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Seven Days: 10 January 2020

A round-up of the biggest business stories of the past week
January 9, 2020

Ofcom consultation

“Supercharge” investment

Ofcom has released its ‘Wholesale Fixed Telecoms Market Review 2021-26’, outlining plans for the regulation of BT (BT.A). The telecoms regulator seeks to “supercharge” investment in fibre broadband. Among its proposals, Ofcom will set wholesale prices for BT’s Openreach arm to encourage competition from new networks as well as investment by Openreach. It also plans to support investment by Openreach in rural areas. BT chief executive Philip Jansen said: “We welcome the direction of today’s consultation from Ofcom.” The group will continue discussions with government, Ofcom and the industry. BT’s shares rose 3 per cent.

 

Burford updates

Seeking US float

Burford Capital (BUR) has revealed management changes, including the appointment of Aviva Will and David Perla as co-chief operating officers. The litigation funder will continue to be managed by its existing management committee. Burford also said that it is now ready to undertake the formal process of seeking a US listing – albeit noting that the timing of this additional float is “difficult to predict”. The group also announced that plaintiffs have dropped a US securities class action filed against it last August, in the wake of Muddy Waters’ short report.

 

 

New car sales down

Third consecutive fall

UK new car registrations fell by 2.4 per cent in 2019, to 2.31m units, according to the Society of Motor Manufacturers and Traders, “as the turbulent market reacted to weak business and consumer confidence, general political and economic instability and confusion over clean air zones”. This marked the third consecutive year of falling annual registrations, with the 2019 market being the lowest since 2013 when 2.26m units were registered.

 

 

HS2 criticism

Lord Berkeley report

“Parliament has been seriously misled by the failure of HS2 Ltd and by ministers to report objectively and fairly on costs and programme changes”, according to Lord Berkeley, former deputy chair of the government’s review into the high-speed rail project. In a “dissenting report”, he wrote “HS2 is the wrong and expensive solution” to improving north-south intercity services and criticises a “significant lack of credibility of HS2 Ltd’s costs”. Allan Cook, chairman of HS2 Ltd, estimated last year that the project would cost up to £88bn in 2019 prices. Lord Berkeley’s report, however, puts the price tag at over £107bn.

Chief exec salaries

£901 per hour

According to research by the High Pay Centre and the Chartered Institute of Personnel and Development, in 2018 the average FTSE 100 chief executive earned £3.46m, or £901.30 an hour. The average (median)full-time worker received £14.37 an hour. The High Pay Centre said: “High pay will be a key issue in 2020 as this is the first year that publicly listed firms with more than 250 UK employees must disclose the ratio between CEO pay and the pay of their average worker.”

Activist trouble at Stock Spirits 

Special dividend?

Stock Spirits’ (STCK) second-largest shareholder has raised concerns about its corporate governance, after bosses at the alcoholic spirits group snubbed proposals for a special dividend. Western Gate Private Investments – which owns a tenth of Stock Spirits’ issued share capital – proposed a resolution for the group’s upcoming annual meeting that would see it pay out €0.1219 (£0.1037) a share in March. However, in its subsequent annual meeting notice, Stock Spirits recommended that shareholders vote against the resolution. Western Gate said the response represented a “major issue” for shareholders.

 

Retailer CVAs

Per Colliers International

Global real estate company Colliers International has found that since 2016, of 23 retailers that underwent Company Voluntary Arrangements (CVA), 13 have entered administration. David Fox, co-head of Retail Agency at Colliers, notes that the CVA “was designed to help struggling businesses and to avoid administration by lowering costs, rent roll, undertaking store closures and reducing staff numbers. However, it does nothing to address the high debt levels”. For many brands, “the CVA, therefore, fails and an administration will result”.