Markets live chat transcript for the chat ending at 12:16 on 20 Feb 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)
PM: Hi there
PM: bear with us for a couple of mo
NH: we have serious IT issues today
NH: basically we have had no email this morning
NH: the server is full up would you believe
NH: and IT are having to compact stuff
NH: until that is completed we have no email
PM: I think there’s an internet cafe near waterloo
PM: While we are sorting things…
PM: Can I ask the VV kind reader that sent me an email about his train journey yesterday PLEASE resend
PM: I seem to have deleted….
PM: Anywaty….
PM: Good morning and welcome to Markets Live – FT Alphaville’s daily markets commentary.
PM: Tough conditions this morning.
PM: Neil’s email not working properly.
PM: Nor is mine
PM: You can imagine how happy he is about that.
NH: over the moon
PM: I’ve still got a crocked neck – from flying Cathy Pacific to and from Hong Kong.
PM: Leg room? Think again. And I’m a shortarse.
PM: But not as shortarsed as the average hong konger.
PM: Meant to mention – went to the races out there and it’s the first time ive been able to stand next to the track and actually see the horses.
NH: we only fly domestic here at the FT
NH: and Paul is an assistant editor
PM: Associate actually
PM: But thanks for the promotion
NH: sorry associate
PM: Below… — didnt mean to describe non-commentors as parasites
PM: v rude
PM: Meant lurkers
NH: right lets get down to business
NH: what shall we start with
NH: KKR or Alliance & Leicester
PM: Or the market generally — wots the index off??
NH: down 80.1 points at 5,886.2
PM: ouch
PM: (bear with us — more email probs this end)
PM: Chat amongst yourselves!
PM: As you are already
NH: hang on
NH: nearly there
NH: right A&L
PM: The banks reporting season rolls on
PM: and what a disaster from Alliance and Leics
NH: yep
NH: although rather annoyingly here are bouncing now
NH: got down to 428p
NH: but now off 44.5p at 483.5p
NH: think that is something to do with the conference call
NH: A&L management seem to be hinting that they would not have pledged to hold the divi in 08 if they thought there were other big credit write offs on the way
NH: anyway none of that should distract from this morning’s poor news
NH: big share price fall today
NH: and don’t forget A&L has already had a torid time this year
NH: shares changing hands at 782p at the end of January
NH: then collapsed
NH: after Santander said it had no plans to bid
NH: and news of further impairments in treasury division
PM: so what’s happened this morning
NH: well just a few weeks after A&L’s last trading statement
NH: which was a post pre close announcement
NH: we get a de facto profits warning
PM: right lets get down to the nitty gritty
NH: in order to do that we need to go back to November
NH: that’s when A&L said it had secured financing to cover all its liabilities out until the third quarter of 2008
NH: the company subsequently extended that to the end of 2008-02-20
NH: now it was able to fund most of its requirements with a £4bn loan from Credit Suisse
NH: this was backed by its prime mortgage book
NH: Now while A&L was happy to shout about this financing at the time
NH: what it did not tell the market was how much it was costing
PM: and I seem to remember a few of sharper analysts pointing that out
NH: yep
NH: anyway, finally A&L revealed the impact of this new funding facility this morning
PM: in a round about way
NH: here’s the killer par from today’s results statement
NH: The additional funding facilities we have put in place in the second half of
2007 and early 2008 have provided the Group with protection from volatility in
the short term funding markets. These facilities, which typically last around
two years, cost more than would have been the case in the first half of 2007.
Whilst these facilities remain in place they will have a negative impact on the
Group’s net interest margin, and, accordingly, in 2008 we expect the Group net
interest margin for the full year to be around 1%.
NH: now, that might not sound too significant
PM: but its impact is massive
NH: it is
NH: this is how one analyst put it to me this morning
NH: Banks are hugely sensitive to NIM changes.
NH: 10bp of £66bn Average Interest Earning Assets equates to £66m versus core A&L PBT of £417m
PM: 10bp can have that impact
NH: yep
NH: and that’s what’s caused the damage this morning
NH: when A&L issued its year end trading statement before Xmas it was guiding for NIM of “stability” i.e. around 110bp
NH: but while this borrowing facility remains in place it will continue to have negative impact on NIM
PM: so analysts have been downgrading numbers
NH: yep
NH: the other thing they are unhappy about is that A&L is guiding towards a ROE of 14.6% well below 20% target
NH: and they are saying it will be a long haul back to 20%
PM: any comment??
