Press | Vox Markets
SSE
Ovo is set to become the UK’s second largest energy provider after it agreed to buy SSE’s retail business for £500million. SSE (SSE) is currently the third largest energy provider, supplying around 3.5million households across the UK. Ovo entered the market as a relative minnow, but has already grown to become the UK’s largest independent supplier, providing energy to 1.5million customers. After taking on SSE’s customers, it will have a customer base of around 5million people, making it second only to British Gas. The transaction is expected to be completed in late 2019 or early 2020 with SSE saying it will do everything to make sure it is a ‘smooth transaction’ for existing customers.
JDW
Wetherspoon (J.D.) (JDW) said it had continued to perform well since the year end, with comparable sales up 5.9% in the six weeks to September 8. Wetherspoons chairman, Tim Martin claimed a no-deal Brexit could provide a massive boost to the pub industry as people go out to celebrate. He said: ‘I think sales will jump dramatically in our pubs if we leave the EU – even if we leave the EU without a deal on October 31. ‘People will be so pleased that we’ve left and I think even people who don’t want to leave will think “thank god we’ve left and can talk about something else”.’ Martin said: ‘Despite continuing political problems … Wetherspoon continues to perform well. Like-for-like sales for the six weeks to 8 September 2019 were up 5.9%. In a statement released along with the annual results, Martin claimed: ‘the UK is clearly in political deadlock, parliament having refused to carry out the pre-referendum promise… sent to every household which said: “The Government will implement what you decide.” ‘Democratic power in the UK in the last 30 years has been diluted by a political faction in parliament, the media and boardrooms, which has a quasi-religious believe in the undemocratic EU – with its unelected presidents, MEPs who cannot instigate legislation and an unaccountable court. Voters resent this loss of power – and distrust of politicians and the “elite” is the result.’ In its annual results, Mr Martin said: ‘Elite Remainers are ignoring the “big picture”, regarding lower input costs and more democracy, and are mistakenly concentrating on assumed short-term problems, such as potential delays at Channel ports – which are easier to extrapolate on their computer models.’
SBRY
Sainsbury (J) (SBRY) mortgage business could fetch £1.3bn if the grocer finds a buyer. The supermarket chain is in talks with advisers as it explores a sale of its mortgage book. A review of the company’s financial services arm was kick-started by Martin Scicluna after he joined as chairman last November. The Sunday Telegraph revealed last week that the supermarket chain was examining a major overhaul of the bank as it prepares to lay out a new strategy to City analysts and investors on Sept 25. Tesco bagged £3.8bn for its mortgage book from Lloyds earlier this month, just £100,000 more than its ­actual value. An industry source, however, said that Sainsbury’s could struggle to sell because its costs are too high, something the supermarket chain rejects. Sainsbury’s, led by chief executive Mike Coupe, is under pressure to get back on the front foot after its merger with Asda was knocked back by competition watchdogs in the spring. Sainsbury’s Bank has been weighing on the supermarket chain’s profits and consuming cash for years. It made a loss of £34m last year, compared to a profit of £25m the year before.
LSE
The Hong Kong stock exchange is set to go hostile with its £30bn bid for the London Stock Exchange Group (LSE) after its offer was rejected on Friday. LSE said earlier it had concerns about the key aspects of Hong Kong Exchanges and Clearing’s (HKEX) proposal, which had “fundamental flaws” around its structure and value. Hong Kong quickly fired back, arguing that the proposed deal represented “a highly compelling strategic opportunity to create a global market infrastructure leader”. HKEX bosses said they hoped to enter into a “constructive dialogue” with the LSE board and were “disappointed” that it had “declined to properly engage”.
SSE
Ovo Energy is buying SSE (SSE) retail business in a £500m deal that will make it one of Britain’s biggest energy businesses, but the founder of the challenger company has refused to rule out job cuts. Set up just a decade ago, Ovo supplies 1.5m households with electricity and has 2,000 staff. It will take on another 3.5m customers and 8,000 staff from SSE. In total it will have about 6.5m accounts, with some customers having more than one account. The acquisition will make Ovo the UK’s second-largest energy company, beaten only by British Gas.
FGP
FirstGroup (FGP) is poised to offload part of its bus business to its own managers amid mounting industry concern of a shake-up by politicians. A string of management buyouts are said to be the frontrunners vying for First’s bus operations in Bristol, Dorset, Devon and Cornwall. A similar swoop by managers is also being pulled together in East Anglia. First put its entire UK bus arm up for sale earlier this year alongside North American coach arm Greyhound, following pressure from its biggest shareholders. The largest of these, activist Coast Capital Management, launched a campaign over the summer to oust half of the board. While Coast failed to attract majority shareholder support, First’s chairman and two other directors would later step down. Some investors want the company to also exit UK rail and concentrate on more profitable operations in the US.
