LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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The Qatar Investment Authority, the Qatari sovereign wealth fund, confirmed that it has sold about a third of its stake in the London Stock Exchange Group PLC, leaving it with a stake of about 10.3% in the exchange operator. In a statement, the Qatari fund said the deal was part of its "routine" portfolio management, and it doesn't expect to sell any more LSE shares in the immediate future. The share sale was done through a block sale. It didn't identify the banks conducting the sale or say exactly how many shares were sold, but the fund held a 15.08% stake before the block sale. "Qatar Holding continues to believe in the management and long term prospects of LSE, and does not expect to dispose of any further shares in LSE in the immediate future," it said in a short statement. The sale by Qatar Investment Authority comes ahead of the LSE's planned USD1.60 billion rights issue in September, money it will use to help fund its USD2.70 billion acquisition of Russell Investments, the operator of benchmark equity indices widely used by US fund managers.
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Marks & Spencer Group PLC Chief Financial Officer Alan Stewart will move to become CFO of Tesco PLC, the two companies confirmed.
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Food concessions operator SSP Group PLC and life sciences company Abzena PLC both got off to a good start after their initial public offerings on the London main and AIM markets, respectively, while building products and mouldings manufacturer Epwin Group PLC added itself to the AIM IPO pipeline. SSP Group, priced its IPO on the main market at 210 pence a share, giving it an initial market capitalisation of GBP997 million. It said the IPO raised about GBP482 million in total, which will rise to about GBP554 million if the over-allotment option is taken up in full. Abzena, meanwhile, raised GBP20 million before expenses in its AIM IPO. Its IPO price of 80 pence a share gave it an initial market capitalisation of GBP77.9 million. Epwin Group added itself to the AIM IPO pipeline, saying it wants to raise GBP94 million in total in the placing. It will raise GBP10 million for the company, which will be used as part of a debt restructuring along with new debt facilities of GBP25 million.
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Oil services company Petrofac Ltd said it has won a USD700 million, three-year contract from Kuwait Oil Company to build one of the three new gathering centres at a site about 70 kilometres north of Kuwait City. In a statement, Petrofac said the three gathering centres are being built to support the Kuwaiti company's plans to increase and maintain oil production over the next five years. Each of the three gathering centres will be capable of producing around 100,000 barrels of oil per day, together with associated water and gas, it said.
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British luxury fashion retailer Burberry Group PLC posted a good increase in retail revenue in the first quarter of its financial year, but said the strength of sterling continues to take a chunk out of its profits. Retail sales increased to GBP370 million in the three months to June 30, up from GBP339 million in the same period the prior year. On an underlying basis, sales grew 17%, but on a reported basis only 9%, hit by the strength of sterling. Comparable sales growth in the period was 12%. "If exchange rates remain at current levels, the full impact on reported retail/wholesale profit in financial year 2015 will be material," Burberry said in its statement.
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Associated British Foods PLC said the persistent strength of sterling continued to hit sales in the third quarter, while the growth of its retail business Primark failed to offset a huge sales decline in its struggling sugar business. The food, ingredients and retail group posted a 3% decline in total sales at actual currency exchange rates in the third quarter, hit by the strength of sterling, but rose 3% on a constant exchange rate basis. In the year to date, AB Foods said sales were down 2% at actual rates, and were up 2% at constant rates. "The likely negative impact arising from currency translation, if current exchange rates prevail, will be some GBP50 million compared with last year's result," the company said in a statement. Despite the significant hit from the strength of the sterling, AB Foods said it now expects full year adjusted earnings per share to be ahead of last year, as a bigger profit from its retail division, grocery and ingredients businesses collectively, offset the currency hit and lower sugar prices.
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Housebuilder Barratt Developments PLC said it expects pretax profit for the full year ended June 30 to be around GBP390 million, which it said is above the top end of analysts estimates. In the year to June 30, 2013, the company reported pretax profit of GBP104.8 million and pretax profit before exceptional items of GBP192.3 million. Barratt said the total average selling price increased to GBP220,000 during the recent financial year from GBP194,800 a year earlier.