NH: this is from ABN Amro
NH: A&L (sell), TP under review. FY07 results. EPS, DPS and Tangible Common Equity not as bad as they might have been, but outlook statement for FY08F is
extremely uncomfortable.
NH: Expect consensus downgrades towards our 33p (60p ex
write offs) and therefore debate about divi sustainability even though mgt
reaffirms plan to hold flat FY08.
NH: Margin guidance is 1.0% FY08F, slightly better than our
0.94% as loan growth shifts away from mortgages (balances to fall!) to higher
margin commercial loans, but markedly lower than consensus. Costs FY08 are to
grow- we had a decline. Valuation: at GBP5.28, A&L trades on 1.4x p/TCE vs 1.0x
at B&B. We would expect AL to trades towards 1x TCE i.e. 380p
NH: and this is from Numis Securities
NH: Pre-tax profit down 30% margins and loan growth falling, impairment expected to increase
The numbers: Pre-tax profit of £399m was below our forecast of £412m with the final
dividend held the dividend was 55.3p for 2007 and the group expects to hold the dividend in 2008.
NH: EPS was 59.4p so the dividend is only covered 1.07x. The level of impairment in the
core businesses was slightly below that recorded in 2006 but with a charge of just £1m within the mortgage portfolio this has to increase over the next couple of years.
NH: With treasury assets up to £23bn further write downs seem inevitable. The group added to its SIV exposure through H2 2007! Most of the growth in treasury assets relate to the increase in group liquidity.
Looking forward: The group highlighted that net interest margins will decline to 1% for 2008 due to increased funding costs. They expect loan growth to decline and we expect the mortgage book to shrink. Impairment within the core business remains at a cyclically low level and with the prospect of a weaker economy in 2008 we expect this to increase.
A&L does however have a relatively low risk book and the anaemic growth of the past few years is now a positive.
NH: The group says it will not achieve its 20% ROE target for 2008 or 2009 but given its
structurally weak market position with a high cost base and the end of the balance sheet leveraging we do not believe A&L will ever see a sustainable 20% ROE (the target).
NH: Valuation and forecasts: Given the negative outlook we expect to reduce our forecasts for 2008 and 2009. We expect the group to hold the dividend but see the very real prospect of the dividend becoming uncovered. Better value elsewhere.
PM: so the divi could be in trouble as well — which is why the stock is yielding over 10%
NH: yep
PM: is there any good news??
NH: well, this year’s dividend was held
NH: and someone might bid
PM: Do u think Santander will return?
NH: not sure if the comments made by its chairman last month, mean Santander cannot return for another six months with an offer
NH: having said that any bid would probably be friendly
NH: So I guess they could
NH: actually the only real positive I can see
NH: is that there is a huge short in A&L
NH: that will have to be closed at some point
NH: around 20% of the company is out on loan
PM: well if that’s the only positive!!
PM: I think A&L remains a sell 
NH: shares hit their lowest level since 2000 earlier this morning
PM: nasty
PM: Moral to all this??
NH: well it’s a bit like northern rock
NH: if you are bank that’s too dependent on the wholesale money markets
NH: they u deserve to trade at a big discount to the rest of the sector
NH: coz the business model depennds on liquidity
PM: ok — thanks for all that
PM: 
PM: Quickly to comment below — hadnt see Waller’s col this morning
PM: Was it about a certain former regulator?
PM: In which case MW must have been emailed as well
PM: re Hushmail — will look at that 
PM: And as for readers having a session up here, with photos etc — SURE
PM: We can arrange that
PM: Shall wwe start with some volunteers?
PM: In the meantime we should look at KKR
PM:
PM: this KKR Financial Holdings thingy.
NH: Yes, spooked people in the far east earlier today
PM: Story by James Mackintosh, the FT’s hedge hack.
NH: In a raincoat.
PM: KKR Financial Holdings, the listed affiliate of the private equity group, has delayed repayment of billions of dollars of commercial paper for the second time and begun a new round of restructuring talks with creditors less than six months after a rescue rights issue.
