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LONDON (Alliance News) - Tesco Wednesday said it swung to a huge loss in its last financial year, after booking a staggering GBP7.0 billion of impairments, writedowns and restructuring charges, as it tried to put a difficult year behind it and get back on track in a revamp that new Chief Executive Dave Lewis admitted is going to take a long time.

The struggling retailer reported a pretax loss for the year ended February 28 of GBP6.38 billion, compared with a profit of GBP2.26 billion a year earlier, as it booked GBP5.61 billion of impairments, mainly on its property portfolio, GBP570 million of stock-related charges, GBP416 million in restructuring costs, and a GBP208 million adjustment accounting for profit overstatements in previous years.

Included in the impairments was a GBP925 million charge after Tesco decided not to proceed with plans to develop 49 sites in its property pipeline, a GBP630 million charge relating to its investment with China Resources Enterprise Ltd, GBP116 million relating to its Dobbies garden centre business and other UK businesses, and an impairment of GBP82 million principally relating to the strategic decision to slow the roll-out of the Harris+Hoole coffee shops and the Euphorium bakery sites.

Its closely-watched trading profit, which excludes the one-off items, dropped by 59% to GBP1.39 billion as revenue fell to GBP62.3 billion, from GBP63.6 billion the year before, although it said UK like-for-like sales volumes were up for the first time in over four years, driven by better availability, service and pricing.

Tesco's like-for-like UK sales excluding fuel fell 3.6%, but it said its investments into improving its offer meant the position improved in the second half of the year, with like-for-like sales down 1.0% in the fourth quarter despite the improvement in volume.

It is also struggling abroad, with trading profit down 18% in Asia and 32% in the rest of Europe. It said it was being hit in South Korea by regulations that have led to a higher number of enforced Sunday closures and increased restrictions on morning trading hours. It said a recovery in consumer spending in Thailand since the recent political unrest has been slower to materialise than it hoped, while it has been hit by the weak economic situation and protests against some Western-owned businesses in Malaysia.

Trading results in Europe were behind its expectations, even though its like-for-like sales improved a bit in the fourth quarter. It has also been hit by strong competition from discount retailers in Ireland, where like-for-like sales fell 6.3%. The fall in the euro against the pound also weighed on the results for the region when translated into sterling.

However, it agreed a pension deficit funding plan with its trustee, comprising cash contributions of GBP270 million a year, adding that it has launched a consultation with colleagues to replace the defined benefit pension scheme with a defined contribution scheme. This comes after some analysts said Tesco would need to raise cash to plug a GBP5 billion hole in its pension fund.

"Whilst the challenges are considerable and that there is no quick fix to Tesco's problems, with little or no hope to our minds of achieving the performance levels of halcyon days of old, we are pleased with the management team that has been put into place, which gives us some confidence of improvement and better times ahead," said Shore analyst Clive Black.

While Tesco shares have fallen after rising initially, Rolls-Royce Holdings is the best-performing stock in the FTSE 100 after the aircraft and marine engine maker said Chief Executive John Rishton will retire on July 2 and be succeeded by former ARM Holdings CEO Warren East, an unexpected move that was welcomed by markets in the wake of several profit warnings in 2014.

East was CEO of chip designer ARM from 2001 to 2013, and became a non-executive director on the Rolls-Royce board in January 2014. Rolls said it had conducted an "extensive international search" for its new CEO.

"I have a strong desire to return to an executive position with the energy and enthusiasm a role like this demands. The markets which Rolls-Royce serves and the technology it deploys are fascinating. This is a wonderful opportunity and I am very much looking forward to leading this remarkable company," East said.

The Bank of England's nine-member rate-setting body in April once again decided unanimously to leave the interest rate and the size of asset purchases unchanged, the meetings of the minutes revealed, although all members are currently expecting rates to rise next, not fall, which helped support the pound.

"All Committee members agreed that it was appropriate to leave the stance of monetary policy unchanged at this meeting, although two members regarded this month's decision as finely balanced," the minutes of the April 8-9 meeting said Wednesday.

"There was a range of views over the most likely future path of Bank Rate, but all members agreed that it was more likely than not that Bank Rate would rise over the three-year forecast period," it added.
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Markets: UK shares are trading lower with investors focusing on corporate news amid a lack of important economic data, with the exception of the release of meeting minutes from the Bank of England, which sent the pound higher.

US stock futures point to a lower open on Wall Street. The DJIA is currently set to open down 0.3% and the S&P 500 and Nasdaq 100 down 0.2%.

