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LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Royal Bank of Scotland Group and Lloyds Banking Group, both based in Scotland, have made contingency plans to move their headquarters to London in the event of the Scottish people voting in favour of a split from the UK at next week's independence referendum. "While the scale of potential change is currently unclear, we have contingency plans in place which include the establishment of new legal entities in England," Lloyds said in a statement. RBS confirmed its own contingency planning and said it believes it will be "necessary" in the event of a 'Yes' vote to re-domicile the bank's holding company and its primary rated operating entity, The Royal Bank of Scotland PLC, to England.
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Wm Morrison Supermarkets posted a further drop in profit in the first half of its financial year, again hit by dwindling UK sales and waning market share, but the grocer raised its interim dividend and confirmed its commitment to paying a dividend of not less than 13.65 pence for the current financial year. The UK's fourth largest supermarket chain raised its interim dividend by 4.9% to 4.03p per share from 3.84p, and confirmed its underlying pretax profit guidance for the full financial year of between GBP325 million and GBP375 million, after booking a combined total of around GBP135 million in new business development costs and other 'one-off' costs.
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Ocado Group sounded a note of caution on the UK retail environment as it posted a rise in sales and average orders per week for the third quarter, but said its average order size had shrunk during the period. The FTSE 250 grocery-delivery company said group sales in the 12 weeks to August 10 were up 23% to GBP231.9 million, against GBP189.2 million a year earlier. Retail sales in the period were up 16% to GBP218.5 million against GBP189.2 million last year. Average orders per week increased by 17% to 163,000, against 139,000 last year, but average order size was down by 1.7% to GBP111.64 against GBP113.54 in the corresponding period in 2013.
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Fashion and home goods retailer Next reported a 19% rise in pretax profit for the first half of the year, citing a range of factors including the improving UK economy and much better summer weather, although it kept most of its full-year outlook unchanged having already raised it twice this year. Next's pretax profit was GBP324.2 million in the six months to end-July, up from GBP271.8 million a year earlier, as revenue rose to GBP1.85 billion, from GBP1.68 billion. The growth was driven by a 7.5% revenue increase in its stores and 16% growth in its directory business. Next raised its interim dividend to 50.0 pence, from 26.0p, but said it wouldn't be paying any more special dividends for the time being. It expects to pay a total dividend of 150 pence this financial year, up 16% from last year.
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DIY and general merchandise retailer Home Retail Group reported a ninth consecutive quarter of like-for-like sales growth for Argos, this time supported by margin growth, but tepid growth at its Homebase DIY unit as sales of seasonal goods fell short of last year. Home Retail said it expects to report a benchmark profit in line with market expectations for the full year, in the range of GBP122 million and GBP135 million, although, as always, this will depend on how Argos performs over the key Christmas trading period. "To meet that target, we need Argos to continue its current run rate, with like-for-like sales broadly around 3% and margins close to flat," Chief Executive John Walden told journalists.
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Dunelm Group upped its full-year dividend by 25% after recording a year of "solid" growth, with rises in pretax profit and revenue supported by the opening of new stores and improvements in its multi-channel offerings. In its full-year results for the 52 weeks to June 28, the homewares retailer said pretax profit rose 7.3% to GBP116.0 million from GBP108.1 million the previous year. Revenue was up 7.8% for the year to GBP730.2 million from the GBP677.2 million reported for 2013. The company said Nick Wharton has resigned from his position as chief executive and is stepping down from the board. Will Adderley, currently serving as executive deputy chairman, has been appointed to resume the role of chief executive with immediate effect.
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The Department for Transport said that it has awarded Go-Ahead's 65%-owned train operating company, Southeastern, a new contract to continue to run the South Eastern franchise until June 2018. Under the terms of the deal, Southeastern will continue to operate services between London, Kent and parts of East Sussex until June 2018, and make major improvements to customer service, passenger satisfaction and train punctuality across their network. The FTSE 250-listed transport group said the contract also includes more than GBP70 million investment into better customer information systems, including new digital display schemes at key stations, additional staff and maintenance to stations and trains along the route.
