The Guardian from London, Greater London, England • 25

Guardian Wednesday November 14 2001 28 Finance The state of the States Land of the free economy is leading the world into recession 26 27 Equitable Problems 'started 40 years ago' 28 Downturn Telecoms debts pile up Mobile woes 'may be ending' iromva 'yeslrasaralfewasMe Hamleeks net.uieunsitei,-..- Sco tfeh Media Group sub-" tcrdayvon a large Slice of the UK cinema adrarsiiig market after contract to service uuu 1 screens. The helpsrestore balance to' themarket, with Pearl hilnntfa uuui iwil, MMMa share and the balance be- irigheia by Carlton Upturn in data Data storage and dMaste'i-J: recovery specifsftnifech' interest in its products f. had "soared" tember 11 attacks in the US. Turnover for the six' months to September 30 was 73i8ra, but the cost of launching its VBak online data reco very product pushejdlnteclmbldgytoa 5.3m pretax loss. i Hamleys is pulling but all theps tb'stiniidate Christmas ses in a des-perateatmpttoreverse the impact iSeptember ll' has had on its business.

The famous toy shop is hoping tq attract more. British shoppers through magazine advertising, niail order supplements arid digital TV channels, and hoihe shopping firm QVC tocounter a 25 fall in tourist trade. Hamleyswas announcing pretax losses of 900,000, against prof- months to September 29, exacerbated by 170,000 loss directly related to the US attacks; like for like sales were down 5 after the Seymour Pierce retail broker Richard Ratner shaved his annual forecast by.Cl.25m to2.Sih, concerned by it higher tlian expected 742,000 loss incurred by Toys tack; Gent insists he is not ready to quit Richard Wray Vodafone boss Sir Christopher Gent, one of Britain's highest paid directors, yesterday moved to play down speculation that he is poised to leave the company he has turned into the world's largest mobile phone operator over the last 15 years. However the 53-year-fold chief executive admitted that he has spotted two or three possible successors and the company has managers who can replace all three of its senior directors in case of emergencies. Investors are becoming increasingly concerned that Vodafone is too heavily reliant on Sir Christopher and the company risks its future growth if it falls into the same trap as BT.

Two weeks ago BT announced chief executive Sir Peter Bonfield will leave in January, possibly before a successor is in place. But Sir Christopher said yesterday "I do hope we plan things rather better thanBT." Sir Christopher's leaving date has been afocus of speculation for months. He is understood to have made several promises to the board as well as some more public pledges to share-holders which he wants to fulfil before leaving, "I have personally still got some major things that I want to achieve for shareholders which I have pledged to the board to deliver," Sir Christopher said. One of these is the pledge to place the company on track to make a quarter of its revenue from data calls rather than mere voice calls. In September the group was making just under 10 of its revenues from such services as SMS and Wap.

1 1 fg I Sir Christopher Gent, announcing the Interim results at the. Savoy yesterday Photograph: Frank Baron EPS DteanCfiiuplCH 3ZBImB7.7ml. 1.17inll,0ml., S64.0niW44.C IOO.CliilZI.Oill:.. 6.6pl.. ae7.9ml358.0m.' rocuaSomomCrpO) I GatonHoliUnesin Iaz68ma60m) 16.95m(19,OM 2.4p2.0ol 1-1 InttrXIQI 24.4nil26.9inl ftellwnFoMltlll 9.701O.ap)....

2.4p(Z4o)n: SlortlngPuMMilngm 16.9mll6.3ml 0B2m2.4ml -y TehCltylN). 2a.lBml7.7inl r30.Oml-9.6m).- downs were expected and analysts concentrated instead on the group's underlying-profitability, with earnings before tax and financing charges doubling to4.8bn. Analysts were also cheered by comments from Sir Christopher that, whi le the amount of mdney earned from each of the company's subscribers is likely to dip slightly towards Christmas as sales of lower-margin pre-paid phones increase, the market has turned. "We do expect average revenue per user to hold up but expect a seasonal downturn over Christmas and the new year. We think it is going to go up modestly next year." 'lVcssan MacCarthy, an analyst at SG Securities, said the figures were solid but "what we need is a big growth engine." look to sell or float the rest of Arcor when conditions allow.

Vodafone yesterday" also wrote 450m off the value of its stake in Mexico's lusacell mobile operator which it bought in January for650m, 'Whetherwe overpaid or not we paid the market rate at the time1 and 300m from the value of its small stake in China Mobile. However Vodafone did not write down the value of the 3G licences it bought last year, despite speculation that the company will be hard pushed to last year's 100bn acquisition of Germany's Mannesmann, is "still being absorUearVbda-fone's ongoing accounting charge for the deal amounted to jE6.7bn in the first six months of the year. But the company yesterday announced a further 4.75bn write-down, mostly relatingto a drop in value of its Arcor fixed-line telecom business in Germany. In July Vodafone signed a deal with the German railway operator Deutsche Bahn to carve out the trackside signaling business owned by Arcor into a separate company and took the opportunity to write down the value of the whole business. That raises the possibility that Vodafone, which wants to concentrate on its German mobile business, will 32.95ml34.5m) VjanatGnmptF) 30S.3m(253.anl 26.7m(40,9m) 14.1p23.6p) VMUfumCnHiplD 8.91I1I7-JZ11)-".

