Transport group Go-Ahead said its rail division will contribute to Treasury coffers from April after seeing growth in its three commuter franchises.

Its London Midland service has been eligible for revenue support from the UK government’s Department for Transport (DfT) since November but Go-Ahead said this has not been required after passenger revenues on the commuter line jumped 13 per cent in the six months to 31 December.

Go-Ahead, whose joint venture with Keolis runs the Southeastern and Southern franchises, said its rail division will be a net contributor to the DfT from April, although Southeastern remains in revenue support.

Across the rail arm, which benefited from average regulated fare rises of 6% at the start of last year, profits were up 25 per cent to £16.5 million when £9m of one-off contracts are excluded from last year’s figure.

Passenger revenues leapt 9.6 per cent to £699.8m, which Go Ahead said reflected the continued shift away from car usage and better marketing. Passenger volumes rose 3 per cent on Southern and Southeastern and by 11.5 per cent on London Midland.

Go-Ahead expects revenues trends to continue into the second half but with January’s latest fare increases causing more modest growth in passenger numbers.

The period will see the start of a busy period for the UK rail market, with many franchises due for renewal and Go-Ahead working with Keolis on bidding for the Thameslink and Essex Thameside services.

Newcastle-based Go-Ahead described the performance of its bus division as robust after revenues increased by 4.7 per cent to £335.7m in the half year, with passenger journeys up 3.6 per cent. Profits were down 2.7 per cent to £18m as a result of implementation costs on a new contract.

The company is one of the UK largest operators with a fleet of around 3,900 buses carrying on average around 1.7 million passengers every day. It is the biggest operator in London and has secured two contracts to provide specific Olympic services this summer.

Across the group, profits were 13.2 per cent lower at £44m, reflecting the one-off contract boost in the rail arm last year and lower bus profits.

Energy giant Centrica today said mild spring and autumn weather had fuelled a 30 per cent slide in profits at its residential arms – British and Scottish Gas – to £522 million last year.

The UK’s biggest gas supplier, which lost 97,000 customers in 2011, said the unseasonably warm weather in spring and autumn led to a 21 per cent drop in average household gas consumption and a 4 per cent fall in electricity.

The slide in profits for the year to 31 December comes despite the energy supplier hiking gas and electricity bills by an average of 18 per cent and 16 per cent respectively in August. It has since announced a 5 per cent cut in electricity prices in January.

Centrica, however, reported a 1 per cent increase in adjusted operating profits to £2.41 billion as its upstream gas and oil exploration business – which includes the former Venture Production unit – saw profits jump 33 per cent to £1bn.

Some of the fall in profits in supplying gas and electricity to households has been clawed back through residential services such as boiler repairs, where profits were 10 per cent higher at £264m.

The upstream business smashed through the £1bn barrier for the first time, recording a 33 per cent increase in profits to £1.02bn, after benefiting from higher wholesale commodity prices and a good production performance.

The company claims it has invested £1.80 for every £1 it has earned over the past five years. Its dividend for shareholders increased 8 per cent to 15.4p a share.

Chief executive Sam Laidlaw said it had been a tough year, “both for Centrica and our customers”, but that the company was still making the investments “on which Britain’s energy future depends”.

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.

RETAIL

Edinburgh Woollen Mill rescues Peacocks but 3,100 jobs are lost

Edinburgh Woollen Mill (EWM) yesterday emerged as the saviour of 6,000 jobs after acquiring part of the failed Peacocks discount fashion chain.. In Scotland, 15 stores will remain open while 30 have closed with an estimated loss of around 400 jobs ({http://www.scotsman.com/business/retail/edinburgh_woollen_mill_rescues_peacocks_but_3_100_jobs_are_lost_1_2132481|Scotsman|Scotsman}).

{http://www.scotsman.com/business/retail|Read all today’s retail news from scotsman.com|Read all today’s retail news from scotsman.com}

BANKING

RBS reports £2bn loss in 2011, fourth since bailout

The Royal Bank of Scotland has reported its fourth year of losses since the bank’s bailout in 2008. The bank posted an attributable loss of £2bn in 2011, up from a loss of £1.1bn in 2010 ({http://www.bbc.co.uk/news/business-17128477|BBC|BBC}).

{http://www.scotsman.com/business/banking|Read all today’s banking news from scotsman.com|Read all today’s banking news from scotsman.com}

ENERGY & UTILITIES

Centrica adds to North Sea assets with Total deal

Scottish Gas parent Centrica added to its growing portfolio of North Sea assets yesterday, buying stakes in seven producing fields from Total for £246 million ({http://www.scotsman.com/business/management/centrica_adds_to_north_sea_assets_with_total_deal_1_2132510

|Scotsman|SDcotsman}).

{http://www.scotsman.com/business/energy-and-utilities|Read all today’s energy and utilities news from scotsman.com|Read all today’s energy and utilities news from scotsman.com}

INDUSTRY

Morrison constructing a positive story as staff grow

MORRISON Construction, the Scottish arm of builder Galliford Try, has boosted staffing by well over 50 per cent in the past year to some 800 as its parent posted higher interim sales, profits and dividends yesterday ({http://www.scotsman.com/business/morrison_constructing_a_positive_story_as_staff_grow_1_2132490|Scotsman|Scotsman})

Jobs to go as Dawn closes general construction arm

SCOTTISH company Dawn Group will implement an “orderly closure” of its general construction division with the loss of about 60 jobs, and focus in future on housebuilding and property development ({http://www.heraldscotland.com/business/company-news/jobs-to-go-as-dawn-closes-general-construction-arm.16830632|Herald|Herald}).

{http://www.scotsman.com/business/industry|Read all today’s industry news from scotsman.com|Read all today’s industry news from scotsman.com}

MANAGEMENT

Boards ‘hampered by non-executives’

Having more non-executive directors on company boards only reduces their effectiveness, according to the findings of research that could undermine a key claim of corporate governance activists ({http://www.heraldscotland.com/business/company-news/boards-hampered-by-non-executives.16745526|Herald|Herald}).

{http://www.scotsman.com/business/management|Read all today’s management news from scotsman.com|Read all today’s management news from scotsman.com}

]]> 1.2133327 Thu, 23 Feb 2012 08:56:38 +0000 http://www.scotsman.com/edinburgh_woollen_mill_rescues_peacocks_but_3_100_jobs_are_lost_1_2132481

Edinburgh Woollen Mill (EWM) yesterday emerged as the saviour of 6,000 jobs after acquiring part of the failed Peacocks discount fashion chain.

EWM has bought 338 stores out of administration but 3,100 staff lost their jobs as 224 stores were closed with immediate effect.

In Scotland, 15 stores will remain open while 30 have closed with an estimated loss of around 400 jobs. The price EWM paid for the stores was undisclosed.

EWM was a surprise bidder for Peacocks, a private equity-backed company which collapsed into administration under its £700m debt mountain in the biggest retail failure since Woolworths, placing 9,000 jobs in jeopardy.

Administrator KPMG had renewed talks with EWM in recent days after a potential £25m deal fell through with Pakistani textile billionaire Alshair Fiyaz, who was thought to be the sole bidder for the chain just last week.

Philip Day, the chairman and chief executive of EWM, held out hope that further jobs could be saved despite the immediate closure of the 224 stores.

He said: “We do hope that there will be scope to save more jobs and stores from those being forced to close now due to performance issues and overhead pressures.

“As you can imagine, there will be a considerable amount of work to undertake over the next few months to stabilise the situation, turn this business around, get the supply chain moving again and excite the customers with great products.”

