Monthly Archives: June 2015

NW Brown announces appointment of a new Deputy Chairman

The Board today appointed Mark Jeffries as Deputy Chairman of the NW Brown Group from 1st July 2015.

Mark said of his appointment:  “The NW Brown Group has always impressed me hugely. Its people are highly professional and the loyalty of its clients speaks volumes for the quality of their advice. I am really looking forward to applying my experience to help the board take the Group to the next stages in its development by building on such strong foundations”.

Editor’s note

NW Brown is the largest independent East Anglia-based financial services house. It operates in all areas of financial planning from retirement and inheritance tax planning for individuals through to advice on pensions and staff incentive and share schemes for employers. It is probably best known for its bespoke investment management service for private individuals, trusts and charities, which currently manages over £700m of client assets.

Mark Jeffries recently stepped down from his position as the National Senior Partner and Chairman of the Board of Mills and Reeve. He is now a consultant with the firm. He has spent over 30 years as a partner of that firm in different positions and locations. He was an elected member of the CBI East of England Regional Council, and is currently an External Adviser to the Department of Education on Free School applications and a director of the Norfolk and Norwich University Hospitals NHS Foundation Trust.


Points of View: Standard Life UK Smaller Companies and the tender offer

This week I am focusing on Standard Life UK Smaller Companies investment trust (SLS), the Board of which offered investors to tender up to 5% of their shareholdings in a highly unusual move.

A tender offer is a form of share buyback, where a company repurchases all or part of their shares from the market on a specified date and at a specified price, often at a premium to the prevailing market price. Among other reasons, the resultant reduction in supply enhances the value of the remaining shares in issue.

The UK Smaller Companies sector has had a difficult time of late, with investors withdrawing £1.2bn in aggregate from the sector over the past 12 months as concerns mount over the global economic outlook. For SLS, such challenging markets have resulted in the discount at which the share price trades to the value of its underlying assets (NAV) widening to 12%, compared with its one-year average of 7% at the time of writing.

Despite this, the Board has only now decided to tender the company’s shares. NAV returns have remained strong and, while wide relative to its own history, the discount compared favourably against its peers. Along with manager Harry Nimmo, who has a proven and consistent investment process, they remain positive on the outlook for UK smaller companies and interestingly neither the Board nor Mr Nimmo himself tendered their own shares.

The results of the tender will be announced on 24 July, and it will be interesting to see the extent that any take-up will have on SLS’s discount. 

Stocks in Focus: Vodafone

This week I am looking at Vodafone and the latest addition to their service offering. The telecoms giant has made its move into the consumer broadband market with “Vodafone Connect”, which will provide internet using the nationwide fibre optic network that they acquired from Cable & Wireless back in 2012. The focus will initially be on promoting the new service to existing mobile phone customers and ultimately to non-Vodafone customers later this year. They are also aiming to reach just over 20 million premises across the country by the end of summer 2015. In order to reach the homes of consumers, however, Vodafone will need to use BT’s Openreach network, which connects homes to the main internet exchanges.  Later this year, Vodafone will also begin to sell internet ­based television services. These new offerings add another string to Vodafone’s bow and the company joins rivals such as BT and Virgin Media that have already launched their so called “quadplay” services by offering packaged mobile, fixed line, internet and TV bundles to the market.

The company is also in initial talks with US company Liberty Global, Europe’s largest cable provider and owner of Virgin Media, about swapping selected assets in Europe. There has been a lot of speculation on the two companies joining forces to create a £100 billion telecoms group, especially after Liberty Global’s chairman John Malone’s comment last month about Vodafone being a “great fit” with their own assets. However, Vodafone recently made it clear that they are not in discussion concerning a combination of the two companies nor is there any certainty that a transaction will be agreed. 

Points of View: Bank Fines

Bank fines were back in the headlines last week following the publication of a study revealing that the total cost of litigation for the 16 biggest global banks since 2010 has now exceeded £200bn. Given the consistent stream of headlines in the UK press relating to regulatory fines, it is perhaps unsurprising that the UK banking sector accounts for approximately 25% of this figure. The latest news on this front is that Lloyds has been served a £117m fine for failings in dealing with complaints over their mis-selling of payment protection insurance (PPI). Furthermore, just last month, Barclays and RBS were fined £2.3bn and £1.3bn respectively for their role in the rigging of forex and other markets.

Some of these costs relate to malpractice and others to failings in service, but despite huge investment by the banks in their compliance departments, it appears that large litigation costs have by no means come to an end. As an investor one must consider how long, and to what extent, litigation costs will continue to be a factor in the sector versus how much is already ‘priced in’ to current share valuations.

Following last week’s article readers may be wondering whether Greece met its €300m loan repayment scheduled for last Friday. In the end it has been delayed until 30 June under an IMF rule which allows the ‘bundling’ of repayments payable in a certain month. The rule is intended to ease administration of multiple payments but for the Greeks this appears to be a political and tactical move to help further their argument for a more lenient bailout deal.

Points of View: Greece’s bailout talks stall

With a pending €300m loan repayment due on Friday, Greece’s chances of securing a vital €7.2bn in rescue aid stalled last week as Greek Prime Minister, Alexis Tsipras, accused bailout monitors of making “absurd” demands.  This statement comes days after the Greek government claimed an agreement was imminent and has caused uncertainty over Greece’s ability to make repayments.

Many believe that this rescue aid is essential if Greece is to meet the €300m repayment to the International Monetary Fund (IMF) on Friday, as well as the €1.2bn of repayments due to the IMF over the subsequent fortnight.  This belief led to large-scale withdrawals from Greek banks last week, with about €800m taken out in two days.

The IMF is just one of three bailout monitors, the others being the European commission and European Central Bank.  All three must sign off on the new reforms before any funds are released.  Mr Tsipras’ criticism seems to be directed at the IMF, which has taken the most severe stance of the three, particularly in regards to public sector pension cuts.  In the past Mr Tsipras has been accused of using similar public statements as a tool for negotiation, dividing the IMF from the perhaps more lenient European Commission.

Despite the public disagreement on repayment conditions, many creditors see Mr Tsipras as the best hope for a deal.  He personally intervened in February to extend the current bailout by four months.