Newspaper round-up

(Reuters) - Marks & Spencer, Micro Focus and CSR feature in our round-up of Friday's business press.

Financial Times

SUSPEND BIOFUELS RULES, SAY MPS

MPs warned the government on Thursday that regulations mandating the use of biofuels must be suspended. Growing concern about their effect on the environment and food prices has led ministers to concede that they may have to rethink biofuels policy from the bottom up. Alarm bells were sounded by the Commons environmental audit committee as the industry warned that Britain only has enough surplus wheat to support three large ethanol plants, even though plans for several more already exist. High costs mean the future of biofuels production in Europe looks bleak, according to Richard Lucas, an analyst at Ambrian Partners.

BANK OPTIMISM MEETS WITH SCEPTICISM

Economists reacted with a degree of scepticism on Thursday to the Bank of England's claim that the worst of the global credit crisis is behind us. The road to stability outlined in the Bank's twice-yearly financial stability review, published on Thursday, was likely to be more bumpy than was implied, according to economists. Birgit Specht, managing director in Citi's securitised products division, said the Bank was spot on in its analysis of the market for residential mortgage-backed securities. But according to Michael Saunders, an economist at Citi, the narrow focus on housing missed the bigger picture. "At its heart, the financial crisis has been triggered by the mix of surging private debts, booming asset prices, strong private spending and plunging private savings," he said.

CALL FOR CREDIT CONTROLS TO STOP EXCESSIVE RISK-TAKING

The National Institute of Economic and Social Research argues in a report published Friday for tougher controls to stop lenders and people taking excessive risks. According to the think-tank, credit needs to be more expensive and harder for risky borrowers to obtain to lessen the chance of a new bubble emerging. "I'd like to fly the flag for regulating what banks can do with their money," said Martin Weale, the institute's director. "The reality is that entrepreneurs and speculators often have poor judgement of risk, and regard the result of excessive risk-taking as honest failure," he added. "If the UK has a problem, it's much more acute in the US."

HORNBY SNAPS UP CORGI

Hornby, best known for its model trains and Scalextric slot car racers, has acquired Corgi, the maker of die-cast model cars, for a total of 8.3 million pounds. Frank Martin, chief executive, revealed that he had considered moving for Corgi several times over the past few years, but held back on grounds of cost. "But it's a perfect fit and at this price it's a cracking deal," he said. Shares in Hornby rose 6.5 pence, closing at 170.5 pence.

HENDERSON CONSIDERS 75 MILLION POUNDS OF BOLT-ON ACQUISITIONS

Henderson, the UK fund manager, is looking to capitalise on investment opportunities thrown up by the market turmoil of recent months and may spend up to 75 million pounds on bolt-on acquisitions. The company said it was "actively looking" for acquisition opportunities as part of a strategy to build up its higher margin businesses, in areas such as property and hedge funds. In a statement released on Thursday, the chief executive Roger Yates said: "Our primary focus will continue to be on profitable organic growth, but we also believe that, in more difficult markets, we are in a good position to capitalise on other opportunities."

BHP INVESTS TWO BILLION DOLLARS IN ALUMINA

BHP Billiton(BLT.L), the Anglo-Australian mining group, unveiled plans on Thursday for an almost two billion dollar (1.02 billion pound) expansion of its alumina refinery in Australia. The group owns 86 percent of the Worsley refinery, which processes bauxite into alumina, the raw material required for aluminium production. BHP said it would spend 1.9 billion dollars expanding the refinery, an investment that should boost its output of alumina from 3.5 million tonnes a year to 4.6 million tonnes a year by 2011.

GALIFORM BANKS ON RESILIENT TRADE SALES

Galiform (GFRM.L), the kitchen supplier that changed its name from MFI Furniture Group in 2006, posted sales figures that outstripped its discretionary consumer spending peers to shrug off the nascent housing market slowdown. Growth slowed for the 16 weeks to April 19, but like-for-like sales advanced 5.9 percent. Matthew Ingle, chief executive, was bullish when asked if the company could maintain pace, saying: "I don't see any reason why we shouldn't . Looking at the front door here; trucks and vans keep pulling in." The shares gained 6.96 percent, closing up 4.75 pence at 73 pence.

