PRESS DIGEST - Financial Times - Aug 6

Financial Times

O2 FEARS LOSS OF EXCLUSIVE DEAL TO SELL IPHONE IN UK

O2's OTOW.OB deal to act as the only UK stockist of Apple's iPhone could potentially come to end when a two-year break clause in the exclusivity deal takes effect in November. At least one of O2's rivals is thought to have approached Apple (AAPL.O) to discuss the sale of the smartphone that has until now acted as a fillip for the UK's largest mobile phone operator. Last month, Vodafone's (VOD.L) chief executive Vittorio Colao said UK business was being damaged by the company's inability to stock the particular handset. However, O2 is adamant it will be able to extend its arrangement with Apple, emulating AT&T's ongoing exclusivity deal in the United States that has run over the agreed two-year timeframe.

ITV TO SELL FRIENDS REUNITED FOR 25 MILLION POUNDS

Less than four years after purchasing Friends Reunited for 170 million pounds, ITV (ITV.L) is selling the website to Dundee-based publisher DC Thomson for just 25 million pounds. Although Friends Reunited was a forerunner of the online social networking scene, its subscription charges saw it sidelined in favour of the free access offered by contemporaries such as Facebook and MySpace. Friends Reunited cancelled customer charges last year, but the subsequent slump in the advertising market meant it suffered a four million pound drop in revenues to 18 million pounds between 2007 and 2008. DC Thomson is expected to combine its family history site, FindMyPast.com, with Friends' subsidiary Genes Reunited, creating the UK's largest genealogy business. ITV's first-half results are expected to show a 16 percent drop in TV advertising revenues on Thursday.

AXA WARNS PENSIONS INCOME WILL BE SLASHED

According to Axa (AXAF.PA), new EU transparency rules for insurers set to be rolled out in 2012 could see UK retirement incomes from annuities cut from current levels. Axa says insurance groups that provide annuities to the UK will most likely be forced to raise capital and slash pay-outs to pensioners, particularly affecting those in defined contribution schemes, when the "Solvency II" rules are implemented. The rules will mean assurers will have to be more aggressive in marking annuity liabilities to market, which will have the knock-on effect of increasing the unpredictability of their balance sheets. This week, L&G's (LGEN.L) chief executive, Tim Breedon, predicted the value of UK pensions savings could suffer cuts of 10-20 percent under the new guidelines.

FOCUS OFFERS LANDLORDS CVA DEAL

Focus DIY is hoping a company voluntary agreement will enable it to push through a deal that will mean its landlords accept less rent for the retailer's 38 closed stores, which cost the group 12 million pounds a year. In a bid to save 8.6 million pounds, the terms of the CVA, arranged by BDO Stoy Hayward, will see Focus rid itself of the leases on these stores, offering the landlords a share of a 3.7 million pound compensation fund in return. Should the CVA be approved, the retailer's lenders, GMAC and HBOS, are expected to extend the group's 50 million revolving credit facility by two years. If the CVA fails to achieve the 75 percent majority vote from creditors meeting on August 24, chief executive Bill Grimsey says the company will most likely fall into administration.

ELECTRIC VAN WINS U.S. GREEN LIGHT

Modec, a small Coventry start-up, has been awarded a 39 million dollar grant to sell eco-friendly, electric vans to the U.S. market in a tie-up with American commercial vehicle manufacturer Navistar. Although the venture will be based in the United States, resultant profits could support expansion of Modec's modest factory in the Midlands, with predictions that staff numbers could grow from the current level of 80 to several hundred if European output rises from 100 vehicles per year to several thousand. While Modec counts Tesco (TSCO.L) and UPS among its clients, the sale of electric delivery vehicles in the UK has been slow, with the suggestion that delivery drivers feel the top speed of 50mph is not fast enough.

