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Newspaper Briefing, including 'Greece emerges as a surprise stock market winner in January' - Daily Mail
The Times
Gilts: U.K. government bonds eased again after a policymaker at the Bank of England suggested it should consider buying other assets to help business. Signs of improvement in Britains manufacturing and building industries weighed, too. The March gilt future settled 51 ticks lower at 116.01, while yields on ten-year gilts rose six basis points to 2.11%.
Bet of the day: With Facebook set become a public company this year, Paddy Power is taking bets on the share price when the social networking site makes its market debut. At an unlikely 10-1 was an initial price of less than $25. Most likely was between $35 and $44.99 at 10-11, followed by $45 to $54.99 at 9-4. A giddy $65 or more was available at 9-2.
Deal of the day: Connemara Mining, another venture by the serial entrepreneur John Teeling, unveiled a joint venture with Hendrick Resources, a privately owned Canadian company, to explore for gold in Ireland. Shares that changed hands for as much as 27p less than a year ago, and that touched a low of 8p in January, rose 22.7% to 11p in response.
Thousands of jobs go at AstraZeneca as Alzheimers research is cut: AstraZeneca warned that its sales would fall sharply this year as it grapples with disappointing scientific productivity and a patent cliff as longstanding blockbuster drugs lose protection from competition. The companys shares slumped by 4%, despite an 11% rise in annual profits to $12.4 billion (7.8 billion), driven by cost cuts from earlier waves of redundancies.
Game Group to end its call of duty and sell up overseas: Game Group has put its loss-making overseas business up for sale as it tries to appease its lenders. The video games group warned last month that it was at risk of breaching its banking covenants after poor Christmas trading.
Indian telecoms deals ripped up: Indias reputation as a safe place to do business took a further knock when its Supreme Court ordered the Government to cancel 122 mobile phone licences. Foreign investors, including Telenor, of Norway, were among those hit by the decision to throw out contracts awarded in a fraudulent sale of second-generation spectrum in 2008
Bankers pay for the losses at Deutsche with their bonuses: Deutsche Bank has slashed bonus payments to its investment bankers after the group fell to a fourth quarter pretax loss amid tumbling revenues from trading and deal-making. Deutsche said that the total pay bill at its corporate and investment bank, which employs 15,200 staff, including thousands in London, reached just over 5 billion (4 billion) last year.
DouBTers call $100 billion price tag into question: With the inner workings of Facebooks business laid open for the first time, the technology industry was asking whether the social network could really be worth $100 billion. The company conceived in a university dormitory filed for an initial public offering of shares worth $5 billion on Wednesday, putting it on track to become the largest internet company flotation yet dwarfing Googles $1.9 billion in 2004.
The Independent
U.K. builders stuck in the slow lane: Britains builders were stuck in first gear in January, as the industrys growth slowed to a crawl, the Chartered Institute of Purchasing and Supply (Cips) said. Housebuilding and civil engineering output shrank, while jobs growth also stagnated, Cips said. Its activity index, where a score over 50 means expansion, slowed from 53.2 to 51.4 signalling the most disappointing growth since last autumn.
Leg-up at Smith & Nephew: The global economy must be on the up: people are buying more artificial knees and hips. Smith & Nephew which suffered in the recession as patients were too scared to take time off work for operations, saw 2011 revenues rise 4% to $4.3 billion (2.7 billion).
Lloyds pledge on branches: Lloyds Banking Group said that it will keep the number of branches it runs in the U.K. for the next three years. It also promised not to close any branch if it is the last bank left in a community.
Dairy Crest sales up but milk price hits profits: The cheese-maker Dairy Crests like-for-like sales rose 2% in the first three quarters of the year, despite a challenging business environment. But the company warned that profits at its dairies business are being hit by the higher costs of buying milk and lower bulk cream values, which fell by 15.2% last month to 1,230 a tonne.
U.S. basketball strike costs Compass: The 149-day strike by U.S. basketball stars this autumn disrupted more than just the NBA season: Compass, the worlds biggest caterer, admitted the lock-down would cost it 30 million this year.
