The Mail 17/03/19 - Vox Markets | Vox Markets

The Mail 17/03/19

Ministers drew up secret plans to nationalise parts of hospital cleaning and school dinner contractor Interserve (IRV) before it was rescued from the brink of collapse last week, leaked documents reveal. An internal Whitehall strategy memo seen by The Mail on Sunday shows that the civil service last year put together a proposal to create a state-controlled company that would have been on standby in case struggling Interserve went into liquidation. In that eventuality the Government was prepared to move staff into the new company to ensure vital public services were not disrupted. The plans are one of the few instances of the Government being prepared to bail out a failed company since RBS and Halifax Bank of Scotland were controversially rescued using taxpayer cash in the financial crisis more than a decade ago.

Discount retail giant B&M European Value Retail S.A. (DI) (BME) is attempting to wriggle out of strict rules designed to stop major chains exploiting food and drink suppliers. The company, which has about 600 stores and annual sales of £2.6billion, claims a decision to force it to sign up to the Groceries Code Adjudicator would lead to ‘irreparable financial harm’. GCA rules ensure that major companies make timely payments to suppliers and that the correct procedures are followed when contracts are terminated. But B&M has claimed it would cost £1million to implement the changes required as it works with 1,600 suppliers. GCA membership is applied to any retailer that has more than £1billion in sales of food and drink, although exceptions can apply. Many suppliers are said to be angry that Amazon and Boots have not been added.

Eight major companies were last night forced to defend links between their senior directors and the Big Four accountancy giants that audit them. Aviva (AV.), Dixons Carphone (DC.) and private equity giant Melrose Industries (MRO) are among the firms named and shamed in a new report alleging that board-level connections with auditors represent conflicts of interest. The report, from shareholder advisory group Pirc, comes at a time when accountancy firms – and in particular the Big Four of KPMG, Deloitte, EY and PwC – are coming under intense political pressure over their auditing work. In recent years, auditors have come under the spotlight over their connections with scandal-hit firms including Sir Philip Green’s BHS, the collapsed outsourcing giant Carillion and the cake shop chain Patisserie Valerie. Last week, the Government announced that audit watchdog the Financial Reporting Council would be scrapped and replaced by a body with new powers to hold firms to account. In its annual corporate governance report, seen by The Mail on Sunday, Pirc identifies BHP Billiton (BLT) as a prime example of a company with unacceptable connections with its auditors.

Hedge funds have dialled up their bets against Vodafone Group (VOD) shares to a record £1billion after the telecoms giant raised billions of pounds in debt to fund a megadeal in Europe. Speculators swooped on Vodafone’s shares last week, with major short positions hitting an all-time high, according to disclosures by the Financial Conduct Authority. At least 2.7% of Vodafone’s shares were on loan to short-sellers, meaning bets worth more than £1billion were placed against the stock. Sources said it was most likely hedge funds were shorting the shares after a major convertible bond launch – although there are also fears Vodafone could be forced to cut its dividend, which is one of the biggest in the country.

One of Britain’s best-paid female bosses has handed her daughter more than £4million in shares. Avril Palmer-Baunack, who runs WeBuyAnyCar owner BCA Marketplace (BCA), gifted her daughter Iona two million shares in the FTSE 250 company last week. Palmer-Baunack, 54, faced a backlash last year after pocketing a share bonus worth £29million, making her one of the best-paid women in the country. Shareholder advisors Glass Lewis called the bonus ‘exceptionally disproportionate’, claiming the used car company’s value may have been inflated by general stock market swings rather than by her management. Now stock market filings indicate she has handed some of those controversial shares to her daughter who graduated from the University of Birmingham in 2017 and is now studying for a PhD.

A massive bonus scheme which could see Ocado Group (OCDO) boss Tim Steiner pocket up to £100million is ‘excessive’ and should be rejected by shareholders, according to an influential investor group. The payouts, revealed by The Mail on Sunday, are based on the online grocer boosting its share price over the next five years. Steiner’s payout is capped at £20million a year and four senior executives could each get a maximum of £5million a year. But Glass Lewis, which advises shareholders on corporate governance and pay, said the targets were too short term and could see Ocado bosses get rich from buoyant market forces rather than management strategy.

Ted Baker (TED) will be hoping to embrace a fresh start when it publishes full-year results on Thursday. The firm is expected to report an 8% drop in profits to £63million. After the results, the firm – now being led by acting chief Lindsay Page and executive chairman David Bernstein – is off on a City roadshow to win over investors.

ASOS (ASC) will this week give its first public statement since December’s shock profit warning. Ahead of its first-half trading update on Tuesday, analysts at Peel Hunt reckon the upset was more down to a ‘poorly executed Black Friday’ rather than fundamental flaws. But clearance sales may have hampered progress in the past three months and a return to normal service may have to wait until the second half of Asos’s financial year.

 

MIDAS SHARE TIPS: Want a winner? Try Zotefoams (ZTF), the firm behind faster trainers. Midas verdict: At £5.92, Zotefoams shares could be considered expensive relative to peers. However, the stock has come off from more than £7 at the end of last year, the business is growing fast and exemplifies British innovation and drive at its best. An attractive buy, particularly for long-term investors.

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Mentioned in this post

ASC
ASOS
AV.
Aviva
BCA
BCA Marketplace
BLT
BHP Billiton
BME
B&M European Value Retail S.A. (DI)
DC.
Dixons Carphone
IRV
Interserve
MRO
Melrose Industries
OCDO
Ocado Group
TED
Ted Baker
VOD
Vodafone Group
ZTF
Zotefoams