LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Prudential reported increases in both operating profit and annual premium equivalent sales, beating analyst forecasts in the process. The FTSE 100 life insurer said its operating profit based on longer-term investment returns before tax amounted to GBP1.88 billion in the six months to the end of June, compared with GBP1.52 billion in the same half of the prior year, ahead of the GBP1.74 billion analyst consensus estimates provided by the company. The company increased its interim dividend by 10% to 12.31 pence per share. Mike Wells, the internal appointment who succeeded Tidjane Thiam as chief executive on June 1, after Thiam left for the top job at Credit Suisse, said that Prudential's main business units performed strongly in the half.
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SIG said its pretax profit was higher in the first half of 2015 than a year earlier thanks to lower exceptional costs, but revenue for the group was pulled lower both by a weakening euro and by challenging market conditions in mainland Europe, while the group said margins pressures are likely to offset some of the benefits from its cost-cutting programme. The building products company said its pretax profit for the half to the end of June was GBP26.8 million, sharply higher than the GBP11.8 million it posted a year earlier, as exceptional costs in the half fell to GBP12.3 million from GBP31.2 million a year earlier.
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Serco Group said it swung to a pretax loss in the first half of 2015, in line with its expectations, but reiterated that overall trading in the half was better than had been anticipated, even as revenue fell and it scrapped its interim dividend. The company, which booked a significant pretax loss for 2014 due to writedowns it booked on a large number of onerous contracts, said its pretax loss for the six months to the end of June was GBP76.2 million, versus a GBP10.9 million profit a year earlier, as it took GBP117.4 million in exceptional costs, split between asset impairments and refinancing costs related to its recent rights issue of shares. Serco said it would pay no interim dividend, having paid out 3.10 pence per share a year earlier.
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Just Retirement Group and Partnership Assurance Group said they have agreed to merge in an all-share deal to create a life insurance company worth almost GBP1.7 billion by market capitalisation, and intend to raise GBP150 million together. The deal values Partnership Assurance at about GBP668.5 million, equivalent to 166 pence per share. The stock closed at 154.25 on Monday. Investors will receive 0.834 new Just Retirement shares for each Partnership Assurance share they already own. Just Retirement shareholders will own about 60% of the combined group, without taking into consideration the planned equity raising, with Partnership Assurance shareholders holding the remainder.
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Ladbrokes said is swung to a loss in the first half of 2015 as its revenue slipped, it slashed its interim dividend and it continues with its three-year strategy to try and turn the business around amid its planned merger with Gala Coral Group. The FTSE 250-listed bookmaker reported a pretax loss of GBP51.4 million in the six months ended June 30, after it made a profit of GBP27.7 million in the same period of the prior year, as it was hit by exceptional costs. Stripping out the one-off costs, pretax profit fell to GBP27.5 million from GBP54.7 million. Ladbrokes said it booked GBP78.9 million in costs associated with retail impairments, UK shop closures and examinership, along with transaction charges relating to the merger with Gala Coral, which wiped out its profit.
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Card Factory reported growth in sales in the first half of its financial year, driven by a rise in like-for-like sales and new store rollouts, and said it is confident for the full year. The card and gifts retailer said that total sales in the six months ended July 31 rose 8%, although this was slower than the 8.9% growth it reported in the same period the prior year. Like-for-like store sales increased 2.7%, against a 2.6% comparative. Card Factory also confirmed it will return surplus capital to shareholders, for which it will provide details when it releases its interim results on September 22.
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Construction company Carillion said its The Hospital Co joint venture has been named preferred bidder for the GBP430 million Midland Metropolitan Hospital public-private partnership project. The FTSE 250-listed company said the joint venture has been selected as the preferred bidder on the project, which will involve the construction of a 670-bed, 15-operating-theatre-suite hospital in west Birmingham.
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MARKETS
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London shares are mixed at mid morning, as the People's Bank of China's devaluation of the yuan has hit investor sentiment, while Greece has agreed with its international creditors a new debt bailout worth EUR86 billion, its third bailout in five years.