S&P stokes up fears of Eurozone recession: The credit ratings agency Standard & Poors (S&P) fuelled fears over Europe as it put the chances of a severe recession in the single currency bloc at 40%. S&Ps best-case outlook for the troubled region this year is stagnation, but under the firms adverse scenario it warns the Eurozone could shrink by up to 2% in 2012, with Italy the biggest casualty.
Financial Times
MPs set sights on Network Rail pay-outs: Network Rail was drawn into the growing row over bonuses on Thursday after the government backed a call by Labour MPs for its Directors to show restraint. After a motion from 28 Labour MPs calling for Directors of the rail network Owner to turn down bonus payments, Maria Eagle, the shadow transport secretary, urged the company to reassure the public it would not pay bonuses, given worsening performance.
BT set to launch ultrafast internet: Ultra-fast broadband using direct fibre-optic connections will become available to most British homes and businesses next year, after a significant technological breakthrough by BT, the telecoms group. The advance, to be announced in BTs third quarter results on Friday morning, will place the U.K. at the vanguard of the European race for the highest available broadband speeds with connections of up to 300mBPs.
QinetiQ set to meet targets: QinetiQ, the defence contractor, said on Thursday that it would meet or exceed expectations it set out last year despite the challenging market in the U.S. and U.K., its main customer bases.
Fitness First Owner replaces Bosses: The Private Equity Owner of Fitness First has replaced the gym chains top management as it fights to preserve its more than 500 million equity investment in the highly indeBTed company. The move by BC Partners comes as analysts forecast further consolidation in a fragmented market that has been hit by a slowdown in consumer spending and the emergence of low-cost competitors.
News Corp names Fenwick to head Dow Jones: News Corp has named Lex Fenwick, a former Chief Executive of Bloomberg, as Chief Executive of Dow Jones, the publisher of The Wall Street Journal. Mr Fenwick fills a position that has been empty since July when his predecessor, Les Hinton, stepped down in the midst of the phone hacking scandal at News Corps U.K. newspaper arm, which he had run for 12 years before joining Dow Jones in 2007.
Taylor Wessing to demerge document review unit: Taylor Wessing is preparing to spin off its document review business into a separate entity in the latest move by a firm to shake up its business model. New Street Solutions, which mines and manages documents for due diligence and property transactions, will be demerged from Taylor Wessing by the autumn.
UniCredits Ex-Chief faces tax fraud trial: Milans Chief prosecutor has asked for Alessandro Profumo, the former Head of UniCredit, three Barclays employees and 16 other people to stand trial for an alleged tax fraud set up by the British bank and used by Italys largest lender by assets.
Lex:
Sony: swash buckled: Swashbuckling gaijin Boss takes on hidebound old guard and triumphs, turning a lumbering giant riven by internal battles into a slick digital-era machine. But there is no happy ending for Sir Howard Stringer or Sonys investors as the companys first foreign head bows out. Since Sir Howard took over in June 2005, Sonys market value has fallen by almost three-fifths to 1.3 trillion a drop two-fifths worse than that suffered by the broader Topix electrical appliances index. On Thursday, the company more than doubled its expected net loss to 220 billion. Sony was struggling to cope with the switch to digital well before he took over. The company has also suffered a strengthening yen, now near its strongest in more than a decade. That has added 1.3 billion to the 66 billion operating loss sustained so far this financial year. Collectively under Sir Howard, currency effects have wiped a net 235 billion ($3.1 billion) off operating income. But it is less than half the 530 billion Sony has sunk on an endless and continuing series of restructurings, over the same period. Put another way, the company has spent half as much again on reorganisation as it has produced in total net profits (220 billion) under Sir Howard.
Shell: Big talk: On Thursday he set a target for capital expenditure for 2012 of $30 billion, and said Europes biggest oil company by market value was aiming to generate up to $200 billion of cash over the next four years. The company is a different beast to what it was in 2009, when he became Chief Executive. It is now a larger producer of gas than of oil just when U.S. natural gas prices hit 10-year lows; upstream earnings have roughly doubled to $20 billion; and the reserves portfolio has been trimmed as Shell withdrew from markets where it had a limited presence. Shell reported $470 billion in revenues for 2011 and $37 billion of free cash flow. That is what happens when the oil price is over $100 a barrel. The issue is whether the 2012-15 strategy is robust enough to maintain the growth momentum. The 30 to 50% targeted rise in cash flow to 2015 will be impressive if achieved, but production growth is expected to rise by only 25% up to 2017/18, to 4 million barrels of oil equivalent a day.
