The City watchdog has fined a leading fund manager £1.9 million after it charged thousands of investors despite not providing them with a service for five years. The move yesterday by the Financial Conduct Authority signalled a tougher stand on mis-selling by the fund management industry and should be regarded as a warning to others, industry experts said. Henderson Investment Funds was punished for levying fees on 4,700 customers. They had been led to believe that their money was being actively managed between 2011 and 2016, even though the funds in which they were invested were passively tracking the stock market.
A bar-room brawl between Britain’s best-known pub landlord and “corporate box-tickers” will come to a head at Wetherspoon (J.D.) (JDW) annual meeting today as Tim Martin squares up to the proxy voting agencies. The pub company’s chairman was hopeful last night of defeating a string of recomendations by the likes of Pirc and ISS that shareholders should oppose resolutions ranging from remuneration to his re-election. An unsually tight-lipped Mr Martin, 64, said that he had not seen the results of the proxy voting, but appeared confident that all the resolutions would pass. “I hope it would be by a decent margin, but I can’t say more than that,” he said.
The new chief executive of Kingfisher (KGF) admitted yesterday that it had been “trying to do too much at once” as the DIY retail group announced another quarterly slump in sales. Thierry Garnier, 53, who took over from Véronique Laury eight weeks ago, said that he would “stop or pause” several of his predecessor’s initiatives to stabilise performance and trading. He has been given the power to break up Kingfisher’s sprawling empire — comprising chains including B&Q and Screwfix in Britain and Castorama and Brico Dépôt on the Continent — if he sees fit.
Shareholders in Aviva (AV.) gave a lukewarm response to the insurer’s long-awaited strategic review yesterday, questioning whether its targets were stretching enough and the rejig radical enough to sweep away its reputation as the stock market’s perennial disappointment. Shares in Aviva were pushed lower to 403½p after it set out plans for a simpler structure with more accountable divisional heads, more disciplined control of costs and a greater focus on customer outcomes. Maurice Tulloch, 50, appointed chief executive in March, also announced plans for re-investing £1.3 billion in the business over the next three years, while holding or increasing the dividend and cutting debt.
SSP Group (SSPG) continues to generate plenty of cash, enabling its new boss to unveil the return of a further £100 million to shareholders alongside its full-year results. Simon Smith, who took over as chief executive of the transport caterer at the end of May, announced the latest cash payout — to be returned via a share buyback over the next 12 months — alongside a raised final dividend of 6p, making a total for the year of 11.8p, up by 15.7%. The £100 million comes on top of two special dividends in the past two years, one of £100 million and one of £150 million.
After five years of beating or meeting City expectations, Fevertree Drinks (FEVR) issued a profit downgrade yesterday — and its stock fizzed 8% higher. Shares of Fevertree Drinks suffered an initial 7.6% fall to £17.17, but quickly rebounded, hitting a high of £21.26, before closing at £20.04, an increase of 145½p, or 7.8%, on a rollercoaster day. Analysts said that after months of speculation that Fevertree would be forced to issue a profit warning, the downgrade to earnings forecasts of only 2 per cent to 3 per cent came as a relief. Edward Mundy, at Jefferies, the broker, said that the trading statement “could help clear the air”.
The chief executive of Taylor Wimpey (TW.) has sold almost two thirds of his shares in the housebuilder for £3.7 million, a week after warning investors to expect lower margins following a record year of profits in 2018. Pete Redfern, 49, disposed of 2.2 million shares, reducing his holding to about 1.5 million. A source close to the company said that he was selling the shares “for personal financial planning reasons” and was “committed to remaining chief executive” at Taylor Wimpey. His remaining shareholding is about three times his salary, so he is not in breach of company rules that mandate his holding should be at least twice his annual salary.
Direct Line Insurance Group (DLG) pledged yesterday to slash annual costs by £50 million a year through increased use of automation and self-service tools. Before a presentation to investors today, Penny James, who stepped up to be chief executive of the car and household insurer in May, said that she aimed to cut operating expenses to below £590 million, from £644 million. The company said that it was “too early to say” whether the programme would lead to job losses. It employs more than 11,000 people in the UK in dozens of centres including in Doncaster, Leeds, Manchester, Glasgow and Bristol. Ms James also promised that the years of heavy capital expenditure were over and that investment by the company would fall from about £175 million.
Britain’s largest listed technology company insisted yesterday that its strategic plan was on track after increased investment reduced annual earnings. Sage Group (SGE) reported a 13% drop in organic operating profit to £432 million, despite rising revenues, as investments in its cloud and subscription businesses took their toll. Steve Hare, chief executive the FTSE 100 software developer, said that he had set out a “very clear path” a year ago and that expectations on revenue had been “exceeded quite considerably”. Revenue rose 5.6% on an organic basis to £1.82 billion in the year to September 30. “In 12 months, we have made a lot of progress; in the next 12 months, we’ll make a lot more,” Mr Hare, 58, said.
The head of HSBC Holdings (HSBA) investment banking division is set to be replaced in the next few weeks and moved to a part-time advisory role. Samir Assaf, 59, one of the longest-serving investment bank chiefs in London, is expected to stand down after several setbacks. These include the hiring and abrupt departure of Matthew Westerman, a star dealmaker, and a leaked memo from employees saying that strategy had “utterly failed”. HSBC declined to comment on the proposed departure, which was first reported by the Financial Times. Noel Quinn, interim chief executive, is understood to believe that leadership needs refreshing, but is keen to keep Mr Assaf in an advisory capacity, possibly even elevating him to a new role of chairman of the investment bank.
Joe Lewis’s 27% stake in Mitchells & Butlers (MAB) is looking increasingly like a Premier League-winning investment. Shares of the All Bar One and Harvester operator, already up three quarters over the past 12 months, rose by another 24½p to 470½p yesterday as it continued to circumnavigate turbulence in the casual dining sector. The pub and restaurant group reported a 36% jump in pre-tax profits to £177 million in the year to the end of September, up 10.7% on an adjusted basis, from revenues 3.9% higher at £2.2 billion. Like-for-like sales for the year grew by 3.5%.
A Christmas postal strike could be back on after the Communication Workers Union said that it was launching an appeal against a High Court injunction won by the Royal Mail (RMG) to prevent its action. Royal Mail persuaded the High Court that a landslide vote for strike action by 100,000 workers, which could upset Christmas deliveries and postal voting for the general election, was unlawful. Seven days later, the CWU is appealing against that judgment. Royal Mail is the former state postal company privatised in 2013. It is trying to offset a chronic decline in letters caused by email, social media and the internet by beefing up its parcel deliveries in competition with newcomers such as Amazon, DPD and DHL.
Babcock International Group (BAB) believes that it has finally put to bed the curse of the Boatman. The company, which builds warships, operates helicopter fleets and offers support and training to the armed forces and the Metropolitan Police, yesterday reported half-year profits that were down year-on-year but were in line with City estimates. These had been rebased after a capital markets day with analysts and investors in the summer. The results enabled Babcock shares to consolidate about 25% above the ten-year lows plumbed in the summer.
