CAPITA SEES GAIN FROM THE PAIN OF GOVERNMENT SPENDING CUTS
Paul Pindar, chief executive of Capita, has informed investors that the outsourcing group is likely to benefit from government spending cuts but could suffer short-term pain. Pindar said he saw 'opportunities across the government to save very material amounts of money'. The news prompted broker Evolution Securities to upgrade Capita shares to 'buy' from 'add', while fellow broker Numis raised them to 'add' from 'hold'. The first six months of the year saw the company secure new and renewed contracts worth 523 million pounds. An average figure from a Thomson Reuters poll of 14 analysts suggested that Capita would post a pre-tax profit of around 358 million pounds for the year.
IT MAY HAVE BEEN COLD, BUT WINTER WASN'T WINDY ENOUGH
Scottish & Southern Energy said on Thursday a dry and relatively windless winter had led to a 30 percent fall in the amount of electricity produced from renewable energy. The country's second-largest energy supplier said output from its portfolio of nine wind parks, nine hydroelectric stations and one biomass plant fell to 700 gigawatt hours in the three months to June 30, compared to 1000 gigawatt hours in the same period last year. The group's interim management statement showed SSE made up for the fall-off by upping production at its 11 gas and coal fired stations.
NEED TO KNOW: SABMILLER
SABMiller reported a one percent decline in lager and soft drink volumes in the three months to the end of June, as worldwide consumer demand 'remained uneven'. The global brewer said lager volumes had improved over the quarter, returning to growth in June.
TEMPUS
Autonomy (buy - but perhaps not in the run-up to any results)
Colt Group (the shares look well up with events)
Tate & Lyle (worth picking up, especially on further weakness)
The Daily Telegraph
UNIQ LOSS NARROWS ON EUROPEAN SALE
Food group Uniq has posted a smaller loss of 8.6 million pounds for the first half of 2010, down from 12.5 million pounds in 2009, after selling its European business and new ranges for retailer Marks & Spencer. Figures show revenue at the firm rose to 156.5 million pounds, from 141.1 million pounds in 2009. But the sandwich and salad maker said it was weighed down by its 436 million pound pension deficit and warned it may need to consider a recapitalisation if it fails to negotiate how to fund its final salary scheme with the Pensions Regulator.
DEVELOPMENT SECS EYES INVESTOR CASH
Property group Development Securities is seeking
100.2 million pounds as part of fund
raising from shareholders to focus on potential deals worth between 25 and 30 million pounds in London and provincial markets. Previously, the firm, which is leading the redevelopment of Paddington in London and recently acquired the Manchester Evening News Arena, raised 94 million pounds in an equity issue in July 2009 but expects those funds to run out by September. Chairman David Jenkins said Development Securities is strongly positioned to 'take advantage of the dislocation in the UK property market caused by difficulties that the market is experiencing in obtaining access to capital, both equity and debt'.
OCADO SHARES SUFFER ANOTHER FALL
Ocado, the online grocery retailer, saw its shares fall further on its second day of conditional trading on the stock market. On Wednesday morning its shares were priced at 180 pence, but fell 4.8 percent to 159 pence. The pricing on Wednesday was at the bottom of the 180-200 pence range, which had been dropped from a 200-275 pence indicative range the day before. Ocado said its finance director Andrew Bracey purchased 2,000 shares on Wednesday at 169.25 pence a share.
MINERVA BATTLE ESCALATES
Property developer Minerva's largest shareholder KiFin has called an emergency general meeting. Nathan Kirsh's investment vehicle owns a 30 percent stake and plans to table resolutions calling for Minerva to disclose financial information and to remove its chief executive and chairman. KiFin said it was not looking to gain control but was concerned by the company's continued refusal to answer basic questions.
QUESTOR
IG Group (hold)
Capita Group (buy)
The Independent
AUTONOMY STOCK SLIDES AS RESULTS MISS ANALYST EXPECTATIONS
Software company Autonomy's Thursday announcement of a drop in pre-tax profits and margins during the second quarter of 2010 sent its shares down by over 12 percent in early trading, eventually closing nine percent down at 1,649 pence. Pre-tax profits fell 5.9 percent to 67.5 million dollars, with operating margins down three percent. Autonomy won major contracts with large firms like oil giant BP and supermarket Sainsbury's during the second quarter. Autonomy chief executive Mike Lynch said the firm was confident in its ability 'to continue to deliver strong growth for the full year'.
ASDA STOPS SELLING ALCOHOL BELOW COST
Asda has become the first supermarket to end the policy of selling alcohol at below-cost prices. In a letter to the Home Secretary Theresa May, chief executive Andy Clarke said the move was a 'first step' in changing the way alcohol is sold in the UK. The change in policy came into effect on Tuesday and means alcohol will not be sold below the cost of duty plus VAT. Clarke said he welcomed the government's plans to tackle alcohol misuse.
INVESTMENT COLUMN
Petropavlovsk (buy)
Kingfisher (buy)
RPC (buy)
The Guardian
CANADIANS ARE TRYING TO BUY TOMKINS ON THE CHEAP
Standard Life Investments, one of the biggest shareholders in Tomkins, with just under a three percent stake, has warned that Monday's 2.9 billion pound bid approach for the engineering group 'materially undervalues the business and its prospects'. The asset manager expressed 'disappointment' that Tomkins had decided to open its books after receiving the 325 pence-a-share offer from a consortium made up of the private equity group Onex Corporation and the Canadian Pension Plan Investment Board. It said it would vote against the deal.
HOME OFFICE STRIPS RAYTHEON GROUP OF BORDER CONTROL CONTRACT
The government has scrapped its 750 million pound e-Borders contract with a consortium led by U.S. defence group Raytheon and which also includes British support services firm Serco and defence company QinetiQ. The programme to put in place an electronic system to check travellers passing through Britain had been running at least a year late. A spokesman for Serco, which oversaw the infrastructure and service management of e-Borders, said the firm had completed its part of the contract and hoped to be part of future arrangements.
Prepared for Reuters by Durrants
Keywords: PRESS DIGEST British business July 23
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