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(An item published at 1205 BST mistated the Burberry outlook and gave an incorrect comparison for analysts' expectations for Marks & Spencer. The correct version follows.)
LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Marks & Spencer Group shares rose to the highest level since December 2007 Wednesday, after the retailer posted profits that beat analysts' expectations as it discounted less and improved its product sourcing, and it further sweetened the news for shareholders by announcing a GBP150 million share buyback. The clothing and food retailer reported a pretax profit for the year ended March 28 of GBP600.0 million, up 3.4% from GBP580.4 million a year before and the highest pretax profit for three years. Exclusing items including restructuring costs and provisions for insuance mis-selling as M&S Bank, its closely-watched underlying pretax profit was GBP661.2 million, beating analysts' expectations of GBP648 million.
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Burberry Group shares took a hit after it lowered its profit guidance for its current financial year due to movements in foreign exchange rates and said it is seeing "increased uncertainty" in some markets. Shares in Burberry were down 5.6% at 1,707.00 pence, making them the biggest fallers in the FTSE 100 index. If exchange rates remain where they are now, it expects retail and wholesale profit in the current financial year to be about GBP10 million than at the prevalent exchange rates in its last year. That is GBP40 million lower than the guidance it gave in April. It left the remainder of its guidance, including a 40% reduction in licensing revenue, unchanged.
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High street retailer Next has been hit with a GBP22.4 million tax bill after a court found the company had diverted profits made in the UK offshore in order to avoid paying tax, the BBC reported. The court ruled Next diverted profits made in the UK to foreign subsidiaries in order to claim tax relief on overseas profits, using a so-called "rate-booster" scheme. Some companies were able to exploit rules designed to prevent the double taxation of companies by using artificial arrangements described by HM Revenue & Customs as "complex circular movements of money between companies in the same group, so they can claim there has been double taxation."
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Hargreaves Lansdown reported an increase in assets under administration in the opening four months of 2015, bolstered by net inflows of GBP2.75 billion in a period including the crucial end of the tax year in the UK. In a statement, the retail fund supermarket said assets under administration amounted to GBP55.3 billion at the end of April, an increase from the GBP49.1 billion recorded at the end of 2014.
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Antofagasta Chairman Jean-Paul Luksic reiterated the company is aiming to produce around 695,000 tonnes of copper in 2015 as it continues to focus on reducing costs following on from the company's fall in earnings in 2014 amid a drop in copper prices. Luksic is due to speak at the company's annual general meeting later Wednesday, and will announce the company is aiming to produce the 695,000 tonnes of copper at a cash cost of USD1.40 per pound of copper, which would be lower than in 2014 when its cash cost averaged USD1.43 per pound. Antofagasta said it will continue to try to reduce the cash cost. That 695,000 tonne figure was originally announced in April after the company reduced its guidance from its full-year results in March, when it had said it would aim to produce around 710,000 tonnes of copper.
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SSE reported annual results that were in line with analyst expectations, with profit experiencing a lift, as all of the power company's divisions remained profitable despite its wholesale division experiencing a fall in profit. The FTSE 100 company reported an adjusted pretax profit, or before exceptional items and remeasurements, of GBP1.56 billion for the year ended March 31, up 0.9% year on year from GBP1.55 billion a year. SSE's wholesale, networks and retail segments were all profitable, whilst its total operating profit came in at GBP1.881 billion, experiencing a tiny lift from GBP1.880 billion.
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Swiss bank UBS is to pay USD545 million to authorities in the US to settle an investigation into the alleged rigging of foreign exchange benchmarks, the first of a slew of fines due to be handed down to banks in the probe. The fine includes a USD342 million payment to the Federal Reserve, UBS said, though it will not be paying any fine to the Department of Justice. Another USD203 million penalty has been imposed after the bank's role in the foreign exchange rigging scandal breached an earlier agreement it had made with prosecutors in the US over the alleged rigging of Libor. The new settlement means UBS will also plead guilty to rigging Libor. UBS is one of five banks due to reach settlements with regulators in the US on Wednesday over the foreign exchange rigging probe, with Citigroup, JPMorgan Chase, The Royal Bank of Scotland Group and Barclays also expected to announce settlements later.
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HSBC Holdings' plans to ring-fence its retail banking operations have hit a hitch after the Bank of England's Prudential Regulation Authority indicated that a possible candidate to chair the ring-fenced bank wouldn't be able to take on the role, Sky News reported. HSBC's indicated to the regulator that it could want the chief executive of HSBC Bank PLC, Alan Keir, to become the chairman of the ring-fenced bank, Sky News said.
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Meanwhile, HSBC is to begin charging clients on deposits in some European currencies, the Financial Times reported. The move comes as banks look to protect their profit margins amid low or even negative interest rates set by central banks.
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The Italian antitrust authority has placed under investigation the Lega Serie A, two pay TV networks and a marketing company over an alleged scheme to lower television broadcast rights, the ANSA news agency reported. Police searched the offices of the Lega, Sky Italia, Mediaset and its controlled company, and media marketing firm Infront Italy earlier in the day. The searches stemmed from an investigation that the antitrust authority launched into last June's bid, which was won by Sky Italia and Mediaset. Sky Italia is owned by the UK's Sky.
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Intermediate Capital Group said it will return GBP300 million in capital to shareholders through a special dividend, as it reported higher assets under management and profit over its last financial year. In a statement, the specialist asset manager said it made a GBP178.5 million pretax profit in the year ended March 31, compared with GBP164.4 million in the prior year. Assets under management increased to EUR18.0 billion from EUR12.98 billion as fundraising inflows more than offset the outflows from realisations.
