Besieged B&Q boss Véronique Laury faces axe. Kingfisher (KGF) mulls ousting Véronique Laury after ambitious plans fall flat. The board of Kingfisher is considering sacking its chief executive, whose costly strategy has failed to deliver any improvement in profits for the DIY conglomerate that runs B&Q and Screwfix. Véronique Laury set out an ambitious plan to consolidate Kingfisher’s unwieldy buying operations in 2016, saying it would help deliver £500m in extra profits within five years. Since then, however, the retailer’s cash reserves have been plundered and a raft of executives have departed. The share price of Kingfisher, which also owns Brico Dépôt and Castorama in France, has fallen by a third to 222.8p, partly weighed down by broader fears over the retail sector. The FTSE 100 index has risen by 15%. Andy Cosslett, the former InterContinental Hotels boss, inherited Laury’s “One Kingfisher” plan when he became chairman in 2017. Laury’s vision involves Kingfisher selling more of the same brands across its retail chains. Abandoning it would prompt questions over the value of owning multiple different fascias and could pave the way for a break-up of the company. B&Q and Castorama have performed poorly but that has partly been offset by the rapid growth of Screwfix, which analysts value at about £2bn.
Celebrities such as Steven Gerrard and Andrew Lloyd Webber sue HSBC Holdings (HSBA) for £100m over tax schemes. Hundreds of investors in controversial tax-avoidance schemes, including the impresario Lord (Andrew) Lloyd-Webber and football manager Steven Gerrard, have launched a £100m lawsuit against HSBC’s private bank, claiming it conspired to defraud them. A total of 248 wealthy and high-profile figures who put money into Ingenious Media schemes are suing the bank in an attempt to recoup losses after HM Revenue & Customs challenged their legality. The schemes promised investors tax relief by putting their money into British film and video game productions, with losses written off against their tax bills. Ingenious helped fund hits including Life of Pi, but it has been pursued by HMRC for years. Under the schemes, investors made a cash contribution and were lent money by an Ingenious company to make further investments.
Corbyn fears drove James Dyson’s move to Singapore. Fears over a Jeremy Corbyn government were pivotal to Sir James Dyson’s decision to move his corporate headquarters to Singapore. The vacuum cleaner tycoon sparked controversy last week when he revealed plans to shift his head office from Malmesbury in Wiltshire to the city state, citing a desire to “future proof” his £4.4bn empire. Dyson, a vocal backer of Britain’s exit from the EU, said the move had nothing to do with Brexit and was a logical step as he targeted the fast-growing Asian market. However, it is understood that Dyson’s concern about the growing possibility of a hard-left Labour government was a central factor in his decision to move the registered office to the low-tax jurisdiction.
UK growth eclipses ailing eurozone. The ailing eurozone has begun to trail behind Britain’s economy, even as Brexit uncertainty begins to bite, according to City economists. Official figures out this week are set to show that the currency bloc’s economy grew by just 0.2% in the final quarter of 2018 as Italy and Germany flirt with recession. City forecasters have pencilled in growth of 0.3% for the UK in the same period, down from 0.6%. Italy’s budget showdown with Brussels, the gilets jaune protests in France and the impact of a global trade war have fuelled a barrage of weak data in recent weeks. Figures on Friday showed that German business confidence is at its lowest since 2015, while private sector activity across the eurozone all but stagnated this month, according to IHS Markit.
Betting giants and Stars Group in merger talks. PaddyPowerBetfair and Stars Group, the owner of SkyBet, are said to have held secret talks over a possible tie-up that would have created a gambling giant worth £8.4bn. The two betting operators, responsible for brands such as SkyBet, PokerStars and FanDuel, are believed to have discussed a merger late last year — although talks are no longer said to be ongoing. Any deal would almost certainly run into competition issues, which could have halted the move. London-listed gambling operators are seen to be vulnerable to takeover interest as their shares have been hit by a government crackdown on problem gambling. William Hill, which plans to close 900 high street stores in two years after a purge on fixed-odds betting terminals, is said by analysts at Canaccord to be “ripe” for a takeover bid. Its shares have halved over the past year.
