Weekend Financial Press Review
Paul Kettle
W/E Press Round-Up -3 min read
07:28, 12th May 2019

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

Vodafone ready to slash dividend to pay for 5G. Mobile giant faced with huge bill set to abandon pledge to shareholders. Vodafone Group (VOD)  FOLLOW is set to reverse a pledge to investors and slash its dividend in order to pay for expensive auctions for mobile phone airwaves in Germany and Italy. The world’s second-biggest mobile operator signalled in November that it would protect its dividend, despite pressure to invest in next-generation 5G mobile networks and to tackle its €32bn (£28bn) debt pile. However, it is expected that the board will change tack at the annual results on Tuesday and rein in its full-year payout. Vodafone has one of the highest dividends on the FTSE 100, with a yield of more than 9%. The payouts cost it €3.9bn last year.

BT set to hike broadband and mobile bills to cover the cost of rolling out ultra-fast networks. BT Group (BT.A) FOLLOW will charge customers more for their broadband and mobile phone contracts to cover the cost of rolling out full-fibre and 5G networks, the company has admitted. New BT chief executive Philip Jansen last week announced he would ramp up the rollout of ultra-fast broadband – aiming to connect 15million households by the mid-2020s – while 5G mobile contracts will be available this year. The improvements will speed up connections so internet users can download films in seconds, but the company said the changes will come at a price to its customers.

Investor anger rises over pension pay and bonus bumps at Lloyds and Centrica. Two well-remunerated FTSE 100 bosses will be in the spotlight this week as a mood of rebellion grows among shareholders. It is bad enough being responsible for slumping customer numbers and rising bills at British Gas, but Centrica (CNA)FOLLOW  boss, Iain Conn, now finds himself lumped in with senior banking executives in controversies over pay. Conn’s bedfellow in shareholder discontent is Lloyds Banking Group (LLOY) FOLLOW chief executive, António Horta-Osório. Both face their investors at annual general meetings this week, having ruffled feathers in recent months over their excessive pay packets. Conn’s remuneration has grown with the help of two bonuses, each worth £388,000, while Horta-Osório is feeling the heat over annual pension payments viewed by many shareholders as little more than a backdoor pay rise. The pressure has been building thanks to the help of trade body the Investment Association, whose 250 members manage about £7.7tn in assets. The association has urged companies to close the gap between contributions made to directors’ pensions and those offered to staff, saying that otherwise it looks like higher payments are just a “mechanism for increasing total remuneration”.

Metro Bank handed reprieve as legal threat recedes. Metro Bank (MTRO) FOLLOW has been handed a lifeline after some investors stepped back from the threat of legal action over the embattled lender’s recent accounting blunder. Shareholders are understood to have concluded that a legal claim could “destroy” the bank. A lawyer involved in the discussions told The Sunday Telegraph that after months of considering a case there was now “no appetite” for a legal battle, which could have ended up in court and added to its woes. Investors had approached a number of law firms earlier this year after a major accounting error wiped £800m from Metro Bank’s share price.

Stobart sets sights on ‘Mr Fix-it’ to repair embattled board. The embattled board of industrial conglomerate Stobart Group Ltd. (STOB) FOLLOW is poised to appoint a new chairman in an attempt to end a bitter boardroom feud. The FTSE 250 company will pick David Shearer, the chairman of Speedy hire, to succeed Iain Ferguson this week alongside the company’s annual financial results, according to Sky News. The report said City sources expect the turnaround veteran to draw a line on the fallout of a bitter attempted coup against Mr Ferguson last summer. A spokesman for Stobart declined to comment on the report.

Coast Capital moves to derail FirstGroup board. Most of the board of the ailing bus and rail giant FirstGroup (FGP) FOLLOW could be ousted under the plans of an activist investor. The US-based Coast Capital has requisitioned a shareholder vote to call for the replacement of board members, including new chief executive Matthew Gregory, chairman Wolfhart Hauser and five other non-executives. Coast Capital partner James Rasteh said they were all “shades of super destructive to extraordinarily under-qualified”. The investor upped its stake last week to 9.7% and has proposed bringing in Steven Norris, a government minister under John Major in the 1990s, as chairman. It needs the backing of more than 50% of voting investors.

