PRESS DIGEST - British business press - July 17

The Times

TESCO READY FOR NEW BATTLE AGAINST COMPETITION TEST

Tesco(TSCO.L) and the Competition Commission are preparing for a confrontation over the commission's plans to introduce a competition test that would make it more difficult for supermarkets to open more stores in areas where they dominate. Tesco, which holds 31 per cent of the grocery market, stands to lose the most from the introduction of such a test. The Competition Appeals Tribunal ruled in March that a similar proposal from the commission had not been properly thought through, but its restated plan has been more thoroughly prepared.

ALL RAIL PHONE INQUIRIES TO BE HANDLED IN INDIA

National Rail Enquiries have made the decision to outsource calls to their hotline to India in December, a move which could result in the loss of over 100 jobs in South Yorkshire. Two thirds of the calls to the hotline are already handled by Indian staff, with the UK business Ventura dealing with the rest on behalf of the rail operator. National Rail hopes to cut costs with the decision which follows a 25 per cent fall in telephone inquiries as passengers make increasing use of the internet instead.

MOTHERCARE SALES RISE

Strong demand for summer products and the contribution of its Early Learning Centre has driven sales at Mothercare(MTC.L) 5.1 per cent higher during the 15 weeks to July 10th. Sales at the company's international division's 639 outlets increased by 32.7 per cent thanks to the weakened pound and new stores. These impressive results build on the progress made in the previous financial year, when overall profits rose by 12.4 per cent to 37.1 million pounds.

TEMPUS

AutonomyAUTN.L (Buy)

HendersonHGI.L (Pass)

Spectris(SXS.L) (Hold)

The Daily Telegraph

C4 AND SKY SET TO MERGE ADVERTISING SALES DEPARTMENTS

Channel 4 and BSkyB(BSY.L) have agreed to merge their advertising sales departments in a bid to protect themselves from ITV's(ITV.L) potential dominance and gain market share. A source has claimed the terms for a deal have been agreed, although both companies declined to comment until the Competition Commission publishes recommendations governing ITV's advertising sales within six weeks. The source said: "The merger will allow both companies to make huge savings, lower headcounts and run a more streamlined operation."

NO PICK-UP THIS YEAR, SAYS ENTERPRISE INNS

There will be no increase in consumer demand for at least a year, Enterprise Inns(ETI.L) chief executive Ted Tuppen has predicted. Tuppen said the recent stabilisation of pub sales was due to the hard work of landlords and the "robust" demand for good pubs. He also noted that pubs in the south of the UK were holding up better than those in the north. Enterprise is confident it will be able to renegotiate the refinancing of its one billion pound debts which are due at the end of the next fiscal year.

SHIRE BOOSTED AS DRUG IS FAST-TRACKED

Shire(SHP.L) has received a major boost from the Food and Drug Administration fast-tracking the approval of its treatment for Gaucher disease. The decision on Shire's Velaglucerase alfa, an enzyme replacement therapy, comes days after the British Government disclosed plans to test new drugs ahead of formal approval, and shows how such flexibility in the approval process can be used. Last week, at the request of the FDA, the pharmaceutical group filed a treatment protocol which will give patients access to Velaglucerase before its approval.

QUESTOR

Vedanta (Hold)

Mothercare (Buy)

Petrofac (Buy)

The Independent

CONFUSION REIGNS OVER TROUBLED GATWICK SALE

The British Aviation Authority has denied reports claiming the two remaining bidders for Gatwick Airport have withdrawn their offers. Sources said the Manchester Airports Group and the Global Infrastructure Partners consortium have both pulled out of the deal but a spokesman for BAA maintained "there are multiple bidders still in the process". Another bidder, the Lysander consortium backed by Citigroup, left the bidding process in May.

SPORTS DIRECT PROFITS SLUMP BY 91 PER CENT

Profits at the sportswear retailer Sports Direct(SPD.L) fell by 91 percent in the last twelve months, with the main problems being the weak pound and the collapse of the Icelandic bank Kaupthing Singer & Friedlander. The large proportion of the group's products which are bought in dollars affected margins significantly, whilst the stakes held in rival retailers such as JJB Sports and Blacks Leisure were partially funded by Kaupthing and frozen when the bank went into administration in October 2008.

LLOYDS BANKING GROUP CUTS 1,200 JOBS

1,200 jobs are to be lost in the group operations and insurance businesses of Lloyds Banking Group(LLOY.L) between now and March 2010. This will mean 8,000 employees of the group have been made redundant since its merger with HBOSHBOS.L in January. Analysts estimate that the company, which now employs 140,000 people after the HBOS deal, could lay off up to 30,000 of them as part of the process of integration.

INVESTMENT COLUMN

Autonomy CorporationAUTN.L (Hold for now)

Mothercare(MTC.L) (Hold for now)

Trafficmaster (Hold)

The Guardian

BIGGEST UK COAL MINING FIRM WARNS OF RECORD LOSS

UK Coal warned it is expecting a pre-tax loss of 82 million pounds for the first half of the year on the back of higher production costs coupled with falling coal prices. UK Coal, the largest coalmining company in Britain, spent 155 million pounds on production at its deep mines in the first half of the year, compared to 136.3 million pounds last year. UK Coal said: "We have deliberately increased the amount of deep mine development work we undertake alongside coal production. This increases costs in the short term but will enable a smoother flow of future coal production and minimise face gaps, consequentially benefiting future production volumes."

GATES THE HEALTH PHILANTHROPIST TAKES SURPRISE STAKE IN CHAIN

JJB's shares received a boost when it was announced that Bill Gates had taken a 3.14 per cent stake in the business. Shares in JJB have fallen by 70 per cent over the past year, with the retailer narrowly avoiding bankruptcy in April when a groundbreaking legal deal was agreed with landlords to ward off administration. News of the share purchase, made on behalf of the Bill and Melinda Gates Charitable Foundation, saw the chain's shares rise by 12 per cent to 28 pence.

BILLIONAIRE JOE LEWIS GAINS M&B BOARD SEAT

Joe Lewis will be represented on the board of Mitchells & Butlers(MAB.L) by an appointee after becoming the largest shareholder in the pub group. Lewis increased his stake in M&B to 22.9 per cent through his Piedmont investment company and is believed to interested in the property aspects of M&B's largely freehold estate. M&B reported a 1.7 per cent increase in like-for-like sales in the eight weeks to July 11, with the group gaining a larger share of a shrinking market.

Prepared for Reuters by Durrants