FTSE 100: down 0.6% at 7,022.99
FTSE 250: down 0.4% at 17,641.66
AIM ALL-SHARE: down 0.3% at 748.54
GBP: up at USD1.5070
EUR: up at USD1.0772
GOLD: up at USD1,203.34 an ounce
OIL (Brent): up at USD61.79 a barrel
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Other Top Corporate News
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BHP Billiton said production mainly rose across all of its segments in the third quarter and the first nine-months of the year and said it is on track to beat its original production guidance and to achieve group production growth of 16% over a two-year period before the end of 2015. The world's biggest miner said iron ore production for the third quarter rose 20% year on year to 59.0 million tonnes, whilst production for the nine months ended March 31 totalled 172.4 million tonnes, which is up 17% from a year earlier. Iron ore production for the 2015 financial year is expected to be around 2% higher than the company's previous guidance of 230.0 million tonnes.
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Reed Elsevier reiterated its outlook for the full year, and said the simplification of its corporate structure and name change to RELX is on track to complete at the beginning of July subject to approval at its annual general meeting. Reed Elsevier said that business trends in the first quarter of 2015 remained consistent with 2014 across the group. It continued to focus on organic growth, it said, with limited acquisition activity of GBP28 million in the year to date.
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BP Chief Executive Bob Dudley has said the company has no appetite for a mega-merger, cooling speculation that the takeover of BG Group by Royal Dutch Shell will spark a wave of deals in the oil and gas industry, the Financial Times reports. The comments come amid speculation that BP itself could become a takeover target for ExxonMobil Inc, the US oil group which has long been linked to a bid for the British major.
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BP is also seeking buyers for up to USD2 billion worth of its US pipelines and storage terminals as the group seeks to offload some of its non-drilling infrastructure, Bloomberg reported. BP has sent offering materials to potential buyers of two of its assets in the past fortnight, Bloomberg said, citing people familiar with the matter. The assets includes its interest in four pipelines and a gas plant along the Gulf of Mexico and 15 storage terminals in the Midwest and East Coast regions, the sources told Bloomberg.
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Vodafone Group has held early talks with French telecoms company Altice SA about acquiring Portuguese cable business Cabovisão, the Financial Times reported. The European Commission cleared Altice's EUR7.4 billion takeover of Portugal Telecom on Monday, on the condition it divests its existing Cabovisão and Oni businesses in Portugal.
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Hammerson said it had signed a GBP415 million unsecured revolving credit facility with a syndicate of nine banks, refinancing an existing GBP505 million facility that was set to mature in April 2016, meaning it will cut its undrawn facilities and reduce borrowing costs.
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British Land got a boost after the UK unit of Facebook Inc leased a further 66,000 square foot of space at the commercial property company's Regent's Place campus in London. British Land said Facebook has leased the fifth floor and floors nine to 16 as well as a ground floor events space at 338 Euston Road, adding to the 87,000 square feet that the US social media giant already has on the Regent's Place campus.
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Travis Perkins said total sales rose 7.2% and like-for-like sales grew 5.1% in the first quarter of 2015, keeping well ahead of its medium-term like-for-like sales growth target. The builders merchant said strong growth in its general merchanting, consumer and contracts businesses more than offset a 3.7% decline in total sales and 6.1% decline in like-for-like sales in its heating and plumbing business.
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Specialty chemicals company Croda International said 2015 has started in line with its expectations and said it expects growth to continue through the year on the back of strong performances in its Personal Care and Life Sciences businesses. Croda said its revenue in the first quarter was GBP284.9 million, compared to GBP274 million a year earlier, with the 4% growth the same in reported and constant currencies.
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Bookmaker Ladbrokes said profit in the first quarter dropped heavily on the back of unfavourable sporting results and the implementation of tax hikes in the UK, as its new chief executive pushes ahead with plans to restructure the business. Group net revenue was up 3.3% in the quarter, with UK retail net revenue up 4.3% and digital net revenue up by 9.5%, despite the latter taking a big hit from a sharp fall in revenue from its Sportsbook business which was offset by a good performance in Australia. Earnings before income and taxation in the first quarter fell to GBP14.3 million, down 22% year-on-year as a result of customer-friendly results, the implementation of the point-of-consumption tax in the UK, increased Machines Games Duty, and the company's withdrawal from unregulated digital markets in line with guidelines issued by the UK Gambling Commission.
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AIM Movers
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Deltex Medical Group shares are up by a fifth after it established its ninth dedicated trainer account in the US, with an unnamed "highly prestigious teaching hospital" based in Boston, Massachusetts. Eurasia Mining has lost nearly a quarter of its value after it completed a strategic share placing to raise GBP515,700 to support its working capital requirements. Eurasia said it has raised the money by issuing 93.8 million shares at 0.55 pence per share, sending its shares down to 0.587 pence. Westminster Group is down after it raised GBP2.3 million through the issue of convertible loan notes, which it plans to use to strengthen its balance sheet, and support its ongoing costs, particularly as it expands its Managed Services division. Phorm Corporation is another faller after it raised GBP6.0 million through a placing of 62.5 million new shares and a subscription for 12.5 million shares at a price of 8.0 pence per share, which it plans to use for general working capital. The company currently trades at 7.0p. Rose Petroleum is down after it said John Blair, the chief executive of the company's two oil and gas subsidiaries, has resigned with immediate effect and been replaced with the group's current senior vice president of operations. Blair decided to leave, and the company wished him every success.
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Other Top Economics And General
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Conservative Prime Minister David Cameron stepped up his attacks on a potential coalition between Labour and the Scottish National Party, as a new study claimed that Scotland will face substantial tax rises under the SNP's plans and as Labour and the Liberal Democrats traded blows on public sector pay pledges. Cameron dismissed concerns within his own party that he risked pushing Scotland towards another independence referendum by demonising the SNP, saying at a speech in Yorkshire that the SNP is not coming to Westminster with a list of demands to strengthen the UK, but rather they will be coming with the single objective of breaking up the UK.
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The Conservatives pushed into the lead in the daily YouGov poll ahead of the UK election next month, but Labour performed the same trick in the TNS survey, overturning the Tories' lead. The latest YouGov/The Sun poll has the Conservatives on 35% to Labour's 34%, with the Tories gaining two points from the survey on Tuesday to overtake their rivals. UKIP and the Liberal Democrats remained flat at 13% and 7%, respectively, in third and fourth. TNS UK, however, now has Labour in the lead, with the party gaining two points against the poll a week earlier to sit at 34%, with the Tories losing the same number of points to fall to 32%. UKIP gained a point to 15%, with the Liberal Democrats down a point to 8%.
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Japan posted a trade surplus in March for the first time in 33 months amid falling energy prices and a weaker yen, the government said. Japan's trade surplus stood at JPY229.3 billion with shipments growing 8.5% from a year earlier to JPY6.93 trillion and imports down 14.5% to JPY6.9 trillion, the Finance Ministry said in a preliminary report. The value of Japan's imports of petroleum fell 50.7% from a year earlier and those of liquefied natural gas declined 12.3%, the ministry said.
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The Greek government called on mayors to hand over their cash reserves saying the state faced a EUR400 million shortfall for the month of April to cover salaries and pensions. "We have a revenue shortfall of about EUR350-400 million that needs to be covered by the end of the month in order to meet the country's needs," said Deputy Finance Minister Dimitris Mardas told private Mega TV. "We call on all mayors to revise their stance," he said. The government earlier this week issued an emergency decree to confiscate cash reserves estimated at EUR2 billion from local authorities. The government wants the cash to be transferred to the central bank where it can be used to cover debt payments.
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The military coalition led by Saudi Arabia against Yemen's Houthi rebels Tuesday claimed success in its air campaign and said the current operation would end at midnight. Coalition spokesman Ahmed Asiri said Operation Decisive Storm had eliminated the heavy weapons and ballistic missiles held by the mainly Shiite Houthis and allied military units. The new operation would focus on preventing the movement of Houthi militias, protecting civilians, and supporting aid and relief efforts, he said at the coalition's daily press briefing in the Saudi capital Riyadh.
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Afternoon Watchlist (all times in BST)