i VoyerThomycroft FTSEMId250 price index 5700 Ctianae says more redundancies may be needed FTSEIOO" 5Z77.10 U30.90 CT-: -'j-'i rrsE250 5750.30'""'. tlZl.BO,. 6788.30:', FTSEM-Slnre 2535.07,-. 61.40... 2128.15 FT5EWH v-: 872.30;, 8.14.40 FTSEEurotl300A 1Z48.37- 1545.54r -DJEuroStx50 3717.98 150,43 4787.45 2877.68 StPSM 1139.09 20.7(i 1373.73 965.80 KmdaqCmp 1892.11 .51.98 2859.15 14Z3.19 DowBldl 9750.95 11337.92 BZ35.81 PAX 4946.97 6795.14 3787.23 CAC40 4565.68 189,10 5998.49 365Z87 W1MHH225 1OO30.56 14529.41 9504.41 1.0 HingSong 70.39 16163.99 8934.Z0 3.1 by almost 5bn of writedowns and one-off charges.

Much of the charges related to a loss in the value of the US businesses Marconi bought at the height of the hi-tech boom as part of its transformation from defence group GEC. But the company has since suffered a dramatic drop in orders for equipment as customers postpone infrastructure projects. The market shows little sign of improvement, and chief ex make a return on the 12bn plus it has spent for the right to operate the new services, which it plans to launch in Europe from October 2002. Sir Christopher said the company looked at whether it should write down the value of its mohile businesses in the UK and Germany which spent the most on licences but had decided its operations were strong enougli to shoulder the cost of the licences. "Nobody has been writing down the value of 3G licences, they have been writing down the value of their businesses," he explained.

"There was no need for us to write down in Germany and the UK." In May, BT wrote down the value of its Viag business by 3bn, which also owns a German 3G licence. The write respond to former company chief Lord Simpson's first public defence of his position, made to the BBC's Money Programme, to be transmitted tonight. Lord Simpson, who many in the City blame for the group's woes, said he regretted what had happened to Marconi but still believed it was the right decision to reposition GEC as a telecoms equipment firm. "I really do believe that, when a view is taken over a full CoombesAtom GMB senior organiser Jim Moohan added: "We are calling on BP to revise their figures as surely these massive job cuts ean't be beneficial to improving health and safety It is ironic that only last week the company was able to appoint a 100,000 Blairitc spin doctor while this week our members are facing redundancy." Loss-making telecom firm Hncrgis yesterday announced plans to cut 350 jobs, about two-thirds of which will be in the UK. The losses come on top of 100 job cuts in mainland Europe as the firm seeks to cut 20m of costs and move towards profitability within the next two years.

Richard Wray Vodafone reported an 8.5bn pretax loss for the first half of the year yesterday as it reacted to the collapse of hi-tech stacks by wiping billions of pounds off the value of assets it has bought in Germany, China and Mexico over the past two years. However underlying profitability at the world's largest mobile phone operator was strong and the company signalled the downturn in the mobile industry may be coming to an end. Chief executive Sir Christopher Gent admitted yesterday that he might have overpaid for some assets, butsaid Vodafone was merely paying what the market demanded at the time. The company's largest deal, Marconi Marconi, the telecoms equipment manufacturer, yesterday raised the possibility of more jobs being lost if market conditions do not improve as it revealed it had dropped 5.1bn into the red in the first six months of the year, writes Richard Wray. The group, which has seen its share price collapse and three senior executives ousted since first warning on profits in July, said a first-half operating loss of 222m was dwarfed BP'S 40 Scottish jobs cut a betrayaB9 says Terry Macalister BP was at the centre of a political storm last night after announcingplans to cut 1,000 jobs at its key Grangemouth refinery in Scotland some 40 of the workforce.

The move raised safely fears at a plant which handles almost half of the UK's North Sea oil and which has been hit by a series of accidents for which BP could he prosecuted. Local Labour MP Michael Connarty said staff understandably would feel "betrayed" by a firm that had made 2bn profits in the three months to the end of September. BP insisted that it needed to restructure operations at the refiningand petrochemical fa cility in an attempt to improve its trading position in the worsening chemicals and refining sectors. "We have no choice but to move ahead with -(-). TnAf'" Dow Jones Industrial price index 3700 YairhlBh Yield of bam rata Nov 8) flnanca House rata HaWaxmortgaBOnrte.

Retail price mdOclolCT) 6.25 174.31-0.31 Ami ib! phtannai MaflofWldt houw price index 182.9 Anmuddungs X3.JW, YfeUchanga on day 1 onysir Mar Chinqt 97.14 Lattice Group share' price, 162. Price (p)Chwifle. Centrica 225.00' 4.00 Conn HBOS Lattice Marti t. Spencer HaBonaKlrM -00 27.00. 3.50 V- toney Kroner 12.42 PortugalEaQioot315.il.

