Blame game at Unilever
AS the British investor revolt against Unilever’s decision to shift its domicile to the financial backwater of Rotterdam gathers pace, the consumer goods company has sent out its big guns to defend the move.
Virtually invisible chairman Marijn Dekkers and British finance chief Graeme Pitkethly insist the move is what shareholders want because it creates a simpler, unified structure.
The approach follows the lead taken by Anglo-Dutch powerhouses Royal Dutch Shell and media colossus Relx in ending a dual- share structure. The latter chose to keep their main share quotation in London and the FTSE 100.
Unilever’s panjandrums seek to shift blame for the loss of a FTSE 100 quote on the shadowy advisory committee overseeing the index, which ruled it out.
In the interests of transparency, the FTSE 100 should reveal the names of those who reached the decision and the reasons why. In essence, the Unilever board seeks to shift blame elsewhere.
Dekkers says the new arrangements will make it easier to complete corporate deals such as last year’s demerger of the spreads arm. Truth is that having a London quote and being in the City is far more useful than Rotterdam. Britain attracts greater inward investment than any other country in Europe, and has the deepest financial markets. The investment banks are located here and so on. If flexibility for deal-making is what Unilever is really after then it has chosen the wrong place.
The Unilever chairman points out that 60pc of the enterprise is also run from London. Unilever insiders tell me that on current projections, with hygiene and beauty the great growth areas, within a decade some 75pc of turnover could be managed from the UK.
Several British funds including Aviva, M&G, Lindsell Train and Columbia Threadneedle have already signalled they will vote against the shift. Legal & General and Standard Life Aberdeen are leaning in the same direction. In a scheme which requires a 75pc majority of shares tendered, the hurdle is starting to look too high for Unilever directors to surmount, hence the assault on the FTSE 100. Unilever also needs a simple 50pc majority of shareholders which includes 35,000 private investors. If small shareholders want to have a say, they will need to unlock voting powers from platforms such as Hargreaves Lansdown and Barclays Smart Investor.
Shareholders must act urgently to reclaim their voting rights otherwise bureaucracy might render them powerless to keep Unilever on these shores.
Online winner
OF all Britain’s clothing retailers, Next sets the standard. Not only does it often outperform expectations, it holds little back. The usual feeble excuses about the wrong weather, Brexit and business rates are foregone in favour of hard numbers.
Other retailers would shrink from precisely quantifying the reasons for a drop in retail net margins claiming commercial confidentiality. Next breaks it down forensically noting among other things that increased pay rates were offset by a productivity rise.
The group’s smooth transfer of the majority of sales from stores to online has to be attributed to the cerebral style of chief executive Lord Wolfson. As the scion of a great retail dynasty, he has shopping and financial discipline coursing through his veins. There is little of the personality cult that many shopkeepers think is part of the job.
No wonder Next is the comparator that top Marks & Spencer management often refers to. It simply delivers, with profits just up at £311.1m in the first half of the year and the outlook upbeat for the rest of 2018.
A fascinating section of the half-year statement is an analysis of Brexit risks and the steps which have been or could be taken to offset them. It is suggested, for instance, that income from increased duties on goods imported from the EU could be used by the Government to offset tariffs which would raise prices to consumers. How much better it would be if other chief executives were less hung up on politics and more focused on finding answers.
Vaping revamp
NORMALLy a leadership change at a top five FTSE 100 company is high drama.
But not at British America Tobacco. Veteran Brazilian boss Nicandro Durante is being replaced with chief operating officer Jack Bowles who is tasked with growing BAT’s investment and exposure to vaping.
No hint of deserting London, even though almost its entire income is earned outside the UK.