Glencore / Xstrata: familiar path: Glencores planned buy-out of the rest of Xstrata wins no prizes for originality. After all, Xstrata owes its creation to a $2.5 billion coal deal struck a decade ago with Ivan Glasenbergs commodities trader-cum-miner. Glencore held on to a 34% stake in Xstrata, which Mick Davis has transformed into a diversified miner worth $58 billion. The two have discussed a reunion before, but Mr Davis resisted it while Glencore was privately-held. However, Glencores $10 billion initial public offering last year has given it an acquisition currency. The companies say they are discussing an $80 billion merger of equals, but it should be seen as a normal takeover, with Glencore doing the taking over. Glencore markets Xstratas ferrochrome and nickel output, and advises on its coal sales. So genuine cost synergies, the ones investors should focus on, are likely to be small perhaps only $100 million after tax. Capitalised, say that is worth $1 billion. Credit Suisse puts these at about $600 million annually, mostly flowing from increased metals volumes through Glencores trading platform.
Lombard:
The BC Partners workout: Private equity partners must develop tremendous upper body strength. All that chucking people off the boards of companies that they own. They can stay fit without joining a gym such as Fitness First. The chain has just parted company with its Chief Executive, Finance Director and U.K. Managing Director. Private equity Owner BC Partners has slung the trio out as pressure mounts on the lossmaking fitness groups banking covenants. Running a buy-out is the grass that looks greener to many executives on the quoted side of the corporate fence. The sale or flotation of the business could trigger a whopping pay-out. However, hard feelings are common among members of buy-out teams who never get that far. Slung out for missing profits targets, they may take a steep haircut on the value of the unquoted shares that they are required to sell.
The Daily Telegraph
Ed Miliband launches fresh assault on City pay: Ed Miliband will open a new front in his war on excessive City pay on Friday, as he calls for curbs on bonuses at banks that have not required government bail-outs.
Bank of Englands Posen attacks banks for failing to deliver value for economy: Taxpayers are getting a bad deal from Britains banks as lenders are failing to help the economy, Bank of England rate-setter Adam Posen has said. Mr Posen, a member of the Banks nine-strong Monetary Policy Committee, added that banks were making excuses for their failure to lend to small businesses, suggesting the real reason might be that they are reluctant, risk-averse jerks.
Cairn India Boss nets 6.6 million in share sale: Rahul Dhir, Chief Executive of oil and gas producer Cairn India, has netted 512.68 million rupees (6.6 million) by selling half of his stake in the company, ahead of receiving another round of stock options.
The Questor Column:
The price is still right to stock up on Petra Diamonds: Petra was named as one of Questors tips of 2012 for this very reason. The company acquired 74% of the Finsch mine from De Beers and moved from Aim to main board. In Tanzania, Petra has a 75% interest in the Williamson mine. Petras diamond production in the six months to 31 December rose by 63% to 953,553 carats but the majority of this uplift was caused by the inclusion of output from Finsch from 14 September. Sales in the period rose 13% to $101.4 million, with the number of carats sold rising 16% to 678,772 carats. Diamond prices are very sensitive to economic conditions and prices plunged in the last few months of 2011 because of the unfolding Eurozone crisis. A report released last week by consulting group and diamond industry expert Bain & Co forecast a compounded annual growth rate of diamond prices of 6.6% between 2010 and 2020, growing to a market worth $23 billion (14.5 billion) annually. Petra plans to provide a full update on costs and capital expansion plans in its interim results, which are expected towards the end of February. The shares are trading on a June 2012 multiple of 11.9, falling to just 7.2 next year. This looks very cheap for this quality player. Named as a tip of the year at the start of January, the shares are up 13% compared with a FTSE 100 up 4%. Petra Diamonds at 130p +1p. Questor Says Buy.
