Scottish Business Briefing – Wednesday 20 August 2008

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Every morning we bring you a comprehensive round-up of all news affecting business in Scotland today.

BANKING & INSURANCE
HBoS not flavour of the month for investment fund
An interim management statement from the Personal Assets Trust, run by the bearish Ian Rushbrook, has revealed the fund's attitude to the rights issues from HBoS and Royal Bank of Scotland. The statement from the fund revealed that while it took up its rights in the £12 billion cash call from RBS it fought shy of the deal offered by HBoS. The statement read: "On June 6, 2008, we took up the rights in RBS Group, the shares of which we believed to be temporarily oversold. On July 14, 2008, we sold our HBOS rights because for much of the rights issue period they were out of the money and we believed the terms were unattractive." (The Herald)

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ECONOMY
UK hobbling to recession
The latest poll from Reuters has revealed that economists now believe UK recession is almost as likely as not. The median probability attached to UK recession in the next 12 months is now at 45 per cent according to the new poll, a jump from 40 per cent in the previous survey of economists. Median forecasts from economists are now predicting a 0.1 per cent contraction in the three months to September 30, paving the way for the UK economy to enter technical recession when it suffers negative growth for two quarters in succession. (The Herald)

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ENERGY & UTILITIES
Swedish bid rumours push SSE
Speculation that Swedish utility Vattenfall is plotting a bid for Scottish & Southern Energy pushed shares in the power firm by as much as 3.6 per cent. SSE have refused to comment on the claims that a bid may be in the offing and the rumours were dismissed in some trading quarters. Vattenfall has already been mentioned as a potential bidder for the Perth company which has been continually linked with takeover bids from European utility firms. (The Herald)

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INDUSTRY
Aggreko snaps up Canadian concern
Glasgow's Aggreko have paid nearly £20 million for the leading power supply firm working on the Canadian oil sands project. Power Plus Rentals is based in Edmonton and is currently supplying generators for projects in the Athabasca oilsands in Alberta and Saskatchewan. Aggreko had already opened a small depot in Edmonton but the move for Power Plus is the portable power firm's first overt move to snap up business associated with the oil project. Chief executive Rupert Soames said: "We suspected there would be a market there so we opened a small depot in Edmonton, and we did some work, but it became obvious that Power Plus were the market leaders, so we approached them and have been in exclusive negotiations for some time. It's a very successful business and a highly profitable one, and it is absolutely the case that the price we've paid reflects the fact that the business is profitable and fast growing, but we think it is a fair price." He added: "A significant portion of the world's undiscovered oil and gas and minerals lie in very cold places, so having the expertise and know how to operate in very cold places and conditions, we think, will be very important strategically, going ahead." (The Scotsman)

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MEDIA & LEISURE
Stirling Uni handed swimming excellence contract
The University of Stirling has been awarded a contract to become one of five centres for intensive swimming training prior to the London Olympics in 2012. The university is already home to the National Swimming Academy but has now been handed an initial four year contract to join Bath, Stockport, Loughborough and Swansea as a centre of excellence. Director of sports development at Stirling University, Peter Bilsborough commented: "This intensive training centre will help the university and its partners build on all that has been achieved providing the finest facilities and services to the country's most talented swimmers." (BBC Scotland Online)

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PERSONAL FINANCE
Investors look to Far East
Fund management firm Martin Currie have predicted investors will increasingly look to the Far East as they focus on finding safe financial havens for their cash. The growing economic uncertainty in the UK and US and the collapse of consumer spending is steadily pushing investors out, according to the respected investment house's chief investment officer and head of global equities James Fairweather. Speaking at an investment briefing in Edinburgh, Fairweather said that cheap debt driven by low interest rates was now 'over for a generation' and that the difficulty of finding credit will continue to slow the economy. He added: "When lending standards go up, corporate defaults rise. And that has only just started. This is the sharpest-ever rise in lending standards we have ever seen and it has continued to sky-rocket." He also worried that the slowdown in consumer spending would begin to have a serious effect. He commented: "The consumer is in a really bad place. Consumers spent their way out of the downturn at the beginning of this decade. Not now. The consumes is completely out of the picture." (The Scotsman)

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RETAIL
Scottish retailers handed 'reality check'
The Scottish Retail Consortium say Scottish shopkeepers were given a 'reality check' in July when like-for-like sales only grew by 0.5 per cent. Sales in Scotland continue to remain stronger than in the rest of the UK but sales last month were considerably weaker than those in the previous two months. The SRC has claimed that when annual inflation is stripped from the most recent figures, the sales for July represent a decline in real terms. Director of the Scottish Retail Consortium, Fiona Moriarty commented: "Sales of non-food goods fell faster than they have since 2000 as Scottish consumer confidence, previously more resilient, slipped closer to levels elsewhere in the UK. After significantly outperforming other parts of the UK all year, this is a reality check for Scottish customers and retailers. These results show marked belt-tightening now extending to Scotland as Scottish shoppers begin to rein in their spending. Despite retailers offering some of the strongest discounts and promotions in recent history, customers are confining spending to essentials with clothing, homewares and DIY retailers the worst hit." (The Scotsman)

Co-op group to make merger bid
Lothian Borders and Angus Co-operative Society is to table merger plans to members which would see it join the UK-wide Co-operative Group. The Scottish group which currently operates 66 food, pharmacy, petrol, funeral and non-food outlets currently employs some 1200 people and enjoys a turnover of £123 million. Chief executive Bob Jamieson explained the move: "We are approaching this proposed merger from a position of considerable strength. We have a robust trading position and a strong balance sheet, but we believe the best way to maintain co-operative trading in the areas in which we operate is to seek this merger now. We also believe the long-term future of the co-operative movement is best served by greater consolidation, with the ultimate objective of creating one highly successful society covering the whole of the UK." Co-operative Group chief executive Peter Marks welcomed the merger proposal: "LBACS is a very strong, well-run society and I am delighted its board and management share our vision of creating a strong Co-operative Group able to compete effectively in tough market conditions. We also believe the proposed merger will be of enormous benefit to the communities which LBACS has served with distinction over many years." (BBC Scotland Online)

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