PRESS DIGEST - British business - June 6

The Times

CARPHONE WAREHOUSE MOVES TO IMPROVE IMAGE

Carphone Warehouse(CPW.L) is attempting to boost sales and improve its image with consumers by introducing a bonus scheme for its sales employees, who will be paid according to how polite and helpful they are to customers. Employees' performance in this area will be assessed through the amount of positive and negative customer feedback received. "With complex products, consumers are looking for more than just a sales service," explained the company's chief executive, Charles Dunstone. "They want someone who can explain products to them and a service where advice and consultancy is on offer."

SIR VICTOR SOLDIERS ON AFTER "GO RIGHT NOW" OUTBURST

An acrimonious annual general meeting at Lloyds Banking Group(LLOY.L) saw some shareholders call upon its chairman, Sir Victor Blank, to leave the bank immediately. Blank, who is generally held responsible for the disastrous 2008 takeover of HBOSHBOS.L, is to depart in 2010 but a section of investors want him to go sooner and be replaced by the deputy chairman Lord Leitch. Trade unions representing bank employees also protested outside about the potential loss of 40,000 jobs at Lloyds.

PROBLEM WITH SUPPLIER SENDS HORNBY OFF THE RAILS

The model railways and Scalextric maker Hornby reported a sharp fall in profits and the cancellation of its dividend, citing the economic slowdown and the financial difficulties of its main supplier of model railway equipment, the Chinese company Sanda Kan, as the main reasons for the disappointing results. The cancellation of orders from numerous toy retailers just before Christmas also contributed to the 32 percent fall in Hornby's full-year pre-tax profits. Nevertheless, the chief executive, Frank Martin, remained optimistic and said that the business was in a better position than six months ago.

Daily Telegraph

POOR GOVERNANCE SENT METRONET DOWN TUBES

According to a report from the National Audit Office, the collapse of the London Underground contractor Metronet -- which fell into administration in July 2007 -- has cost the taxpayer as much as 410 million pounds. The NAO also estimated that Metronet's five main shareholders -- WS Atkins(ATKW.L), Balfour Beatty(BALF.L), Bombardier, EDF Energy(EDF.PA) and Thames Water - have lost 510 million pounds between them. An NAO spokesman said: "The Metronet PPP contracts left the DfT without effective means of protecting the taxpayer."

CARPHONE DELAYS PLANNED DEMERGER UNTIL NEXT YEAR

On Friday, Carphone Warehouse(CPW.L) announced results inline with analyst expectations. The communications group reported a pre-tax loss of 72 million pounds for the year to March 31, compared with an 86 million pound loss the previous year. Carphone attributed the loss to its tie-up with the retailer Best-Buy, as it was forced to convert Swiss currency operations into sterling -- losing 85 million pounds. Carphone said that excluding the currency loss and restructuring costs, it made pre-tax profits of 133 million pounds. Best-Buy Europe is set to open the first 60 of 70 out-of-town retail stores in the UK next spring, creating 10,000 British jobs.

RIO SCRAPS ITS DIVIDEND AS IT SEEKS 15.2 BILLION DOLLARS

Rio Tinto(RIO.L) has cancelled its interim dividend and called on shareholders for $15.2 billion to cut its 38 billion dollars of debt thorough a 21-for-40 rights issue. The new shares are being offered at 14 pounds each in London, a 49 per cent discount to Thursday's closing price. Rio scrapped its dividend after refusing a "strategic investment" from Chinalco, the group's largest shareholder. Chinalco is said to be undecided as to whether to take up its share entitlement. Rio said that it will only pay a final dividend this year if there are "satisfactory trading results", but expects to resume payments at their previous level in 2010.

WHAT THE BROKERS SAY

BSkyB(BSY.L) [Buy]

Northern Foods(NFDS.L) [Buy]

Severn Trent(SVT.L) [Buy]

Paddy Power [Hold]

Chloride Group [Hold]

TUI Travel(TT.L) [Buy]

Michael Page(MPI.L) [Sell]

Speedy Hire(SDY.L) [Sell]

Electrocomponents(ECM.L) [Sell]

The Independent

RIO RISKS A CHINA CRISIS

Analysts have warned that the collapse of a $19.5 billion financing deal between Rio Tinto(RIO.L) and Chinalco could damage Rio's reputation in China. Rio now intends to raise more than $20 billion to pay down debts through a $15.5 billion rights issue and a joint venture with rival BHP Billiton. Professor Shujie Yao, head of Chinese studies at the University of Nottingham, said: "This will be a painful blow for Chinese esteem. Rio Tinto has been courting two lovers at the same time - one openly and one under the table."

PROPERTY WRITEDOWNS HIT PROFITS AT FULLER

Pub operator and brewer Fuller, Smith & Turner (FSTA.L) has announced a 40 percent fall in profits after a "very difficult year" which saw massive property writedowns. However, the group said that trading since the year end had been "solid". Underlying profit, excluding a 6.2 million pound hit to the value of recently-bought properties, was down one percent at 22.8 million pounds, while revenues were up three percent at 210 million pounds.

BELLWAY WARNS OF PATCHY RECOVERY IN HOUSE PRICES

Housebuilder Bellway(BWY.L) said that house prices are showing signs of stabilising, but warned of a growing north/south divide. The group's southern division had experienced a slightly stronger market, it said, and turnover in the south was expected to be "much higher" by the year-end than in the north. The company plunged into the red with half-year pre-tax losses of 48.6 million pounds, compared to a profit of 96.9 million pounds a year ago.