Press | Vox Markets
HSBC, one of the world biggest banks, has reported a 16% rise in full-year profits but weaker stock markets, the US-China trade war and a slowing global economy left growth below market expectations. Shares in HSBC Holdings (HSBA) fell 22p to 642p in early trading in London as the chairman, Mark Tucker, said: “Differences between China and the US will likely continue to inform sentiment in 2019”. HSBC has assets of $2.6 trillion, more than 39 million customers and employs 235,000 people around the world. It made 89% of its profit in Asia last year. Despite growing protectionism, an easing in global growth and the weakest Chinese economy in 28 years, Mr Tucker was upbeat about prospects. “The fundamentals for growth in Asia remain strong in spite of a softer regional economic outlook,” he said. The bank reported profit before tax of $19.9 billion for 2018, up from $17.2 billion the year before but below analysts’ average estimates of $22 billion. It maintained its full-year dividend at $0.51 a share and said that it was confident of keeping the payout at this level.
The company behind the Holiday Inn and Crowne Plaza hotel chains has reported solid growth at its Chinese subsidiary despite the trade conflict with the United States. InterContinental Hotels Group (IHG) said that sales in the world’s second largest economy grew by 22% last year, with profits up by a third after it opened 77 new hotels. Revenue per available room (revpar) rose by 2.5% last year across its chains last year — a slowdown from last year’s rate of 2.7%. Intercontinental reported a 7.7% increase in its reported operating profit to $816 million, which is slightly higher than the $807.54 million forecast by City analysts. Pretax profits fell by 26% to $485 million after the company booked $104 million in one-off charges relating to acquisitions and a cost-cutting programme. It lifted its dividend by 10 per cent to $1.14 a share. “The fundamentals of our business remain strong, and while there are macroeconomic and geopolitical uncertainties in some markets, we are confident in the year ahead,” said Keith Barr, 48, the chief executive.
A runaway train and problems at its copper mines have derailed profits and wiped out $1 billion in planned productivity savings at BHP Billiton (BLT). The world’s biggest listed miner reported an 8% drop in underlying net profit to $3.7 billion in the second half of last year as the disruption pushed up its costs. BHP had been targeting $1 billion in productivity gains over the year to June — down from an original target of $2 billion — but said that it now expected productivity to be “flat” for the year. The result was weaker than analysts had expected and BHP’s shares dropped by about 2% in early trading in London.
Barclays boss Jes Staley loses key supporter as Tiger bows out. An American hedge fund has wound down a stake of more than $1 billion in Barclays (BARC) as the bank fights off an attack from an activist investor. Tiger Global Management, which held a 2.5% stake, making it a top ten shareholder, has sold its entire holding over the past year, according to the Financial Times. The hedge fund was believed to have been a supporter of plans by Jes Staley, 62, Barclays’ chief executive, to revive the lender’s fortunes. However, the bank’s shares have lost about a third of their value over the past two years, prompting concerns about Mr Staley’s turnaround strategy.
Laing O’Rourke passes its own risk assessment. Britain’s largest private construction company said that a no-deal Brexit would pose a minimal risk, if any, to its present projects as it reported a £46.5 million post-tax loss for its latest financial year. Laing O’Rourke is filing its annual results today, more than four months after they were due — a delay, Stewart McIntyre, its finance director, said, that was down to the company’s lenders and auditors taking a more detailed look at the risks from its longer-term contracts, as well as the potential impact of Brexit. They also assessed potential cost provisions associated with fire safety and cladding upgrades. Laing O’Rourke found that Brexit had not caused a delay to any of its “live” projects. It faces the risk of increased costs for workers and materials that come from the European Union, but it said that of the 16.1% of its British-based workforce who were European Union citizens, almost a quarter were from Ireland and could continue to work in the UK.
Break-up issue set to top in-tray for next Reckitt Benckiser boss. Any break-up of Reckitt Benckiser Group (RB.) would be unlikely to happen before the middle of next year and therefore would be overseen by a new chief executive, the company indicated yesterday. The consumer goods group said that it continued to “evaluate the opportunities to maximise shareholder value” from a restructuring that is set to be completed in mid-2020. Chris Sinclair, 68, Reckitt’s chairman, also said that the successor to Rakesh Kapoor, the outgoing chief executive, would be “consistent with execution of RB 2.0” and that an update on the selection process would be given by its annual meeting in May.
JD Sports deal boots Footasylum stock higher. JD Sports Fashion (JD.) has snapped up a chunky stake in Footasylum (FOOT), prompting the Aim-listed trainer and sportswear retailer’s share price to almost double. JD Sports told the stock market yesterday that it had bought almost 8.7 million shares in Footasylum, equivalent to an 8.3% stake. The acquisition, worth about £2.5 million, fuelled speculation of a potential collaboration between the businesses. Investors quickly bought into that idea, sending shares in Footasylum bounding 26¼p higher to 55¼p, a surge of 91.4% that added more than £27.5 million to its market capitalisation.
Ex-Jardines boss to take wheel at Pendragon. Pendragon (PDG), the struggling car retailer that trades as Stratstone and Evans Halshaw, has found a new chief executive. After Trevor Finn announced in December that he would be leaving after 30 years of running the company, Pendragon said yesterday that it had appointed Mark Herbert, formerly of Jardine Matheson, the Hong Kong trading house that is controlled by the Keswick family. The car retailer, which operates 200 dealerships, had a difficult year in 2018. There was disruption in the car market because of a fall in diesel sales, while new emissions regulations led to delivery backlogs for manufacturers. Mr Finn had announced plans last year to pull back from the new car market because of shaky consumer confidence and difficulties dealing with some manufacturers. Towards the end of 2018, six weeks before news of his resignation, he revealed that profits for the year would be £10 million lower than the previous results at £50 million.