In a regulatory filing on Tuesday, KKR Financial Holdings (KFN) said it had begun talks with creditors and deferred repayment of a chunk of debt due last Friday. The move is a further embarrassment for KKR, following a $270m bail-out of the leveraged investment vehicle last September, which saw founders Henry Kravis and George Roberts personally inject cash.
KFN is a leveraged investment vehicle that had borrowed in the commercial paper markets to invest in home loans, particularly the “Alt-A” loans seen as riskier than mainstream borrowers but safer than subprime loans. Like other mortgage-backed securities, Alt-A loans have been hard-hit by the credit squeeze and US house price falls.
Last week, Standard & Poor’s, the credit rating agency, downgraded KKR Pacific, one of the two funding vehicles for KFN, by two notches to A-3 because of falls in the value of the mortgages.
KFN is one of many borrowers hit by the seizing-up of the asset-backed commercial paper market. But, unlike most similar borrowers, KFN used extendible commercial paper known as secured liquidity notes, which allowed it last October to defer payment of half its borrowings to February 15 and the rest to March 13.
On Tuesday KFN put off February repayments until March 3, but warned that most investors had the right to demand their money back with one day’s written notice.
PM: So this thing – basically a REIT that became a SIV – floated by buyout group KKR, which made all its investors feel safe and happy at the time of the IPO.
NH: Got stung by residential property – and so it moved into leveraged debt.
PM: Great! Savvy investors!
PM: Now I rang up James Mac this morning to tell him he’d wiped billions off shares in the Far East and he seemed a little surprised.
PM: He actually says they could simply be playing hardball with their CP conterparties. And he also pointed out that it is just a few billion.
PM: But then he doesn’t really know – because its dealing with KKR, and they are not exactly the most garrulous operation when it comes to communicating with the market.
NH: a situation to watch though
PM:
NH: right, quick bit of RAW info from the market place
NH: LONMIN BID SPEC DOING THE ROUNDS
NH: not sure we believe that but the shares are up
PM: Completely raw of course
NH: ahead 66p at £35.29
PM: Doing the rounds of trading rooms this morning
PM: The other bit of gossip in the same sector concerns Xstrata
NH: yep, shares hit £39.26 in early on
NH: amid rumours of an imminent £48 a share bid from Vale
NH: now, this seemed to be based on the fact that Vale has a board meeting today
PM: hang on minute Vale have a board meeting every week
NH: i know, but the market does not seem to be bothered
NH: the word in the market
NH: is that the board are going to get sign off for a bid
NH: and then start serious negotiations will Xstrata and Glencore
PM: well, that would seem to rule out an imminent bid then
NH: i would say so
NH: and that’s why we have been giving this story short thrift
NH: as we wrote last week
NH: Xstrata and Vale are miles apart on price
NH: the Brazilians want to pay £40-42 and the Xstrata and Glencore want £45-£48
NH: and then Glencore wants to keep the marketing rights for its metals
NH: I don’t know how the two sides are going to come together
NH: and if there is a way of doing it, it is going to take some time
PM: None theless…
PM: Shares in Xstrata still up 39p at 39.30 this morning
PM: And that is against the backdrop of a very week london market
NH: Vik, we are also secptical on Lonmin. gais probably more to do with strong platimun price
PM:
PM: CORRECTION AND CLARIFICATION
PM: Concerns College Hill.
PM: We were wrong yesterday. Badly wrong.
PM: Having identified this firm as the worse financial PR business in London we WRONGLY identified Punch Taverns as a client.
PM: To clarify: punch are only a semi-client of College Hill. They got sidelined recently by Brunswick.
NH: Was that because they screwed up communicating a story?
PM: I think it was.
PM: So please accept our profuse apologies.
PM: Happy to set the record straight.
PM: So those opportunistic traders who have marked Punch Taverns 7p lower this morning on the understanding that they have College Hill as their prime PR agency can now mark the shares back up.
PM:
NH: Right, to Vodafone.
