Sunday newspaper round-up: Brexit, BT, Lloyds, energy companies

24th Jul 2016 11:22

(ShareCast News) - Plans to allow the UK an exemption from EU rules on freedom of movement for up to seven years while retaining access to the single market are being considered in European capitals as part of a potential deal on Brexit. Senior British and EU sources have confirmed that despite strong initial resistance from French president François Hollande in talks with prime minister Theresa May last week, the idea of an emergency brake on the free movement of people that would go far further than the one David Cameron negotiated before the Brexit referendum is being examined. - The ObserverOfcom's chief executive Sharon White will attempt to allay fears the regulator has been too soft on BT Group's Openreach when it unveils tough new service targets and highly anticipated reforms to Openreach's £1.4bn cashflow next week. The watchdog is set to reveal a radically restructured BT Openreach on Tuesday, but will stop short of full separation, following months of backroom negotiations between bosses at BT and rival companies including Sky and TalkTalk. - Sunday TelegraphOfcom is expected to warn that BT faces a forced break-up unless Openreach dramatically improves service levels and is run more independently of its parent. Among the measures likely to be proposed by Ofcom is forcing Openreach, which owns much of Britain's high-speed fibre-optic broadband network, to create its own autonomous board. It may also propose blocking the company's staff from receiving share-based bonuses and order BT to give other broadband providers, including TalkTalk and Sky, easier access to its cable network and local exchanges. - Sunday TimesEnergy companies should make a profit margin of just 1.25pc on household bills, a fifth of the level made by the two biggest suppliers last year, the Competition and Markets Authority has said. Roger Witcomb, who led the watchdog's two-year investigation into the sector, said it was "appropriate" for suppliers to make only £12.50 pre-tax profit on a £1,000 gas and electricity bill, since "they don't make the stuff". - Sunday TelegraphEurope's biggest banks face stress tests this week that will expose the looming debt crisis in Italy's financial system. Monte dei Paschi di Siena, the country's third-biggest lender and the oldest bank in the world, is tipped to be among the worst performers in the financial health checks. - Sunday TimesBritain's two biggest drug companies will this week shrug off the impact of Brexit and confirm they plan to remain based in the UK. GlaxoSmithKline and AstraZeneca will say they have no plans to relocate, despite fears the pharma industry will be ravaged by the EU vote. - Sunday TimesSimon Walker, the director general of the Institute of Directors, wants to look on the bright side of Brexit. 'We are not doom and gloom merchants, I want to be as positive as we can be,' he says. But it is nevertheless difficult for him to avoid the fact that leaving the European Union creates a host of challenges for the businesses he represents. And one obvious one is staff. - Mail on SundayBritain's executive pay system is broken, top bosses should be paid less, and bonus schemes are too complex, some of the City's leading investors will say this week. A damning report into boardroom remuneration at the biggest companies on the London stock market will describe almost universal dissatisfaction among shareholders over a set-up that sparked a new wave of revolts earlier this year. - Sunday TelegraphLloyds Bank is poised to dash investor hopes of a big increase in its dividend payouts. Antonio Horta-Osorio, the boss of the bailed-out lender, will instead marshal his resources to withstand a possible downturn in the economy. - Sunday TimesThe activist investor that tried to break up the transport operator FirstGroup has waded into the growing shareholder dispute over the brewer SABMiller's £77bn takeover by its rival Anheuser-Busch InBev. Sandell Asset Management, the hedge fund founded by the Swedish billionaire Tom Sandell, is understood to have built up a small stake in the FTSE 100-listed beer giant SAB to join the growing ranks of activists on its shareholder register, some of which are intervening in the deal. - Sunday TelegraphA horde of City fund giants is cranking up the pressure on SABMiller to revise the terms of its £71bn sale to the owner of Budweiser, throwing into doubt the biggest takeover yet of a British company. The charge is being led by Aberdeen Asset Management, according to sources familiar with the discussions, with institutional investors demanding that SAB reconsider the cash element of Anheuser-Busch InBev's bid, which has dived in value relative to a cash-and-stock alternative because of the sterling crash. - Sunday TimesOne of London's best-known developers is to slash the value of a luxury homes scheme in Earls Court in the wake of the EU referendum. Capital & Counties (Capco) is expected to mark down the southwest London project by as much as 15% when it reports half-year results on Tuesday. - Sunday TimesOwners of restaurants and bars are overwhelmingly pessimistic following the European referendum result, according to research from consultants CGA Peach. The study revealed fears of a decline in consumer spending, as diners stay at home, leading to cuts in investment, compounded by staffing problems caused by Brexit. A survey of 800 leading business owners and directors in the sector by revealed that just 15% of operators were optimistic about the market for the next six months, much lower than the 75% who were optimistic at the start of the year. - Mail on SundayCasino operator Rank Group and online gambling operator 888 Holdings are in talks to create a £2bn gaming giant. Discussions between Rank, which owns Grosvenor Casinos, and 888, whose brands include Bingo Fabulous, are understood to be relatively advanced. - Sunday TimesProfit warnings spiked in the three months to June at their highest total since the peak of the financial crisis in 2008. Such alerts occur when stock market-listed companies revise their expected profits downwards and can be an indicator of expectations of worsening times ahead. The figures from accountancy firm EY show that one in ten of the warnings related to the uncertainty caused by the Brexit vote including fears over demand and a weaker pound. - Mail on SundaySir Philip Green is expected to come under renewed heavy fire on Monday in a scathing report by senior MPs who have spent the past three months investigating the "murky" collapse of the BHS retail chain. The joint select committee inquiry is expected to direct its scorn at the lack of care that Sir Philip, Arcadia's board and its advisers showed in deciding that a former bankrupt was the right owner of BHS in terms of safeguarding its future and dealing with the company's pension deficit. - Sunday TelegraphSir Philip Green's Arcadia Group has written to the former owner of BHS threatening legal action over the alleged misuse of £12m of company funds during the high street chain's takeover. The group alleges that Dominic Chappell's firm, which bought BHS for £1, failed to honour contractual obligations to pump money into the company, with concerns centring on £7m taken out of the business within hours of the takeover in March last year by the company run by twice-bankrupt Chappell. - Mail on SundayThe Japanese suitor for British technology giant ARM Holdings could face court action if it fails to meet promises to double staff numbers and keep its head office in the UK. The new powers will come into force for the first time when SoftBank files papers outlining commitments which will be overseen by a specially appointed independent supervisor and monitored by the Takeover Panel. - Mail on SundayNigel Wray, chairman of Saracens rugby club, and Stephen Hemsley, chairman of Domino's Pizza, will float a new franchise business this week, which they part-funded by selling slices of the £1.8bn pizza delivery firm. Franchise Brands is an umbrella company made up of three businesses offering mobile car paintwork repairs; oven cleaning; and house cleaning services. - Sunday TelegraphJaguar Land Rover has held talks with Ford and BMW over building a giant battery factory for electric cars in the UK. Executives from Britain's biggest car maker are understood to have met their American and German counterparts about collaborating on a plant with the capacity to power several hundred thousand vehicles. - Sunday Times Russian, Chinese and South Korean nuclear companies should be offered subsidy contracts to build reactors in the UK if they are cheaper than other projects already under development, a prominent nuclear lobbyist has said. Tim Yeo, the former chairman of the House of Commons energy select committee, said EDF's proposed £18bn plant at Hinkley Point, which is expected to get the go-ahead this week, should be allowed to proceed, but he urged the Government to rethink its approach to future projects. - Sunday Telegraph