Outsourcer Kier in sell-off to cut debt pile after departure of Haydn Mursell. Outsourcer offloads housing repairs arm in race to raise cash. Kier Group (KIE) is close to selling its housing maintenance business as the embattled builder races to repair its balance sheet. The outsourcing company, whose chief executive Haydn Mursell left abruptly last week, is talking to bidders about the £240m-turnover division, which could fetch £20m to £30m. Kier has endured a torrid year and was forced to beg shareholders for £264m in November amid fears over its debt pile. The deeply discounted rights issue raised £250m after fees and was completed last month, but five banks and brokers that underwrote the cash call were saddled with Kier shares after only 38% of investors subscribed. Criticism from shareholders including fund manager Neil Woodford led to Mursell’s exit. He joined Kier in 2010 as finance director and ran the company from 2014, leading it on an acquisition spree. Chairman Philip Cox has stepped up to an executive role while Kier hunts for Mursell’s replacement.
Activist Luis Amaral fires broadside at vodka maker Stock Spirits Group (STCK). Tycoon stokes revolt against chairman of Stock Spirits. A Portuguese cash-and-carry entrepreneur is gunning for the chairman of Stock Spirits, claiming shareholders in the listed vodka maker should be handed a greater share of its profits. Luis Amaral’s investment vehicle, Western Gate, plans to use its 10% shareholding to rally other investors, urging them to vote against the re-election of David Maloney at the company’s annual general meeting on February 14. Western Gate has accused the board of failing to execute a “credible growth strategy”, highlighting the lack of meaningful acquisitions. It wants the company to return more cash to investors in the form of a special dividend, and also wants shareholders to vote against the re-election of senior independent director John Nicolson. “Stock Spirits needs to be run for the company, its owners, not its managers,” said Western Gate. “The board . . . continues to treat corporate governance as a box-ticking exercise while ignoring shareholders and overseeing a culture of group-think.” Stock Spirits, which operates primarily in Poland, the Czech Republic and Italy, hit back at the demands, claiming that Maloney and Nicolson had the “unanimous support of their colleagues on the board”. “We have made it clear that M&A [mergers and acquisitions] is an integral part of our growth strategy, and we continue to assess a range of opportunities to enhance shareholder value,” it said.
Auditor Grant Thornton faces grilling over failures that led to Patisserie Holdings (CAKE) collapse. Grant Thornton faces questions over whether it examined Patisserie Valerie’s accounting journals, which could have provided clues about the suspected fraud that brought down the cake-shop chain. The auditor may have failed to look at journal entries, according to someone familiar with a report commissioned by Patisserie Valerie from the accountant PwC. The journals show the names, dates and amounts of transactions. Grant Thornton audited the company until the discovery of a £40m black hole in its accounts, caused by “significant, and potentially fraudulent, accounting irregularities”, Patisserie Valerie said. Luke Johnson, who took control of the chain in 2006 and floated it on AIM five years ago, had about £170m tied up in his 37% stake. The chain went bust last week after failing to win a tussle with Barclays and HSBC over the deadline on a standstill agreement on two overdrafts. Just over 70 shops have closed with the loss of 900 jobs.
Shell to reveal gushing profits. Royal Dutch Shell ‘B’ (RDSB) is set to report bumper profits this week, driven by higher oil and gas prices and more efficient spending. Analysts have pencilled in annual profits of $20bn (£15bn) when it reports on Thursday, against $16bn last year, due to gains in its liquefied natural gas (LNG) and exploration and production divisions. Earnings are expected to fall in its retail arm. The Brent crude price was 15% higher in the final quarter of 2018, compared with a year earlier, while the European gas price rose 53% and Asian LNG prices by 3%. Analysts at Citi believe big oil companies can now afford to invest in projects while paying dividends to shareholders, even with oil at $50 a barrel. It currently stands at about $60.
