Haversham Drives Off With £1.2bn Car Dealer

By Mark Kleinman, City Editor

Britain's biggest seller of secondhand cars is to reverse onto the London stock market in a £1.2bn deal that could be announced within hours.

Sky News has learnt that British Car Auctions (BCA) is in the final stages of talks about an agreement to be acquired by Haversham Holdings, a vehicle set up to buy companies in the automotive sector.

Sources close to the deal said the transaction could be announced as early as Thursday morning.

If it does take place, the reverse takeover would see £1.2bn raised from institutions including Aviva Investors, Artemis, Invesco, Schroders, and Woodford Investment Management, the firm set up by Neil Woodford, the City's best-known fund manager.

Established last year, Haversham is fronted by Avril Palmer-Baunack, a former boss of Autologic who subsequently had a short-lived spell as boss of Stobart, the haulier company.

Shares in Haversham were suspended last week after the company issued a statement confirming Sky News' disclosure that it was in talks to acquire BCA.

Insiders said that if the deal is announced on Thursday, Haversham shares would probably resume trading during the course of next week.

BCA, which operates the online operation webuyanycar.com, has been owned by Clayton Dubilier & Rice (CD&R), the private equity firm, since 2009.

Reports had suggested that CD&R would retain a stake of roughly 10% in Haversham once the deal is completed, but several sources said on Wednesday that it was unlikely to remain such a substantial shareholder.

The BCA takeover will coincide with a £935m refinancing of the AA, the breakdown recovery service, and a £2.5bn flotation of Auto Trader, which is part-owned by rival buyout firm Apax Partners.

CD&R attempted to launch a flotation of BCA last autumn, but abandoned it, blaming volatile global equity markets.

At the time, it said: "The board and shareholders were very encouraged by the broad engagement and interest in BCA shown by investors and remain excited about supporting the next phase of the group's growth.

"BCA has an excellent track record as Europe's leading used vehicle marketplace with strong revenues and earnings growth on the back of momentum across its physical and digital platforms."

Operating from more than 200 locations across Europe, BCA claims to be more than two-and-a-half times the size of its nearest competitor.

It said last autumn that over the three-year period to the end of 2013, BCA saw revenues rise 74% to £442.3m, with adjusted pre-tax profit growing by 27% to £62.5m.

In total, more than 900,000 vehicles were sold using BCA in 2013, with 37% of those transactions taking place online, highlighting the growing importance of digital channels in the sector.

A spokesman for Haversham declined to comment.

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Bank Lacks Robust Crisis Management - Report

A failure of the Bank of England's interbank payments system last year showed it was not fully able to handle a crisis in the financial system, a report has found.

The Real Time Gross Settlement (RTGS) system went down for nine hours on 20 October leaving almost £300bn of payments, including house purchase transfers as well as financial market trades, in limbo.

The failure was blamed on "the introduction of defects as part of functionality changes made to the RTGS system in April 2013 and May 2014", the report said.

The investigation, which was commissioned by the Bank and compiled by auditors Deloitte, said that while all the cash transfers affected eventually cleared that day, a third of the house purchases were delayed by at least 24 hours.

It identified a lack of robust crisis management at the bank - a finding that will be seen as particularly embarrassing because of the central bank's own demand of UK lenders that they should ensure financial stability through robust IT systems.

The report also highlighted a lack of supervision at the time of the outage.

It showed that three senior staff were abroad and did not see an email warning them of the problem and officials chose not to start a backup system in the hope of fixing the immediate problem quickly.

The Bank said it was to implement all the report's recommendations and it had since launched a committee to oversee the system.

It is being led by Minouche Shafik, the deputy governor for markets and banking.

He said: "The RTGS system is vital to the effective functioning of the UK economy and the financial system.

"Participants in the RTGS system - and most importantly, their customers - rightly expect it to meet extremely high standards of service, availability and resilience.

