Liam Fox has promised to protect the National Health Service in trade negotiations after campaigners warned that American plans would allow large multinationals to “run riot”. The international trade secretary said this morning that he was unsurprised by proposals announced by the United States for a post-Brexit trade agreement to get food including chlorinated chicken and hormone-fed beef on to British supermarket shelves. Appearing before MPs, he said that ministers could “potentially” endorse leaving the European Union without an agreement, even though it would be “hugely sub-optimal,” should parliament reject Theresa May’s proposed deal next week. Dr Fox refused to comment on reports that Britain would remove up to 90% of import duties under an “emergency tariffs” strategy following a no-deal Brexit, adding that the government had yet to decide when to publish its plans.
Mark Carney has urged the government to stop issuing inflation-linked gilts using the discredited retail prices index and to start using the consumer prices index instead. The Bank of England governor, a persistent critic of RPI, said that “the nettle does need to be grasped” after peers called for the chancellor to end the “absurd” use of RPI six years after errors were found in the way it is measured. Despite having lost its national statistic status, RPI is used to uprate roughly £400 billion of government debt and private finance initiative contracts. The interest on student loans is tied to RPI, as are rail fares. Although Mr Carney, 53, objects to the measure, he stopped short of endorsing a key House of Lords recommendation. Peers want RPI’s errors to be corrected, but the governor signalled that it was unlikely to happen because holders of index-linked gilts, many of which are pension funds, would suffer big losses.
Provident Financial warns shareholders against ‘flawed’ takeover offer. Provident Financial (PFG), the subprime lender, said that it had largely resolved regulatory issues hanging over the business and had a clear growth plan as it reiterated its rejection of a hostile takeover from a smaller rival. The board said that the unsolicited all-share offer from Non-Standard Finance (NSF), which is run by its former chief executive, was not in the best interests of Provident’s shareholders and had significant flaws. Non-Standard Finance made its all-share offer last month and has the support of more than half of Provident’s shareholders. It believes that the takeover would create a leading provider for people with poor credit histories and restore the confidence of regulators in Provident and Vanquis, its credit card business.
Brexit turmoil is putting carmakers ‘on death row’. Motor industry attacks lack of clarity amid Nissan job fears. Leading carmakers are “on death row” as they await clarity on Britain’s departure from the European Union, their executives complained yesterday. Bosses attacked the political furore over Brexit as “not good enough”, warning that a no-deal departure would have dire consequences for generations to come. Their criticism came amid rising fears for hundreds of jobs at Nissan’s Sunderland plant after reports that the company could reduce shifts. BMW also said that a no-deal Brexit would imperil British production of the Mini. On the first day of the Geneva Motor Show, Bentley Motors said that a disorderly Brexit would “seriously impact” its ability to turn a profit. Toyota predicted that three days of border disruption would force it to halt production. The motor industry employs about 856,000 staff in the UK and generates 12 per cent of Britain’s total exports.
We’ll be hot-footing it back to FTSE 100, vows confident GVC Holdings (GVC). The gambling operator behind Sportingbet, Ladbrokes and Coral has bullishly predicted that it will bounce back rapidly from its impending eviction from the FTSE 100. Unveiling a strong set of 2018 results, GVC Holdings, which is set to drop out of the index of Britain’s leading quoted companies this month after a period of weak share price performance, insisted that it had performed “ahead of expectations and materially ahead of the market”. Kenny Alexander, 49, GVC’s chief executive, said that although the company’s share price had performed better than most of its peers, it was “significantly undervalued” — and he offered to bet The Times £10,000 that it would return to the blue-chip index within six months. “Form is temporary, class is permanent. We’re delivering and we’ll be back,” he said. Comparing its full-year results to those of the rival William Hill last week, he added: “If it was a boxing match between William Hill and GVC, the referee would have stopped it by now. We’re blowing them out of the water.”
Sainsbury’s sales are stuck in reverse. A further fall in sales at Sainsbury (J) (SBRY) has thrown a still sharper focus on the supermarket’s planned £12 billion merger with Asda. Sales at Britain’s second biggest grocer slid by 1% in the 12 weeks to February 24, with its market share falling by 0.5 percentage points to 15.7%, according to the latest data from Kantar Worldpanel, the market researcher. The figure compares with sales increases of 10% and 5.4%, respectively, at Aldi and Lidl, the German-owned discounters, and marks an acceleration from the 0.3% fall in sales that Sainsbury’s suffered in the 12 weeks to January 27.
Profit warning adds urgency to Debenhams’ restructuring. The pressure on Debenhams (DEB) to reset its business grew still further yesterday when the struggling department stores group issued yet another profit warning, its fourth since the start of last year. It said that a company overhaul that was likely to be “disruptive”, wider economic uncertainty and rising financing costs meant that forecasts issued as recently as January were “no longer valid”. In an unscheduled trading update, issued 45 minutes later than stock exchange filings are usually released, the retailer also announced a 5.3% slide in like-for-like sales for the 26 weeks to March 2. Investors reacted predictably to the news and the company’s already bombed-out shares fell a further 2.8%, or 0.09p, to 3.10p, valuing it at £38 million.
