Economics
Banking reform The Treasury was thrown on the defensive as its Special
Resolution Regime plans to overhaul banking regulation to prevent future
Northern Rock-style crises came under fire from MPs on the Commons Treasury
Committee and also from Mervyn King, the Governor of the Bank of England.
Financial crises Mr King also admitted that there may be little that
the authorities can do to prevent future financial crises from taking place.
“We have very few tools to deal with greed and hubris and excessive optimism
. . . I don’t think anybody has found a way of preventing these waves of
optimism eventually producing a financial crash,” he told the Commons
Treasury Committee.
US home loans Henry Paulson, the US Treasury Secretary, urged Congress
to approve swiftly a support package for Fannie Mae and Freddie Mac to make
sure that the two mortgage groups, which collectively underpin America’s
housing market, can continue to prop up the home loan financing system.
US bank lending rates Directors at the Federal Reserve Banks of Kansas
City and Dallas had sought a quarter percentage point rise in the US bank
lending rate in June to keep inflation at bay.
Oil prices slipped to their lowest level in six weeks with the price of
a barrel of light sweet crude for delivery in August — the main New York
contract — falling by $4.63 to $126.41. The price of a barrel of Brent
crude, the main London contract, also fell to about $127.
World Trade Organisation The US sought to rescue the World Trade
Organisation talks on global trade by offering to reduce a ceiling on its
contested farm subsidies. But the leading developing countries said it was
not enough.
Banking
& finance
Paragon, the buy-to-let mortgage lender, saw its shares close up almost
31 per cent after it confirmed that it is in takeover talks. While the
company did not name its potential suitor, it is understood that it is in
discussions with Blackstone, the US private equity group.
F&C Asset Management said that it will combine its UK and Ireland
property asset management operations to form F&C Reit Asset Management,
with total assets under management of £8.5 billion.
Absolute Capital Management, the embattled $2.3 billion (£1.15 billion)
hedge fund, has plunged into a full-year pre-tax loss and suffered a sharp
slide in investment performance in the wake of the sudden departure of
Florian Homm, its star trader, last year.
Wachovia The US banking industry continued its rollercoaster ride as
Wachovia, the country’s fourth-biggest bank, announced a record $8.9 billion
loss for its second quarter, the elimination of 6,350 jobs, and an 87 per
cent cut in the dividend.
Edeus, the sub-prime mortgage lender, is waiving all exit fees and
early redemption penalties for some borrowers who pay off their mortgages
early, as well as accepting between 92 and 99 per cent of the original loan
as full payment. Borrowers offered the 8 per cent discount would have to
repay only £138,000 of a £150,000 loan, for example.
Construction
& property
Great Portland Estates reported a 4 per cent fall in the value of its
properties, cutting £63.9 million off the value of its £1.54 billion
portfolio in the quarter to the end of June. It added that conditions in
Britain’s embattled property market would worsen before the end of 2008,
knocking its shares.
Consumer
goods
Budejovicky Budvar, the state-owned Czech lager brewer, is unlikely to
be privatised by the Government before its current term of office ends in
2010, Mirek Topolanek, the Prime Minister, said.
FoodVest Lion Capital, the owner of Weetabix, has acquired FoodVest,
the owner of Findus and Young’s, the frozen food businesses. The private
equity group said it had paid £1.1 billion to acquire FoodVest, making the
deal one of the biggest private equity transactions in the UK this year.
FoodVest, which employs more than 6,000 people across 20 factories,
generated turnover of more than £1 billion last year.
Engineering
BAE Systems, the defence group, said that it is to implement all 23
recommendations of Lord Woolf’s company-sponsored report into its ethics in
a three-year programme that will be monitored by an external auditor.
General Electric Mubadala Development, Abu Dhabi’s state investment
arm, will become one of the largest investors in General Electric, the US
conglomerate, and the two companies will set up an $8 billion (£4.01
billion) joint venture to provide commercial finance in the Middle East and
Africa.
GKN Aerospace, part of GKN, the London-listed engineering group, said
it has won a $750 million contract with Honeywell Engines for the HTF 7000
series business jet turbofan engine.
SPI Lasers, the supplier of fibre laser products based in Southampton,
reported a strong performance in the first half and said that it looks
forward to a “good result in 2008”. The company added that trading was
buoyed by account acquisitions and repeat business from its pulsed laser
products.
Health
Nestor Healthcare, the independent social care group based in Surrey,
confirmed that it had received indications of interest for certain parts of
its business and added that talks are under way.
NeutraHealth, the AIM-listed vitamins and supplements company based in
Birmingham, reported a fall in first-half pre-tax profits to £95,000, from
£654,000 last year, but added that it has the facilities and management in
place to achieve “significant growth in profitability” in the next 18
months.
Neuropharm, the pharmaceuticals company based in Surrey which is
focused on neuro-developmental disorders, said that it had received positive
results of its Phase IIA clinical trial of NPL-2005 in children and
adolescents with Fragile X syndrome.
SkyePharma, the drug delivery specialist, said that Mundipharma, its
European development partner, has successfully completed two Phase III
clinical studies for the European development programme for Flutiform,
SkyePharma’s asthma treatment.
Industrials
Johnson Matthey, the speciality chemicals and precious metals group,
said that it had made a “strong start” to the year to March 2009, with both
revenue and profit ahead in the first quarter, buoyed by robust markets in
Asia and strong platinum prices.
ArcelorMittal, the steel maker, said that it will invest €76 million
(£60.3 million) in expanding electrical steel production capacity at its
Saint Chély d’Apcher plant in southern France.
Leisure
The Savoy Hotel in London will reduce its electricity consumption by 50
per cent and its total energy usage by 40 per cent as part of its £100
million refurbishment. Fairmont Hotels, which runs the Savoy, is being
advised by Evolve Energy, the consultancy.