"The Bank is committed to meeting those high expectations, including through the full and timely implementation of the recommendations contained in this independent review."

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Balfour Beatty Makes New £118m Risk Provision

The crisis in Balfour Beatty's UK construction business has resulted in the company making further provisions of £118m - on top of a £205m hit already announced.

The development was contained in the troubled infrastructure firm's final results for 2014, which reported a pre-tax loss from continuing operations of £304m.

It had made a loss of £49m in the previous year.

The company, which issued four profit warnings in 2014, had said in January that recommendations by auditors would result in a £70m additional hit to profits in the UK construction division.

It had previously taken £135m in provisions, relating to a string of problems including cost over-runs, skills shortages and weak controls.

The results statement said: "In January 2015, having just received the results of the KPMG review on the operational issues in the UK construction business, the board announced £70m of contract write-downs and that it would also assess the overall level of contract risk provisions in that business - the outcome of which would be announced at the full-year results in March 2015.

"The Board has now completed this process and concluded that further risk provisions of £118m are appropriate."

KPMG's investigation examined the company's focus on commercial controls, on 'cost to complete' and contract value forecasting and reporting at "project level".

Balfour Beatty, which has a contract to help convert London's Olympic Stadium into a new home for West Ham United FC, confirmed there would be no dividend but it hoped to resume payments to shareholders next year.

Chief executive Leo Quinn said: "Over the next two years we should work through the severe legacy of "problem" construction projects.

"However, in tackling the cultural change required to ensure these issues are behind us, we face major short-term challenges.

"The key is that we are determined to address this through self-help.

"Our transformation programme, Build to Last, is gaining rapid traction and we are driving initial improvements of £200m cash in, £100 million cost out over 24 months.

"In addition, our investments portfolio will provide the financial flexibility of both reliable income and the sale of maturing assets into a strong market."

"To maintain balance sheet strength throughout this period, we have already cancelled the share buyback and re-phased our pension fund payments with the support of the trustee.

"We have also decided not to recommend a final dividend this year, but expect to reinstate the dividend at an appropriate level by March 2016.

"I remain convinced that all our operations can achieve industry-standard performance as markets improve.

"The real prize is a sustainable return to profitable growth, built on the Group's unique capabilities, underpinned by leaner, stronger processes and flawless execution.

Its share price, which has fallen 17% over the past 12 months, was 2.2% down when the FTSE 100 opened for business on Wednesday.

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Inflation Hits 0% As Food Costs Fall Further

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Food prices are falling as a supermarket price war continues

Falling food prices meant the annual rate of UK inflation stood in uncharted territory of 0% in February, boosting family budgets.

The Office for National Statistics (ONS) said its headline CPI measure of inflation eased from 0.3% in January to 0% in February year-on-year.

The figure sets a new record low for CPI since comparable records began in 1989 though the ONS added that inflation may have been lower in 1960 at -0.6%, based on unofficial estimates.

The ONS said consumer prices, measured under prices for a core basket of goods, were unchanged from a year earlier as lower food and computer goods prices outweighed upward pressures.

Food and non-alcoholic beverage prices saw a record year-on-year drop of 3.3% amid the supermarket price war.

1/10

1. Gallery: Last Time Inflation Was As Low

   A loaf of bread, which could finally be bought sliced, would have set you back 4.5p

You could spread your money thinly with a pound of butter just 22p

]]>

Fancy a pint? 8p, please!

]]>

Or if you preferred something lighter, 250g of tea would have cost 16.5p

]]>

And if you took sugar, 1kg wouldn't be more than 6.5p

]]>

Falling prices have also been locked in because of the drop of up to 60% in world oil costs.

Economists expect inflation to fall further in the coming months as cuts to energy bills are felt.

The static cost of living, on an annual basis, has arrived at a time when wages are rising by 1.8% year-on-year.

It is a welcome relief for consumers following six years of inflation outpacing salaries.

