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Some Business News as at 2006-03-04Vodafone
pulls plug on Japan operation
Vodafone is to quit Japan, its biggest single market, ending two decades of relentless global expansion during which it has gone from a division of Racal in 1985 to a £73bn multinational. However, a dismal performance in recent years has forced Vodafone to admit defeat for the first time in one of its major markets. It is in talks to sell a controlling stake in its Japanese business to SoftBank Corporation for about £5bn, with the highest estimates from analysts suggesting a value of £6.6bn. The shares rose sharply, climbing 8.5pc to 121.5p as investors furiously traded 1.6bn shares, a performance that was largely responsible for a 25.7-point rise in the FTSE 100 to 5858.7. A sale is unlikely to be completed immediately but could come before the end of this month. A deal would provide much needed relief for Arun Sarin, Vodafone's embattled chief executive, who has been forced to deliver a string of poor trading updates in the past two years, culminating in a statement on Monday which said Vodafone was writing down the value of its operations by £28bn, reflecting lower growth prospects across its major markets. He has also been under pressure from some shareholders to sell Vodafone's 45pc stake in the Verizon Wireless business in the US and address rapidly slowing growth in the mature markets of western Europe. At its recent interim results, Vodafone, which is being advised by UBS on the Japanese disposal, said it generated revenues of £3.6bn from Japan, £2.9bn from Germany and £2.6bn from the UK. In a statement yesterday the company said: "Vodafone confirms it is in discussions regarding a potential sale of a controlling interest in Vodafone Japan to SoftBank. These discussions may or may not lead to a transaction." The company has failed to recruit customers to its third generation mobile phone services in Japan, where there is fierce competition from the likes of NTT DoCoMo. In November it said Japanese revenues were up just 0.4pc and the division's customers had fallen to 14.99m from 15.12m a year earlier. At the end of January Vodafone said the Japanese market remained "challenging" as competitors focused on grabbing market share through aggressive price competition. A turnaround plan had started to stabilise customer numbers, but average revenue per user has continued to fall. Vodafone faced the prospect of even stiffer competition in Japan this year after SoftBank won a licence to enter its local mobile phone market. Selling out to its newest rival will provide the company with a neat exit route. However, Vodafone refused to indicate what it planned to do with the proceeds of the sale or whether it would receive them in cash or partly in SoftBank shares. Analysts heralded the news as a significant moment in Vodafone's development and in Mr Sarin's tenure. Robin Hearn of Ovum said: "For those shareholders who have been pressing Arun Sarin to do something, he will have bought himself some time." Hilary Cook of Barclays Stockbrokers said: "What the market wants is for the company to run itself with a steady revenue stream. There is no need for Vodafone to chase global dominance." Past
Times inquiry likely to call supermarket big names
The finance directors of supermarket retailers Tesco and J Sainsbury look set to become embroiled in an investigation surrounding the collapse of historically-themed gift retailer Past Times. Tesco's Andrew Higginson and Sainsbury's Darren Shapland could be dragged into an inquiry looking into the demise of Past Times' parent company Retail Variations. The company was placed into administration on January 4 after collapsing with debts of more than £25m. Messrs Higginson's and Shapland's role and that of a host of other well-known faces in the retail world will be looked into after Retail Variation's creditors called for an independent investigation looking at the role of former directors of the business. Accountancy firm KPMG was last night appointed to lead the inquiry after the first meeting of the company's 700-plus creditors. KPMG partner Richard Philpott will head the investigation, reporting to Vantis, whose Nick O'Reilly and Simon Glyn were appointed as joint administrators in January. Mr O'Reilly told The Daily Telegraph: "The investigation will look at the period leading up the administration and the whole range of issues centring on what happened. It can go back as far as the formation of the company. What we want to make clear is that nothing is off limits for the investigation." Companies House filings show that both Messrs Higginson and Shapland were directors and shareholders of Retail Variations. Although Mr Higginson resigned from the board on August 5, 2003 and Mr Shapland departed on May 5, 2004, the scope of the inquiry has the potential to focus on their time in office at the company. Mr Higginson said he had no particular