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LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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ARM Holdings posted a rise in profit for 2014, boosted by strong licence revenue growth and improved royalty revenue growth in its fourth quarter, and said it expects to meet market expectations for dollar revenues in 2015. ARM expects both its licence and royalty revenue to meet market expectations in the current year. It expects its dollar revenues in its first quarter to be up 10% compared to the previous year, based on improving royalty revenue growth. The chip designer proposed a final dividend of 4.5 pence per share, taking its total dividend for 2014 to 7.02 pence, up from a total dividend of 5.7 pence a year before.
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Glencore said it has revised down its capital expenditure budget for 2015 in response to "the volatile market backdrop" and said production rose across the board during 2014, as it announced it will divest its stake in Lonmin in the first half of 2015. In December, the mining and oil company had laid out a USD7.9 billion capital expenditure budget for 2015, which has now been revised down to between USD6.5 billion and USD6.8 billion. Glencore said it will divest from its 23.9% stake in platinum miner Lonmin during the first half of 2015 by distributing Lonmin shares to Glencore shareholders. Glencore acquired the stake in Lonmin through its acquisition of Xstrata in May 2013, and said it has always classed the stake as "non-core" because the company does not trade in platinum or have any "special insight" into the market.
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Reckitt Benckiser Group's fourth-quarter net revenue growth beat market expectations, and the group announced further cost-cutting initiatives and plans to bolster its share-buyback programme in 2015. The British consumer goods giant reported higher pretax profit for 2014 of GBP2.13 billion for 2014, compared with GBP1.86 billion in 2013. Its operating profit rose 15% to GBP2.16 billion. The figures exclude RB's pharmaceuticals business, which it spun off into new FTSE 250 constituent Indivior at the end of last year. The move left Reckitt solely focused on its consumer health and hygiene products. While profits benefited from price increases and cost optimisation initiatives, net revenue for the year came in at GBP8.84 billion, compared with a restated revenue figure of GBP9.27 billion in 2013.
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Indivior posted a lower pretax profit for 2014 due to generic competition in the US and price cuts in Europe hitting its revenue in the US and exceptional costs relating to the de-merger. The FTSE 250-listed pharmaceutical firm said that its outlook for 2015 is "very uncertain as to the timing, extent and impact of tablet price erosion." It is guiding net income of between USD130 million to USD155 million for 2015, on revenue of USD850 million to USD880 million. It noted however that the outcome could be higher in a more positive environment, or lower in a "very adverse scenario".
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Tullow Oil said it swung to a pretax loss in 2014 after booking significant impairment charges, which - combined with falling production and revenue - caused the oil exploration and production company to suspend its final dividend for the year. In an interview with Alliance News, Chief Executive Aidan Heavey said the company is focusing on retaining as much cash in the business until the middle of 2016 when its flagship TEN project in Ghana comes into production, hinting that the dividend may remain suspended over the next one to two years. Tullow swung to a USD2.04 billion pretax loss for 2014 from a USD313 million pretax profit in 2013. The loss was caused by impairment charges and losses on the company's disposal of assets, as well as lower revenue and production.
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GlaxoSmithKline said it has acquired the remaining stake in Switzerland based specialist vaccine company GlycoVaxyn for USD190 million. It has held a minority stake in the company since 2012, it said. The company says the acquisition will bolster its early stage vaccine pipeline, including providing it with a technology which will enable it to develop a simplified cojugated vaccine manufacturing process. GlycoVaxyn has development a biological conjugation platform technology which Glaxo says "has the potential to play an important role in the development of new prophylactic and therapeutic vaccines for a range of bacterial diseases."
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Capita said it has been named as the preferred bidder for the Food and Environment Research Agency joint venture by the UK Department for Environment, Food and Rural Affairs. As part of the deal, the joint venture between Capita and DEFRA has secured a long-term service agreement for up to 10 years to deliver services on behalf of DEFRA, its network and the Health and Safety Executive. The deal also includes a 10-year supplier framework under which scientific services can be bought directly by other crown bodies. Under the deal, Capita will acquire a 75% stake in the joint venture for GBP20 million in cash.
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The English Premier League said late Tuesday it has signed a GBP5.13 billion deal for the broadcasting rights for its football matches covering the three years from 2016 to 2019, significantly more money than analysts were expecting. Sky secured five of the seven packages available, equating to 126 live games per season from a total 168 matches, for a cost of GBP1.32 billion per year, whilst rival BT Group secured two packages, or 42 live games a season for a cost of GBP320 million per year. Sky said the price equates to an 83% increase from the cost of its existing contract, noting that it has won Friday evening games for the first time. The new deal will see Sky broadcast 126 fixtures a season compared to 116 games under its current contract. The new deal results in BT showing 42 games a season, up from its current 38 games. BT has secured a live Saturday evening game each week during the Premier League season.
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Ireland-based paper packaging manufacturer Smurfit Kappa Group reported a rise in pretax profit in 2014 on the back of an uptick in revenue and hiked its final dividend in response to the performance. The group reported a pretax profit of EUR378 million for the year to December 31, up from EUR294 million last year. Revenue for the year rose by 2% to EUR8.08 billion, up from EUR7.96 billion last year.
