PRESS DIGEST – British business – July 18

Sunday Telegraph

CONCERNS OVER TIME TO PAY DEBT MOUNTAIN

Michael Izza, chief executive of the Institute of Chartered
Accountants in England and Wales, has urged the Treasury to
clarify the future of its Time to Pay tax-deferral scheme.
200,000 businesses have used the 5.2 billion pound scheme since
it was launched in November 2008, which Izza praised as “one of
the most helpful measures” introduced by the former government
to aid businesses. But Izza continued: “We always knew that at
some point this debt would need to be repaid. So we need more
details as to how HMRC will be approaching requests from
businesses, either for further deferments or for extensions to
existing arrangements.”

BT AND C&W FACE REVOLT ON TOP PAY

Telecommunication groups BT (BT.L: ) and Cable & Wireless
(CWP.L: ) are both likely to face investor rebellion over their
executive remuneration packages at their annual meetings this
week. Investor groups Pirc and the Association of British
Insurers have issued alerts over C&W’s executive payments, with
Pirc expressing concern at the presence of chairman Sir Richard
Lapthorne on the remuneration committee. The ABI also issued an
“amber alert” on BT and warned members to think carefully before
approving directors’ pay packages which include a 1.2 million
pound bonus for chief executive Ian Livingston.

GLAXOSMITHKLINE FACES AVANDIA BLOW

Royal Bank of Scotland analyst Michael Leacock has warned
tighter restrictions on the use of diabetes treatment Avandia
will probably cause further declines in its sales for
GlaxoSmithKline (GSK.L: ). America’s Food and Drug Administration
allowed Avandia to stay on the market following a two-day
hearing into whether or not the drug could pose a risk to the
heart but ruled it should carry new warnings and restrictions.
Leacock wrote in a note: “We now forecast sales of 575 million
pounds in 2010 (down from 623 million pounds) falling to 286
million pounds in 2012 (down 37 percent from prior forecasts),
the year of the drug’s patent expiry.”

KPMG NUCLEAR POWER THREAT

A study by KPMG commissioned by RWE npower has warned the
government’s promise to refuse taxpayer support will prevent any
of the UK’s new generation of nuclear power stations from being
built. The government has offered to impose a carbon “floor
price” to increase the cost of fossil fuel and make nuclear
energy more attractive. But KPMG warned the move is not enough
to make investments of billions of pounds in nuclear power
economically viable for large utility companies.

350 MILLION POUND SHOPPING CENTRE FOR LEEDS TO BE GIVEN
GO-AHEAD

Property developer Land Securities (LAND.L: ) will sanction
the development of a 350 million pound shopping centre in Leeds
this week. Land Securities will announce that it has secured
enough pre-lettings with retailers to begin the construction of
Trinity Leeds at its trading update on Wednesday. The
development will be the first in the UK since the beginning of
the recession and should be completed in 2012, creating hundreds
of new jobs. Land Securities is also believed to be in talks
with Canary Wharf Group about creating a joint venture to
develop the ‘Walkie Talkie’ tower in central London.

QUESTOR

Ryanair (RYA.I: ) (Buy)

Cranswick (CWK.L: ) (Hold)

The Sunday Times

BP PLOT FOR BREAK-UP AFTER SPILL

Directors of the energy company BP (BP.L: ) are considering a
variety of options for restructuring the company after its
disastrous oil spill in the Gulf of Mexico. Options under
consideration include the break-up of the company by selling off
its refineries and petrol stations and switching its outsourced
engineering work to internal operations. These measures would be
in addition to the selling off of ten percent of its assets,
including the Prudhoe Bay field in Alaska. BP is also under
pressure from US legislators for its alleged role in the release
of terrorist Ali Mohmed Al-Megrahi by the British government.

REVEALED: EASYJET LESS PUNCTUAL THAN AIR ZIMBABWE

Figures compiled by Gatwick airport have shown that only 48
percent of airline EasyJet’s (EZJ.L: ) international flights
departed from the airport on time in June. The figure compares
unfavourably with rival airlines such as Air Zimbabwe, at 50
percent on-time departures, and British Airways (BAY.L: ), at 85.7
percent. EasyJet blamed air traffic controller strikes in
Europe, but one source said the excuse was “nonsense”. The
airline is in the process of recruiting more staff and has
leased three more aircraft to remedy the situation.

