PRESS DIGEST - British business - July 18

Sunday Telegraph

CONCERNS OVER TIME TO PAY DEBT MOUNTAIN

Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales, has urged the Treasury to clarify the future of its Time to Pay tax-deferral scheme. 200,000 businesses have used the 5.2 billion pound scheme since it was launched in November 2008, which Izza praised as "one of the most helpful measures" introduced by the former government to aid businesses. But Izza continued: "We always knew that at some point this debt would need to be repaid. So we need more details as to how HMRC will be approaching requests from businesses, either for further deferments or for extensions to existing arrangements."

BT AND C&W FACE REVOLT ON TOP PAY

Telecommunication groups BT (BT.L) and Cable & Wireless (CWP.L) are both likely to face investor rebellion over their executive remuneration packages at their annual meetings this week. Investor groups Pirc and the Association of British Insurers have issued alerts over C&W's executive payments, with Pirc expressing concern at the presence of chairman Sir Richard Lapthorne on the remuneration committee. The ABI also issued an "amber alert" on BT and warned members to think carefully before approving directors' pay packages which include a 1.2 million pound bonus for chief executive Ian Livingston.

GLAXOSMITHKLINE FACES AVANDIA BLOW

Royal Bank of Scotland analyst Michael Leacock has warned tighter restrictions on the use of diabetes treatment Avandia will probably cause further declines in its sales for GlaxoSmithKline (GSK.L). America's Food and Drug Administration allowed Avandia to stay on the market following a two-day hearing into whether or not the drug could pose a risk to the heart but ruled it should carry new warnings and restrictions. Leacock wrote in a note: "We now forecast sales of 575 million pounds in 2010 (down from 623 million pounds) falling to 286 million pounds in 2012 (down 37 percent from prior forecasts), the year of the drug's patent expiry."

KPMG NUCLEAR POWER THREAT

A study by KPMG commissioned by RWE npower has warned the government's promise to refuse taxpayer support will prevent any of the UK's new generation of nuclear power stations from being built. The government has offered to impose a carbon "floor price" to increase the cost of fossil fuel and make nuclear energy more attractive. But KPMG warned the move is not enough to make investments of billions of pounds in nuclear power economically viable for large utility companies.

350 MILLION POUND SHOPPING CENTRE FOR LEEDS TO BE GIVEN GO-AHEAD

Property developer Land Securities (LAND.L) will sanction the development of a 350 million pound shopping centre in Leeds this week. Land Securities will announce that it has secured enough pre-lettings with retailers to begin the construction of Trinity Leeds at its trading update on Wednesday. The development will be the first in the UK since the beginning of the recession and should be completed in 2012, creating hundreds of new jobs. Land Securities is also believed to be in talks with Canary Wharf Group about creating a joint venture to develop the 'Walkie Talkie' tower in central London.

QUESTOR

Ryanair (RYA.I) (Buy)

Cranswick (CWK.L) (Hold)

The Sunday Times

BP PLOT FOR BREAK-UP AFTER SPILL

Directors of the energy company BP (BP.L) are considering a variety of options for restructuring the company after its disastrous oil spill in the Gulf of Mexico. Options under consideration include the break-up of the company by selling off its refineries and petrol stations and switching its outsourced engineering work to internal operations. These measures would be in addition to the selling off of ten percent of its assets, including the Prudhoe Bay field in Alaska. BP is also under pressure from US legislators for its alleged role in the release of terrorist Ali Mohmed Al-Megrahi by the British government.

REVEALED: EASYJET LESS PUNCTUAL THAN AIR ZIMBABWE

Figures compiled by Gatwick airport have shown that only 48 percent of airline EasyJet's (EZJ.L) international flights departed from the airport on time in June. The figure compares unfavourably with rival airlines such as Air Zimbabwe, at 50 percent on-time departures, and British Airways BAY.L, at 85.7 percent. EasyJet blamed air traffic controller strikes in Europe, but one source said the excuse was "nonsense". The airline is in the process of recruiting more staff and has leased three more aircraft to remedy the situation.

