Royal Dutch Shell ‘B’ (RDSB) has warned that slowing global economic growth is depressing oil and gas prices and could delay the completion of its $25 billion share buyback programme. Shares in the Anglo-Dutch oil giant sank yesterday after it said that prices were lower than it had planned for and could leave an $9 billion hole in its cashflow assumptions if they persisted. Shell issued the warning as it reported third-quarter results in which underlying profits, excluding one-off gains, fell by 15% to $4.8 billion because of the impact of lower prices and weaker margins in its refining and chemicals businesses. The group has said increasing its dividend would be dependent on a “line of sight” to completing the buyback programme. It indicated yesterday that a dividend increase now looked further off. Jessica Uhl, chief financial officer, said: “We are focusing on completing the buyback programme and then looking to grow dividend per share in the coming years.” Ben van Beurden, the chief executive, made an unscheduled appearance on a call with analysts to insist that “nothing has changed” in Shell’s plans or intentions. However, economic conditions had changed and “the current macro, if it persists, is going to affect us”, he said.
Profits at Lloyds Banking Group (LLOY) plunged after it took a further £1.8 billion charge for mis-selling payment protection insurance, taking its total bill for the scandal to almost £22 billion. António Horta-Osório, Lloyds’ chief executive, said that he was disappointed by the near wiping out of quarterly profit by the latest PPI hit, which had been generated by an unprecedented flood of claims before the August deadline. Lloyds PPI is the UK’s biggest ever mis-selling scandal and cost banks a total of £50 billion. Lloyds has borne the biggest cost for its clean-up, reflecting the fact that it was the biggest seller of the toxic product in the 1990s and early 2000s.
Goals Soccer Centres (GOAL) has admitted that its historic profit figures may have been overstated by up to £40 million after an investigation into its accounts. The five-a-side football operator has been in the stock market spotlight since March when its shares were suspended after an accounting inquiry by BDO. It was suggested that it owed £13 million in VAT. Goals said yesterday that its historic profit figures could have been overstated by up to £40 million. Details on the financial issues dating back to 2009 have been handed to the Serious Fraud Office. Goals alleged that it had uncovered the apparent creation of false fixed assets, false revenues, fake invoices and the wrongful payment of cheques to individuals associated with the company.
The CEO of BT Group (BT.A) has called on the next government to prioritise plans for faster broadband and dismissed concerns about nationalisation under a Corbyn administration. Philip Jansen said that BT was prepared to accelerate the expansion of full-fibre networks to help hit Boris Johnson’s target to connect all premises to networks offering “gigabit speeds” by 2025. However, BT was waiting to hear from ministers and regulators about its return on what would be a multibillion-pound investment that could threaten its dividend. There is new uncertainty surrounding the plans because of next month’s general election, the announcement by Nicky Morgan, the culture secretary, that she is standing down as an MP, and the search for a successor to Sharon White as head of Ofcom, the regulator.
The owner of British Airways has taken a €155 million hit from the first strike by pilots in the carrier’s history. Underlying operating profits fell 7% to €1.4 billion in the third quarter and the group warned that annual earnings would be 6% lower, according to accounts for International Consolidated Airlines Group SA (CDI) (IAG). Pilots downed controls in September in a dispute over pay, forcing BA to axe about 1,700 flights. Members of the BA pilots’ union had planned another strike at the end of that month but called it off to allow for more negotiations. Willie Walsh, IAG’s chief executive and a former Aer Lingus pilot, said that the company would not be providing a running commentary on talks but added that he expected a resolution before the end of the year. Mr Walsh, who has run the company and its predecessor for a decade and a half, said that he would step down within two years. “I’m 58 and I will not be in this job when I’m 60,” he said. The Irish executive, who joined BA from Aer Lingus in 2005, once said he would resign when he was 55.
Crest Nicholson Holdings (CRST) has issued a profit warning after a period of volatile trading that the housebuilder said was largely driven by Brexit-related consumer uncertainty. The company said that it expected to report full-year pre-tax profit of between £120 million and £130 million. That is down from the £176.4 million it achieved last year and below average analyst estimates of £152.9 million. The trading update sent the shares lower. The company said that it had written down the value of its London developments by £10 million across about five sites “to reflect current market conditions”. It has also recorded an exceptional charge of £17 million for remedial work that it expects to carry out after changes to government building regulations since the Grenfell tower fire tragedy.
