The leading body for the water industry has announced plans to improve Britain’s infrastructure between 2010 and 2015 with £27bn funding. According to Water UK, the £27bn investment is in addition to £80bn already invested by the Water Industry since 1990.
The announcement is thought to counter any resentment against the planned increase in water bills, despite companies making huge profits. An average increase of 2% above inflation every year in water bills will be too high, especially for the many already struggling to cope with the impact of soaring fuel prices.
Pamela Taylor, the chief executive of Water UK, claimed the average increase in water bills was less than 12p per week. She added the industry needs to invest £250bn for replacement of mains and sewers; it is currently spending £2 billion a year on renewal.
Investment can not be postponed indefinitely since it would result in collapse of services, which would annoy customers and would also damage the economy and environment. The industry highlights its accomplishments post-privatisation, and claims that the leakage rate of 228 litres per property each day has been cut down to 149 litres.
According to Regina Finn, chief executive of Regulator Ofwat, the industry’s draft business plan would be examined. The regulator would make sure that each plan takes due note of customer concerns and also meets the expectations of the Water industry.
The Co-op Group, which acquired Somerfield Store for £1.5bn, has decided to break up the store’s portfolio. It has appointed investment bank Credit Suisse to manage the sale of its 107 stores. The Credit Suisse bankers have invited preliminary proposals from bidders for submission on or before August 22. The sale involves freehold as well as leasehold properties.
The Co-op group has put 10 London stores on sale including Camberwell, Tooting and Kentish Town. Credit Suisse bankers, in their sales memorandum, have described this auction as a unique opportunity for acquiring national prominence through acquisition of a significant portfolio of retail grocery stores. The memorandum further mentioned that all transactions would be affected with the sale of stores, including elements of stock, fittings and fixtures.
The Co-op Group spokesman refused to comment on details of the memorandum, but added the Group has approached a number of prospective bidders who showed interest in the deal.
Co-op is seeking involvement of the Office of Fair Trading to take care of competition issues. It is not yet known which major supermarket players are likely to show interest in buying these stores. Speculation is rife that WM Morrison, J Sainsbury and Asda might stake a claim as part of their expansion plans.
Centrica, the owner of British Gas, is proposing a cash offer in its bid for British energy to counter government objection, which has 35% stake in the nuclear group. Centrica aims to buy more electricity and upstream gas business to minimise its dependence on the volatile energy markets.
Further to recent speculation, Centrica confirmed it is indeed in discussions with a third party for taking a minority ownership in British Energy, subject to several conditions, comprising this third party acquiring British Energy successfully and receipt of regulatory clearances.
If the third party does not proceed with an offer, or the firm’s discussions with them do not end in an agreement, Centrica might well consider a number of other alternatives regarding British Energy stake.
Centrica has no background of nuclear power generation. Centrica has insufficient cash, but its debts are relatively much lesser and it would be in a position to make an offer of cash and share for the British Energy. It would tap some of its shareholders, who are also investors in British energy, over the bid issue.
EDF’s £12bn cash bid was earlier rejected by British Energy’s largest shareholders Invesco and M&G terming 765p a share offer as very low.
All3Media is set to become the largest British-owned TV independent TV producer this year with a turnover of £400m. The producer of TV hits Midsomer Murders and Richard and Judy has increased its turnover by £22m in last 11 months.
The sales are likely to double by the end of this year in August, courtesy a string of acquisitions during the past few months. Acquisition spree has shot up All3Media’s international income by around 33% from 10% of group turnover two years before.
Chief executive and co-founder Steve Morrison earned gross salary and bonuses of £419,000 for the year as against £384,000 in 2006. While the two other directors were paid £60,000 as monitoring fees for their advice, Permira charged a combined £183,000 fees for representatives Carl Parker and Robin Bell-Jones. Earnings that form key measurement for the equity-owned companies increased to £35m in 11 months from £27m in 2006. Interest payments rose to £43m from £8.7m in 2006.
Three foreign-owned groups – the X Factor producer Fremantle, IMG World and Big Brother producer Endemol - ominate the UK’s independent television production. All3Media now becomes the largest operator after these three.
Virgin Media, the UK cable company suffered an operating loss of £333m after writing down £366m of its mobile phone business.
Its initial value of £960m, when Sir Richard Branson sold it in 2006, now stands at £600m.
Presenting results of second-quarter, chief executive Neil Berkett mentioned that company’s operating loss in three months to June was £333m, against profit of £3m for the corresponding period last year. The decline in number of new customers due to shifting of houses when home owners disconnect cable, resulted in revenue fall of £4.5m to £990.5m
But Berkett is confident and claims that under a tougher economic environment, company has shown good resilience and would overcome the economic uncertainties successfully.
The percentage of customers deserting the company has continued falling down and stands at 9.7 per cent compared to BSkyB’s 9.8 per cent a year. This rate of 9.7 per cent which was 19 in the second quarter of last year indicates a marked improvement in the defection rate.
50 per cent of Virgin customers avail more than three of its services viz. broadband, television, mobile and landline phone connections. Virgin Media’s “revenue generating units” which represents number of products sold, increased from 142,000 to over 12m.
As a measure for improving revenues, Virgin hooked BBC’s online show library up to its network, enabling its customers to watch iPlayer on their television rather than a computer.
The dealer in historical signatures and stamps, Stanley Gibbons has doubled its online sales in addition to its success in in-store sales. Wise investors have chosen collectables to protect themselves against rising inflation.