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FTSE 100: down 0.8% at 6,683.03
FTSE 250: down 0.3% at 17,706.33
AIM ALL-SHARE: up 0.1% at 754.40
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GBP: flat at USD1.5590
EUR: up at USD1.1025
GOLD: up at USD1112.74 per ounce
OIL (Brent): down at USD49.96 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Greece and its creditors struck a deal on a new bailout for the near-bankrupt country, local media reported following two weeks of intense negotiations. The two sides had been under pressure to finalise an agreement and give Athens access to bailout funds by August 20, when it is supposed to make a EUR3.2 billion debt repayment to the European Central Bank. Greek Finance Minister Euclides Tsakalotos told journalists in Athens that there were still "one, two details" to clarify. Neither the Greek government, nor its international creditors have yet made an official announcement about the bailout talks, which reportedly concluded on Tuesday morning.
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In an unexpected move seen as step to counter the domestic economic slowdown, the People's Bank of China lowered the value of the yuan. This led to the yuan sliding 1.3% to 6.2920 yuan per dollar in Shanghai. In a statement released on Tuesday, the bank set the value of yuan at 6.2298 a dollar, 1.9% lower than Monday's official fixing rate. The bank termed it as an one-time adjustment as it strives to keep the yuan stable at a reasonable level. The devaluation is seen as step towards making the exchange rate of the yuan more market determined.
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Bank of England policymaker David Miles has said there was a "reasonable" argument in favour of the central bank hiking interest rates at its meeting last week in order to avoid tightening faster in the future, Bloomberg reported. Miles, speaking in an interview with Bloomberg, said he "thought there was a case for beginning the journey now" as he said he came close to voting in favour of a rate hike at his final meeting as a member of the Bank's Monetary Policy Committee last week. "It was a perfectly reasonable case," Miles said. Ultimately, only Ian McCafferty voted in favour of hiking rates.
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Federal Reserve Bank of Atlanta President Dennis Lockhart said the US central bank is close to raising short-term interest rates, potentially sooner than September, as he said the economy is "approaching an acceptable normal", The Wall Street Journal reported. Lockhart, during a speech at the Atlanta Press Club, said the "point of liftoff is close". He added that "September remains a live possibility" for a first rate rise in the US for nine years. Lockhart's comments came after Stanley Fischer, the Federal Reserve's vice-chairman, said the US labour market is now nearly back to full health, but that inflation remains weak, adding the data needs to drive any decisions the Fed must make. Though not offering any prediction for a rate rise, Fischer said "the concern about the situation is, not to move before we see inflation as well as employment returning to more normal levels."
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Like-for-like retail sales in the UK jumped 1.2% on year in July, the British Retail Consortium said. That topped expectations for an increase of 1.0%, although it slowed from the 1.8% spike in June. Overall retail sales advanced an annual 2.2% in June, the BRC said, after rising 2.9% in the previous month.
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Japan reactivated a nuclear reactor for the first time in nearly two years despite lingering public fears of atomic power following the country's worst accident at the Fukushima Daiichi plant in 2011. Kyushu Electric Power Co said it brought reactor 1 at the Sendai Nuclear Power Plant back online at 10:30am local time, about 50 kilometres from the active Sakurajima volcano on the southern island of Kyushu. The company said it would start generating and delivering electricity on Friday, and enter commercial operation at the plant in early September, a year after regulators approved the resumption of its two reactors. It is expected to restart the other unit in October.
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US President Barack Obama said partisan political considerations were keeping lawmakers from supporting a deal agreed between Iran and world powers, but expressed hope that once implemented, opinions of the deal will change. "Unfortunately, a large portion of the Republican Party, if not a near unanimous portion of Republican representatives, are going to be opposed to anything that I do," Obama said in an interview with NPR News. Obama has been trying to sell the deal to lawmakers, who are expected to vote next month to approve or disapprove the deal.
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A state of emergency has been declared in the US city of Ferguson after a black teenager was critically injured in police retaliation to violence. The city is reported to be tense after 18 year-old Tyrone Harris was critically wounded in a gun battle with police after a peaceful vigil marking the first anniversary of the killing of unarmed black teenager Michael Brown turned chaotic late Sunday night. The state of emergency order was issued by St. Louis County Executive Steve Stenger on Monday.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun
Copyright 2015 Alliance News Limited. All Rights Reserved.
26 Oct 2015 07:29