The luxury trappings of tycoon life have been revealed in Mike Ashley’s latest accounts as they show billed his family £2.1 million for using the company’s private jet and helicopter. Sports Direct took delivery of a $51.1 million Dassault Falcon 7X corporate jet in 2016. Flight tracking data reveals that the plane has this year made trips to Miami, where Mr Ashley has a holiday home, Toronto and Glasgow. Carl Tennants, head of brand at Flannels, has posted on Instagram details of his “average day” flying between the company’s House of Fraser store in Glasgow and a football match at Newcastle United, which Mr Ashley owns. Accounts for Mash Holdings, which includes all the 55-year-old billionaire’s business interests. reveal that the company also spent £113,000 on matchday hospitality at Newcastle for Mr Ashley’s family. Mr Ashley’s son, Oliver, 29, caused a £500,000 hit to Mash’s accounts after winding down his grime radio station, Radar Radio.
The largest shareholder in Carpetright (CPR) has swooped on the flooring retailer to try to take it private in a cut-price £15.2 million deal. Meditor Capital yesterday tabled a 5p a share offer for the 70% of shares it does not already own. The move has backing from a quarter of investors because of fears that the alternative is administration. As well as building a 29.9% stake in the business, Mr Shakerchi bought out Carpetright’s £40 million of debt in September in addition to a £25 million loan he provided to help with working capital requirements.
The new boss of Smith & Nephew (SN.) plans to continue the turnaround strategy introduced by its outgoing chief executive, whose departure was announced suddenly last week after a pay dispute. Roland Diggelmann, 52, was appointed to replace Namal Nawana, who had been in the top job for 18 months. His exit surprised shareholders as Mr Nawana, 48, was in the early stages of attempts to drive improvement in the medical equipment company after years of sluggish performance. The company is consulting with shareholders on a new executive remuneration policy. A spokeswoman said last week that “there was too big a gap between Namal’s aspirations on pay . . . and what’s acceptable in terms of UK corporate governance best practice”.
Human rights lawyers have taken the first steps in a legal action against British American Tobacco (BATS) on behalf of almost 2,000 tobacco tenant farmers, including hundreds of children, from Malawi accusing the company of forced labour and child labour. The group, represented by Leigh Day, have sent a pre-action letter to the tobacco giant. The law firm said that if no satisfactory response was received to the letter “the case will be issued in the High Court in London”, as BAT has its headquarters in the capital. The farmers accuse the tobacco company of unjust enrichment, namely that it made huge profits from the leaves that were picked by the farmers who were effectively forced to work for very little pay and left no option but to put their children to work too.
Generic competition to a blockbuster anti-opioid treatment at Indivior (INDV) has wiped out half its market share and hit revenue and profit. Net revenue fell by 18% to $199 million and operating profit fell by 16% to $57 million in the three months to September 30. Indivior is a leading anti-addiction drugs company through its Suboxone treatment in the United States which is grappling with an opioid epidemic. Its dominance has come under threat after months of costly legal patent battles failed to stop generic competitors from launching and hitting its market share.
Capita (CPI) said it had renewed its contract with the Co-operative Bank to run its British mortgage servicing operation and support its digital transformation. The contract is worth £141 million over six years.
A note from Shore Capital on the betting and gaming sector, advising investors to sell shares in Flutter Entertainment (FLTR), failed to knock the stock. Although the analysts said they were encouraged by the momentum in the US sports betting industry, they saw this opportunity as already well reflected in Flutter’s valuation, but underrepresented in those of rivals William Hill and GVC.
Codemasters (CDM) said that it had extended its contract with Liberty Media to develop and publish the Formula One game at least until 2025 and potentially until 2027. The company has held exclusive rights to the console and computer game since 2008. Analysts at Liberum said the extension of the contract “highlights the increasing strength and value of this partnership”, noting that Codemasters would benefit from trackside advertising at Grand Prix.
Burford Capital (BUR) climbed 15p to 879½p. It had its bonds rated for the first time this morning in response to criticism. Moody’s rated its outlook as positive, which Numis said would open opportunities in the corporate bond market. “Burford still has some way to go to regain real investor credibility, but this is another step in the right direction,” Peel Hunt said. “We believe it can get there, that it will take time, and that there is good upside even on a base case.”
Tempus – Carpetright (CPR): Hold. Shares are trading below the takeover offer