No-deal Brexit would be more than inconvenient for McColl’s. A convenience stores chain has become the latest retailer to warn that its sales will suffer in the event of a no-deal Brexit. McColl’s Retail Group (MCLS), which manages 1,550 newsagents and shops around Britain, said that it expected an 11% drop in sales in April and May if Britain does not negotiate a trade deal with the European Union. It based its forecast on product shortages and supply chain disruption. The company said that it also was reviewing plans for a “far more challenging Brexit”, which could result in a dividend cut and even may force it to renegotiate its banking covenants. However, it added that a divorce deal would result in no material impact to trading and reported its first rise in quarterly sales in a year.
Chapter is over for Pearson. Pearson (PSON) offloaded its American schools textbook business yesterday, more than 18 months after it effectively put it up for sale. The education publisher said that it had agreed to sell its K12 courseware business to Nexus Capital Management, a private equity firm, for $250 million as part of its plans to create a digitally focused business. Under the terms of the transaction, Nexus will pay only $25 million initially, with a further $225 million to be paid via a vendor note due in the next three to seven years. Once the note is repaid, Pearson is entitled to 20% of all future dividends to equity-holders and will receive 20% of net proceeds if the business is sold by Nexus.
The share price of the Queen’s carpet maker tumbled by almost 15% after the company warned that its recent pursuit of a bigger slice of the market would come at a short-term cost. Victoria (VCP), a 124-year-old business that counts Buckingham Palace and John Lewis among its customers, said that its efforts to gain market share by cutting prices and focusing on volume products would hit its earnings this year. In a trading update yesterday, the Kidderminster-based business said that it had 18 months left on its bank facilities and would update its shareholders soon on its plans for longer-term financing. It expects earnings before interest, tax and other charges for the year to the end of March to be between £95 million and £97 million — about 9% below present estimates, according to Berenberg Bank.
Spirax-Sarco Engineering (SPX), the valve and pumps manufacturer, added 75p to £67.55 after its proposed £139 million acquisition of Thermocoax, a French cable maker, was well received by investors. Spirax-Sarco said that the purchase would enhance its electrical process heating business, with particular potential to expand in the United States.
Drax Group (DRX), the power station operator, rose 6½p to 378¾p despite a downgrade to “sell” from “neutral” by Citigroup. Analysts at the bank pointed to falling commodities prices and argued that the company had overpaid for the UK generation asets that it acquired from Iberdrola, the Spanish utility company.
City of London Investment Group (CLIG) rose 21½p to 399½p after the asset manager maintained its dividend of 9p a share and declared a special dividend of 13½p per share, despite suffering almost $42,700 in net outflows in the first half, mostly from its emerging market strategies.
Odey Asset Management, the hedge fund run by Crispin Odey, 60, has increased its stake in Plus500 Ltd (DI) (PLUS) at the same time as brokers at Canaccord cut their target share price in half and criticised the company over “disturbing” revelations. Odey’s stake in the Israeli spread betting company is now worth almost £133 million by yesterday’s share price, having increased its holding by more than 1% to 14.5%.
Tempus – Micro Focus International (MCRO): Avoid. It’s all too easy to make slip-ups in this complex and highly competitive market
Tempus – Vesuvius (VSVS): Avoid. A quality performer but the backdrop is uncertain
City relief as EU gives no-deal green light for clearing houses. Europe stepped up preparations for a no-deal Brexit on Monday after giving key parts of the City of London temporary access to EU customers in the event of a cliff-edge departure. The European Securities and Markets Authority, the EU financial regulator, has granted three UK-based clearing houses — LCH, ICE Clear Europe and LME Clear — licences to carry on doing business with European-based customers over the next 12 months even if politicians fail to strike an agreement. London dominates clearing for derivatives traded by European customers and clears nearly all over-the-counter derivatives, mainly interest-rates swaps, traded in euros. Clearing houses are a vital part of the financial infrastructure and ensure stability by acting as the buyer or seller of last resort in the event of a customer default.
Shoe Zone should be shoe-in for dividend hunting investors. This is not the glamorous end of the shoes market — no £500 Louboutins in sight. But Shoe Zone (SHOE) is fast becoming a solid little earner for small-cap investors, providing a reliable dividend and strong earnings. At its results last October it recorded a profit of £11.3 million, an 18.4% increase on the £9.5 million recorded the year before. Investors will be hoping it can do the same again for the year ahead as 60% of profits are paid out in dividends. The firm also has a strong debt-free balance sheet which could appeal to a predator. But the real key to its success is its ability to control its rents. Shoe Zone’s average lease length is just two years, meaning it has frequent chances to renew. The question is whether the firm will continue to grow. It is also focused on developing its website. Last year online revenues contributed £9.8 million to overall sales, a marked 19.9% increase on the previous year. Nevertheless, analysts have warned that customers still prefer to buy shoes in store. Still, while the high street crumbles, Shoe Zone shows that with sensible pricing and a low cost base any firm can still compete.
Reckitt Benckiser brushes off Brexit in £105m UK research centre spend. The boss of Reckitt Benckiser Group (RB.) on Monday cheered sales growth and signalled that the consumer goods giant has no regrets about opening a new £105 million UK research centre in post-Brexit Britain. Rakesh Kapoor made the comments as Reckitt Benckiser, which is behind the Durex, Dettol and Nurofen brands, posted a 10% jump in full-year revenues to £12.6 billion. The FTSE 100 firm first unveiled plans to invest in a science and innovation centre in Hull in 2014. It has had a presence in the Yorkshire city since 1840.