14:00 US Housing Price Index
15:00 EU Consumer Confidence Preliminary
15:00 US Existing Home Sales
15:30 US EIA Crude Oil Stocks change
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Thursday's UK Corporate Events

Computacenter - Q1 Interim Management Statement
Anglo American - Q1 Production Report
Meggitt - Trading Statement
Taylor Wimpey - Interim Management Statement
Air Partner - Full Year Results
Acacia Mining - Q1 Results
Camellia - Full Year Results
Pace - Interim Management Statement
William Hill - Q1 Interim Management Statement
WPP - Trading Statement
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Thursday's Key Economic Events (all times in BST)

00:50 Japan Foreign bond/stock investment
02:35 Japan Nomura/ JMMA Manufacturing PMI Preliminary
02:45 China HSBC Manufacturing PMI Preliminary
07:00 Germany Gfk Consumer Confidence Survey
07:45 France Business Climate 100 99
08:00 France Markit Manufacturing/Services PMI Preliminary
08:30 Germany Markit Manufacturing/Services PMI Preliminary
09:00 EU Markit Manufacturing/Services PMI Preliminary
09:00 Italy Wage Inflation
09:30 UK Public Sector Net Borrowing
09:30 UK Retail Sales
10:00 Italy Trade Balance non-EU
13:30 US Jobless Claims
14:45 US Markit Manufacturing PMI Preliminary
15:00 US New Home Sales
15:30 US EIA Natural Gas Storage change
16:00 US Kansas Fed manufacturing activity
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