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Ashmore Group reported a 34% drop in full-year pretax profit, as it came under pressure due to emerging-market volatility, lower performance fees and the strength of the pound. In a statement, the emerging markets asset manager said it made a GBP170.3 million pretax profit in the year ended June 30, compared with GBP257.6 million last year. Ashmore said GBP46.0 million was due to foreign exchange translation, while GBP30.1 million was due to lower performance fees as a consequence of the market sell-off in May and June 2013 and continued volatility throughout the first half of the financial year. Chairman Michael Benson said the remainder is largely explained by a reduction in net management fees, offset by lower operating costs.
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Housebuilding and construction company Galliford Try said it had been appointed to three new contracts worth over GBP100 million combined, in Lincolnshire, Swansea and Northampton.
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MARKETS
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Investors reined in early optimism causing London indices to trade mixed by mid-morning.
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FTSE 100: down 0.2% at 6,818.25
FTSE 250: up 0.2% at 15,709.06
AIM ALL-SHARE: up 0.02% at 775.75
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The euro is up against the dollar after final German inflation figures for August came in as expected. ECB President Mario Draghi will be making a keynote speech at Eurofi Financial Forum in Milan at 2000 BST.
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GBP-USD: up at USD1.6249
EUR-USD: up at USD1.2924

GOLD: down at USD1245.89 per ounce
OIL (Brent): down at USD97.35 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The house price balance in the UK fell all the way to 40% in August, the Royal Institution of Chartered Surveyors said. That was well shy of forecasts for 47% and down sharply from the downwardly revised 48% in July (originally 49%). In the London area, house prices were higher for a balance of nine percent of agents - slowing from 11% in the previous month.
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Inflation in China slowed more than expected in August and producer prices extended its decline for the 30th consecutive month, providing leeway for the implementation of additional stimulus to offset the weakness in property sector. Consumer price inflation slowed to a four-month low of 2% in August, the National Bureau of Statistics reported Thursday. It was forecast to ease moderately to 2.2% from the 2.3% in July. Inflation remains well below the government's full-year target of 3.5%. During January to August, headline inflation was 2.2%.
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Germany's inflation in August, measured on the consumer price index, held steady as initially estimated, at its lowest level since February 2010, final data from Destatis showed. The consumer price index rose 0.8% year-on-year in August, same as in July. This was the lowest since February 2010, when prices climbed 0.5%. On a monthly basis, consumer prices remained unchanged.
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French inflation slowed as expected in August to the lowest since late 2009, the statistical office Insee showed. Consumer prices rose 0.4% year-on-year, in line with forecast, but slower than the 0.5% increase in July. The 0.4% was last reported in November 2009 and it was the lowest since October 2009, when prices fell 0.2%. Consumer prices were up 0.4% on a monthly basis, which reversed the 0.3% decline in the prior month. The monthly rate also matched economists' expectations.
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US President Barack Obama said the US will lead a broad coalition of nations to take the fight to the Islamic State and vowed to degrade and ultimately destroy the terrorist group. Obama used a prime-time speech Wednesday night to offer a comprehensive and sustained counterterrorism strategy to combat ISIS that includes US military action as well as provide support to Iraqi forces and Syrian rebels that are fighting the terrorists on the ground. The president also said he is sending more US service members to Iraq as part of the strategy.
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Syria's Western-back opposition coalition said it welcomed Obama's announcement that the US would expand airstrikes against the militant Islamic State group into Syria. The Syrian National Coalition called on Congress to approve Obama's plan to strike the al-Qaeda splinter group "wherever they are," along with arming and training moderate Syrian rebels who are battling both the Islamic State and Syrian President Bashar al-Assad's forces. "The Syrian Coalition has long called for this action and has warned time and again of the growing threat of this extremist group," the opposition grouping said in a statement.
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EU member states on Wednesday failed to reach a decision on the implementation of new sanctions against Russia, with ambassadors due to resume talks the following day, according to sources in Brussels. While the measures were formally approved on Monday, there is now disagreement over their implementation, amid indications that a ceasefire in eastern Ukraine is holding, as well as concerns over Russian retaliation.
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The murder trial of South African athlete Oscar Pistorius enters its final phase Thursday, and judge Thokozile Masipa is expected to announce her verdict this week. The judge's analysis of the arguments presented by the prosecution and defence could last until Friday, followed by the announcement of the verdict.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun

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