NH: Bohemia was right
PM: On the ball Bohemia
NH: just been talking to one of Voda’s brokers
NH: they say fall and heavy volume in stock this morning caused by this Verizon move
NH: to recap
NH: Verizo unlimited voice calls for $99.99 a month
PM: So price war over there
NH: and none of that will help Voda get a dividend out of Verizon
PM: Some people might remember that we distributed news last summer about Voda considering a bid for Verizon
PM: Caused a bit of stink i seem to remeber 
PM: remember even
PM: They were planning one — but shelved the idea
NH: ah yes I remember
PM:
NH: just got some feedback from the A&L analyst meeting
NH: this is from ABN
NH: helps explain why the stock rallied
NH: lliance and Leicester (SELL). The conference call performance was not as bad
as it could have been. Structurally the SELL case remains for Alliance and
Leicester, trading on 1.2x ’07 TCE, and 1.35x ’08 TCE it remains expensive vs
BB on 1x. Short term however we are most likely entering the last phase of
strong underperformance.
* Conference call detail :
NH: 2 small +ves:
1) Wider new biz margins in mortgages & personal loans however these will not
come through until the 2H08,
2) The unsecured bad debt charge went down in ’07 ( 50% of this was a change in
methodology). These two small +ve issues for HBOS and LLOY where funding
costs are much lower than AL and BB.
4 -ves:
1) AL will struggle to raise new deposits unless they pay up for them, and
this is margin -ve.
2) Due to the continuing high expense of wholesale funding, the loan book will
shrink & their NIM is falling. Higher asset margins will not be evident until
2H08, so the 1H08 results will also be uncomfortable.
3) Costs are rising and you should expect further writedowns from treasury.
4) If dividend cover falls below 1x they will cut the dividend and will not pay
for it out of capital.
* CONCLN: We are expecting AL to deliver c.60p underlying earnings ’08. For the
FY08 we expect TCE / share to be c.370p (assuming a flat dividend vs ’07), and
if earnings fall again in ’09 the dividend is at risk. We expect AL to go
ex-div (36.5p) badly on the 23rd April, however short term pace of
underperformance of AL shares may slow.
PM: Quite a few analysts determined to be nice to A&L
PM: Cazenove saying nice things last week; james Eden at Exane likes em
PM: Stock now down just 9 .5%
PM:
PM: very quickly for the gold bugs…..
PM: Try this site — http://www.lemetropolecafe.com/
PM: For gold conspiracy theorists
PM:
NH: had a few questions about the LSE
NH: stock has been really weak recently
NH: can only put it down to the fact people are finally realising there will not be scrap between Borse Dubai and the QIA
NH: in fact the QIA don’t even seem bothered about raising their stake
PM: Not suprised at this price
PM: Probably wait for it to come back a couple of quick — if they hav any sense
NH: the other to remember with the LSE now is that it is an extermely volatile stock
NH: free float is really small with the Dubai, QIA, Italians and a couple of hedge funds all in there and not selling
PM: Hmm — good point
NH:
PM:
PM: Sainsbury v weak this morning — someone mentioned below….
NH: they are.
NH: down 15.5p at 366p
PM: Whats caused that ?
NH: now I have heard rumours that MR T has been selling out
NH: but we don’t believe that
NH: reckon its more to do with yesterday’s figures from Wal-mart
PM: Which owns Asda in the UK of course
NH: and Wal Mart were talking about “tightening conditions” in the UK
PM: hmm
PM: Talking of Mr T
PM: Wasnt there another big trade print in Mitchells & Butlers this morning????
NH: yep 8.35m shares at 441p. probably more stock being shifted between prime brokers
PM: Ok thanks
PM:
PM: What else is moving?
NH: Wolseley
NH: and it’s heading lower
NH: following a very bearish note from Credit Suisse
PM: how bearish?
NH: 
PM: ouch
NH: reckon Wolseley could breach its banking covenants in 2009 as the downturn in the US and UK housing markets bite
PM: that is gloomy — breach covenants!
PM: let’s have a peak at the note
NH: We are downgrading Wolseley to Underperform from Neutral. We are also reducing our target price to £5.40, in
accordance with sizeable earnings downgrades (FY08E and FY09E EPS down by 14% and 56% respectively), updates to our cash flow assumptions and an increase in the cost of financing.
PM: 56% downgrade in 09 !?!?
PM: no wonder he thinks Wolseley will breach its banking covenants
NH: Coupled with a recovery which we believe is some time away,
we believe Wolseley’s stretched financial position will call for cuts to future investments with potential implications for Wolseley’s longer-term aspirations.
NH: As such, we believe the market does not appreciate how far recovery may be from now, nor has it yet to fully price in the risks in the interim, in our view.
