Bet of the Day: Recent reports say that a Russian draft Bill will have a big impact on tobacco companies. Thursday’s trading update from Imperial Tobacco is likely to touch on this story. The defensive stock slipped by 10% in August, but Imperials 500 million share buyback is ticking along.
Deal of the day: The AIM-listed Serica Energy has pulled off something of a coup. It has sold an 85% stake in a central North Sea block to JX Nippon Oil & Energy for 154,000. Japans largest refiner will carry future drilling costs associated with the licence, including the expenses of an exploration well to the Jurassic level or deeper. The shares fell 1.7% to 283/4p.
Gilts: U.K. government gilts rallied after a small fall in inflation and uncertainty about a potential bailout for Spain. Index-linked gilts, however, fell sharply on the back of possible changes to the RPI-inflation measure they are based on. The December gilt future settled 42 ticks up on the day at 118.77 in line with a rise in German government bond futures.
Huffington Post admits the Arianna factor is missing from British edition: The parent company of the Huffington Post has admitted that the online newspapers British edition suffers from a lack of a prominent Arianna-like figure to break out of a crowded media scene. Jimmy Maymann, the AOL executive in charge of introducing the American news brand around the world, has told The Times that lessons have been learnt from its British venture, which, in the eyes of media analysts, has had a quiet first year.
New sheriff for the City will be quick on the draw: The incoming Boss of one of the City’s new regulators has threatened a get-tough approach to protecting consumers, promising to use powers to shoot first and ask questions later. Martin Wheatley, Chief Executive-designate of the Financial Conduct Authority, said that the new body would have the right to move quickly to ban the sale of inappropriate or overly risky financial products.
Billionaire gives backing to Heinekens hunt for Tiger: Heinekens efforts to acquire Singapore’s Tiger Beer were given a boost after one of the leading players in the international bid gave his support. The Thai billionaire who is the largest shareholder in Fraser & Neave part-Owner of Asia Pacific Breweries has agreed to back the sale of Fraser’s stake to the Dutch brewer.
Lenovo uses launch pad in Indiana to head for cloud: The Chinese computer maker said that it had bought Stoneware for an undisclosed sum. The deal comes two weeks after Lenovo bought the Brazilian consumer electronics group CCE for $147 million as it tries to keep pace with Samsung and Apple in reacting to the growing influence of smartphones and tablet computers.
Focus turns to top investor after Hermes funds sale: The future of one of the City’s most revered individual investors was unclear after Hermes parted company with its flagship Focus funds and the Focus team of a dozen Activist Managers. David Pitt-Watson, a pioneer in shareholder activism, founded the Focus funds in 1999 with Alastair Ross Goobey, the former Chief Executive of Hermes.
Brussels may delay start of Solvency II: European regulators appeared poised to delay aspects of controversial rules that critics say will hit the incomes of British pensioners. Michel Barnier, the European Commissioner for the Internal Market, has tabled a plan to delay parts of Solvency II by a year, according to sources familiar with the matter.
The long-term answers to all that fast fashion: The latest family member at the helm of Benetton Group has explained his reasons for taking the Italian company private. Alessandro Benetton said that his mission to turn around the fortunes of the flagging group, which has 6,500 outlets in 120 countries, was at least a medium-term effort.
Akzo Nobel’s new Chief joins Executive sick list: The Chief Executive of the Dulux paint maker Akzo Nobel has become the latest high-profile business leader to take time off because of fatigue or illness. Ton Büchner is standing down until about mid-October to overcome what the company called temporary fatigue.
Giant wind farm spins closer to launch: A vast wind farm in the Thames Estuary came a decisive step closer to completion as a consortium including Barclays was appointed as the preferred bidder for the schemes high-voltage power link. Blue Transmission, a consortium which also includes the Australian infrastructure fund Macquarie Capital and Mitsubishi Corporation, has been selected by energy regulator Ofgem to own and operate the multi-million-pound transmission link that will transport power from the London Array offshore wind farm in the Thames Estuary.
