Morning Financial Press Review
Paul Kettle
AM Press Round-Up -3 min read
08:16, 11th January 2019

Below are the key morning headlines from today’s papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

Debenhams chairman ousted by Mike Ashley. Retailer’s chairman Ian Cheshire steps down and CEO Sergio Bucher leaves board. The chairman and chief executive of Debenhams (DEB)FOLLOW have been ousted from the retailer’s boardroom after two major shareholders – including Mike Ashley’s Sports Direct – voted against them. The chairman, Ian Cheshire, stepped down immediately while the chief executive, Sergio Bucher, will stay on but not as a director. Sports Direct International (SPD), which owns nearly 30% of Debenhams shares, and Milestone Resources, controlled by the Dubai-based retail billionaire Micky Jagtiani, who owns a 7% stake, both voted against Cheshire and Bucher. A total of 56% of shares voted were against both directors after a number of shareholders either withheld or failed to use their votes. Cheshire joined Debenhams three years ago and he appointed the former Amazon executive Bucher. He told the board after the group’s shareholders’ meeting that he had concluded “it is no longer possible” to remain on the board without the backing of key shareholders. Bucher is to stay on as the board said it had “full confidence in Sergio and in the management’s plan to reshape the business”. “The board believes that it is in the best interests of Debenhams plc that the executive team remains fully focused on delivery of the plan. In the meantime, the board remains open to constructive suggestions from shareholders that are in the interests of the business as a whole.”

German industry calls on Europe to take a tougher line with China. German businesses have called on the European Union to adopt a tougher stance towards China as concerns mount over state subsidies from Beijing, dumping of excess produce and technology transfer. Echoing some of the issues raised by President Trump, BDI, one of Germany’s biggest industry bodies, criticised China for funding the acquisition of foreign technology through takeovers. It noted the world’s second-biggest economy had been dumping excess produce such as steel, cement, and ceramics in Europe and blocking access to its markets, while using state money to allow Chinese companies to tender for work in the EU. In a paper yesterday the BDI said: “China is no longer developing structurally in the direction of a market economy and liberalism but is in the process of consolidating its own political, economic and social model.

Brighton Pier takes dive before alert. The City watchdog is expected to scrutinise share trades at Brighton Pier Group (The) (PIER)FOLLOW after a 14% fall in the stock price in the two days before yesterday’s profit warning. The alert, which sent the shares tumbling 62% in early trading, is a fresh blow to Luke Johnson, its chairman and biggest shareholder, as he seeks to rebuild his reputation after the travails of Patisserie Holdings. An investigation by the Financial Conduct Authority would be embarrassing for him, given that Patisserie Holdings, where Mr Johnson is also chairman, is at the centre of investigations by the Serious Fraud Office and Financial Reporting Council over a £40 million hole in its finances.

Lucan’s son embroiled in oil firm boardroom coup. A British oil company is facing a boardroom coup from its ousted former chairman who is seeking to appoint Lord Lucan’s son as a director. Angus Energy (ANGS)FOLLOW said it had received letters from two shareholders requisitioning a general meeting to seek to appoint George Bingham, the 8th Earl of Lucan, and Adam Salim Habib as directors and to remove Paul Vonk, the managing director. It said it believed that Jonathan Tidswell-Pretorius, the former chairman, had a direct interest in the shareholding represented by one of the letters. He stood down in July after Angus said it was investigating whether he had violated regulations in his share dealings.

Optimistic Marks & Spencer ‘still on target’. Improved online sales helped Marks & Spencer Group (MKS) FOLLOWto produce a third-quarter performance that was slightly ahead of the City’s expectations. The household retailer said its turnaround was “exactly where we planned it to be at this stage” even as it again reported that sales at its UK food and clothing and home divisions fell by 2.1% and 2.4% like-for-like, respectively. Overall like-for-like sales were down 2.2% in the 13 weeks to December 29. The retail chain, which has been in turnaround programmes for more than a decade, has maintained its full-year profit guidance. Steve Rowe, chief executive, said it had been a “very challenging” third quarter, particularly in November when footfall to its shops and traffic to its website fell, but he was pleased with the performance. He added that it discounted less during the period and had 25% less stock as it started its Christmas sale, in a planned reduction in inventory.

Halfords punctured after mild winter deters buyers. Halfords Group (HFD) FOLLOWwarned shareholders to brace for another year of subnormal profits yesterday, blaming the mild winter for poor returns this year and saying it expected weak consumer confidence to hit next year’s profits too. Shares in the car parts, repairs and bicycles retailer fell by 22% to 216¾p, leaving investors with losses on paper for the day of £123 million. The mild weather hit sales of de-icer, scrapers, screen wash and batteries in the third quarter, leading to a 2.2% decline in like-for-like sales in the 14 weeks to January 4. Underlying pre-tax profits for the year to March would be in the £58 million to £62 million range, well below expectations of £70 million. However, investors were more spooked by Halfords’ warning that there would be no profits recovery in the year to March 2020. Consumer confidence could be weak into next year, it said, pointing to low sales of bigger-ticket items such as adult bikes and roofboxes. The reduced profits guidance “poses some very serious fundamental questions,” Jonathan Pritchard, of Peel Hunt, said. He questioned whether the dividend was safe and advised clients to sell the shares. Halfords last cut the dividend, by a third, in 2013. The shares now yield 8.1%.