NH: • Thesis: The main reason for the 56% FY09E EPS downgrade is a more bearish forecast for US housing starts, which we now expect to trough at 750k vs. 1m previously. The EBIT downgrade in US building materials (£147m forecast loss vs. £0m previously) accounts for approximately 50% of the downgrade. Although smaller in magnitude, we also downgrade our Ferguson, UK & Ireland and France forecasts.
NH: We forecast Wolseley’s FY09E net debt/EBITDA ratio to reach 3.64x such that
it may have to renegotiate its financial commitments to lenders (Wolseley’s debt covenants are struck at 3.5x net debt/EBITDA). As such, the remainder (c12%) of the EPS downgrade is accounted for by a 90bp hike in the FY09E interest
charge to reflect these renegotiations.
NH: Catalysts: Wolseley will report its interim results on 17 March 2008. Additionally, we believe a number of US housing
statistics, such as today’s monthly starts figures, could signal further deterioration in the US residential market. Consensus
forecasts (BBG) 1.01m starts for January vs. 1.006m last month. Given last month’s permits data which was 8% below
consensus estimates, and unsold inventory which remains high, we believe there is downside risk to this forecast.
• Valuation: On our revised CY09E estimates, Wolseley trades on a P/E of 20.4x and generates a FCF yield of 4.3%. We
estimate a CY08E and CY09E dividend yield of 5.1%, and a CY09E net debt to EBITDA ratio of 3.7x.
PM: blinkin eck
PM: Wolseley’s price has fallen 20.5p to 658p this morning
NH: and on a related subject, housebuilders are very weak this morning
NH: and that’s also because of bearish note
NH:
NH: this one’s from Dresdner
NH: and basically they are saying sell everything in the housebuilding sector
PM: Everything?
NH: well almost
NH: check this
NH: Next week’s start to the results round is expected to show the grim reality following builders’ trading statements indicating it was too early to call the spring selling season. We reckon it will be dreadful. We believe it is payback time for years of speculation and sharp practice, to which most housebuilders are now indirectly
exposed. Take advantage of the recent bounce and head for the escape exit
PM: 
NH: We have slashed forecasts for the second time since the trading updates: It is now clearer that results will show a marked slowdown in volumes, prices and incentive pressure and a retreat from the land market. We believe we are bottom of the range.
PM: speculation and sharp practice
NH: Ratings cut: Our price targets remain intact (based mainly on considerations of tangible book value) for now. However, we downgrade Bovis, Persimmon and Taylor Wimpey from Reduce to Sell.
NH: Bellway, Redrow and Barratt remains at Hold, Reduce and Sell respectively.
Hitting a wall: Most surveys of the wider housing market point to a sharp fall in volumes, falling prices and, in the case of housebuilders, increasing discounts and the threat of ‘downvaluations’. There is now evidence that land market values are on the turn – crucial to any assessment of housebuilders’ valuations
NH: Reckless lending and over-building of flats threatens recession: The bubble was
stoked by highly speculative (and potentially highly suspect) development, lending and valuation practices which have led to over-supply of flats in cities across the country, most notably Leeds. Flats rose from 21% of all housing starts to 49% in Q3 2007.
NH: Widespread suspected fraud: This may have stoked inflation on new developments,
according to the FSA, which is investigating over 200 cases, and Nationwide among others.
NH: We still believe there is considerable downside risk to our estimates: Even now,
these represent close to our best case scenario: a year of steeply falling volumes,
modest price falls and margin pressure impacting P&Ls for two years. We expect (and
are already seeing evidence of) negative equity on many recent flatted developments.
Worst case: Our worst case (approaching even chance) is a multi-year slump, losses in two to three years, land write-downs, strain on cash and dividends. In this outlook, NAV is no support
NH: so, we are in no doubt where Dresdner sit on the UK housing market
PM: 
Persimmon (PSN:LSE): Last: 711.00, down 29 (-3.92%), High: 732.00, Low: 710.50, Volume: 2.03m
Barratt Developments (BDEV:LSE): Last: 394.75, down 16.75 (-4.07%), High: 405.00, Low: 392.50, Volume: 2.50m
Taylor Wimpey (TW.:LSE): Last: 170.80, down 9.3 (-5.16%), High: 176.00, Low: 169.20, Volume: 4.83m
Bellway (BWY:LSE): Last: 782.50, down 17.5 (-2.19%), High: 799.50, Low: 780.50, Volume: 224.30k
PM: Thanks for those
PM:
PM: Question about Shire below from maximus
PM: Any thoughts on their strength???
