Scottish Business Briefing – February 23


Standard Life seeks global domination

Standard Life aims to become one of the three largest players in the lucrative offshore investment market within three years with the expectation of generating 800 million worth of business (The Scotsman). Offshore investments sold back into the UK amounted to 3 billion in 2004. The life-insurance giant, which opened its Dublin-based international operation last month, has set its sights on taking a 20% share of the 4 billion UK offshore sector by the end of 2008, amounting to 5% of the Edinburgh-based firm's overall sales. Standard is targeting the market after a strategic review that saw it perform a U-turn on its mutual status and focus on securing more profitable single-premium business, such as self-invested personal pensions and investment bonds. Standard Life International chief executive Murray Drummond: "Within the next three years we’d like to be getting into the top three. It’s an ambitious target but it’s by no means out of the question."

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Interest rates cut hope diminishes

Only one member of the Bank of England's Monetary Policy Committee opposed a decision to keep interest rates as they are (The Times). For a third month in a row Steve Nickell, an external committee member, backed lower rates. The record of the MPC's debate a fortnight ago poured more cold water on the chances of a rate cut and revealed that the majority of the committee gave broad support to the Bank of England's latest quarterly forecasts. These expect growth to pick up sharply to an annual pace of 3% and above the long-term trend rate. Inflation is expected to remain close to the committee's 2% target.

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Rhind "threatened to ruin BowLeven"

Philip Rhind, the former BowLeven chief executive, is alleged to have threatened to use damaging information to ruin his former employers if he was dismissed and is alleged to have been sacked and legally gagged for claiming that he would use this "red button" information against the AIM-listed company. BowLeven is reported to be to be mystified by the claims (The Scotsman). Rhind partly won an Edinburgh Court of Session hearing to have the gagging order lifted but last night refused to reveal his side of the story, claiming a statement would be made later. The oil exploration firm sacked Rhind with immediate effect last Thursday, citing "gross misconduct" (The Herald). In court proceedings it was revealed that one director had said Rhind repeatedly stated he would "f***" the company if he was removed as chief executive.

Merger frenzy lifts ScottishPower shares further

ScottishPower shares surged by a further 3% last night as merger frenzy across the Europe-wide utilities sector reached fever pitch (The Scotsman). Industry analysts are said to be reclassifying all the continent's major players as predators or prey. ScottishPower was classed as prey with ING claiming the firm remains a bid target. Shares closed up 15.5p to 591.5p. Speculation remains that ScottishPower could be subject to takeover bids from Scottish & Southern Energy, nPower-owned RWE and Russian state giant Gazprom. ScottishPower rejected a takeover bid in November from German utilities firm E.ON, which has now launched a takeover for Spanish firm Endesa. This leaves the two Scottish companies as odds-on favourites to combine in a defensive merger that would protect them from foreign ownership (The Herald). A merger would create Britain's biggest power company with a market worth almost twice that of Centrica, which owns British Gas.

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Manufacturing sector showing signs of recovery

Factories across the UK are reporting their highest order-book levels in 11 months hinting at fledgling signs of recovery in the manufacturing sector (The Scotsman). In the CBI's latest monthly trends survey the balance of factories reporting order books above normal against those saying they are worse has improved to minus 18 from minus 28 in January. The February balance was the best since last March. Ian McCafferty, chief economic adviser at CBI said: "The decline in output may finally be coming to an end."

Scotland may lose rights to tartan army

A Borders weaving firm fears it could lose a contract to supply the British army with tartan (BBC Scotland Online). The Ministry of Defence will decide the contract for the new Royal Regiment of Scotland by competitive tendering in order to look for best value. The contract is open to any company anywhere in the world sparking fears from the Robert Noble group of Peebles that Scottish soldiers could end up wearing tartan made outside of Scotland. Roland Brett, managing director of Robert Noble, said: "We have a Scottish industry and we’re not supporting it." The MoD contract is for a total of 5,000 kilts.

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Edinburgh software developer Vebnet back in black

Edinburgh-based Vebnet has doubled its sales and moved back into the black with pre-tax profits of 100,000 in the six months to December against a loss of 300,000 over the same period a year earlier (The Scotsman). The firm's core product is an employee benefits system called Fix&Flex, which is undergoing "massive growth" and added 18 new clients during the period, bringing the total to 67. The listed software developer says a further 21 new customers are due on board, including a global investment bank with more than 12,000 employees. More than 134,000 employees, an increase of 44% in a year, now access the benefits system acccording to Vebnet.

Nanotechnology set to grow

A hi-tech Scottish manufacturing firm has revealed it hopes to make it big by thinking small (Aberdeen Press & Journal). Glenrothes-based nanotechnology specialist Semefab believes a new 15 million project will help it become an international centre of excellence for the design and development of the tiny technology. The company hopes the cash boost for developing a variety of micro-machines will lead to major advances in medicine, security and defence and has teamed up with academics throughout Scotland on the project, which is receiving Scottish Enterprise and DTI funding. Manufacturers which want to branch out into the field of nanotechnology will be able to take advantage of Semefab's knowledge and facilities to create new prototypes and products. Scottish Enterprise expects the project to contribute 53 million to the Scottish economy.

MED moves manufacturing offshore as costs rise

An Edinburgh technology firm is moving its volume manufacturing division offshore to cope with growing manufacturing costs in the UK (The Scotsman). Edinburgh-based Microemissive Displays (MED) claims the decision has no implications for jobs in the city and will keep its research and development divisions in the capital. The AIM-listed firm, which designs and manufactures low-power light-emitting power displays, is hoping to sub-contract its manufacturing capability in the Far East by the end of this year. The firm has also announced its full-year results which showed an increased pre-tax loss of 5.18 million, up from 4.46 million. Chief executive Bill Miller expects the firm to become "cash generative and profitable" by 2008 and claims the losses have increased as a result of increased investment in product development and a move towards volume production (The Herald). Unique binocular headset goggles, which can be plugged into games machines or hand-held multi-media players, are among the products MED makes. These have been tipped by Samsung and Orange to be the must-have device of the future.

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Stagecoach director sells shares

Martin Griffiths, Stagecoach's finance director, has exercised share options and sold 480,000 shares at 114p each, netting him 367,000 after deducting his exercise price (The Herald). Griffiths still holds 15,830 shares, according to a regulatory statement from the London Stock Exchange and also has options over a further 772,405 shares.

High fuel costs take toll on easyJet

No frills airline easyJet has forecast a doubling of its first-half pre-tax loss as higher fuel prices take their toll (Financial Times). Traditionally the group makes all of its profits in the second half of its financial year from April to September. The airline revealed that it was still planning to achieve growth for the full year but in the first six months from October to March there will be an increase in losses from 22 million to 45 million.

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Investors interested in Stranraer development

A blue-print for the redevelopment of Stranraer's waterfront is attracting significant interest from private investors (BBC Scotland Online). The strategy was recently published jointly by Dumfries and Galloway's enterprise company and council who are now seeking tenders to construct a breakwater to pave the way for a new marina. The project includes leisure, housing and retail developments and has already sparked a number of external inquiries ahead of formal marketing. Dumfries and Galloway Council;s regeneration manager Tony Fitzpatrick said: "The word is out that things are happening on the west coast and in Stranraer. That is already prompting some major developers to make informal contacts."

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