Economics
Insolvency The number of firms going bust in England and Wales rose by
15 per cent to a five-year high in the three months to June as the economic
downturn forced increasing numbers of bars, clubs and property companies to
the wall. Some 3,560 firms were liquidated between April and June, up 15 per
cent on the same period last year, and the highest number since 2003.
Economists gave warning that the number was set to increase further.
Manufacturing activity Fears of a recession were heightened yesterday
as manufacturing activity fell in July for the third month in a row, and at
the fastest pace in nearly a decade. In a sharper drop than analysts had
forecast, the headline index of manufacturing activity from the Chartered
Institute of Purchasing and Supply fell to 44.3 in July, down from 45.9 in
June. This is the lowest reading since December 1998.
US unemployment jumped to a four-year high in July, its seventh
consecutive monthly increase, providing further evidence that the economy
could dip into recession in the second half of the year. The gloomy
employment data combined with disappointing second-quarter results
announcements from General Motors and NYSE Euronext, and rising oil prices,
to push down US stock markets.
Eurozone Manufacturing activity in the Eurozone fell in July at the
fastest pace in more than five years. The eurozone purchasing managers’
index for the manufacturing sector slid to 47.4 points in July, from 49.2 in
June.
US manufacturing activity fell slightly in July to the cusp of
contraction. The ISM Manufacturing Index fell 0.2 of a point to 50.0. A
reading above 50 indicates growth, and a reading below 50 indicates
contraction.
Banking
& finance
UBS, the embattled Swiss bank, yesterday accused a group of former and
departing executives backed by Goldman Sachs of orchestrating a “smash and
grab raid” that devastated the bank’s UK wealth management arm. The
accusations emerged at a preliminary High Court hearing of a
bitterly-contested lawsuit that exposed widespread discontent at the bank’s
UK wealth management operation.
JPMorgan, the American bank, will be the latest global financial
institution to abandon the City for Canary Wharf. Hammerson, the British
commercial property giant, announced yesterday that JPMorgan had pulled out
of talks to take a planned 90,000 sq m building on the St Alphage House site
in the City. It has had to write down £17 million in costs as a result of
JPMorgan pulling out.
FSA inquiry The Financial Services Authority (FSA) yesterday opened a
review of how investors deal with the rumours rocking financial markets,
after admitting that it had failed to find the culprits who destabilised
HBOS’s share price with false speculation in March. The FSA had launched an
investigation on March 19 after shares in HBOS plummeted 17 per cent within
an hour.
Alliance & Leicester Interim profits have been virtually wiped out
after the mortgage lender took a £209 million hit on credit-related Treasury
investments and as it grappled with higher funding costs. Pre-tax profits
for the six months to June 30 fell 99 per cent from last year’s £290 million
to just under £2 million.
The London Stock Exchange has unveiled a new list of tariffs that it
claims will make it the cheapest trading venue in Europe for heavy users.
The prices will come into effect on September 1, to coincide with the launch
of Turquoise, a trading facility that claims to undercut the LSE on price.
Carlyle, the US private equity group, has suffered a setback after it
was forced to liquidate its $600 million (£300 million) first and only hedge
fund because it had failed to achieve “critical mass”. The ill-fated Blue
Wave Partners Management was set up just months before the credit crunch hit
last year.
Construction
& property
Artisan, the property developer, expects results for the year to June
30 to be substantially below market expectations as a review of the value of
its land bank and investment property portfolio will have an adverse effect
on pre-tax profits. However, it said that full-year results would be only
slightly below expectations. Trading for its Rippon Homes division remained
challenging, it said.
Consumer
goods
Cains Beer said that its shares have been suspended from trading at its
request after it failed to reach an agreement on the renewal of its banking
facilities. On July 28, the Liverpool craft brewer and pub operator said
that it was in advanced negotiations with its bankers, Bank of Scotland,
regarding its funding agreement.
Engineering
BAE Systems, Europe’s largest defence company, is in “detailed
discussions” with Hindustan Aerospace over expanding its presence in India.
Mike Turner, the outgoing chief executive, said that BAE was hoping to
create joint ventures with Indian companies as part of its plan to expand in
the sub-continent.
General Motors The gloom surrounding the global car industry deepened
yesterday when General Motors reported a $15.5 billion quarterly loss, BMW
issued its first profits warning in many years and Nissan’s earnings fell
short of expectations. The three large carmakers are the latest in the
industry to report that they are paying a heavy price from stalling sales
and rising raw material costs, especially in the US market.
Ford Motor Company said that its US sales had fallen 14.9 per cent in
July on an unadjusted basis amid the downturn, especially sales of large
trucks and SUVs. Sales dropped to 161,530 vehicles in July, from 189,920
vehicles a year earlier, including all of Ford’s brands, the automaker said.
Health
GlaxoSmithKline An experimental treatment for leukaemia being developed
by Genmab, the Danish biotechnology company, and GlaxoSmithKline has proved
effective in a pivotal Phase III trial. The companies said that the result
demonstrated Ofatumumab’s potential to become a multibillion-dollar seller.
It could reach the market as early as mid-2009.