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Telecity Group has agreed to take over European data centre services provider Interxion Holding in an all-share deal, as it posted a lower profit for 2014 due to exceptional costs mostly relating to its Turkish business. Telecity proposed a final dividend of 9.0 pence per share, taking its total dividend to 13.5 pence compared to 10.5 pence a year before. The company also will begin a GBP400 million share buy-back programme over three years. Telecity will acquire New York Stock Exchange-listed Interxion in an all-share deal, with Interxion shareholders receiving 2.3386 new Telecity share per Interxion share. Telecity shareholders will own around 55% of the combined group.
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Housebuilder Redrow doubled its interim dividend, as it reported its pretax profit also nearly doubled on the back of higher revenue and a rise in sales in the first half. The company said its pretax profit for the six months to the end of December was GBP91.2 million, up from GBP47.5 million last year. Revenue in the half rose to GBP560.6 million from GBP363 million, with gross margins rising to 22.4% from 20.3%. The revenue increase was also given a boost by the GBP46.8 million sale of all the commercial units and reversionary interest in the One Commercial Street development in east London. The jump in pretax profit prompted the group to double its interim dividend, up to 2 pence per share from 1 pence last year.
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Travel operator Thomas Cook Group said it cut its first quarter operating loss by more than 40% on the year before, as it continued to cut out costs across the business, but cited pricing and competitive pressures, and tough trading in continental Europe. Thomas Cook reported a seasonal loss before interest and taxes of GBP73 million for the three months to end-December, smaller than the GBP122 million loss it reported a year earlier. Its pretax loss for the quarter was GBP115 million, down from last year's GBP161 million loss.
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US private equity firm Warburg Pincus sold a larger-than-expected stake in FTSE 250-listed retailer Poundland Group, sending shares in the company lower. Warburg, its largest shareholder, sold 35 million shares in the company, nearly half its existing stake. It had planned to sell 25 million shares, but upped the placing following strong demand. Warburg sold the shares for 405 pence, raising GBP142 million. The private equity house now owns 41 million shares in the high-street discount chain, or around 16.4% of its issued share capital.
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Derwent London said it has struck a property swap deal with LaSalle Investment Management under which it will buy the leasehold on a property in Farringdon and will dispose of stakes in three other properties. Under the deal, Derwent will acquire a 175-year leasehold on 20 Farringdon Road in London's Tech Belt area. The passing rent is GBP3.6 million per annum or GBP3.2 million per annum net of the 10% ground rent. In return, Derwent will hand the 22 Kingsway property in central London and the Mark Square House property, in the City of London, to LaSalle.
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Homewares retailer Dunelm Group delivered a higher first-half profit, driven by a 14% increase in revenue helped by new store openings and strong growth online. However, the group cautioned that it expects benefits of top-line growth in the remainder of the financial year to be largely offset by higher operating costs, saying it expects to return to stronger profit growth next year. Dunelm declared a 10% increase in its interim dividend to 5.5 pence per share, and also proposed a special distribution of 70.0 pence per share.
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QinetiQ Group affirmed its guidance for the full year, despite continued challenges in its markets. The defence services company said its Europe, Middle East and Africa services arm is performing well and has a high level of contracted revenue for the final quarter of its financial year to the end of March, despite of uncertainty in the UK defence market related to current spending overhauls at the Ministry of Defence. But it said the performance of its Global Products business is still being impacted by reduced funding for US military operations, which has reduced demand for conflict-related products.
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Balfour Beatty said Philip Aiken has been appointed as its new chairman, with incumbent chair Steve Marshall to retire from the board on March 25.
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MARKETS
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London shares are lower, as investors digested a flurry of corporate announcements while awaiting the outcome of negotiations between Greece and European authorities over the country's debt programme.
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FTSE 100: down 0.2% at 6,817.06
FTSE 250: down 0.1% at 16,641.50
AIM ALL-SHARE: down 0.2% at 698.58
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GBP-USD: up at USD1.5299
EUR-USD: up at USD1.1311
GOLD: up at USD1233.93 per ounce
OIL (Brent): down at USD55.65 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Greek Prime Minister Alexis Tsipras vowed to renegotiate the terms of the country's debt deal on the eve of tough negotiations with its eurozone partners on Wednesday, saying there was "no turning back". "We want a new agreement that is in the mutual interest of Greece and its lenders - one which will end punishing conditions and the destruction of the Greek economy ... there is no turning back," he told parliament just before his leftist coalition-led government survived its first confidence vote. Lawmakers voted 162-137 for Tsipras' coalition government. Eurozone finance ministers are to hold an emergency meeting Wednesday before an EU summit on Thursday on the Greek crisis.
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Casualties mounted in eastern Ukraine, just hours before the leaders of France, Germany, Ukraine and Russia were expected to hold a peace summit in the Belarusian capital Minsk. Some 19 soldiers were killed and 79 injured during the past 24 hours, defence ministry spokesman Vladislav Seleznyov said in Kiev, according to local media. In Donetsk, the separatists said that six civilians were killed and eight injured when a rocket exploded at a bus station. The Ukrainian army denied responsibility for the attack.
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The G20 finance ministers and central bank governors called for accommodative monetary and fiscal policies as the global growth remains 'uneven' with subdued progress in Eurozone and Japan. According to a communique released after the two-day meeting of G20 finance ministers and central bank governors in Istanbul on Tuesday, officials expressed determination to overcome challenges to achieve the common objective of strong, sustainable and balanced growth and to add jobs and foster inclusiveness.
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Chinese President Xi Jinping is to pay his first state visit to the US in September, state media announced. Xi Wednesday held phone talks with US President Barack Obama where he formally accepted the latter's invitation to pay a state visit, Xinhua reported.
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