The acquisition includes 338 stores, 57 concessions, three distribution centres and the head office operations in Cardiff. Around 250 head office staff were previously made redundant when the company entered administration on 19 January.

John Gorle, national officer for the shopworkers’ union Usdaw welcomed the deal but said the loss of 3,000 jobs was “one of the worst redundancy situations of recent years with Scotland being particularly hard hit”.

“Usdaw will be seeking a meeting with Edinburgh Woollen Mill as soon as possible to discuss its plans for the business,” he added.

The Langholm-based EWM has been leading an aggressive expansion, picking up troubled retail assets such as home wares chain Ponden Mill and linen shop Roseby’s, which it merged into Ponden Home in 2010.

In June it bought failed retailer Jane Norman, but later missed out on a deal to buy troubled outdoor wear retailer Blacks.

Barclays, the last of Peacocks’ original trio of lenders, and Santander backed EWM with funding for the acquisition.

Day intends to continue trading the stores under the Peacocks brand.

The administrator said that the retailer had failed due to the “decline in consumer spending due to the tough economic conditions...a surplus of stores and unsustainable capital structure”.

In 2007, Peacocks’ chief executive, Richard Kirk, took the company private in a highly leveraged £405m deal with Goldman Sachs, the investment bank, and Och-Ziff and Perry Capital, two hedge funds.

It is thought that two of its lenders, the Royal Bank of Scotland and Lloyds Banking Group, put the firm into administration after talks to restructure £240m of debt failed.

Last year EWM made a £12.5m pre-tax profit on sales of £196m.

Day staged a £67.5m management buy-out of EWM in 2002 and the group is now owned by him and his family.

COMMENT, PAGE 35

A FURTHER bout of money printing to prop up Britain’s ailing economy remains on the cards, analysts said yesterday, as signs of division emerged at the Bank of England.

Minutes of the bank’s latest rate-setting meeting showed that two officials voted for a bigger increase this month in quantitative easing (QE) than was eventually agreed.

Many economists had judged that the momentum for additional stimulus was fading after last week’s cautiously upbeat forecast from the central bank.

Governor Sir Mervyn King said that while he expected the UK economy to “zig-zag” in and out of growth in 2012, the recovery was heading in the right direction.

That optimism, coupled with a string of positive business surveys in recent weeks, had prompted many analysts to call time on further QE.

But news that David Miles had joined long-standing dove Adam Posen in voting for a £75 billion boost, rather than the £50bn increase favoured by the rest of the bank’s monetary policy committee (MPC), reopened the debate over whether policymakers will embark on further emergency support.

The split among the nine MPC members appeared to run deep as some considered doing nothing, worried that inflation may turn out higher than the central bank expects.

David Tinsley, chief UK economist at French bank BNP Paribas, said the minutes to the February meeting revealed “a somewhat surprising voting pattern”.

He said: “In terms of the policy outlook, these minutes are more dovish than we were expecting. But we would not overstate that case.

“Posen is something of a perma-dove, having voted to increase QE in every meeting over 2011 until it actually occurred in October. Miles, on the other hand, has tended on average to vote with the pack.”

In their argument for a greater bout of fiscal stimulus, Posen and Miles noted that there was “a risk of a prolonged period of depressed demand”.

Howard Archer, chief UK and European economist at IHS Global Insight, has forecast QE will rise in £25bn increments in May and August to top £375bn.

TECHNOLOGY giant Microsoft yesterday lodged a formal complaint with the European Union’s competition regulator against Motorola Mobility and its soon-to-be owner Google, claiming Motorola’s aggressive enforcement of patent rights breaks EU anti-trust rules.

The complaint follows a similar step by another US tech giant, Apple, against Motorola last week. Analysts said yesterday that the regulatory developments were not unexpected given that Apple and Microsoft have been hit by legal cases in Europe and the US. Motorola claims that its big rivals are using key patents it owns without permission.

But Apple and Microsoft have hit back with allegations that Motorola overcharges for the use of these patents, which cover technologies necessary to connect wirelessly to the internet or stream video online.

Dave Heiner, Microsoft’s deputy general counsel, said yesterday: “We have taken this step because Motorola is attempting to block sales of Windows PCs, our Xbox game console and other products.

“Motorola is on a path to use standard essential patents to kill video on the web, and Google as its new owner doesn’t seem to be willing to change course.”

Motorola is being taken over by search engine Google for $12.5 billion (£8bn), the biggest acquisition in the Californian company’s history. Analysts said Microsoft fears that Google will continue Motorola’s tight hold on key patents.

A spokesman for Google said that the company had not seen the Microsoft complaint. Motorla was not immediately available for comment.

The complaints are the latest development in increasingly bitter disputes between global technology giants over patents on standardised technologies.

When the European Commission, the EU’s competition watchdog, cleared Google’s takeover of Motorola earlier this month, it indicated concern over Motorola’s aggressive patent enforcement. The US justice department in its clearance of the merger made similar comments.

Microsoft says Motorola is demanding an unreasonable fee for using its patents, amounting to 2.25 per cent of the products’ total price. For a $1,000 laptop that would mean a royalty of $22.50 for using 50 patents related to a video standard. Microsoft says a group of 29 companies that hold the other 2,300 patents related to this standard charge a total of 2 cents for using them.

Heiner said yesterday: “If every firm priced its standard essential patents like Motorola, the cost of the patents would be greater than all the other costs combined in making PCs, tablets, smartphones and other devices. Obviously, this would greatly increase prices for consumers.”

ST JAMES’S Place, the wealth management business majority owned by Lloyds Banking Group, hiked its dividend by a third yesterday as it continues to defy the downturn and attract new business.

The firm said yesterday that the funds it manages grew by £3.3 billion last year, a 10 per cent hike on 2010’s figure, taking its total to £28.5bn despite market conditions that were “far from helpful”.

Chief executive David Bellamy said most of the new business came from existing clients and word-of-mouth recommendations. “We build long-term relations with our distribution channels and our clients. The success of this business will be about the attention we pay to our clients.”

St James’s made pre-tax profits of £109.7 million, up 30 per cent on the year before. The firm proposed a final dividend of 4.8p, up 21 per cent, taking the total to 8p for the year, 33 per cent higher than in 2010.

It also said it was appointing former Sunday Telegraph editor Baroness Wheatcroft as a non-executive director.

MORRISON Construction, the Scottish arm of builder Galliford Try, has boosted staffing by well over 50 per cent in the past year to some 800 as its parent posted higher interim sales, profits and dividends yesterday.

The news came as Ken Gillespie, head of the group’s construction division, claimed Holyrood was better than the UK government at green-lighting public-sector building projects “to help get the economy moving again”.

Now in the third year of a turnaround programme, Galliford revealed that pre-tax profits had surged 89 per cent to £32.2 million on sales up 30 per cent to £746.8m in the six months to end-December. Investors benefit from a doubled dividend payment of 9p, up from 4.5p.

While Galliford’s housebuilding profits, skewed to the south of England, leapt to £35m from £9.9m, construction profits were flat at £10.9m in what Gillespie said was a “difficult” climate. The construction division turned over about £500m, of which £100m was in Scotland, with contracts including Morrison’s part in a consortium working on the new Forth road bridge and schools built in Orkney.

Gillespie said Morrison was able to boost its staffing to beyond the peak of 750 in 2009.

He forecast that group profit margins would slip below 2 per cent after falling to 2.2 per cent from 2.5 per cent in the latest period.

“The Scottish Government has managed to keep its capital projects moving while we have seen many shelved elsewhere in the UK,” Gillespie said.

“Holyrood has made the connection quicker than central government that investing in major infrastructure projects in the public sector is the quickest way to get the economy moving again.”

