PRESS DIGEST - British business press - Feb 28

Mail on Sunday

ENERGY GIANTS IN PRICE PROBE THREAT

A multi-billion pound investment strike has been threatened by Britain's leading energy companies should they be subjected to an inquiry over soaring prices and profits by the Competition Commission. Calls for an inquiry intensified after British Gas (CNA.L) reported a 58 percent increase in profits to 595 million pounds. The 'Big Six' energy firms have warned the government and regulator Ofgem that no board of directors would approve expensive projects while the Commission came up with a new framework. The holding back of investment decisions would prove devastating for the nuclear-build programme, with energy watchdog Consumer Focus describing the stance as "protectionist".

BIG PERSIMMON PROFITS PUT IT ON ACQUISITION TRAIL

UK housebuilder Persimmon (PSN.L) is this week expected to announce 2009 profits of 60 million pounds and the reduction of the company's debt from 908 million to 275 million pounds. It has been suggested by those in the industry that Persimmon may be looking to effect a takeover of its smaller rival Bovis (BVS.L) for the price of 600 million pounds, but Persimmon has said that uncertainty about market stability makes this unlikely to happen in the next few months.

PROFITS PLUNGE AT WPP

Advertising company WPP (WPP.L) is expected to post an 18 percent decline in annual profits to 788 million pounds this week. The report is likely to show that most of the profit was made in the second half of 2009, and the company's U.S. and Asian operations are expected to show more improvement than its European arm. Chief Executive Sir Martin Sorrell will likely predict flat revenues for 2010 with a decline in the first half before rallying in the second. The company is also expected to have shed 10 percent of its 140,000 workforce to increase its profits.

PEARSON SHOWS RESILIENCE

Book and newspaper publisher Pearson (PSON.L) will this week unveil a 10 percent increase in profits from 2008 to 750 million pounds. Pearson performed well despite the recession, with its share price outperforming the media market by 30 percent. However, the group's newspaper, the Financial Times, saw a decline in sales of 13 percent while its Penguin book publishing business suffered from a decline in market conditions, leading to a 30 percent drop in sales in December of last year.

MOSCOW LAUNCH OF TUI TARGETS RUSSIAN TOURISTS

Travel retailer TUI Travel (TT.L) is to open an outlet in Moscow in an attempt to broaden its market to Russian tourists. TUI last year partnered with investment firm S-Group Capital Management, which is backed by Russian billionaire Alexey Mordashov, to set up tourism operations in the former Soviet Union. TUI is building on that to develop its brand in the region. Analysts have predicted that the developing economies will provide an excellent growth market for TUI.

Sunday Times

CUT YOUR PAY, INVESTORS TELL M&S'S ROSE

Institutional shareholders are calling for retailer Marks & Spencer (MKS.L) to reduce the salary of executive chairman Sir Stuart Rose when Marc Bolland takes over Rose's chief executive role in May. One unnamed large investor recommended that Rose's salary be cut by at least 20 percent. M&S declined to comment on the situation, though sources close to the retailer said that no decision had been taken on reducing Rose's pay. Steve Holliday, the National Grid (NG.L) chief executive who chairs M&S's remuneration committee, is set to hold further discussions with investors this week.

SWISS TAX BOOSTS INFORMA

Informa (INF.L), the publisher behind shipping trade journal Lloyd's List, has relocated four key executives, including chief executive Peter Rigby, to Zug, Switzerland. The move means that Informa is domiciled in Switzerland for tax purposes, and is expected to save the company 12 million pounds a year. Annual results announced on Tuesday will show that Informa's corporate tax rate has remained at 26 percent, the relocation having helped the company avoid changes to the UK taxation of foreign profits introduced last July, which would have seen corporate tax rise to 31 percent.

AERO INVENTORY TO FACE FRAUD PROBE

The Serious Fraud Office has opened an investigation into the collapse of AIM-listed aircraft components group Aero Inventory AI.L. A senior source said that a number of allegations regarding the company had been made to the SFO, with sufficient evidence being presented to warrant an investigation into potential wrongdoing. Accounting errors in a Canadian contract led to the suspension of Aero's shares last October. The SFO said: "We will be investigating everything."

