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18 ★ FINANCIAL TIMES FRIDAY OCTOBER 21 2011

Companies | UK

Contracts & Tenders

RESULTSName Turnover Pre­Tax EPS (p) Div (p) Pay day Total

ADVFN Fin 9.17 8.59 0.783L 0.185L 0.14L 0.02 – – – – –

Debenhams Fin 2,210 2,120 160 140 9.1 7.5 2 nil Jan 13 3 nil

MWB* Fin 330 224 45L 10.2L 16.3L 20.2L – – – – –

Premier Mgt Int – – 0.417L 0.029 0.08L 0.02L – – – – –

Punch Taverns Fin 607.2 653.1 335.4L 130L 134.8L 24.9L nil nil – nil nil

Smiths News Fin 1,734 1,830 32.1 28.1 12.1 11.7 5.4 – Feb 3 8 7.4

Spirit Pub Co Fin 734.4 724 206.6L 162.9L 22.7L 21.7L – – – – –

SureTrack Monitoring Int 0.208 0.249 0.383L 0.263L 0.06L 0.07L – – – – –

Figures in £m. Earnings shown basic. Figures in light text are for corresponding period.*Compares 18 months with previous 12.For more information on dividend payments visit www.ft.com/marketsdata

News digestTimes set to cut100 editorial jobsOne in seven journalists’jobs at The Times is to becut because of risingnewsprint costs and fallingadvertising and circulationrevenues, the newspaper’sparent company said.

Most of the cuts, whichwill also affect The SundayTimes, will fall on casualand part-time staff, peopleclose to the group said.

News International, theparent company of NewsCorp’s three remainingBritish newspapers,announced in Septemberthat 110 full-time staffposts across the entire3,000-strong workforce of

the group would go.Thursday’s address byJames Harding, editor,showed that 100 out of the700 editorial jobs at TheTimes would go.

The cuts are the first tobe driven through sincethe News of the World wasclosed in July as a resultof the phone hackingscandal and the arrival ofTom Mockridge as chiefexecutive of NewsInternational.

Staff were told that avoluntary redundancyscheme would be opened,but there are likely to becompulsory job losses.

Ben Fenton in Londonand Andrew Edgecliffe-

Johnson in New York

BATS’ takeoverof Chi­X ‘cleared’The takeover of Chi-XEurope by US rival BATShas been given provisionalclearance by UK antitrustauthorities in a move thatwill seal the enlargedgroup’s position asEurope’s largest share-trading venue.

The CompetitionCommission’s finding infavour of the deal is set tocreate a share-tradingplatform that accounts forabout 40 per cent oftrading in FTSE 100 stocks,behind only the LondonStock Exchange.

Lombard, Page 16.Philip Stafford

By Mark Wembridge

Pace has blamed flooding inThailand for its third profitwarning of the year, pullingshares in the set-top boxmaker down 12 per cent.

The group, based in Salt-aire, Yorkshire, said thefloods had forced closure ofa factory that supplied3½-inch hard-disk drives.Western Digital, the second-largest maker of computerhard drives by sales, haltedits operations in Thailandthis week after flooddefences at its site in theBang Pa-in industrial parkwere breached. Its otherThai factory at the Navana-korn industrial park wasalso at risk.

Pace said the floodswould knock $9.5m (£6m)from 2011 operating profit“before taking account ofmitigating actions”.

Operating profit for thefull-year to December 31was “likely to fall belowprevious guidance of$150m-$170m”, Pace said.

“Because Western Digitalis the major supplier . . . toPace, this will negativelyimpact expected shipmentsof products with hard-diskdrives from this supplierduring the remainder ofthis year.”

Seagate, the company’sother supplier of 3½-inchhard drives, has also beenaffected by the flooding butto a lesser extent. “We havetwo choices – use a WesternDigital drive or a Seagatedrive,” said Neil Gaydon,Pace’s chief executive.

“We are working withWD to see what we can doto get supply from there.Where customers are opento using an alternativedrive, we will have to workwith them to approve thatdrive within the design ofthat product.”

Analysts at Altium Secu-rities said: “While theinterims were in line, thisprofit warning makes itthree in a row for Pace.Confidence in managementremains fragile. We lowerour target price from 105pto 87p and maintain our‘hold’ recommendation.”

In May, the FTSE 250company blamed lowermargins in Europe andsupply-chain problems fol-lowing the tsunami inJapan for a $50m cut to full-year operating profit expec-tations. Shares in Pace,which last year overtookMotorola and France’sTechnicolor to become thebiggest maker of set-topboxes by shipments, thenfell 40 per cent on the day.

That followed a single-dayfall of 20 per cent in Marchafter analysts found that anorder from a large US cus-tomer had been delayeduntil 2012 – which the com-pany neglected to report inits annual results statementreleased on the same day.

Shares in Pace fell 10.95pto 81.05p in early Londontrading on Thursday.