Galliford’s shares closed up nearly 9 per cent, or 44p, at 545p.

Bankers head overseas; Call for tax relief on mortgages; Over 20% of Heathrow flights delayed and GM in talks with Peugeot Citroen

Bankers heading for foreign shores

The boss of recruitment firm Hays yesterday said there was still evidence that bankers were heading overseas as hiring in the sector fell around 10 per cent and pushed its UK division to a £3 million loss. Chief executive Alistair Cox said the recruitment squeeze in the banking industry would persist for “some time” and had spread beyond the UK to markets such as Hong Kong. The slowdown was behind a 1 per cent drop in private sector fees, which make up 78 per cent of UK revenues.

Call for mortgage interest tax relief

The head of Travis Perkins, the British builders’ merchant and DIY retailer, has called on Chancellor George Osborne to re-introduce mortgage interest tax relief for first-time buyers to release pent-up demand in the housing market.

“The housing market is so important to the UK economy, it’s operating at such low levels at the moment and there’s huge pent-up demand,” chief executive Geoff Cooper said yesterday. “We have to find a way of releasing that pent-up demand.”

21% of Heathrow flights delayed

More than a fifth of flights departing from Heathrow airport were delayed last year, operator BAA said yesterday, although this was an improvement on snow-hit 2010.

It said 21 per cent of flights left Heathrow 15 minutes or longer after the scheduled departure time in 2011, although this was better than 29 per cent the previous year. The delays came as Heathrow handled 69.4 million passengers in 2011, helping BAA to narrow its losses from Heathrow and Stansted to £255.8 million, from £316.6m.

GM in talks with French carmaker

General Motors and European peer PSA Peugeot Citroen were last night thought to be discussing a manufacturing alliance designed to stem losses in Europe and reduce production costs elsewhere.

Talks between GM, the world’s biggest carmaker, and European No2 Peugeot focused on sharing vehicles and parts rather than swapping stakes, according to sources. Any new shareholdings that emerged are likely to be small. Like Peugeot, GM’s European division already faces heavy restructuring.

]]> 1.2132505 Thu, 23 Feb 2012 00:00:00 +0000 http://www.scotsman.com/1bn_cove_move_will_take_shell_into_vital_east_african_sector_1_2132516

INVESTORS in oil and gas explorer Cove Energy were rewarded yesterday after Royal Dutch Shell offered nearly £1 billion for the company in order to get its hands on its East African gas assets.

Cove’s main asset is an 8.5 per cent stake in a drilling area off the coast of Mozambique, where operator Anadarko says reserves could top 30 trillion cubic feet of natural gas.

Analysts said Shell would probably approach other parties in the project and offer to buy part of their stakes. Irene Himona, oil analyst at Societe Generale, said: “As the number one liquefied natural gas player, Shell absolutely must be in East Africa.”

Shell said it had a “firm intention” to make a 195p per share cash bid, valuing the firm at £992.4 million, which Cove’s directors said they would recommend to shareholders. The offer is a 70 per cent premium on Cove’s 4 January share price, when the firm put itself on the market, and 25 per cent above Tuesday’s closing price.

Scottish Gas parent Centrica added to its growing portfolio of North Sea assets yesterday, buying stakes in seven producing fields from Total for £246 million.

The company, which has been building its oil and gas reserves in recent months, said the deal increased its scale in the central North Sea and was expected to add “immediate strong cash flow”.

Mark Hanafin, managing director of Centrica Energy, said the acquisition marked another step in the growth of the firm’s upstream oil and gas business.

“This acquisition in the North Sea provides a good fit with our existing portfolio and strategy, bringing strong cash flow and adding value,” he added.

“It underlines our commitment to invest where we see attractive opportunities, securing future energy supplies for the UK.”

The fields are in three major areas of the central North Sea – the Alba field, Greater Armada and the Mungo and Monan cluster – and will boost Centrica’s oil and gas reserves by some 5 per cent.

The group’s increased share in the fields, all operated by other companies, gives it an estimated 22 million barrels of oil equivalent (mboe) of reserves in the region. They are expected to produce 9,300 barrels of oil equivalent per day in 2012.

The oil and gas is mostly un-contracted and linked directly to the UK market, where Centrica sells directly to consumers, operating under its British Gas and Scottish Gas brands.

It marks the latest investment in production from the British energy giant. Last month, the firm bought ConocoPhillips’ share of the Statfjord gas field, which straddles UK and Norwegian waters, for £142m, while in November it bought £1 billion of oil and gas assets from Norway’s energy giant Statoil.

Centrica has also moved to secure its long-term gas supplies by signing a £13bn ten-year deal with Norway relating to assets it does not own.

In July, the group warned that the Chancellor’s tax grab on the North Sea may force it to switch some of its investment programme towards Norwegian waters and to other territories such as Trinidad.

John Musk, an analyst at RBC Capital Markets, said Centrica had, in short order, increased its production profile from 50 mboe a year to around 70 mboe, including the recent Statoil and Statfjord deals.

“For 2012, taking account of when the various deals will complete, we estimate that production is likely to be around 63 mboe,” he said.

He said that, although the newly acquired capacity would add about £100m to Centrica’s earnings before tax and interest, the impact on its earnings per share would be limited because of the 70 per cent effective tax rate on the assets, all in the UK section of the North Sea.

Centrica’s shares showed little reaction as investors awaited the firm’s full-year results, due today. It is set to report record overall profits of £2.5bn, up 4 per cent on 2010, as its burgeoning upstream business smashes through the £1bn barrier for the first time. That is expected to offset a poor performance from its retail arm as UK consumers used less gas and electricity in this year’s milder winter.

FTSE 100 CLOSE 5916.55 -11.65

Royal Bank of Scotland led the financial sector lower yesterday as traders took a cautious view ahead of today’s results.

The part-nationalised bank was down 3.1 per cent at 27.33p as it prepared to unveil hefty bottom-line losses. That was despite Espirito Santo upping its “fair value” price for the stock to 27p.

Barclays also fell, down 3.5 per cent at 239.2p, albeit as the stock went ex-dividend.

Carnival and Reckitt Benckiser also traded without their payment attractions, down about 2 per cent each at 1,903p and 3,500p respectively.

The FTSE 100 closed down 11.65 points or 0.2 per cent at 5,916.55 as weak economic data from the eurozone added to scepticism over the recent Greek bail-out. Mike McCudden, head of derivatives at Interactive Investor, said that with the Greek debt crisis now shifting to the background, oil was coming to the forefront of traders attention once again.

“Signs of a global recovery mixed with supply issues and increasing tensions with Iran is all the ammunition speculators need to talk oil up as high as $150 a barrel,” he said.

Royal Dutch Shell was up 0.2 per cent to 2,309p after it launched a near-£1 billion offer for Mozambique-focused small cap oil explorer Cove Energy. Cove’s shares jumped 25 per cent to 194p, just shy of the offer price.

And shares in Edinburgh oil and gas explorer Bowleven added 4.5 per cent at 123p amid heavy trading in light of interest in the company from Dubai-based Dragon Oil.

Alan Bonner, the chief executive of Stirlingshire-based Pinnacle Telecom, upped his stake in the firm to 9.6 per cent with a £14,000 share purchase, but it closed 5 per cent lower at 0.37p.

New York: Banks led U.S. markets lower last night as the Standard & Poor’s 500 Index stalled near a ten-month-high after signs of weak European business activity rekindled concerns about a recession overseas.

The Dow Jones industrial average ended the day down 26.72 points, or 0.21 per cent, at 12,938.97 while the S&P 500 closed down 4.57 points, or 0.34 per cent, at 1,357.64. The Nasdaq Composite Index ended down 15.40 points, or 0.52 per cent, at 2,933.17.