United Utilities has a good income stream: The North-based water group said that current trading was in line with expectations of delivering a good underlying performance. On Tuesday, industry regulator Ofwat said the average household water and sewerage bill in England and Wales will rise by 5.7% in 2012 as water companies prepare to invest up to 22 billion in the countrys water infrastructure over the next five years. United said that, following an agreement of a 200 million loan facility, it has more than enough financing in place to meet its needs to 2014. On 01 October, the ownership of, and responsibility for, private sewers was transferred to the English and Welsh water and sewerage companies. Managements dividend policy is for real growth of 2% a year for the next four years. This followed a 12.5% cut in the payment at the start of the last review period. The dividend yield is 5.2% this year rising to 5.6%. The shares are trading on a March 2012 earnings multiple of 17.4, falling to 15.1, and at a 3% premium to the value of its regulated asset base, which is not expensive. Last tipped at 603p on 24 November last year, the shares are a buy for income. United Utilities at 609p +7p. Questor Says Buy.
The Guardian
Brussels discovers new 15 billion black hole in Greeces finances: Pressure on Greeces recession-stricken economy has intensified after international deBT inspectors admitted an additional 15 billion (12.5 billion) would be needed to fill a newly discovered black hole in the countrys finances.
Cambodian workers hold peoples tribunal to look at factory conditions: Workers in Cambodia will hold a peoples tribunal next week to investigate pay and conditions at factories working for fashion brands including H&M and Gap. An international panel of judges will hear evidence from workers, factories and multinational brands including Puma and Adidas.
Coalitions fiscal squeeze will return U.K. to recession, warns NIESR: The U.K. will slide into recession this year as the government continues to deliberately damage the economy with its unwavering fiscal squeeze, a respected thinktank has forecast. The National Institute of Economic and Social Research (NIESR) has slashed its outlook for the U.K. economy and predicts it will contract by 0.1% this year.
Trinity Mirror Boss faces investor rebellion over 1 million pay deal: Sly Bailey, head of Trinity Mirror, publisher of the Daily Mirror, has become the target of one of the biggest shareholder rebellions of recent years, as investors demand she take a pay cut to reflect a massive slump in the share price. Leading shareholders told the Guardian Bailey must significantly reduce the value of her pay, bonus and pension awards, which topped nearly 1.7 million in 2010 and could reach at least 1 million in 2011.
Daily Mail
Shell profits soar to a lofty 18 billion in 2011 despite missing recent refining targets: Profits at Royal Dutch Shell rose 54% to a towering 18.1 billion last year as oil prices remained at elevated levels. The bumper annual earnings at the Anglo-Dutch firm came despite a weaker than expected performance in the last three months of the year, when trading was impacted by a squeeze on refining margins and lower American natural gas prices.
Greece emerges as a surprise stock market winner in January: The countrys stock market has raced to the top of the leader board of Europes best performing indices. Sadly, it was only a one-month gain, so backers of the countrys shares are still deep underwater. But a rise of 23% in January, according to Russell Global Indices, will certainly be a welcome relief.
Broker Views:
IGAS Energy: Numis Securities Ltd maintained a Buy rating on the stock, with a target price of 151.00p
Cable & Wireless Worldwide: AlphaValue maintained a Buy rating on the stock, with a target price of 57.50p
Shanta Gold Ltd: Fairfax I.S. Limited maintained a Strong Buy rating on the stock, with a target price of 80.00p
Bovis Homes Group: Citi upgraded the stock to Buy and increased the target price to 520.00p
Imperial Tobacco Group: Nomura upgraded the stock to Neutral and increased the target price to 2150.00p
Petrofac Ltd: Numis Securities Ltd downgraded the stock to Add and decreased the target price to 1626.00p
Daily Express
Xstrata and Glencore in tie-up talks: Glencore is looking to merge with miner Xstrata to create an industry behemoth worth more than 50billion. Shares in the two companies soared after they announced talks on the all-share merger, which would create a giant big enough to rival Rio Tinto and BHP Billiton, possibly netting more than 500 million in fees for City investment banks.
Unilevers sales slow: Shares in consumer products giant Unilever tumbled after it suffered a sales slowdown in emerging markets led by penny- pinching Russians. The Dove soap, Lipton tea and Cif cleaner group lost 91p to 1994p, as emerging market sales growth dipped from 13% in the third quarter to 12.3% in the fourth.
