PRESS DIGEST – Financial Times – May 1

Financial Times

FRANCHISES WEATHER RECESSION

Figures from the annual NatWest British Franchise
Association survey show the franchise industry has grown in
spite of the recession, with the sector’s revenue increasing by
400 million pounds to 11.8 billion pounds in 2009. The number of
franchise systems active in the UK increased to 842 from 835 in
2009, while the number of employees of franchise business units
operating in the UK fell by 2,000 during 2009 to 465,000 staff,
including both full-time and part-time workers. On average,
franchises reduced the number of full-time staff in 2009, while
hiring more part-time staff.

SMALL BUSINESSES AVOID BANKS

A survey of 1,400 companies, conducted by the Federation of
Small Businesses, suggests that small firms are still reluctant
to go to banks for funds. Only 18 percent of respondents applied
for new credit in February and March, with half being
successful. Among firms with loans or credit facilities already
in place, 16 percent said the cost had risen in February and
March. FSB national chairman John Walker said: “Trust needs to
be restored between banks, bank managers and business as credit
conditions remain tight for small firms.”

HOUSE PRICES RISE 7.5 PERCENT IN YEAR

According to the Land Registry index, UK house prices were
7.5 percent higher in March of this year, when compared with
March 2009. House prices fell 17 percent from their January 2008
peak to their trough in March of last year and the data shows
that the housing market has staged a recovery since that
low-point. Despite this, the Land Registry data also shows the
number of homes sold was still at a historical low.

BANKS FACE COMPLAINTS PROBE

State-supported banks Royal Bank of Scotland (RBS.L: ) and
Lloyds Banking Group (LLOY.L: ) have been singled out by the City
regulator over failures to handle customer complaints properly.
After investigating several banks, the Financial Services
Authority found some banks were putting bonuses before the issue
of fairly handling customer disputes and that complaint
resolution was given a low priority by senior managers. As a
result of the industry-wide probe, the FSA has demanded five
banks, understood to include Lloyds and RBS, review the methods
employed to deal with complaints.

SETTLEMENT CLOSE IN PRICE-FIXING INQUIRY

Leading supermarkets and dairies are nearing a settlement
with the Office of Fair Trading, following a long-running probe
into alleged price-fixing. The competition watchdog has cut from
116 million to 70 million pounds the maximum penalties it plans
to impose on seven firms.

EXPANSION OF FOOD BUSINESS LOOKS TO BIG BRANDS

Retailer Marks and Spencer (MKS.L: ) (MKS.L: ) has signalled
plans to expand the supply of big-brand foods by the end of
August, to compete against food business rivals like Tesco
(TSCO.L: ). The move cements its shift away from solely supplying
its own-label foods towards offering familiar consumer brands,
ranging from PG Tips to Kelloggs corn flakes. Industry figures
say expansion into big brands, which could include stocking
branded cosmetics in the future, could bolster revenue generated
from branded food lines currently worth one percent of M&S’s
turnover in food, to five percent within two years.

ROK FACING DROP IN PROFITS AS COLD SNAP BACKLOG BITES

Building firm Rok warned bad weather and weak performance in
household maintenance contracts would cut profits, resulting in
shares slumping to their lowest level in more than a year. In an
effort to mitigate against the impact of the downturn in new
construction work, Rok has focused business interests on
non-discretionary repair and maintenance spending during the
past 18 months and initiated cost cuts. Efforts by the group
have helped it to treble its profits for 2009, with Rok expected
to post pre-tax profits of 19.5 million pounds for the year
ending December 31 2009. But Rok, which has restructured its
plumbing, heating and electrical business after identifying
underperforming contracts, has warned the cold weather would
damage its 2010 first quarter revenues.

JON MOULTON AND STAFF BUY OUT REMAINING FINNCAP STAKE

Staff at broking house FinnCap have assumed full ownership
of the company along with the company’s chairman, Jon Moulton.
On Friday, Moulton and 45 FinnCap employees bought the remaining
50 percent of the equity formerly held by private client
stockbroker JM Finn & Co. The transaction means FinnCap chief
executive Sam Smith is now its biggest shareholder, with a 12
percent stake in the firm. Moulton’s new private equity group,
Better Capital, holds a six percent stake. The deal values
FinnCap’s equity at nearly six million pounds.

NORMAN MAKES CHANNEL 4’S LYGO FIRST BIG SIGNING FOR ITV

Broadcaster ITV (ITV.L: ) has appointed Kevin Lygo, the
director of programmes at rival Channel 4, as managing director
of ITV Studios. Lygo will be in charge of producing new
programmes for the ITV1 channel to succeed hits like Britain’s
Got Talent. He will also assume responsibility for ITV schedule
mainstays, like Coronation Street and Emmerdale. ITV chairman
Archie Norman and new chief executive Adam Crozier have told
staff that the broadcaster’s future depends on the production of
hit shows that can be sold internationally. A former colleague
of Lygo said he was a “very good spotter of hits”.

LLOYDS ACTS TO REDUCE HBOS PROPERTY DEBTS

Norwich-based property developer Targetfollow has placed a
500 million pound portfolio of properties backed by HBOS loans
on the market. The move is a further sign that Lloyds Banking
Group (LLOY.L: ), which acquired the lender in 2009, is taking a
tougher stance with its real estate customers and moving to
reduce its loan book to the sector. There are facilities of
nearly 700 million pounds behind the properties that will mature
later this year and the debt is unlikely to be rolled over. A
sale is expected to raise around 500 million pounds and,
although this would represent a 200 million pound loss for
Lloyds, the deal is expected to be structured in such a way that
Lloyds would benefit from long-term profits made on the
properties.

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PRESS DIGEST – Financial Times – May 1