"Singapore Dollar 2.55 SouPi Ulrica Banc 13,65 SpelnPaala261.Zl SweoKroiior 14.85 Saitararland Francs 2.30 fiRoyUa 3,176,471 i UnrltitStatetDollaisl.41 reassurance. "That hearts and minds campaign is bearing fruit. But in the general marketplace people are unwilling to spend any more money than they need to." Marconi must also reach agreement with banks that control its 4.5bn credit facility, part of which comes up for renewal next year. The group hopes to reach a deal early next year. It is also looking to sell non-core assets to reduce its 3.5bn debt by 500m.

iannual inflation rate from 1.7 to 1.654 last month. The irate.S'w)ilcHiRs;! put tbe.post of. horne loans remained justbaiow.the; set by.jSordqn Broyynjg impugn priuBs ur uiuy.iiy ason sales, anarystsaxpecK recession to cause, inanjiuaw i'The CBI saldJBach of xmim ifseriau3 decllhe'ltf business 'arMst tfron rseordfidinS AVajeNoWerhl thaEnalishWestMldlaridaa nuuamiuiuKjjsj "goods arepectect rece'ssionr'thapBlsaJdtheMS; i FourrBoIonBiiiScoBflndSvS business cycle, not at the low point in the business cycle, a more balanced picture will emerge," hesaid. Marconi's final financial quarter will be a crucial test for Mr Parton, who took over from Lord Simpson in September. Historically the fourth quarter is its strongest in sales terms, but many customers have been concerned about Marconi's chances of survival.

Mr Parton has contacted customers personally to offer A further 30,000 jobs will be lost In British industry in.the final three months 'of 2001 as. manufacturers in "every region or the country respond to the confidence prompted by thb attacks oh the 'employers', organisation; (said undermined 0x10660'; 1 1 warning that its regular quarterly survey rvMtn.tMlbiieaMgi Buslness'Strategies indicated no let up.ih.the mouhtlrig to jj of miiliiCleuiiv.sirv associate director of arAnnmte' 'oealrHhaf thfl survoy'sgloomyrosults 'of subduBcUasf wash's cut need I not be'tho'lastjntrjej jihof Icondrtloris eohtjn'ue Figures from tjw'f bbmm'emVastaraa'; i mbrla'aaes were themamtes 'factor behind asrhall fall ln'thej ecutive Mike Parton yesterday warned that further cost-cutting measures might be needed if the company's fortunes did not improve. Marconi has already cut its workforce by 7,000 over the past six months and now employs 32,600 people in its core equipment business. "At the moment we are not announcing any more job cuts but it depends on the market going forward," he said. Mr Parton was unwilling to view of the site's assets and operations following an explosion and a fire at Grangemouth last year.

But Mr Connarty, also secretary of the parliamentary oil and gas group, said there were already signs of increasing stress levels among the workforce since the last round of 600 job cuts in the plant. He explained: "If this approach goes wrong, it will threaten the future of the Grangemouth complex. "The management is asking the workforce, which has produced so much profit for the company in the good years, to take the hits when things are not so bright." 'Change Pounddollir 1.4431 0.0137 Poumliiro 0.0076 Eurodollar 088 19 DoWiryen 121.47 1.2403 Stoilinglndax 107.1 BnittOHISIDoc 20.9a GoW(S). 277.65' US lO-yaaf T-bM IQ4 T6374 4,38 German 10-yrbund 1015 300 "l.a'i Dec Chang Short aerftig 12 BGshae price, pence Price pl Changa Abbey HaaaMl 1034,0025.00 Alliance tLelc 750.00 19.50. 575.00- 11.00 BG Group BP 267.50' 5.75 566.00 15.50.

168.50 7.50 Brlllih Energy 294.50 19.50 BrtOrt Telecom 3ZO.50 10.25 AunraBaBoilani 171 AuttlaSchln8S21.6r Belgium Francs 63.3 1 Canada dooms 2.25 VK5anJCMlCTi3.46 Hong Kong Dolus Wle 69.35 Irelend Pons 1.24 Safety Issue? BP'S refinery at Grangemouth Photograph: Ashley this transformation if we are to ensure that Grangemouth remains safe, modern and equipped to prosper in an increasingly competitive global marketplace so that we can safeguard its long-term future," said Colin Maclean, director of the complex. Talks had already started with employees, unions and other representatives, and every effort would be made to relocate staff to other BP jobs, retrain them oroffer them severance packages. The world's third largest oil group has discussed its plans with the health and safety executive and claimed the changes followed a safety re 10.86 liraIStieKel5.90 llary Lira 3.039 JapanYen 170.49 MaleyilRigil5.24 -Malta Raw Cyprui Pounds 0.91 benfflark Kroner 11.70 Flntond Malta 9,34 Franwrranct 10.31. 'Germany Marks.