PRESS DIGEST - British business - June 7

Mail on Sunday

ONLINE STORE IS ALL THE FASHION IN A DOWNTURN

M and M Direct has reported a rise in sales of 29 percent in the 12 months to February, contributing to a growth of over a fifth in profits to 10 million pounds ($16.05 million). The online retailer buys excess, rather than old season, stock from other retailers and brands, which has paid dividends in the recession. "I would never be so bold as to say we are immune to what is happening," remarked the chief executive Stephen Robinson. "But because we sell discounted shopping we are clearly at an advantage."

WATER CHIEFS IN PLEA FOR A BIG PRICE SHAKE-UP

Senior executives at two British water companies have urged the water regulator Ofwat to reform the current five-yearly pricing review, claiming that it is unnecessarily expensive and complicated. John Cuthbert, managing director of Northumbrian Water(NWG.L), said that a longer period between pricing reviews would encourage water companies to make savings further into the future and reduce price volatility. Tony Wray, chief executive of Severn Trent(SVT.L), stated improvements could be made in the efficiency of the present system of water regulation.

BANK STAKE BOSSES SNUB PENSION PLEA

UK Financial Investments, the government body set up to manage the taxpayers' stake in partially-nationalised British banks, will not step in if the final-salary pension schemes at Lloyds Banking Group(LLOY.L) and Royal Bank of Scotland(RBS.L) are scrapped for existing members. After a week in which a number of major institutions, including Barclays Bank(BARC.L), stopped their final-salary schemes, unions are becoming increasingly concerned that Lloyds and RBS will be next. However, spokesmen for the banks claimed that there were no plans to axe their schemes at this time.

The Sunday Times

CARPHONE AND VODAFONE RECONNECT

A three-year dispute between Vodafone(VOD.L) and Carphone Warehouse(CPW.L) looks set to end, with an announcement expected that Vodafone will resurrect a sales agreement with the telecoms store chain. Carphone head, Charles Dunstone, is thought to be in advanced talks with Vodafone over a deal which would see Vodafone mobile contracts sold at Carphone's 800 UK store for the first time since 2006. A joint venture between Carphone and US electrics retailer Best Buy will be known as Best Buy Europe from July 2010.

SKIPTON BUILDS UP WAR CHEST

Skipton Building Society, Britain's sixth-largest, is considering a sale of at least three non-core assets in order to raise up to 40 million pounds to fund rescue takeovers of struggling rivals. Credit checking agency Callcredit, estate agents Connells and mortgage-servicing business HML are all likely candidates for disposal. The Financial Services Authority is currently stress-testing Britain's biggest building societies, with Skipton thought to be one of the regulator's favoured homes for other struggling societies.

ASHLEY DRAWS UP BONUS PLAN FOR 2,000 SPORTS DIRECT STAFF

Mike Ashley is putting together plans for a 50 million pound bonus scheme which could see 2,000 Sports Direct(SPD.L) staff rewarded with bonuses worth an average of 25,000 pounds. A draft version of the plan suggests that the scheme would come into effect if the company generates more than 200 million pounds of underlying profits by the 2010-11 financial year. The retailer generated profits of 188 million pounds when it floated two years ago. Bonuses would be paid only to full-time staff who have been with the company for more than two years.

SHAREWATCH

Wincanton(WIN.L) [Hold]

Sunday Telegraph

BARCLAYS EYES STAKE IN US FUND MANAGEMENT GIANT

Barclays(BARC.L) is finalising a deal to merge its one trillion dollar fund management arm with BlackRock of the U.S., in a complex transaction that values Barclays Global Investors at about 13 billion pounds. Details of the deal are still being negotiated, but it is likely to involve Barclays taking an economic interest in the enlarged fund management group of as much as 20 per cent. The takeover of BGI by BlackRock will also see one or more Gulf-based investment bodies injecting money into the New York-based company to help finance the deal.

FORMER HBOS CHIEF HORNBY IN TALKS ABOUT ALLIANCE BOOTS JOB

Andy Hornby, the former chief executive of HBOSHBOS.L at the time of its taxpayer-backed merger with Lloyds TSB(LLOY.L), has been holding secret talks about taking a role at the helm of Boots, the high street retailer. Hornby is among several candidates who have been in discussions in recent weeks with Stefano Pessina, the Italian billionaire who runs Alliance Boots and who is to move into the role of executive chairman. Despite the criticism directed at Hornby at the time of the Lloyds rescue, friends point to the fact he managed to secure a deal for shareholders despite financial turmoil in the industry.

PROPERTY GIANT RISKS ROW ON BONUSES

Great Portland Estates(GPOR.L), the FTSE 250 property group that sank to a 436 million pound pre-tax loss last year, has risked a rewards-for-failure row after awarding Toby Courthold, its chief executive, a 400,000-pound bonus. The payout came despite Portland writing down the value of its property portfolio by 308 million pounds. Courthold is one of four executives to receive bonuses. However, in response to economic conditions, Great Portland said it would no longer pay bonuses if net asset values in its portfolio decline year-on-year.

SUNDAY QUESTOR

Wood Group [Buy]

Tesco(TSCO.L) [Buy]

Air Partner [Avoid]