BAUGUR OFFLOADS MK ONE TO HILCO

Baugur, the Icelandic investment group, has offloaded its loss-making fashion chain MK One to Hilco UK, a retail restructuring specialist. Suppliers fear the deal will lead to the business being split up. Departing from its usual practice, Baugur declined to comment on the financial terms of the transaction, saying only that it was "being sold as a going concern". Industry observers believe the equity will have been valued at little or nothing. "MK One no longer fitted in the portfolio and we're pleased to announce a sale," said Gunnar Sigurdsson, the chief executive.

CSR SAYS REVENUE WILL UNDERSHOOT

CSR, the chipmaker whose components are used in the Sony Playstation 3, warned that revenues for the second quarter will fall below expectations as the normal pick-up in sales failed to materialise for its Bluetooth-enabled headsets. Previous guidance had suggested that revenues would be flat, but CSR's revised guidance pointed to second quarter revenues in the range of 89 million to 101 million pounds - meaning turnover would be down between seven percent and 19 percent year-on-year. The shares fell 71 pence to close at 324 pence.

MICRO FOCUS SNAPS UP US RIVAL FOR 73 MILLION DOLLARS

Micro Focus International (MCRO.L), whose software enables corporations to update legacy IT systems, raised its revenue guidance for the year to April 30 to between 226 million and 228 million dollars. The company also snapped up Nasdaq-listed rival Netmange for 73.3 million dollars in a 720 cents-a-share cash deal, its second foray into the US market after the 40 million dollar acquisition of AcuCorp in May last year. Shares in Micro Focus closed up 18.25 pence at 252 pence.

The Times

ROSE TO SELL KARAOKE STAKE AT CENTRE OF M&S ROW

Marks & Spencer(MKS.L) chief executive Sir Stuart Rose is to sell his 100,000 pound stake in Martha Lane Fox's karaoke business to dispel concerns over whether Ms Lane Fox's integrity as an independent director at M&S may be compromised by the holding. Although there was no suggestion of any impropriety, the move was welcomed by the Association of British Insurers, which had raised concerns.

C&R SHARES PLUNGE ON FEAR ITS MALL FUND HAS BREACHED COVENANTS

Capital & Regional(CAL.L) was on Thursday hit by a brutal share sell-off over concerns that its banking covenants had been breached by its flagship Mall Fund, resulting in a fifteen percent drop in its share price. The company said that the loan-to-value borrowing covenant with Royal Bank of Scotland (RBS.L) for the Mall Fund, in which it has a 24.2 percent stake, stood at 58.5 percent, rather than the 60 percent at which it is supposed to stay.

COWDERY BREATHES LIFE INTO RESOLUTION

Clive Cowdery has relaunched Resolution(RSL.L), his pioneering investment vehicle, to target distressed European financial services companies hit by the credit crunch. Aiming to work with existing management, who will be offered the opportunity to take part in any restructuring plans, Resolution will buy stakes in public companies as well as embarking on acquisitions.

The Daily Telegraph

LAND OF LEATHER SEES SALES PLUNGE AS SHOPPERS CUT BACK

Land of Leather on Thursday warned that a lack of money among its customer base was translating into falling sales figures, and said it would cut back on advertising and discretionary spending. The company, which was forced to issue a profits warning just before Christmas, said it expected further pressures during the rest of the financial year, but that efforts to cut costs by 11 million pounds on an annual basis were now under way.