Footasylum shares soar as JD Sports buys stake. Britain’s biggest sports retailer acquires 8.3% in struggling smaller rival. JD Sports Fashion (JD.), Britain’s biggest sports retailer, has acquired an 8.3% stake in Footasylum (FOOT), sending shares in its struggling smaller rival surging by more than 80%. JD Sports said it had bought the stake in the footwear and hoodie chain for investment purposes and was prepared to increase its holding to 29.9% – the maximum level permitted without triggering a bid – but that it had no intention of making an offer. The stake was acquired from one major institutional shareholder at a price of 50p a share. Footasylum responded by saying that it “continues to operate its business as usual and remains focused on delivering its differentiated, product-led, multi-channel proposition”.
Petrofac co-founder accused posthumously of paying bribes. SFO alleges Maroun Semaan was complicit in six counts concerning multi-million-dollar scheme. The co-founder of the oil company Petrofac Ltd. (PFC) has been posthumously accused of taking part in a scheme to pay multi-million-dollar bribes to secure contracts. The Serious Fraud Office’s allegations against Maroun Semaan, who died two years ago, have been revealed in charges laid before a court. The multinational’s other co-founder is Ayman Asfari, a major financial backer of the Conservatives. Together with his wife, Asfari has donated almost £800,000 to the party since 2009. Currently the firm’s owner and chief executive, he was arrested and interviewed under caution in May 2017 by the SFO and released without charge.
Campaigners protest against BP sponsorship of British Museum. Activist says sponsorship allows oil group to appear a ‘good corporate citizen’. Hundreds of people have occupied the British Museum in protest against its relationship with longstanding sponsor BP (BP.) and to highlight that the multinational lobbied the UK government to help it gain access to Iraq’s oil reserves prior to the war in the country. I am Ashurbanipal, the museum’s current main exhibition, features artefacts that protesters said had been removed from modern day Iraq during the Ottoman era, while BP’s impact on climate change was also a central cause for concern.
Ryanair passengers get double the time to alter bookings for free. Airline extends limit for free changes to 48 hours, with hefty fees for last-minute switches. Ryanair Holdings (RYA) passengers will now have 48 hours to make changes to bookings for free after the airline announced a series of “customer care improvements”. Customers currently have a 24-hour grace period to correct any minor errors – for example, a misspelled name – free of charge, but this is being doubled. Ryanair’s fees in this area can be hefty – for example, its name change fee is £115 per passenger, rising to £160 at the airport. Ryanair has also launched a £199/€199 annual frequent flyer programme called Ryanair Choice offering “free seats, fast-track and priority boarding”. EU261 is the EU directive that obliges airlines to pay compensation for flight delays of more than three hours, and Ryanair announced a customer care charter whereby it says claims will be processed “in 10 days”, with new 24/7 support.
Pearson (PSON) agrees sale of US school textbook business. Private equity group Nexus Capital Management to buy supplier of course materials
Reckitt Benckiser Group (RB.) revives growth as Kapoor nears exit. Dettol maker predicts slight acceleration this year driven by consumer health
UK chairmen face increasing pressure to unseat them. Pub chain founder Tim Martin says new nine-year limit for chairs is ‘deeply flawed’
Standard Life Aberdeen (SLA) clinches Asia deal after Japan’s Mitsubishi offloads stake. Scottish investment group has lost two of its largest shareholders in less than a year
Tiger Global dumps Barclays (BARC) stake in blow to Staley. New York hedge fund offloads $1bn stake as Barclays chief battles activist investor
Citi offers to buy London skyscraper HQ for £1.2bn. Talks are part of US bank’s strategy to own rather than rent its major buildings
McColl’s Retail Group (MCLS) – British corner shops squeezed by price and brand changes. The days when customers were happy to pay a hefty premium for convenience are over
Reckitt Benckiser Group (RB.) saw profits and sales rise as its departing boss cheered ‘a year of good financial progress’, sending shares in the company higher. The consumer goods giant said it saw a solid performance across both its health division, which includes brands like Nurofen and Gaviscon, and its home division, which includes Cillit Bang and Veet. Net revenue rose 2% to £3.4billion in the fourth quarter, leading to an 8.9% rise in profit to £2.7billion. Over the full-year, operating profits rose 8% to £3.3billion, with revenues 10% higher at £12.59billion.
Fishing equipment retailer Angling Direct (ANG) said it is well stocked to weather any disruption to supply due to Brexit as it unveiled a strong rise in sales. In a pre-closing trading update, the company said it has structured the company in preparation for Brexit given ‘the very high percentage of stocks coming from the Far East’. ‘Inventory numbers in general are good and the business does not foresee any disruption to supply throughout the next few months, regardless of any Brexit outcome,’ the company said in a statement.
Trainers and sportswear retailer JD Sports Fashion (JD.) has bought up sizeable stake in its rival Footasylum (FOOT), triggering a sharp rise in the latter’s shares. Footasylum, which has suffered a dismal year amid challenging trading conditions, saw its beleaguered shares rocket 70% to 49p on the news. JD Sports bought the 8.3% stake for, it said, ‘investment purposes’, and said it was prepared to acquire up to 29.9% in the recently-listed firm – just below the mandatory takeover threshold of 30%. However, it insisted it is not intending to table an offer for the firm.
