Barclays (BARC) bosses have told investors to reject corporate raider Ed Bramson’s bid for a seat on its board as they prepare to meet the activist investor in New York. In the bank’s first formal letter to investors on the issue, chairman John McFarlane urged shareholders not to support the activist in a vote later this year. He said the board was confident in its strategy and believed it was “important to avoid a further period of significant disruption which we have only just freed ourselves”. Chief executive Jes Staley, who will sit down with Mr Bramson next month, added that it was still not clear how the top shareholder wanted the FTSE 100 lender to change and that he hoped to get “more depth”.
British Gas owner Centrica (CNA) sounded the alarm on payouts to shareholders as it revealed the company could come under pressure from potential hits to its cash flow this year. The FTSE 100-listed group’s stock price fell to a 20-year low after the energy price cap, introduced at the start of January, and challenging market conditions weighed on its performance. Centrica, which has lost more than two million customers in the past two years, is also facing declines in its nuclear output and a drop in volumes at its oil and gas division.
Shares in BAE Systems (BA.) fell sharply on Thursday following a warning that Germany’s attempts to block exports to Saudi Arabia could scupper its contracts with the kingdom and hit its financial performance. The German government is trying to stop weapons exports to Saudi Arabia following the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul last October and its role in the conflict in Yemen. Germany is one of the four countries in the Eurofighter Typhoon consortium along with Spain, Italy and the UK and export licences must be issued by each government.
The boss of Heathrow has come out in support of a Virgin Atlantic-led rescue of Britain’s biggest regional airline Flybe Group (FLYB). John Holland-Kaye believes a cut-price takeover by Connect Airways, a consortium that also includes Southend Airport owner Stobart Group Ltd. (STOB) and US private equity firm Cyrus Capital “could be a really positive move”. It would allow Virgin Atlantic to create a “hub” at Heathrow, he said, providing a “viable competitor” to British Airways owner IAG. Flybe’s 1p-a-share deal with Connect is under threat from a rival proposal, announced and rejected yesterday, from US airline Mesa Air and private equity firm Bateleur Capital.
A slowdown in Germany has overshadowed an otherwise positive set of half-year results for Hays (HAS). The UK’s biggest recruitment firm posted a 8% rise in net fees for the six months to Dec 31, with pre-tax profits up 7% to £112.6m. The dividend was up 5% to 1.11p a share. Alistair Cox, chief executive, said the results were “testament” to Hays’ strategy of global expansion over the past decade, with 80% of profits now coming from outside the UK. However, shares fell 4% as investors fretted over a slowdown in growth in Germany, its biggest market, which accounts for about a third of profits.
Serco Group (SRP) defied concerns over the troubled outsourcing sector after it reported a seven-fold increase in profits and raised its growth forecasts for next year. Rupert Soames, chief executive, said the company would grow ahead of the wider market for the next two years, boosted by a clutch of bumper contracts including a 10-year deal to house UK asylum seekers worth £1.9bn. The turnaround has raised the prospect that Serco could soon start paying dividends after scrapping them in 2014.
Go-Ahead Group (GOG), the under-fire operator of the Govia Thameslink train network, sought to draw a line under its railway woes after making bumper returns from its giant Southeastern franchise. The FTSE 250 company beat market expectations on rail profits and also impressed with the amount of money it was making on London buses. Half-year revenue rose 5% to £1.9bn. Pre-tax profit fell sharply to £44.2m after losing the London Midland franchise in December 2017, however. While Go-Ahead impressed the City, its rail business remains precariously placed. Chief executive David Brown said Go-Ahead “would make no money” this year on Britain’s biggest train franchise, Govia Thameslink.
Shares in Purplebricks Group (PURP) fell off a cliff on Thursday after it slashed sales forecasts and bid farewell to two senior bosses. The online estate agent said it was facing a “challenging” market in the UK and efforts to revive its fortunes in Australia and a marketing push in the US had failed to provide a big boost, meaning full-year revenues would fall short of expectations. They would now be between £130m and £140m, compared with a forecast of £165m to £175m in December. Purplebricks shares plummeted as much as 40% in early trade before stabilising at 115p, down 30%. They had already lost almost two thirds of their value in the past year amid concerns of a slowing housing market.
