strategy, which involves taking its stores upmarket to attract luxury brands. Sports Direct’s annual report yesterday said Murray had been providing ‘property consultancy services’, with his payout linked to how many new stores he was able to find and negotiate the purchases of. It follows a £5.2million windfall the previous year. His largesse stood in stark contrast to cash meted out to other key figures at Sports Direct.

The grounding of Boeing’s 737 Max airliner in the wake of two fatal crashes continues to send shockwaves through the sector, with holiday company TUI AG Reg Shs (DI) (TUI)FOLLOW  and aviation services group Menzies(John) (MNZS) FOLLOW warning of hits to their business as a result. TUI said not being able to fly the 737 Max meant it would run up a €300m (£278m) bill in the year to the end of September, as it totted up the cost of disruption to flight schedules, charters of replacement aircraft, additional crew and higher fuel bills. “It’s a critical situation, with the jet on the ground now for almost five months. It’s a lot of stress,” said TUI chief executive Fritz Joussen, adding that leasing planes is “very, very expensive” and the fuel bill was higher. John Menzies swung to a £4.4m loss for the first half of the year against a profit of £8.3m a year ago. Revenue rose 3.6% to £650m. Giles Wilson, chief executive, said a combination of the loss of contracts last year, weak cargo volumes and the grounding of the 737 Max drove John Menzies into the red. “Cargo volumes and yields have been weak and we are seeing a number of airlines failing to fly their stated schedules further compounded by the grounding of Boeing 737 Max,” Mr Wilson said. He added that “well-documented weaker markets across the wider aviation sector” were multiplying John Menzies’ woes. It has a launched an efficiency drive to save £10m a year, having warned on profits last month.

Father’s Day failed to deliver the same boost as Mother’s Day and Valentine’s Day for Card Factory (CARD) FOLLOW  this year, the greeting cards retailer revealed alongside a rise in half-year sales. Sales at Card Factory rose by 5.5% in the six months to the end of July. Like-for-like sales rose by 1.5%. Despite other retailers closing shops as they battle rising business rates and the move of shoppers online, Card Factory plans to open 50 stores this year. The retailer said that its second-quarter performance had been “a little weaker in the season of Father’s Day, impacted by footfall”. Analysts at Investec said they estimated that this had knocked like-for-like sales to 0.7% in the second quarter.

Plus500 Ltd (DI) (PLUS) FOLLOW shrugged off fears over a potential crackdown in Australia as it battles rule changes aimed at protecting punters from running up huge losses. New powers given to the Australian Securities and Investments Commission (ASIC) are similar to those already held by European regulators, allowing them to tackle abuses in the sale and marketing of a range of financial products. One City analyst said sales at Plus500 could drop up to 6% if tighter rules were enforced Down Under, although it was unlikely to affect results for this year. Plus500 chief executive Asaf Elimelech said he “definitely” expected rules in Australia to change although he would not comment on when. “We are constantly assessing the potential impact of the regulatory landscape and are preparing ourselves for any event if it may come,” said Mr Elimelech. “There will most likely be a hit on the revenues, and maybe that’s up to 6% in the long term, but it will depend on the level of the restriction.”

The government faces fresh calls to intervene in the £4 billion takeover of Cobham (COB) FOLLOW by an American private equity firm amid concerns that ministers have “abandoned” the British aerospace and defence company. Chuka Umunna, the Liberal Democrat MP, has written to Andrea Leadsom, the business secretary, to ask her whether the government is assessing the national security implications of the sale of the company to Advent. It comes after the founding family of Cobham wrote to the government this month to raise concerns the deal was not in the “national interest”. Silchester International Investors, Cobham’s biggest shareholder with a stake of more than 11%, has also criticised Advent’s 165p-a-share cash offer as being too low.

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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