BBY
GFRD
Two of Britain’s biggest road builders are hurtling towards a £250m legal showdown with the taxpayer over one of the contracts that broke Carillion. Balfour Beatty (BBY) and Galliford Try (GFRD) have until December to strike a deal with Scottish highways authorities over the construction of the Aberdeen bypass or else issue legal proceedings under the terms of the contract. Industry analyst Stephen Rawlinson said: “I can’t see why either party would want to settle.” The Aberdeen Western Peripheral Route was supposed to cost £745m but quickly spiralled out of control with the final bill well in excess of £1bn after series of delays. It was originally contracted to Balfour Beatty, Galliford Try and Carillion. The two companies took on commitments left by Carillion after it collapsed in January 2018. “That particular venture could have put Galliford Try out of business,” said Galliford Try boss Graham Prothero, adding that the claim against Transport Scotland “would be in the hundreds of millions”. “You’d rather negotiate,” he added. “[But] we’re realists and it may have to go through the legal route.” A Transport Scotland spokesman said: “The cost of the project remains at £745m. To date, Aberdeen Roads Limited has yet to provide sufficient evidence to substantiate its claim.”
INCH
Questor: despite tough markets, there should be more in the tank for Inchcape (INCH). Hold. Questor share tip: the car distributor is redirecting its cash to where returns are best, while there is a decent 4% yield
LSE
Hong Kong’s stock exchange will turn its fire on data provider Refinitiv in an attempt to bear-hug the London Stock Exchange Group (LSE) and win investor support for its hostile £32bn takeover. Hong Kong Exchanges and Clearing (HKEX) is understood to be planning to undermine LSE’s case for buying Refinitiv, owned by private equity giant Blackstone and Thomson Reuters, by branding it a low-growth utility saddled with debt. “We’re looking for shareholders to understand how bad the Refinitiv deal is,” said a source, adding that it would rubbish the rival deal. “Refinitiv is a desk-top service . . . it’s not a data acquisition, it’s a terminal acquisition.” The onslaught is a crucial part of HKEX’s game-plan under chief executive Charles Li and chairwoman Laura Cha, after it made a cash-and-share offer worth £83.61 per LSE share last week.
TCG
The aviation watchdog is making contingency plans for the possible collapse of Thomas Cook Group (TCG) as the tour operator races to secure a £1.1bn rescue package. The Civil Aviation Authority (CAA) is on alert over the health of the airline and tour business, which serves about 22m customers a year. Its planning is believed to include the possibility of having to repatriate hundreds of thousands of passengers stranded abroad. Thomas Cook’s Air Travel Organiser’s Licence (Atol), which allows it to sell package holidays, is due for renewal on October 1. The tour operator is understood to have lined up insolvency experts from advisory firm AlixPartners, which is on standby should rescue talks with Chinese conglomerate Fosun and a clutch of lenders fail. AlixPartners has been working with Thomas Cook on tackling its debt pile.
NXT
Next (NXT) is expected to remain a bright spot in Britain’s battered retail sector as rising online sales counter tougher trading in shops. The high street bellwether is poised to post a 4% jump in full-price sales when it announces half-year results on Thursday. That rise will be underpinned by a 12% surge in online sales for the six months to July 27, with in-store non-discounted sales dropping 4% over the period. Shares in Next have soared 45% to £60.60 since the start of the year, valuing the chain at £8.1bn, as it has weathered the turmoil engulfing the retail sector better than its rivals. Chief executive Lord (Simon) Wolfson said in July that the decline in its bricks-and-mortar shops “hasn’t been nearly as bad as we thought”.
MTRO
Metro Bank (MTRO) has scrapped early termination fees for some commercial borrowers as it attempts to shift its lending towards residential property, after a mammoth accounting error sent its shares tumbling. The challenger bank is allowing commercial customers to pay off loans early, as it reduces exposure to corporate lending. In July, the bank sold back a portfolio of mortgage loans to Cerberus Capital Management for £521m. The challenger bank is seeking a new chairman after saying in July that 74-year-old American Hill would step down from the role. However, sources said his continued presence on the board could deter successors. Hill declined to comment.
DRX
The American boss of Drax Group (DRX) has made several trips to Louisiana to investigate whether bagasse — a residue from sugar cane — could help fuel Drax’s power station in North Yorkshire more cheaply than the sawdust and tree thinnings that have replaced coal in four of its six turbines. His trips are urgent: the giant power station, which supplies up to 6% of the UK’s electricity, is dependent on subsidies that will end in 2027. While coal plants have been closing apace, Drax has clung on by swapping to wood chips. That may not last. The finite subsidies bring the business some £800m a year — a fifth of its £4.2bn revenue. One of its turbines is guaranteed £100 per megawatt hour (MWh), well above the current electricity wholesale price of £35 per MWh. “Biomass has a long-term role to play,” insists Gardiner, the former finance chief promoted to chief executive at the start of 2018, “but it has to be economically viable”.