Convenience store chain McColl’s Retail Group (MCLS) said it is still suffering from the collapse of supplier Palmer & Harvey as it reported falling profits and sales and slashed its dividend by more than half. McColl’s, which has around 1,600 convenience stores and newsagents around the UK, also said sales may fall further in April and May if the UK leaves the European Union without a deal as supply chains are disrupted. The expected weak annual results follow two profit warnings and an 80% slide in the small cap firm’s share price in a year.
Clothing chain Primark is expected to report resilient sales figures later this month, bucking the trend of high street gloom. Its next trading statement may even outshine its Christmas performance, according to City analysts.  Brokers at Jefferies said Primark could increase profits in the six months to March by as much as 25% to £425 million. It said the chain could also have been lifted by better weather and solid performances in the US, Italy, France and Poland. The broker added that Primark could also benefit from a ‘rational completion of Brexit’ and a subsequent recovery in sterling that would make imports relatively cheaper. Primark’s turnover will be around £8 billion this year. It is owned by food and agriculture group Associated British Foods (ABF) which also runs Twinings and Ovaltine. ABF’s shares closed on Friday at £22.66 valuing it at £18 billion.
US bank Citigroup is looking to buy its London skyscraper offices for a reported £1.2 billion. In a boost to the capital ahead of Brexit, the firm is said to be in talks with property owner AGC Equity Partners about acquiring 25 Canada Square tower in Canary Wharf.Citi has been based at the 42-storey office since 2001 and uses it as its main headquarters for Europe, the Middle East and Africa.
Takeaway delivery firm Just Eat (JE.) faces mounting pressure to merge with a rival after a second investor broke ranks to call for a shake-up. Last week activist investor Cat Rock Capital, which holds 2% of Just Eat, wrote an open letter to the firm’s board demanding a major overhaul. Just Eat has until now been able to dismiss the letter as a lone critic’s view. But now another of its largest shareholders has broken ranks to back the call for action and has vowed to write to the board. The Mail on Sunday understands that a further three shareholders have also written to the board in the past week to express their frustration at poor communication from the company over an action plan they deem worthy of discussion.
Spreadbetting firm Plus500 Ltd (DI) (PLUS) was warned that it would suffer a huge blow from tighter regulation nine months before it issued a shock profit warning last week. One of the hedge funds betting against the company’s shares told a New York conference in May last year that new rules could hit Plus500’s profits by more than 50%. The revelation will be seized on by critics who claim that Plus500 – which is listed on the FTSE 250 and sponsors Atletico Madrid football club – may have misled investors about its expectations for future performance.
Britain’s top banks are poised to reveal their biggest profits since the financial crisis erupted in 2007, detailed analysis by The Mail on Sunday shows. Figures out this week are tipped to indicate that Lloyds Banking Group (LLOY), Barclays (BARC), HSBC Holdings (HSBA) and Royal Bank of Scotland Group (RBS) made a combined profit of £23.9 billion last year – an astonishing 85% increase on the previous 12 months when the figure was just £12.9 billion. Lloyds will lead the way by revealing its biggest ever profit for a single year, according to a consensus of analyst forecasts. The last time the four biggest lenders made more than £20 billion was 2007 – the year Northern Rock went bust – when profits hit a combined £26.4 billion. Ever since then, the four have been weighed down heavily by legal costs, payment protection insurance compensation and various bills for mis-selling and misconduct. PPI compensation alone has wiped around £30 billion off their balance sheets, while legal settlements have cost them £49.3 billion since 2009, MoS analysis found. These costs are finally starting to tail off as banks move on from a torrid decade.
Hedge funds are betting on a fall in the share price of Big Six energy giant SSE (SSE) as it faces a £200 million bill to upgrade its ageing computer systems. Bets against SSE’s share price hit an all-time high last week, with Marshall Wace and WorldQuant’s taking £170 million of so-called short positions, where they profit if the share price falls. The short-sellers could benefit as SSE tries to regroup after its failed merger with rival Npower. It had planned to use Npower’s new systems as part of the £3 billion deal, but will now need another solution. All five of its biggest rivals – British Gas, Eon, Scottish Power, EDF and Npower – have gone through major upgrades of their systems. An industry source said SSE’s ageing technology is unlikely to be able to cope with the switch to smart meters, which send real-time energy usage data to companies every 30 minutes.
Beleaguered grocer Ocado Group (OCDO) is to ditch its familiar green and purple branded vans for its new rapid delivery service and instead use a French courier firm. The Hertfordshire company has signed up Stuart Delivery – a subsidiary of French postal giant La Poste – to operate Zoom which promises grocery orders to the doorstep within the hour. The launch using a third party is likely to raise eyebrows among customers and investors as Ocado prides itself on fine service and precision technology. Deliveries will be sent from Ocado’s giant distribution centre in Erith, South East London, to a smaller ‘mini-hub’ at a location near Chiswick, West London, before being handed over to Stuart’s drivers. The trial beginning next month coincides with growing questions about the Ocado business model, some of which may not be answered until fire chiefs discover the cause of a blaze a fortnight ago at its massive warehouse in Andover, Hampshire.
The mega-merger between Asda and Sainsbury (J) (SBRY) could be stopped in its tracks if the authorities order the chains to hive off more than 170 stores, say senior supermarket sources. UK competition rules mean the two retail giants could be forced to sell scores of stores to their grocery rivals. But sources said getting rid of so many outlets could prove too painful.