Elementis joins the rush to stockpile ingredients. A specialist chemicals company that makes ingredients for make-up and skincare products has begun to stockpile supplies in case of a no-deal Brexit. Elementis (ELM) said that it had taken steps to “pro-actively manage our supply chain to mitigate any potential impact” if Britain were to crash out of the European Union without a deal. The company is aiming to ensure that it has enough raw materials to use in its plant in Livingston, Scotland, and sufficient finished goods to supply its overseas customers. Only one of its twenty-one plants is in the UK and the company generates 96% of its revenues overseas, it said.
Direct Line insures itself for Brexit. Direct Line Insurance Group (DLG) has almost halved its special dividend to preserve a cash buffer in case of bumpy market conditions after a potential no-deal exit from the European Union. The motor insurer said that it had taken account of “the high level of political and economic uncertainty, including in relation to Brexit”, and considered it prudent to boost its solvency capital ratio, a key measure of balance sheet strength, to a higher level than normal. It still lifted its final dividend by 3% to 14p in line with business growth, but decided to cut its special dividend from 15p last year to 8.3p. The company has paid them for the past four years.
Phoenix flying high after £3.2 bn Standard Life deal. Phoenix Group Holdings (DI) (PHNX) is “open for business” after its £3.2 billion acquisition of Standard Life Aberdeen’s insurance business last year, its chief executive has said. Clive Bannister, 61, said that it was interested in doing more deals. “We believe there are enormous numbers of transactions [in the market],” he said. Phoenix estimates that £540 billion of people’s savings is tied up in books of business that insurance companies no longer have open to new customers. Of that, about £380 billion is believed to be in the UK.
Wood flips £11m behind Gocompare’s new service. Sir Peter Wood has taken an £11 million bet on Gocompare.com Group (GOCO) because he believes in the potential of Weflip, its new automatic switching service. The insurance entrepreneur, who chairs Gocompare, said that he had acquired 17.8 million additional shares, raising his stake in the comparison company from 25.7% to 29.9%, just below the level at which he would have to make a full takeover bid for the company. He said yesterday: “My share purchase underlines my view, which is shared by my fellow board members, that the current Gocompare share price does not fully reflect the operational and strategic momentum in the business. I’m particularly excited about our Weflip brand and the potential opportunities it offers.”
Watchdog has guarantor loans in its sights. Guarantor loans are “in our sights”, a senior Financial Conduct Authority official said yesterday as the regulator separately confirmed a crackdown on rent-to-own retailers. Christopher Woolard, director of strategy and competition at the FCA, said that he had heard anecdotal evidence that guarantors of these high-interest loans increasingly were being called on to pay off the debts. He also was concerned that loan rates might be too high. “If the guarantor is themselves highly creditworthy, then why are the rates set in the way that they are?” he told The Times. Guarantor loans are a fast-growing corner of the sub-prime lending market, in which people with impaired credit histories borrow at about 50% a year by getting family members or friends to agree to guarantee the loan and to step in to repay it if they default. Amigo Holdings (AMGO), which was floated last year with a £1.3 billion price tag, and Non-Standard Finance (NSF), which is trying to buy Provident Financial, are two of the biggest providers.
Vodafone called-in with some much-needed good news to its investors yesterday. The telecoms company unveiled a financing plan for its acquisition of Liberty Global’s cable networks in Germany and eastern Europe, which will help to expand its reach in the region while avoiding an increase in its €32 billion debt and mitigating any dilution of shares. Vodafone Group (VOD) said that it would raise €4 billion through issuing convertible bonds, which would be repaid in shares instead of cash, meaning that they won’t be categorised as debt — something that would have damaged the company’s all-important credit rating. Voda also cited the potential for it to buy back shares in order for it to limit any dilution for shareholders.
NMC Health (NMC), the Middle East-focused private hospital operator, rose 82p to £29.38 after it said that it had agreed a joint venture with Hassana Investment Company, part of the General Organisation for Social Insurance, Saudi Arabia’s largest pension fund. The venture is designed to help NMC to increase its expansion in the region. NMC will hold a 52% stake in the venture.
Genus (GNS) rose 58p to £22.44 after Liberum upgraded the stock to “buy” from “hold”. Its analysts claimed that an outbreak of African swine fever in China should be a positive for Genus, because the global pork industry would need to increase production to meet Chinese demand for imports and because the disease would accelerate the growth of commercial farmers in China, a core client of Genus.
W H Ireland Group (WHI) plummeted 27p to 37p after the stockbroker carried out a share placing to raise £5 million to comply with Financial Conduct Authority capital requirements. It also hit investors with a profit warning. “Trading conditions have remained challenging . . . and the directors do not believe that there will be any improvement before the end of the financial year or in the immediate future,” the company said. It forecast operating losses to be “substantially higher in the second half of the year” compared with the first half, when it reported a loss of £1.9 million.
Tighter safety regulations and a growing appetite for responsibly sourced food is fuelling growth at the world’s biggest product-testing group. Intertek Group (ITRK) reported an 8% increase in its pre-tax earnings last year after revenues jumped by 5% to £2.8 billion. The company, based in London, lifted its full-year dividend by 39% to 99.1p after putting in place a new policy to return half of its profits to shareholders. André Lacroix, chief executive, said that Intertek was benefiting from the “growing complexity faced by global corporations, higher quality and sustainability expectations from consumers and increased regulatory demand”.
Tempus – ITV (ITV): Avoid. Though it now has a considerably more diverse earnings profile, volatile advertising remains central
Tempus – Jupiter Fund Management (JUP): Buy. Shares are good value and there is bid potential
