The Mail 14/03/19 - Vox Markets | Vox Markets

The Mail 14/03/19

The boss of oil and gas giant Royal Dutch Shell ‘B’ (RDSB) received a 126% pay rise last year. Chief executive Ben Van Beurden pocketed over £17million, including a long-term incentive plan linked sum of £12.8million, up from £7.6million, and a £2.5million bonus. In its latest results, the group said: ‘As a consequence of the LTIP vesting in particular, the single figure of remuneration for the CEO is significantly higher this year than in previous years.’ Mr van Beurden has been leading an ambitious efficiency drive since the industry was buffeted by the 2014 oil price crash. But, the bumper pay award is still likely to reignite the debate surrounding ‘fat cat’ executive pay packets. Luke Hildyard, director at the High Pay Centre, said Shell epitomised the ‘warped corporate culture’ of modern big business. He added: ‘The bulk of this package results from very high incentive payments, which have decreasing credibility with pay experts.’ Last year, over a quarter of Shell’s investors voted against Mr van Beurden’s pay at the energy giant’s annual meeting.

Consumer demand and possible border delays pose sofa group DFS Furniture (DFS) the biggest headaches when it comes to Brexit, the company has claimed. In its latest half-year results, the group said: ‘Consumers’ willingness to make a purchase of upholstery is strongly linked to consumer confidence. The continuing significant uncertainty has obviously impacted consumer confidence.’ On the issue of potential border delays, DFS said: ‘We would still see a deferral in revenue in our made-to-order model.’ The sofa chain’s pre-tax profit more than doubled from £6.2million to £14.1million a year earlier.

High-end estate agency Savills (SVS) has warned its performance for the year ahead looks set to be ‘overshadowed by macro-economic and political uncertainties across the world.’ Chief executive Mark Ridley said: ‘It is difficult accurately to predict the impact of these issues on corporate expansionary activity and investor demand for real estate. ‘At this stage, we expect to see declines in transaction volumes in a number of markets and growth in our less transactional business lines; accordingly we retain our expectations for the group’s performance in 2019.’

Challenger banks OneSavings Bank (OSB) and Charter Court Financial Services Group (CCFS) have agreed the terms of a £1.6billion deal to merge in the hope of creating a ‘leading specialist lender.’ Under the share sale deal, Charter Court’s shareholders will own around 45% of the newly merged group, while OneSaving’s investors will hold around 55% of the merged group. For each Charter Court share, holders would receive 0.8253 new OneSavings share. In early morning trading, Charter Court’s share price was up 1.4p to 326.4p, while shares in OneSavings are up 7.6p to 404.8p.

Veteran investor Martin Gilbert is standing down as joint chief executive of Standard Life Aberdeen (SLA), leaving his colleague Keith Skeoch solely in charge. Gilbert will stay on as an executive director, focused on working with important clients and bringing in new customers. It ends a power-sharing agreement introduced when the firm was created by an £11billion merger of Gilbert’s Aberdeen Asset Management and Skeoch’s Standard Life in 2017. The tie-up was seen as a way to fend off rivals in a tough market for fund managers. But the share price has since fallen 42% and savers have pulled out billions of pounds and invested elsewhere instead. Another £40.9billion was withdrawn from SLA last year, equal to 7% of its overall assets, leaving it with £551.5billion at the end of 2018. The combined group had £670billion of assets on its books at the time of the merger. Profits dipped 1.5% to £650million last year, but the company hiked its total annual dividend by 1.4% to 21.6p per share.

Sports Direct International (SPD) has accused Debenhams (DEB) of misleading investors after the department store chain rushed out a profits warning just weeks after saying it was on track to meet forecasts. It is the latest skirmish in a battle between the two firms as Sports Direct boss Mike Ashley tries to orchestrate an audacious boardroom coup at Debenhams and become chief executive of the struggling group. In a letter to the Debenhams board, Sports Direct accused the retailer of ‘being wildly optimistic or at worst being deliberately misleading, to the point that the board and chief executive have no place leading a plc or in making public statements to the market’. The 54-year-old, who owns nearly 30% of Debenhams, upped the stakes again last night, offering the chain an alternative to the current refinancing deal it is thrashing out with lenders. Through Sports Direct, he offered Debenhams a £150million unsecured loan, £40million of which will go towards paying off the emergency funding it secured last month. Sports Direct said it will offer the loan interest free on the basis that it is given an additional 5% stake in Debenhams, allowing it to seize control of the business and install Ashley as chief executive. Debenhams hit back, branding the tycoon’s complaints ‘self-serving’ and ‘unfounded’.

