Business news in brief
Tuesday 04 March 1997
A warning from AT&T yesterday that 1997 earnings would suffer from competitive pressures had no negative implications for British Telecom's planned merger with MCI Communications, analysts said. "AT&T is the big incumbent and has more to lose, while MCI is the stronger, nimbler competitor," said Jim McCafferty at ABN Amro Hoare Govett. AT&T chief executive Robert Allen announced that first-quarter earnings in 1997 could fall as much as 10 per cent below the 76 cents per share recorded in the fourth quarter of 1996.
British Petroleum and Royal Dutch/Shell have discovered a third oilfield west of Shetland. The companies said an exploration well had encountered a potentially commercial volume of hydrocarbons on UK block 204/19. The discovery, named Suilven, lies to the north of the Foinaven and Schiehallion fields, some 100 miles west of Shetland. Although the well was not tested, the log and core data confirmed the presence of hydrocarbons, the companies said. Richard Olver, deputy chief executive of BP Exploration, said: "This is an encouraging discovery."
SIG, the building products group, has sold its security and hardware division to a management buyout team, led by David Hunt and backed by NatWest Ventures, for pounds 65m. Bill Forrester, chief executive of SIG, said the company would require a 15 per cent return on any acquisitions it made with the proceeds of the sale of SIG Architectural Products. "We are looking for bolt-ins that would raise average return to shareholders," he said and added that SIG Architectural Products was producing a return of only 10.5 per cent on the value placed on it by the buyout team.
Traders who have lost out in barter transactions will be able to obtain bad-debt relief for VAT following a European Court of Justice ruling in favour of jewellery chain Goldsmiths. The company's advisers, accountants Ernst & Young, argued that the UK Government had exceeded its authority in claiming that repayments could only be made if the transaction involved money.
Newman Tonks, which has agreed to be taken over by Ingersoll-Rand, said the cost of defending the hostile bid made by FKI was pounds 6.3m. Full- year results from Newman showed operating profits rose from pounds 19.3m to pounds 20.6m, but the pre-tax result fell from pounds 27.2m to pounds 6.3m after pounds 11.8m of exceptional charges, against pounds 10.1m of credits last time. The total dividend rises from 6.9p to 8.025p.
Granada has sold the Plaza Athenee Hotel in Paris to PA Holdings France for pounds 45m. The hotel is part of the Exclusive portfolio and PA Holdings is controlled by a group of Brunei-based investors. In the last full 12- month trading period to January 1996, the Plaza Athenee made pounds 200,000 before tax from pounds 21m of turnover.
European Leisure announced a rise in first-half taxable profits from pounds 2.2m to pounds 3.04m. Interim dividend is being restored with a 1p payment. Ian Rock, chief executive, said American Pool Bars, Snooker Clubs and Maygay had traded well since the new year.
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