Industrials
Symphony Environmental Technologies, the maker of biodegradable
plastic, said that it has raised £140,000 by placing 3.5 million shares at
4p each to reduce the size of its debt obligations to Headstart Funds. The
company was unable to meet its obligations under an earlier agreement to
repay the outstanding loan capital and accrued interest to Headstart by July
30, 2008.
Leisure
Guoco Group, the Malaysian gaming company that has built an 18 per cent
stake in Rank, the casino and bingo operator, has pulled out of a £6 million
casino project in Wolverhampton at the eleventh hour.
Punch Taverns, Britain’s biggest pub company, has been criticised by
Unite, the union, over its plans to scrap the 27 employment contracts in
operation at its Spirit Group subsidiary and replace them with a single
contract. Unite claims the move will mean lesser terms and conditions for
many of the workforce.
Regent Inns, the embattled operator of Walkabout bars and Jongleurs
comedy clubs, announced the appointment with immediate effect of Jim Glover,
a non-executive director, as chairman, replacing Bob Ivell.
Media
ITV said that Granada America, its US production entity, has bought a
10 per cent stake in Electric Farm Entertainment, a digital studio, for an
initial $2 million. Granada America also has an option to take a controlling
stake at the end of 2008, the advertising funded broadcaster said.
Ten Alps, the media company, said that it has acquired Films of Record,
the television production company, but did not disclose financial details.
Films of Record’s team will immediately join Ten Alps’s two existing TV
brands, Brook Lapping and Blakeway, in their Kentish Town production
offices.
GfK, the German market research group, is continuing to pursue a cash
offer for its rival Taylor Nelson Sofres (TNS). Discussions about this
possible offer are progressing positively, the company said this week. GfK
is facing competition for TNS from WPP, the advertising and marketing
services group. WPP has made an unsolicited hostile offer of £1.08 billion
for TNS.
Natural
resources
Empyrean Energy said that electric logs run at its Sugarloaf Block A4
well in Texas have indicated “encouraging” gas shows. The Sugarloaf prospect
is operated by Empyrean’s partner Texas Crude Energy, a Houston
international oil and gas exploration and production company.
Retailing
Kingfisher, the owner of the B&Q chain, has sold its
underperforming Italian business for for €560 million (£441 million). Shares
in Kingfisher rose by 4 per cent yesterday after the news that the retail
group had signed a binding agreement to sell its Castorama Italy chain to
Groupe Adeo, a French DIY and hardware group.
John Lewis Sales at John Lewis, the department store group, fell by
nearly 5 per cent last week, ending a short recovery over the previous
fortnight. The department store put the 4.5 per cent drop in the week to
July 26 down to hot weather keeping consumers away from the high street.
Flying Brands, the home shopping group, said that its first-half profit
from ongoing operations more than halved as it announced that it will not
pay an interim dividend and remains cautious on the outlook for the
remainder of 2008.
Support
services
Petrofac said that it has secured a further contract from Khalda
Petroleum to provide engineering and procurement services for an additional
gas train in the Western Desert area of Egypt. The international oil and gas
facilities company said that it expects the new train to come on stream
towards the end of 2010.
Spice, the utilities support service provider, said that it has
proposed to subdivide its share capital on the basis of five new shares of
2p each for every existing share of 10p held. The company said that having a
larger number of tradeable shares with a lower value will help to improve
the liquidity of the company’s shares.
Technology
Yahoo! Roy Bostock, the chairman of Yahoo!, has rejected calls for his
resignation from shareholders who claimed that he had bungled the takeover
offer by Microsoft, the software giant. Speaking at Yahoo!’s annual meeting
in San Jose, California, yesterday, Eric Jackson, a shareholder who
represents a group of investors with 3.2 million shares, asked Mr Bostock to
step down.
Anite, the IT services company, has sold its public sector operations
to Northgate Information Solutions for £54.3 million cash, subject to the
settlement of a £3.8 million receivable owed by Anite and a working capital
adjustment. The company said that it will make a profit on the disposal of
about £28 million, but added that the deal is expected to be dilutive to
underlying group earnings over the year to April 2009.
Telecoms
Ofcom, the UK communications regulator, has launched an investigation
to see whether BT Group has abused its dominant position in wholesale call
pricing, following complaints by Thus and Gamma Telecom.
Transport
British Airways issued a profit warning yesterday after a collapse in
its earnings during the first quarter of this financial year. The airline
said that its pre-tax profits fell 88 per cent in the three months to June
30 due to rising fuel bills and the worsening economic environment. BA,
which earlier this week revealed that it was in merger talk with Spain’s
Iberia, has lowered its full-year profit forecast from about £600 million to
just above break even.
Utilities
British Energy The two biggest shareholders in British Energy rejected
EDF’s £12 billion takeover proposal on only one ground: price. Invesco
Investment Management and M&G between them own just over 22 per cent of
the nuclear group, giving the two fund managers almost enough power to block
the prospective French buyer between them.
Severn Trent said that it has decided not to appeal against the fines
of £35.8 million imposed by the Water Services Regulation Authority (Ofwat)
for deliberately providing false information in 2005-06 and for delivering
poor service to its customers.