Hibu asks for time to avoid default: Hibu, the recently renamed Owner of Yellow Pages, has admitted it has asked lenders to relax its bank loan covenants to avoid a possible breach at the end of this month. Hibu wants to postpone the covenant test, which is based on the ratio between profits and deBT, until November.
Turnaround specialist buys Dublin store Clerys: Clerys, the landmark Dublin department store, has been acquired out of receivership by Gordon Brothers, saving nearly 150 jobs. Gordon Brothers, a global restructuring firm, is understood to have bought Clerys for about 15 million (12 million), including its deBTs, from joint receivers at the accountancy firm Grant Thornton.
BHP Billiton freezes executive pay to cut costs: BHP Billiton will freeze the base pay of its top executives this year, as the miner cuts costs in the wake of a hefty write-down in the value of its U.S. shale gas business. Six weeks after announcing the Chief Executive Marius Kloppers would forgo his bonus for the year to 30 June, 2012, BHP said his base pay would be frozen this year, along with that of all senior management.
IP injects million for revolutionary monitoring device: New technology that could revolutionise the way doctors measure patients vital signs has attracted a 500,000 investment from the intellectual property firm IP Group. The device, which uses a webcam and computer software, allows medical staff to measure heart rate, respiratory rate and, uniquely, oxygen saturation.
The Daily Telegraph
Inflation change could deliver 3 billion windfall: Pension deficits, train fares and water bills are in line to fall under plans to change the way inflation is calculated that could save the Government up to 3 billion a year.
Indian Ministers to resign over Tesco plan, raising fears over coalition: A key partner in Indias ruling coalition has withdrawn support from the government and said its Ministers would resign in protest over a plan to allow foreign retailers such as Tesco into the country.
Saudi Arabia ready to step up oil production to counter price spike: Saudi Arabia has signalled it is prepared to step up oil production to prevent the price of crude hurting the fragile global economy. Although the price of crude has fallen so far this year, prices have spiked almost 20% in the past three months amid escalating fears of a showdown over Iran’s nuclear programme.
Lonmin workers to return to work after accepting 22% pay rise: Striking workers at the London-listed Lonmin platinum mine in South Africa have secured a 22% pay hike and will resume work on Thursday, ending a six-week deadly wildcat strike.
The Questor Column:
Vodafone falls present buy opportunity: Vodafone shares are near a three-month low after the Chief Financial Officer said in an interview over the weekend that the group may have put aside cash for a potential tax bill in India. Analysts say this could be as much as $2.2 billion (1.4 billion). Finance Chief Andy Halford said that the group may have to raise a provision for the disputed tax bill and the comments have been widely reported. The tax dispute relates to Vodafones 2007 $10.7 billion purchase of Hutchison Whampoas Indian unit. In the last financial year, free cash flow was 6.1 billion even after capital expenditure of 6.4 billion. Free cash flow is expected to be in the range of 5.3 billion to 5.8 billion this year, reflecting the weaker Euro and the loss of the dividend from French unit SFR, which has been sold to Vivendi. Questor is not concerned and sees the falls as a buying opportunity to lock in a very impressive yield. Based on next year’s earnings forecast, the shares are yielding 7.5% and the group has a target of 7% growth in the payout. Some investors have been focusing on the Indian tax issue and European weakness, but it should be remembered that about 60% of Vodafone’s earnings now come from the U.S. Trading on a December 2012 multiple of 11 falling to 10.5, the shares don’t look expensive. Vodafone at 175.65p-2.2p. Questor Says Buy.
