PRESS DIGEST - British business - Feb 22

The Times

WIMPEY TO FIGHT FOR FIRST-TIME BUYERS

Housebuilder George Wimpey WMPY.L is to target the UK's first-time buyer market with a range of affordable homes. The move puts Wimpey in direct competition with rivals Barratt Developments (BDEV.L) and Redrow (RDW.L) and will see the firm rollout around 400 compact flats, all priced below the stamp duty threshold. The news came as the group delivered 2006 figures which far exceeded forecasts. Operating profit from the UK business rose 14 percent to 317.6 million pounds while group pre-tax profit fell 15 percent due to a one-off 60.7 million pound write-down of US land inventories.

AIRWAVE FACES FINE FOR MISSING DEADLINE

O2 (OTOW.OB) airwave, the business that provides the UK emergency services' exclusive digital radio network, is facing the prospect of a multi-million pound damages claim after failing to meet a deadline on a key government contract. The Firelink contract was intended to provide the fire and rescue service with a single digital radio system for voice and data transmission. The Department of Communities and Local Government are considering their options with regard to imposing the fine but have agreed to extend O2's deadline. Telefonica (TEF.MC), O2's owner, is currently seeking government approval to sell airwave; the Government is unlikely to veto the plans, despite the sensitive nature of the business.

HERMES REVIEW COULD LEAD TO INDEX-TRACKING TIE-UP

Hermes, the country's third largest pension fund manager and manager of the BT (BT.L) pension scheme, is to conduct a strategic review of its 30 billion pound index-tracking business. The review could result in Hermes making a major investment into the expansion of the business or lead to a tie-up with another large fund. Hermes is also said to be considering the possibility of outsourcing some of the businesses activities. Tracker fund providers are coming under increasing pressure to cut fees and major providers see increasing the size of their portfolios as one way to be able to do this.

The Daily Telegraph

BACK OFFICE FIRM SET FOR 500 MILLION POUND LONDON FLOAT

Xchanging has announced plans to float on the London Stock Exchange (LSE.L), with an expected price tag of more than 500 million pounds. The company was set up by David Andrews in 1999, and he could realise a proportion of the 100 million pounds paper fortune from the flotation. Xchanging offers outsourcing services to financial institutions, and employs 4000 people in 14 countries to this end. Some of its clients include Citigroup, Deutsche Bank and various Lloyd's of London insurance groups, and processes around 1.6 billion pounds worth of transactions a day.

PYM BOWS OUT AS BOSS OF ALLIANCE & LEICESTER ON HIGH NOTE

Alliance & Leicester AL.L has announced an increase of four percent in its profits, which rose to 569 million pounds over the last year. It also revealed that bad debts at the bank had increased by 40 percent to 105 million pounds, but stated its belief that the figure had peaked and tighter regulation would prevent it growing. In addition, chief executive Richard Pym announced that he would be resigning. He said, "I planned to retire before I'm 60. When you get to my age you do want to do other things as well. I feel I've done my time."

BRAMBLES BOSS READY TO RETIRE

Brambles BI.L has revealed that its first-half net profits were 983 million dollars. However, this figure was inflated by the sale of its UK Cleanaway operation for 771 million dollars, and that its sales figures actually slipped 30 percent to 2.1 billion dollars. Chief executive David Turner took the opportunity of the company's results to announce his resignation, and it is thought that the pallets and document management company is looking for an external replacement as well as internal candidates.

The Independent

N EXPRESS TARGETS EUROPE

Richard Bowker, chief executive of National Express (NEX.L), is expected to outline plans to expand further in Europe when he announces the bus and rail operator's annual results next week. The move follows the success of the company's Spanish operator Alsa, which contributed 18 million pounds in the first half of the year. Sources claim that unlike rival FirstGroup (FGP.L), National Express is more interested in deals in Europe than in the US, where it already owns the yellow school bus company Durham.

EMI SEES REGULATORY RISK TO WARNER TIE-UP

EMI EMI.L still holds the view that a merger with Warner Music would fall foul of regulators despite having gained the backing of independent labels body Impala. In a formal letter, EMI has told Warner Music that it would consider a proposal depending on price and the likelihood of a successful merger. The European Commission is evaluating the initial approval it gave to the Sony/BMG merger following a complaint from Impala that the move had harmed competition. Regulatory risk will continue to worry EMI until the Sony/BMG ruling is made public next week.

O2 STOPS SELLING THROUGH PHONES4U

Mobile operator O2 (OTOW.OB) will stop selling contracts at Phones4U stores having signed a deal with Carphone Warehouse (CPW.L). The move comes after Vodafone (VOD.L) decided to offer contracts exclusively through Phones4U, highlighting the trend that sees operators forcing better deals out of third-party retailers in order to cut costs.

The Guardian

SUMMIT ON CORPORATE GOVERNANCE FOR LSE'S FOREIGN FIRMS

Fund manager F&C is holding a summit with the Association of British Insurers and the Corporation of London to discuss the issues surrounding foreign firms listing on the London Stock Exchange (LSE.L) as it seeks the best means of establishing corporate governance standards. F&C fears that an "inconsistent system" could arise from the boom in foreign listings. Karina Litvack, head of governance and sustainable investment at F&C hopes to see that Russian and other foreign firms comply with the combined code on corporate governance whenever their local rules allow.

ANGLO AMERICAN CHIEF BOWS OUT WITH PROFIT LEAP, STOCK FALL

Tony Trahar has presented his last set of results for Anglo American (AAL.L) after 30 years at the mining firm in which he held the role of chief executive for over six years. However, the market reacted to the announcement with a 2.5 percent drop in the company's share price to 25.36 pounds, after a 63 percent leap in full year profit to 4.7 billion pounds. The firm's announcement of a three billion dollar share buyback programme also failed to impress the market, as analysts expressed disappointment at its size in light of BHP Billiton's ten billion dollar programme.

LINKTONE OFFERS 67 PENCE IF MONSTERMOB REJECTS ZED

Linktone, the Chinese mobile phone content company, has stated it is ready to place a formal bid for ringtone group Monstermob if shareholders in UK firm agree to reject a competing offer from Spain's LaNetro Zed at an extraordinary general meeting on Friday. Linktone said it will offer 67 pence a share and meet the firm's financial commitments from Friday until the closure of the deal. In late 2006, Monstermob agreed a refinancing that included the issue of 68 million new shares at 50 pence each, giving LaNetro Zed a 53 percent stake.

Prepared for Reuters by Durrants.