TIMIS: I’M TRADING UP TO MAIN MARKET

Businessman Frank Timis is working on plans to move his
mining company, African Minerals (AMI.L: ), from the Alternative
Investment Market stock exchange to the London Stock Exchange.
Timis has previously described LSE regulators as “a kangaroo
court” but now says he is about to hire new directors, auditors,
legal firms and an investment bank to satisfy the LSE ahead of
the company’s relisting on the exchange. Timis has previously
been penalised by regulators when he was the head of Regal
Petroleum (RPT.L: ) while it was fined for misleading investors.
African’s LSE listing is expected to value the company at 4
billion pounds.

INVESTORS SNUB RULE ON BOARD ELECTIONS

Three large investors have written to 700 companies to
inform them that they will receive their support if they choose
to ignore new boardroom code of best practice guidelines that
require annual re-election of board members. The rule has been a
controversial, but key, part of new corporate governance
guidelines drawn up since the financial crisis. The letter,
written by investment managers Hermes and Railpen and pension
scheme operator the Universities Superannuation Scheme,
expresses concern that the increased frequency of elections will
lead to “a short-term culture”.

The Independent on Sunday

‘WATER POVERTY’ LOANS TO UTILITIES SET TO HIT FOUR BILLION
EUROS

The European Union is planning to increase the amount that
it loans to water utilities in the UK to help reduce the number
of people who are unable to pay their bills. The amount of cheap
loans to companies such as United Utilities (UU.L: ) and Severn
Trent (SVT.L: ) will be increased by 60 percent to 3.4 billion
pounds. Last year 804 million pounds worth of bills had not been
paid after twelve months, 16 percent higher than in 2008.
Legislation passed in 1999 prevented water companies from
disconnecting customers with unpaid bills, causing inflated
bills and thus an increase in bad debts.

Mail on Sunday

BANK STRESS TESTS CAUSE CITY JITTERS

The Committee of European Banking Supervisors will release
the results of its stress tests on 91 European banks this week,
including British high street banks such as HSBC (HSBA.L: ),
Barclays (BARC.L: ), Royal Bank of Scotland (RBS.L: ) and Lloyds
Banking Group (LLOY.L: ). Banking sector shares declined during
Friday trading as a result, with a total of seven billion pounds
wiped off the value of major UK banks. Barclays Capital, the
investment banking division of the bank, has predicted the tests
will force the weakest European banks to raise 85 billion euros
between them.

FRENCH CONSIDER 6.4 BILLION POUND CASH OFFER FOR IP

International Power (IPR.L: ) may be acquired by the French
energy monolith GDF Suez (OLDO.L: ) for 6.4 billion pounds. Prior
discussions over a merger failed in January, but an all-cash
offer for the British power generation company may be more
successful. The bid has the approval of the French government,
which has a 35 percent stake in GDF, and the company is
discussing the potential takeover with its advisers NM
Rothschild, Goldman Sachs and BNP Paribas (BNPP.PA: ).

VODAFONE FACES STORM OVER “EXCESSIVE” PAY

Revenues for Vodafone (VOD.L: ) are expected to have declined
by 1.8 percent when the first-quarter results are released on
Sunday. This, however, will be an improvement on the 4.4 percent
fall observed over the same period last year. The mobile phone
company is set for a somewhat acrimonious annual general meeting
next Tuesday, after the investor advisory body Pirc advised the
company’s shareholders to vote against its remuneration policy.
Vodafone’s total executive remuneration rose this year from 5.19
million pounds last year to 7.5 million pounds, with Pirc
considering both fixed and variable pay to be excessive.

Observer

CITY BANKS PUT FIVE BILLION POUNDS ASIDE FOR STAFF BONUSES

Despite the negative publicity that bankers’ bonuses have
received since the start of the financial crisis, UK banks are
thought to have set aside a total of over five billion pounds
with which to pay staff remuneration packages. The City Minister
Mark Hoban is to meet with the heads of investment banks with
major operations in the UK and the investment banking arms of
domestic banks such as Royal Bank of Scotland (RBS.L: ) and
Barclays Capital (BARC.L: ) on Monday, in an attempt to persuade
them to rein in bonuses.

ONLINE SUPERMARKET OCADO INSISTS THAT ITS ONE BILLION POUND
FLOAT IS ON TRACK

Ocado is still making efforts to overcome misgivings of
potential investors about its stock market flotation on Tuesday.
Analysts and investors alike have expressed doubts about the
realism of the 200-275 pence per share price range which the
online supermarket has set for itself, which would value the
company at 800 million to 1.1 billion pounds. Nevertheless,
Ocado states that it has gained the support of investors in the
US, and will meet with potential backers in London and Amsterdam
before make a final decision on price on Tuesday.

PRESS DIGEST – British business – July 18