TIMIS: I'M TRADING UP TO MAIN MARKET

Businessman Frank Timis is working on plans to move his mining company, African Minerals AMI.L, from the Alternative Investment Market stock exchange to the London Stock Exchange. Timis has previously described LSE regulators as "a kangaroo court" but now says he is about to hire new directors, auditors, legal firms and an investment bank to satisfy the LSE ahead of the company's relisting on the exchange. Timis has previously been penalised by regulators when he was the head of Regal Petroleum (RPT.L) while it was fined for misleading investors. African's LSE listing is expected to value the company at 4 billion pounds.

INVESTORS SNUB RULE ON BOARD ELECTIONS

Three large investors have written to 700 companies to inform them that they will receive their support if they choose to ignore new boardroom code of best practice guidelines that require annual re-election of board members. The rule has been a controversial, but key, part of new corporate governance guidelines drawn up since the financial crisis. The letter, written by investment managers Hermes and Railpen and pension scheme operator the Universities Superannuation Scheme, expresses concern that the increased frequency of elections will lead to "a short-term culture".

The Independent on Sunday

'WATER POVERTY' LOANS TO UTILITIES SET TO HIT FOUR BILLION EUROS

The European Union is planning to increase the amount that it loans to water utilities in the UK to help reduce the number of people who are unable to pay their bills. The amount of cheap loans to companies such as United Utilities (UU.L) and Severn Trent (SVT.L) will be increased by 60 percent to 3.4 billion pounds. Last year 804 million pounds worth of bills had not been paid after twelve months, 16 percent higher than in 2008. Legislation passed in 1999 prevented water companies from disconnecting customers with unpaid bills, causing inflated bills and thus an increase in bad debts.

Mail on Sunday

BANK STRESS TESTS CAUSE CITY JITTERS

The Committee of European Banking Supervisors will release the results of its stress tests on 91 European banks this week, including British high street banks such as HSBC (HSBA.L), Barclays (BARC.L), Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L). Banking sector shares declined during Friday trading as a result, with a total of seven billion pounds wiped off the value of major UK banks. Barclays Capital, the investment banking division of the bank, has predicted the tests will force the weakest European banks to raise 85 billion euros between them.

FRENCH CONSIDER 6.4 BILLION POUND CASH OFFER FOR IP

International Power (IPR.L) may be acquired by the French energy monolith GDF Suez OLDO.L for 6.4 billion pounds. Prior discussions over a merger failed in January, but an all-cash offer for the British power generation company may be more successful. The bid has the approval of the French government, which has a 35 percent stake in GDF, and the company is discussing the potential takeover with its advisers NM Rothschild, Goldman Sachs and BNP Paribas (BNPP.PA).

VODAFONE FACES STORM OVER "EXCESSIVE" PAY

Revenues for Vodafone (VOD.L) are expected to have declined by 1.8 percent when the first-quarter results are released on Sunday. This, however, will be an improvement on the 4.4 percent fall observed over the same period last year. The mobile phone company is set for a somewhat acrimonious annual general meeting next Tuesday, after the investor advisory body Pirc advised the company's shareholders to vote against its remuneration policy. Vodafone's total executive remuneration rose this year from 5.19 million pounds last year to 7.5 million pounds, with Pirc considering both fixed and variable pay to be excessive.

Observer

CITY BANKS PUT FIVE BILLION POUNDS ASIDE FOR STAFF BONUSES

Despite the negative publicity that bankers' bonuses have received since the start of the financial crisis, UK banks are thought to have set aside a total of over five billion pounds with which to pay staff remuneration packages. The City Minister Mark Hoban is to meet with the heads of investment banks with major operations in the UK and the investment banking arms of domestic banks such as Royal Bank of Scotland (RBS.L) and Barclays Capital (BARC.L) on Monday, in an attempt to persuade them to rein in bonuses.

ONLINE SUPERMARKET OCADO INSISTS THAT ITS ONE BILLION POUND FLOAT IS ON TRACK

Ocado is still making efforts to overcome misgivings of potential investors about its stock market flotation on Tuesday. Analysts and investors alike have expressed doubts about the realism of the 200-275 pence per share price range which the online supermarket has set for itself, which would value the company at 800 million to 1.1 billion pounds. Nevertheless, Ocado states that it has gained the support of investors in the US, and will meet with potential backers in London and Amsterdam before make a final decision on price on Tuesday.