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LONDON (Alliance News) - Prudential is the biggest gainer on the FTSE 100 Wednesday after the insurer's closely-watched operating profit grew by 17%, driven by its US and Asian operations, while G4S has plummeted after it reported a loss and finally settled with the UK government, paying much more than rival Serco did.
Prudential also signed a new 15-year agreement with Standard Chartered, that will see a wide range of Prudential's life insurance products exclusively distributed through the bank's branches in a number of markets, including Hong Kong and Singapore. The blue-chip powerhouses also will look to collaborate in other parts of Asia and Africa
Although Prudential's 2013 pretax profit fell by 40% to GBP1.64 billion due to investment return fluctuations, its closely-watched operating profit, which is based on longer-term investment returns, grew to GBP2.95 billion from GBP2.52 billion in 2012. The rise, driven by strong profit growth in Asia, the US and the UK, beat analysts' expectations.
Prudental Chief Executive Tidjane Thiam predicted "more of the same, just better".
G4S, meanwhile, said it swung to a loss in 2013 as it booked GBP386 million in charges and restructuring costs related to its issues with UK government contracts.
It then said it will refund the Ministry of Justice GBP108.9 million for both the tagging and facilities management contracts that were at issue, more than the GBP69.5 million Serco paid to settle its part of the tagging contract, and way more than the GBP24.1 million G4S had originally offered as compensation for overcharging on the tagging contract.
G4S is now hopeful that it too is allowed to bid again on UK government contracts.
The pickup in London initial public offerings continued Wednesday: Discount retailer Poundland and pets product retailer Pets at Home Group both priced their initial public offerings and commenced conditional dealings. With IPO's priced at 300 pence per share and 245 pence per share, the companies are valued at GBP750 million and GBP1.23 billion, respectively.
Poundland said it plans to use the raised funds to finance big expansion plans, believing it has the potential to have more than 1,000 stores in the UK alone in the longer term; it is also planning expansion into continental Europe. Pets at Home said it will use to cut its debts and expand the business. The IPO also will give private-equity owner Kohlberg Kravis Roberts, which bought Pets at Home in 2010 for around GBP955 million, a return on its investment.
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FTSE 100: Down 1.2% at 6,605.93
FTSE 250: Down 0.8% at 16,352.29
AIM ALL-SHARE: Down 1.0% at 887.22
GBP-USD: 1.6622
EUR-USD: 1.3898
GOLD: USD1,364.64 an ounce
OIL (Brent): USD107.83 a barrel
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Key UK Corporate News
FTSE 100: WPP's marketing communications network Ogilvy & Mather has agreed to buy a majority stake in marketing services company Memac Ogilvy. It did not provide any financial details.
FTSE 250: LondonMetric Property has exchanged contracts to acquire the Marks & Spencer distribution centre in Sheffield for GBP32.2 million from clients of CBRE Global Investors, reflecting a net initial yield of 7.6%. Ferrexpo said its pretax profit increased in 2013 due to strong revenues and said that there are currently no disruptions to its operations in Ukraine despite the ongoing political upheaval in the country. Hikma Pharmaceuticals has proposed a final special dividend and raised its total dividend, as it saw pretax profit jump in 2013. Ocado Group said group gross sales rose 23% in the first trading quarter of its new financial year, boosted by double-digit growth in the number of average orders per week and the launch of its delivery services for Wm Morrison Supermarket's fledgling online business. Kenmare Resources said it swung to a pretax loss in 2013, as revenues fell significantly on lower commodity prices and as it focused on the development of its Moma investment during the period. Salamander Energy has discovered gas at the West Kerendan-1 exploration well in Indonesia.
AIM: Shares in Pentagon Protection have jumped after the security and energy savings company announced GBP555,000 of new contract wins. Nyota Minerals shares have risen after AIM-listed KEFI Minerals said it has increased the total JORC compliant resources at its newly acquired Tulu Kapi project in Ethiopia. KEFI holds a 75% interest in the site, while Nyota Minerals holds the other 25% interest. Hummingbird Resources is up after a new mineral resources estimate carried out at the Tuzon deposit on its Dugbe 1 project in Liberia materially increased the resource grade, size and indicated ounces in the deposit. Rose Petroleum is doing well after it completed the acquisition of its new hydrocarbon exploration concession in Bavaria, Germany, after the statutory period for legal challenges against the licenses expired. Amara Mining is another gainer after it said the results of its preliminary economic assessment at its Yaoure gold project in Ivory Coast confirmed the opportunity for strong returns. Karelian Diamond Resources is up after the Finnish diamond explorer said it has been granted three more exploration claim reservations by Finnish authorities. Ceres Power Holdings is also up after its pretax loss narrowed significantly in its first-half due to improved revenues and reduced costs. At the other end of the market, Wolf Minerals has dropped after the metals exploration and development company said its shares on the Australian Securities Exchange have been placed in a trading halt at the company's request. CloudBuy is down after it posted a widened pretax loss for 2013, as cost for its launch in Asia Pacific offset higher revenues.
