Scottish Business Briefing – Thursday November 20, 2008

Published on Thursday 20 November 2008 07:45

WELCOME to scotsman.com's Scottish Business Briefing. Every morning we bring you a comprehensive round-up of all news affecting business in Scotland today.

BANKING & INSURANCE

Royal Bank of Scotland chief says: I'm so sorry

SIR Tom McKillop, the chairman of Royal Bank of Scotland, will today declare that he is "profoundly sorry" that the once all-powerful financial Leviathan has been brought to its knees amid the storm of the global financial crisis (Scotsman). Sir Tom will apologise to shareholders, customers and the bank's staff for taking the institution from a position of record profits of more than 10 billion to being forced to seek a humiliating 20 billion government bail-out in less than a year. His dramatic act of public contrition will be seen as an attempt to draw a line under the events of the few months in which the once invincible financial giant moved from world-beater to the verge of collapse. It is understood that Sir Tom decided that it was appropriate to make the apology in his speech to the shareholders' meeting today in Edinburgh, which is set to formally approve the move to take the government's funds.

Read all today's banking news from scotsman.com

ECONOMY

Business leaders urge tax rethink

The impact of the proposed local income tax would be "spine-chilling" in the current economic climate, business leaders have warned (BBC). Scottish Government ministers hopes to replace the council tax, claiming that a charge based on ability to pay is fairer than the current system. But Norman Quirk, from the Scottish Chambers of Commerce, said it would be "the wrong tax at the wrong time". The Scottish Government said it would be the biggest tax cut in a generation. But the proposals have been the subject of criticism from business leaders. Under Scottish Government proposals, a local income tax would be set at 3p in the pound, although there have been suggestions that councils could be allowed to vary the charge down from this.

Read all today's economics news from scotsman.com

INDUSTRY

Dawson shares jump on Chinese deal talks

DAWSON International has signed a non-binding agreement to sell its cashmere spinning business to a Chinese supplier that has previously tried to buy the entire company (Scotsman). Shares in the Kinross-based textile company jumped 43 per cent yesterday after it revealed that it was in talks with Zhongyin Cashmere, which is based in the city of Lingwu, in the Ningxia province of central China. Dawson said it had signed a non -binding heads of agreement contract with Zhongyin over the possible sale of Todd & Duncan, its cashmere yarn spinning business. The company said there was no certainty a deal would go ahead, with any sale conditional on the completion of due diligence by Zhongyin and detailed contractual negotiation. As well as being a supplier of raw cashmere products to Dawson, Zhongyin has been involved in lengthy takeover talks with it in the past. In August 2007 Dawson confirmed it was in talks with Zhongyin over a sale of all or part of the company.

As offices empty, revenue rockets for Space Solutions

COMPANIES squeezing income out of spare office space have boosted turnover to a record 12.8 million at workspace design company Space Solutions (Scotsman). And the Aberdeen-based firm, bought out by management from commercial property company Chess Group in July last year, yesterday predicted that its turnover would rocket by 22 per cent to 15.5m in the current financial year. Profits came in at 1.06m. In the first set of accounts filed with Companies House since the MBO, Space revealed that revenue in the 12 months to 30 June beat expectations as the company increased its order book "significantly". Direct comparison figures are not available as the company's year-end changed following the MBO, but the previous turnover figure, for calendar year 2006, was 9.5m. The company, which has more than 100 staff, said companies that had been forced to axe staff were looking to alter the layout of offices to allow them to rent out unused sections.

Read all today's industry news from scotsman.com

RETAIL

Woolies to go for just 1 in new quid pro quo

IT IS one of the most familiar fixtures on Britain's high streets. Woolworths, the famous "pick'n' mix" retailer, has been a household name for almost 100 years (Scotsman). But it is now set to become the industry's most high-profile casualty of the economic downturn after it emerged that its 815 stores could be sold off for just 1. Woolworths, which has about 295 million worth of debts, has entered takeover talks which could see its retail division sold for a nominal sum to Hilco, a firm specialising in takeovers of distressed companies. Retail industry sources say other household names, including MFI, BHS, JJB Sports and WH Smith could all be vulnerable to takeovers in the next few months. Experts believe that retailers hit by the dramatic downturn in the housing market are likely to be most vulnerable.

Read all today's retail news from scotsman.com

TRANSPORT

'The bad old days are now over' as Flyglobespan returns to profit

NO-FRILLS airline Flyglobespan has staged a dramatic recovery, announcing a full-year profit – following a 13 million loss – and a further contract win in its lucrative winter plane leasing business (Scotsman). The firm, which is predicting higher profits in the current year, revealed it had returned to the black in the 12 months to 31 October, producing a profit understood to be in the region of 1m. The result was boosted by record load factors in the summer months and strong revenues from leasing out planes and crews during its quieter season. Flyglobespan said its latest multi-million-pound deal with the Ministry of Defence for transporting troops to Qatar increased the latest full year's turnover from winter leasing to just over 40m – 60 per cent more than the previous year.

Read all today's transport news from scotsman.com

Scotsman Business Club

Get to the heart of the issues affecting Scottish business at www.scotsman.com/businessclub. Features include blogs from The Scotsman's formidable team of business writers - including Bill Jamieson, Martin Flanagan, Peter MacMahon and Scott Reid, a diary of forthcoming company announcements and networking events and video interviews with leading business experts covering a wide range of useful topics."