DEPUTY Prime Minister Nick Clegg will announce today that an extra £1 billion is to be made available to businesses seeking support to help them grow and create jobs.

The new money will be part of the Regional Growth Fund and takes the total fund to £2.4bn, available to businesses and public/private partnerships to drive local economic growth.

Clegg will make the announcement at the UK government’s national manufacturing summit at the Bristol & Bath Science Park.

He is set to confirm that 48 firms have completed their legal checks and have access to the Regional Growth Fund which leverages private sector investment, with at least £5 of private money for every £1 of public money.

The deputy PM will say the fund “is already having a huge impact across the UK”. Clegg will argue that he wants to see “more businesses that are confident they can create jobs and get Britain building and making things again”.

A key part of government economic strategy is to make manufacturing more important again.

The British Chambers of Commerce welcomed the extra £1bn. Adam Marshall, the BCC’s policy director, said it would “help improve the business environment” in the regions “because it creates jobs and prosperity”.

He added: “We will watch carefully to ensure that strong applications do not get caught up in red tape or unnecessary delays.”

A FALL in direct flights to Scotland could reduce the number of export deals and discourage inward foreign investment, a government adviser has warned.

Crawford Beveridge, chairman of the Scottish Government’s Council of Economic Advisers (CEA), told MSPs a lack of direct air routes is forcing many executives to make an extra journey via London, potentially

deterring them from doing business in Scotland.

Mr Beveridge, a former chief executive of Scottish Enterprise, appeared before members of Holyrood’s Economy Committee, alongside fellow CEA member Professor Andrew Hughes Hallett.

The pair answered questions from MSPs on the council’s work, following its first formal meeting last month since being relaunched by the First Minister in November 2011.

The council consists of academics, economists and entrepreneurs whose role is to give economic advice to ministers.

It has been given a specific agenda to look at jobs, economic recovery, internationalisation and “economic levers”.

Committee member and SNP MSP Chic Brodie raised the issue of direct flights during a discussion on internationalisation and the council’s advice on increasing exports and inward investment.

Mr Brodie referred to airline Ryanair’s recent announcement that it will be axing five routes from Edinburgh Airport.

He said: “I was just wondering what advice had been given to the Government in terms of having more direct connectivity.”

Mr Beveridge replied: “I think you’re spot on there. One of the things that makes it hard to even get people to come and visit us is the difficulty in getting here.

“When you’ve already made the 12-hour flight from Beijing or California, or anywhere else, into London and then you have to hang around for another two or three hours to get that last flight up here, it’s a problem.

“If there are easier places to get to, many executives will just go to the easier places. It’s just too hard to make this extra dimension.”

The Scottish Government has already set out ambitions to improve international air connections with key global economies such as China.

Mr Beveridge said it is “very important” to consider measures such as funding airlines to set up direct flights, in order to see if a market can be established.

Barratt Developments has revealed a strong start to its spring selling season after reservations jumped by a fifth on a year earlier.

The housebuilder said the performance reinforced its optimism after a return of half-year profits with a surplus of £21.6 million for the six months to 31 December, compared with losses of £4.6m a year ago.

Average selling prices in the half-year rose by 3.1 per cent to £181,200, fuelled by greater robustness in the South East, where it has many of its 382 sites.

Chief executive Mark Clare said the acquisition of land at attractive prices during the economic downturn was driving its recovery.

He added: “Over the last six months we have continued to improve the performance of the business, despite the wider economic uncertainty.”

While most housebuilders have reported strong growth in recent months, there are fears of a slump when first time buyers are required to start paying stamp duty again next month.

However, builders hope that the UK government’s mortgage indemnity scheme, which sees it guarantee to underwrite losses on new build properties in England to help first time buyers borrow up to 95 per cent of the value of their home, will stimulate demand.

In the first seven weeks of 2012, Barratt said private reservations increased by 21.8 per cent on a year earlier, while cancellation rates have remained low at an average of 13.8 per cent.

Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers, said a combination of self-help initiatives, ultra low interest rates and government assistance had underwritten Barratt’s recovery.

He said: “A change in the product mix away from flats and towards houses continues to assist selling prices, whilst the use of cheaper land bought post the start of the credit crisis has reduced costs, boosting the group’s profit margin.”

The boss of recruitment firm Hays has said there is still evidence that bankers were heading overseas as hiring in the sector fell by around 10 per cent and pushed its UK division to a £3 million loss.

Chief executive Alistair Cox said the recruitment squeeze in the banking industry would persist for “some time” and had spread beyond the UK to markets such as Hong Kong as major players restructure their operations.

The recruiter’s results come as the banking industry faces pressure from all sides, as it battles with volatile markets, weak consumer confidence, increased regulatory heat and criticism over pay.

The slowdown, which was behind a 1 per cent drop in private sector fees prompted Hays to close 12 UK outlets. It is cutting its total headcount by 4 per cent, including a 2 per cent drop in the number of consultants to 2,071.

However, the wider group was supported by a strong performance overseas, particularly in Germany, leading to a 21 per cent increase in overall operating profit to £63.1m in the six months to 31 December.

Hays said there were areas of the private sector which continue to show some growth, such as IT, legal and marketing businesses.

Overall in the UK, net fees fell 6 per cent on a like-for-like basis to £116.4m.

Across the group, net fees rose 11 per cent to £373.8m on a like-for-like basis, driven by 16 per cent fee growth in Asia Pacific region and 27 per cent fee growth in the continental Europe and “rest of world” arm.

There was some disappointment for shareholders as the firm announced a 55 per cent cut to its interim dividend to 0.83p.

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.

FOOD, DRINK & AGRICULTURE

Chivas mulls new distillery after whisky exports surge

SCOTLAND’s second-biggest whisky producer is considering building a further distillery as drinkers in emerging economies continue to develop their taste for Scotch ({http://www.scotsman.com/business/chivas_mulls_new_distillery_after_whisky_exports_surge_1_2130128|Scotsman|Scotsman}).

Devro eyes fresh export growth after 22% surge in profits

SAUSAGE skin maker Devro is targeting further growth in Germany, Japan and Latin America this year after posting a 22 per cent rise in full-year profits ({http://www.scotsman.com/business/food-drink-and-agriculture/devro_eyes_fresh_export_growth_after_22_surge_in_profits_1_2130145|Scotsman|Scotsman}).

{http://www.scotsman.com/business/food-drink-and-agriculture|Read all today’s food, drink and agriculture news from scotsman.com|Read all today’s food, drink and agriculture news from scotsman.com}

INDUSTRY

Parklands plans to invest up to £3m in Elgin care home

A Moray care-home provider has announced plans to add another property to its portfolio in the area. Parklands already has six sites in Moray and the Highlands, but will invest up to £3million to develop its first home at Elgin ({http://www.pressandjournal.co.uk/Article.aspx/2649769|P&J|P&J}).

{http://www.scotsman.com/business/industry|Read all today’s industry news from scotsman.com|Read all today’s industry news from scotsman.com}

PERSONAL FINANCE

New pension scheme will cost biggest firms up to £11m each

SCOTLAND’S largest employers face a potential bill of up to £11 million each under new legislation designed to “auto-enrol” employees into pension schemes, research has suggested ({http://www.scotsman.com/business/personal-finance/more-stories/new_pension_scheme_will_cost_biggest_firms_up_to_11m_each_1_2130202|Scotsman|Scotsman}).

