Pressure grows on Centrica (CNA) boss. Fears of dividend cut as shares in British Gas owner tumble. The boss of Britain’s biggest energy supplier is under growing pressure amid concerns that the company may have to cut its dividend. Shares in Centrica, the owner of British Gas, fell almost 12% yesterday to lows not seen since 2003 after Iain Conn said its profits and cashflow would be lower than expected this year due to the government’s energy price cap and problems in its oil and gas and nuclear divisions. He acknowledged: “Some people could conclude the dividend is under some pressure.” Mr Conn, 56, has presided over a 57% fall in the FTSE 100 energy group’s shares since taking over at the start of 2015. One leading analyst raised the question of whether the warning, alongside disappointing annual results, would prove to be the “last straw” for his tenure.
Death of Bruno Schroder raises questions for banking and fund management empire. The death of Bruno Schroder, patriarch of the family that controls the Schroders (SDR) fund management and banking empire, has raised questions about the long-term ownership and control of a company that manages £439 billion of assets. Schroder, great-great grandson of John Henry Schröder, who founded the business in 1804, died on Wednesday after a short illness. He was 86. Michael Dobson, the fund’s chairman, paid tribute to Schroder, who had served continuously on the company board since 1963. “Bruno made an enormous contribution to Schroders over more than 50 years,” he said. “He was passionate about Schroders and unwavering in his support for the company. His long experience, good judgment and sense of humour will be sorely missed.”
Germany’s Saudi export ban risks BAE orders. A German ban on arms exports to Saudi Arabia over the Jamal Khashoggi scandal could blow a £2.5 billion hole in the accounts of BAE Systems (BA.) and scupper a £5 billion order for 48 Eurofighter Typhoons, potentially putting thousands of jobs at risk. Shares in the British defence company fell nearly 8% yesterday, taking them close to 3½-year lows, because of concerns over contracts with Saudi Arabia, its largest customer after the British and US governments. BAE works with the German arm of Airbus on production of the Typhoon fighter jets and a third of components for the aircraft come from Germany.
Barclays delivers snub to Bramson as investment bank faith pays off. The management of Barclays (BARC) has strengthened its case against its activist investor by announcing expectations-beating results from its investment bank while its board made a unanimous call to block Edward Bramson from winning a seat. Shares in the lender jumped more than 3% yesterday before falling back after it posted a 26% increase in annual pre-tax profit in its corporate and investment bank, boosted by a 25% rise in income from the equities division. The results were better than most other European banks, which were badly hit by market turmoil in December. Jes Staley, Barclays’ chief executive, said the UK bank’s results reflected its commitment to the investment bank and improvements in its technology. It would be “irresponsible” to damage the franchise, Mr Staley, 62, said.
Flybe Group (FLYB) operations bought up. A consortium led by Virgin Atlantic, Stobart Group Ltd. (STOB) and Cyrus Capital, the American private equity firm, last night completed the purchase of Flybe’s operations. The bidders, who call themselves Connect Airways, have paid £2.8 million for the troubled regional airline’s aviation and digital operations. The Exeter-based airline is now a shell company with no subsidiaries and no major assets. The remaining cash will be used to cover rundown costs and shareholders will be able to vote on whether to receive 1p per share on March 4.
Go-Ahead Group gets back on track. Improvements in the performance of the ill-starred Thameslink and Southern Railway train services are helping Go-Ahead Group (GOG) to rebound from the loss of its London Midland franchise. Go-Ahead yesterday reported a 44% year-on-year fall in pre-tax profits for the half-year to December 29 to £44 million. This was mostly due to the Department for Transport’s (DfT) decision in 2017 to relieve it of the London Midland franchise, which runs services between Birmingham and the capital, but it took a hit from its Govia Thameslink Railway (GTR) services in the southeast. GTR and, specifically, Southern has been one of the causes célèbres of the crisis on the railways in recent years.
Relx unruffled by university revolt over its journals. Relx plc (REL) soothed investors yesterday, playing down the impact that a simmering revolt by some university libraries was having on its core scientific, technical and medical publishing division. The group, which runs exhibitions and provides online analytical tools to business clients and was formerly known as Reed Elsevier, reported a 6% improvement in operating profits to £2.35 billion for the year to the end of December. The scientific division at the heart of the dispute raised revenues by 3% to £2.54 billion and adjusted operating profit by 3% to £942 million.
