Sunday newspaper round-up: Vodafone, Carney, Housebuilders

A.B. | ShareCast | 01 Sep, 2013 16:49 - Updated: 07:50 | | |

Vodafone

Vodafone will avoid paying billions of pounds in tax on the sale of its stake in Verizon Wireless, the Sunday Times and other papers said. The sale of the 45% stake, set to be worth about $130bn (£84bn), is likely to be announced on September 3rd. The tax bill has been pared down from earlier estimates of up to $40bn to only $5bn but the use of offshore tax jurisdictions could revive uproar about Vodafone’s tax arrangements. Shareholders expect to get about £56bn with Chief Executive Vittorio Colao left with £25bn to spend on acquisitions, the Sunday Times said.

A group of economists has attacked Bank of England Governor Mark Carney’s forward guidance policy, warning it is based on a “flawed model” and risks “accelerating inflation or worsening boom-bust cycles”, the Sunday Times reported. Members of the “shadow monetary policy committee”, sponsored by the Institute of Economic Affairs think-tank, criticised Carney’s guidance on interest rates as ineffective and said it would delay necessary rate rises as the economy recovers. The public might also doubt the BoE’s ability to respond in time to developments, the economists said.

Shareholders in listed British housebuilders such as Bovis Homes and Persimmon are set for a windfall as companies boosted by the reviving property market and Government schemes return more cash to investors, the Financial Times reported. Data from Markit, the research group, shows dividends from seven UK FTSE 350 housebuilders are expected to rise 90% this year to as high as £285m. The forecast is up from £150m in the last financial year and could almost double again to £540m next year, the FT said.

British Airways and other airlines are working on emergency plans to divert planes and cope with higher fuel costs if there is a military attack on Syria, the Sunday Telegraph reported. Many long-haul airlines fly through or close to Syrian air space en route to other destinations and when linking up with Heathrow. Emirates, Etihad and International Airlines Group-owned BA all told the paper they were keeping operations under review and would make changes when needed.

DIY retailers such as Kingfisher-owned B&Q will get a boost from the housing market recovery as consumers spend on home improvements, the Sunday Express reported citing corporate health specialist Company Watch. After a wretched few years, UK DIY retailers, which also include Wickes and Homebase, could benefit from the halo effect as counterparts have done in the US, where Home Depot, had a 10% rise in like-for-like sales in its most recent quarter, Company Watch said.

Half of British retail chains are in danger of closure, an industry report will say on September 4th, the Sunday Telegraph and Mail on Sunday reported. The report by Bill Grimsey, the former chief executive of Wickes and Iceland, will say Britain’s high streets are in a “deep decline” and there is a “frustrating sense of policy being conducted in the margins”. Grimsey will recommend 31 measures to help retailers, including tax relief for those that occupy stores that have sat empty for a year or more.

Imperial Tobacco is paying $75m (£48m) for a stake in the Chinese company that invented the electronic cigarette, the Sunday Times said. The UK company will acquire the ecigarette division of Dragonite, which is listed on the Hong Kong stock exchange. Hon Lik, one of Dragonite’s co-founders, is credited with inventing the technology. Imperial is buying the company’s patents on ecigarettes as well as rights to any proceeds from legal claims against companies alleged to have infringed them. The ecigarette market is growing but Imperial has been slower at getting into the business than some of its rivals.

Sage, the software group, wants to tap into the “huge transformation” in online payments as it tries to double organic growth within three years, the Financial Times reported. Guy Berruyer, Chief Executive, said Sage would increasingly look to sell payments services to existing customers instead of chasing new customers. Berruyer rejected calls for Sage to sell the payments business to take advantage of high industry valuations. He told the FT: “We see [payments] as a core business . . . With each customer that has payments [with Sage], we have doubled our revenues.”

Dixons is expected to report a 6% increase in UK like-for-like sales for the first quarter, the Sunday Express reported. Demand for tablet computers and the collapse of rival comet have boosted business at the owner of Currys. The paper quoted Cantor Fitzgerald analyst Kate Calvert saying: “We expect first-quarter trading to confirm that Dixon’s core businesses have good momentum and the strategy is on-track.”

The UK was WPP’s fastest growing region in the second quarter of the year, the advertising giant’s Chief Executive Martin Sorrell wrote in the Sunday Telegraph. He said the success was mainly down to his company’s hard work and leadership in key markets but that economic recovery was playing a part. Chancellor George Osborne’s medicine of spending cuts seems to be paying off and, though GDP growth is still not strong, the economy is picking up. However, WPP’s main growth markets will still be in Asia, Latin America, Africa and other emerging markets.

A record amount of gold has been sold from British vaults as fears of financial turmoil recede, the Sunday Times reported. In the first six months of the year 797 tons worth an estimated $37bn was sold to foreign buyers, mostly in China and India, the paper said citing research by Macquarie. The biggest sellers this year have been exchange traded funds, which allow investors to buy into gold without physically taking possession of the metal. The closing price of gold on August 31st was $1,397, down a quarter from the high in 2011.

Investors have warned the Co-operative Group that it risks a rebellion if it does not start talking to its bondholders about its bank’s £1.5bn emergency recapitalization, the Sunday Telegraph said. Hedge funds holding Co-op Bank bonds have told the mutual company it is in “cloud cuckoo land” for refusing to talk to investors after unveiling a £559m loss at the bank. One fund wrote to Co-op bosses saying their behaviour was not fitting for a company in such a bad state. Bondholders have been told to write off some of their investments to help the Co-op raise the funds it needs to stay in business.

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Net long-term migration to the UK rose to 260,000 in the year ended in June, an increase of 182,000 since last year, the Office for National Statistics said on Thursday.

17:05 London Capital Group chairman buys 1.2% stake

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17:14 Europe close: Stocks mostly higher after German data, Draghi stimulus remarks

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16:36 FTSE 250 Movers: Transport surges, energy sector dips

Stagecoach saw shares surge after its 90%-owned joint venture with Virgin Rail won the contract from the Department for Transport to run the new InterCity East Coast franchise for eight years from March 2015.

17:10 Market overview: FTSE finishes lower after OPEC keeps output target unchanged

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16:13 FTSE 100 movers: Supermarkets fall amid Campylobacter outrage, energy stocks drop

The share price of UK supermarket chain Sainsbury was under pressure on Thursday after Shore Capital downgraded its rating from 'hold' to 'sell', saying investors should expect a "material contraction in profitability". The broker said it sees "few attractions in holding Sainsbury's shares". It expects a 30% "reset" in earnings per share and is forecasting three years of declines in Sainsbury's profits and dividends.

15:36 Charles Stanley swings to £3.9m first-half loss

Investment management firm Charles Stanley has reported a £3.9m loss for the six months to 30 September following increased costs during a period of static markets.

15:23 Smith & Nephew's chief executive Bohuon slams reports of Sanofi appointment

Smith & Nephew’s shares rose after chief executive Olivier Bohuon reportedly told employees he has no intention of leaving the company following speculation that he was taking the helm of Sanofi.

15:21 Mulberry poaches Celine's design director Johnny Coca

Mulberry appointed Johnny Coca as its new creative director more than a year after the departure of Emma Hill.

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