Falkland Oil and Gas shares should be avoided: The shares in punters favourite Falkland Oil and Gas (FOGL) swung wildly after it announced a gas recovery. The shares opened 15% lower before closing 5% ahead. Gas prices are low at the moment, especially in the U.S., because of a glut of gas following the shale boom. Oil is more highly prized. FOGLs last fundraising was in January this year, when it raised almost 50 million. Oil explorers can sort out this cash problem through farm-ins, where other groups stump up the cash for a stake in the discovery. Indeed, last month Noble Energy said it would farm-in for 35% of all FOGLs licences for $25 million (15.4 million). There may or may not be substantial amounts of commercial oil sitting in basins near the Falkland Islands. However, from an investment point of view, Questor thinks this does not really matter. FOGL has no production, no cash flow and no significant resources. The entire valuation of the business which stands at 225 million is based on its exploration potential in the Southern Falkland Basin. Falkland Oil and Gas at 69.25p 4.75p Questor Says Avoid.
Hold BT Group as sports move increases risk: BT unveiled an exclusive live broadcast deal with Premiership Rugby to add to its acquisition in June of live Premier League football rights. Broker Exane estimated there would be a 340 million annual hit to free cash flow from the rights payments compared with last year’s total FCF of 2.52 billion. However, the brokers figure does not account for any marketing costs. BT is struggling to increase its top line and the sports acquisitions do not look as if they will achieve this in the short term. Shares in BT have had a good run so far this year, rising by an impressive 19%. They are currently yielding a prospective 4.2% rising to 4.7%. This is not spectacular when compared with the likes of Vodafone on 7%-plus, but it is still worthwhile. Questor has had a hold view on the shares for some time, having last said buy at 199p in May last year. If the strategy doesnt work, then free cash flow will take a large hit over the medium term. BT has committed to up its dividend by 10% to 15% over the next three years. BT Group at 227.1p-1.1p. Questor Says Hold.
Greek economy to shrink 25% by 2014: The ailing Greek economy is on the verge of a 1930s-style Great Depression, as the Athens government predicted a 25% fall in GDP by 2014, putting intense pressure on the EU to relax the terms on the country’s 130 billion (105 billion) bailout package.
Mass slaughter of farm animals set to push food prices up 14%: The mass slaughter of millions of farm animals across the world is expected to push food prices to their highest ever levels. As well as hitting consumers’ pockets, the predicted 14% jump in food prices will also dash the Bank of Englands hopes of pushing inflation down to 2% by next year.
Russia writes off $10 billion of North Korean deBT: Russia has agreed to write off nearly all of the $11 billion deBT accrued by North Korea during Soviet times as the Kremlin seeks to boost ties with its reclusive neighbours new leader, Kim Jong-un.
Achilleas Kallakis retrial begins: The retrial of Achilleas Kallakis, the former travel agent accused of posing as a Mayfair-based shipping tycoon in order to dupe Allied Irish Bank and Bank of Scotland into lending more than 750 million to fund a string of ill-fated property purchases, began at Southwark crown court on Tuesday.
Debenhams accelerates sales and shrugs off retail malaise blighting rivals: Debenhams says being all things to all men (and women) helped it accelerate sales and shrug off the retail malaise blighting its rivals. Britain’s second biggest department store chain credited its broad church of customers and wide range of products for a 3.1% rise in underlying sales in the 16 weeks to 23 June.
JD Sports admits it has further salvage work to do on Blacks Leisure after profits slump: JD Sports Fashion profits have fallen sharply since it rescued outdoor goods chain Blacks Leisure from administration in January. The Bury-based group, which bought Blacks for 20 million, has acknowledged it inherited a business with a severe shortage of stock and an excessively large store chain.
Manchester United shares fall as club pays price for season without a trophy: Shares in Manchester United fell after the club paid the price for a season without a trophy. The Premier League giants slumped to a pretax loss of 4.7 million for the 12 months to the end of June having made a profit of 12 million the previous year.
More deals for first timers: First-time buyers could find it easier to get on the property ladder as a raft of new deals are launched for those with small deposits. New findings from Moneyfacts show there has been an increase in activity from lenders introducing mortgage deals at a higher loan-to-value (LTV).
DIY route can cut cost of selling your home: Everybody moans about estate agents but they are still the first people we call when selling our home. This could change under new Government proposals that will make it easier for ordinary people to market their home cheaply online.