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Top Economics And General
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The UK's financial conduct regulator said it will launch a review into the way payday lenders and other high-cost short term lenders collect debts and manage borrowers in arrears. The Financial Conduct Authority said its review will be one of its very first moves when it become responsible for regulating consumer credit on April 1. The move comes amid intense scrutiny of the so-called payday lending sector, which makes small, short-term loans but can charge interest rates running at over 100% or more.
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The FCA has also announced the hire of a new head of investment banking in its supervision division, as it continues to step up its supervision of the industry. Julia Hoggett from Bank of America Merrill Lynch will start in the new role in May.
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Eurozone industrial production declined unexpectedly in January largely due to a contraction in energy output, official data showed. Industrial output fell 0.2% month-on-month in January, which was the second consecutive drop, Eurostat said. Economists were expecting production to expand 0.5% after falling revised 0.4% in December.
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European ministers gave consent to improve the mandate to tackle the menace of bank failure, yet much more remained to be agreed on the scheme to handle bad banks. Ministers need to decide on how much countries should help one another in managing a troubled bank. Members were open to reducing the mutualisation period of the EUR 55 billion Single Resolution Fund to 8 years from 10 years. But the details on the subject remain unclear. "The Council adjusted the mandate given to the presidency for negotiations with the European Parliament on the establishment of a single resolution board and a single fund for the resolution of banks," the EU said in a statement after the meeting on Tuesday.
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Italian Prime Minister Matteo Renzi was poised Wednesday to unveil his government's first batch of economic reforms, including a 10-billion-euro (14-billion-dollar) cut on labour taxes to boost jobs and growth. Italy is emerging from the worst recession since World War II, and unemployment is close to 13%. Renzi was sworn in at the end of February, promising a quick-fire succession of measures to revive the economy and make the country more governable.
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Employment in France's non-agricultural sector returned to growth in the December quarter, ending six quarters of contraction, data released by statistical office Insee revealed. The number of employees in the market sector, excluding the farm division, moved up by 15,100, or 0.1%, in the fourth quarter from the the preceding three-month period, when payroll numbers decreased by about 9,600.
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Crimea's secessionist authorities said they have partially closed the region's airspace to "keep out provocateurs" in the run-up to the March 16 referendum about joining Russia. "This is a selective measure which will be cancelled after March 17," first deputy prime minister Rustam Temirgaliev told the Russian Interfax news agency. He explained that incoming flights had been partially restricted "to avoid provocateurs entering" Crimea.
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The US House of Representatives on Tuesday passed a resolution condemning Russia's violation of Ukrainian sovereignty and calling for Russian sanctions. "This resolution is an important part of a larger effort to aid Ukraine and impose real costs on Russia," said Representative Ed Royce, a Republican from California and chairman of the House Foreign Affairs Committee, which unanimously passed the resolution last week. Royce called the resolution, which now goes to the Senate, "a very important declaration of support for the people of Ukraine during this crisis." It condemns "in clear and unmistakable terms" Russia's aggression.
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Malaysian Prime Minister Najib Razak appealed for patience in the search for a missing Malaysia Airlines jet amid confusion over the aircraft's last known location that prompted Vietnam to scale down its effort. The Malay-language Berita Harian newspaper had quoted air force chief General Rodzali Daud as saying that flight MH370, with 239 people on board, changed course before it disappeared.
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Former Libyan premier Ali Zeidan has defied a travel ban and left the country, a source close to Zeidan told dpa on Wednesday, with the move coming less than a day after parliament removed him from office through a no-confidence vote.
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Afternoon Watchlist:
11:00 US MBA Mortgage Applications
14:30 US EIA Crude Oil Stocks change
18:00 US Monthly Budget Statement
23:50 Japan Machinery Orders
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Thursday's Key UK Corporate Events
Trinity Mirror Full Year Results
Bwin.party digital entertainment Full Year Results
F&C Asset Management Full Year Results
Wm Morrison Supermarkets Full Year Results
TT Electronics Full Year Results
Nichols Full Year Results
Home Retail Group Trading Statement
SIG Full Year Results
Salamander Energy Full Year Results
Eurocastle Investment Full Year Results
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Thursday's Key Economic Events
00:01 UK BoE Quarterly Bulletin
00:01 UK RICS Housing Price Balance
02:00 China Industrial Production
02:00 China Urban investment
05:30 China Retail Sales
07:45 France Consumer Price Index
09:00 EU ECB Monthly Report
12:30 US Import And Export Price Index
12:30 US Initial Jobless Claims
12:30 US Retail Sales
14:00 US Business Inventories
14:30 US EIA Natural Gas Storage change
18:00 US Monthly Budget Statement
23:50 Japan BoJ Monetary Policy Meeting Minutes
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By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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