comment to make, adding: "It [Retail Variations] was in reasonable shape when I left the business." Mr Shapland could not be reached. Other high-profile former directors include Fat Face entrepreneur Clive Beharrell, and former Kurt Geiger owner David Spitz, who quit the board just two weeks before it went into administration. No timescale has been set for KPMG's investigation. It will also look into Vantis' sale of Past Times to turnround specialist Epic Investment Partners in January and KPMG will also become joint liquidator alongside Vantis when Retail Variations is liquidated in the summer. Isabel Martinson, chief executive of the Gift Association, representing 50 creditors owed more than £2m, said she was pleased with KPMG's appointment. Spanish
ready to move on BAA bid
The Spanish-led consortium working on a bid for BAA is planning to make a formal approach to the airports operator within the next fortnight. BAA shares shot up 28 to 835½p on reports in Madrid that the consortium, led by infrastructure group Ferrovial, could make its move early next week at 920p a share. While this is well wide of the mark, the consortium is conscious that when its interest was first revealed three weeks ago, it indicated any move would be within weeks rather than months. The consortium, believed to include Temasek, the investment arm of the Singapore government, and Canada's Caisse de Dépôt de Québec, is being advised by Citigroup. Caisse de Dépôt is thought to be advised by HSBC. It has yet to decide the price to make an approach to the BAA board, though a conditional offer below 850p per share, valuing the equity at £9.2bn, is likely to get short shrift. BAA will also have £8bn of debt by 2008. Analysts at Dresdner Kleinwort Wasserstein yesterday said BAA could be worth 810p-995p a share, arguing "at least 900p is required to interest existing shareholders". DKW also suggested that a regulatory regime that leaves the world's busiest airport, Heathrow, as only the 17th most expensive in Europe in terms of landing charges could need overhauling. It said: "The potential bid for BAA... throws the spotlight on the pricing structure at Heathrow, where almost 20 years of UK utility regulation have left it underpriced and undervalued. It may be that this is politically acceptable, with its attendant congestion and environmental issues, but it may be time to debate that structure." In what could shape up into a major political debate, DKW argued: "Capacity can be better rationed through something closer to open-market pricing, having the effect of driving out the operators of small aircraft or uneconomic routes who are only using Heathrow because of the artificially low aeronautical charges, lowering the investment requirement of BAA and reducing the planning and environmental pressure. "It would also have the political side-effect of dramatically increasing the market value of BAA and rendering it virtually invulnerable to a bid. The additional value creation could be divided between taxpayers, users and shareholders through some form of windfall tax," it said Cairn
climbs as India eyes oilfields
The possibility that Cairn Energy, Europe's largest independent oil company, might be swallowed by a larger rival has again been raised after India's state-run energy company said it was interested in buying Cairn's prized assets in the country. Shares in the Edinburgh-based company rose 30p to £19.97 yesterday after Subir Raha, chairman of India's Oil and Natural Gas Corporation (ONGC), said a bid for Cairn's oilfields in the country was "one of the opportunities we are looking at". Cairn's Indian assets have been valued by analysts at about £2bn. They include extensive oilfields in the desert of Rajasthan which, when Cairn discovered them in 2004, marked the largest finds in India for 22 years. The discovery also transformed Cairn, founded by chief executive Sir Bill Gammell, pushing the shares up 400pc since January 2004 and making it the largest oil and gas company below national majors such as Shell and BP. Cairn also operates in Bangladesh and Nepal. The Rajasthan fields are still in the exploration phase. If they meet expectations, they should more than double Cairn's daily delivery to 250,000 barrels. ONGC is Cairn's exploration partner in India. If it tabled a bid it would be buying Cairn's largest and fastest growing part of the business. Cairn, which reports full-year results on March 14, would not comment on the possibility of a closer tie-up with ONGC. IMF
voices unease at house valuations