Pace citesThailandf loodingfor profitwarningTECHNOLOGY HARDWARE

By Norma Cohen,Economics Correspondent

Struggling companies withunderfunded pensionschemes are likely to bebarred from higher-yielding

but riskier investments asthey try to make up theshortfall in their schemesunder new rules expected tobe unveiled shortly by thePensions Regulator.

The regulator has beenconcerned that companiesunable to fill their short-falls with cash are “puttingall their money on the 2:30at Newmarket” knowingthat the Pension ProtectionFund would step in if thecompany later becameinsolvent. Those fears have

been heightened in recentweeks by volatility in worldstock markets and poor per-formance at some leadinghedge funds.

However, it is expectedthat the well-fundedschemes of strong employ-ers will be the subject oflighter regulation than theyare today.

Several high-profile casesin which insolvent compa-nies have shed underfundedschemes into the PPF haveheightened awareness of

the scale of the problem.This year, Polestar, a colourmagazine publisher, wasput through a prepackagedadministration procedureby Sun European Partners,its new owners, enabling itto leave its pension liabili-ties with the PPF.

The group had been givenpermission to hive off itsscheme in 2006 into a stan-dalone company inexchange for providingfunding for the shortfall inthe scheme but had contin-

ued to pursue an invest-ment strategy that left itexposed to equity markets.The consequence, said JohnRalfe, an independent pen-sion consultant, was thatthe shortfall rose from £70min 2006 to about £260mtoday. The PPF will nowhave to make good thisshortfall.

“The Pensions Regulatormade the wrong decision inprinciple in December 2006by allowing Polestar to con-tinue as a zombie scheme

with no sponsor and bettingon investment perform-ance,” Mr Ralfe said. “Butin practice, the regulator’sdecision has also exponen-tially increased the loss tothe PPF.”

The PPF is funded by pre-miums paid by solventemployers whose retire-ment benefits it insures andby investment returns onthose premiums. The regu-lator’s duties require it tolimit claims on the PPF andto ensure that pension

promises are honoured infull.

The new approach to reg-ulation, likely to beannounced within weeks,should allow the regulatorto concentrate its oversighton businesses that need itthe most.

Companies with strongbalance sheets that arecommitted to funding theirschemes fully can expect aneasier regime, for example,that requires less frequentreporting.

Pensions Regulator to raise risk barrierGENERAL FINANCIAL

Watchdog moves tocurb high­yield bets

Rules for healthygroups may ease

By Paul J Davies,Insurance Correspondent

The board of Omega Insur-ance and Invesco Perpetual,its main investor, haveended the battle for controlof the Lloyd’s of Londoninsurer by throwing theirweight behind MarkByrne’s tender offer for25 per cent of the company.

Canopius, the privately

held rival Lloyd’s vehicle,responded by withdrawingits revised indicative cashtakeover offer, which itclaimed on Thursday hadbeen at a higher price thanthe 83p upper limit of thetender offer.

Omega has in effect beenon the block for more thana year since a spate of man-agement infighting sparkedby Invesco, owner of 29 percent of the shares, that sawits chairman and chief exec-

utive replaced. Along withMr Byrne’s tender offerthrough his Bermuda-basedHaverford vehicle and theCanopius indicative cashoffer, Omega also received aproposal for a nil-premiummerger with Barbican,another privately heldLloyd’s rival.

Mr Byrne said that hehoped now to complete histender offer within the nextsix to eight weeks. “I don’twant to do the chicken

dance until we’re over thetry line, but it feels likewe’ve won,” he said.

Analysts and otherobservers have always sus-pected that Omega’s fatewould lie ultimately in thehands of Neil Woodford, theInvesco fund manager whocontrols a 29 per cent stake.

“Invesco Perpetual hasconfirmed to the board thatthe Haverford offer, includ-ing Mark Byrne’s appoint-ment as executive chairman

of Omega, has its support inpreference to the Barbicanand Canopius proposals,”Omega said on Thursday.

There are big differencesbetween shareholders aboutthe approaches, with somewanting a cash exit andothers happier to stay onboard. There are concernsamong some that the stockwill be less liquid if up to54 per cent ends up in thehands of only two investors,Mr Byrne and Mr Woodford,

but Invesco’s support forHaverford means investorsnow have no choice.

“The board is aware thatamong the larger sharehold-ers there are different viewson the form of the mostappropriate transaction,with some shareholdersseeking a continued expo-sure to Omega’s businessand others seeking a cashexit. In view of Invesco Per-petual’s preference for theHaverford offer, no alterna-

tive is available to share-holders at present whichgives a total cash exit,” theOmega board said.

Those investors who dochoose to sell could findthemselves getting muchless than the 83p a sharemaximum offer price as thetender is being conductedas a Dutch auction whereinvestors will have to com-pete to sell their shares.

Omega shares fell 5.6 percent to 67p on Thursday.

By Roger Blitz, LeisureIndustries Correspondent

Punch Taverns reported a£14m fall in full-year pre-taxprofits but sought to focusinvestors’ attention on itsefforts to revive the debt-laden leased pub group,highlighting the reductionin gross debt and the dis-posal of assets.