{http://www.scotsman.com/business/personal-finance|Read all today’s personal finance news from scotsman.com| Read all today’s personal finance news from scotsman.com}

RETAIL

Reid plans to shut furniture warehouse

Reid Furniture has become the latest victim of the consumer spending squeeze as it revealed plans to close its Hillington warehouse. This deals another blow to its Renfrewshire heartland, where it closed its factory four years ago ({http://www.heraldscotland.com/business/company-news/reid-plans-to-shut-furniture-warehouse.16785564|Herald|Herald}).

{http://www.scotsman.com/business/retail|Read all today’s retail news from scotsman.com|Read all today’s retail news from scotsman.com}

TRANSPORT

O’Leary wields Ryanair axe but impact on Edinburgh Airport ‘exaggerated’

RYANAIR boss Michael O’Leary has axed five summer routes and threatened to halve his airline’s winter service from Edinburgh if his dispute with airport operator BAA is not settled by October ({http://www.scotsman.com/news/transport/michael_o_leary_wields_ryanair_axe_but_impact_on_edinburgh_airport_exaggerated_1_2130582|Scotsman|Scotsman}).

{http://www.scotsman.com/business/transport|Read all today’s transport news from scotsman.com|Read all today’s transport news from scotsman.com}

]]> 1.2130932 Wed, 22 Feb 2012 08:44:47 +0000 http://www.scotsman.com/greek_bail_out_fails_to_excite_the_city_1_2130843

FTSE 100 CLOSE 5928.20 -17.05

Miners were among the few risers yesterday as markets were underwhelmed by the details of the latest Greek bail-out deal.

Deutsche Bank raised earnings forecasts within the sector to include upgraded base metal price expectations for 2012.

It said: “Improved economic data in the US, a growing sense that a resolution in Europe is not too far off and expectations that China will avoid a hard landing have all lent to a low-volume drift upwards in metals prices.”

Multi-metals group Vedanta Resources topped the FTSE 100 risers’ board, with rumours that the miner might restructure its international business to save costs. Its shares added 7 per cent, or 95p, to 1,453p, while peer Anglo American advanced 25.5p at 2,715.5p.

Britain’s top index was 17.05 points lower at 5,928.2, a fall of 0.3 per cent, after the Greek bailout deal came alongside a cautious report on the struggling country’s economic prospects.

The banking sector was hit by the uncertainty, with Royal Bank of Scotland down 0.3p at 28.2p and Lloyds Banking Group 0.6p lower at 35.8p.

Tullow Oil sank to near the bottom of the FTSE 100 despite announcing that an exploration well in Sierra Leone had discovered hydrocarbons – a sign that crude oil could be present. Analysts said the company suggested more work would be needed to understand the commercial value of the find. Shares were 58p lower at 1,543p.

Aberdeenshire-based Xcite Energy fell 10 per cent to 139p as investors took their profits from its recent stellar run of form. The North Sea explorer, which had added more than 70 per cent to its market value over the previous two weeks on expectations of an announcement, finally obliged on Monday with a large hike to its audited reserves.

New York: Wall Street ended little changed last night, paring gains after the Dow rose above 13,000 for the first time since May 2008, and as higher oil prices threatened prospects for the economy.

The Dow Jones industrial average ended up 16.12 points, or 0.12 per cent, at 12,965.99 while the broader Standard & Poor’s 500 Index closed up 1.00 point, or 0.07 per cent, at 1,362.23. The Nasdaq Composite Index ended the day down 3.21 points, or 0.11 per cent, at 2,948.57.

Investment manager Rathbone Brothers yesterday said there were signs of improvement in developed economies after it revealed a 30 per cent increase in profits in 2011.

The firm’s hike in profit before tax to £39.2 million was credited to buoyant equities and a marked rise in net fee income in its investment management division.

Stripping out exceptional items such as office relocation costs and gains from the disposal of financial securities, underlying profit of £46.2m was ahead of analysts’ forecasts.

Andy Pomfret, Rathbone’s chief executive said: “There is no doubt uncertainties over Europe persist but are balanced by indications that the world economy continues to grow and some developed economies are showing small signs of improvement.”

The firm, whose Edinburgh office is its largest outside London, confirmed that total funds under management were up marginally, by 1.4 per cent to £15.9 billion at the end of December.

Finance director Paul Stockton confirmed assets managed north of the Border at its Edinburgh and Aberdeen offices were flat at about £2bn.

“They are very important offices to us and a rather nice location as well,” he said of the firm’s St Andrew Square office in the capital.

Analysts welcomed the performance although some said the company was expensive compared to its peers. Brokerage Numis said the shares “deserve a premium rating” but added that at 14 times its price to earnings ratio “it already has one”.

Shares dipped 15p to 1,275p.

ASDA boss Andy Clarke turned up the heat on Tesco yesterday as he pledged to step up the US-owned chain’s price guarantee scheme.

He said the UK’s second-biggest grocer, which has more than 540 stores, had “only just scratched the surface” of the pricing strategy, which allows customers to check receipts and receive a refund if their Asda shop is not 10 per cent cheaper than its rivals.

Britain’s supermarkets became embroiled in a fierce price war after Tesco unveiled its £500 million “Big Price Drop” last October.

But the UK’s biggest retailer recently admitted its pricing strategy had failed after a disappointing Christmas period saw Tesco’s like-for-like sales excluding petrol and VAT drop 2.3 per cent.

Asda said sales at stores open more than a year, excluding fuel and VAT, rose 1 per cent in the 14 weeks to 7 January, after a 1.3 per cent increase in the third quarter.

One of the UK’s biggest pawnbrokers unveiled higher profits yesterday after it said its business benefited from a lack of lending by high street banks.

Albemarle & Bond, which has 174 stores and about 40 gold-buying pop-up shops, said its area of the market, which also includes payday loans, had been helped by the volatile and tough economic climate.

The gold-buying division saw an 88 per cent surge in gross profits while pre-tax profits at the group rose 12 per cent.

MEMBERS of Glasgow Chamber of Commerce have elected Varry McMenemy, managing director of call centre operator Bellcom Worldwide, as their president for the next two years.

She succeeds James Andrew, a chartered surveyor at Shirlaws, who will remain on the chamber’s management board.

Voters at the chamber’s annual general meeting also elected former BAE Systems managing director Vic Emery to serve as McMenemy’s vice-president.

Neil Amner, a partner at law firm Biggart Baillie, and City of Glasgow College principal Paul Little have also joined the management board.

Buchanan Galleries shopping centre manager Kathy Murdoch, law firm Harper McLeod partner David Kaye and Bank of Scotland senior manager Craig Kennedy have also been elected as directors of the chamber’s council.

ENERGY services heavyweight Wood Group yesterday secured a £75 million contract from oil giant Shell for engineering work at its St Fergus and Mossmorran gas terminals.

The two-year deal, which follows on from a previous contract awarded to the group in 2007, could be extended for a further two years. Wood Group’s PSN division will use its teams in Aberdeen, Glasgow and Runcorn to fulfil the Shell contract, which will supply work for more than 500 people.

Three senior executives at Johnston Press, the owner of The Scotsman, are in consultation over their future with the publishing company.

The three include Michael Johnston, divisional managing director for Scotland and North-East, who is the last member of the Johnston family with the newspaper and media group.

David Caskie, divisional finance director for Scotland and North-East and Richard Bell, managing director of Johnston Falkirk, are the other executives in talks with the senior management of the London-listed company.

The group is one of the three largest local newspaper publishers in the UK.

Founded in Falkirk in 1767, Johnston Press also owns The Scotsman’s sister papers, Scotland on Sunday and the Edinburgh Evening News, as well as more than 270 local newspapers.