FLTR
The owner of Paddy Power and Betfair has defended itself over accusations that it groomed a problem gambler with football tickets and trips to the Grand National. Flutter Entertainment (FLTR) also said it was a “common occurrence” for deposits to be matched by bookmakers, after it was alleged to have put £20,000 into the account of a problem gambler to encourage him to bet more. Flutter is being sued in the High Court by Amarjeet Singh Dhir, a former business associate of Antonio Parente. Dhir claims he is owed £942,135. He alleges that Parente, a gambling addict, used money for property investments to feed his habit.
SAGA
Activist fund Elliott Advisors faces a battle to convince investors of the merits of a break-up of insurer and cruise operator Saga (SAGA). The New York hedge fund took a 5% stake in the over-50s-serving conglomerate in July, and is understood to be pushing for the board to explore options that include selling either division. A source with knowledge of the situation said the insurance and travel arms “don’t need to stay together”. However, a top 10 Saga shareholder said a break-up was not the answer: “They need to stabilise the top line and invest in the brand. “They are in a very good population period. If they exploit the opportunities, that could be very powerful.” Analysts at Numis expect Saga to post a half-year pre-tax loss of £56.8m on Thursday, compared with a £106.8m profit last year.
ARW
Distressed debt collector Arrow Global Group (ARW) has several hedge fund grizzlies shorting its shares, including Lansdowne Partners and Marshall Wace. A total of 8% of its shares are out on loan, according to Markit, making it one of the London market’s most shorted stocks. Among the weaknesses targeted by the bears is Arrow’s debt pile, with net debt levels 3.6 times adjusted earnings. Chief executive Lee Rochford has bowed to this pressure, committing to cut Arrow’s gearing by the end of the year to 3.5 times. The debt collector faces other challenges, including high costs and its attempt to broaden its business model. Arrow said last month that there is a “significant opportunity” for the group to grow in managing money for private equity and hedge funds, with European banks sitting on €800bn (£717bn) of non-performing loans. Analysts say asset management will yield lower profit margins but suck out less capital. The shorting is ominous, but cost-stripping and asset management growth provide hope for Arrow. Hold.
LSE
The group behind the London Stock Exchange has rejected the £32 billion takeover bid by its Hong Kong rival, calling it strategically flawed, unattractively structured and priced and with a strong possibility that it could be blocked by regulators. London Stock Exchange Group (LSE) said its board had unanimously rejected the approach from Hong Kong Exchanges and Clearing because of its “fundamental flaws”, adding that it “sees no merit in further engagement”. Don Robert, chairman of the London group, rebuked Laura Cha and Charles Li, chairwoman and chief executive of the Hong Kong group, for going public, in effect making their bid hostile. “We were very surprised and disappointed that you decided to publish your unsolicited proposal within two days of our receiving it,” he wrote in a letter alongside the rejection statement.
COB
Cobham (COB) is on course to fall into the hands of its American suitor next week despite scepticism over the £4 billion offer. Sources said that the takeover by Advent International “looks set to go through” based on proxy voting before an extraordinary shareholder meeting on Monday. Some have been persuaded to accept the bid as Advent’s approach failed to flush out rival bidders. “We’ve voted for the bid, but with a heavy heart. We are surprised it didn’t prompt counter-offers,” a top ten shareholder said.
AML
Aston Martin Holdings (AML) plans to tap the debt markets to bolster its battered balance sheet. The luxury carmaker wants to build up its cash buffers by issuing a junk bond. It is boosting its cash balance before the launch of its DBX sports utility vehicle next April. The financing, first reported by Bloomberg, is the latest setback for Aston Martin, which has lost 70% of its value since its £4 billion stock market debut.
SSE
Ovo Energy has clinched a £500 million deal to acquire SSE (SSE) household supply arm, making it Britain’s second-largest supplier. The deal spells the end of the Big Six in their current form and continues the remarkable rise of Stephen Fitzpatrick, Ovo’s chief executive, who founded the upstart supplier a decade ago. Mr Fitzpatrick, 41, predicted the deal would form part of “a wave of consolidation and change across the whole of Europe” as utilities struggle to adapt to radical changes in the energy sector. Ovo will add SSE’s 3.5 million household customers to its 1.5 million. The Bristol company, which has 2,000 workers, will take on 8,000 SSE staff. Ovo is to pay £400 million in cash and £100 million in loan notes in the deal, which is expected to complete this year or early in 2020, subject to approval by the competition watchdog.
TALK
Sir Charles Dunstone, executive chairman of TalkTalk Telecom Group (TALK), has increased his stake in the struggling telecoms group while its share price is at a near-record low. The billionaire is Talktalk’s largest shareholder, having spun it out of his Carphone Warehouse retail business a decade ago. After buying £10 million worth of shares in the past few days, he now owns 29.5% of Talktalk’s stock, taking him close to the threshold that would force him to make a formal takeover offer to other shareholders.