MIDAS SHARE TIPS: Can fracking bring you a deep well of profit? Hunting (HTG) sells to the oil industry and it could pay off. Midas verdict: The oil market is cyclical and few participants can escape the highs and lows. But Hunting shares have fallen too far too fast and they are now undervalued. Johnson has also undertaken several self-help measures that should boost resilience in the future. Buy.
MIDAS SHARE TIPS UPDATE: Sales gush at Diversified Gas & Oil (DGOC) as expert snaps up neglected shale sites. Midas verdict: Diversified’s share price has risen nearly 60 per cent since mid-2017. That is an impressive run but it does not fully reflect the transformation of the business or its prospects. The stock remains attractive.
A gold mining veteran will take over at Petra Diamonds Ltd.(DI) (PDL) boss as the struggling miner seeks to dig its way out of a hole. South African-born Richard Duffy, former chief financial officer of AngloGold Ashanti, will become chief executive on April 1. He previously held roles at Anglo American and is running a renewable energy company in southern Africa that he also co-founded. Mr Duffy replaces Johan Dippenaar, who announced his departure last year after Petra was forced to raise £125m from investors to tackle its teetering debt pile. Tyler Broda, an analyst at RBC, said Mr Duffy “appears to be a very solid hire with 27 years’ experience in mining across a wide range of roles”.
Stock shortages following the collapse of wholesaler Palmer & Harvey hit profits at convenience store chain McColl’s Retail Group (MCLS) last year. Pre-tax profits fell by more than half to to £7.9m for the year to Nov 25, while like-for-like sales, which exclude store openings and closures, were down 1.4%. Total revenue rose 8.1% to £1.24bn driven by the acquisition of 300 Co-op stores in 2017. The stores account for about 30% of sales. Jonathan Miller, chief executive, said 2018 was “undoubtedly a challenging year” after Palmer & Harvey, which supplied 700 of its stores, fell into administration.
Hedge funds bet against Intu Properties (INTU) ahead of results. Hedge funds have ramped up their bets against under-pressure shopping centre owner Intu as it prepares to unveil a dramatic slump in the value of its properties on Wednesday. Analysts forecast the company’s net asset value – a key industry measure – will have tanked by around a fifth after landlords across the sector were battered by a wave of retailers going bust and shutting stores last year. Around 5.2% of its shares are now on loan to short sellers including Crispin Odey and Marshall Wace, the highest level on record and up from 1.9pc as recently as November.
Galliford Try’s Truscott urges long-term plan for new homes. The boss of one of Britain’s largest construction companies has called on the Government to offer more “joined-up thinking” and “less initiatives and soundbites” if it wants to solve the housing crisis. Peter Truscott, chief executive of Galliford Try (GFRD), bemoaned the country’s “very complex, very cumbersome and very slow” planning system, adding: “There is a little bit of initiative overload and what it really needs is a long-term plan to help delivery.” Building rates have rocketed over the past five years from historic lows, but the industry has faced criticism for racking up booming profits while still falling well short of the Government’s target of 300,000 new homes per year.
Former Barclays chairman Marcus Agius to appear in court over landmark fraud trial. Former Barclays (BARC) chairman Marcus Agius is expected to take the stand this week as a prosecution witness at the criminal trial of four former executives over the bank’s 2008 Qatari fundraising. The case, over the bank’s £11.8bn bail-out during the financial ­crisis, has been brought by the Serious Fraud ­Office. Mr Agius, 72, stepped down as ­chairman in 2012 after Barclays’ record £290m fine over its role in the Libor-rigging scandal. He is now deputy chairman of PA Consulting. Qatar largely bankrolled the emergency fundraising which helped the British lender avoid a UK bail-out following the collapse of Lehman Brothers in 2008.
Questor: a punt on Paddy Power Betfair (PPB) could net big winnings – but there’s a lot that could go wrong too. Gambling is going global and Paddy Power Betfair has £1bn in firepower. But watch the execution risk
The outgoing boss of Reckitt Benckiser Group (RB.) raised expectations that sales growth was set to pick up this year as he delivered his last set of annual results. The consumer goods group posted a 3% rise in like-for -like sales in the year to the end of December, after they rose 4% in the final quarter. Two per cent of the growth came from volumes and 1 per cent from the price mix over the year, with Reckitt saying that the growth in both its health and hygiene and home divisions balanced in the fourth quarter. The results come after Reckitt announced last month that Rakesh Kapoor, 60, would be stepping down as chief executive at the end of the year having been in charge for more than eight years.
Footasylum (FOOT) raced up the Aim junior market after the sportswear retailer JD Sports Fashion (JD.) snapped up an 8% stake and said it was in the business of buying more. The chain best known for its trainers leaped in value by as much as 70% as the stock market opened this morning after JD Sports said in a filing that it was happy to increase its holding in Footasylum to as much as 29.9%. Going any higher than this would mean that under takeover rules JD Sports would be forced to table a mandatory offer to buy the rest of the business. Footasylum was still more than 55% higher, up 16½p to 45½p in late morning trading, adding more than £15 million to its market value of £30 million as at the end of last week.
Citigroup hands Britain £1.2bn vote of confidence. Citigroup is close to agreeing a £1.2 billion deal to buy the skyscraper in Canary Wharf that houses its European headquarters. In what would be a striking financial commitment to Britain only weeks before Brexit, and one of the largest UK commercial property transactions on record, Citi is in advanced talks to buy the 42-storey Citi Tower, or 25 Canada Square, according to EG, a property trade publication. Banks are considering moving staff and assets out of the country amid concerns about Brexit, but the potential investment by one of the world’s largest banks underlines that they expect London to remain a global financial centre.
