Centrica (CNA) is set to slash its dividend and put its oil and gas business up for sale as chief executive Iain Conn attempts to revive the struggling British Gas owner. The strategy overhaul is Conn’s last-ditch attempt to revive the fortunes of the flagging energy giant. Its market value has fallen from almost £14bn when he joined in 2015 to £5.3bn, amid intense competition and turmoil in the utilities sector, leaving it in danger of demotion from the FTSE 100 blue-chip index. Conn has staked his reputation on a turnaround of the former state monopoly, with a plan to shift it from power generation to selling hi-tech services to households. However, Centrica’s “connected home” business, which sells smart meters and boiler insurance, lost £85m last year; its slow progress is understood to have caused consternation among board members.
ITV (ITV) is due to report a slide in advertising this week, despite attracting a record number of viewers for its reality television show Love Island. Half-year advertising revenues have slipped 6% to £837m compared with last year as uncertainty over Brexit weighs on demand, the broadcaster behind Coronation Street and The X Factor is expected to say. Shares in ITV, run by chief executive Dame Carolyn McCall, have fallen by 12% to 110.2p since the start of the year, as investors question how traditional companies such as ITV can compete with American streaming juggernauts such as Netflix and Amazon Prime Video. With a market value of £4.4bn, it is clinging to its FTSE 100 status.
A hostile takeover tussle in which accusations have been flying over leaks of inside information and promises of oversized bonuses is finally due to come to a head this week in a £14m deal. Science Group (SAG), a consultancy, is to win approval for its takeover of smaller tech rival Frontier Smart Technologies Group Limited (FST) after a pursuit that has bordered on the farcical. Science Group had accused Frontier of seeking to “frustrate” its proposal by urging shareholders not to take action, claiming that board members were awarding themselves oversized deal-related bonuses. At one point, Frontier’s adviser N+1 Singer disclosed inside information to Science Group’s adviser, Panmure Gordon, without its prior consent — forcing Panmure to resign from the transaction. After an initial rebuttal by Frontier’s board, Science Group went straight to shareholders — aggressively building a 43% stake in the company by offering 35p per share. It is this week expected to succeed in its takeover bid.
The chief executive of life sciences company BTG (BTG) was handed a bumper pay rise last year, as the FTSE 250 company prepares to fall into US ownership. Dame Louise Makin, who has transformed BTG from an odd collection of technology assets into a £3.3bn success story over 15 years, received £3.5m in salary, bonuses and long-term incentive payments last year, up from £2.7m in 2017. The increase comes a year after BTG suffered a revolt over pay, when 24.5% of investors voted against its remuneration report — taking issue with payments to the company’s former finance director, Rolf Soderstrom.
Promising results from a new ovarian cancer treatment mean the chief executive of GlaxoSmithKline (GSK) will avoid a walk of shame at Wednesday’s first-half results. The drug was acquired last year in a £4bn swoop on American company Tesaro that netted a collection of unproven cancer treatments — and drew criticism over the price paid. The 50-year-old former L’Oreal executive has staked her reputation on an overhaul that has seen her slash scores of drug programmes, sack 40% of her top managers, and announce a plan to split the FTSE 100 company in two. In only two years, Walmsley has done more to shake up Glaxo than her predecessor Sir Andrew Witty did in a decade. Yet the next six months promise to be her biggest test yet: Walmsley is desperate to rebuild Glaxo’s portfolio of cancer drugs, reversing Witty’s decision to offload oncology to Novartis in 2014, when he was criticised by some for swapping “cancer drugs for toothpaste”. She faces an uphill struggle to catch her competitors. Three new cancer drugs have the power to make or break her big plan. Last week’s positive test results are a sign her gamble is beginning to pay off — and have given the sceptics reason to be hopeful.
AstraZeneca (AZN) is expected to report strong sales of its new cancer drugs when it reports quarterly results this week, with treatments for lung cancer taking centre stage. Under chief executive Pascal Soriot, the Anglo-Swedish drugs giant has staked its future on respiratory, oncology and cardiovascular medicine. The company is expected to report sales of £5.6bn for April to June, its second quarter, up from £5.2bn in the same period last year, according to a poll of analysts. Pre-tax profits are expected to be £1.1bn, up from £1bn a year earlier. It comes after Astra was last week forced to set aside up to £12m to cover the redundancy costs of former employees at the collapsed Avlon drugs factory in Bristol, following revelations in The Times. Astra had sold the plant to pharma company Avara for £1 in 2016.
Unilever (ULVR) new chief executive Alan Jope is expected to underline his focus on “purposeful brands” when the consumer goods giant updates the City on Thursday. The Dove soap-maker is expected to report sales of €26.1bn (£24bn) for the first half of the year, compared with €26.4bn last year — €24.9bn excluding its spreads business, which it announced it was selling to KKR for €7bn at the end of 2017.
Capita (CPI) plans to launch a consultancy arm to take on rivals including Accenture, Deloitte and KPMG. The outsourcing giant is being overhauled by boss Jon Lewis, who is trying to shift it towards higher- margin technology work. The new division, which will employ about 1,000 consultants, will sell services including advising manufacturers on how to use artificial intelligence to speed up production lines. Lewis has taken drastic action since joining in January 2017. He scrapped Capita’s dividend, warned on profits and asked investors for £700m to repair its balance sheet.
Jeff Bezos used hi-tech gloves to wield giant robotic arms at last month’s re:MARS conference in Las Vegas. Amazon’s boss believes robots and people can exist together, despite fears they will eradicate humans from the world of work. Blue Prism Group (PRSM) is putting that theory into practice. By allowing robots to tackle admin such as processing customer orders, workers can get on with more creative and productive work — or so Blue Prism argues. That view has convinced some corporate giants, Lloyds Banking Group, eBay and Siemens among them, to sign up. Hype surrounding Blue Prism’s robotics boosted its shares by 70% between January and April, but they fell 30% last month amid fears that the company was losing momentum. While most software companies spend 20%-30% of total sales each year on acquiring customers, Blue Prism spends about 130%. A large slug of the £100m raised in February is going into sales and marketing. When the spend is that high, shareholders are right to pause for thought when customer growth fails to match analyst expectations. As one of three dominant players in a nascent market, Blue Prism remains uniquely positioned. Last year, only 3% of the market was penetrated, while the industry is expected to grow from about $1bn to $3bn by 2022. Panmure Gordon has set a price target of £24.25, claiming Blue Prism’s “superior growth profile should more than outweigh its near-term profitability”. Blue Prism may face competition from rivals UiPath and Automation Anywhere, but growth opportunities should keep sales advancing at a double-digit rate. Buy.