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Vodafone Group PLC said it has entered into a "partner market agreement" with Bemobile Ltd, which trades as bmobile, for Papua New Guinea and the Solomon Islands. Under the non-equity partnership agreement bmobile will act as Vodafone's exclusive partner in the two markets, and bmobile customers will be able to roam on Vodafone's global mobile network.
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Ashmore Group PLC reported 7% growth in assets under management during its fiscal fourth quarter, the first growth since its fiscal first quarter, driven by USD1.6 billion of net inflows and a positive investment performance of USD3.3 billion. The specialist emerging markets asset manager said assets under management are estimated to have risen to USD75.0 billion in the three months to end-June, from USD70.1 billion at the end of March. It had reported 1.4% quarterly growth in assets under management in its fiscal first quarter, but then assets under management declined 4.1% in the second quarter and 6.9% in the third quarter.
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Informa PLC said it has hired St Ives PLC Chief Executive Patrick Martell to head up its new business intelligence division, as it announced changes to its operating model and executive team following a strategic review. The business media and events company said that following a strategic review earlier in the year it was making changes to ensure it can deliver on its future growth potential.
Informa also said it is trading in line with expectations, and it will announce its strategic growth plan for 2015 to 2018 in the second half of the year. Martell will step down from his position at St Ives at the end of July, although he will remain on the company's board until its annual general meeting in November, St Ives said. Martell will be succeeded by Matt Armitage, who is presently chief financial officer and managing director of marketing services at St Ives, from the beginning of August.
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Recruiter Hays PLC said net fee income was flat in its fiscal fourth quarter, as the strength of sterling against the euro and Australian dollar wiped out strong growth in the UK during the period, although it still expects to report strong operating profit growth for the year as a whole. The company said net fee income was up 11% in the UK in the three months to end-June, driven by 17% growth in fees from permanent placements. It said its major specialisations of accountancy and finance, construction and property and IT all grew by over 15%. The UK net fee growth was slower than the 14% growth Hays had reported in the UK in its fiscal third quarter, but stronger than the 9% growth posted in the first half of the financial year. The figures support recent economic data in the UK suggesting that the recovery is accelerating and businesses are becoming more confident about taking on permanent staff again.
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Bus and rail operator FirstGroup PLC said trading in its fiscal first quarter has been in line with its expectations, and the steps it is taking to turn around businesses like its UK bus, US Greyhound coach and First Student operations are delivering improvements. The UK-based transport operator had pledged earlier this year to turnaround its underperforming businesses, after rebuffing demands by activist shareholder Sandell Asset Management to break itself up by spinning off its US operations. Sandell said a company breakup would improve shareholder returns, a claim disputed by FirstGroup, even though it currently isn't paying a dividend as it puts money into the turnaround plan. In a statement, FirstGroup said it has now accelerated its programme to address issues with its contract portfolio pricing at its US First Student educational transport business, making sure it achieves an "appropriate" level of return on contracts it wins or retains.
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MARKETS
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Major stock markets are lower in the UK as markets fail to capitalise on the modest equity gains made in the US on Wednesday, with very little positivity to be found in data released so far.
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FTSE 100: down 0.8% at 6665.9
FTSE 250: down 1.1% at 15380.5
AIM ALL-SHARE: down 0.7% at 772.67
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The pound has slid against the dollar after data showed the UK trade deficit widening in May. Gold is trading at a near four-month high as the price of precious metals continues to rise due to the demand for safer assets increasing in part to more equities being sold.
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GBP-USD: down at USD1.7118
EUR-USD: down at USD1.3622
GOLD: up at USD1341.1 per ounce
OIL (Brent): down at USD108.03 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The UK visible trade deficit widened in May as the increase in imports exceeded the growth in exports, data from the Office for National Statistics showed. The visible trade deficit widened to GBP9.2 billion from GBP8.8 billion in April. Economists had forecast a shortfall of GBP8.75 billion. Exports of goods grew only 0.6% from April to GBP24.1 billion. At the same time, imports of goods climbed 1.7% to GBP33.3 billion, reflecting a rise in demand for finished manufactured goods.
