PRESS DIGEST – Financial Times – May 6

Thursday May 6 2010

Financial Times

NUMIS BACK IN THE BLACK WITH HELP FROM FLURRY OF IPOS

Independent stockbroker Numis (NUM.L: ) reported a 6.14
million pound ($9.31 million) first half pre-tax profit after
benefiting from a clutch of initial public offerings. Numis was
mandated to list High Osmond’s Horizon Acquisition (HZN.L: )
vehicle and also whiteboard maker Promethean’s (PRW.L: ) 400
million pound flotation. The stockbroker avoided making direct
investments after writedowns on investments made during the boom
years saw it record a 6.35 million pound loss for the same
period in 2009. Chief executive Oliver Hemsley said: “We have
had a reasonably good downturn. We are in reasonably good
shape.”

JD WETHERSPOON SOUNDS CAUTIOUS NOTE ON RECOVERY

Like-for-like sales at pub group JD Wetherspoon (JDW.L: )
declined by 0.8 percent in the 13 weeks to April 25. Although
total sales including new openings rose 3.6 percent, the pub
group said it was more cautious on the outlook for 2011. JD
Wetherspoon warned that higher taxes and interest charges
coupled with the risk of weaker consumer spending will see it
scaling down its expansion plans, with 45 pubs to be opened this
financial year rather than the 50 it announced in January’s
trading update.

BUILDING SOCIETIES ‘UNFAIRLY TREATED’

Graham Beale, chief executive of Nationwide Building Society
and chair of the Building Society Association, claimed at the
sector’s annual conference that the structure of the Financial
Services Compensation Scheme places the mutual sector at a
disadvantage. The amount institutions pay into the FSCS is
dependent on the size of their deposit base, with building
societies generally holding more retail funding than banks and
therefore paying more into the fund which covers recent bank
failures. Beale said: “It is not right that the prudent pay for
the mistakes of the imprudent.”

ORGANIC REVENUE SETBACK RESTRICTS SAGE

Software group Sage (SGE.L: ) reported first-half results
marginally ahead of expectations but offered little indication
of an immediate upturn. Pre-tax profits for the six months to
March 31 increased by 15 percent to 159.6 million pounds due to
heavy cost-cutting, with turnover from subscriptions offsetting
declines in new sales. Organic revenue declined by two percent
despite Sage attracting 127,000 new customers in the period.
Chief executive Paul Walker, who is stepping down after 16
years, said a market recovery would see pent-up demand
materialise.

CORUS CHIEF ANSWERS CRITICS

Steelmaker Corus’ chief executive Kirby Adams has responded
to criticism of his management style by unions after becoming
embroiled in a long-running dispute with the Community steel
union general secretary Michael Leahy over the decision to
partly close its Teesside factory. Adams said: “I am a straight
shooter, I don’t sugarcoat and I might irritate some people. If
this is what some people might call ‘adversarial’ then it seems
to me that this could be a compliment.” Adams said Corus has not
given up its effort to find a buyer for the plant and is in
contact with “a few businesses that have made serious inquiries”
about a deal for the site.

UK BONDS REACH HIGHS AS MARKETS GAMBLE ON TORY TRIUMPH

Financial markets appear to be betting on a Conservative
victory in the UK general election on Thursday, despite the fact
that opinion polls still suggest a hung parliament. Investors
have been switching into gilts, with yields on ten-year UK
government bonds hitting their lowest level since December 2009
following four consecutive days of falls. It is thought that
investors view Britain as a safe haven from the economic woes
weighing on the eurozone economy, amid a growing view that the
Tories would win a strong mandate to cut the UK’s 163 billion
pound deficit.

BUDGET DEFICIT LIKELY TO OVERTAKE GREECE’S

New forecasts published on Wednesday by the European
Commission suggest that the UK’s budget deficit will this year
be larger than that of Greece, while growth will fail to meet
Treasury expectations. The Commission said that the UK’s deficit
would this year hit 12 percent of gross domestic product, higher
than any other country in the European Union. Greece’s deficit
is expected to reach 9.3 percent, compared to an EU average of
7.2 percent. In 2011 the EC predicts that the UK deficit will be
11 percent, the second highest in the EU behind Ireland.

MOODY’S OUTLOOK ON BP CHANGES TO NEGATIVE OVER OIL SPILL

Ratings agency Moody’s has revised the outlook for BP’s
(BP.L: ) credit to negative following the oil spill in the Gulf of
Mexico. The energy company also faces the prospect that Moody’s
could change its view of the company for the first time in more
than a decade. Moody’s said that strong operating results and
cash flow would cushion the impact of the disaster on the
company, but warned that it was “too early to exclude scenarios
leading to downward pressure on [BP’s] Aa1 rating”.

M&S FINANCE DIRECTOR QUITS

Ian Dyson stood down as finance director at retailer Marks
and Spencer (MKS.L: ) on Wednesday. Dyson, who will become chief
executive of pubs group Punch Taverns (PUB.L: ), made the
announcement within 48 hours of the arrival of new M&S chief
executive Marc Bolland. M&S is thought to be unlikely to ask
Dyson to work a six-month notice period, and the retailer now
finds itself searching for a new finance director as well as a
new chairman, with Sir Stuart Rose set to depart the latter
position next year.

TNK-BP TO SET UP FIRST IRAQ VENTURE

TNK-BP, the Russian oil venture half-owned by energy giant
BP (BP.L: ), announced on Wednesday that it has agreed to
establish a joint venture with the Iraq Oil Company for Oil
Investments to identify potential projects in Iraq. In 2009,
TNK-BP’s Russian shareholders argued that BP was blocking the
company’s international expansion, but the Iraq deal follows a
move into Venezuela last year, when BP agreed with the
shareholders to set up new mechanisms for joint control.
However, TNK-BP chief-executive-in-waiting Maxim Barsky said
that the company’s main focus will remain on development in
Russia.
Investing Analysis

($1=.6592 Pound)

PRESS DIGEST – Financial Times – May 6