Burberry, led by Marco Gobbetti, buffeted by cold wind from China. Burberry Group (BRBY) FOLLOW will update on the impact of China’s economic slowdown and trade war with America when it reports full-year results this week. The luxury brand is hugely reliant on China’s expanding middle-class, and analysts estimate that more than 40% of the brand’s sales come from the country. That leaves it highly exposed to escalating trade tensions with America, which have been amplified by Donald Trump’s decision to raise tariffs on $200bn of Chinese goods. The City is expecting annual sales to be unchanged at £2.72bn, and underlying operating profits to drop 5% to £442m.

Superdry dives as analysts claim recovery hopes are overblown. Rising hopes of a quick recovery at Superdry (SDRY) FOLLOW following the return of founder Julian Dunkerton were punctured by analysts warning of its waning brand power. The company’s shares held firm on Thursday despite issuing a third profit warning in less than a year as Mr Dunkerton vowed to steer a turnaround at the ailing retailer. However, its shares suffered a setback yesterday after a UBS survey revealed that shoppers’ perceptions of the brand have deteriorated over the last 12 months, particularly regarding design. The bank argued that the survey suggested that “a product refresh is the necessary next step” for Mr Dunkerton.

Thomas Cook Group (TCG)  FOLLOW shares rose on reports that Virgin Airlines, the carrier part-owned by Sir Richard Branson’s Virgin Group, was interested in buying its long-haul flights branch. Germany’s Lufthansa and Wizz Air’s private equity backer Indigo Partners are also rumoured to be sniffing around, and investors will be hoping for a bidding war that drives up the price of their shares. The long-haul business accounts for around 20 per cent of all seats sold by Thomas Cook. Virgin Airways was also part of the consortium which snapped up troubled Flybe in February.

G4S faces shareholder revolt over chief’s retirement pay. The chief executive of G4S (GFS) FOLLOW  is facing a potential shareholder revolt next week over a £239,638 cash payment he is due to receive this year to bolster his retirement. Shareholders in the guarding group are concerned that the payment in lieu of pension to Ashley Almanza, which is equivalent to 25% of his base pay, far exceeds the percentage pension contribution given to ordinary staff at G4S. The Investment Association, which represents British institutional shareholders, is understood to have given the payment an “amber top” rating, alerting members that it raises potential concerns.

Brewin Dolphin Holdings (BRW) FOLLOW  has spent £70 million on expansion over the past 12 months and said yesterday that it had agreed to pay £38 million to buy Investec’s Irish wealth management business. It wants to boost its assets under management at a time when funds have been falling because of the general economic uncertainty. It reported an 8.2% fall in first-half profit before tax to £35.6 million, which it said reflected broadly flat income as a result of volatile markets in the first quarter. The wealth manager issued 19.7 million new shares at 305p per share — a 5% discount on Thursday’s closing price. David Nicol, chief executive, said the placing would enable the company to have “continued financial flexibility for further development opportunities” and ensure that its capital position remained robust. Peel Hunt analysts said that the “dilutive impact will moderate higher profit expectations”. They added that the Investec transaction was “attractively priced” and would strengthen the group’s presence in Ireland

British Airways chief: Brexit has had no impact on bookings. There is “no evidence” that Brexit has dented British Airways bookings, the boss of owner International Consolidated Airlines Group SA (CDI) (IAG)  FOLLOW insisted as profits were almost wiped out by soaring fuel costs. Some airlines have blamed Britain’s exit from the European Union for depressing consumer sentiment, prompting people to refrain from booking flights. But chief executive Willie Walsh said: “We can’t see any evidence to support that… We don’t see any change in booking habits. “We don’t see any Brexit impact going forwards.” Pre-tax profit plunged from €885m (£764m) to €86m in the first three months of the year, IAG announced on Friday as fuel costs rose by €254m.

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