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LONDON (Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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BT Group reaffirmed its outlook for the full financial year in its current guise, as it reported a rise in pretax profit in its third quarter and year to date and outlined a new organisational structure following its acquisition of mobile network EE. For the quarter to end-December the telecommunications and pay-TV company reported a pretax profit of GBP862 million, up from GBP694 million a year before, as revenue rose to GBP4.64 billion from GBP4.48 billion. BT said that, following its acquisition of EE, it will have a new organisation structure with effect from April. Under the new structure, it will have six lines of business, Consumer, EE, Business and Public Sector, Global Services, Wholesale and Ventures and Openreach.
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Engine maker Rolls-Royce Holdings said it won a USD2.7 billion contract with Norwegian, the Norwegian airline, for Trent 1000 engines and TotalCare long-term service support. The order will cover service support for 19 new Boeing 787 Dreamliner aircraft, along with services for Trent 1000s which will power 11 further leased Boeing 787s that have yet to enter service for the airline.
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Medical devices manufacturer Smith & Nephew said Chief Executive Olivier Bohuon has been diagnosed with a treatable form of cancer. The company said Bohuon will continue to handle his CEO duties during the majority of his treatment period, which is due to start later this month and be completed by the late autumn. The group has, however, approved provisional governance procedures to ensure the group operates effectively during his treatment period, including Robert Quarta, Smith & Nephew's chairman, taking on executive oversight if required.
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J Sainsbury is facing pressure to increase its bid for Home Retail Group in order to secure an agreement to buy the Argos and Homebase owner, the Financial Times reported. According to the newspaper, people close to the matter said Sainsbury's met with Schroders and Toscafund, the two biggest shareholders in Home Retail, last week, with the pair indicating Sainsbury's would have to pay at least 160 pence per share, or preferably close to 165p, to get their support. A 160p per share deal would value Home Retail at around GBP1.3 billion. The stock closed on Friday at 136.70p. The pair are still discussing a deal and may request an extension to the deadline for Sainsbury's to make a firm offer. That deadline is on Tuesday.
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Credit Suisse Group and Barclays have agreed to pay USD154.3 million combined to settle allegations by the US Securities and Exchange Commission and New York Attorney General that they misled investors on how they managed their private trading platforms, according to media reports citing people familiar with matter. The reports indicated that Barclays will pay about USD70 million to settle charges that include those brought in a high-profile fraud case by the New York Attorney General against Barclays in connection with its dark pools in June 2014. In that case, the New York Attorney General alleged Barclays misled clients about the extent of high-frequency trading in its dark pool, called LX. Barclays is expected to admit it misled investors and violated securities laws. The London-based bank also agreed to install an independent monitor, the reports said.
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HSBC Holdings will impose a hiring and pay freeze globally in 2016 as part of its drive to cut as much as USD5 billion in costs by the end of 2017, according to reports. The actions were outlined in a memorandum received by employees on Friday, the reports said. Akin to other global banks, HSBC is in the midst of a cost-cutting drive to boost its profitability and returns to shareholders. The group is also due soon to make a decision on whether it will move its headquarters out of London to Asia or elsewhere.
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Prudential said the chief executive of its M&G Investments fund management arm is to retire from his role and said it has poached the chief investment officer of Aberdeen Asset Management to replace him. Michael McLintock will retire as the chief executive of M&G and as an executive director of the FTSE 100-listed life insurer later this year, though no exact date was given for his departure, after 19 years with the company. He will be replaced by Anne Richards, currently the chief investment officer and head of Aberdeen's European, Middle East and African operations. She joined Aberdeen in 2003 after her former employer, Edinburgh Fund Managers, was acquired by the company.
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Grainger said it has acquired the Clippers Quay property in Salford Quays, near Manchester, for GBP98.7 million to boost its private rented sector portfolio. The company, which last week outlined plans to sell its non-core businesses and focus on the private rented sector, said the new property will deliver 600 new homes, along with further commercial space. Once fully let, it should deliver more than GBP7.5 million in gross rent per year, Grainger said.
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Online property portal Zoopla Property Group said it has appointed Andy Botha as its chief financial officer, effective from April 18. He will join from online fashion retailer Notonthehighstreet.com, where he has been chief commercial and financial officer for the past three years.
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Allied Minds said it now owns a 73% stake in Federated Wireless Inc after a recent fundraising round in which Federated Wireless raised USD22 million. The fundraising values Federated Wireless as USD82 million, increased from USD10 million, and Allied Minds' stake in the company is now valued at USD60 million, up from USD9 million.
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Builders' merchant and DIY group Grafton Group said it has acquired builders' merchant Allsand Supplies. No financial details were provided on the deal, but Grafton said Allsand, based in Kent, generated revenue of GBP6.0 million for the year to the end of March 2015.
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MARKETS
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UK indices were lower hindered by a mixed-to-negative set of economic data from China. Oil prices were holding firm at around USD35.00 a barrel. Wall Street was pointed to a lower open.
