Anything we do now will totally disrupt the demerger process. That story is totally speculative.” He added that there was no way that Hanson would interfere with the many complex legal arrangements that had been put in place to allow the first two spin-offs, of the chemicals and tobacco activities, on 1 October. Details of those two demergers are expected next Friday, including an indication of the possible level of dividend to be paid on the shares to be handed to existing Hanson shareholders.Fears that the combined dividends of the four companies would amount to no more than about 6.2p (against the 12p payout last year) have been a big factor in Hanson’s massive stock market underperformance since the demerger was first announced.Immediately after the split was first mooted, Hanson’s shares reached a high of 211.5p, but as analysts focused on the complex tax and dividend issues surrounding the break-up, their forecasts of the group’s underlying value slipped further and further. Hanson yesterday denied speculation that it has been quietly seeking out trade buyers for some of its businesses ahead of a planned four-way break-up of the conglomerate. According to persistent market rumours, Hanson has been contacting parties who might be potential buyers of its Imperial tobacco and Millennium chemicals businesses in an attempt to restore confidence in the share price, which has plunged since the January announcement of demerger plans.
Derek Bonham, chief executive, said: “There will be no trade sales.

The company has been the target of speculation that a suitor would appear to break it up, although analysts now expect no action until after the demerger goes through.The key attraction is the EMI music business, one of the world’s largest, which will become the only top company in its sector not already owned by a big media conglomerate.Potential buyers include Disney, Rupert Murdoch’s News Corporation and Seagram, the Canadian company that last year bought MCA, the Hollywood studio.. Over the past decade, Sir Colin has retained as many shares as possible each time he exercised his options, subject to covering costs.Simon Duffy, the finance director, has also exercised options, borrowing money to hold a total of 154,750 shares.Shareholders of Thorn EMI will meet today at an extraordinary meeting to approve the demerger. In addition, the options – granted every year – can only be exercised every three years. From that date, Sir Colin’s share options would no longer have carried the full advantage of tax relief, and he said yesterday: “I would have to be pretty brainless not to do these trades.”Some of the earliest options were awarded in 1986, and would have lapsed if no action had been taken. Some people may have a few million up their sleeve, but not Colin Southgate.”The dealings came just days before the demerger is scheduled to take place, on 19 August, after which shares in Thorn and EMI Group will be traded separately. The proceeds were used to cover the costs of exercising additional options awarded between 1986 and 1988 over 170,000 ordinary shares, which he is keeping.
The dealings, timed to maximise Sir Colin’s tax advantages in advance of the demerger, mean he now holds nearly 330,000 shares, worth pounds 5.9m.Sir Colin said he made the trades in order to “maximise the number of shares I have in the company” He added: “I had to sell shares to finance the exercise. Sir Colin generated a profit of pounds 1.2m by exercising options, awarded in 1989 and 1993, and then immediately selling the shares.

As a whole, services prices increased by 2.6 per cent in the year to July, the biggest rise since the spring of 1995.Government statisticians said the outlook for prices so far this month was also flat, though there would be a boost from the recent cuts in mortgage rates by some lenders, and from reductions in electricity prices by three companies.. Sir Colin Southgate, chief executive of Thorn EMI, yesterday emerged as the company’s largest private shareholder, following the exercise of share options just ahead of today’s EGM scheduled to approve the demerger of the music and rentals businesses. In July, the price of services sold by retailers, such as entertainment, catering, and rentals, went up at an annual rate of 4.3 per cent, the highest since March 1994. There was little evidence of any further downwards pressure on beef prices from the mad cow disease scare, though the cost of lamb and pork rose substantially.Though the inflationary outlook remains broadly flat, economists pointed to an increasing gap between the outlook for prices of goods and the cost of services, as consumer confidence improves. One factor was a late, but abundant home-grown fruit crop, while this year’s wetter summer weather put more vegetables on the shelves than during last summer’s drought.

The clothing and footwear index dropped by 4.9 per cent in July compared with June, with shoes particularly heavily discounted.Seasonal food prices, which traditionally fall as summer produce comes into the shops, were 9.1 per cent lower in July than June, against a 6.6 per cent drop during the same period last year. The Office for National Statistics also said inflation had been stoked by the rise in the cost of postage stamps, and the fact that reductions in phone charges had not been as big as in 1995.Inflationary pressures were dampened by heavy discounting in high street stores’ summer sales, which helped contribute to the largest July fall in clothing and footwear prices since records began in 1948. But there was little suggestion from yesterday’s figures of an impending price explosion.The impact of the increase in house prices was clear from the detailed breakdown of the figures, which showed housing costs rising by 0.4 per cent month on month, with house prices up 3 per cent compared with July 1995. Kevin Gardiner, an economist with investment bankers Morgan Stanley, explained: “It’s looking more and more likely that the Government will fail to hit that target. We haven’t got many months left before the end of this Parliament and along with yesterday’s better-than-expected unemployment figures, it looks as though inflation may gradually pick up.”The inflation data follows Wednesday’s release of minutes of July’s monthly meeting between the Chancellor and the Governor of the Bank of England, which showed tough opposition by the Bank to further interest rate cuts as concern continued about inflationary risks.