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Britain is to bring in emergency legislation on data retention, Prime Minister David Cameron said, after a legal ruling by the European Court of Justice made current laws invalid. The new legislation, to go before parliament next week, will oblige telecoms companies to retain data on customers' telephone calls, internet use and text messages for 12 months. Cameron said the ability to access such information was "essential to fight the threat from criminals and terrorists targeting the UK."
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The harmonised index of consumer prices, or HICP, for France grew at a slower than expected rate in June, a report from French Statistical Office INSEE showed. The HICP, a measure of consumer prices that is comparable across all the eurozone countries, increased 0.6% year-on-year in June, a slower rate of rise than the 0.8% growth expected by economists. The consumer price index increased 0.5% year-on-year in June following April's 0.7% rise. The slower rate of increase was partly due to the time lag of the price collection that included a higher number of days during the summer sales in June this year than last year. Also, food prices and energy prices declined in June.
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House prices in the UK continued to rise in June, albeit at a slower pace, the latest index from the Royal Institution of Chartered Surveyors revealed. Fifty-three percent of respondents reported an increase in house prices in their designated regions. That was shy of forecasts for 55%, and down from the downwardly revised 56% reading in May (originally 57%). The June reading is the lowest score since March 2013.
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The Federal Reserve plans to completely unwind its asset purchase plan in October as long the economy continues to pick up, the minutes of its June meeting revealed Wednesday. The Federal Open Market Committee has reduced bond purchases by USD10 billion at each meeting since December, and will end by cutting USD15 billion in October. "Participants generally agreed that if incoming information continued to support its expectation of improvement in labor market conditions and a return of inflation toward its longer-run objective, it would be appropriate to complete asset purchases with a USD15 billion reduction in the pace of purchases in order to avoid having the small, remaining level of purchases receive undue focus among investors," the minutes stated. "If the economy progresses about as the Committee expects, warranting reductions in the pace of purchases at each upcoming meeting, this final reduction would occur following the October meeting." The minutes offered few signals about when the Fed might potentially begin tightening interest rates from near zero.
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The value of Chinese exports rose 7.2% in June, year on year, to USD187 billion, Xinhua news agency reported, citing customs data. Imports rose 5.5% to USD155 billion, while total foreign trade increased 6.4% to USD342 billion, according to the General Administration of Customs. Trade balance saw a surplus of 31.6 billion dollars in June, Xinhua reported. In 2014, China's trade growth target is 7.5%, slightly less than last year's expansion of 7.6%, the report said.
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Core machine orders in Japan plummeted 20% on month in May, the Cabinet Office said - worth JPY685.3 billion. Marking the biggest monthly decline on record, the headline figure catastrophically missed forecasts for an increase of 0.7% following the 9.1% contraction in April. On a yearly basis, machine orders tumbled 14% - also well shy of expectations for a gain of 10% following the 18% spike in the previous month.
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The Euro Area countries should "learn to be sovereign together" in order to fulfill the basic needs of growth and job creation for the citizens, European central Bank's President Mario Draghi said. The eurozone crisis revealed that the cohesion of the Union depended on the behaviour of each of its members and hence governing structural reforms are necessary along with fiscal policy governance, he said in his speech in honour of late ECB policymaker Tommaso Padoa-Schioppa. "If some governments retain the ability to stabilise their economies but others do not, then it becomes more plausible that economic divergence will occur. This is one channel through which the cohesion of the Union can be affected. This ability depends on keeping debt low and budget deficits close to zero when output grows at potential, not on having more flexibility in the existing rules." he explained.
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Egypt has partially reopened the Rafah border crossing, Gaza's only non-Israeli outlet to the outside world, so it can take in Palestinians wounded in the ongoing offensive against the enclave, the state-run site al-Ahram online reports. Egyptian authorities have decided to "open the crossing exceptionally" to allow in wounded Palestinians to get treatment at Egyptian hospitals, the site says, quoting a statement by the Palestinian embassy in Cairo.
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