Martin Bralsford, chairman Stanley Gibbons, states that it was never clear how the investment in collectibles as an alternative asset could be beneficial to an investor. But historical signatures and rare stamps are enabling a safe business diversification in unfavourable economic conditions and also offering a hedge against inflation.
Bralsford goes on to add that collecting is a passion; hence there is no correlation between property prices or stock market and other form of investments with the prices of stamps and historical signatures. He argues that high inflation times have always witnessed increase in demand of collectables.
Stanley Gibbon, the oldest stamp dealer in the world, registered 6% jump in profit before tax to £1.8m. Sales of its memorabilia, autographs and rare stamps shot up by 12% to £9.8m. The company was able to tap in to the US and Far East market through internet after redesigning its website.
Company’s shares gained 5.7% to 166.25p. Company announced 14% raise in interim dividend to 2p a share.
According to company officials, the GB30 rarities stamp price index for the British stamps, rose by 39% over last year.
Platinum miner Lomnin’s board rejected £5bn takeover offer from Xstrata, calling it opportunistic and blamed Xstrata for making an unwelcome attempt to buy the company at a price much lower than the value of its assets.
Lonmin is demanding an offer of £33-a-share amounting to 42 per cent premium on closing price on Tuesday.
The deal could have boosted Xstrata’s attempts in diversification away from nickel, copper, ferrochrome and coal business. Xstrata started its own platinum business in South Africa last year and has an ambitious plan of producing 1m ounces of platinum in the next 10 years. A deal with Lonmin would have enabled the group to attain this target in the shortest span of one year.
Some analysts feel that Xstrata can clinch the deal by increasing its bid by 20 per cent to £40-a-share, but its chief executive Mick Davis insists that Xstrata’s offer price was right and some shareholders endorsed fairness of the bid. He claimed that Xstrata had the required expertise to fully exploit Lonmin’s assets and bring turn around in its poor performance.
Xstrata bought additional 2.65 per cent stake in the market yesterday, taking its total stake in Lonmin to 8 per cent.
Graham Birch, Black Rock fund manager who is also the shareholder of Lonmin, remarked that Xstrata took advantage of a weak market and made an opportunistic offer.
McDonald is all set to reap the advantage of consumer trading down in the backdrop of consumer downturn. It will recruit 4,000 new employees increasing its current strength of 67,000-strong UK staff by 6 per cent.
The fast food chain will launch its national ad campaign to improve perceptions of people, about working as a fast food operator. According to McDonald’s UK spokesperson Nick Hindle, the chain’s expansion in Britain, its longer opening hours and increased footfalls in restaurants have created the need for recruitment of additional staff. After the launch of ten new sites in the UK, 600 new staff will have to be employed by the company.
Hindle informs that McDonald’s captured substantial market share of its rivals and increased sales by ten per cent in the first half of current financial year. According him, this was company’s ninth consecutive quarter sales growth last month.
Steve Easterbook, McDonald’s UK chief executive, claims that the company is more recession resistant than the other companies in the face of a gloomy economy.
He had launched a campaign against the dictionary explanation of McJob as “a low paid, un-stimulating job created by the service sector expansion”. McDonald will now be using the term “My McJob” in its new recruitment advertisement.
Drax group has reported a decline of 45 per cent in its profits in the first half of current year. Its selling prices could not compensate the increase in coal costs and carbon emission allowances. It registered £150m profit before tax, down from £273m registered last year, though revenues jumped to £802m from £640m on account of increased selling prices. Drax revised its electricity charges from an average £48.1 megawatt an hour to £53.6.
Erosion in profits was caused by the costs of coal and carbon emissions which doubled up from £222m to £413m during last few months. Coal prices shot up from $68 a tonne to $218 between 2006 and 2008. The cost of extra carbon emission permits went up to £108m from £11m during the same period. The permit for one tonne emission of CO2 now costs £16.50 against £3 in the previous years.
Drax has tried to contain other costs by increasing co-firing capacity and efficiency of its generators. It is planning to generate 500 megawatts of output through sustainable sources making use of 15 per cent extra renewable resources.
According to chief executive Dorothy Thompson, despite the fact that bio matter is costlier than coal, Drax is confident of getting sufficient economic return on its investment.
Four British Airways executives have been charged with price fixing in collusion with Virgin Atlantic. They can face five years of imprisonment for involvement in fixing passenger fuel surcharges. The executives charged for the grave offences include Martin George, former director marketing, Andrew Crawley, present head of BA’s sales, Iain Burns the former communications head and Alan Burnett, ex-in-charge for airline’s UK and Ireland sales.
BA was slapped with fine of £271.5m by the US authorities and the Office of Fair Trading last year, for fixing fuel charges for cargo and passenger flights. The four accused are summoned to appear on 24 September, before the City of London, magistrate court. This would probably be the most high-profile cartel trial in the UK.
Six more former employees of BA, including Gareth Kirkwood who was removed over Terminal 5 opening fiasco, are facing investigation by the US department of justice. BA ‘s reputation which had nose dived after the Terminal 5 incident would be embarrassed further, but the scandal would also expose Virgin Atlantic for its involvement although it escaped prosecution and won immunity from punishment. Two of its former executives, Willy Boulter and Paul Moore have been named in the lawsuit in the related case.
BA chief Willy Walsh wants Virgin Atlantic’s role in the scandal to be exposed, since people deserve to know the whole truth. Fuel surcharges are the levies on tickets imposed to cover fuel cost. Millions of passengers in Britain pay up to £20 for a return journey.