NH: stock been a bit of dog in the year to date
NH: had figures tomorrow
NH: and I think Citigroup might be giving them a push this morning
NH: FY07 results due 21 February — Key numbers: Adderall XR $1,003m (+16% vs. consensus $998m), Vyvanse $76m vs. consensus $49m, total sales $2,375m (+32% vs. consensus $2,364m), income from ongoing operations $499m (+36% vs. consensus $502m). Non-GAAP EPS $0.88 (+24% vs. consensus $0.92).
Vyvanse and cost growth – These are the two biggest issues, especially given the potential impact on earnings from 2Q09 when Adderall XR goes generic. We set out a conservative set of assumptions with respect to the Vyvanse ramp and R&D spend to reflect investment in the growing pipeline of late-stage assets. While we forecast cash EPS growth of 30% in 2008, we have built in a decline of -12% in 2009E, with a 2007-2012E EPS CAGR of 14%.
Vyvanse — We continue to believe Vyvanse has blockbuster potential, though temper our previous forecast ramp. Rx trends should accelerate through 2008 driven by increasing reimbursement coverage. We estimate 56% of new ADHD patients are adults; with current off-label use at c.25% Shire has a significant incremental opportunity to go after once FDA approval is given in April.
BUY maintained; PT cut to £11.50 — Shire’s growth drivers are approved and on the market, with a maturing late-stage portfolio expected to sustain growth in the next decade. While we concede near-term P/E multiples look punchy the share price suggests Vyvanse achieves peak sales of just $600m. Given annualised sales are already $250m, with Rx trends improving and patent protection until 2023, we believe the benefit risk profile lies to the upsid
PM: thanks for that
PM:
PM: you know i feel something is missing from my life this morning
NH: ah, that must be the Crock then
Readers may also know this former bank as Northern Rock.
PM: yes. our world is empty
PM: Though I believe Helen has jsut done a post on the former bank being downgraded by Moody’s
PM: Which is quite entertaining
PM: i also have the latest letter from that great Roger Lawson
PM: From the UK Shareholders association
PM: Fair Compensation to Shareholders?
The Treasury has said that it will appoint an “independent“ valuer to determine the
compensation to be paid to shareholders in Northern Rock. However, the draft Northern
Rock plc Compensation Scheme Order 2008, which can be read on The Treasury website,
http://www.hm-treasury.gov.uk/media/F/B/banking_draftnr_compensationorder.pdf
requires the valuer to assume that Northern Rock:
(a) Is unable to continue as a going concern; and
(b) Is in administration.
With such “terms of reference” imposed upon him any valuation will NOT be fair, unbiased
and independent!
PM: Guy should be knighted
PM: or r something
PM:
PM: I know what I was going to mention. James Montgomery’s suggestion actually.
NH: Oh, heads up. What is it?
PM: Well, that we should swing out weight and influence behind Porsche and their brave resistance to Ken Livingston’s plan to charge TWENTY FIVE QUID to drivers of quality cars into London.
PM: Here’s bob Sherwood’s stuff in the paper this morning, for those of you who missed it.
PM: Porsche, the luxury carmaker whose products are the ultimate emblem of success in the City, is planning a legal challenge to prevent its customers from paying the £25-a-day ($49) London congestion charge.
The German company intends to seek a judicial review aimed at quashing Mayor Ken Livingstone’s plan to increase the charge for the most polluting cars from October.
At a time of year when bonus-fuelled bankers are traditionally poring over the company’s brochures, Porsche said that its solicitors were formally writing to the mayor to challenge his decision.
Transport for London predicts that 22,000 fewer cars will be driven in the congestion charge zone when those that emit more than 225 g/km of C02 are liable for the higher charge.
Among those that would be hit are Porsche’s Cayenne 4×4, which can be bought for about £50,000 with a 4.8-litre engine, and the iconic 911, which has an engine size up to 3.8 litres and a price of up to £80,000.
Porsche said it did not know what impact the increase would have on its UK sales, but it insisted that the charge would unfairly penalise successful people who generated wealth in the capital. Andy Goss, managing director of Porsche Cars GB, said the charge was “unjust” and the company had to protect its brand and its customers in London.