JDW
The Brexiteer chairman of Wetherspoon (J.D.) (JDW) renewed his attack on “elite Remainers” yesterday as he reported market-leading like-for-like sales growth for the full year but a fall in profits. Tim Martin announced a 7.4% rise in revenues to £1.81 billion in the year to the end of July, with like-for-like sales up 6.8%, which one analyst called “staggering”. Presenting the results he attributed the continuing strength of its like-for-like performance to myriad small measures, including bonuses for its staff, the design of its pubs, low food and drink prices and the introduction of coffee and breakfast. He also pointed to the impact of gin sales. “The bandwagon went past and we got on it — we now have 50 different gins.” he said. “Everyone is drinking gin. Even the guys from the building sites down the road are drinking pink gin with strawberries. It is quite a revolution.”Mr Martin compared the group’s prices with those of pub and restaurant rivals, saying that on a recent visit to a Pizza Express he was charged £13.95 for an American hot pizza and £7.55 for a bottle of Peroni. “In Wetherspoon it’s £6.49, including the Peroni!”
MLC
Millennium & Copthorne Hotels (MLC) is to be taken private by its majority shareholder in a £2.23 billion deal, bringing down the curtain on its 23-year stint on the London Stock Exchange. Kwek Leng Beng, its Singapore-based chairman and 65.2% shareholder, declared his recommended 685p-a-share offer unconditional after securing backing from investors speaking for 58.3% of the shares that he does not already own. His offer, valuing the company at £2.9 billion, was launched in June, 18 months after an earlier bid pitched at 620p a share had been rejected by minority shareholders.
HSBA
CNE
Former HSBC Holdings (HSBA) forex chief loses appeal over US conviction. Case revolved around $3.5bn transaction for energy group Cairn Energy (CNE).
LSE
Hong Kong bourse eyes cash boost to London Stock Exchange Group (LSE) bid. HKEX is open to sweetening £32bn offer that also faces political obstacles
CPI
Capita (CPI) to pay all employees living wage from 2020. Improvement comes as contractor seeks to overhaul image after profit warnings
Trainline Plc (TRN) driven by ticket sales on mobiles. Online booking group’s June IPO was second-largest in London this year
MRW
Morrison (Wm) Supermarkets (MRW) defies sales stalling with stronger than expected profits. Grocer’s earnings climb even as key measure of sales growth cools
Trainline Plc (TRN) expects to rake in higher full-year revenues after the popularity of mobile tickets led to a surge in sales. The rail fare-selling website, which will join the FTSE 250 index later this month, estimates revenue will grow by more than 20% this year. This was up from a previous forecast that growth would be in the high teens. The firm also said turnover climbed to £129million in the six months to August 31, up 29% on the same period of last year. Trainline said this was down to an increase in sales of virtual tickets that are sent to customers’ mobile phones rather than printed out.
BATS
British American Tobacco (BATS) is cutting 2,300 jobs as it focuses on vaping under chief executive Jack Bowles. Around a fifth of senior roles at the cigarette maker will face the axe in the shake-up. BAT, which has around 55,000 employees worldwide, said the restructuring will make it a more efficient and simplified company with fewer, but larger, divisions. Major tobacco firms have been ramping up investment in new products such as so-called e-cigarettes, as health concerns and changing habits have led to a rapid decline of smoking in the West. Bowles, who has been boss for five months, said he wants to rapidly boost expansion in these products. But the proposal was overshadowed by President Trump announcing that his administration plans to toughen its stance on e-cigarettes after several deaths.
WPCT
Neil Woodford’s troubled investment trust has suffered another multi-million pound blow after being forced to cut the estimated value of one its investments. The board of Woodford Patient Capital Trust (WPCT) said the write-down will wipe out £36million from its value – equal to 4p per share. In an update to the stock exchange released after markets closed last night, it did not reveal any details about which investment has been knocked down. The revaluation was carried out by Link Fund Solutions, the business which oversees Woodford’s funds and is in charge of putting a price tag on their portfolio companies.
LSE
Watchdogs in the US will wade in to block the Hong Kong stock exchange’s £32billion bid for the London Stock Exchange Group (LSE), experts believe. Hong Kong Exchanges and Clearing faces an uphill struggle to seize control of the LSE, former boss Xavier Rolet said, warning that American officials are likely to be concerned about the influence it would give China’s Communist regime over Western finance. The growing doubts over the deal came amid rumours that the Hong Kong firm is planning to sweeten its offer, by stumping up more cash for LSE shareholders. Its previous preliminary offer consisted of £7.2billion in cash and a 41% stake in the combined business. But after the approach received a lukewarm reception on Wednesday, reports suggested the Hong Kong suitor was open to considering a meatier proposal.
MRW
Morrison (Wm) Supermarkets (MRW) has signed up to a new multi-year agreement with online giant Amazon as the supermarket attempts to keep pushing further into the wholesale market. Chief executive David Potts revealed the deal, which will enable more shoppers to order Morrisons products for same day delivery on Amazon – expanding on a previous trial. Shares in Morrisons opened up 7.3p at 201.3p and ‘will be exploring new opportunities to innovate and improve the shopping experience for both Morrisons and Amazon customers’. Less was said about the supermarket’s relationship with Ocado, which currently fulfils online grocery deliveries for Morrisons, although Mr Potts said the partnership remains in place. He added: ‘That’s not ending any time soon and we’ve got an important relationship with Ocado.’
