Economics
Correction Members of the Finance & Leasing Association, which
represents about 75 per cent of “second charge” lenders, reported that there
were 40,000 mortgage accounts in arrears, not repossessions as previously
reported (August 6).
Economic growth The International Monetary Fund cut its forecasts for
Britain’s growth and sounded a warning that the country faced two years of
economic pain. It also cautioned that the Bank of England had “little scope”
to cut interest rates to shore up growth.
Fresh food inflation The British Retail Consortium (BRC)-Nielsen Shop
Prices Index (SPI) revealed that fresh foods were 10.8 per cent more
expensive in July than a year ago and were up from 8.4 per cent in June.
Overall retail price inflation recorded by the BRC reached 3.2 per cent, up
from 2.5 per cent in June and the highest figure since the survey began in
December 2006.
German industrial orders Preliminary figures from the German Economy
Ministry showed that factory orders fell by 2.9 per cent in June. The
ministry also revised down the fall recorded for May to 1.4 per cent, from
an initial estimate of a drop of 0.9 per cent.
Chinese foreign exchange system China has revised the rules governing
its foreign exchange system to reflect rapid growth in its foreign reserves
and increasingly heavy cross-border capital flows. Chinese companies can now
retain forex income if they wish.
Japanese economy The Japanese Government’s composite index of
coincident indicators, which includes industrial production, retail sales
and other gauges, has fallen by 1.6 points and close to its lowest level
since the index was established in 2005. The drop in the index meant that
its official reading of the world’s second- largest economy has been
downgraded to “deteriorating”.
Oil market America’s top futures market regulator will be invited to
give evidence in London as part of an investigation by the Treasury Select
Committee into possible manipulation of the oil market.
Banking
& finance
Standard Life, the life assurer, reported half-year operating profits
up by 51 per cent to £534 million and said that its small shareholders will
receive a 7 per cent interim dividend increase after it lifted operating
profits on the back of strong sales growth.
American International Group announced a $5.36 billion (£2.77 billion)
second-quarter loss, from a $4.28 billion profit last time, after the
world’s biggest insurer was forced to take a writedown of more than $11
billion on mortgage insurance contracts and investments in home-loan related
assets.
Freddie Mac, the US mortgage giant, reported a second-quarter loss of
$821 million (£421.2 million), its fourth successive loss, against a profit
of $729 million last time. It plans to cut its dividend after growing
numbers of homeowners failed to make their loan repayments.
F&C Asset Management said that it had lost a further £1.9 billion
worth of institutional client business, blaming uncertainty over its
ownership caused by Friends Provident, its parent company.
Blackstone, the private equity group, reported a second-quarter loss of
$156.6 million, from a $774.4 million profit last time, and added that the
credit crunch was continuing to restrict commitments to new debt.
Old Mutual, the FTSE 100 life assurer, said that it had failed to hedge
against falls in Asian stock markets, leaving it nursing losses of £107
million.
London Stock Exchange Group said that trading activity had remained
resilient during July, driven by strong trading in UK equities, with the
combined value of trades up by 35 per cent to £263.5 billion, compared with
the same month last year.
Sigma Finance, the $30 billion structured investment vehicle, said that
the fund was solvent and paying its debts in full. The statement on its
website followed moves by creditors to appoint Deloitte, the accountancy
firm, and Orrick, the lawyers.
Collins Stewart, the London stockbroker, has received a takeover
approach, believed to be from an unnamed Asian bank. Confirmation that the
company was considering a possible offer is thought to have been made at the
prompting of the Takeover Panel after a sharp rise in the share price.
Construction
& property
Balfour Beatty said that its US unit had agreed a $206 million (£105.6
million) deal to provide a range of property services at the West Point
military academy, including the construction and management of 824
properties.
Barratt Developments, the housebuilder, said the final documentation
relating to the restructuring of its covenant package with its banks and
private placement note providers had been signed and had become effective.
Galliford Try, the construction group, said that it had secured four
projects worth £84.5 million to regenerate communities and build 671
affordable homes for rent and shared ownership in London.
Liberty International, the shopping centre owner, reported a 7.4 per
cent fall in its portfolio value to £7.99 billion and said that there were
no signs of a revival in the UK property market.
Consumer
goods
Jinro soju, the Korean grain spirit, has been named the top- selling
spirit in the world, with total sales of 72 million cases. The annual league
table by IWSR, the drinks industry consultant, found that 35 of the 100
bestselling brands by volume were Asian.
Marchpole Holdings, the London-listed fashion designer, said that it
had formed a joint venture and strategic licensing pact with Donna Karan
International, part of the Louis Vuitton Group, under which Marchpole will
produce a range of DKNY menswear.
Engineering
Morgan Crucible, the engineering company based in Berkshire, beat
expectations with a 9.1 per cent increase in first-half pre-tax profits,
boosted by defence and petrochemicals sales, and said it was confident that
it would meet full-year forecasts.
