PRESS DIGEST – British business – Jan 27

The Independent

HOUSING MARKET CONTINUES ITS RECOVERY

The British Bankers’ Association released figures on Tuesday
that show the number of mortgage approvals in December was the
highest it has been for more than two years. A total of 60,518
new mortgages were being prepared in November 2009, more than
double that in November the previous year. The total amount
advanced for mortgages grew by six percent to 10.2 billion
pounds. David Dooks, statistics director of the BBA, said: “The
high street banks continued to lend substantial amounts in the
weaker mortgage market of 2009, approving more than 440,000
loans for house purchase.”

CHURCH MAY WITHDRAW INVESTMENT IN VEDANTA OVER ETHICS ROW

The Church of England will this week make a decision about
whether to retain its 2.5 million pound investment in the mining
group Vedanta Resources (VED.L: ), which has been accused of
building a mine that breaches the rights of a tribe of native
people in India. The Church of England’s Ethical Advisory Group
will meet to discuss the issue now that the group’s members have
visited the mining operations in question. Three years ago the
Norwegian state pension fund sold its shares in the mining
company because it did not want to risk contributing to “severe
environmental damage and serious or systematic violations of
human rights”.

INVESTMENT COLUMN

PZ Cussons (PZC.L: ) (Buy)

Severn Trent (SVT.L: ) (Buy)

Porvair (PORV.L: ) (Hold)

The Guardian

KING OPENS RIFT WITH BROWN OVER BANK REFORMS

Senior Bank of England officials have given enthusiastic
backing to proposed changes to the U.S. banking system outlined
by U.S. President Barack Obama last week. At a Treasury Select
Committee meeting, central bank officials called for a
wide-ranging debate about the banking system, reiterating calls
made last June by Bank of England governor Mervyn King for
bigger banks to be broken up into smaller banks with specialist
activities, rather than large banks that were too big to fail.
King told MPs at the hearing that while the UK could act alone
to break up banks he had also detected a willingness to discuss
the idea internationally.

STANDARD LIFE CUTS PAYOUTS DESPITE FTSE RALLY

On Tuesday, insurer Standard Life (SL.L: ) announced fresh
reductions to payouts on endowment policies and pension plans.
It also said 97 percent of its mortgage endowment policies were
now considered to be in the red zone, meaning there is a high
risk that they would not pay off the mortgage they were bought
to cover. The remaining 3 percent were considered to be in
either the amber or green zones — where amber indicates a
significant risk of a shortfall and green indicates they are on
track to meet their target. Standard Life said, however, that
many of its with-profit customers would see a year-on-year
increase in the value of their policies, and that many of these
had exceeded the returns from regular savings accounts.

The Daily Telegraph

STERLING FALLS ON WEAK UK GROWTH

On Tuesday, the British pound fell by almost a cent against
the U.S. dollar after figures were released that showed UK
economic growth for the last quarter of 2009 amounted to 0.1
percent of gross domestic product instead of the 0.4 percent
that was widely predicted. The pound closed at 1.6147 against
the dollar. The news fuelled expectations that the Bank of
England will keep interest rates lower for longer and extend its
quantitative easing programme beyond its current limit of 200
billion pounds. Bill Gross, managing director of bond house
Pimco, advised against buying UK government bonds, saying that
the pound could be pushed down further by high national debt.

RADIATORS CAUSE LEAK IN CAB MAKER PROFITS

Manganese Bronze (MNGS.L: ), maker of London’s black cabs, saw
its shares fall 21 percent to 87.25 pence Tuesday after saying
that leaking radiators on the TX4 model had led to
higher-than-expected costs from honouring warranties. Full-year
results are expected to fall below expectations as a result. It
is believed radiators on vehicles manufactured in early 2009
were the source of the problem, which has now been resolved.

LADBROKES PLEADS FOR “SENSIBLE” TAXATION

Chris Bell, chief executive of gambling company Ladbrokes
(LAD.L: ), has called for a “more sensible approach” to the
taxation of the bookmaking industry. Bell made the plea as he
unveiled a new report from accountants Deloitte showing that
more than 100,000 UK jobs are sustained by the industry, which
contributes more than six billion pounds to the economy. The
report comes ahead of Budgets expected either side of a May
election. Bell denied that he was launching a “pre-emptive
strike” designed to win favourable legislation.

SEVERN TRENT BOOSTED AS FALL IN BUSINESS USE ENDS

Severn Trent (SVT.L: ), Britain’s second-largest water
company, said in a Tuesday trading update that a fall in water
use by business customers had levelled off. It said the impact
on revenues would be between five and ten million pounds, down
from an earlier estimate of 15 to 20 million pounds. The company
said recent cold weather had increased leaks in its pipes, but
that it was too early to evaluate the impact on annual leakage
performance, which will be assessed after the March year-end.

QUESTOR

Lonrho (LONR.L: ) (Buy: )

Playtech (PTEC.L: ) (Hold: )

The Times

M&B DISPUTE INTENSIFIES

The ongoing quarrel between the billionaire Mitchell &
Butlers (MAB.L: ) investor Joe Lewis and the company’s board has
acquired a new dimension, after a fellow investor demanded that
those on the board responsible for 500 million pounds of hedging
losses repay the money. Elpida, an investment vehicle owned by
the racing tycoons JP McManus and John Magnier and holder of a
17.6 percent stake in M&B, has sent a letter to the directors
saying it will vote for “a new independent board” at Wednesday’s
annual general meeting.

FIRST CAPITAL PAYS PASSENGERS BIGGER REFUNDS

The struggling railway operator First Capital Connect, owned
by FirstGroup (FGP.L: ), has offered its regular passengers
compensation for the past three months of delays and
cancellations arising from a pay dispute. Customers with season
tickets can be refunded five percent of the cost of their ticket
or take ten free days of travel. More than 200,000 commuters had
their journeys disrupted between Bedford and Brighton during the
last quarter, with this poor performance being a major factor in
the Transport Secretary Lord Adonis’ threat to take away FCC’s
franchise.

PIRC URGES OPPOSITION TO GRAINGER CHIEF PAYMENT

Investors in the property group Grainger (GRI.L: ) have been
encouraged by the pension fund consultant Pirc to vote against
the company’s remuneration report. A “compromise payment” of
2.83 million pounds to the departing chief executive Rupert
Dickinson was queried by Pirc, along with other issues such as
the lack of disclosure for executives’ performance targets. Pirc
said the remuneration paid out to Dickinson, who left due to a
mystery illness last October, is six times his annual salary.

TEMPUS

Hornby (HRN.L: ) (Hold)

Hiscox (HSX.L: ) (Buy)

Aegis (AEGS.L: ) (Buy)

Stock Market Advice

Prepared for Reuters by Durrants

PRESS DIGEST – British business – Jan 27