HOWDENS JOINERY POSTS RISE IN SALES

Galiform (GFRM.L) published a 5.9 percent rise in like-for-like sales at its depots over the 16 weeks to April 19, with chief executive Matthew Ingle calling this a good performance in an economic environment which was "less certain". Despite his optimism, analysts' reactions were mixed, with Panmure Gordon reiterating its sell recommendation due to a predicted weaker trading outlook through the year, while Dresdner Kleinwort argued that the company was undervalued.

NORTHERN ROCK STARTS TALKS WITH UNIONS OVER PLANS TO CUT 2,000 JOBS

Northern RockNRK.L has begun consulting with staff and unions over plans to cut a third of its workforce, a procedure which it hopes to have concluded by 2011, with the majority of job losses taking place this year. Unite has urged to bank to avoid compulsory redundancies, as the situation the bank found itself in was not of their making. Under public ownership, the bank hopes to cut its mortgage book by 50 percent, pay off the Bank of England loans and release the government from its guarantees within three to four years.

The Independent

HSBC CALLS IN POLICE OVER ALLEGED 70 MILLION POUND FRAUD ATTEMPT

Police are investigating an alleged scam that was discovered last week at HSBC's(HSBA.L) securities services division, which settles trades for clients. One man was charged on April 25 with conspiracy to defraud, money laundering and abusing a position of trust after a payment to a bank raised suspicions at Britain's largest bank. HSBC said that no customer funds were involved, no transactions were disrupted and that it is "co-operating fully with a police investigation into an alleged fraud at the bank."

LLOYDS TO RESIST RIGHTS ISSUE DESPITE EFFECT OF WRITEDOWNS

Lloyds TSB (LLOY.L) is expected to announce next Tuesday that its strong capital ratios and access to funding will allow it to resist the need for a rights issue. HBOS HBOS.L and Royal Bank of Scotland (RBS.L) recently announced rights issues of four billion pounds and 12 billion pounds respectively, but a Lloyds spokeswoman said: "We continue to have a strong capital and funding position." Shares in Lloyds fell for the third day running, and closed trading on Thursday at 430.75 pence.

ABBEY CUTS RATES IN RESPONSE TO BANK OF ENGLAND INITIATIVE

Abbey, owned by Santander (SAN.MC) of Spain, has announced that it will cut the cost of its two-year fixed-rate mortgage deals by 0.11 percentage points, while its variable-rate and tracker mortgages will fall by 0.1 percentage points. The move follows last week's 50 billion pound Bank of England liquidity initiative, and an Abbey spokesman said: "We will continue to offer competitive products whilst still being careful to balance this against the need to maintain service levels for customers given recent competitor moves."

The Guardian

BARCLAYS COULD AVOID CASH CALL TO BOOST CAPITAL, SAY ANALYSTS

Analysts Keefe, Bruyette & Woods believe that Barclays (BARC.L), which is under pressure to bolster its balance sheet with a cash call of more than four billion pounds, may be able to raise money from other sources. One and a half billion pounds could be raised through a private placement without seeking approval from existing shareholders and the entire 2008 dividend could be paid in shares rather than cash, saving 2.3 billion pounds. Another option to save cash would be to simply cut its dividend.

CHIP DESIGNER LOSES 18 PERCENT OF ITS VALUE WITH 26 MILLION POUND WRITE-OFF

CSR (CSR.L) recorded a first quarter loss of 41.9 million dollars (21 million pounds) on sales up less than one percent at 160.9 million dollars, after demand for its chips from major electronics companies fell. Shares in the company, which were changing hands for over 900 pence last July, closed at 324 pence on Thursday. Analysts believe that the share price plunge makes CSR an obvious bid target.

TRAIN AND BUS CARRY BAD NEWS FOR BUDGET AIRLINES

National Express(NEX.L) has announced a "softening demand" on the Stansted Express train service and "lower footfall" on coach services. Ryainar RYA.I and easyJet EZJ.L, both of whom fly to Stansted Airport, recently issued profit warnings but they have yet to indicate that economic conditions have caused a fall in passenger numbers or forced them to cut ticket prices to uneconomic levels.