HALIFAX HALVES FORECAST OF HOUSE PRICE FALLS

Halifax has revealed house prices rose 1.1 percent in July, leading the mortgage lender to halve its forecast for falls in property value in 2009 from 15 percent to seven percent. "Demand for homes has risen, albeit from a very low base, since the start of the year, driven by improvements in affordability and low interest rates," said Martin Ellis, Halifax housing economist. "Higher demand has combined with the low levels of property available for sale to boost sales activity from exceptionally low levels and support prices over the past few months." However, figures show a 0.8 percent fall in house prices during the first seven months of 2009, prompting Halifax to warn that the conditions are by no means ideal, particularly in light of rising unemployment and continued uncertainty in the mortgage market.

STATE-LED VENTURE CAPITAL LAGS RIVALS

New research from the British Venture Capital and Private Equity Association shows state-backed venture capital funds have been outperformed by purely commercial alternatives for several years. Those commercial VC funds started in 2002-2004 generated a weighted annual average return of 7.7 percent -- considerably more than the 1.7 percent recorded for all VC funds, including those led by the state. The release of the BVCA figures corresponds with the government's search to appoint a manager to run its VC fund-of-funds, made up of 150 million pounds of taxpayer money. An unnamed private-equity executive believes the figures may serve to persuade the government to allocate a greater percentage of the fund to the private sector.

MAX COMPLETES 232 MILLION POUND DEAL

Max Property (MAXP.L) has paid 232.1 million pounds for industrial properties from the Industrious Group, which were valued at 630 million pounds two years ago. This was its first completed deal since flotation on Aim in May. The acquisition was made from Ernst & Young, acting as receiver for the group, and the debt behind the portfolio, comprising 7.6 million square feet of properties, was securitised by Royal Bank of Scotland. Max's shares rose by four pence at the news, closing at 123 pence.

OLD MUTUAL NAMES ITS NEW CHAIRMAN

Patrick O'Sullivan, recently retired as vice-chairman of Zurich Financial Services, has been named as the new chairman of Old Mutual (OML.L), taking over from Chris Collins. First half pre-tax profits for the life assurance and savings group, which is in the process of restructuring to repair its balance sheet, fell 81 percent from 853 million pounds to 160 million pounds. Old Mutual has pulled out of several markets and will also be looking to sell other businesses, according to chief executive Julian Roberts. The group's shares rose 0.4 pence at the news to 95.4 pence.

HOUSE DEMAND EASES WIMPEY'S SUMMER DECLINE

Taylor Wimpey (TW.L) chief executive Peter Redfern has said the traditional summer decline in housebuilding has been eased by underlying demand in the housing market, with the sales rates in the summer months marking only a 10 percent fall compared to the usual 20 percent. However, Redfern said a return to high-volume building was not going to happen in the short-term. The company's net assets fell by 35 percent from 2.2 billion pounds last year to 1.4 billion pounds on the news of a 527 million pound write-off of its land holdings, a worse figure than expected.

SHIRE UPBEAT ON TREATMENT FOR GENERIC MALADY

Shire (SHP.L) has experienced a loss in revenues after a competitor, Teva (TEVA.TA), began manufacturing a generic alternative to its attention deficit and hyperactivity disorder treatment drug Adderall XR. Sales of the drug fell by 77 percent, knocking 229 million dollars from the group's top line, although Shire chief executive Angus Russell indicated that strong growth in new products should compensate for this loss. Among these products is Vyvanse, a new attention deficit and hyperactivity disorder drug, which is marketed by GlaxoSmithKline (GSK.L) in the United States and has experienced a 75 percent rise in sales to 114 million dollars in the quarter, making up for a decline in the group's turnover for the quarter.

CARPETRIGHT RETURNS TO SALES GROWTH

Carpetright (CATVU.L) finance director Neil Page has said the flooring retail giant has returned to growth in the first quarter thanks to an upswing in the housing market. The chain saw like-for-like sales rise by 1.4 percent in its core UK and Irish business in the 13 weeks to August 1, benefiting from its major competitor Allied Carpets going into administration, despite pre-tax profit for the year to May having fallen by 72 percent to 17.7 million pounds and grim forecasts for the next 12 months. Shares in the chain rose by 82.5 pence, or 12 percent, to close at 746.5 pence.

Prepared for Reuters by Durrants