LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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RSA Insurance Group said it has signed contracts to sell its operations in Latin America to Suramericana, the insurance subsidiary of Colombia's Grupo de Inversiones Suramericana, for about GBP403 million in cash, the last of its larger businesses to be disposed of under a restructuring plan. In a statement, RSA said that Zurich Insurance Group, which has shown interest in making a GBP5.6 billion takeover offer for its smaller rival, was made aware of the sale process. "This transaction is not conditional on the outcome of their possible offer for RSA," the company said.
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Whitbread reported a rise in sales in the first half of its financial year, boosted by growth in both its Premier Inn and Costa businesses, and it said it is on track to meet expectations for the full year. The hotel and coffee shop operator said that total sales in the 24 weeks to August 13 grew 11.8%, or 3.9% on a like-for-like basis on the same period the year before. In the second quarter, total sales increased 11.1% and rose 3.3% on a like-for-like basis. "We are developing plans to adopt the recently announced National Living Wage. We shall mitigate this substantial cost increase over time with a combination of productivity improvements, boosted by investment in systems and training, efficiency savings and some selective price increases," Chief Executive Andy Harrison said.
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Hikma Pharmaceuticals said it has struck a deal to acquire Egypt-based EIMC United Pharmaceuticals for an undisclosed amount. Hikma said EIMC United specialises in oncology products and said the deal will strengthen its position in the Egyptian market and will add an attractive oncology and injectables pipeline to its portfolio, with the potential to add around 50 products by 2020.
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Royal London Asset Management is set to vote against the re-election of Sports Direct International founder Mike Ashley as executive deputy chairman at the company's annual general meeting on Wednesday, the Financial Times reported. Royal London said it has lost confidence in the company's board and would vote against Ashley's re-election for the first time. Ashley Hamilton Claxton, corporate governance manager at Royal London, one of the City's most prominent institutional investors, said the investment manager is "very concerned about the long list of corporate governance failings that have not been addressed."
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Amlin said it has agreed to be acquired by Mitsui Sumitomo Insurance in a deal valuing the UK insurer at about GBP3.47 billion, as the wave of mergers and acquisitions continues across the industry. Mitsui Sumitomo Insurance, which is owned by Japan's MS&AD Insurance Group Holdings Inc, will pay 670 pence per Amlin share. In addition, Amlin shareholder will be able to receive the insurer's 8.4 pence interim dividend declared last month.
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Berkeley Group Holdings reiterated its earnings guidance as it said it has continued to expand its operations in its current financial year so far. The housebuilder, which will be promoted to the FTSE 100 later this month, said that since the start of its financial year at the start of May, it has continued to invest across its business, signing contracts to acquire five sites and investing further in order to hit its three-year earnings targets. Chairman Tony Pidgeley, in a statement issued ahead of the company's annual general meeting, said that following the positive start to the year, the group reiterates its guidance for earnings of GBP2.0 billion to be delivered in aggregate over its 2016, 2017 and 2018 financial years.
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Housebuilder Redrow posted big rises in pretax profit and revenue and doubled its dividend payout as its 2015 financial year saw it selling more houses at higher prices. The FTSE 250 company said its pretax profit for the year to the end of June was GBP204.0 million, up from GBP133.0 million a year earlier, while revenue increased to GBP1.15 billion from GBP864.0 million. The group declared a full-year dividend of 6.0 pence per share, double the year before.
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Paddy Power said it has reached an agreement with Betfair Group on the terms of a recommended all-share merger between the two companies. The merged entity, to be called Paddy Power Betfair, will result in Paddy Power shareholders owning 52% of the combined group, while Betfair shareholders will own 48%. Betfair shareholders will receive 0.4254 new Paddy Power Betfair shares in exchange for each Betfair share. Paddy Power shareholders will also receive a special dividend of EUR80 million.
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Ashmore Group reported higher pretax profit in its last financial year, as the asset manager defended the fundamentals of emerging markets. Chief Executive Mark Coombs said that sentiment towards emerging markets is being influenced by macroeconomic factors such as the timing of the first US interest rate increase and China's rebalancing of its economy. Ashmore said it made a GBP181.3 million pretax profit in the financial year ended June 30, compared with GBP171.6 million the prior year. Net revenue was up by 8% to GBP283.3 million as higher performance fees and the strength of the dollar more than offset lower management fees on a fall in assets under management to USD58.9 billion from USD75.0 billion over the course of the year.
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MARKETS
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UK indices were trading higher after Chinese equities turned positive following mixed trade data. Shares in insurers were given a boost after Amlin said it agreed to be acquired by Mitsui Sumitomo Insurance.
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FTSE 100: up 1.6% at 6,170.60
FTSE 250: up 1.2% at 17,042.25
AIM ALL-SHARE: up 0.3% at 734.63
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GBP: up at USD1.5380
EUR: flat at USD1.1162
GOLD: flat at USD1120.50 per ounce
OIL (Brent): up at USD48.63 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Eurozone economy grew more than initially estimated in the second quarter, data released by Eurostat showed. Gross domestic product advanced 0.4% sequentially after rising 0.5% a quarter ago. The growth rate for the second quarter was revised up from 0.3%. Likewise, annual growth was raised to 1.5% from 1.2% for the June quarter. GDP climbed 1.2% in the first quarter.
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The total value of like-for-like sales in the UK was down 1.0% on year in August, the British Retail Consortium said on Tuesday - following the 1.2% increase in July. Overall retail sales added 0.1% after climbing 2.7% in the previous month. Non-food sales surged an annual 17.2%, accelerating from 16.3% a month earlier. Online sales of non-food products advanced 6.5% on year.
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China posted a merchandise trade surplus of USD60.24 billion in August, the National Customs Office said. That was well above forecasts for a surplus of USD48.0 billion and up from USD43.03 billion in July. Exports were down 5.5% on year - bettering expectations for a fall of 6.6% after tumbling 8.3% in the previous month. Imports skidded an annual 13.8% versus expectations for a fall of 7.9% after dropping 8.1% a month earlier.
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German exports and imports grew more than expected in July, taking the trade surplus to a record level, data published by Destatis showed. Exports rose 2.4% month-on-month to EUR103.4 billion in July. This was the fastest growth since December 2014. Economists had forecast shipments to grow 1% reversing a 1.1% fall in June. At the same time, imports advanced 2.2% to EUR80.6 billion in July. Imports had declined 0.8% in June. Imports were expected to rise 0.7%. These were the highest seasonally adjusted monthly figures ever calculated both for exports and for imports, Destatis said.
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The European Commission offered measures worth EUR500 million to help farmers facing economic problems, but they said the package was not sufficient, following a day of angry protest in Brussels. Farmers have been hard-hit by a Russian ban on European food imports, implemented amid political tensions over the crisis in Ukraine. Slowing growth in China and a summer drought in Europe have also contributed to the pressure on farms, whose incomes have plunged. The situation is said to be especially dire in the dairy, pork, beef, fruit and vegetable sectors. The commission presented its aid package to EU agriculture ministers at special talks on the challenges facing the industry. The bulk of the funding is to go directly to member states, with the advice that they spend it predominantly on dairy farmers.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun
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