BOD
Botswana Diamonds (BOD) sparkled after a company in which it is invested edged closer to getting a mining permit in South Africa. Vutomi, in which Botswana Diamonds has a 40% stake, has been given environmental authorisation over an area of gravel next to a mine believed to contain sellable diamonds. Botswana Diamonds said it is a critical step towards getting permission to mine.
BAB
BA.
Babcock International Group (BAB) has fought off major rival BAE Systems (BA.) in the race to build Britain’s newest generation of warships. A consortium led by contractor Babcock has been anointed by the Ministry of Defence as preferred bidder to put together five Type 31 frigates – nicknamed the ‘Lidl ship’ after the German budget grocer because they are smaller and cheaper than existing models. Work on the project will secure some 2,500 jobs and is slated to begin later this year, with the first ships set to be delivered in 2023. The coveted contract, worth £1.25billion, has particular weight for Babcock, which has had a somewhat choppy 12 months in which it was forced to fend off two verbal attacks from a mystery research outfit called The Boatman Capital and turn down two approaches from Serco.
BP.
BP (BP.) lost ground after boss Bob Dudley told a JP Morgan conference that the company plans to cut some of its oil projects and reduce investments in others, in an attempt to reach its climate goals.
ENOG
Mediterranean-focused oil and gas group Energean Oil and Gas (ENOG) fell 45p, to 951p after it swung to a loss and cut its guidance for how much oil it will produce in Greece following a temporary shutdown in July.
HUR
Hurricane Energy (HUR) jumped 2.34p, to 47.64p, after it reported ‘excellent’ results from a well off the coast of the Shetland Islands.
WTB
IHG
JP Morgan sent Premier Inn-owner Whitbread (WTB) and InterContinental Hotels Group (IHG) lower after it got jittery about the outlook for the European hotel industry. It slapped an ‘underweight’ rating on both stocks, sending Whitbread down 115p, to 4429p and IHG down 130p, to 5037p.
XAR
Struggling inkjet printer firm Xaar (XAR) surged 12.3p, to 71.4p after it agreed to sell 20 per cent of its holding in its 3D printing business to a joint venture partner, US group Stratasys, for £8million. Stratasys also has the option to buy the rest of the 55% it doesn’t own.
LSE
One of the London Stock Exchange Group (LSE) largest shareholders believes it is “now or never” for other suitors to make a rival offer to the shock £30bn bid from the Hong Kong bourse. The top ten shareholder said they would not be rushed into a decision over the surprise offer from Hong Kong Exchanges and Clearing (HKEX), because they want to see whether it could spark a bidding war. The investor said exchanges such as America’s Intercontinental Exchange would probably “feel pressure” to come up with a counter-offer or risk missing out on one of the world’s most prized financial companies. Other City sources speculated that Hong Kong’s cash-and shares bid of £83.61, made on Wednesday at a near-23% premium on Tuesday’s closing price, was an “opening gambit”. “If they go 10% higher, then it will be a case of what might happen in the short term to the LSE share price versus a five-year view on where the share price can go on a successful Refinitiv integration,” a source said.
Trainline Plc (TRN) has increased its full-year revenue expectations after total ticket sales in the first half jumped 19% year on year to £1.8bn. The ticket-selling platform, which completed a £1.7bn stock market float in June, said it now expected revenue to rise more than a fifth, driven by a strong UK performance and more consumers buying via mobile. It also revealed a 52% rise to £259m for international ticket sales while total revenues jumped 29% to £129m over the period. However, the travel ticketing app admitted that UK sales growth would be lower in the second half. Clare Gilmartin, Trainline chief executive, said she was “pleased with the strong levels of growth”.
BATS
British American Tobacco (BATS) is to cut more than 2,000 jobs as part of a sweeping restructuring designed to address a decline in smoking and a shift towards vaping. The tobacco giant will shed layers of management, reorganise its business units and simplify its structure to create a “more efficient, agile and focused” company. Around a fifth of its senior management workforce, some 2,300 jobs, will be culled. The Dunhill and Lucky Strike maker declined to comment on the geographical location of the cuts. The overhaul will be seen as chief executive Jack Bowles trying to stamp his mark on one of London’s biggest listed companies. Mr Bowles replaced long-term chief executive Nicandro Durante in April after shares halved last year.
MRW
Morrison (Wm) Supermarkets (MRW) is taking full advantage of its tie-up with Amazon to expand its swift grocery delivery service across the country. The grocer revealed plans to extend its presence to Glasgow, Newcastle, Liverpool, Sheffield and Portsmouth this year. “Morrisons at Amazon” is already live in Leeds, Manchester, Birmingham and parts of London; the service allows shoppers to buy Morrison’s own products on Amazon’s website. The move comes after Morrisons revealed in May it would no longer have an exclusive online partnership with Ocado, which it sealed in 2013. Ocado still provides the delivery service that underpins Morrisons.com, but the two companies negotiated a looser partnership earlier this year after the former suffered a devastating fire at one of its warehouses, reducing its capacity to serve its other customers.