Merry Christmas puts Tesco ahead of forecast. Tesco (TSCO)FOLLOW has enjoyed its best Christmas sales growth in almost a decade, beating City forecasts. The retailer reported a 2.2% rise in like-for-like sales in its core Tesco business in Britain in the six weeks to January 5, its fourth consecutive annual rise in festive sales. It beat a company-compiled analyst forecast range of between 1 and 1.5%. Dave Lewis, the chief executive who has for the past four years been leading the turnaround, said Tesco had “delivered significant improvements in our competitive offer and this is reflected in a very strong Christmas performance which was ahead of the market”. “We have more to do everywhere but remain bang on track to deliver our plans for the year, and as we enter our centenary we are in a strong position.”

Pub group proves its festive pull. Drinkers and diners poured into Mitchells & Butlers (MAB) FOLLOWinns and restaurants over the holiday period, helping the pubs operator to notch up a bumper increase in festive sales. In what one analyst described as a “Christmas cracker” of a trading update yesterday, Mitchells & Butlers was able to boast like-for-like sales growth of a healthy 9.8% for the three weeks. Underlying sales at the Harvester and All Bar One chain over the two weeks around Christmas rose by 12.3% and in the seven weeks to January 5 by 6.9%, split evenly between food and drink, he said.

Professional recruitment slows to crawl, says Robert Walters. Hiring activity for professionals such as lawyers, accountants and IT workers in Britain is stagnant and could get worse if politicians do not soon deliver clarity on Brexit, a leading recruitment consultancy has said. Robert Walters (RWA) FOLLOWsaid that workers trying to move jobs and businesses trying to release capital to bring in new staff had been affected by the uncertainty. It said it was continuing to reduce its own exposure because jobs growth “lies elsewhere”, such as in France, Germany and Japan. “We have experience of dealing with extremely difficult situations,” Robert Walters, founder and chief executive of the company, said. “We have flexibility and very limited exposure to the UK. If we do need to downside or reallocate our people into growth markets, we can do that.”

Merlin Entertainments (MERL),FOLLOW the operator of the London Eye, Madame Tussauds and London Dungeon, was in for a scare after UBS raised concerns about the popularity of some attractions. Analysts sifted through more than 550,000 customer reviews of around 100 Merlin attractions. They also examined a monitor that tracks average queue times at theme parks. They found a continued decline in average reviews across Merlin’s Midway Attractions brands, which include the Blackpool Tower and Sea Life Centres. Merlin also operates Legoland and resort theme parks including Alton Towers, Chessington World of Adventures and Thorpe Park. UBS raised the alarm six months after it first expressed concern about increasingly negative reviews at the company’s city centre sites.

Biotech minnow Angle (AGL) FOLLOWtriumphs with cancer blood testing kit. Biotech company Angle has scored a win after its blood testing technology was central in helping doctors discover a potentially ground-breaking treatment for cancer. The Aim-listed firm’s device, called Parsortix, is able to catch tumour cells circulating in the blood through a simple blood test. Now researchers at Basel University Hospital in Switzerland have now shown that Parsortix can also harvest tumour cells that are attached to each other in clusters, called circulating tumour cell clusters, or CTC clusters. These are highly metastatic meaning they spread the cancer easily, but research has been limited because until now it has not been possible to harvest them. 

B&M targets more stores despite sales wobble. B&M European Value Retail S.A. (DI) (BME) FOLLOWbargains hailed a “pleasing finish” to the year after reporting a jump in festive sales and said it would look to open more UK stores despite uncertain trading conditions. Total sales at the discount retailer climbed 12% to £1.08bn in the three months to Dec 28, while UK sales rose 4.5% to £874.5m. B&M’s December sales at stores open more than one year were up 1.2%, but fell 1.6% across the three months – a result blamed on a “difficult November”. The group enjoyed 3.9% growth in the same period last year.

Record production helps Premier Oil cut debt. Premier Oil (PMO) FOLLOWhas used its second consecutive year of record oil production to make bigger than expected cuts into its huge debt pile. The London-listed oil and gas company expects its financial results to reveal end-of-year debts of $2.3bn, after shaving $390m off the total following a boom in its oil output. Premier told investors it found $100m more than expected to help pay off debt after producing an average of just over 80,000 barrels of oil a day in 2018. The record production helped Premier post a $300m rise in annual profit of $1.4bn last year.

Hormone therapeutics company Diurnal Group (DNL) FOLLOWrocketed on announcing it has been granted a second patent in the US. Its Chronocort drug, which allows for the release of hydrocortisone in a way which aligns with the natural sleep cycle, treats conditions which affect the adrenal glands. The patent will protect the drug from copycats until 2033, and comes on top of the original patent which protected the formulation. Shares soared 116.3%, or 25p, to 46.5p.

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