Morning Press Round-Up
Paul Kettle
AM Financial Press Review -3 min read
07:53, 6th December 2018

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.

Thomas Cook flies thanks to sharp change in outlook. Investors sprang to the defence of Thomas Cook Group (TCG)  FOLLOWyesterday, sending its shares up by 51% as the travel operator shrugged off concerns about its debts. Invesco, the fund manager that owns 15.2% of Thomas Cook, dismissed the sharp fall in the company’s share price since a profit warning last week as an “overreaction”. The shares were given further votes of confidence by Frank Meysman, the company’s chairman, who bought £80,400 of shares, and by a string of stockbrokers, which issued positive research notes. The turnaround in sentiment comes after a torrid week in which the company’s second profit warning in two months sent the stock tumbling from 48½p to 22¾p over six days of trading.

BT removing kit made by Chinese firm Huawei from its network amid fears of spying. The move comes after the governments of the US, New Zealand and Australia blocked the use of Huawei’s equipment completely in next generation 5G mobile networks. Earlier this week, the head of MI6 suggested the UK needed to decide if it was comfortable using technology owned by the Chinese. Critics have suggested that laws in China could force Huawei to hand over data or spy on other countries if it was instructed to do so. BT Group (BT.A) FOLLOW confirmed it was in the process of removing Huawei kit from the most sensitive parts of its mobile network.

City offices in demand. Remember the scare stories? Many bankers, politicians and analysts predicted that Brexit would prompt an exodus of financial services jobs and businesses, weakening the City’s dominance as a global financial centre. Yet with less than four months to go before Britain is set to leave the EU, banks and financial services companies are looking for more new office space in the City than at any time since 2015, according to JLL, the property services company. The sector is actively looking for a combined 2.4 million sq ft of office space, 37% of total demand and higher than any other sector. Many of those requirements are driven by lease expiries, but some represent an expansion.

Capita invites its workers to join board for £65,000 a year. Capita (CPI) FOLLOW has invited 70,000 employees to apply to join its board as non-executive directors, becoming the first FTSE company since the 1980s to appoint workers to its board. The two successful employees, who must have worked for Capita for at least two years, will be paid an additional £64,500 on top of their existing salary. They will take on full boardroom non-executive duties as well as keeping  their day job. The appointment of worker-directors on big companies was one of the key ideas of Theresa May when she became prime minister in 2016. However, after a cool reception from the business community — which had not been consulted before the announcement on the steps of  Downing Street — Mrs May has quietly dropped the initiative. Capita’s plan is the work of Jon Lewis, who was appointed chief executive of 12 months ago. He hopes for applications to come in “from Colwyn Bay to Cape Town”.

Stagecoach puts struggling US arm on the market. Stagecoach Group (SGC) FOLLOW insists it will not sell its troubled US coach arm “at any cost” despite swinging sharply into the red following a hefty writedown on operations across the Atlantic. The bus and rail giant announced on Wednesday that it had opened sale talks with a number of parties over the sale of all or part of its North America network. The announcement came as the company posted a £22.6m half-year pre-tax loss, principally driven by a painful £85.4m writedown of its US investment. Stagecoach also shouldered a £24.2m cost to equalise minimum pension benefits between men and women. Shares rose around 13% and the company’s valuation briefly broke through the £1bn barrier as profit margins on Stagecoach’s UK rail arm beat City expectations.

Joules sales rise as fashion brand braces for Brexit. Fashion brand Joules Group (JOUL) FOLLOW, known for its brightly coloured designs, has taken early deliveries of its spring and summer ranges and set up a European warehouse as it braces for a no-deal Brexit. The company said that it was also preparing for increased paperwork that could result from stricter customs checks and had hedged its US currency requirements for the next year “to mitigate the expected disruption that  could arise in the event of a hard Brexit”. Joules joins the growing list of British companies, including drugs firm AstraZeneca and drinks merchant Majestic Wine, that are scrambling to stockpile products and looking for alternative routes in fear that the ports at Dover will be  thrown into chaos from increased checks.

Shareholders snub Takeda family to back £46bn Shire deal. One of the biggest global pharmaceuticals mergers and acquisitions to date is set to complete next month after Takeda shareholders backed the £46 billion takeover of Shire Plc (SHP) FOLLOW. In a general meeting in Osaka, at least 88% of voting shareholders backed the Japanese drugs company issuing new shares as part of the deal, despite opposition from some members of the founding family. The vote paves the way for Takeda to finance what will be the largest overseas takeover by a Japanese company. A group of rebel shareholders, led by members of the Takeda family, including a former chairman, had come out publicly against the deal. They had said that the cash-and-shares buyout was too risky for Takeda and that the company could expand by  developing its own drugs pipeline.

Ryanair sued by airline watchdog over failure to pay strike compensation. Ryanair Holdings (RYA) FOLLOW faces a “watershed” legal bid by airline industry watchdogs to force the low-cost carrier to pay compensation to customers affected by a wave of strike action over summer. The Irish airline is refusing to reimburse passengers, claiming the industrial action across the continent amounted to “extraordinary circumstances” and that compensation laws do not apply. In April the European Court of Justice ruled that “wildcat strikes” by flight staff do not fall within the scope of “extraordinary circumstances”, which usually relates to bad weather or air traffic controller  disruption. Ryanair was hit by unprecedented levels of industrial action this summer as pilots and cabin crew launched concerted action. This came after the industry suffered from continued air traffic controller capacity shortages. Coupled with rising fuel prices, the airline admitted in October that profits have been hurt as result. And strike action has also negatively impacted passenger confidence, with fewer forward bookings made over the school half-term and  Christmas periods.

Patisserie Valerie hires finance chief to help steady the ship. Scandal-hit cake and coffee chain Patisserie Valerie has secured the services of a new finance chief after a hiatus of almost two months. Nick Perrin, the former finance director Aim-quoted veterinary company CVS, has been picked on an interim basis by parent company Patisserie Holdings (CAKE) .FOLLOW He fills the void left by Chris Marsh, who was suspended on Oct 10 and resigned later in the month. Mr Marsh was interviewed by police as part of an ongoing fraud investigation. Led by serial entrepreneur Luke Johnson, Patisserie Valerie was plunged into crisis two months ago after revealing “significant, and potentially fraudulent, accounting irregularities”. A £40m black hole in its books was later  unearthed.

Takeover target Faroe Petroleum clinches Norwegian oil deal. Faroe Petroleum (FPM)  FOLLOWhas clinched a deal to boost its oil production in the Norwegian North Sea while battling a hostile takeover bid from its largest shareholder. Faroe told shareholders that the asset swap arrangement with Norwegian major Equinor, formerly known as Statoil, would raise its oil production by between 7,000-8,000 barrels of oil a day from next year. The Aberdeen-based producer said the output boost could allow it to return cash to shareholders and push through a sustainable dividend policy.

Kraken delays apply brake to EnQuest (ENQ) FOLLOW in North Sea. Technical problems and drilling delays at Enquest’s principal North Sea site are likely to result in the company’s oil and gas production growing by less than expected next year. Enquest said yesterday that the Kraken field, which started up in June 2017, continued to be affected by “a small number of system outages and equipment repairs”, while a drilling rig for a new well at the project also had been  delayed. The company said that it was making “conservative assumptions” and that it expected to produce between 30,000 and 35,000 barrels per day from Kraken in 2019, less than analysts had expected. Despite the setback, Enquest said that it expected total production to grow to between 63,000 and 70,000 barrels of oil per day in 2019, up 20% on the 54,000 to 56,000 barrels per day expected this year, thanks to its acquisition of Magnus, Britain’s most northerly oilfield, from BP.


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