Today's letter from the Editor
The Business Matrix: Monday 16 May 2011
The mobile phone giant should be in an upbeat mood when it reveals full-year results on Tuesday. It has already upgraded forecasts and profits are expected to hit about £12bn. Vodafone also solved a major strategic headache in April with the sale of its stake in French mobile phone group SFR, raising £7bn, with £4bn to be handed back to investors.
Mothercare is expected to reveal a slump in full-year profits to under £30m on Wednesday, amid speculation it is planning to increase the rate of store closures. But, while the retailer has issued two profit warnings this year, and was particularly hit by the snow over Christmas, its overseas business is booming, led by growth in India, China and Australia.
Britain’s second largest pub firm Enterprise Inns is expected to report a drop in profits of nearly a fifth to about £70m at the half-year stage on Tuesday. But with Easter and the Royal Wedding bank holiday in the second half of the year and beer industry sales rising, the analysts are hoping to see some recovery in trade since the first quarter of 2011.
Customers will be looking for signs of further bill rises when SSE, the UK’s second biggest energy firm, unveils full-year results on Friday. The firm, which was the first to raise prices last year, blamed a drop in profits in the half year on soaring wholesale gas prices. After its December price hike, SSE is expected to meet City expectations of profits of £1.3bn.
First quarter sees M&A slowdown
The main market of the London Stock Exchange and the Alternative Investment Market saw the completion of just 14 deals over the first three months of the year, down 39 per cent on the 23 deals sealed in the previous three months, and 61 per cent lower than the 36 completed in the first quarter of 2010, according to a survey by the law firm Wedlake Bell.
Lower inflation in AIM listing costs
The cost of listing on London’s Alternative Investment Market has climbed by less than 1 per cent over the past year – well below the average 5 per cent rise in fees in each of the preceding four years, according to the accountancy firm UHY Hacker Young. Overall, the firm said the price of a listing on the growth market now stood at around 7.3 per cent of all funds raised.
Charterhouse to buy ERM stake
The private equity group Charterhouse Capital has agreed to buy a 65 per cent stake in Environmental Resources Management in a deal which values the environmental consultancy at around £585m. The remainder of the business will be owned by the company’s 440 partners, which includes senior managers.
New sellers push up asking prices
House prices booked a monthly gain of 1.3 per cent over the past month, while new sellers’ asking prices rose to their highest in almost three years, according to Rightmove. The median asking price, although lower in real terms because of inflation, is now only 1.5 per cent below the May 2008 peak of £242,500.
Rival bid for Canada’s TMX
A group of Canadian financial institutions, including banks and pension funds, have made a takeover proposal to TMX, challenging the London Stock Exchange’s plans to merge with its Toronto-based counterpart. The proposal, from the Maple Group Acquisition Corporation, is not a formal offer.
Diageo aims for Asia-Pacific boost
Diageo expects to draw 20 per cent of its sales from Asia-Pacific by 2015, the company’s regional president, Gilbert Ghostine, said yesterday. “Our journey to 20 per cent will come half organically, and half through acquisitions,” he said. Currently, the region accounts for 12 per cent of the drinks giant’s sales.
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