Germany objects to Shell’s rig disposal plan. Britain and Germany are at loggerheads over plans to let Royal Dutch Shell ‘B’ (RDSB) abandon oil platform legs in the North Sea. The Times can reveal that last month the government endorsed the oil major’s plans to leave the concrete legs of three platforms and the steel footings of a fourth at the Brent field, about 186km northeast of Shetland. It did so despite serious environmental and safety concerns raised by Germany, which claims that the British assessment process may be biased in favour of dumping at sea, according to documents obtained by Unearthed, the investigative unit of Greenpeace, the campaign group. The German environment minister has written to Michael Gove, the environment secretary, urging the UK to reconsider.
European Commission puts spotlight on Formula One deal. The European Commission is examining tie-ups between Formula One racing teams and big tobacco companies amid concerns from public health campaigners. British American Tobacco (BATS) and McLaren last week unveiled a global partnership before the 2019 championship next month. The sponsorship marked BAT’s return to Formula One 13 years after the sport banned tobacco advertising amid stricter international regulation. BAT, a constituent of the FTSE 100 with headquarters in London, is valued at £61.7 billion and generated £20 billion of revenue last year. Its cigarette brands include Lucky Stripe and Dunhill and its “potentially reduced-risk” brands include the e-cigarette Vuse and its Glo device, which heats tobacco instead of burning it.
Six face arrest in Patisserie Valerie accounts scandal. Up to six people face arrest over the Patisserie Valerie scandal, it can be revealed. Their names are highlighted in a report by the accountant PwC into the alleged fraud at the cake shop chain. They are said to have signed fraudulent cheques and sent emails discussing fabricating invoices. The revelation is the latest chapter in the biggest AIM scandal in recent memory. Patisserie Holdings (CAKE) collapsed into administration last month, three months after discovering a £40m hole in its accounts. Trading of its shares was suspended in October and it was revealed that cheques worth millions of pounds had been used to artificially inflate the company’s cash reserves.
Domino’s Pizza, led by David Wild, calls off annual awards day over fears of boycott. Domino’s Pizza Group (DOM) has been forced into an embarrassing climbdown as its store owners grow increasingly disgruntled over profits. The FTSE 250 company has written to franchisees to announce that it will cancel its annual awards day in April, after almost all its shop owners said they would boycott the event. Domino’s said in an email on Friday that it was “disappointing” to hear there was “currently less appetite to celebrate as one team”.
Sainsbury’s boss Mike Coupe gambles on go-ahead for Asda deal. Consultants called in before watchdog rules on merger. Sainsbury (J) (SBRY) has drafted in consultants to help with the mammoth task of merging with Asda as it awaits a key ruling on the £14bn deal this month. Chief executive Mike Coupe is understood to have called in the management consultancy Bain before Christmas to work on knitting together 330,000 employees, as well as IT systems and disparate parts of the supermarket chains. The move underscores Sainsbury’s confidence in a favourable ruling from the Competition and Markets Authority (CMA), which is this week expected to reveal how many shops it will require Sainsbury’s and Asda to sell for the deal to be waved through.
Buyout firms circle WPP’s market research sleuths. Private equity titans are circling WPP (WPP) data company Kantar as the advertising giant prepares to sell a majority stake in the £3.5bn business. Buyout funds TPG, Apax, Bain Capital and Cinven are understood to have shown strong interest in Kantar. WPP said its adviser, Goldman Sachs, would send details to prospective bidders soon. The advertising giant announced plans last October to offload a majority stake in Kantar to a “strategic or financial partner”. The move is a key plank of a strategy, drawn up by chief executive Mark Read, that will lead to 3,500 job losses and 180 offices closing or merging across the globe.
Even De Beers knows diamonds aren’t for ever. The market in synthetic gems grown in laboratories is booming as the real thing becomes harder to find. Tiaan Boshoff has worked at one of the world’s largest diamond mines for years — but, like most of his colleagues, he has yet to see a diamond there with his own eyes. The burly engineer is among hundreds of staff who man trucks and crushers 1km underground at Petra Diamonds Ltd.(DI) (PDL) Cullinan mine in South Africa, digging out rock to be taken up and x-rayed. “Sometimes during the blast process the rock does disintegrate and it falls on to the ground,” said Boshoff over the roar of machinery. “They say when you see it, you will know it.” Extracting diamonds from the earth is arduous and expensive, and for the workers who scurry deep below ground at Cullinan, near Johannesburg, a growing threat is challenging the centuries-old way of doing things: technology. Synthetic diamonds can now be grown in a lab within weeks, with much lower costs than mining and much higher profit margins. That has triggered a rush of start-ups producing cheaper, lab-grown gems that look the same as natural diamonds to the naked eye — raising questions over marketing, consumer behaviour and the future of the industry.
A trio of former Barclays (BARC) bankers shared almost £160m in pay and bonuses over seven years while a key interest rate, Libor, was being rigged, it can be revealed. Mike Bagguley, Eric Bommensath and Harry Harrison shared the sum between 2005 and 2011. The fixing of the interbank rate saw three junior traders jailed. The disclosure of their pay came through the efforts of Jay Merchant, a former Barclays trader who was jailed for 5½ years in 2016 for rigging the interest rate benchmark. He is seeking to clear his name. The three bankers were Merchant’s superiors; Bagguley was his supervisor. Merchant, 48, who served half his sentence before being extradited to India — the country of his birth — has accused Barclays and the Serious Fraud Office (SFO) of sharing a common goal: “To cover up the truth and deflect blame on to a handful of low-level traders.”