He said: “This was a last resort for us but we have been pushed into a corner.
“Successful people from across the world will start to think twice about basing themselves here if they think they are going to be used as cash cows for city hall.” Mr Goss said the £25 charge would affect other carmakers and Porsche had decided to act out of a sense of principle that it would be bad for London’s business while having little effect on C02 emissions.
PM: Now I reckon quite a few of our readers fall in the 225 g/km and higher category.
PM: I of course, have a green car.
NH: A retro jag with an engine as big as house – that happens to be painted racing green.
PM: This is just the politics of envy from Livingston you know
PM: And we’re not calling him cuddly ken, cos he’s not.
PM: He’s drunk
On power
In my humble.
NH: Well it’s supposed to be good for us all – encourage you to bring your children up in a better environment.
PM: Hmm. Think is was CS Lewis said something about this?
NH: What, tax on gas guzzlers?
PM: No, on tyranny. Hang on.
PM: Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience
PM: Don’t you think that is beautiful prose?
NH: So FT Alphaville is going shoulder to shoulder with Porsche.
PM: We are with them in their brave resistance.
NH: In fact, we might even offer to sponsor their cars or something.
PM: Or we could drape Neil over the bonnet of a 911.
NH: Actually, there are synergies here.
NH: Here’s an Alphaville post from Gwen back in November:
NH: Porsche on Monday revealed it earned three times as much money from trading derivatives as it did from selling cars, prompting accusations it was acting more like a hedge fund. The German luxury sports carmaker said €3.6bn ($5.2bn) of its €5.86bn pre-tax profit in the year to July was from share options. Stripping out the €521m it made from revaluing its 31% controlling stake in Volkswagen and €702m from its share of VW’s profits, Porsche made at most just €1.05bn from its “core” carmaking business. “It does look like a hedge fund,” said Stephen Cheetham, analyst at Sanford Bernstein. The FT’s Paul Betts says nobody is quite sure how Porsche made all that money from share options, though it seems to have bet on VW’s shares rising. Not been a bad bet, he says, but the question is, what happens now that credit markets are souring and VW looks very expensive?
PM:
PM:
PM: Market roundup before we go?
NH: turning ugly out there
NH: FTSE 100 down 108.1 points at 5,897.2
NH: oh, just need to do a favour for contact
PM: What you gotta puff??
NH: not a puff. he wanted to see the Landsbanki note on UK Coal this morrning
NH: as we have neither email or fax
NH: i will have to post it here and hope he is watching
PM:
NH: We initiate on UK Coal with a 661p price target, some 50% plus ahead of the
current share price. Property has been the driving force behind re-rating, but we
believe the mining operations are increasingly becoming as important in terms of
valuation, as macro conditions and management actions take effect. In this
document we outline sensitivity analysis of the two key operations, UK mines and
property, and argue that our medium case valuation justifies this target price and
indeed could prove conservative on the back of expected planning gains and coal
prices maintaining current levels.
NH: there’s 20 pages of this. indepth note. looks good
NH: and the stock is up
NH: up 14.7p at 434p
NH: people probably interested in this note as there is a bit of two way pull in UK Coal
PM: Thanks for that
PM:
PM: Right — we’ve got a late breaker here….
NH: William Hill getting hammered
PM: Down 21.7p at 403
NH: seems one of the big US investment banks had gone into a mad panic
NH: telling clients that it is pulling a trading call it made yesterday
PM: ha!
PM: Thanks for that
NH: oh and one little stock
NH: Colliers CRE
NH: bit of volume
NH: shares ticked up 5p to 55p
PM: What does it do?
NH: some of sort of property surveyor i think
PM: Surveys damaged property i hope
NH: company rushed out statement before Xmas
NH: responding to press speculation about a bid
NH: trouble was no one could find the speculation
PM:
NH: must have been in some obscure trade mag
NH: anyway, talk in the market is that Decembers mystery bidder is around again
PM: Raw one that one — and small, so be careful!
NH: very careful
PM:
PM: Right — we are done
PM: Apols for earlier chaos
NH: email still not working properly
PM: thanks for all your funny comments
NH: missing around 50 from this morning
PM: thanks for joining us
PM: We will be back tomorrow at 11am
NH: see ya