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(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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UK regulators outlined a string of measures intended to strengthen the financial position of water utility firms which could see dividend payments paused. UK water regulator Ofwat confirmed it was calling on water firms, including listed peers Severn Trent, United Utilities and Pennon, to adopt common standards involving a bundle of measures to strengthen their "financial resilience". Amongst the proposals, Ofwat is looking to strengthen requirements for water firms to maintain investment grade credit ratings. Should the firm become at risk of losing investment grade status, the company would accept a bar on payouts to shareholders or any other means of taking money or assets out from the business. "Water companies must provide resilient services to their customers," Ofwat Chief Executive Officer Rachel Fletcher said. "To do that, they need to be financially resilient. To help secure that, we want to introduce clearer, consistent requirements and protections."
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Micro Focus International left its annual guidance unchanged, as interim profit swelled following the sale of its SUSE business. For the six months ended April 30, revenue came in at USD1.66 billion, down 7.5% from USD1.79 billion the year before. Profit for the period after tax surged to USD1.40 billion from USD619.7 million the year before, following the sale of its SUSE software business. The company said the SUSE separation and disposal was delivered on schedule resulting in a USD1.7 billion profit on disposal and USD1.8 billion returned to shareholders. From continuing operations, Micro Focus posted a pretax loss USD99.6 million, in line with the USD100.9 million loss the year before. The company maintained its interim dividend at 58.33 US cents. The software firm reiterated its guidance for constant currency revenue change for the 12 months to 31 October of minus 4% to minus 6%.
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Grocery delivery firm Ocado Group said its interim loss deepened due to the effects of a warehouse fire in Hampshire, but it continues to experience healthy sales growth amid "strong" demand. For the six months ended June 3, pretax loss widened dramatically to GBP142.8 million from just GBP13.6 million a year prior. This was despite revenue rising 11% to GBP882.3 million from GBP795.3 million, as retail revenue grew 10% to GBP811.5 million from GBP736.6 million. Profit performance was primarily hurt by GBP100.6 million in exceptional administrative costs during the period. This was largely the write down of property, plant and equipment following a fire at Ocado's Andover warehouse. Adjusted pretax loss, excluding such one-off costs, still worsened to GBP43.0 million from GBP12.9 million the year before.
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WPP is close to clinching the sale of a majority stake of market research arm Kantar to Bain Capital, Bloomberg reported. The business news agency - citing "people familiar with the matter" - said WPP was discussing a 60% stake sale to private equity firm Bain. Final terms are currently being discussed, with an announcement possible within as little as two days, Bloomberg reported. On Monday last week, WPP announced it had entered into exclusive talks with Bain about the sale of a "majority" stake in Kantar. At the time, WPP said the talks gave Kantar an enterprise value of around USD4 billion.
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SSE has found it difficult to attract investors due to the UK opposition Labour Party's stated intention to renationalise energy networks, the Financial Times reported. In an interview with the FT, the electricity utility's chief executive, Alistair Phillips-Davies, claimed to have had trouble encouraging new investors to purchase shares in SSE after Labour announced that it wanted to bring the large companies which own the country's electricity and gas infrastructure into public hands. According to the newspaper, Phillips-Davies said: "We are in a situation where you have...an event that appears unlikely but could have quite nasty effects and so it's difficult for us to get new investors to buy into the stock."
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MARKETS
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London shares were lower ahead of the two-day congressional testimony of Federal Reserve Chair Jerome Powell on Wednesday for clues on the direction the central bank will take. Ocado was the best blue chip performer, up 8.2%. Wall Street was pointed to a lower open, with soft drinks maker PepsiCo set to report second-quarter earnings before the market opens in New York on Tuesday.
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FTSE 100: down 0.3% at 7,523.82
FTSE 250: down 0.7% at 19,443.14
AIM ALL-SHARE: down 0.4% at 907.44
GBP: down at USD1.2463 (USD1.2508)
EUR: soft at USD1.1200 (USD1.1215)
GOLD: down at USD1,388.24 per ounce (USD1,397.26)
OIL (Brent): soft at USD64.32 a barrel (USD64.78)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Milder weather conditions led to the worst June on record for UK sales as retailers struggled to compete with last year's performance, the British Retail Consortium-KPMG Retail Sales Monitor showed. Retail sales fell by 1.3% in June on an annual basis, compared to a 2.3% rise in the same month a year ago. This brought the three-month average to a decline of 0.1% and the twelve-month average to a rise of 0.6%, the lowest since the monitor's records began in December 1995. On a like-for-like basis, UK sales fell at an annual rate of 1.6% in June, versus a 1.1% rise in the same month the year before. "June sales could not compete with last year's scorching weather and World Cup, leading to the worst June on record," said BRC Chief Executive Helen Dickinson.
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Downing Street has insisted the British ambassador to the US has the prime minister's full support despite Donald Trump saying he would no longer work with him. Theresa May stood by Kim Darroch, who enraged the US president by describing his administration as "inept" in leaked advice. Trump dramatically escalated the transatlantic war of words over the controversy, attacking May as well as Darroch. But a UK government spokesman said: "We have made clear to the US how unfortunate this leak is. The selective extracts leaked do not reflect the closeness of, and the esteem in which we hold, the relationship.
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Boris Johnson and Jeremy Hunt are preparing to take part in their only scheduled head-to-head encounter of the Tory leadership campaign. The two contenders to succeed Theresa May as party leader and UK prime minister will appear on a live ITV debate at 2000 BST on Tuesday which could help to decide the outcome of the contest. Johnson will hope to use the occasion to seal his position as the clear frontrunner, with polls giving him an overwhelming lead among party members. For Hunt, the UK foreign secretary, it potentially offers a final chance to turn around a contest in which he has been the underdog throughout. There has been frustration in the Hunt camp at the reluctance of his rival to engage in direct debate. Although both men have taken part in numerous hustings - where they take questions separately from party members - Johnson has agreed to take part in only one previous TV debate, when there were still five contenders left in the race.
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