BT slammed by Frank Field MP for refusing to accept pension rulings. BT Group (BT.A) has come under fire for seeking to appeal against two court rulings that stopped the telecoms giant making changes to its pension scheme, writes Ben Woods. Frank Field, chairman of the Commons work and pensions committee, said he was “appalled” that BT was trying to overturn the decisions. About 88,000 members could be left worse off financially if the company succeeds. In December, the Court of Appeal ruled that BT could not change the measure of inflation used to calculate increases for its Section C pension scheme. BT wants to switch from the retail price index to the consumer prices index. RPI tends to be higher than CPI, but is no longer considered a national statistic. BT also lost a High Court case against the Treasury in November. It had wanted to prevent changes that mean it will have to pay more money to some of its defined-benefit pension scheme members to shield them from inflation.
OnTheMarket plc (OTMP) looks as if it might soon get the keys to a bigger market value. The upstart rival to Rightmove and Zoopla, which listed on AIM last year, is ramping up plans to turn a profit. The estate agent-owned company boasted this month that it had delivered more than seven times as many phone and email leads as this time last year. Its secret? Offering free listings under introductory offers to get agents to make the switch from Rightmove and Zoopla. OnTheMarket has now signalled that it will start converting new customers into fee-paying subscribers. The shares closed on Friday at 106.5p, valuing OnTheMarket at £65.7m. It made sales of £7m in the six months to the end of July, losing £5.7m. If it can prove it can turn a profit, there should be value ahead. Buy.
Royal Bank of Scotland profits double but chief warns over Brexit slowdown to economy. Royal Bank of Scotland Group (RBS) chief executive Ross McEwan today issued a stark warning about the risks to the economy from Brexit, even as he unveiled a massive dividend hike, of which £1 billion will go to the government. McEwan, the Kiwi who can be credited with rescuing a bank destroyed by Fred Goodwin, said: “It is clear that the economy is slowing. That will start to be felt. We are starting to feel it.” McEwan said the Bank of England, not usually regarded as overoptimistic, could be underestimating the hit to the economy, since big companies have been holding off investment for at least the past year. “If this goes on for a long period of time we’re going to see the economy slowing down more than the Bank of England suggested,” he added. RBS saw profits double in 2018 to £1.6 billion. It is paying a final dividend of 3.5p a share and a special dividend of 7.5p a share, far higher than City analysts had pencilled in and £1.6 billion in total.
Stobart Group claims victory in High Court battle with Andrew Tinkler. Logistics firm Stobart Group Ltd. (STOB) on Friday welcomed a high court judgement which it claimed left it victorious in a fight with rebel shareholder Andrew Tinkler. A judgement was today announced after a hearing in November 2018. Stobart was suing ex-boss and 5.91% shareholder Tinkler, accusing him of conspiring to harm the firm. Tinkler had a strategy dispute with the board. Tinkler denied wrongdoing and counterclaimed, saying his dismissal and the result of a controversial AGM vote were invalid. Southend airport owner Stobart today pointed to a number of key findings in the judgement, including that the dismissal of Tinkler as a director was lawful. Judge Jonathan Russen also found Tinkler acted in breach of his fiduciary and contractual duties to Stobart in many ways, including criticising the board’s management and improperly sharing confidential information with retail tycoon Philip Day.
Premier Foods drops plans to sell off Ambrosia custard brand. Under-pressure Mr Kipling cakes maker Premier Foods (PFD) on Friday axed plans to sell off its Ambrosia custard brand for a possible £100 million. In a move that could disappoint some shareholders who have seen a tough three years at Premier Foods, the company today said talks with potential suitors for the custard and rice pudding division have concluded. The manufacturer said it has been in detailed discussions with a small group of potential buyers since New Year. However, it added: “The board has concluded that in the present business climate the [sales] process will not result in a satisfactory financial outcome.” When Premier Foods first announced it was eyeing a disposal in November it did not give a price. Analysts predicted it could go for £90 million or £100 million.
Millennium & Copthorne Hotels suffers Brexit-induced recruitment woes. Millennium & Copthorne Hotels (MLC) on Friday reported lower profits and warned Brexit is making it harder to hire staff in London. The FTSE 250 operator of hotels in areas such as Knightsbridge, Kensington and next to Chelsea football club said it has faced difficulties in recruiting EU workers in the capital. They account for more than half the firm’s London workforce. That is one of a number of headaches the hotelier is facing. It also pointed to UK wage rises, and competition from the growth of Airbnb. Kwek Leng Beng, the group’s Singaporean billionaire chairman, said: “The hospitality industry faced a range of geopolitical and global headwinds in 2018, many of which look set to continue in the current year.”
New Italian oil and gas legislation is continuing to cause havoc. This session it was the turn of Global Petroleum Ltd. (GBP), exploring in the country, to warn that the permits it has applied for will face delays. This week the populist Five Star Movement pushed through an 18-month suspension on offshore oil and gas exploration. While it shows it is serious about green issues it opens the government to potential lawsuits from energy companies. Global will now focus on its assets in Namibia. Chief executive Peter Hill said: “The publication by the Italian Government of a clear hydrocarbon plan would be a welcome development for all operators in the region although the coming 18 months is likely to be an uncertain period for the industry. “We are, to an extent, insulated from much of it pending the appeals process on our Applications and our objective will be to bring this court process to a satisfactory conclusion before the end of the moratorium on exploration activities.  “We still believe that the permits we have applied for contain good prospectivity and we remain of the view that in time our Italian assets could provide material upside for our shareholders. “Global intends to focus on the Company’s Namibian acreage where we are particularly excited about the prospects within our new Namibia Block 2011A, designated PEL 0094, located in the Walvis basin.”
