PRESS DIGEST - Financial Times - June 4

The Financial Times

HOUSE PRICES STILL BEYOND REACH OF YOUNG WORKERS

Over 25 percent of all young working households are unable to get on the property ladder due to stubbornly high prices and mortgage rationing, according to new research. The study, carried out by Professor Steve Wilcox of the University of York, found that London was the worst-affected region, with over 40 percent of young households unable to purchase property.

CHINESE FUND TRIES TO CALM WEST'S FEARS

The head of China's sovereign wealth fund has moved to try to allay foreign fears over 'politicised' investments and a lack of transparency. Gao Xiqing, president of the 200 billion dollar China Investment Corporation, said that the fund would be 'as transparent as required by any law in any country', and would withdraw from countries which were publicly hostile to sovereign wealth funds. Gao also said the fund was looking to increase its long-term investments in private equity, commodities and distressed debt.

FEARS OVER ENERGY CONSOLIDATION

An investigation by MPs into rising energy prices has been told that further consolidation of the British energy market would be bad for customers. During the hearing, industrial consumers of energy and independent power generators agreed that the market is already too concentrated, and that the situation would be further exacerbated by the sale of nuclear generator British Energy BGY.L to an existing supplier. Chris Tane, chief executive of chemical company Ineos Chlor, said that the government should force whoever buys British Energy to sell a set amount of electricity to the open market in order to preserve industry supplies.

SUPPLIER WARNS OF HIGHER ENERGY PRICES

Paul Golby, the chief executive of Eon's EONG.DE British arm, has warned that energy consumers must be prepared for permanently higher prices. Golby said that against a backdrop of rising energy prices and shrinking supply, the level of investment needed by energy producers to combat climate change means that the industry is undergoing a 'seismic' change. 'We have gone from a world where energy is plentiful and cheap to one where it is scare and expensive,' he warned. 'I don't see what will change to flip that back again'.

EUROPE FEELS HEAT MORE THAN AMERICA

Data released by Bloomberg has revealed that European companies suffered a larger fall in profits than their US counterparts during the first quarter of 2008, despite the Continent experiencing superior economic growth. Net earnings at European companies fell by 23.4 percent during the period, while American companies experienced a drop of only 13.4 percent. However, corporate earnings remained strong in Britain, supported by the large number of energy and mining companies headquartered there.

COLLINS STEWART POACHES TEAM FROM DRESDNER

British investment bank Collins Stewart is believed to have poached a team of up to 15 employees from Anglo-German rival Dresdner Kleinwort. Dresdner's investment companies team, led by Robbie Robertson, is considered to be one of the best in Britain, and carries out sales, market-making, research, corporate finance and advisory work for investment trusts. Some members of the team have worked together for nearly 20 years, and began telling their clients of the move yesterday. A spokeswoman for Dresdner declined to comment on the news.

SMITHS TO HALVE ITS HEAD OFFICE STAFF

Philip Bowman, chief executive of engineering conglomerate Smiths Group (SMIN.L), has announced plans to halve head office staff numbers and signalled that the company is considering shifting its tax domicile outside Britain. Bowman said that the new slimmed-down corporate centre would dedicate itself 'to a small number of core functions where it can add real value to our portfolio of businesses' and that 'possible changes to UK tax legislation' were being 'closely monitored'. Following the announcement, shares in the company rose by 11.5 pence to 10.05 pounds.

BAE SEALS 1.6 BILLION DOLLAR PENTAGON TACTICAL VEHICLES CONTRACT

BAE Systems (BAES.L) has secured a 1.66 billion dollar contract to supply trucks to the US Army. Under the deal, driven by BAE's recent acquisition of Armor Holdings, the defence contractor will provide 8,400 medium tactical vehicles to US forces, with the Pentagon holding the option to expand the deal by an extra 10,000 vehicles. BAE was last year the Pentagon's sixth-largest supplier, winning contracts worth a total of 9.2 billion dollars. Shares in BAE rose by 6.75 pence to 459 pence on the back of the news.

DULLNESS SET TO BE ASSET AS CAPITA SEEKS GOVERNMENT BOOST

Capita (CPI.L) chief executive Paul Pindar has said that his firm is well-placed to benefit from the credit crunch, with private firms increasingly likely to attempt to cut costs by outsourcing back office functions. However, the firm is also aiming to secure more central government contracts, with Mr Pindar estimating that Capita's income from health and defence contracts alone could 'easily be worth one billion pounds within five years'. Capita's central government income has been stuck at 200 million pounds for several years, despite the value of its private contracts doubling in size during the same period.

OVERSEAS GROWTH HELPS SEPURA BEAT REVENUE FORECAST

Specialist mobile radio maker Sepura (SEPU.L) yesterday unveiled a 4.7 million pound rise in pre-tax profits to 12 million pounds, driven by strong growth in international markets. The group, which was only publicly listed last August, makes radios for emergency services around the world. International revenues rose by 68 percent to 41.2 million pounds, although income from British markets fell by 2 percent to 26.8 million pounds. The firm also warned that delays to two key contracts mean that it will miss its earnings estimates by 10 percent. Shares in Sepura later closed 7.25 pence higher at 94.25 pence.

Prepared for Reuters by Durrants