PRESS DIGEST - British business - March 25

The Times

CENTRICA MAY DIG DEEPER IN BID BATTLE

Centrica (CNA.L) was considering increasing its offer for North Sea oil and gas explorer Venture ProductionVPC.L on Tuesday. The chief executive of Venture, Mike Wagstaff, and chairman John Morgan met Sam Laidlaw, Centrica's chief executive, and Roger Carr, its chairman, on Monday to discuss a possible "friendly" 1.1 billion pound ($1.61 billion) takeover. Venture is the tenth-biggest holder of gas reserves in the UK sector of the North Sea, and the meeting was understood to be cordial but Venture rebuffed the approach.

ASHLEY READY TO POUNCE IF JJB FALTERS AFTER GYM DEAL

On Tuesday night, JJB Sports, the embattled sports retailer, faced a cash squeeze even as it was set to secure the last-ditch sale of its gym division to its founder Dave Whelan. The parties remained in negotiations on Tuesday night, but Whelan revealed he was confident that the move would be concluded for roughly 75 million pounds. However, JJB may have to wait up to six months for the cash. It is understood that Sports Direct(SPD.L) and Hilco are waiting to pounce if the retailer's lack of cash tips it into administration.

BERTELSMANN SWITCHES ON THE CHARM IN ATTEMPT TO WOO ITV

Five is "not sustainable" as a standalone broadcaster and needs to consider a tie-up with ITV(ITV.L) to ensure its survival, its owner said on Tuesday. German media group Bertelsmann (BTGGg.F) indicated that a deal with ITV was a viable alternative to a merger with Channel 4, but added there was no cash on the table for a takeover bid. Thomas Rabe, chief financial officer, said: "A combination of Five and ITV, if we can agree the terms, would make sense."

Daily Telegraph

MORTGAGE LENDING 'UNMANAGEABLE'

The annual world retail banking report from Cap Gemini(CAPP.PA), Unicredit(CRDI.MI) and EFMA, says mortgage lending in Britain has reached "unmanageable" levels and must shrink as a proportion of national economic output if banks are to make home loans profitable again. According to the report, mortgage lending has "exceeded reasonable limits" with the volume of debt running at 86 percent of GDP. It recommended 60 percent as a sustainable upper level.

'NO MORE PLANS' FOR POST OFFICE CLOSURES

Lord Mandelson, the Business Secretary, revealed on Tuesday that the Government will not support any further post office closure programmes. Lord Mandelson said: "The closures of the last year were difficult but they were necessary. And I can say this afternoon that the Government has no intention of supporting any further programme of post office closures." More than 140 Labour MPs have expressed their opposition to the part privatisation of Royal Mail. However, the Business Secretary defended the scheme, saying that without proposed changes it would suffer "inexorable decline and possibly worse".

ENERGY COMPANIES 'PROFIT FROM DIRECT DEBITS'

Which? Money accused energy companies on Tuesday of using customers' money as interest-free loans by setting monthly direct debit payments too high. Martyn Hocking, editor, said: "It seems incredible that energy companies can take hundreds of pounds more than they need to from customers, and profit from the interest that this money will earn at our expense." Research from Which? Money found that a quarter of people in credit were owed more than 100 pounds by their energy supplier, with eight per cent owed more than 200 pounds.

The Independent

DRAGON ADMITS EX-STAFF TOOK MONEY FROM BIDDING CONTRACTORS

Dragon Oil (DGO.I), the development and production company, admitted on Tuesday that some former employees in its marketing and contracts departments colluded to line their pockets from contractor deals. The group began an investigation in February after its internal audit department found "irregularities" committed by former senior managers. Dragon Oil said: "Although internal controls were in place, the individuals involved managed to override the various controls in the procurement process through collusion."

CARLYLE RETURNS TO THE TABLE WITH OFFER FOR TIG

Carlyle, the private equity giant, has launched a bid for Innovation Group (TIG.L), after it was revealed by the Independent that it was circling the firm, along with other buyout groups, in December. TIG, which provides outsourcing to insurance firms, announced it was in discussions after receiving an expression of interest from Carlyle's European technology business, and its shares soared by more than 70 per cent on the news.

'MAIL' OVERHAULS DISTRIBUTORS

Newspaper and magazine wholesaler Smith News (SNWS.L) has won new five-year distribution contracts with Associated Newspapers, and Comag, the magazine distributor. John Menzies (MNZS.L) was also celebrating a contract win from Associated, which publishes the Daily Mail(DMGOa.L), on Tuesday. The companies won the contracts from smaller rival Dawson (DWN.L), whose shares tumbled on the news. Dawson revealed the deals were worth a combined 139 million pounds in sales last year.

The Guardian

HURRICANES AND DOWNTURN HALVE LLOYD'S PROFITS

Despite a conservative investment policy that served to protect Lloyd's of London from the worst of the global economic downturn, a bad year for hurricanes slashed profits at the group in 2008. On Tuesday, Lloyd's reported pre-tax profits for last year of 1.9 billion pounds, down by half from 2007. Back then, calmer seas and lighter winds off the U.S. eastern seaboard allowed the firm to generate 3.85 billion pounds. Chairman Lord Levene said: "The market has inevitably been impacted by significant claims from natural catastrophes, lower insurance rates and a reduction in investment income but this has been partially offset by currency movements and prior year surpluses."

QUARTERLY RENT DEMAND ADDS TO RETAIL MISERY

On Wednesday, more retailers will be feeling the strain as rent demands for commercial property fall due. According to accountants, the quarterly rent bill will push many more businesses into insolvency as it comes on top of deteriorating trading conditions. Such bankruptcies would then have inevitable repercussions for landlords, who need the income to meet their own debt repayment demands. The British Retail Consortium believes Wednesday's demands would mean "the toughest quarterly rent payments day for at least 18 years . hard pressed retailers face rent bills totalling hundreds of millions of pounds".

STATE INTERVENTION VITAL FOR BRITAIN TO MEET GREEN TARGET

According to Lord Browne, the former head of BP, Britain must revert to greater state control of energy markets to hit ambitious targets on climate change and renewable energy. In a speech on Wednesday night, Browne is expected to tell Cardiff University that he remains "convinced that the market is the most effective delivery unit available to society. But the market will need a new strategic direction and a new framework of rules, laid down by government." Britain must generate 15 per cent of its energy from renewable sources by 2020 under EU efforts to combat global warming.

The Times

Tempus

Ferrexpo(FXPO.L) [Best avoided]

IQE [Hold on]

QinetiQ [Buy]

Daily Telegraph

QUESTOR

Ferrexpo(FXPO.L) [Hold]

BG Group(BG.L) [Buy]

The Independent

The Independent Investment Column

RM [Buy]

Ferrexpo(FXPO.L) [Avoid]

Proximagen Neuroscience [Avoid]

Prepared for Reuters by Durrants ($1=.6822 Pound)