Morning Financial Press Highlights
Paul Kettle
AM Press Round-Up -3 min read
07:23, 7th February 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.

Glaxo hunts more deals to stay competitive, Walmsley says. GlaxoSmithKline (GSK)FOLLOW is on the lookout for more deals this year that will replenish its drugs pipeline and give it an edge over rivals in an increasingly competitive pharmaceuticals sector, its chief executive said. Emma Walmsley said there would be no slowdown in corporate activity and to expect further deals, particularly in oncology. “I have always absolutely clear that the number one priority is to strengthen the pipeline,” she said. The announcement comes a day after GSK unveiled a multi-million pound collaboration with fellow drugmaker Merck to co-develop and commercialise a potentially ground-breaking cancer medication.

Houses and industrial estate evacuated due to Ocado Group (OCDO)FOLLOW warehouse fire. Firefighters fear explosion at Andover facility as retailer faces weeks of disruption. A Hampshire industrial estate and nearby homes are being evacuated because of the risk of poisoning or explosion after a major fire at an Ocado warehouse. As smoke continued to billow from the site in Andover on Wednesday evening, more than 36 hours after the incident began, the fire spread to a new part of the building and firefighters evacuated properties up to a mile away. A rest centre has been set up at Harrow Way community school two miles away. “We have a risk of a toxic release or a large cylinder explosion,” said the deputy chief fire officer of Hampshire fire and rescue service, Andy Bowers. “There is a phased evacuation of Walworth industrial estate taking place as a precaution and a rest centre has been set up. “We are working extremely closely with all of our partners to keep the public safe.”

RBS sued by Newham council over the terms of £150m in loans. East London authority files high court claim over lender option borrower option loans. Newham council is suing Royal Bank of Scotland Group (RBS)FOLLOW over the terms of about £150m in complex bank loans, making it the latest UK bank to face a lawsuit over lending terms that critics say piled undue pressure on local services. The east London authority filed a high court claim against RBS earlier this week, the Guardian can report. The claim centres on terms of its lender option borrower option loans, known as Lobos, which proved popular with local councils in the early 2000s. One of the main attractions were the Lobos’ teaser interest rates that kept costs low in the short term but later proved expensive as austerity and spending cuts took hold. Lobos have attracted criticism by campaigners and the shadow chancellor, John McDonnell, who has called for a government investigation and action to restore any historic losses to the public purse.

High Street banks and a Scottish pub tycoon are among creditors set to take control of contractor Interserve (IRV) FOLLOW in a deal to save it from collapse. HSBC, Royal Bank of Scotland and others who are owed money are to get £480million of new shares in the ailing company, which has 75,000 staff. Alan McIntosh, the co-founder of Punch Taverns, whose investment firm has been buying Interserve’s debt on the cheap for a year, will also number among their ranks. The deal will stop the business going under. But existing shareholders will be nearly wiped out, losing almost everything. One furious shareholder has tabled an emergency vote to remove nearly all the firm’s board members.

Bailed-out Royal Bank of Scotland Group (RBS) FOLLOWhas won approval from shareholders to buy back its shares from the Government. At a meeting in Edinburgh yesterday, investors said that RBS could buy up to 4.99% of its stock from the Treasury in any one year. It would cost RBS around £1.5billion at current market prices. The Government did not vote, but more than 98 per cent of voting shareholders approved the resolution, well above the 75% threshold it needed to pass. Howard Davies, RBS’s chairman, said that the bank had strong cash reserves to support the buyback. And he pointed to the fact that it paid a dividend last year for the first time in a decade.

Cambridge video games developer Frontier Developments (FDEV) FOLLOWwas a winner for investors, as revenue for the six months to November 30 shot up from £19million in 2017 to £64.7million last year. Frontier launched its Jurassic World Evolution game. It plans to release its fourth game franchise, based on its own ideas rather than a blockbuster film, later this year. Frontier said it was ‘comfortable’ with analysts’ revenue predictions of £79million to £88million for the year to May 31.

Bob Diamond steps down but not out at Atlas Mara. Bob Diamond has insisted that he is not preparing to leave Atlas Mara Limited (DI) (ATMA) FOLLOWafter his decision to step down as chairman of the African banking business he co-founded. The former Barclays boss has been chairman for more than two years, despite having originally taken the role on a temporary basis. He will return to his previous role as a non-executive director and will be replaced as head of the board by Michael Wilkerson, chief executive of Fairfax Africa, Atlas Mara’s biggest shareholder.

Investor anger at tobacco firm Imperial Brands (IMB) FOLLOWas chairman re-appointed. Tobacco giant Imperial Brands’ investors have shown their anger at the re-appointment of company’s long-serving chairman. Almost a fifth of shareholders voted against Mark Williamson at the Lambert & Butler owner’s annual general meeting on Wednesday. Mr Williamson, who also chairs of FTSE 250 engineer Spectris and is senior independent director at National Grid, has been on the board of Imperial Brands since 2007. Ahead of the shareholder meeting in Bristol, proxy advisers had raised concerns over Mr Williamson’s reappointment.

More cost savings to be made from Virgin Money deal. The banking group that bought Virgin Money last October has promised to squeeze another £30 million of annual cost savings from the combined group. Shares in CYBG (CYBG) FOLLOWsurged yesterday after it said that it expected the £1.6 billion acquisition to yield £150 million a year of cost savings by the end of 2021, not £120 million, as had been suggested previously. CYBG, which also owns the Clydesdale and Yorkshire banks, is expected to extract the additional savings by cutting duplicated services and reducing third-party contracts in areas such as IT. It made no change to its target of cutting 1,500 jobs from its combined workforce of 9,500. It also eased fears about margins this year, saying that it expected its net interest margin to drop from 1.78 percentage points last year to between 1.65 and 1.7 percentage points. Previously it had warned that it could shrink to as little as 1.6 percentage points.

Barratt results boost building sector. Britain’s biggest housebuilder has lifted its first-half, pre-tax profit by 19.1%, in the process offering hope that the sector is proving to be more resilient than many had thought. Barratt Developments (BDEV) FOLLOWsaid that pre-tax profit for the six months of its financial year to the end of December was £408 million, with its gross margin up two percentage points to 22.6%. It completed 7,622 homes in the period. The average selling price was £282,000, slightly higher than the previous year. Worries about Brexit uncertainty hitting consumers’ willingness to buy new homes pushed shares in the leading housebuilders down by about 25% at the end of last year, though they have rallied since the start of 2019.

Founder of Redrow will bow out with record first-half profit. Redrow (RDW) FOLLOWreported a record first-half profit in its last results before the departure of its founder. The housebuilder said that profit before tax was up 5% at £185 million, on the back of a 9% rise in revenue to £970 million. It completed 2,970 homes in the six months to the end of December, a rise of 12%. The average selling price of its private homes was up 4% to £391,000, while that of its affordable homes rose by 15% to £141,000. Steve Morgan, who founded the company in 1974 when he was 21, said that the market before Christmas had been subdued because of economic and political uncertainty. However, sales in the past three weeks had bounced back. He said that this was down to buyers wanting to “get on” with life. “I think there’s an element of everyone saying we are sick to death of Brexit and uncertainty,” he said.

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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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