Doorstep lender Provident Financial (PFG) could sell some operations or merge with a rival to fend off a hostile takeover. Chief executive Malcolm Le May insisted all options are being considered as he battles a bid from competitor Non-Standard Finance (NSF). It came as the Provvy unveiled profits of £90.7million for 2018, up from a £123million loss the previous year, and restarted dividend payments. Le May said: ‘I’ve delivered on what I said I was going to deliver, and then some. Having said that I will obviously be exploring all avenues to maximise benefits for all of our shareholders.’ The 61-year-old refused to go into detail about what these options might be, and would not say if it is in talks with any other companies.

The break-up of Prudential (PRU) is continuing at speed, bosses have said. The Pru is splitting itself in two, creating a separate company made up of its US and Asian businesses, and another, M&G Prudential, housing its UK insurance and fund management arms. The insurance group also unveiled profits of £4.8billion in 2018, up 3% on a year earlier, and hiked the dividend 5% to 49.35p. Profits were boosted by a strong performance in Asia, as well as a £440million windfall in the UK because life expectancy is rising slower than predicted. This means Pru customers will die sooner than previously thought, so the firm has to set aside less cash to pay their pensions.

Shares in the oil and gas explorer Red Emperor Resources NL (DI) (RMP) tanked after a test at a well at its Alaska site turned out to be a dud. The London-listed company, with partners 88 Energy Limited (DI) (88E) and Pantheon Resources (PANR), said the quality of oil at the site did not warrant further testing. It was a major blow for the firm, which lists the location as one of only two projects it is involved in on its website. Yesterday, shares in Red Emperor plunged 85.2%, or 4.33p, to 0.75p.

Veronique Laury’s future as chief executive of B&Q owner Kingfisher (KGF) looks increasingly uncertain after analysts asked if time was running out for the FTSE 100 boss. Investment bank Stifel downgraded the DIY group, suggesting shareholders were losing confidence in her five-year transformation plan. Laury has been racing to reduce costs, improve its IT system and integrate the products sold across the entire business. But Stifel suggested that shareholders now think Laury’s ambitions to achieve £500million in additional profits in less than two years are unachievable. She is now more than halfway through the transformation plan. Analysts at the bank blamed poor planning and an out-of-date DIY business model for the group’s woes. Stifel has now urged the board to take action on management ahead of Kingfisher’s full-year results next Wednesday.

Shopping centre owners Hammerson (HMSO) and Intu Properties (INTU) both fell after a report by Liberum issued a disappointing outlook for the retail property sector. It forecasted a 20% decline in retail values across the two companies’ portfolio over the next two years. The grim forecast follows Hammerson’s botched attempt to buy Intu for £3.4billion last year.

G4S (GFS), the world’s biggest security firm, was the biggest faller on FTSE 250 index, down 9.3p, to 194.5p, after its price target was slashed by RBC. The brokerage blamed ‘messy’ results for the downgrade and said it was sceptical of a plan to separate its cash business.

SIG (SHI) had the biggest gains on the FTSE 250 after it was boosted by a Stifel research note. Analysts lifted their price target to 130p from 116p, sending shares up 6.9%, or 9.1p, to 141.2p.

Petrofac Ltd. (PFC) jumped 20.8p, to 486.3p, after it won a £760million project in Algeria.

A ‘buy’ recommendation for online travel firm On The Beach Group (OTB) lifted shares by 19.5p, to 415.5p. Analysts at Liberum said the market has undervalued the company’s potential and slapped a 560p target price on the stock. On The Beach has been expanding overseas amid a boom in demand for budget holidays. Liberum said its new products and overseas expansion gave it ‘a long runway for the future’.

 

Domino’s Pizza Group (DOM) fell after Liberum raised concerns about its international prospects and the dispute with franchisees which run its outlets. Franchisees have been dragging their heels on new store openings as they demand a bigger share of Domino’s profits. Analysts said: ‘We do not feel the market fully appreciates the situation Domino’s finds itself in. Debt is high and it may find that it has backed itself into a corner.’ Liberum said the row ‘remains a crucial debate as to how Domino’s returns to a sustainable growth model’.

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Mentioned in this post

CCFS
Charter Court Financial Services Group
DEB
Debenhams
DFS
DFS Furniture
DOM
Domino\'s Pizza Group
GFS
G4S
HMSO
Hammerson
INTU
Intu Properties
KGF
Kingfisher
NSF
Non-Standard Finance
OSB
OneSavings Bank
OTB
On The Beach Group
PANR
Pantheon Resources
PFC
Petrofac Ltd.
PFG
Provident Financial
PRU
Prudential
RDSB
Royal Dutch Shell \'B\'
RMP
Red Emperor Resources NL (DI)
SHI
SIG
SLA
Standard Life Aberdeen
SPD
Sports Direct International
SVS
Savills