Purplebricks Group (PURP) loses two bosses as US market proves a hard sell. An online estate agency has said that its chief executives in the United States and Britain are leaving and its overseas expansion is performing worse than expected, sending its shares down by almost a quarter. In an unscheduled trading update, Purplebricks said that it expected full-year revenue to be between £130 million and £140 million, against its previous forecast of between £165 million and £175 million. The shares fell by 39½p to 125p in London. The company cited lower-than-expected activity in the US and Australia as the reason for cutting its forecast.
SSP shareholder pay revolt over £6.2m Swann song. The boss of the airport and station food retailer SSP Group (SSPG) has suffered a shareholder revolt over her £6.2 million pay package as she prepares to leave in May after six years. Kate Swann, 54, has been paid a total of £22.4 million since she led SSP to a float in 2014. She holds shares worth £40.3 million. At its annual meeting yesterday, 33% of SSP shareholders voted against the remuneration report after the advisory groups ISS and Glass Lewis urged them to vote against “excessive payouts” and bonuses that are tied to one metric, the underlying operating profit. The company operates under 500 brands including Burger King, Starbucks and Yo! Sushi and its own brands such as Upper Crust and Caffè Ritazza. It employs more than 37,000 workers.
Serco chief Soames is turning the ship around. Five years after the near-death experience of Serco Group (SRP) in the first of the financial crises that have hobbled government services contractors, the FTSE 250 company appears to be in recovery. Serco reported a 40% surge in pre-exceptional trading profits to £93 million on revenues marginally down at £2.3 billion for the 2018 year. The results, alongside contract wins worth £2.5 billion for this year, as well as pledges by Rupert Soames, the chief executive, that profit margins should return to industry-standard levels of 5% early in the next decade, sent the shares up 6% to close at 121¾p, a two-year high. “This has been a long time coming,” Mr Soames, 59, said. The turnaround expert joined in 2014 after Christopher Hyman was ousted. Serco had overcharged the Ministry of Justice for prisoner contracts. “One of the lessons to learn when companies get into the sort of trouble that this one did is they are recoverable,” Mr Soames said. “But it does take time.” Serco’s two big contract wins were for the UK’s £1.9 billion asylum accommodation and support services and Australia’s £600 million defence forces healthcare scheme.
Brazil must be turning point for safety, urges mining boss Cutifani. Efforts to improve the safety of mining waste dams worldwide could be hampered by a shortage of independent experts, the boss of Anglo American (AAL) has warned. Mark Cutifani said he was confident that Anglo already had stringent “industry-leading” standards and independent checks on its dams. He backed calls for higher standards across the industry and an independent body to enforce them in the wake of the collapse at Brumadinho in Brazil last month. However, he warned there was “not a single group worldwide that has the expertise, or access to expertise, to do that job today”.
Rathbone fears for value of overseas funds after Brexit. The wealth manager Rathbone Brothers (RAT) has warned that Brexit could damage the value of its overseas funds. Mark Nicholls, its chairman, said that the lack of agreement about the UK’s future relationship with the European Union was creating “unprecedented levels of uncertainty”. Brexit will not bring big changes to Rathbone’s clients in the UK, he said. But “the impact of Brexit more generally could affect the value of our funds under management and administration,” Mr Nicholls, 61, added.
Gaming software provider Playtech (PTEC) believes buyback is best bet. The gambling software provider Playtech has slashed its dividend and instead pledged to buy back as much as €40 million of shares. Alan Jackson, 75, Playtech’s chairman, said it had decided to change the way it returned capital to shareholders after consulting with investors. Shares in the FTSE 250 company rose by 30¼p to 398½p after it announced the changes and it said it expects to post adjusted profits before tax and other items of between €390 million and €415 million this year, compared with €343 million in 2018. Playtech reported a halving of net profits last year to €123.8 million, hit by costs associated with its acquisition of Italian gambling operator Snaitech.