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Thomas Cook Group reported a narrowed pretax loss in the first half of its financial year, even though revenue fell, although it said current trading is performing above the levels of this time last year. The travel operator reported a pretax loss of GBP303 million in the six months to March 31, narrower than the GBP366 million reported in the same period the prior year. Revenue fell to GBP2.7 billion from GBP3 billion, although it did increase on a like-for-like basis by 1.2% as a result of growing new product and long haul sales.
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Zoopla Property Group reported higher profit for the first half of its financial year, as revenue was buoyed by higher revenue per agent and higher advertising revenue, and the company said it had stemmed the loss in agents that had been caused by the opening of a new rival property portal. The company, which is set to expand from its property sales and rentals portal into utility and financial services price comparison by buying uSwitch for up to GBP190 million, reported a pretax profit of GBP18.4 million for the six months to end-March, up from GBP16.3 million a year earlier, as revenue rose to GBP42.0 million from GBP38.3 million. Zoopla declared a maiden interim dividend of 1.0 pence a share.
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Soft drinks company Britvic said its pretax profit improved in the first half of its financial year despite a fall in revenue following an improvement in its gross margin, and the group hiked its dividend on the back of a confident outlook for the year. Britvic said its pretax profit in the 28 weeks to April 12 was GBP51 million, up from GBP45.3 million in the 28 weeks to April 13, 2014. On the back of the rise in profit, the group hiked its interim dividend by 9.8% to 6.7 pence per share, up from 6.1% for the first half of 2014.
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MARKETS
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London stock indices are trading mixed mid-morning as fears about Greece's finances continue amid a busy day on the UK corporate front.
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FTSE 100: flat at 6,996.40
FTSE 250: down 0.2% at 18,132.45
AIM ALL-SHARE: flat at 762.43
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The pound is up against the dollar after the Bank of England said members of its Monetary Policy Committee voted unanimously to keep UK interest rates unchanged.
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GBP: up at USD1.5518
EUR: down at USD1.119
GOLD: down at USD1207.85 per ounce
OIL (Brent): up at USD64.78 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Bank of England policymakers unanimously voted to maintain its monetary policy stance at the meeting held early this month, the minutes of the meeting showed. The Monetary Policy Committee voted 9-0 to hold the key interest rate at a record low of 0.50% and asset purchase programme at GBP 375 billion. For two members, the immediate policy decision remained finely balanced between voting to hold or raise the bank Rate.
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UK households' finance outlook worsened for the first time in eight months in May, while their financial woes eased to a record low, results of a survey by Markit Economics and financial information provider Ipsos Mori revealed. The seasonally adjusted Markit Household Finance Index rose slightly to 45.8 in May from 45.7 in the previous month. A score below 50 suggests pessimism regarding finances among the UK households. However, the latest data pointed to the weakest squeeze on UK household finances since the survey began in early 2009.
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The European Central Bank's Governing Council will meet Wednesday to discuss whether to raise the collateral requirements for the emergency loans it gives to the Bank of Greece. The 25-member council, led by ECB President Mario Draghi, is set to meet in Frankfurt to decide whether to tighten the rules for the Emergency Liquidity Assistance, or ELA, for Greece. However, analysts expect ECB policymakers not to any take decision that could trigger a crisis. That said, pressure is mounting on the bank to get tough with Greece as the country veers towards a default amid the ongoing political crisis.
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The Greek government's parliamentary speaker said the struggling nation will not be able to make a payment to the International Monetary Fund on June 5 if there is no deal with its creditors by then, Reuters reported. "Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5," Nikos Filis told ANT1 television. "If there is no deal by then that will address the current funding problem, they won't get any money."
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Germany's producer prices declined at a slightly faster-than-expected pace in April, figures from Destatis showed. The producer price index fell 1.5% year-over-year in April, just above economists' expectations for a 1.4% decrease. In March, prices had fallen 1.7%. Producer prices have been falling since August 2013.
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EU leaders are set to meet with their counterparts from six eastern countries in Riga this week, amid concern that the meeting could further inflame tensions with Russia. Their last meeting, held in Vilnius in 2013, triggered the current crisis in Ukraine, after the country's former president Viktor Yanukovych backed out of a deal on closer ties with the European Union. On Tuesday, Russian Foreign Minister Sergei Lavrov warned the EU during a trip to Brussels against steps that could harm Russian interests, adding that the bloc's relations with its eastern neighbours must not have negative consequences for Moscow. The EU's Eastern Partnership programme aims to encourage six former Soviet states - Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine - to undertake reforms, in return for closer relations and economic benefits.
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Iraqi authorities bowed to pressure from leaders in the western al-Anbar province and agreed to allow thousands of families fleeing Islamic State to enter the capital Baghdad. A security source told dpa that a bridge across the Euphrates river near Baghdad, where refugees have camped out for days since the jihadists captured al-Anbar's provincial capital Ramadi, would be opened to all civilians. Security forces had imposed strict security checks at the crossing, limiting the numbers of fleeing residents who have been able to cross, for fear that militants might infiltrate the capital.
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Efforts to reach 16 million Yemenis in need of aid were faltering, the United Nations said, as the capital Sana'a was hit by Saudi-led airstrikes for the first time since a five-day truce with Houthi rebels ended. Aid organizations have had to "stop delivery of some assistance activities initiated during the pause due to increased insecurity and limited humanitarian access," the UN Office for the Coordination of Humanitarian Affairs (OCHA) said. The UN also said it was pushing for renewed talks between the warring parties, as Arab media reported a peace conference could take place in Geneva on May 28.
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