Ashley Highfield has recently taken over as chief executive at the company, joining from Microsoft, where he was vice-president responsible for its UK consumer and online business, including the MSN website.

In a statement issued last night, Highfield said: “We can confirm that we are in consultation with senior executives at The Scotsman Publications and Johnston Falkirk and we are unable to make any further comment at the present time.”

SAUSAGE skin maker Devro is targeting further growth in Germany, Japan and Latin America this year after posting a 22 per cent rise in full-year profits.

The Moodiesburn-based firm, which has a market value of more than £450 million, has installed more efficient equipment at its factory in Bellshill and is looking to do the same at its facility in the Czech Republic.

Group finance director Simon Webb stressed the efficiency savings had not involved redundancies, adding that the firm had in fact taken on an extra 12 staff at the Scottish plant to boost its headcount to around 200.

Replacing the older machines helped Devro to post a 22.4 per cent rise in profits before exceptional items to £43m in 2011, on the back of a 6.6 per cent increase in turnover to £227.7m.

The rise in profits triggered a 14.3 per cent increase in the total dividend to 8p a share.

Webb told The Scotsman: “We’ve seen a 30 per cent rise in sales in Japan in the past year and that’s a very profitable market for us. We’re also still seeing double-digit growth in China and we’ve opened a sales and marketing office in Beijing.”

Devro and its peers have enjoyed rising sales in China and other developing markets in south-east Asia as the growing middle-classes spend more money on processed meat.

But Devro is also looking to grow its profits in developed markets such as Germany and Japan after introducing its higher-quality “Select” product about 18 months ago.

The firm sells cases made from collagen, the same material that makes up the connective tissue found in all mammals, which is designed to replace sausage skins made from animals’ guts.

Clive Black, an analyst at Shore Capital, said: “Devro had a very good year indeed. Whilst not a bargain basement stock of any sort, we do continue to see value in Devro’s shares.”

Numis Securities analyst Charles Pick cut his recommendation on Devro from “add” to “hold” following a good run for the shares. But Pick added: “The fundamentals remain good for Devro, with increased consumption of processed meats in emerging markets and manufacturing savings for sausage makers switching to edible collagen from gut.”

Charles Hall, an analyst at Peel Hunt, said: “Devro has strong long-term growth prospects due to population growth, demand for protein and gut conversion with the potential for ‘Select’ to improve margins.”

Devro’s bottom-line profits fell from £54m to £43m after there was no repeat of 2010’s £18.8m pensions credit.

A LANDMARK £89 million research centre at Strathclyde University has been granted planning permission by Glasgow city council.

The Technology and Innovation Centre on George Street will host up to 1,200 researchers.

CONSTRUCTION group Morgan Sindall, the company responsible for Edinburgh’s new Waverley steps and the Haymarket station revamp, reported lower profits yesterday after cutting margins to win work.

The firm – which employs some 7,000 staff including 800 in Scotland – announced a 2 per cent dip in full-year profits to £40 million despite revenues rising by 6 per cent to £2.2 billion.

Executive chairman John Morgan said the year had been a success, with the company winning “key construction opportunities” in growth areas such as energy, transport and commercial projects.

He said the firm had also grown its pipeline of regeneration work by securing five major schemes together valued at £800m.

Morgan said: “We are focused on maximising opportunities in sectors we believe offer the most growth and reward.

“We continue to invest for sustainable growth in the medium-term whilst maintaining a strong balance sheet and dividend.”

He said the firm would use cash generated from its construction operations to invest in and grow the regeneration-related businesses.

The firm said its rescue of parts of collapsed rival Connaught had paid off despite the drop in profits.

The purchase of some of the assets of the social housing specialist at the end of 2010 saved around 2,500 jobs and opened up a range of opportunities for Morgan Sindall’s own affordable housing arm, Lovell. The division achieved profits of £18.5m last year, up 15 per cent on 2010.

In Scotland, Morgan Sindall is part of the £150m South Lanarkshire schools framework which will deliver 30 primary schools over a four-year period, and last year won a £20.7m contract to build the new Chryston High School campus in Muirhead.

It is also delivering a £14.1m contract to build a five-storey community health centre with retail facilities in Airdrie for developer AWG Property and has an £11m contract to deliver a 273-room student accommodation block at the Edinburgh campus of Heriot-Watt University.

The company has also recently completed the £20m Aggreko manufacturing plant and headquarters in Dumbarton.

Richard Curr, head of dealing at Prime Markets, said that although Morgan Sindall continues to give a cautious outlook due to its challenging markets, its pipeline of regeneration work made it a “transformation growth story”.

“Since the interim statement last year highlighted the increased focus on regeneration projects, the firm has reported contract win after contract win in this area,” he said.

“Although, the full-year results show a marginal fall in profits, revenues have grown, cost savings have been made, and prospects look good.”

London-based Morgan Sindall pegged its dividend at 42p a share.

Brandishing her credentials as the UK minister of agriculture, Caroline Spelman made several references, both directly and indirectly, to Scotland in speaking yesterday to the National Farmers Union of England.

The significance of the minister’s comments on CAP reform was that the EU agricultural commissioner, Dacian Ciolos, was sitting alongside her at as she told delegates that the UK was a diverse country with major differences in its agriculture “from the uplands of Scotland to the arable acres of East Anglia”.

Any reform of the CAP had to be sufficiently flexible to accommodate the variations in the type and intensity of farming undertaken, she said.

She also argued that the present proposals for introducing environmental measures were too constrictive and Europe should realise that the UK was “ahead of the curve” with its agri-environment schemes, designed to involve all farms and not just specialists.

“We want the CAP to recognise these achievements,” she said, adding that “greening” measures had to deliver meaningful environmental benefits and they should not constrain the primary aim of producing food.

Despite these comments – and others from delegates more directly critical of his proposed measures – Ciolos defended them robustly, saying “we will find the appropriate ways to recognise efforts made under your environmental schemes where they genuinely contribute to greening”.

He added the schemes could not be voluntary and denied claims it would affect production. “What is the cost of doing nothing?” he asked. Spelman also brought to his attention that fact that the UK was currently poorly rewarded compared with other member states when it came to indirect support – a point which actually affects Scotland more severely than other parts of the UK.

Time and again, Spelman stated she wanted to work in partnership with UK farmers in getting a new CAP; one that was simpler, one that produced more food and one that was less wrapped up in red tape.

But she said it had to be recognised that the EU CAP budget would be smaller in years to come. This was not to be feared.

“Competitive farming needs open markets,” she said. “It is not subsidies, regulations and trade barriers that will feed an extra billion mouths in less than 13 years time.”

Insulation maker Superglass said yesterday it was searching for a new finance director after long-serving incumbent Tony Kirkbright resigned his position with immediate effect.

Kirkbright has been the Stirling-based firm’s finance chief since it was set up as an independent entity in 1987.

The company said yesterday that he was leaving “for pastures new” following the re-capitalisation of the business last year with a share placing and debt-for-equity swap.

The company has previously blamed low demand for insulation through the UK government’s carbon emissions reduction scheme (Cert) for several years of disappointing sales.

Kirkbright’s departure follows news that chairman Tim Ross is leaving – he said at the company’s January AGM that he would step aside once a replacement was found.

The company said Kirkbright was leaving with the board’s “best wishes and sincere gratitude” for his commitment to the business over many years.

David Wilton will cover the role as a consultant on an interim basis.

Google has begun offering real-time share prices from the London Stock Exchange in a move it hopes will breed a new generation of small investors.

The search giant’s finance arm has signed a deal with LSE Group to provide up-to-date last-trade prices, for which traders have had to pay a premium until now. They were previously only available with a 15-minute delay.

