PRESS DIGEST – Financial Times – April 8

ECONOMY POISED FOR RAPID EXPANSION

The Organisation for Economic Co-operation and Development
forecasts that, of the world’s large industrialised economies,
only Canada will see faster economic expansion than the UK in
the first half of this year. The OECD expects UK output to
expand at an annualised rate of two per cent in the first
quarter and 3.1 per cent in the second quarter of 2010. The OECD
also warned member states that they should soon begin planning
for the withdrawal of economic and monetary stimuli.

DIGITAL BOOST PROPOSALS FALL BY WAYSIDE

Several of the measures put forward in the government’s
Digital Britain initiative have been dropped due to resistance
from the Conservatives and from industry figures and the lack of
time to pass the proposals before the general election. Among
the proposals dropped from the digital economy bill is a plan to
fund regional television news, while the one significant reform
to survive is a crackdown on online piracy. MPs were set to
approve the slimmed-down version of the bill on Wednesday night.

SHAREHOLDERS’ ANGER DIRECTED AT PAY

The Association of British Insurers has revealed that
violations of best practice guidelines for companies attracted
more no-votes from shareholders in 2009 than 2008. In 2009, the
trade association marked 72 company reports as “red tops” — an
indicator that the company had deviated from best practice —
higher than the previous year’s 60 red tops. The biggest single
contentious issue, accounting for nearly half of all red tops,
involved pay for executive directors. Three red top company pay
reports were voted down by shareholders in 2009, those of
residential property developer Bellway (BWY.L: ), financial
services group Provident Financial (PFG.L: ) and bar and pubs
operator Punch Taverns (PUB.L: ).

MORRISON’S NEW CHIEF WINS SIX MILLION POUND PAY DEAL

Dalton Philips, the new chief executive of supermarket group
Wm Morrison (MRW.L: ), has been awarded a pay package worth up to
6.1 million pounds. The package includes a basic salary of
800,000 pounds and a payment of up to 2.2 million pounds under a
share incentive plan linked to sales and earnings per share
targets. Analysts are waiting for Philips to outline his vision
for the company. Spectators are also waiting to see whether
finance director Richard Pennycook will stay on after missing
the top job.

MARSTON’S WARY ABOUT TAX RISES

Brewer and pub operator Marston’s (MARS.L: ) has reported a
1.4 percent increase in the sales of its managed division in the
first 26 weeks of the trading year. The increase was fuelled by
a 2.4 percent increase in food sales and a 0.5 percent increase
in drinks sales. Chief executive Ralph Findlay said that the
results are evidence that the economy is improving, but that tax
rises after the election could threaten the recovery. The report
increased Marston’s share price by 2.6 pence to 97.05 pence.

DRAGON OIL CANCELS MOVE TO BERMUDA

Oil development and production company Dragon Oil (DGO.L: )
has cancelled its plans to relocate its company headquarters
from Ireland to Bermuda after consulting shareholders. The move
was originally suggested in March 2009, when the relocation
would have been attractive for tax efficiency. The original
plans stalled when Emirates National Oil Company, which owns 52
per cent of Dragon, offered to buy out the remainder of the
shareholders; an offer subsequently rejected. The U.S. has
recently been considering legislation that would bring companies
operating in the US but incorporated offshore under the tax
jurisdiction of the US government.

HERITAGE SHARES FALL ON CONCERNS OVER IRAQ ASSET

Oil and gas exploration and production company Heritage Oil
(HOIL.L: ) saw its share price fall 63 pence to 518 pence after it
announced it was to increase the depth of its Miran West-2
drilling after initial extraction had proven unsuccessful. The
drilling will nearly double the depth of the well and is
expected to take four to five months. Chief executive Tony
Buckingham said: “The further hydrocarbon potential in the
deeper targets in the Miran structure has the potential to
increase resources significantly.” Analysts have questioned
Buckingham’s optimism and have raised concerns about the quality
of the oil from the site.

BUOYANT SHED REMAINS IN MANAGEMENT BUY-OUT TALKS

Independent television production company Shed Media has
said that talks about a potential private equity-backed
management buyout were continuing. Seven of Shed’s directors own
35.98 percent of the company. An indicative approach was made in
December by a consortium managed by Bowmark Capital and Darwin
Private Equity in cooperation with some of Shed’s management.
Despite unfavourable economic conditions, Shed reported a 13
percent increase in revenue in 2009 to 92.6 million pounds and
an increase in profits of 1.9 million pounds. The company’s
share price fell 1.2 pence to 79.3 pence.

CHLORIDE BENEFITS FROM RECORD ORDERS

Power protection company Chloride Group (CHLD.L: ) has
revealed that it is holding 16 percent more orders than a year
ago, worth a record total of 160 million pounds. The company has
said that trading for the year to March 31 will be in line with
expectations, with a three percent rise in annual turnover from
326 million pounds in 2008-9. This year’s trading is expected to
be boosted by Chloride’s recent acquisitions of two companies,
French energy supplier AEES and UK back-up power provider
Emergency Power Systems. The company’s share price dropped 2.3
pence to 220.5 pence.

SHAREHOLDERS APPROVE LIBERTY SPLIT

Shareholders of British property investment company Liberty
International (LII.L: ) have voted in favour of splitting the
company into two businesses, one holding shopping centres and
the other owning London developments. Shareholders were 80
percent in favour of the split, with the 20 percent opposed
almost entirely based in South Africa, where changing the
company from a real estate investment trust will have tax
implications for the shareholders. The demerger is expected to
cost about 11.5 million pounds excluding swap breakage fees and
has been seen as a positive move by analysts.

Stock Market News

PRESS DIGEST – Financial Times – April 8