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LONDON (Alliance News) - Shares in the UK were higher after the open Thursday, with Lloyds Banking Group leading blue-chip gainers after lifting its payout and announcing a special dividend.
Still ahead, fourth-quarter UK gross domestic product data is due at 0930 GMT.
The blue-chip FTSE 100 index was up 1.4%, or 81.57 points, at 5,948.75. The FTSE 250 was up 0.7% at 16,235.00 and the AIM All-Share up 0.1% at 687.93. In Europe, the French CAC 40 and the German DAX 30 were adding 1.5% and 0.8%, respectively.
Lloyds Banking shares rose 9.7% after it lifted its payout to shareholders and declared a special dividend in a return of capital, even as the bank's 2015 profit took a dent from a new GBP2.1 billion charge for the payment protection insurance scandal. Lloyds lifted its dividend for the year to 2.25 pence per share from 0.75p in 2014, and declared a special payment of 0.5p in addition.
Pretax profit fell to GBP1.64 billion in 2015 from GBP1.76 billion in 2014. Underlying profit, which excludes asset sales and the cost of PPI provisions, rose to GBP8.11 billion from GBP7.76 billion. The total PPI provision for the year was GBP4.0 billion, up from GBP2.2 billion in 2014, including a fourth-quarter charge of GBP2.1 billion.
Still state-backed after its GBP20.5 billion rescue in the 2008-09 financial crisis, Lloyds is awaiting the sale of the the UK government's remaining 9.2% stake. Weak sentiment towards financial stocks since the start of 2016 has delayed UK Chancellor George Osborne's plan to sell the last of the taxpayer's shares.
RSA Insurance also was firmly in the green, up 7.7%, after it reported a 43% jump in annual operating profit, beating analyst expectations, and raised its full-year dividend to 10.5 pence from 2.0p the prior year.
Operating profit before tax rose to GBP523 million in 2015, the London-listed insurer said, up from GBP365 million at actual exchange rates and from GBP334 million at constant currency. Analysts had expected operating profit of GBP481.0 million for the year, according to company-compiled consensus estimates.
Annual net written premiums for the core group, excluding discontinued and non-core operations, amounted to GBP5.72 billion in 2015, down from GBP6.09 billion at actual currency rates and slightly lower than the GBP5.75 billion constant currency comparative.
UK telecoms regulator Ofcom said BT Group's Openreach division must be reformed to better serve customers and businesses, and that BT "must open up" its network. Although the regulator has not enforced a structural separation of the division, it said that "if necessary", it reserves the right to require BT to spin off Openreach as an entirely separate legal entity with its own shareholders, as part of plans to reform Openreach's governance.
Shares in BT Group were up 3.2% in relief at the announcement.
Mondi was up 2.7%, after the South African paper and packaging group said its pretax profit rose 29% in 2015 thanks to strong and profitable trading across its operations, prompting a 24% hike to its dividend payout.
Mondi said its pretax profit for the year to the end of December rose to GBP796.0 million from GBP619.0 million a year earlier, as revenue grew to GBP6.82 billion from GBP6.40 billion, a 7.0% rise. The group will pay a final dividend of 37.62 euro cents per share, taking its total dividend to 52.0 cents, up 24% year-on-year.
Meanwhile, Merlin Entertainment was up 2.4%, after the theme park operator reported growth in profit and revenue in its recently-ended financial year, despite a tough summer when a rollercoaster crashed at Alton Towers, and said it has signed a partnership deal with Big Bus Tours.
The theme park and attractions operator said pretax profit in the year ended December 26 rose to GBP237 million from GBP226 million the year before, as revenue increased by 2.3% to GBP1.28 billion from GBP1.25 billion.
Merlin said strong performances from its LEGOLAND Parks and Midway Attractions divisions offset difficult trading at Resort Theme Parks, the latter which saw the temporary closure of Alton Towers last summer following a rollercoaster crash. Like-for-like revenue grew by 8.2% at LEGOLAND Parks and by 2.3% at Midway Attractions, but fell by 12% at Resort Theme Parks.
Merlin will pay a total dividend of 6.5 pence per share, a 4.8% increase on the 6.2p paid the year before.
St James's Place was among the few fallers in the FTSE 100, down 1.5%, despite lifting its full-year dividend by 20% as the wealth manager's operating profit beat analyst expectations.
Operating profit, stated on an embedded value basis, rose to GBP660.2 million in 2015 from GBP596.4 million, beating analyst expectations of GBP553.4 million, though IFRS profit before shareholder tax fell to GBP151.3 million from GBP182.9 million. Net inflows rose to GBP5.78 billion from GBP5.09 billion, helping to boost funds under management to GBP58.6 billion from GBP52.0 billion.
St James's Place said it would pay a dividend of to 27.96 pence per share, up 20% year-on-year
Shares in British American Tobacco were down 0.4% after the tobacco giant reported growth in profit in 2015 but a decline in revenue as it continued to be hit by negative currency movements throughout the year. It said pretax profit in 2015 grew to GBP5.86 billion from GBP4.85 billion in 2014, even though revenue fell by 6.2% to GBP13.10 billion from GBP13.97 billion.
BAT said revenue declined as a result of adverse movements in foreign exchange rates, and that revenue would have risen by 5.4% to GBP14.72 billion if currencies had remained constant. Profit, however, benefited from gains on the disposal of assets and tax repayments. BAT will pay a dividend of 154.0 pence per share for the year, which is a 4% increase on the 148.1p paid the year before.
Blue-chips Rio Tinto, easyJet, Diageo were down 2.5%, 2.2% and 0.5%, respectively, after going ex-dividend.
Stocks in Asia ended mixed on Thursday, with the Japanese Nikkei 225 index up 1.4%, the Shanghai Composite down 6.4%, and the Hang Seng index in Hong Kong down 1.5%.
US stocks were lower for most of the day on Wednesday, but took back losses towards the end of the session and finished higher. The DJIA closed up 0.3%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.9%.
CMC Markets chief market analyst Michael Hewson said the UK's fourth-quarter GDP reading is expected to grow 0.5%, unchanged from the previous reading, while the year-on-year data is also expected to come in flat at 1.9%.
However, Hewson believes "we could see some evidence that business investment is starting to slow from the previous 2.2% to 0.6%, though the annualised measure is expected to increase to 6.4% from 5.8%".
Other than UK GDP, there is a flurry of European and US economic data scheduled Thursday.
The Eurozone consumer price index is expected at 1000 GMT, with economists expecting year-on-year inflation to pick up in January to 0.4% from 0.2% in December, while core prices are seen to remain unchanged at 1.0%.
In the US, initial and continuing jobless claims are due at 1330 GMT, as well as US durable goods orders data. US housing price index is due at 1400 GMT, while EIA natural gas storage data are due at 1530 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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