Health
William Ransom & Son said that talks on an indicative offer for the
company made on behalf of Steve Quinn and Fred Whitcomb, the former
directors, had been terminated. The natural healthcare company, based in
Hertfordshire, said potential bidders were still evaluating a proposal to
acquire the group, but there was no certainty that an offer would be made.
Industrials
Continental, the German tyre company, is in talks with Apollo and
Kohlberg Kravis Roberts, the private equity groups, as well as with
Bridgestone, the Japanese tyre supplier, about a possible white knight bid
to fend off a takeover attempt by Schaeffler, its German rival, according to
reports.
Leisure
Whitbread, the leisure group, is to announce plans to invest £100
million developing nine new Premier Inns as it cashes in on the growing
availabity of sites previously earmarked for office and residential
development.
Cirque du Soleil, the touring circus company, has sold a 20 per cent
stake to Dubai World, the state-controlled investment group, in a deal
rumoured to value Cirque at about £1 billion.
Food & Drink Group, the troubled operator of the Jamies wine bar
chain, has been placed in administration and 17 of its 28 outlets have been
sold to Mainpaint, a new company headed by Nick Tamblyn, a former director
of First Leisure and Trocadero, and backed by NBGI Private Equity.
Media
ITV, the commercial broadcaster, was downgraded to junk status by
Standard & Poor’s, the credit rating agency, after the broadcaster
predicted a 20 per cent collapse in advertising in September. The decision
means that ITV will be forced to pay £8 million a year more in interest to
service its debt.
Publicis, the French advertising group, is to acquire Performics Search
Marketing, the search marketing services provider, from Google, the US
search engine, for an undisclosed sum, as part of its move into digital
advertising.
Natural
resources
Xstrata, the London-listed Anglo-Swiss mining group, has bid £5 billion
for Lonmin, claiming that the platinum producer has underperformed in a
booming market. Lonmin has rejected the offer, but Xstrata has bypassed the
company’s management and is putting the deal to investors.
Hunting, the oil services company, said that it had sold Gibson Energy,
its Canada-based business, to a private equity consortium led by Riverstone
and Carlyle for up to £626 million. Hunting will book a £305 million gain
from the deal, which represents a multiple of 13 times Gibson’s profit from
operations in 2007.
Anglo American, the mining group, said that it had completed the
transaction to gain control of IronX — and thereby of the Minas-Rio iron ore
project and the Amap iron ore system in Brazil — for $3.5 billion (£1.79
billion).
Retailing
Tesco, the supermarket group, has cut the price of organic produce as
customer demand slows in response to the credit crunch. It said the cost of
organic vegetables and salads were now at levels last seen almost a decade
ago.
Marks & Spencer Carl Leaver has emerged as a leading candidate to
succeed Sir Stuart Rose as the future chief executive of Marks &
Spencer. Mr Leaver, head of the retailer’s international division, has been
given the added task of running M&S’s homewares and internet business.
Woolworths Ardeshir Naghshineh, the Iranian property tycoon, fuelled
rumours of a bid for Woolworths after taking his stake in the high street
retailer to 9.68 per cent. He is rumoured to be trying to put together a bid
consortium.
Support
services
WS Atkins, the consultancy and support services group, said it had
started the year well, with performance in the first quarter in line with
expectations, and it remained confident of further progress.
Johnson Service, the dry-cleaning and industrial laundry group based in
Cheshire, plans to raise up to £10 million through an open offer of up to
nearly 50 million shares priced at 20p each.
Spring Group, the recruitment company, reported a 52 per cent rise in
first-half pre-tax profits to £3.4 million, from £2.2 million last time. It
also expressed confidence in having a business that was “robust enough” to
deliver a profitable performance.
Technology
Patsystems, the software group, reported a first-half pre-tax loss but
said that it was confident of meeting the market’s full-year expectations on
the back of improving sales in the past two months and a robust order book.
Telecoms
Inmarsat, the London-listed telecoms group, reported a 30 per cent rise
in second-quarter pre-tax profits to $51.5 million (£26.4 million). Revenues
were up by 14 per cent with a strong performance in its aeronautical sector,
which services the government aircraft and business jet markets.
Motorola, the US telecoms group, won multiple network expansion orders
worth $431 million from China Mobile, the world’s leading mobile phone
operator, during the first half of 2008.
Transport
BAA, the airports operator, has received approval from bondholders to
refinance its debt burden. The bondholders, who own £4.7 billion of debt,
have voted to move to a new structure backed by income from Heathrow,
Gatwick and Stansted.
Delta Air Lines European regulators said that they have cleared the
proposed acquisition by Delta Air Lines of Northwest Airlines, its fellow US
carrier.
Utilities
KSK Power Venture, the AIM-listed power project developer which is
focused on India, said that its full-year pre-tax profit had risen to $53
million (£27.2 million), against $6 million in the eight months to March
2007, adding that it looked forward to another year of significant growth.
Sellafield workers are to be balloted over a strike after talks to
resolve a pay dispute at the nuclear plant broke down. Management had
offered a 2 per cent pay rise with a further 2 per cent bonus funded by
efficiency savings.