The Scottish Herald
Inflation drop could pave way for interest rate cut: Annual U.K. inflation dropped from 2.6% in July to 2.5% last month, despite a 3.5p-a-litre surge in petrol prices during August, giving the Bank of England scope to provide further monetary support to the ailing economy.
Buccleuch sells Tyne Tees TV site for student housing: Buccleuch Property has sold some of the former Tyne Tees Television site in Newcastle, after planning permission for student housing was granted. U-Student Group has paid an undisclosed sum and plans to spend about 16 million building 386 student bedrooms. Building work is scheduled to begin early next year.
3 million purchase takes TOM into Aberdeen: West of Scotland-based TOM is moving into Aberdeen with the acquisition of the commercial vehicle division of John R Weir from car dealership giant Arnold Clark, in what is believed to be a near-3 million deal.
Galliford Try Boss confident of Scottish projects: The head of Galliford Trys construction arm reiterated his support for the Scottish Governments infrastructure investment policies which he said are helping keep the market in Scotland in better shape than south of the Border.
Sodexo in 300 million deal: Sodexo has won a contract renewal thought to be worth 300 million for catering and facilities management with energy company Talisman. The five-year agreement, awarded after a bid process, secures around 300 jobs and covers 12 offshore installations, the Flotta oil terminal near Orkney and Talismans Aberdeen office.
Retailer bucks the trend with sales rise: Debenhams, which has 16 stores in Scotland after opening in Dumfries this year, said like-for-like sales excluding VAT, rose 3.7% in the final 10 weeks of its financial year to 01 September.
Head of ScottishPower’s parent company Galn calls for united European strategy: The Head of ScottishPower’s parent company, Iberdrola, has called for a united European energy strategy to bring investment into utilities and help pull the continent out of its economic crisis.
Chances raised for Bank of England to print money as inflation falls: BANK of England rate-setters have been given extra leeway to pump more cash into the struggling U.K. economy after a dip in inflation last month. The fall in the annual rate of consumer price inflation to 2.5% from 2.6% in July had been widely expected as higher prices at the petrol pump were offset by an easing in clothing costs and domestic gas bills.
Stafford eyes swoop for JJB: The owner of Ireland’s biggest sports retailer has emerged as a contender to buy all or part of JJB Sports, whose trading and financial troubles have placed it on the brink of administration. Sources say Dublin-based conglomerate Stafford Group, which is privately owned and turns over 400 million a year in areas such as sports retail, shipping and energy, will go head-to-head with Mike Ashley’s Sports Direct to snap up JJB assets at a bargain price.
Lloyds Banking Group and HBOS merger PR veterans take new roles: Two former executives who handled communications during the torrid merger of Lloyds Banking Group and HBOS have found new roles. Shane O’Riordain, the former Head of communications for both HBOS and Lloyds Banking Group, will be relocating to Australia in February as he takes up a new role with Sydney-based bank, Westpac Group.
HMRC launches crackdown on London lawyers: The legal industry reacted with surprise after Her Majesty’s Revenue & Customs (HMRC) announced a crackdown on tax dodging by London lawyers, with the aim of recovering up to 3 million in missed payments.
New U.K. takeover rules lessen uncertainty for target firms: New measures to identify takeover bidders and tighter offer rules have almost halved the amount of time that target firms spend under siege, research out claims.
Ashley’s move for JJB thrown by new interest: Sports Directs bid for JJB has taken a setback as new offers for the retailer have surfaced, with Mike Ashley’s firm no longer considered the frontrunner for the bid.
Aibaba makes Yahoo buyback: Chinas Alibaba has gone ahead with its plan to buy back half the stake Yahoo owned in the company for about $7.6 billion (4.7 billion) as it moves closer to an initial public offering. Alibaba said it paid Yahoo about $6.3 billion in cash and $800 million in preferred shares in Alibaba Group.
Microsoft hit by security breach: Microsoft warned that hundreds of millions of its users were vulnerable to a bug on its Internet Explorer browser. The security flaw leaves Internet Explorer users open to hackers who could install viruses on computers.