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FTSE 100: down 0.4% at 6,060.05
FTSE 250: down 0.1% at 16,470.05
AIM ALL-SHARE: up 0.3% at 695.49
GBP: up at USD1.4286 (USD1.4171)
EUR: flat at USD1.0863 (USD1.0820)
GOLD: up at USD1,122.90 per ounce (USD1,116.20)
OIL (Brent): flat at USD35.75 a barrel (USD35.24)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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British manufacturing growth quickened unexpectedly at the start of the year to the strongest level in three months, survey data from Markit Economics showed. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index for manufacturing rose to 52.9 in January from 52.1 in December. Economists had expected the index to fall to 51.8.
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UK mortgage approvals rose to a 4-month high in December, the Bank of England reported. The number of mortgage approvals rose unexpectedly to 70,837 in December from 70,424 in November. This was the highest since August 2015. Economists had forecast approvals to fall to 69,600 in December. Consumer credit increased GBP1.2 billion or 0.7% in December from prior month. It was forecast to climb GBP1.3 billion.
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Britain and the EU have agreed the terms of an "emergency brake" to restrict EU migrants' rights to welfare benefits, but there is "still more hard work required" to negotiate other reforms, Prime Minister David Cameron said. "On welfare, the [European] Commission have tabled a text making clear that the UK's current circumstances meet the criteria for triggering the emergency brake," his spokesperson said after Cameron met EU President Donald Tusk over dinner. "This is a significant breakthrough, meaning the prime minister can deliver on his commitment to restrict in-work benefits to EU migrants for four years. Tusk said he would oversee another 24 hours of talks on Britain's demands before releasing draft proposals for the EU's response to the demands on Tuesday. "No deal yet," Tusk wrote on Twitter, noting that "intensive work" is needed in the next 24 hours.
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UK economic growth weakened in the three months to January but outlook for the next three months improved slightly, the latest growth indicator from the Confederation of British Industry showed. The balance of firms reporting rise in output fell to 6%, the slowest pace of growth since May 2013. The outlook for the next three months was more positive, with an above average rise in output to +13% expected. "The overall domestic outlook still looks fairly secure, and a rise in output across all sectors is expected in the coming three months," Rain Newton-Smith, CBI Director of Economics, said.
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Chinese manufacturers signalled deterioration in operating conditions at the start of 2016 but the pace of contraction slowed slightly from December, the results of a private survey showed. However, official data released by the government showed that the manufacturing sector underwent a faster contraction than seen at the end of 2015. The Caixin Purchasing Managers' Index rose to 48.4 in January from 48.2 in December, Markit said. Nonetheless, activity has been contracting for the eleventh successive month. At the same time, the official manufacturing PMI fell to 49.4 in January from 49.7 in December.
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Bank of Italy Governor Ignazio Visco called for an amendment to recently-introduced EU rules on bank bailouts whose implementation has created problems and market tensions in his home country. The legislation, adopted in the wake of costly public bank rescues following the 2008 global financial crash, establishes "bail-in" principles for banks, meaning that shareholders and investors should pay when lenders run into trouble, rather than taxpayers. But the "delicate changeover" from state-funded bailouts to private bail-ins has been too sudden, Visco argued in a speech in the northern city of Turin.
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Candidates in the race for US president criss-crossed Iowa, speaking at rallies and meeting voters in a final push to win support ahead of all-important caucuses on Monday. The 11 Republican and three Democratic candidates made their last appeals for votes before Iowa kicks off the state-by-state nominating process leading up to national party conventions in July and ultimately to the general election on November 8. Former US secretary of state Hillary Clinton, once considered the clear front-runner among the candidates seeking the Democratic nomination, spent the day defending herself against charges that she mishandled emails while she served as the top US diplomat. The scandal resurfaced this week after the US State Department said it would not make public 22 emails that it says are top secret.
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Despite the scandal Clinton is the top pick of 45% of likely Democratic voters in Monday's caucuses, according to a poll published Saturday by the Des Moines Register. Her main opponent, US Senator Bernie Sanders of Vermont, received 42%. On the Republican side, front-runner Donald Trump had the support of 28% in the poll, conducted with Bloomberg news. Second among the field of Republicans was US Senator Ted Cruz of Texas with 23%; third was Senator Marco Rubio of Florida with 13%.
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The Syrian opposition bloc threatened Sunday to boycott UN-sponsored peace talks in Geneva aimed at ending the country's civil war, while in Syria 63 people were reported killed in suicide attacks in a Damascus suburb. The radical Sunni Islamic State group carried out the double suicide attack in southern Damascus in the mainly Shiite district of Sayyida Zeinab, the Syrian Observatory for Human Rights said.
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A Russian jet has violated Turkish airspace, Ankara and NATO said Saturday, adding to recent strains in the traditionally friendly relationship between the two countries. The SU-34 fighter jet violated Turkish airspace on Friday, according to a statement from the Turkish Foreign Ministry. Ankara said it had summoned the Russian ambassador for talks.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun
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