PRESS DIGEST – Financial Times – May 29

Financial Times

INVESTORS SCRAMBLE TO BUY GOLD COINS TO ESCAPE CAPITAL GAINS
TAX

British investors are buying up sovereigns and Britannia
gold coins in an attempt to exploit a tax loophole to avoid
increases in capital gains tax. Mark O’Byrne of London-based
gold coins and small bars dealer Gold Core said the firm had
been selling sovereigns and Britannias “in the thousands”. The
government plans to raise CGT for items such as second homes and
shares to rates “similar or close to those applied to income”,
an increase that could come as early as June 22. However,
sovereigns minted in or after 1837 and Britannia gold coins are
exempt from CGT.

NEW PLAYERS BATTLE TO GET GOING

New entrants to the UK banking market continue to face
difficulties. Three months after obtaining regulatory approval,
Metro Bank (MBFS.PK: ) continues to battle with system checks and
product preparations. Virgin Money awaits further buying
opportunities after failing to acquire RBS’s branch network.
Tesco (TSCO.L: ) is taking its time before launching products.
Simon Maughan at MF Global Securities said new banks can expect,
at most, to take five to six percent of market share between
them within five years, with Tesco expected to take half of
that. The other entrants would be left to battle it out with the
giants of the market, including Lloyds (LLOY.L: ), Barclays
(BARC.L: ) and Santander (SAN.MC: ).

DEARTH OF DEPOSITS THREATENS LENDING

Data from the British Bankers’ Association shows that savers
stayed away from banks in April, with deposits rising only 0.4
billion pounds against 5.4 billion pounds in March. However,
regular monthly overpayments on mortgages rose by around 30
percent on normal levels, suggesting homeowners have been opting
to repay mortgage loans rather than save. Ian Gordon, an analyst
at Exane BNP, said that the fall in deposits could restrict
banks’ willingness to lend to households and businesses. The
BBA’s statistics director, David Dooks, said that April normally
sees large increases in deposits as savers rush to use tax
breaks.

TELEVISION REVOLUTION FACES DELAY UNTIL 2011

Project Canvas, the joint venture which plans to connect the
Internet to television sets, is not likely to launch until the
spring of 2011 after its partners conceded that regulatory
scrutiny from the BBC Trust and the Office of Fair Trading had
taken longer than expected. The BBC Trust’s ruling on the
project is expected at the end of June. Broadcasters BSkyB
(BSY.L: ) and Virgin Media [VMEDL.UL] have both criticised Project
Canvas, citing concerns that it would restrict competition in
the new market for internet-connected televisions. Partners in
the venture include ITV (ITV.L: ), BT (BT.L: ) and TalkTalk
(TALK.L: ).

888’s SHARES PENALISED AS WORLD CUP FEVER STRIKES

888 (888.L: ), the online gambling operator, warned its
profits would be hit by the World Cup as customers turn their
attention to football. 888 said it had already lost five million
dollars in revenue this year due to currency fluctuations,
including 1.9 million dollars in May alone. Its shares, which
have fallen 46 percent since the start of the year, dropped
another 14 pence to 53.25 pence. The group said the average
number of players per day was down 18 percent between January
and May. Chief executive Gigi Levy said 888’s poker problems
were industry-wide but the group had already implemented
cost-cutting measures.

AAC ACQUIRES UK METHADONE MAKER FOR 100 MILLION POUNDS

Martindale Pharmaceuticals, the UK’s leading methadone
manufacturer, has been acquired by AAC Capital, the former
private equity division of Dutch bank ABN Amro, for
approximately 100 million pounds. AAC Capital had competed
against rival private equity groups Lloyds Development Capital
and CBPE to buy the firm. However, some buy-out groups declined
to bid for Martindale because of concerns over public spending
cuts and reputational risk. Martindale has been sold by
healthcare group Cardinal Health (CAH.N: ), which is selling off
assets in a bid to focus on its medical products distribution
and services business.

ENGLAND KIT PIONEER ADMIRAL SOLD

International Brand Licensing (NFIN.L: ) has sold the Admiral
sports brand to an undisclosed buyer in a 530,000 pound deal
covering trademarks in the UK and Ireland as well as some
territories in North Africa and the Middle East. The brand,
famous for pioneering the production of bespoke sports strips,
has previously held kit deals with both Manchester United and
the England team, and the sale is expected to be completed by
January. Talks are still ongoing to sell the Chinese trademark
as well as the rights in other European countries.

ELECTROCOMPONENTS EXPECTS RISE IN SALES AFTER VOLATILE YEAR

Electrocomponents (ECM.L: ) reported a 21 percent fall in
pre-tax profit to 76 million pounds for the year to March 31,
citing “extremely volatile” trading conditions. Sales for the
group, which supplies electrical components to businesses, saw
strong improvement at the end of its financial year and the
company benefited from the continued expansion of its product
range and improvement of its internet offering. Following a poor
first half of the year, brought about by the manufacturing
recession, the Oxford-based firm is currently experiencing
double digit percentage sales recoveries in all of its key
territories and expects further strong sales growth.

BOFA EYES SALE OF FOXTONS’ LOANS AS CREDIT SECTOR REVIVES

Bank of America (BAC.N: ) is holding discussions with
investors about the sale of loans it made to Foxtons, the estate
agents. The move would take advantage of recoveries in both the
credit markets and the London property market and highlights
Foxtons’ move back into profit following the housing crash.
Foxtons borrowed 260 million pounds from BofA and Japanese
investment bank Mizuho as part of a 2007 buy out by private
equity group BC Partners. In 2009 the two banks agreed a deal to
take control as part of a debt restructuring that reduced
Foxtons’ debt to 125 million pounds of so-called mezzanine debt
and it is BofA’s half of those loans that has been put up for
sale. BofA’s equity stake in the company is not thought to be up
for sale.

WEEKEND BRIEFING: BURBERRY

Burberry (BRBY.L: ) is to increase expenditure on new stores
by 50 percent as it attempts to expand its reach. The luxury
fashion brand, which recently posted a pre-tax profit of 166
million pounds for the year to March 31, aims to open 20-30 new
outlets in the next year, with the focus on emerging markets,
particularly those in the Americas and Asia-Pacific. The group
opened 21 new stores in the 12 months to the end of March –
eight of them in Asia, where it experienced an 18 percent
revenue growth.

Investing Research

Prepared for Reuters by Durrants

PRESS DIGEST – Financial Times – May 29