BP.
BP (BP.) plans to axe some of its oil projects and reduce investment in others in a bid to be more environmentally friendly, its chief executive has said. Bob Dudley said one way to help reduce greenhouse gas emissions was to sell some of its most carbon-intensive projects, although he would not say which assets BP was targeting. Earlier this year shareholders voted to force BP to explain how it is aligning its operations with the Paris climate change agreement of 2015 by issuing a report on the matter before its annual general meeting in May next year. This puts senior managers under pressure to come up with solutions.
LLOY
Questor: why Lloyds Banking Group (LLOY) decision to axe its share buyback is good news for investors. Questor Income Portfolio: in response to bad news about PPI the bank was able to curtail its share repurchases rather than disappoint income investors. Hold
LSE
London Stock Exchange Group (LSE), the target of a £32 billion bid from its Hong Kong rival, is considering moving its headquarters out of the Square Mile for the first time in its history. The business, which emerged from 17th-century coffee houses in the City of London, has appointed Make Architects to design an office on land it owns in Hackney, east London. Hong Kong Exchanges and Clearing, which revealed its cash-and-shares tilt at its London rival on Wednesday, is understood to have contacted No 10 in attempt to head off a political storm over its proposal.
MRW
Morrison (Wm) Supermarkets (MRW) is to extend its online partnership with Amazon as it reported disappointing sales compared with those in last year’s hot summer. Like-for-like sales fell 1.9% in the second quarter, against a 6.3% rise a year ago when they were boosted by the World Cup and royal wedding. The figure was better than expected, however, as was a 5.3% rise in pre-tax profits to £198 million in the half year to August 4. Ocado operates Morrisons.com after a deal between the two companies while Morrisons products are also sold on Amazon, the US online giant, through a wholesale arrangement. Morrisons has now signed a multi-year agreement with Amazon, rather than its current rolling contract, and will expand its same-day delivery service to Glasgow, Newcastle, Liverpool, Sheffield and Portsmouth. The service is already available in Leeds, Manchester, Birmingham, parts of London and the home counties.
The chairman of Trainline Plc (TRN) is resigning less than three months after the ticketing app’s £2 billion flotation triggered multimillion-pound paydays for senior staff. Douglas McCallum, 53, will leave in November, with Brian McBride, the senior independent director, taking his place. Trainline’s listing in June valued the company at more than First Group and Stagecoach, two of Britain’s big rail operators, combined. Mr McCallum, who has been chairman since 2013, sold shares worth £6.5 million at the float and retains a £12.3 million holding. Clare Gilmartin, 44, chief executive, made £15.8 million through stock sales.
NG.
About 10% of emergency back-up power supplies that were supposed to help avert blackouts last month failed to deliver electricity as expected, National Grid (NG.) has admitted. The group, whose job is to keep the lights on, said it was still looking into the “under-performance” by some of the companies that were supposed to provide a rapid response on August 9. National Grid had not procured enough back-up power supplies to compensate for the losses, resulting in a sharp drop in the frequency on the grid. Electricity had to be cut to a million homes to restore balance.
WPCT
Investors backing Neil Woodford suffered a fresh setback last night when the investment trust he runs said it was writing down one of his unquoted investments by £36 million. Woodford Patient Capital Trust (WPCT) declined to identify the unlisted company that had disappointed because of “confidentiality obligations”, but said the writedown would wipe 4p from its net assets per share, which were previously 72.85p. The move is expected to hit the Patient Capital share price when trading begins today. The shares closed yesterday, before the announcement, at 45.25p.
BATS
About 2,300 jobs at British American Tobacco (BATS) will be cut as its new chief executive focuses on its vaping business. The FTSE 100 company said the restructuring, which would be substantially complete by January, was focused on removing management layers and simplifying the business. The job losses represent about 4% of the workforce and more than 20% of its senior roles are likely to be affected. The company said the changes were designed to deliver savings that can be reinvested in new products, such as vapour, tobacco heating products and oral tobacco.
BWNG
The online fashion retailer behind Jacamo and Simply Be has become the latest company to warn investors about a jump in potential payment protection insurance liabilities. Shares of Brown (N.) Group (BWNG) Group fell by 2½p to 108p after it estimated it would have to make an additional PPI provision of between £20 million and £30 million in its results for the half-year to the end of August. The group has so far paid out £108 million to settle claims, a figure that includes an additional provision of £22.6 million booked in the second half of last year to cover claims up to the August 29 deadline.