The Bank of England, while welcoming weak inflation as a benefit to the UK economy, is keeping a close eye on the measure for fear that negative prices it has forecast in the coming months could become entrenched in the medium term.

Deflation has a tendency to delay purchases by consumers and businesses on hopes the cost of goods and services will be cheaper in future.

The Bank believes record employment and rising wage levels will help maintain consumer spending.

The surprise scale of February's fall is likely to push back the expected timing of an interest rate rise, currently pencilled in by markets for 2016 and putting downward pressure on the pound.

Bank rate has been held at 0.5% for six years but the bank's chief economist Andy Haldane has suggested that the next move was as likely to be a cut as a hike because of lower inflation.

Low inflation is welcome for the Chancellor George Osborne ahead of May's General Election.

He tweeted: "Inflation at zero is a first for the British economy.

"Low inflation due to falling oil prices is good news for family budgets.

"Prices are frozen and, as the recovery from Labour's Great Recession strengthens, their economic argument has literally come to nought".

TUC general secretary Frances O'Grady warned: "Zero inflation is a reminder of how fragile the economy remains.

"Stagnating prices are not a sound foundation for the strong and sustained pay rises that workers have waited so long for.

"With deflation on the horizon, the Chancellor's plans for extreme cuts after the election look more and more like a suicide note for the UK economy".

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We use cookies to give you the best experience. If you do nothing we'll assume that it's ok.

Food prices are falling as a supermarket price war continues

Falling food prices meant the annual rate of UK inflation stood in uncharted territory of 0% in February, boosting family budgets.

The Office for National Statistics (ONS) said its headline CPI measure of inflation eased from 0.3% in January to 0% in February year-on-year.

The figure sets a new record low for CPI since comparable records began in 1989 though the ONS added that inflation may have been lower in 1960 at -0.6%, based on unofficial estimates.

The ONS said consumer prices, measured under prices for a core basket of goods, were unchanged from a year earlier as lower food and computer goods prices outweighed upward pressures.

Food and non-alcoholic beverage prices saw a record year-on-year drop of 3.3% amid the supermarket price war.

1/10

1. Gallery: Last Time Inflation Was As Low

   A loaf of bread, which could finally be bought sliced, would have set you back 4.5p

You could spread your money thinly with a pound of butter just 22p

]]>

Fancy a pint? 8p, please!

]]>

Or if you preferred something lighter, 250g of tea would have cost 16.5p

]]>

And if you took sugar, 1kg wouldn't be more than 6.5p

]]>

Falling prices have also been locked in because of the drop of up to 60% in world oil costs.

Economists expect inflation to fall further in the coming months as cuts to energy bills are felt.

The static cost of living, on an annual basis, has arrived at a time when wages are rising by 1.8% year-on-year.

It is a welcome relief for consumers following six years of inflation outpacing salaries.

The Bank of England, while welcoming weak inflation as a benefit to the UK economy, is keeping a close eye on the measure for fear that negative prices it has forecast in the coming months could become entrenched in the medium term.

Deflation has a tendency to delay purchases by consumers and businesses on hopes the cost of goods and services will be cheaper in future.

The Bank believes record employment and rising wage levels will help maintain consumer spending.

The surprise scale of February's fall is likely to push back the expected timing of an interest rate rise, currently pencilled in by markets for 2016 and putting downward pressure on the pound.

Bank rate has been held at 0.5% for six years but the bank's chief economist Andy Haldane has suggested that the next move was as likely to be a cut as a hike because of lower inflation.

Low inflation is welcome for the Chancellor George Osborne ahead of May's General Election.

He tweeted: "Inflation at zero is a first for the British economy.

"Low inflation due to falling oil prices is good news for family budgets.

"Prices are frozen and, as the recovery from Labour's Great Recession strengthens, their economic argument has literally come to nought".

TUC general secretary Frances O'Grady warned: "Zero inflation is a reminder of how fragile the economy remains.

