PRESS DIGEST - Financial Times - July 9

Financial Times

SCOTLAND RULES OUT PRIVATE NHS MOVES

Nicola Sturgeon, the Scottish health secretary, said on Tuesday the Scottish National Party government planned to close "a legal loophole" that allows health boards to open contracts with commercial companies. Speaking at the British Medical Association's annual meeting, Sturgeon received a standing ovation after she declared herself "firmly opposed to the commercialisation of healthcare" and said she would legislate "to make sure there is no privatisation of GP services by the back door". The Scottish approach is different to that followed in England, where there is a presumption that if primary care trusts introduce new services or make significant changes to existing ones, the service should be put out to tender.

MORTGAGE LENDING SHOWS SLIGHT RISE

The latest data from the Council of Mortgage Lenders has revealed lending for house purchases rose by four percent in May to 52,700 and by two percent by value, compared with April, while new loans for remortgages dropped by 14 percent to 71,000. Affordability of mortgages appears to be improving marginally, as first-time buyers borrowed 3.3 times their income, compared with 3.39 times in July 2007. The overall loan volume was 44 percent down on a year earlier, while interest-only mortgages comprised 16 percent of all mortgages, the lowest level in nearly two years. It appears that borrowers whose fixed-rate mortgages are coming to an end are finding it harder to refinance their loan as lenders have tightened their lending criteria.

MINISTERS ATTACKED ON E-CRIME RESPONSE

The Lords science and technology committee said on Tuesday there was still a lot of work to be done with regard to the scale of lawlessness on the Internet, and they criticised an "unsatisfactory response" from the government. They acknowledged the government had begun to move in the right direction following embarrassing data losses by Revenue & Customs, the Driver and Vehicle Licensing Agency and the Ministry of Defence, but suggested the issue of Internet security was "more a matter of promises for the future than achievements in the present". The report was a follow-up to one in August, to which the government response had been that e-crimes were standard offences "facilitated by new technology, rather than new types of offence". Due to e-crimes requiring particular investigative skills, the committee said his response missed the point.

MONEYSUPERMARKET WARNS OF PROFITS BLOW AS FIRSTPLUS CLOSES

Shares in Moneysupermarket.com (MONY.L) fell by 32.2 percent on Tuesday after a trading update warned that profits would be hit by Barclays' (BARC.L) decision to close its FirstPlus secured loans business to new customers next month. FirstPlus provided more products to the price comparison Web site than any other partner, with gross profit margins of around 70 percent. Moneysupermarket chief executive Simon Nixon said revenues would be affected by up to 7 million pounds, though trading across the rest of the group would be in line with previous expectations.

PRIVATE EQUITY CIRCLES VULNERABLE SOUTHERN CROSS

Care home operator Southern Cross is attracting the interest of private equity groups, including Blackstone, Apax Partners and Cinven, after it lost three-quarters of its market value last week following a profit warning and financing troubles. Chief executive Bill Colvin acknowledged rumours of a private equity bid but said the company had not yet received any approaches. He said it was "just focused on trying to fix the short-term issue and get back to level ground".

POSSIBLE BID APPROACHES BOOST CONCATENO SHARES

Shares in Concateno COT.L, the UK's biggest drug and alcohol testing company, rose by 21 percent on Tuesday after revelations it had received several possible bid approaches. The company, backed by investment fund Marwyn Capital, has appointed UBS as an adviser and is exploring a number of options. Chief executive Fiona Begley has previously commented that the UK drug and alcohol testing market, worth around 50 million to 70 million pounds, is primarily driven by increasing regulation and fear of litigation.

SKYEPHARMA STRUGGLES TO REFINANCE

SkyePharma (SKP.L) has failed to renegotiate the terms of convertible bonds that mature next year. The drug-delivery specialist holds bonds with a face value of 89.6 million pounds, of which 69.6 million pounds could be called for repayment in May 2009, while a similar option exists on a further 20 million pounds of convertible bonds for June 2010. The company's finance director Peter Grant has said it would not be able to meet the put call next May due to an absence of refinancing. SkyePharma has said it is now holding discussions with a small number of bond and equity holders and is expected to deliver a further update next month.

DUNELM CONFIDENT DESPITE SETBACK

Homewares retailer Dunelm (DNLM.L) has revealed a 2.4 percent fall in like-for-like sales in the 13 weeks to June 28. However, the company said the slip was due to a tough prior year comparison, and that sales for the full-year had actually increased by 2.5 percent. Despite its poorer gross margins, Dunelm's chief executive Will Adderley said the company would be able to benefit from a tougher market as a result of a strong balance sheet and increasing market share.

MERGED SAGA AND AA BENEFITS FROM "GREY POUND" RESILIENCE

Acromas, the holiday and insurance specialist for the over-50s, has reported a 4.1 rise in turnover to 1.54 billion pounds for the year to January 31. Earnings for the privately held company, which formed from last year's merger of Saga and AA, rose by 8.4 percent to 484.5 million pounds before interest, tax, depreciation and amortisation. Chief executive Andrew Goodsell said the credit crunch had had little impact on the company and its clients, with bookings for cruise packages this year at a record high.

MORSE SIGNALS TRADING ALERT AS CHIEF GOES

Technology consultancy Morse (MOR.L) has said its final-quarter trading would be hit as clients reduced their discretionary spending. The company also revealed its chief executive Kevin Alcock would be leaving with immediate effect, having held the post for just over a year. Kevin Loosemoore, who became chairman of Morse in February, is replacing Alcock as executive chairman. Loosemore said that in light of "a deteriorating business climate", the company had reviewed its operations and decided on a restructuring strategy to simplify its individual business units.

Prepared for Reuters by Durrants.