HSBC banking veteran to leave months after scathing memo. A top HSBC Holdings (HSBA) executive who was singled out in a scathing internal memo about the bank’s leadership last year is understood to be leaving the business. Robin Phillips, the co-head of global banking, was criticised in an internal letter sent to the group’s board last summer that called out the “utter failure” of leadership in the global banking and markets division. The memo, which claimed to be written by an anonymous group of “extremely concerned” investment banking staff, shocked the City when it was leaked. Sources told Sky News that Mr Phillips now plans to leave the bank, with his retirement expected to be announced today. The decision was said to be unrelated to the memo.
Sainsbury’s vows to fight on after watchdog throws Asda merger into doubt. Sainsbury (J) (SBRY) has vowed to fight on to clinch its takeover of Asda despite a damning report from the competition watchdog throwing the multibillion-pound merger into doubt. The Competition and Markets Authority (CMA) said it had “extensive” competition concerns over the proposed deal between Sainsbury’s and Asda, warning it could lead to higher prices and reduce quality in store and online. The merger could lead to a “poorer shopping experience” and a “reduction in the range and quality of products offered”, the CMA said. It also warned that the deal could result in a hike in petrol prices in around 100 locations in the UK where there are both Sainsbury’s and Asda petrol stations.
Flybe rejects attempt to gatecrash Virgin-led takeover. Flybe Group (FLYB) has rejected a last-ditch attempt to gatecrash its 1p-a-share sale to a consortium led by Virgin Atlantic. US airline Mesa Air and private equity firm Bateleur Capital made a rival bid to buy the ailing regional carrier. It was backed by Andrew Tinkler, Flybe’s second-largest shareholder and “other unnamed institutional shareholders”. However, Flybe dismissed the approach on Wednesday, calling it a “preliminary and highly conditional outline contingency proposal” and “not executable”. Sources said it was written on just two pages.
Sainsbury’s shares dive on ‘mortal’ blow to Asda deal. Mike Coupe’s future as Sainsbury (J) (SBRY) boss has been thrown into doubt after his planned £12bn mega-merger with rival Asda was crushed by the competition watchdog. Sainsbury’s shares tumbled by more than 18% after the Competition and Markets Authority said it had “extensive” concerns about the deal. Investors in Sainsbury’s were left reeling by the CMA’s findings, which were much harsher than the market had expected. The watchdog said combining the UK’s second and third biggest supermarket could lead to a “poorer shopping experience” and a “reduction in the range and quality of products offered”.
Laura Ashley sales slump sparks another profit warning. Ashley (Laura) Holding (ALY) has warned on profits yet again as sales slumped in the second half of last year amid “difficult trading conditions”. The soft furnishings and fashion retailer reported a pre-tax loss of £1.5m including exceptional items and said its performance for the second half would fall short of expectations. It was the fourth profit warning in just two years. The company pointed to an 11.8% jump in fashion sales, which include accessories and perfumery, although they accounted for less than a fifth of revenues, according to Hannah Thomson at GlobalData.
Acacia bolstered by Tanzania progress. Acacia Mining (ACA) long-suffering shareholders were finally provided some relief after the gold producer’s biggest investor made a breakthrough in talks to end its costly row with the Tanzanian government. Canadian mining mammoth Barrick Gold brokered an agreement that would force Acacia to share the spoils of its mines in the country on a 50/50 basis and pay Tanzania $300m for “outstanding tax claims”. Acacia has seen its earnings and share price plunge after the East African country banned exports of gold concentrate, alleging that it owed $180bn in unpaid tax.
Questor investment trust bargain: Herald Investment Trust (HRI) has had the same manager since 1994 and she has a habit of nurturing her holdings for the long term