Enterprise Inns, the tenanted and leased pub operator, said that its
profits were coming under pressure from a near double-digit decline in beer
volumes and the need to provide increased financial support to its tenants.
Media
Vitesse Media, the publishing to events company, has narrowed its
full-year pre-tax loss to £98,100, on the back of a rise in revenues, and
said it is confident that once the economy recovers it will demonstrate
strong profit and financial performance.
Euromoney Institutional Investor, the business information group, said
that trading since May 15 had continued in line with its own expectations,
and added that revenues for the quarter to June 30 had risen by 13 per cent.
BSkyB, the satellite broadcaster, has unveiled plans to take on Apple’s
iTunes with a subscription-based digital music service, with packages likely
to be priced at about £10 a month. News Corporation, parent company of The
Times, has a 39.1 per cent stake in BSkyB.
Ten Alps, the independent television producer, said Atalink, its
publishing unit, has signed a new contract with Grand Designs Live, the
consumer show for design and innovation, to produce a visitor’s promotional
chequebook for the event. Ten Alps added that Grand Designs has increased
the duration of next year’s event to ten days, thanks to popular demand.
Natural
resources
Oilexco, the Canadian oil and gas explorer, said that Oilexco North
Sea, its wholly owned unit, has successfully flow tested gas condensate at
significant rates from its Moth discovery. Merrill Lynch estimates the Moth
discovery to be between 160 million and 240 million barrels in size.
Central China Goldfields said the final batch of drill results from the
Dong Mao Huo gold project, in northern China, had confirmed the presence of
significant gold mineralisation and added that it sees production commencing
early next year.
BP, the oil and gas group, has conceded a fresh defeat in its struggle
for control of TNK-BP, its Russian joint venture, saying that it would
withdraw the last of its seconded staff from Moscow.
Ferrexpo, the Swiss iron ore pellet company which has assets in
Ukraine, said that its second-quarter production was on target, with total
pellet output up by 2.6 per cent from the first quarter.
Retailing
Tesco and Sainsbury’s lost further market share to cheaper
supermarkets in the 12 weeks to July 13, with the market share of discount
stores growing to record levels, according to the latest data from TNS
Worldpanel. Aldi and Lidl, the discount supermarkets, saw year-on-year
growth of 20 per cent and 14 per cent respectively, increasing their market
share to 2.9 per cent and 2.4 per cent.
Floors-2-Go the wood and laminates flooring retailer, has called in
administrators after sales collapsed. Alchemy Partners, the private equity
vehicle, had backed the £52 million management buyout of Floors-2-Go, in
December 2006. At the time, management described the retail environment as
challenging and Floors-2-Go had already issued one profits warning that
year.
Instore, the owner of Poundstretcher, has reiterated its rejection of
the £11.4 million takeover bid from Seaham Investments, despite the offer
having been declared unconditional last week.
Support
services
Turner & Townsend, the construction consultancy based in Leeds,
reported a 29 per cent rise in full-year pre-tax profits to £17.1 million
and said that it had made a good start to the year with a record order book.
The company also said that it might still join the stock market next year.
Amec, the engineering services business, has bought AllDeco, the Slovak
nuclear services company, for £11.1 million.
Intertek, the provider of safety and quality services, said that it has
bought Applica, the German food testing laboratory, for up to €4.5 million
(£3.57 million).
Technology
SCi Entertainment, the London-listed video games maker, said that it
expects to report a full-year loss of no more than £100 million.
Trafficmaster, the navigation group, said its first-half profits are in
line with its expectations with increased revenue in both Britain and the
United States compared with last year.
Yahoo!, the US internet search engine, said its second-quarter profits
had dropped by 18 per cent to $131 million (£66.3 million), compared with
$161 million at the same time last year. The company had rebuffed a $47.5
billion takeover offer from Microsoft, the software group, in May.
Ericsson, the Swedish mobile phone maker, reported a 70 per cent fall
in second-quarter profits to 1.9 billion Swedish crowns (£160 million), from
SKr6.4 billion, hit by the cost of cutting jobs and lower demand for mobile
handsets at its joint venture with Sony.
Kewill Systems, the supply networks software provider based in Surrey,
said that it has continued to make good progress since its full-year results
were announced on June 16 and is performing in line with management’s
expectations.
Telecoms
Vodafone, the mobile phone group, saw its shares fall by almost 14 per
cent on news that it had trimmed its full-year revenue forecast to the
bottom end of the £39.8 billion and £40.7 billion range given in May.
Transport
United Airlines, America’s second-biggest carrier, said that it will
sack 13 per cent of its workforce — or 7,000 staff — and cut more than a
sixth of its domestic routes in a desperate attempt to cut costs as the
price of fuel continues to surge. The airline added that it would also cut 7
per cent of all its international routes, including Denver-London.
Ryanair, the budget airline, has won a court injunction against the
decision by Enac, the Italian aviation regulator, to force the carrier to
divert late-night flights from Rome’s Ciampino airport to Fiumicino, the
city’s other airport.
Utilities
Severn Trent, the water utility, has voiced concerns that its customers
may soon begin to struggle with paying their bills. The company, which has
more than eight million customers, warned that although it had not yet
experienced any serious payment problems, the issue remained a risk.
Water companies want the Government to use the forthcoming Floods and
Water Bill to make it easier for them to pursue customers who refuse to pay
their bills. Some in the industry suspect customers are deliberately
avoiding payment as they know they cannot be disconnected.
GDF Suez, the French utility, saw its shares fall by 4 per cent to
¤yesterday<NO>amid investors’ concerns over high oil prices and
French government interference. The fall was a blow to executives after the
long-awaited merger of Suez, the Franco-Belgian utility, and GdF, the French
state gas supplier.
