PRESS DIGEST - Financial Times - June 24

Financial Times

BUSINESS FEARS TORIES' EU ALLIANCE WILL WEAKEN BRITISH INFLUENCE

Employers' groups in the UK cautioned on Tuesday that the Conservatives' new anti-federalist European parliament alliance could weaken British influence in Brussels. Their warning came as Waldemar Tomaszewski, an MEP from Electoral Action of Poles in Lithuania, was expected to join the grouping, taking the number of countries that the new European Conservatives and Reformists Group would represent to nine. David Yeandle, head of employment policy at the EEF manufacturer's body, said: "We are concerned the Tories won't be as influential as they would have been within the EPP group." The British Chambers of Commerce said that "having so many UK MEPs outside the mainstream groupings is a worry for business".

BANK LENDING TO PRIVATE COMPANIES SLIPS

New figures by the British Bankers' Association have revealed bank lending to private companies dropped in May, although a surge in loans to public sector bodies offset declining corporate lending. Lending to non-financial companies rose by 100 million pounds in the period, but that was more than accounted for by an increase of 300 million pounds in loans to public and quasi-public sector bodies. Overall, lending to private non-financial groups has dropped by an average of one billion pounds over each of the past six months. David Dooks, the BBA's statistics director, said the figures represented both risk aversion on the part of lenders and lack of demand from companies anxious to tread water amid the financial crisis.

BRUSSELS SEEKS CLARITY ON DEFICIT REDUCTION

Brussels stressed on Tuesday the UK must clarify how it plans to reduce its soaring government deficit, as the European Commission again cautioned about public finances. In an embarrassing move for the British economy, the Commission placed it in the same group with the ailing economies of Ireland and Latvia. All three "had low or very low debt levels, which, however, are now rising sharply," the Commission said. The UK is expected to have the second-largest public deficit in the European Union in 2010 and the biggest underlying deficit, equal with Ireland. Chancellor of the Exchequer Alistair Darling has set a target of reducing by half the deficit between 2009-2010 and 2013-2014.

VODAFONE MOVES HQ TO CAPITAL

Vodafone (VOD.L), the world's largest mobile phone operator by revenue, will shift its global headquarters to London in October, almost 20 years after the company started life in the town of Newbury in Berkshire. The group's top executives will relocate from the Newbury campus to an office in Paddington. Vodafone said the move was not part of its cost-cutting drive amid the recession but was designed to bring its management closer to the group's business partners and shareholders. In total, around 200 of Vodafone's Newbury staff will move to Paddington, while 900 employees responsible for global functions and another 2,400 workers employed at Vodafone's UK business will stay on the campus.

SUN EDITOR TO TAKE CHARGE OF MURDOCH'S UK NEWSPAPERS

Sun editor Rebekah Wade has been promoted to chief executive of News International. In her new role, Wade, 41, will lead Rupert Murdoch's UK newspaper business, including The Times, The Sunday Times, The Sun, the News of the World and the London Paper, beginning on September 1. The move is expected to free James Murdoch, who has been acting as de facto chief executive of the operation since Les Hinton left the group to be chief executive of Dow Jones in New York in 2007. Rupert Murdoch, chairman and chief executive of News Corp (NWSA.O), said Wade's promotion "reflects the importance of journalism to this business".

SHAREHOLDERS GIVE DEBENHAMS' OFFER LUKEWARM RESPONSE

Shareholders in Debenhams (DEB.L) took up only 30.3 percent of the 242.2 million shares placed in an open offer, on top of 161.6 million shares in a placing, as the department store chain tried to reduce its debt pile of almost one billion pounds. The lukewarm response to the fund-raising, which was announced on June 4, came as CVC and TPG, the private equity groups that owned slightly more than 20 percent of the chain before the dilutive deal, made clear that they had no plans of supporting a share placing. Tony Shiret, an analyst at Credit Suisse, said: "Because of the shareholder structure and the remaining debt, it looks like a good result and the management has done well."

BUNZL MARGINS UNDER PRESSURE

The financial crisis in the UK and Ireland and the weakening of the sterling against the Australian dollar has put pressure on margins, Bunzl (BNZL.L), the FTSE 100 distribution group, has said. In a first half trading statement, the company said underlying revenues were marginally down, adding however that the headline figure had increased by 17 percent as a result of acquisitions and the declining value of the sterling. Cash generation remained robust, with operating cash flow in 2008 amounting to 84 percent of the company's 244.5 million pounds operating profits.

BOSTOCK AWARDED OVER ONE MILLION RBS SHARES

The new executive appointed to help restructure Royal Bank of Scotland (RBS.L) has been awarded 1.182 million shares worth about 416,000 pounds that will vest between June 2010 and June 2012. The bank said the awards to Nathan Bostock replace existing agreements that he had given up on leaving his previous role as finance director of Abbey. Bostock is a key member of the team put together by new chief executive Stephen Hester, who wants to restructure the bank to focus on its strengths in areas like UK retail banking, wealth management and global payments and insurance.

ACQUSIITIONS HELP CHEMRING TO RECORD REVENUES

Shares in Chemring (CHG.L) added 98 pence to 20.97 pounds after the maker of anti-missile decoys and pyrotechnics reported record revenues and orders in the six months to the end of April. Revenues from continuing operations jumped 55 percent to 233.5 million pounds, of which about 33 million pounds was due to acquisitions and 23 million pounds was due to favourable currency movement. The company's order book rose 42 percent to 603 million pounds while pre-tax profits increased by 44 percent to 29.9 million pounds, giving earnings per share of 61 pence. Chemring, which has achieved an average of more than 50 percent compound growth in earnings per share in the past decade, proposed an interim dividend of 14 pence, up 40 percent.

HANSTEEN PLANS 200 MILLION POUNDS CASH CALL

Industrial property specialist Hansteen (HSTN.L) said on Tuesday it plans to sell around 268 million new shares at 75 pence each in a bid to raise 200.8 million pounds, or 194.6 million pounds after costs, as it tries to benefit from the slump in property prices. The fund-raising, which comes at an 8.5 percent discount to Monday's close of 82 pence, marks a return to the UK property market for Ian Watson and Morgan Jones, the group's joint founders and chief executives. The duo, who have spent much of the past four years looking at investment opportunities in mainland Europe, said the time was right for a comeback in the UK market, citing the fall in asset prices and the opportunity for double-digit yields.

Prepared for Reuters by Durrants