Japanese eye Imperial Tobacco: Lambert & Butler and Embassy cigarette maker Imperial Tobacco puffed up higher as it was tipped to be in the takeover sights of Japan Tobacco. Broker Nomura said Imperial, up 5p to 2308p, could benefit from the u%oming sale of the Japanese governments stake in Japan Tobacco and growing consolidation in the sector.
Fury at 578 million FSA fees: City watchdog the Financial Services Authority was embroiled in a row with some of the biggest companies it oversees after announcing a sharp rise in fees for this year. Insurers and banks protested after the FSA said the amount the financial industry would have to pay will be 15.6% higher year-on-year as it prepares itself for the new system of regulation, which would see the watchdog split into the Prudential Regulation Authority and the Financial Conduct Authority, following severe failings in the run up to the financial crisis.
The Scottish Herald
Mongolian university tie-up on cards: Glasgow University has taken the first step towards a tie-up with the National University of Mongolia after participating in a Scottish trade delegation to the fast-developing Asian nation.
Slump in growth of sector: U.K. construction sector growth slowed sharply in January, fuelling fears of renewed recession. The Chartered Institute of Purchasing and Supplys activity index for construction dropped from 53.2 in December to 51.4 last month on a seasonally-adjusted basis.
The Scotsman
Call for local councils to give land to housing associations: Scotlands main housing association body called on local authorities and other public groups to hand over land for free to meet demand for affordable homes and help the flagging construction industry. The Scottish Federation of Housing Associations (SFHA) noted the 35% cut to development budgets, with more set to follow.
Olympics already boosting Scots tourism businesses: Hotels and tourism operators north of the Border are already enjoying an Olympics-related boost, according to online travel website Expedia. Revealing a 32% jump in forward summer bookings for Scotland, Andy Watson, the firms Managing Director in the U.K. and Ireland, said people were looking for alternative routes into London for the Olympics.
Barclays taps into intelligence: Barclays Wealth has bolstered its ranks in Glasgow with three appointments including the hiring of an ex-RAF intelligence officer. The news follows last months appointment of Gordon Scott as director of private banking in the city.
Service sector set to reinforce hope of avoiding double-dip: Critical data out was expected to show that Britains dominant services sector remained in growth territory last month, reinforcing hopes that a double-dip recession may yet be avoided.
McColls latest fund picks up 420 million with US investors leading the way: Clyde Blowers Capital, the private equity vehicle set up by Jim McColl, has attracted more than 420 million from investors for its latest fund to back engineering businesses. Strong interest particularly from the U.S. saw the original funding target of 350 million extended but it was still significantly oversubscribed at the final close.
Subsea 7 lands 63 million BP North Sea contract: Offshore engineering group Subsea 7 has landed a fresh $100 million (63 million) contract with BP for work on a massive project off the Shetland Islands. The Aberdeen-based firm will help produce pipelines for the Clair Ridge drilling project, which is located where the North Sea and Atlantic Ocean meet.
Brightsolid expansion into US begins with launch of census records site: Family history website operator Brightsolid will unveil details of its push into America. The Dundee-based company, which is run by dotcom pioneer Chris van der Kuyl and operates the website Scotlands People on behalf of the Holyrood Government, will use the RootsTech 2012 trade show in Utah to unveil Censusrecords.com.
Troubled Comet sold for token 2: Struggling electricals chain Comet was set to change hands for a token 2 following days of tense talks with suppliers. The company, which operates 248 stores and has about 10,000 staff in the U.K., will be sold to retail turnaround firm OpCapita in a deal which will see its former Owner Kesa Electricals pump 50 million into the business and take on its pension scheme.
Beef producers say no to increased optimism: This weeks farm income figures may have looked positive and encouraging but beef producers opted out of any optimism. The Scottish Beef Cattle Association described the 14% drop in income of beef farms in less favoured areas as a real concern.
Call for radical innovation down on the farm: After the best part of a decade where productivity from Scottish farms has either levelled off or dropped, a leading economist has called for a radical change to policies that would encourage a culture of innovation and suggested that the trigger for change might be a reduction in public subsidies.