Micro Focus bosses got £40m payday. The software developer Micro Focus International (MCRO) has handed its current and former bosses a pay package worth almost £40 million despite management presiding over a halving of its share price. The six men, including Kevin Loosemore, executive chairman, received a combined £39 million for the 18 months to October 31 after the pay of four of them was boosted by share awards. The total also includes almost £5 million for Chris Hsu, who spent little more than six months as chief executive of Micro Focus before leaving last March, according to the company’s annual report published yesterday.
Kaz Minerals reaps the benefit of new copper mine in Kazakhstan. Profits at Kaz Minerals (KAZ), the FTSE 250 copper miner, rose 11% to $642 million last year thanks to increased output from one of its new mines in Kazakhstan. Kaz Minerals reported a 14% increase in copper production last year, to 295,000 tonnes, thanks to a ramping up of output from the Aktogay open pit mine. It said that production this year was expected to grow to about 300,000 tonnes. It also reported a 3% increase in gold and silver production last year.
Fears that Uber could be about to take a bite out of Just Eat’s market share spooked investors. Uber Eats, the online food-ordering company set up by the group best known for its taxi services, said it was cutting delivery fees and launching a marketplace service for restaurants looking to do their own deliveries. Just Eat (JE.) shares fell 35¼p to 699p as investors feared the move would create more competition in the restaurant food delivery market and push down prices. Uber Eats said it would open up its platform to 50,000 restaurants across the UK and Ireland as it seeks to capitalise on the growing food delivery market, which is expected to be worth nearly £10 billion by 2021. Liberum had a more positive take on the update than some investors. “What Uber Eats’ move does suggest is that they recognise their model is not working and that they are not gaining share,” Liberum said. “In that case, we think the more likely outcome is that Uber Eats decides at some point to acquire Just Eat.”
Miners were under pressure after copper prices fell back to their worst level in seven weeks on the back of weak manufacturing reports from France, Japan and Germany. Fresnillo (FRES) dipped 37p, or 3.6%, to 990½p, Glencore (GLEN) fell 10p, or 3.2%, to 300½p.
Hays (HAS), the recruitment business, slipped 6½p to 151¾p after it flagged slower growth in Germany, its biggest market, as well as a negative impact from foreign exchange movements.
Plus500 Ltd (DI) (PLUS), the spread-betting company which has been sold off heavily in recent weeks after a profit warning and an accounting error, found support for a second day. Odey Asset Management increased its stake again, from 16.2% to 18.2%, while Morgan Stanley raised its holding from less than 3% to 5.6%, according to regulatory filings. The shares climbed 56½p to 823½p.
Vitec Group (VTC), a company that makes equipment for television camera crews and broadcasters, climbed 70p to £11.95, after it reported a 20.8% rise in pre-tax profit to £51.2 million on the back of a 9.1% jump in revenue to £385.4 million. It also announced a 21% increase in its total dividend to 37p per share. Investec analysts said: “New products, acquisitions and developments have set the stage for further good growth in future and we believe that the mix of talents in Vitec should ensure reliable delivery.”
InnovaDerma (IDP), the developer of beauty, personal care and life science products, rose 5½p to 90p, after reporting better-than-expected second-half results, driven by new product launches and entry into retail chains including Boots and Tesco.
A London-listed Georgian bank jumped almost 10% after posting profits ahead of expectations and resolving a regulatory dispute with the local banking watchdog. TBC Bank Group (TBCG), which is Georgia’s largest retail bank, reported a 21.5% rise in full-year profit to 437.4 million lari (£126.3 million). Peel Hunt said this was 5% ahead of consensus forecasts, with the higher profits driven by improved margins and loan book growth. The bank said it had withdrawn its appeal related to the National Bank of Georgia investigation and that it would pay a fine of 1 million lari. It also said its chairman, Mamuka Khazaradze, had stepped down and it planned to restructure its supervisory board. The National Bank said: “This will have a positive effect on the transparency of the bank and will increase investor confidence.” Vakhtang Butskhrikidze, chief executive of TBC, said: “The Georgian economy continued to perform strongly in 2018 following the sharp recovery of 2017. According to initial estimates, GDP growth amounted to 4.8% in 2018, placing Georgia among the fastest-growing economies in the region.”
Tempus – JD Sports Fashion (JD.): Hold. Fast-growing, profitable retailer likely to benefit from cost-effective move into US
Tempus – Cineworld Group (CINE): Hold. Bold move into US will come through strongly in time