New Unilever boss Alan Jope seeks to woo City after HQ debacle. The consumer goods titan behind Dove soap and Persil will seek to move on from the furore over its abortive move to Rotterdam when it reports full-year results this week. Unilever (ULVR) is due to report almost flat operating profits of €9bn (£7.8bn), while sales are expected to have fallen by 4.9% to €51.1bn, according to consensus analyst estimates. The results presentation on Thursday will be the first led by new chief executive Alan Jope. Jope, 54, is the former president of beauty and personal care, Unilever’s largest division. The Glaswegian stepped into the role on January 1 after Unilever’s humiliating U-turn over a decision to abandon its dual-listed structure and move its headquarters from London to the Netherlands. Shareholders lobbied for former chief executive Paul Polman to speed up his exit, accusing the board of failing to heed investor opposition. The company swiftly announced that Polman would retire.
Intu nears Derby shopping centre deal with Kuwait’s sovereign wealth fund. The debt-laden property giant Intu Properties (INTU) has entered exclusive negotiations to sell a 50% stake in its Derby shopping centre — a deal that would test the market for retail property, writes Sam Chambers. Intu is in talks with Cale Street Partners, an investor backed by Kuwait’s sovereign wealth fund. The deal would create a joint venture, with Intu receiving management fees from Cale Street. The two sides are said to be “quite close” to agreement. Intu bought the Derby centre, which is anchored by Marks & Spencer and Debenhams, from Westfield for £390.3m in 2014. Selling a stake would bring in much-needed cash for the company, also owner of the Trafford Centre in Manchester, which was the subject of a failed takeover bid late last year.
Hedge fund tycoon Jeremy Hosking will seek to oust Flybe Group (FLYB) chairman as the battle over a cut-price sale of the troubled airline intensifies. Hosking, a Tory donor and avid collector of locomotives, owns nearly 19% of Flybe through his fund. He wrote to the airline on Friday to requisition an extraordinary general meeting to remove Simon Laffin, Sky News reported yesterday.
Tony Pidgley, the £28m-a-year chairman of housebuilder Berkeley Group Holdings (The) (BKG), is used to riding the ups and downs. So it is no surprise that the 71-year-old sees the slowdown in London’s property market as an opportunity. Berkeley has quietly been buying up slices of prime real estate at a discount to be ready for a market recovery. Investors would do well to believe in Pidgley. Since founding Berkeley in 1976, he has earned a reputation for calling property cycles correctly — liquidating assets before the late-1980s housing crash, shifting resources into the centre of London in the 1990s, then pulling back from volume housebuilding before the 2008 financial crisis. UBS has a £46 price target on the stock, pointing out that its £860m net cash balance provides a strong buffer against Brexit-related troubles. The builder also has some high-value developments in London’s Millbank Quarter and Prince of Wales Drive, set in 2.5 acres of landscaped gardens. Additionally, Berkeley will now face less competition for sites as other mainstream housebuilders flee the market. The company is also promising about £280m a year in shareholder returns until 2025. Berkeley is fond of generous share buybacks. However, the full-year results for the year to April 2018 represented the peak of Berkeley’s current cycle, when it posted revenues of £2.7bn and pre-tax profits of £934.9m. Profits are expected to be 30% lower this year, as it plans for limited growth. Analysts at Berenberg bank have set a £34.50 target for the shares and think there are better opportunities elsewhere in the sector. With its bias towards London and the southeast, Berkeley is more exposed than competitors to any no-deal Brexit blow-up. And while housing stocks look cheap, the failure to secure a deal with Brussels could cause them to fall further. Nevertheless, Berkeley’s chunky returns — and Pidgley’s plan to explore building in Birmingham, where house prices are still rising — should reward investors who wait for the market to recover. Hold.