RBS warns of Brexit damage despite profits more than doubling. Figure of £1.6bn means bank records second straight year of profit since 2008 state bailout. Royal Bank of Scotland Group (RBS) has said Brexit uncertainty has “gone on far too long”, despite posting better-than-expected full-year profits and declaring new dividends that will boost government coffers by £1bn. RBS’s chief executive, Ross McEwan, admitted the additional pressure of Brexit risks would affect the bank’s performance over the coming year and it may struggle to meet its target of getting costs below 50% of its income by 2020. “I don’t think I’m alone in saying that the political uncertainty around Brexit has gone on far too long,” he said on Friday. “Our corporate clients are pausing before making financial decisions and this, of course, is damaging the UK economy and will affect our income performance.”
Renewable energy will be world’s main power source by 2040, says BP (BP.). Annual energy forecast predicts record surge in wind, solar and other renewables. Renewable energy sources will be the world’s main source of power within two decades and are establishing a foothold in the global energy system faster than any fuel in history, according to BP. The UK-based oil company said wind, solar and other renewables will account for about 30% of the world’s electricity supplies by 2040, up from 25% in BP’s 2040 estimates last year, and about 10% today. In regions such as Europe, the figure will be as high as 50% by 2040. The speed of growth was without parallel, the company said in its annual energy outlook. While oil took almost 45 years to go from 1% of global energy to 10%, and gas took more than 50 years, renewables are expected to do so within 25 years in the report’s central scenario.
Patisserie Valerie saved in buyout backed by Irish private equity firm. More than 100 cafes and 2,000 jobs saved in Causeway Capital and AF Blakemore & Son deals. The Patisserie Valerie cafe chain has been saved from closure by a management buyout backed by an Irish private equity firm. Almost 100 cafes will be rescued in the deal, funded by Causeway Capital Partners. Another 21 Philpotts sandwich shops that were part of the Patisserie Valerie group have been bought by AF Blakemore & Son, the family-owned company which is the largest operator of Spar convenience stores in the UK. The two deals will save about 2,000 jobs. Patisserie Holdings (CAKE) – the listed parent company of the two chains – said they had been sold for £13m in total, a fraction of the £450m the group was once worth. The company fell into administration in January, three months after a black hole emerged in its accounts which it blamed on “potentially fraudulent” accounting irregularities.
Ryanair says air traffic control problems will disrupt summer flights. Disruption due to strikes and staff shortages will be worse than last year, airline predicts. Ryanair Holdings (RYA) has said air traffic control strikes and staff shortages will cause record levels of disruption to holiday flights this summer. Strikes have already forced the airline to cancel several hundred flights this year in its quieter winter schedules. According to A4E (Airline For Europe), which represents the 15 biggest European airlines, there was a 53% rise in delays due to air traffic control staffing issues in 2018, forcing its members to cancel more than 5,000 flights last summer. Ryanair’s chief marketing officer, Kenny Jacobs, said that represented record disruption, but predicted even worse for 2019. He said air traffic control staff shortages were now the primary reason for flight delays and would aggravate the effect of strikes: “You don’t feel it so much now, but once you get into the summer I promise you the French air traffic controllers will go on strike in May … that will then be followed by the Italians. “You could have the Belgians taking industrial action more, and you also have the backdrop that they don’t have enough trained staff.” Jacobs said passengers would “be feeling that at weekends in the summer” and there was “a cost for customers not getting away for their holidays on time, but also for us in EU261s”.
Property group SEGRO (SGRO) raises £450m to fund new developments. Warehouse specialist benefits from booming demand from online retailers and data centres
Royal Bank of Scotland Group (RBS) to pay much bigger dividend than expected. Bank warns bad loans likely to increase in 2019 as political uncertainties bite.
Vodafone Group (VOD) drops PwC as auditor after Phones4U dispute. FTSE 100 telecommunications group chooses Big Four rival EY
Lloyds Banking Group (LLOY) names William Chalmers as CFO. Bank to pay £4.4m to replace Chalmers’ Morgan Stanley share awards
Premier Foods (PFD) calls off sale of Ambrosia custard unit. Indebted Mr Kipling maker says talks with potential buyers have been disappointing
Lombard – Patisserie Holdings (CAKE) ‘rescue’ leaves more than face lost. Deal saves 2,000 bakers and waiters, but already some 900 jobs have gone and 71 stores closed.
Interserve (IRV) eyes £66m risk of blocking restructuring deal. UK outsourcer would have to pay amount to banks if its debt-for-equity swap collapses
New drugs help AstraZeneca (AZN) sales rebound. Pharmaceutical group confident that ‘earnings, not just sales’ will return to growth
Restaurant Group (RTN) plunges after chief executive quits. Andy McCue, who was instrumental in Wagamama takeover, cites ‘personal circumstances’
Ashmore Group (ASHM) chief to cut stake below 30% after ‘creeping control’ row. Mark Coombs responds to negative commentary and will sell up to 4% of his stake each year
Patisserie Holdings (CAKE) rescued from administration. Management and Causeway Capital plan to keep open 100 stores in, saving 2,000 jobs
MONY Group (MONY) forms partnership with ING’s Yolt app. Price-comparison site signals new strategy with service on third-party platform