LSE Group, which also owns Borsa Italiana, said the aim of the deal was to attract more retail investors – small investors who buy and sell equities for their personal account, and not for another company.

The deal only covers the last price traded. LSE will not provide data such as bid-offer spreads on which professional traders depend.

Jarod Hillman, head of real-time data at LSE, said: “For the first time Google users will have access to free, real-time last-trade prices, allowing them to make more informed investment decisions.”

Google Finance was launched in 2006 and features business headlines for a range of companies, stock information and charts.

The changes will strengthen Google’s empire, which covers the original search engine service, e-mail, news, shopping and maps among other services.

Maxim Edelman, the group’s head of strategic partnerships, said: “The addition of real-time quotes from the London Stock Exchange and Borsa Italiana will enable our users to better monitor market changes, manage their portfolios and track economic and financial developments in Europe.”

PROFITS at Aberdeen-based oil and gas engineering consultancy Optimus have more than doubled after the firm worked on a higher number of small projects.

The company – which lists BP, Centrica and Melrose Resources among its clients – has also beefed up its senior team as it prepares for further expansion in 2012. Five new managers – Stuart Heggie, Sarah Innes, Gordon Lamont, Nigel Melling and Linda Strachan – will help to guide Optimus’ 70 staff as part of its 14-strong management team.

Director Alasdair Reid said: “The North Sea remains at the core of our business, but we’re looking to work on a wider scale and are looking at opportunities in the Black Sea, Pacific Rim and Australia.”

Pre-tax profits for 2011 rose to £1.1 million from £435,000 on the back of an 88 per cent increase in turnover to £10.7m. Projects contributed £2.6m.

SCOTLAND’s second-biggest whisky producer is considering building a further distillery as drinkers in emerging economies continue to develop their taste for Scotch.

French drinks giant Pernod Ricard, which owns Chivas Brothers, yesterday said it is looking for emerging markets to account for 50 per cent of group sales in the next few years following last week’s bumper interim results.

News of the possible new distillery from Pernod comes less than a fortnight after rival Diageo, Scotland’s biggest whisky maker, said it was also mulling plans for a further site, just two years after opening a £40 million plant at Roseisle, in Moray.

Christian Porta, chairman and chief executive of Chivas Brothers, said the group was also well-advanced in its plans to bring its Glen Keith distillery back into production in 2013 on the back of the continued robust performance of the sector.

“We are almost there in reopening all our distilleries, with Glen Keith early next year,” Porta said. “If we believe the Scotch industry will continue to grow, we will consider opening a new distillery.”

Glen Keith in Speyside was established on the site of a corn mill in 1957 by Chivas Brothers, which also owned the adjacent Strathisla distillery. Glen Keith was mothballed in 2000.

But Scotch exports have boomed in recent years. At last week’s results, the company revealed that half-year sales of Glenlivet rose 19 per cent, while the eponymous Chivas Regal brand was up 13 per cent.

On the back of this expansion, Chivas Brothers reopened the Allt a’Bhainne distillery in 2005, expanded Glenburgie’s production by 50 per cent in 2006, reopened Braeval in 2009 and increased Glenlivet production by 75 per cent in 2010.

Porta said the group had doubled its production for blended whisky via such moves and the reopening of Glen Keith would further increase distillery capacity by up to 15 per cent.

The march of Scotch has been particularly strong in emerging markets, helping Pernod to a 18 per cent jump in sales in Asia in the first half of its trading year.

However, Pierre Pringuet, Pernod’s chief executive, said emerging markets now also embraced the likes of Russia, Poland, Turkey, Ukraine, as well as Africa and Latin America.

Pernod has 39 per cent of its sales in emerging markets, which have been unscathed by the eurozone financial crisis. Pringuet said that, at current growth rates, it was feasible to have 50 per cent of its sales in emerging markets “in the next to or three years”.

He added that the increase would be achieved through organic growth and bolt on acquisitions.

SCOTLAND’S largest employers face a potential bill of up to £11 million each under new legislation designed to “auto-enrol” employees into pension schemes, research has suggested.

The rules, which begin to come into play later this year, will compel staff to save for their retirement but are likely to present a fresh financial headache for embattled businesses.

The changes will mean businesses, public-sector employers and charities will need to sign up eligible workers, including temporary staff, to pension schemes. The onus will be on the worker to opt out.

Accountancy firm Deloitte said auto-enrolment would mean an additional employer contribution of £10.9m for the largest companies and councils employing some 20,000 staff. The figure is before costs associated with payroll and other functions.

Deloitte said an organisation with some 500 people on its books faced an estimated bill of about £273,000.

According to the accountant, some 2,400 employers in Scotland have 250 or more staff, with 375 employing 500 or more.

Richard Slater, pensions partner at Deloitte, said: “Employers will be concerned about the additional cost of this legislation, but it cannot be avoided so it’s important to look at ways to avoid the unnecessary costs created by unpreparedness.

“This shouldn’t simply be considered as a pensions issue, since it affects the entire organisation. HR has to be geared up to deal with the communications requirements and payroll needs to make sure that changes in employee eligibility status are identified and acted on, to give just two examples.”

From October, organisations with more than 50,000 employees will be affected by the new rules. The legislation will be rolled out to include employers of more than 500 people by the end of 2013, and to all others with at least one employee by 2017.

Those preparing to alter their contributions ahead of October include NHS Scotland, which employed some 155,000 people in 2011, followed by large employers in the public and private sectors such as Glasgow City Council, Royal Bank of Scotland and Tesco in 2013.

Larger companies – with 250 or more staff – represent just under 1 per cent of all enterprises in Scotland but account for an estimated 46 per cent of employment and 64 per cent of turnover.

A smaller company with 100 employees can expect to pay about £54,600 in additional contributions, Deloitte said.

CBI Scotland’s assistant director, David Lonsdale, said: “We support the goal of auto-enrolment which is about getting the vast majority of employees saving for their retirement, and the longer phasing-in period for smaller employers will help those firms cope with the costs involved.

“The CBI’s own research has found that 80 per cent of larger firms have already discussed how to comply with auto-enrolment at board level. Cost is a big issue but firms tell us that the biggest challenges are actually to do with practical administration issues, such as managing opt-outs, and communicating the scheme to staff.”

Other countries including Australia and New Zealand have introduced similar auto-enrol schemes.

THE owner of mobile phone networks Orange and T-Mobile yesterday pledged to spend more than £1.5 billion over the next three years to bring faster and more reliable coverage to its customers.

Everything Everywhere, which has 27 million customers in the UK, will introduce broadband-speed 4G technology for mobile phones, replacing the current 3G network.

4G allows users to download music and films to their phones at the same speed as their home or office computers.

The company, formed in 2010 by the merger of Orange and T-Mobile, has run successful trials of the new technology in and around St Newlyn East in Cornwall and will bid for 4G coverage at auctions later this year.

Everything Everywhere posted a 2 per cent increase in underlying profits to £1.4bn as customers switched to higher-revenue contract deals and demand grew for smartphones, such as Apple’s iPhone and HTC and Samsung’s Android models.

Chief executive Olaf Swantee side-stepped questions over whether Deutsche Telekom – which owns half of the company – could sell its stake or list it on the stock market. France Telecom owns the other half of Everything Everywhere.

A LANDMARK £89 million research centre at Strathclyde University has been granted planning permission by Glasgow city council.

The Technology and Innovation Centre on George Street will consider challenges including climate change, disease, and the need for fresh drinking water.

The 25,000sq m facility will host up to 1,200 researchers from the university and its partners in both the public and private sector and is set to open in 2014.

