PRESS DIGEST - British business - Feb 16

The Times

ENERGY GIANTS TURN UP THE HEAT FOR DIRTY POWER

RWE (RWEG.DE), npower and E.ON (EONGn.DE) are lobbying the Conservative Party to keep nine polluting power stations in operation beyond an EU deadline. The six coal and three oil-fired power stations are due to be closed at the end of 2015 in line with European Union anti-pollution legislation. However, the two German-owned big names in British energy supply argue that these stations provide 15 percent of the UK's total electricity supply, and without a partial exemption Britain could face blackouts as not enough replacements are being built.

NUCLEAR SURGE HELPS TO DOUBLE PROFITS FOR EDF

French energy giant EDF (EDF.PA) has profited from the 12.5 billion pound purchase of the UK's nuclear energy provider British Energy, with earnings from the unit rising by 96 percent. EDF reported on Monday that earnings had increased to 1.7 billion euros compared with 865 million euros for the same period in 2008. Four reactors in Lancashire and County Durham were returned to service between January and March last year, at a cost of 125 million pounds, after they had been forced to close in 2007, due to cooling and wiring problems.

VIRGIN MEDIA TV SALE

Virgin Media [VMEDL.UL] is believed to be in the final stages of an agreement over the sale of its television channels to rival BSkyB (BSY.L). Virgin 1, Bravo, Challenge and Living, the channels that are entirely owned and produced by Virgin Media, would be sold to BSkyB, in which Rupert Murdoch's News Corp (NWSA.O) has a 39.1 percent share. Both Virgin Media and BSkyB declined to confirm or deny the validity of the claims being made.

HSBC FACES INVESTOR ANGER OVER PROPOSED PAY RISE FOR TOP TEAM

Investors are understood to be unhappy about HSBC's (HSBA.L) plans to award pay rises to its executive team. One notable area of contention is the amount the bank plans to pay chief executive Michael Geoghegan, who relocated his office to Hong Kong at the beginning of this month in a move which the bank said recognised Asia as a significant source of growth. Observers have pointed out that the move comes just ahead of the introduction of a 50 percent tax on high earners in the UK and it is unclear whether or not Geoghegan's new deal will fall under the less onerous Hong Kong regime.

CHEAPER, SMARTER AND MASS MARKET - NEW MOBILES TAKE A BOW

Vodafone (VOD.L) has announced the launch of two new handsets aimed at consumers in emerging markets. The announcement came on Monday at the Mobile World Congress in Barcelona. The phones will offer basic voice and text services as well as mobile payment services. The devices, one of which is priced at less than ten pounds, will tap into the growing market for mobile payment services in countries where there is difficulty accessing traditional banks. Similarly, Nokia announced that it is testing mobile banking services in India, with the intention of rolling the service out to all the big cities in the country by the end of the year.

BET OF THE DAY

Spreadex predicts Domino's Pizza's (DOM.L) annual results, which are due on Tuesday, will prove a further benefit for the company. Domino's has been one of the few companies to perform well in the recession, as diners have opted for takeaways rather than meals out, and shares hit a record high of 335 pence earlier this month before easing to 327.7 pence. Spreadex is offering a March spread of 326.7 to 331.1 pence.

TIDDLER TO WATCH

Intandem Films has sold back the rights to five films to U.S. hedge fund Arrowhead Target Fund in a 6.1 million pound deal which cuts debts at the movie production and distribution company. Shares in Intandem, which still manages 30 films, rose 0.38 pence to 3.75 pence. GE&CR predict the stock may rise as high as 6.84 pence.

TEMPUS

Fidessa (FDSA.L) (hold)

Telecom Plus (TEP.L) (investors advised to wait for May's announcement of full-year results)

Regal Petroleum (RPT.L) (A high risk buy)

The Daily Telegraph

FLOTATION CONFIRMATIONS EASE FEARS OVER MARKET VOLATILITY

Three individual companies have helped buck increased fears over market volatility after announcing plans for flotations, despite seeing rival IPOs pulled last week. Retailer SuperGroup, which owns fashion brand Superdry, is seeking to raise 125 million pounds in an Easter flotation, valuing the company at 430 million pounds. EMIS, the supplier of health care software which is currently used in 52 percent of GP practices to store patient records, confirmed it would join the Alternative Investment Market and raise 50 million pounds, valuing the company at 200 million pounds. Promethean, a maker of electronic whiteboards, also confirmed its intention to float.

ING FUND EYES RUGBY ACQUISITION

Listed property fund ING UK REIT has confirmed it is holding talks aimed at acquiring Rugby Estates Investment Trust, a real estate investment trust managed by Rugby Estates. Although no specific details have been made clear, it is believed an offer could be based around 65 pence per share, which would value Rugby REIT at 30 million pounds.

BAE TAKES 592 MILLION POUND HIT ON LOST TRUCK DEAL

BAE Systems (BAES.L) has been forced to make provisions totalling 592 million pounds after the U.S. military decided to award a FMTV transport vehicle contract to Oshkosh, a rival manufacturer based in Wisconsin, America. Shares in BAE closed at 341.4 pence, down 0.3 pence. Full-year results will be announced on Thursday.

QUESTOR

British Airways BAY.L (hold)

Icap (IAP.L) (buy)

The Independent

LLOYDS MOVES TO QUELL FEARS OVER EXECUTIVE EARNINGS

Lloyds Banking Group (LLOY.L) (LLOY.L) has moved to dismiss reports that its chief executive Eric Daniels is due a multi-million pound bonus. The bank, which is 41 percent owned by the taxpayer following last year's bailout by the government, will announce its 2009 results on February 26, with its annual report, including details of executive pay, published a month later.

FIRST GROUP STRIKES GOLD FOR LONDON OLYMPICS

The Aberdeen-based bus and rail operator First Group has won a 20 million pound contract to provide spectator transport to the 2012 London Olympic Games. The company will supply almost one thousand buses and coaches for the shuttling of spectators to the games. It is believed that the firm's bid beat seven of its rivals.

INVESTMENT COLUMN

BAE Systems (BAES.L) (strong buy)

Fidessa (FDSA.L) (hold)

Playtech (PTEC.L) (buy)

Prepared for Reuters by Durrants.