"Stagnating prices are not a sound foundation for the strong and sustained pay rises that workers have waited so long for.

"With deflation on the horizon, the Chancellor's plans for extreme cuts after the election look more and more like a suicide note for the UK economy".

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5. Cameron Rules Out VAT Rise In Next Parliament

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Banks To Carry On Closing Despite Cable Deal

By Mark Kleinman, City Editor

Britain's banks will pledge this week to continue investing in their branch networks "for decades to come" despite signing an agreement enabling them to close outlets even when they are the final one in a local community.

Under the 'Access To Banking Protocol', a copy of which has been obtained by Sky News ahead of its release on Thursday, lenders will have to  provide 12 weeks' notice of any branch closure and publish an assessment of the likely impact on its customer base.

"Banks will publish the results of their engagement and impact assessment, and the considerations taken into account in assessing the impact of the branch closure, subject to the removal of commercially sensitive information," the document is expected to say.

"The results will be made public before the closure of the branch."

However, the agreement drawn up by officials working for Vince Cable, the Business Secretary, and the British Bankers' Association (BBA), is unlikely to stall the accelerating wave of branch closures being undertaken by major high street banks across the country.

"While ensuring that customers are treated fairly, decisions on branch closures are ultimately commercial decisions for banks to take," it will say.

That acknowledgement is likely to dismay community campaigners who have expressed alarm at the disappearance of hundreds of branches, with Lloyds Banking Group alone saying it will shut a net figure of 150 – equivalent to less than 10% of its network – by the end of 2017.

This week's deal will include a commitment from banks that they will consult on the provision of alternative banking services such as a new ATM, credit unions and Post Office branches, which Mr Cable has said will become an increasingly important element of the UK's banking infrastructure.

"Banks will…engage at an early stage with the Post Office to coordinate communications, operational planning and use of brand," the agreement will state.

The protocol is also expected to say that once a branch closure decision has been taken, "banks will be obliged engage with other key local stakeholders (these may include the local authority, local business associations and local advice agencies)".

While banks will have to consider the impact of the closure on vulnerable branch users, there will be no obligation for them to reconsider their decision if the impact assessment indicates that disproportionately high numbers of elderly or disabled customers would be disadvantaged.

Where alternative banking services are likely to be required, suitable options will be provided before a branch is closed, the protocol will say.

"The nature of this alternative provision will be informed by the bank's impact assessment and the community engagement described above.

"Consideration will be given in particular to ensuring the continuity of small business relationship management (e.g. telephony, internet), and enabling branch users to check balances, make cash withdrawals, and make cash and cheque deposits."

As Sky News revealed last week, the new framework will come into effect on May 1, with "any existing plans for branch closures…reviewed in the spirit of this protocol".

An independent review of the agreement with the banks will take place after 12 months to see if it is providing the necessary assistance to affected communities.

The BBA will engage with the Department for Business, Innovation and Skills, the Treasury and the Financial Conduct Authority when appointing the independent reviewer, and consult with consumer and small business groups.

"Banks will…take into account the local availability of broadband and access to alternative ways to bank for vulnerable customers," the protocol will say.

"The existence of an alternative bank's branch alone will not be considered an appropriate suitable alternative."

However, the document to be published this week is not expected to highlight any potential repercussions for banks not deemed to be complying with the protocol.

Sky News revealed in January that Mr Cable had been keen for banks to renew a binding commitment not to close branches when they were the last one remaining in a local community.

However, bank chief executives made clear their belief that rapid technological changes - with customers now performing billions of transactions remotely each year - had rendered such a pledge obsolete.

The BBA is expected to herald the protocol as a "ground-breaking agreement" that will ensure bank customers are supported in their use of internet and mobile banking services, as well as continuing to invest in their "integral" branch networks "for decades to come".

A spokeswoman for Mr Cable's department and the BBA both declined to comment.

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China Unveils Lightweight 3D-Printed Car

Chinese engineers have unveiled their country's first 3D-printed car.