In contrast, Spirit, themanaged pub business thatdemerged from Punch thisyear, pointed to a rosierfuture, recording a 17 percent rise in pre-tax profitsin its maiden full-yearresults. It announced thatMike Tye, deputy chiefexecutive, would step up tothe top job in Decemberwhen Ian Dyson leaves.

Punch, which has 5,000leased and tenanted pubs,said its full-year results toAugust 20 were in line withmarket expectations. Pre-tax profit was £76m, com-pared with £90m in 2010.Earnings before interest,tax, depreciation and amor-tisation came in at £258m,down from £291m for theprior period, and revenueswere £607.2m, compared to£653.1m last year.

Punch’s asset disposals of£108m from the sale of justunder 400 pubs wereslightly ahead of book valueand its gross debt was cutby £133m. Its total liabilitiesof £3bn are £202m below itstotal assets.

On October 7 cashresources were £113m.Roger Whiteside, chief exec-

utive, said that cash, alongwith its half-share in Mat-thew Clark, the drinks sup-plier, would help the groupstay above bank covenantlevels. Mr Whiteside saidthe year had seen “goodprogress,” adding thatwhile the UK economicoutlook remained challeng-ing, the group would main-tain its twin-track approachof driving medium-termgrowth in its core pubs andextracting maximum valuefrom non-core assets.

He would not be drawnon a timetable for address-ing the group’s capitalstructure, but he said therewas “no immediate pres-sure”. He added: “We aregoing forward as fast as wethink is prudent.”

Paul Hickman, analystwith Peel Hunt, said thetwin-track process was“likely to take years towork through” and wasconditional on the strategyworking as well as negotia-tions with bondholders.

But Alistair Macdonaldat Espirito Santo said thatthe property disposals andvalue of the estate demon-strated the “potentialupside” of the propertyassets. Punch shares weredown 0.47p to 9¼p.

Spirit, which owns 1,315pubs within such chains asChef & Brewer and TaylorWalker, enjoyed like-for-like sales growth of 5.2 percent at its 765 managedpubs, with trading in thelast eight weeks up 4.8 percent, and food sales holdingup well. Spirit shares rose3p to 43½p.

Harverford’s tender offer for 25% stake in Omega backed by InvescoNON­LIFE INSURANCE

Punch highlightsdebt reduction asprofits fall £14mTRAVEL & LEISURE

By Claer Barrett,Retail Correspondent

Shares in Debenhams rosemore than 7 per cent onThursday after the depart-ment store groupannounced plans for ashare buy-back next yearand reinstated its full-yeardividend.

In spite of tough condi-tions on the high street,pre-tax profits rose almost15 per cent to £160.3m in the53-week period to Septem-ber 3. This was flattered bya £15m cut in the group’sinterest charge following its

refinancing and an addi-tional £8m of profit fromthe extra week’s trading,which covered the Augustbank holiday weekend.

Michael Sharp, chief exec-utive, said the groupintended to conduct a sharebuy-back in the second halfof the current financialyear, which some analyststhink could be worth upto £50m, about 6 per centof its current marketcapitalisation.

Debenhams paid down25 per cent of its debts inthe period, ending the yearwith net debt of £383m. Afinal dividend of 2p wasdeclared, bringing the full-

year dividend to 3p a share.“This demonstrates our

confidence that we cangrow the business, eventhough the market will bedifficult,” Mr Sharp said.The cash return is a turn-round for the retailer,which was floated by itsprevious private equityowners in 2006 with £1.1bnof debt and suspended divi-dend payments in 2008.

Outlining long-termstrategy, Mr Sharp said hewas targeting 70 new UKstores and planned todouble the number of inter-national franchise stores to130. Nine UK stores are setto open by 2015, and he said

the group was in talks withdevelopers on a further 30sites.

The group also said thatChris Woodhouse, chieffinancial officer, will retirein January and be replacedby Simon Herrick, who waspreviously at Kesa Electri-cals and Northern Foods.

Analysts said theexpansion plans were over-shadowed by a 10 per centfall in operating profits atthe 169 UK departmentstores, where like-for-likesales fell 0.3 per cent overthe period excluding valueadded tax. Including gainsfrom Magasin du Nord, itsDanish businesses, and its

international franchises,total sales revenues rose4 per cent to £2.21bn.

Kate Calvert, retail ana-lyst at Seymour Pierce,said: “It is unusual toannounce a share buy-backso far in advance. If it doeshappen, the scale isunlikely to be large, and ifDebenhams has a badChristmas or consumer con-fidence deteriorates further,they may not do it at all.Really, shareholders aregetting their own cashback, having given the com-pany £306m via a capitalraising in June 2009.”

Shares rose 4.55p to closeat 67.3p.

Debenhams rises 7% over buy­back planGENERAL RETAILERS

The department store group plans to open another 70 sites in Britain even though conditions in the retail sector remain difficult Bloomberg

OCTOBER 21 2011 Section:Companies Time: 20/10/2011 - 21:00 User: thompsonb Page Name: CONEWS3, Part,Page,Edition: LON, 18, 1