Professor Jim McDonald, Strathclyde University’s principal, said: “Today’s news marks an important milestone in a development, which will reinforce our position as a leading international technological university, attract major inward investment to the city, create jobs and help businesses compete on the world stage.”

Ferrovial, the Spanish owner of UK airports operator BAA, is understood to have whittled down the shortlist of bidders for Edinburgh airport to four and will accept final offers in early April.

Analysts expect the airport, which handled 9.4 million passengers last year – up 9 per cent on 2010 – to fetch between £500 million and £700m.

It is thought that Global Infrastructure Partners (GIP), JP Morgan Asset Management and consortiums led by Carlyle Group and 3i have made it to the second round after a longer list was cut down in recent days.

BAA put the airport up for sale last year, bowing to an order by the Competition Commission to sell either Edinburgh or Glasgow airports as well as London’s Stansted. It sold Gatwick, near London, to GIP for £1.5 billion in 2009.

BAA is due to announce full-year results today.

A SECOND-HAND car supermarket and consumers hunting for deals online drove an improved performance at the owner of the Evans Halshaw and Stratstone dealerships yesterday.

Pendragon, which sells marques including Ford, Jaguar and Vauxhall from some 250 sites, said used vehicle sales rose 14 per cent despite the overall market being flat. It was helped by the expansion of its Quicks second-hand car supermarket trial.

Merger plans involving the UK operations of Tarmac and France’s Lafarge were under threat yesterday after being criticised by competition chiefs.

In a market where there are only four UK producers of bulk cement, the Competition Commission said it was concerned that the tie-up would increase the “susceptibility of the market to co-ordination”. The commission is already holding a separate investigation into the UK’s £3.3 billion building materials industry.

SHARES in Flying Brands, the Jersey-based mail order firm in which Ayrshire tycoon Sir Tom Hunter owns a 29 per cent stake, jumped 8 per cent yesterday after it unveiled plans to sell its gifts division.

The company wants to offload the business – which includes the Flying Flowers and Flowers Direct brands – to rival Interflora for £2.6 million in cash.

The proposed sale price is less than the book value of the gifts division’s assets, which were £3.2m on 1 July. Shareholders will be asked to vote on the deal.

Interflora is seeking clearance from the Office of Fair Trading for the purchase to go ahead.

A series of profit warnings last year sparked a restructuring at Flying Brands, with its properties at Meadow Springs and Retreat Farm on Jersey being sold in December. Selling the gifts division would leave the company with its bird food and gardening supplies businesses.

QUANTITATIVE easing (QE) has caused “unpleasant side effects” for the UK economy, the deputy governor of the Bank of England admitted last night.

However, Charlie Bean, who was speaking to an audience of business people in Glasgow, credited the bank’s asset buying policy for preventing unemployment from rising further and easing the “task of fiscal consolidation and deleveraging”.

He said the latest £50 billion round of QE unleashed earlier this month had prevented the bank from undershooting its 2 per cent inflation target “in the medium term”.

He acknowledged that QE has “proved controversial”, critics having said it is not effective in stimulating demand and has reduced pension pots for people buying annuities. But he argued that, while pensions yields were reduced, asset buying had also boosted the value of the pension pots. Bean said: “The stance of monetary policy needs to be loose in order to sustain demand. Treating serious medical conditions has unwanted side effects. But, unpleasant as those side effects sometimes are, treatment is invariably better than the alternative.

“So it is with the economic medicine of low interest rates and quantitative easing.”

He added: “The immediate consequences may be unpalatable, but the sooner we can get the economy on the mend, the sooner we can return policy to more normal settings and the better it will be for all of us – savers, businesses and employees alike.”

Bean told members of the Scottish Council for Development and Industry that the Bank’s first bout of QE in 2009 had reduced bond yields by 1 per cent and boosted demand for gilts by 1.5 to 2 per cent.

But while UK equity prices rose 50 per cent during the programme, “only a small part of that is likely to be down to” QE, he added.

In total, the Bank’s asset buying programme has now reached £325bn after the monetary policy committee resumed its purchases of government debt. This amounts to “about a fifth of the annual output of the UK and around a third of the total stock of UK government debt in issue,” Bean said.

Yet another new record average was achieved yesterday at the sale of Charolais bulls at Stirling with unprecedented demand for the bulls on offer.

David Benson, chief executive of the Charolais Cattle Society, said the average exceeded all expectations at £7,653 for 168 bulls sold – a clearance rate of 83 per cent – £1,800 up on the year and £1,000 up on October’s record average.

No fewer than 34 bulls sold at five-figures, the most at any sale according to David Leggat, who said: “The quality of bulls through the ring was excellent and there is increased focus among buyers on the top end of the market.”

Father and son team of John and Raymond Irvine, of Inverlochy, Ballindalloch, saw were thrilled to take their first ever championship on Monday but also to be reserve overall, which is the first time this has been achieved for 30 years.

Yesterday their intermediate champion and reserve overall, Inverlochy Ferdie, sold for the day’s top price of 25,000gns to the Harestone herd owned by Neil Barclay, South Road, Insch.

Their junior and overall champion, Inverlochy Fencer, sold for 20,000gns to Jim and John Jeffrey, Kersknowe, Kelso. This helped the Irvines to a record herd average of £14,595 for five sold.

The senior champion, Blelack Forester from Neil and Graeme Massie, Blelack, Dinnet, made 22,000gns in a three-way deal to Bob Adam, Newhouse, Glamis, Bill Bruce, Balmyle, Meigle, and Major Walter, Balthayock, Perth.

Welsh breeder Esmor Evans, from Monfa, Mold, had 20 bulls entered yesterday. His best was 20,000gns for the first prize Maerdy Flambeau, bought by Peter Donger, Seawell Grounds, Towcester.

Thrunton bulls from Colin, Ian and John Campbell’s farm near Alnwick are always in demand and this year was no exception with their best selling for 18,000gns. The first prize Thrunton Fairfax was bought by Hampshire farmer, Ben Harman, Grove Farm, Chesham. Thrunton Figaro made 13,500gns to Messrs Watkins, , Abergavenny, Wales, while Thrunton Fireball made 13,000gns to G Prentice and Son, Hermitage, Castle Douglas.

Welsh breeder Kevin Thomas, Llechwedd, Newcastle Emlyn, parted with 16,000gns to secure the first prize Anside Foreman from Martin Irvine, Braehead, Keith.

Bus passengers in Edinburgh have been hit with dramatic hikes in fares from the city’s main operator - just days after a host of services were slashed.

Councillors are to seek emergency talks with Lothian Buses and the Scottish Government after the operator blamed a huge cut in national funding for the moves.

Day tickets will be hiked up 9.3 per cent, from £3.20 to £3.50, while single tickets will rise 7.7 per cent, from £1.30 to £1.40.

An annual “ridacard” will go up £36 - six per cent - to £612, which will actually be more expensive than buying a monthly ticket by direct debit.

The bus company’s justification of the fare rise makes no mention of the ongoing tramworks in the city centre, which have seen traffic diverted away from Princes Street since last September.

Ian Craig, managing director, said: “We endeavour to keep ticket prices as low as possible but this is an extremely challenging time for everyone.

“As with the majority of public transport providers, we have had to review our prices as a result of government funding cuts and rising operating costs.

“We know price increases are never welcome and this decision has not been taken lightly. It is however a necessary step to ensure we safeguard services as best we can and continue to invest in the quality of our operation and our environmental objectives.

“We appreciate that our customers are experiencing their own financial challenges and we have endeavoured to keep the increases to a minimum.

“Even with these fare increases, we remain one of the most cost-effective and value-for-money operators not just in Scotland but UK-wide.”

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