The 3.6-metre long (11.9ft) and 1.63-metre (5.5ft) wide vehicle was made within five days using low-cost composite materials in south China's Hainan Province.

Chief designer Chen Mingqiao said the two-seater convertible "features high strength and toughness".

"The density of the material is much lighter than that of the metal, only one-seventh or one-eighth.

"Lighter weight will help save energy in the future." 

The vehicle is powered by rechargeable batteries and can reach a maximum speed of 40 kilometres (24 miles) an hour.

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Kraft Gobbled Up By Heinz In Mega Merger

Heinz has confirmed it has agreed a merger with Kraft in a deal that would create the world's fifth largest food and drinks company worth approximately $80bn (£54bn).

A statement confirmed the new firm would be called Kraft Heinz and, subject to Kraft shareholder approval, current Heinz investors would hold 51% of the stock.

Kraft shareholders will own 49% of shares in the combined company and net a special cash dividend of $16.50 per share.

Heinz said the aggregate special dividend payment of approximately $10bn was being fully funded by an equity contribution by billionaire investor Warren Buffett's Berkshire Hathaway and 3G Capital.

Berkshire and 3G, which owns Burger King, came together in 2013 to buy Heinz.

It is understood they brokered the deal with Kraft, a company which caused controversy in the UK in 2010 when it bought the UK chocolate maker Cadbury and shifted work overseas.

Kraft later spun Cadbury off.

The merger statement said it offered "significant synergy potential", including an estimated $1.5bn in annual cost savings to be implemented by the end of 2017.

It added synergies would come from the increased scale of the new organisation, the sharing of best practices and cost reductions.

The news release did not mention the possibility of job losses.

The combined company would be run by Bernardo Hees, currently the chief executive of Heinz.

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Women On Boards: 'Enormous' Progress Made

A 25% target for the number of women on FTSE 100 company boards this year is close to being met already following "enormous" progress, according to the latest figures.

The voluntary milestone was set by the former trade minister Lord Davies in 2011 following a review.

Business Secretary Vince Cable, who has championed the cause, said just 17 more women were needed to be appointed this year to meet the 25% figure.

Mr Cable said he expected to see further progress, with company boards made up of a third of women by 2020.

On the most recent figures he said: "We must celebrate this outstanding achievement and the change in culture that is taking hold at the heart of British business.

"The evidence is irrefutable - boards with a healthy female representation outperform their male-dominated rivals."

Lord Davies said the rate of change since his report had been "remarkable" and proved that the voluntary approach was working.

A study by the Cranfield University School of Management, published alongside the Government report, found there were 263 women directors in the FTSE 100.

Professor Susan Vinnicombe, director of the Cranfield International Centre for Women Leaders, said: "There is no doubt that the Davies review and the threat of EU-wide quotas has had a major impact on this progress.

"It is crucial that the momentum that has built up around this issue is maintained, especially with the support of whoever is in power after the General Election."

Diageo, the drinks company, and Intercontinental Hotels Group topped the rankings with 45% of their boards made up of women.

The Cranfield report also said the UK was now fifth in the world in terms of female representation.

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Ex-Centrica Chief To Hand Bonus To Charity

By Mark Kleinman, City Editor

The former boss of Centrica, Britain's biggest energy supplier, is to hand "a substantial portion" of his annual bonus to charity for the second successive year.

Sky News has learnt that Sam Laidlaw, who stepped down as chief executive of the parent company of British Gas at the end of December, has decided to donate part of an award of approximately £500,000 to voluntary causes.

The £500,000 bonus will be disclosed in Centrica's annual report, which will be published on Thursday.

Sources said that in addition to the annual bonus and his base salary of just under £1m, Mr Laidlaw will also receive a payout under the company's long-term incentive plan of roughly £1m, which will vest next month.

His total remuneration for 2014, including pension contributions and other benefits is understood to have been in the region of £3m, roughly one-third higher than the previous year.