HUR
CNA
Hurricane Energy (HUR) has earmarked the Lincoln Crestal well as a future producer after successful flow tests. Investors had cheered an update this week when the Aim favourite revealed it had struck oil at the site, the second in a three-well programme in the Greater Warwick Area, which bosses believe could hold up to 1.5 billion barrels of oil. After a couple of days of testing, Lincoln Crestal flowed at an average rate of 4,682 barrels of oil per day, peaking at almost 10,000. The well will be capped off until the new year, when it will be tied back to the Aoka Mizu floating production, storage and offloading vessel. “We are delighted with the results of the Lincoln Crestal well,” Robert Trice, chief executive, said. “We have confirmed the presence of light oil, which can be produced at commercial rates.” Light crude oil, which is less “sticky” than heavy crude, fetches a higher price on the markets because it produces more gasoline and more diesel per barrel when refined. Analysts at Berenberg described the results as “excellent”. Centrica (CNA) investors also had Hurricane to thank as the British Gas owner found itself climbing 2p to 74¾p. Its Spirit Energy subsidiary, which it is trying to sell, owns a 50 per cent stake in the Greater Warwick Area following its farm-in agreement this time last year.
WTB
IHG
Whitbread (WTB), owner of Premier Inn, and Intercontinental Hotels, which owns Holiday Inn, were among those holding the Footsie back after analysts at JP Morgan Cazenove put out a bearish research note. After hitting record highs at the end of July, the number crunchers said InterContinental Hotels Group (IHG) now looked “unattractive” as they cut their rating to “underweight”. Shares in the company, which also owns the Crowne Plaza brand, fell back 130p to £50.37, although JPM Cazenove thinks their true value is closer to £47. Whitbread was hit with the same “underweight” rating, with the analysts wary of its exposure to “the current economic and political UK turmoil”. Shares dropped 115p to £44.29, still some way above the bank’s £38 target.
BOD
Botswana Diamonds (BOD) sparkled after environmental authorisation was granted for it to mine diamond-bearing gravels at an old De Beers project called Marsfontein. Bosses said this was a “critical step” towards obtaining a mining permit.
SXX
Shareholders in Sirius Minerals (SXX) are petitioning the government to rescue the company’s $5 billion North Yorkshire fertiliser project as it scrambles to secure funding. The group has weeks to complete a crucial $500 million bond offering or risk going bust. A petition signed by more than 550 people is calling for the government to support the project with loan guarantees. The Times reported on Saturday that Sirius was hoping to secure cornerstone investors for the bond sale as well as suggestions it might seek government support through a loan guarantee. Sirius Minerals and the Treasury declined to comment.
CPG
Tempus – Compass Group (CPG): Buy on weaknes. Dominant US operations are booming, Europe is resilient and the rest of the world has plenty of potential
GROW
Tempus – Draper Esprit (GROW): Buy. High growth, sophisticated tech investor unfairly unloved by market
LSE
Serious doubts about Hong Kong’s £32 billion offer for the London Stock Exchange Group (LSE) grew on Thursday just one day after the daring bid emerged. Investors say the deal could fail over price, regulatory and political concerns even in the unlikely event that the LSE’s management backed the offer. The first opportunity investors in Hong Kong Exchanges and Clearing (HKEX) had to react to the deal saw the shares fall more than 3%, taking $1 billion off the value of the company. With growing talk in the City that HKEX is in effect controlled by the Chinese, the LSE is widely expected to formally reject the deal.
MRW
The boss of Morrison (Wm) Supermarkets (MRW) today struck a bullish tone as the food industry digested the government’s chaotic Operation Yellowhammer warnings. The government was last night forced to release its no-deal Brexit planning documents, which predict supplies of fresh food will decrease, a reduction in choice of products, disruption of fuel distribution and huge delays to Dover-Calais crossings. Morrisons chief executive David Potts said: “We have prepared for all eventualities. It’s important we can keep the goods flowing to provide the goods shoppers have got used to receiving.”
MTRO
Metro Bank (MTRO) shares took a tumble today as hedge funds and Goldman Sachs ganged up on the challenger bank. Regent Street-based Ena Investment Capital increased its short position by 11% to 3.4 million shares, or 2% of the company’s stock. Ena follows Marshall Wace, Odey Asset Management and Connor, Clark & Lunn Investment Management, who have also made moves over the past week, stats from the ShortTracker website show. Goldman Sachs also stuck the boot in, downgrading the stock. The bets come as Metro is set to crash out of the FTSE 250 this month and in the wake of Vernon Hill stepping down as chairman. It tops what has been a torrid year for Metro after the group admitted in January that many commercial loans had been incorrectly classified in an accounting error. It was then forced to ask investors for £375 million to bolster its balance sheet.
 
BWNG
Brown (N.) Group (BWNG) showed that PPI doesn’t just affect the big banks. The retailer provides credit to its customers and had been selling PPI. This session it said it would take another £30 million hit from the scandal, sending its shares lower. John Stevenson at Peel Hunt said: “In keeping with the wider financial services sector, N Brown has seen a surge in claims volumes ahead of the deadline, with volumes up tenfold.”
BATS
British American Tobacco (BATS) new boss on Thursday outlined plans to cut 2300 jobs as the firm tries to adapt to customers ditching traditional cigarettes for vaping. The owner of brands such as Benson & Hedges and Lucky Strike said the lay-offs are expected to complete by January 2020. BAT, which employs some 55,000 people, of which just under 2500 are in the UK, gave no breakdown of where the cuts will happen. However, it said there will be a “focus on simplification and removal of management layers”. It is expected over 20% of senior roles will be affected.
