The Mail on Sunday
Energy group Centrica (CNA.L) is to enter the shale gas business as it looks to double the size of Direct Energy, its North American operation, to a turnover of 12.2 billion pounds within five years. Centrica is expected either to enter a joint venture or to acquire a company with the capability to extract gas from North American shale rock sites. Centrica currently has five million U.S. customers and is looking to invest around 1.5 billion pounds in the region over the next few years. Direct Energy chief executive Chris Weston said last month: “We are interested in shale gas. It is a phenomenon.”
NEW MORRISONS CHIEF SEEKS SIR KEN‘S COUNSEL
Dalton Philips, the new chief executive of supermarket chain Morrisons (MRW.L), has arranged a series of store visits with former chairman and major shareholder Sir Ken Morrison. Philips is undertaking a two-month review of the chain and is also expected to meet other major shareholders. Morrison recently voiced his displeasure at the departure of Marc Bolland, who is to become chief executive at rival Marks & Spencer (MKS.L) having spent just four years at the helm of Morrisons.
The sportswear chain JJB JJB.L has surprised the sportswear industry by putting its stock orders on hold only two months before a period of expected high demand during the World Cup in June. The new chief executive Keith Jones is attempting to restructure the company after a difficult 2009, and has begun a review of its buying programme. A person familiar with the matter claims the move will not affect orders for the World Cup.
The power struggle between two investors in the British miner Crew Gold continues, with the Russian steel company Severstal (CHMF.MM) asking for a special meeting to hire new directors which it hopes will reduce what it considers the overbearing influence of the Canadian investment bank Endeavour Financial. Endeavour holds a 43.2 percent stake in the company and has appointed three members of the board. Although Severstal holds a smaller 26.6 percent stake, its call for a meeting is backed by other investors.
Barclays (BARC.L), sponsor of the Premier League, is working on an agreement to refinance Liverpool Football Club, oust the current owners and give the chairmanship to British Airways’ BAY.L Martin Broughton. The bank’s investment banking arm Barclays Capital has been appointed to find a buyer. Barclays will also replace Royal Bank of Scotland (RBS.L) and Wachovia as the club’s main creditor, freeing it from its outstanding loans of 237 million pounds.
Lloyds Banking Group (LLOY.L) is holding discreet talks with various stockbroking firms, including Numis Securities, Evolution (EVG.L), and Execution Nobel on setting up a joint venture which would cement its presence in equity capital markets. A joint venture would allow Lloyds to make large profits through underwriting the equity market fundraisings of its clients. The state-backed bank’s attempts to headhunt brokers in recent month have provoked accusations of anti-competitive behaviour from independent stockbrokers, so collaborating with a broker is now Lloyds’ preferred option.
The chief executive of ITV (ITV.L), Adam Crozier, is seeking out potential programme makers to head the broadcaster’s production arm ITV Studios. The Channel 4 director of television Kevin Lygo and Talkback Thames chief executive Lorraine Heggessey have both emerged as possible candidates for the role. Crozier wants an incoming head of ITV Studios to produce popular new programmes that it can export.
Gem Diamonds (Buy)
The Sunday Telegraph
Vodafone (VOD.L) is to consult shareholders on the options for U.S. Verizon Wireless, Vodafone’s joint venture with American partner Verizon Communications. Options under consideration include a merger between Vodafone and Verizon Communications, which would create a company worth more than 120 billion pounds. Verizon is thought to favour buying Vodafone’s 45 percent stake in the joint venture, but heads of rival businesses believe that the merger is the most likely outcome. PROFIT WARNINGS AT LOWEST FOR DECADE BUT LIKELY TO RISE
In the first quarter of 2010, the number of profit warnings issued by British companies was at its lowest for a decade. However, accountant Ernst & Young warns that the figure is likely to rise in coming quarters as support measures are withdrawn from the economy. Fifty four profit warnings were issued in the first quarter of 2010, down from 117 in 2009. The warnings issued in the first quarter were largely from companies offering services to businesses and those in industrial sectors including engineering and electronics.
WHAT‘S MINE IS MINE
Leading investors in the UK’s largest mining companies have voiced concerns over recent calls for South African mines to be returned to black ownership. ANC Youth League leader Julius Malema said last week: “They have exploited our minerals for a very long time. We want the mines, now it’s our turn.” A leading investor in miners BHP Billiton (BLT.L) and Rio Tinto (RIO.L) said: “It’s the cost of doing business there. But clearly there could be a point when it could be less attractive to invest in South Africa.” BHP and Xstrata XTA.L both declined to comment.
Vedanta Resources (VED.L) (Buy)
ICAP IAP.L (Buy)
The Independent on Sunday
UK‘S BIG FIRMS WARN OF DANGER WITHIN NEW CORPORATE CODE
British Airways BAY.L, along with other UK businesses including Tesco (TSCO.L), Morrisons (MRW.L) and Sainsbury (SBRY.L) have warned that the obligation to hold annual re-election of directors that is to be included in the revised corporate governance code published next month could leave directors open to recriminations from disgruntled employees who hold shares in their employer. Alan Buchanan, BA’s company secretary, said that annual re-election would give labour groups the opportunity to “disrupt annual meetings”. BA is involved in a labour dispute with the union Unite over redundancies and changes to working conditions of its flight crew.
CHINA SEEKS ANGLO‘S ZINC ASSETS
The state-run China Metallurgical Corporation is among the bidders for the 800 million dollar zinc assets of mining group Anglo American (AAL.L). CMC is considered to be among the most favoured bidders because of the financial weight that it wields. Other potential bidders include private equity firms Apollo and First Reserve and mining groups Vedanta Resources (VED.L) and HudBay Minerals. The sale is being managed by banks UBS UBSN.VX and Goldman Sachs (GS.N). The assets are being sold as part of a streamlining of Anglo. Shares in Anglo closed up 73 pence at 2,979-1/2 pence on Friday.
Department store chain Debenhams (DEB.L) is to release a six-month trading update on Tuesday that is predicted to report a 14.3 million pound increase in pre-tax profits to 116 million pounds. David Jerry, a retail analyst at Investec (INVP.L) which made the prediction, said that better-than-expected trading has led to a large increase in gross profit margin. Investec is forecasting a full-year increase in pre-tax profits of 15.6 million pounds to 141 million pounds.
Trade body the Association of British Insurers has warned the shareholders of the Royal Bank of Scotland (RBS.L) that they will need to make a “careful considered judgement” before voting this spring on the company’s remuneration plans, which will include new bonus arrangements for chief executive Stephen Hester. Fellow British banks Lloyds Banking Group (LLOY.L) and HSBC (HSBA.L) will also soon be submitting potentially controversial pay reports to their shareholders. The ABI last week announced that it expects more remuneration packages to be rejected this year after it was revealed that five companies’ pay reports were rejected by shareholders in 2009.
Figures released by government department the Office for National Statistics show that 62.9 percent of private sector employees are not participating in an occupational pension scheme. This compares to an 85 percent participation rate among public sector workers. The figures have been described as demonstrating the government’s failure to encourage private sector workers to save for retirement by Lord Oakeshott, the treasury spokesman for British political party the Liberal Democrats. Business trade body the Confederation of British Industry last week voiced concern that public sector pensions are more generous than their private sector equivalents, making them unaffordable.