A source pointed out that the increase was because Centrica's remuneration committee had not made any awards under its long-term share scheme for 2013.

The details will be closely scrutinised in Westminster at a time when energy companies are firmly in politicians' crosshairs ahead of the General Election.

However, any criticism of Mr Laidlaw's pay is likely to be tempered by his decision to give what one insider said was "a substantial portion" of his £500,000 bonus to charity.

The £3m total pay figure represents less than half the theoretical maximum that Mr Laidlaw could have earned under the policy set out in last year's annual report.

Under Centrica's remuneration policy, Mr Laidlaw will remain eligible for an award to be paid out in 2017 worth 25% of a £1.9m maximum opportunity allocated to him during the course of last year.

However, sources pointed out that that future payout was "highly uncertain".

The news of Mr Laidlaw's remuneration package for last year emerges on the day that his successor, Iain Conn, meets competition watchdogs as part of their inquiry into the UK energy market.

Centrica's meeting with the inquiry panel is seen as being particularly important because as the market leader in residential gas and electricity supply, it is the likeliest target of any attempt to break up big providers.

The CMA said last month that about 40% of Centrica's domestic gas customers had been with the company for more than a decade, which is likely to prompt questions at Wednesday's meeting about the profitability of these so-called 'sticky customers'.

Mr Conn is already facing a challenging start to his career as Centrica's chief executive, announcing several weeks ago that it was cutting its dividend for the first time since 1997 in the wake of sharp oil price falls and mild winter weather.

The move was designed to protect Centrica's credit rating, but it has since been downgraded by Moody's, the ratings agency.

An overhaul of the energy market is likely to feature prominently during the General Election campaign, with Ed Miliband, the Labour leader, having pledged to freeze energy prices until 2017 if he wins in May.

The political battle over the cost of living has led both sides of the Coalition to promise tough action against energy companies.

Matthew Hancock, the Conservatives' Business and Energy Minister, wrote to the largest energy companies, after which they all announced price cuts, while Ed Davey, the Energy and Climate Change Secretary, has repeated a public threat to break up the 'big six'.

EDF Energy, EOn, Npower, Scottish Power and SSE have all met with the CMA inquiry panel in the last fortnight‎.

Centrica declined to comment on Wednesday.

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Cameron Rules Out VAT Rise In Next Parliament

Prime Minister David Cameron has ruled out a rise in VAT in the next parliament if the Conservatives are in power after the election.

In the final head-to-head debate with Ed Miliband before the election, he appeared to wrong-foot the Labour leader by unexpectedly ruling out an increase in the tax.

As his opening question, Mr Miliband asked whether the Prime Minister would give a straight answer and rule out a VAT rise if his party forms the next Government.

Mr Cameron replied - apparently muddling some of his words: "He's right, straight answers deserve straight questions, and the answer's yes."

The Prime Minister - watched by his wife and children from the public gallery - countered by demanding that Mr Miliband rule out a rise in National Insurance contributions, but he would not.

Video: 'I'd Rather Resign Than Raise VAT'

Mr Cameron said: "This is Labour's jobs tax, this is their tax of choice, this is what they clobber working people, families, enterprises with."

The exchange opened with Mr Miliband joking about Mr Cameron's "retirement plans", after he said he would only serve one further term.

Mr Cameron shot back: "In 43 days time I plan to arrange his retirement, Mr Speaker."

Later, the Prime Minister touched on the support touted by the SNP's Alex Salmond for Labour in the event of a hung parliament.

Video: The Battle For Number 10

He said: "As far as I can see Alex Salmond has taken the entire Labour Party as hostage and then today we've got the ransom note."

A separate head-to-head television debate between the pair before the election will not take place after Mr Cameron declined to take part.

However they have both agreed to appear separately in a live question-and-answer session hosted by Sky News and Channel 4 on Thursday at 9pm.

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