The British economy is still being threatened by over-valued house prices and energy costs, despite having successfully battled through the toughest year in a decade, the International Monetary Fund has warned. Pensions and savings remain threats to the economy, the Washington-based IMF added, in its annual survey of the UK. But for the first time in a number of years it has dropped calls for Gordon Brown to raise taxes to mend his accounts. The IMF lifted its growth forecast for the UK by a quarter point to 2.5pc but said that "in 2005, policy makers faced their toughest challenges in several years. "The slowdown in real GDP growth and the rise in inflation were sharper than in other G7 countries, presenting a dilemma for monetary policy," it added. The economy grew by 1.8pc last year but while Mr Brown continued to borrow to fund spending, he raised North Sea oil taxes, helping balance his Budget. The report appeared to imply that Mr Brown had won a long-running spat between the IMF and the Treasury, in which the latter repeatedly refused to accept the former's fiscal sums. But despite no longer urging the Chancellor to raise taxes, the IMF indicated that the closely watched "golden rule" had lost some of its credibility after the Treasury changed the dates of the economic cycle on which the rule is judged. The IMF said that despite the recent slowdown in property inflation, "house prices are likely still overvalued". The warning will cause added concern to analysts, since households have become even more dependent on their homes as a store of value in past months, with evidence that they are transferring billions of pounds of credit-card debts on to their mortgages. The report also warned: "The key issues facing the public finances in the coming years are pensions and health spending." Euros
to replace dollars in Syria’s economic transactions
By Iaonnis Solomou, Nicosia: Fearing increased US pressure from
possible futher sanctions, the Government of Syria has decided to
replace US dollar with the euro in all foreign currency transactions to
be made by government departments and public utilities. Repayment of
debts and obligations to foreign creditors, as well as income to be
collected from foreign debtors will also be made in euros. In 2004,
Syria’s imports totalled 6.7 billion dollars and exports 5.4 billion
dollars. Although the decision is bound to create numerous practical problems and cumbersome accounting procedures, Syrian officials believe that it was unavoidable given the real possibility of very serious sanctions on the part of the United States. The switch to euros would help the Syrian economy avoid settlement problems as well as cope with problems arising from the transfer of foreign funds in US dollars via US Banks in case of stiffer sanctions. Duraid Durgham, Head of the Commercial Bank of Syria, commenting on the measure said that it was a precautionary measure. The money involved amount to billions of dollars and the move to euro “would help avoid complications with correspondent banks which expressed a preference to deal in euros,” he said. It should be recalled that Damascus has already been suffering from some sanctions since May 2004, following the adoption by the US Congress of the Syria Accountability and Lebanese Sovereignty Restoration Act. While interest in the business affairs of Tessa Jowell's husband centres on Italy, a search of Companies House listings shows that David Mills has maintained a complicated web of directorships in Britain. Mr Mills currently holds five posts as director or company secretary of four UK-registered companies, the purposes of which are unclear. But this number has diminished significantly since the 1990s, when he accumulated more than 100 company appointments. He has since resigned from 46 and 54 have been dissolved. Among the many companies with which Mr Mills has been associated are several with a distinctly Italian flavour: Fininvest, Silvio Berlusconi's holding company (from 1992-98); Silvio Berlusconi Entertainment Ltd (1992-95); Renault F1 Team Ltd (1991-2000); Benetton Retail Ltd (1993-2004); and Pizzarotti Construction Ltd (1991-92). The current appointments are: Secretary and director of Mayfair Corporate Services Ltd, where he owns the only issued share. The only other director is Janet Girardi, described as a PA. This is a tiny company and at March 3, 2005, it showed a cumulative profit of £13,654. However, Mayfair Corporate Services Ltd is itself a director or secretary of some 41 other companies. Director of Mayfair Corporate Management Services. This is a dormant company and Mayfair Corporate Services owns all of the 1,000 issued shares in it. Mr Mills is the sole director. Director of Saint James Capital Ltd. This was only formed in 2005 and so has not yet filed any accounts. Once again, the 1,000 issued shares are all owned by Mayfair Corporate Services Ltd. The only other director is Iranian citizen Shahan Shirkhani, who is a lawyer. Director of Magnoglide Ltd. Mr Mills is the sole director of the company and the 1,000 issued shares are all owned by Fiduciaria Toscana SA of Florence, Italy. The company holds investments in European companies and, at Dec 31 2004, showed a cumulative loss of £189,233. The company owns 25 per cent of the issued capital of Ancorra SRL, a company incorporated in Italy. |
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