LSE
HKEX chief faces battle to win over sceptics on London Stock Exchange Group (LSE). Li kicks off charm offensive after stunning investors with£32bn move
SPD
Lombard – Hiring Sports Direct International (SPD) auditor is no job for Leadsom. Each day the retailer lacks scrutiny of its accounts reinforces case for new system
SPD
Sports Direct International (SPD) in race against time to find new auditor. Mike Ashley’s group has a week to find alternative to Grant Thornton or ask government to appoint one
LSE
Lex – London Stock Exchange Group (LSE)/HKEX: bid rings wrong bells. Unrest means Hong Kong bourse looks more like a refugee than a gatekeeper to Asia
SFOR
Martin Sorrell’s S4 Capital (SFOR) expects to double in size by 2021. Jump in billings at digital marketing venture as former WPP chief hails work for big-name clients
LSE

Investors in the London Stock Exchange Group (LSE) hope a bidding war will erupt after its Hong Kong rival launched a £32 billion takeover bid. In a shock announcement, Hong Kong Exchanges and Clearing (HKEX) said it wanted to buy the 448-year-old British institution and create a ‘global market infrastructure leader’. But it is thought that the LSE will reject the offer and instead press ahead with its own £22 billion takeover of data firm Refinitiv, which is best known among City professionals for its trading terminal screens. The surprise offer from Hong Kong has set the City alight with the possibility of other bidders moving in. Analysts speculated that the Intercontinental Exchange (ICE), which owns the New York Stock Exchange, and Chicago-based CME Group could be in the picture. HKEX is just the latest foreign predator to try to take control of the LSE, known as one of the three pillars of the City along with the Bank of England and Lloyd’s of London.

SRP
Serco Group (SRP) has been given a two-year extension to a contract with the Australian government to monitor and run its detention centres. The British firm will have completed 12 years as a contractor for the government when the deal ends in 2021. The deal covers the Christmas Island detention centre which has been fiercely criticised by campaigners over harsh treatment of asylum seekers, which has led to riots. Serco has also had success with new contracts in the UK, winning a £1.9bn deal to manage 5,000 properties occupied by asylum seekers waiting to hear if their refugee status has been approved.
COB
The widow leading the campaign against the proposed takeover of Cobham (COB) is refusing to meet the US private equity firm behind the £4 billion bid. Lady Cobham, who was married to former boss Sir Michael Cobham, the son of founder Sir Alan Cobham, warned that Advent International ‘will never be a long-term strategic owner’ of the defence group. And the 76-year-old said meeting Advent bosses ‘is highly unlikely to change my view’. She has spurned an offer to talk, telling the Mail: ‘Advent will be looking to profit by selling the business on, either as a whole or in parts, which is why the UK Government needs to urgently review this transaction.’
SPD
Mike Ashley could be forced to ask the Government to find an auditor for his Sports Direct International (SPD) retail empire, in the latest setback for the billionaire. The retailer has been left without an auditor after Grant Thornton quit the post at its annual shareholder meeting yesterday. Under company law, if Ashley cannot find someone to sign off the Sports Direct books, it must tell Business Secretary Andrea Leadsom, who could then oversee an appointment. In a further blow, a third of independent shareholders voted against Ashley’s re-election as chief executive. Ashley, 55, survived the rebellion as he is Sports Direct’s largest shareholder with a near-63% stake. But he conceded that the past few months ‘can’t have been very comfortable’ for shareholders.
 
GMS
Gulf Marine Services (GMS) delayed publishing its half-year results while it continues talks with one of its lenders about a short-term loan – but pledged to release the figures by the end of September. The oilfield services contractor has a staggering debt pile – more than £300m at the end of 2018 – for a small-cap firm and is planning a longer-term restructuring of its finances. The Abu Dhabi-based firm operates support vessels that service deepwater oil and gas rigs and offshore wind farms. It was stung when it made investments to build a range of new boats before the oil price crash of 2014 and 2015, which then put customers off using expensive services such as those offered by Gulf Marine. In December it released a profit warning that hammered its share price and so far this year it suffered a bruising investor revolt against its 2018 executive pay in May, following which chief executive Duncan Anderson left last month.
CAL
Capital & Regional (CAL) soared after South African real estate firm Growthpoint Properties kicked off talks to buy a majority stake in the British shopping centre owner. Growthpoint has made its approach at a time when Britain’s malls have been hammered by struggles in the retail sector, which have led to mass shop closures and falling rents.
GFRD
Galliford Try (GFRD) stock was seemingly immune to the news that the costs of a bypass in Aberdeen have taken a hefty chunk out of its profits. The construction giant’s profit dropped to £105m for the 12 months to the end of June, compared with £144m the year before – and revenues fell from £2.9 billion to £2.7 billion. But the news on Tuesday that it is planning to merge its housebuilding arm with Bovis’s equivalent division was still working its charm on Galliford’s shares.