PHONE GROUP MOVES ON CUBA

The international arm of Cable & Wireless CW.L, the British telecoms company whose UK arm is set for a demerger next month, is close to securing a foothold in Cuba. CWC will run a subsea cable from Jamaica into Cuba, putting the company in a strong position to acquire a stake currently held by Telecom Italia (TLIT.MI) in Cuba's state-controlled mobile phone operator Etecsa. Chief Executive Tony Rice also spoke of the firm's intention to take majority stakes in part-owned associates in Trinidad, Afghanistan and the South Pacific in order to "run them better or divest them".

SHAREWATCH

Moneysupermarket.com (MONY.L) (We are staying on the sidelines)

Sunday Telegraph

ITV "NEEDS TO SELL OFF PRODUCTION ARM"

Luke Johnson, who left his position as chairman of Channel 4 last month, has remarked that ITV (ITV.L) would be well advised to consider selling off its production business in case of another economic downturn. Although analysts expect earnings before interest, tax, depreciation and amortisation at the broadcaster to be between 180 million pounds and 200 million pounds when the broadcaster announces its full-year results this week, Johnson warned that volatile advertising revenues and the role of the Internet could land the company in trouble in the future.

PRUDENTIAL PLANS 15 BILLION POUND BID FOR AIA

The insurance giant Prudential (PRU.L) is considering a 15 billion pound bid for AIA, the Asian subsidiary of American International Group (AIG.N). Clive Cowdery, the founder of Resolution, has also declared his interest in buying Prudential's UK business for a sum in the region of 6 billion pounds if the planned acquisition of AIA is successful. A takeover deal would depend upon the approval of the U.S. government, which has been supporting AIG for over a year since it nearly collapsed in the credit crunch. If the scheme comes to fruition it would make Prudential a major force in the Asian and global insurance market.

BP JOINS THE DASH FOR GAS

British Petroleum (BP.L) is to announce a significant expansion of its gas division in a strategic document released to its investors this week. The company is to point out the superior environmental credentials of natural gas over oil and coal and its reliability compared to renewable energy sources such as wind and wave power. The document will go on to outline BP's planned increase in the size of its gas operations in deep-water exploration, global gas, and the controversial new method of extracting shale gas from the ground.

SUNDAY QUESTOR

Royal Bank of Scotland (RBS.L) (Buy)

Lloyds Banking Group (LLOY.L) (Buy)

Independent on Sunday

NEXUS TO DEAL WITH NASA HACKERS

A division of the UK-based technology group Nexus Management (NEXMA.L) has been appointed by the U.S. space exploration agency NASA to help defend it against the depredations of Internet hackers and viruses. Resilience Technology, a subsidiary of Nexus, has been assigned to provide firewalls to deter online criminals. Resilience is also expected to announce deals with a large U.S. telecoms company and a Caribbean-based bank during the coming week. It is hoped that the success of Resilience will boost Nexus' 2010 earnings.

The Observer

HSBC CHIEF EXPECTED TO MISS OUT ON 40 PERCENT PAY RISE.

An investor revolt is likely to force Michael Geoghegan, chief executive of banking giant HSBC (HSBA.L), to abandon plans to increase his pay by up to 40 percent. The pay deal, designed to shield board members' incomes from the wider public row over bank bonuses, would have boosted Geoghegan's base salary by up to 400,000 pounds. Shareholders are believed to have voiced their displeasure at the plans to alter the balance of pay and bonuses ahead of a major regulatory upheaval in the sector.

ENERGY FIRMS FACE ONSLAUGHT FROM TAR SANDS CAMPAIGNERS

A group of shareholders and environmentalists are planning to turn the annual meetings of several energy firms into a referendum on the mining of Canadian tar sands. Oil giants BP (BP.L) and Shell (RDSa.L) will be targeted by the groups, as well as Royal Bank of Scotland (RBS.L). A report by a collection of green groups will say RBS has provided 7.5 billion dollars of loans over the past three years to companies carrying out the carbon-intensive oil extraction.

Prepared for Reuters by Durrants.