Zytronic Share News (ZYT)

LONDON (Alliance News) - A large number of companies resumed or hiked shareholder payouts on the biggest day of the UK earnings season Thursday, as earnings generally headed higher thanks to the gradual economic recovery in 2013.

Housebuilders Barratt Developments and Redrow both resumed paying dividends after several years where investors did without during the financial crisis and ensuing economic downturn. They were joined by a host of FTSE 250-listed companies raising payouts after the economic recovery boosted the earnings of many of the UK mid-caps last year.

And larger international companies in the FTSE 100, like British American Tobacco, WPP and Reed Elsevier, joined ITV in boosting shareholder payouts.

WPP hiked its dividend for 2013 by 20% as it reported another big rise in profits and revenues, and said it was targeting a pay-out ratio of 45% in 2014, up from 42% last year, while it also raised its share buy-back target to 2% to 3% of share capital, from 1% currently.

None of that was enough to prevent its shares sinking towards the bottom of the FTSE 100 as it warned that sterling's strength had an increasing impact during the second half of the year and is set to weigh on its results in 2014. Its still predicting like-for-like revenue and gross margin growth for the year, with like-for-like revenues up 5.7% in January.

Martin Sorell, chief executive of the media buying giant, called Facebook Inc's recent acquisition of Whatsapp for USD19 billion "potty".

The biggest faller on the blue chip index was perhaps inevitably Royal Bank Of Scotland Group, which reported its sixth consecutive annual pretax loss, and its biggest since 2008.

It reported a GBP8.24 billion pretax loss for 2013, widened from GBP5.28 billion in 2012, after incurring GBP3.84 billion in provisions and GBP4.82 billion in impairments and other losses.

Its net losses over the past six years are now over GBP46 billion, almost exactly the amount it was bailed out for in 2008.

More recent struggler RSA Insurance is another big decliner, as it unveiled a plan to raise GBP1.08 billion in order to plug the hole in its balance sheet, while also reporting a swing to a 2013 pretax loss following mounting claims from weather losses and the effects of the accounting scandal at its Irish business.

Pretax losses amounted to GBP244 million, compared with a GBP448 million pretax profit in 2012, after a surge in weather-related claims because of severe flooding in parts of southern and south-west England, bad weather across Europe and losses from the Irish business.

Meanwhile, the capital raising plan is made up of a planned GBP775 million rights issue, representing 20% of its market value, and a plan to raise GBP300 million from business disposals.

RBS hasn't paid a dividend since its bailout, and is still someway from being able to. It has a target of restarting payouts over the "medium term", but certainly won't be able to until the government starts selling down its stake in the business and it starts showing signs of returning to profitability.

RSA, meanwhile, scrapped its final dividend and said any dividend at the half-year would be "modest".

Outsourcing company Capita Group is the leading gainer on the FTSE 100 after it hiked its dividend 13% as earnings excluding acquisitions and disposals rose, cashflow increased and it reported higher revenues, order book and bid pipeline.

The company was buoyed by its largest ever contract win by annual value, a GBP1.2 billion deal with O2 to provide customer management over 10 years.

Costa Coffee and Premier Inn owner Whitbread was another big gainer after it reported strong sales growth in recent weeks, buoyed a strong Christmas trading period and "favourable" (ie. no snow, which keeps people out of its restaurants) weather in January.

In political news, Chancellor Angela Merkel damped British hopes of gaining her outright support for reform of the European Union, in the first speech by a German leader to both houses of Parliament in nearly three decades.

Merkel said those who had high expectations of her were "in for a disappointment." The hopes of others who wanted the chancellor to give the clear message that the rest of the Europe was not prepared to pay "almost any price" to keep Britain in the EU "will be dashed too," she said.

She was "caught between the devil and the deep blue sea" on the subject, which was "not a pleasant position to be in," she continued.

In Ukraine, parliament has elected former opposition leader Arseniy Yatsenyuk as the country's prime minister. The close ally of former prime minister Yulia Tymoshenko, was backed by 371 of 417 participating deputies.

The news came after Moscow admitted it is protecting deposed Ukrainian president Viktor Yanukovych in Russia, and as Ukraine's Crimean peninsula, a region that leans toward Moscow, descended into turmoil.

Interim President and parliamentary speaker Oleksandr Turchynov warned Russia to keep its armed forces on the peninsula inside their bases, after pro-Russian self defence forces seized regional government buildings and raised the Russian flag atop them. Thousands of Russian troops are stationed in the Crimean port city of Sevastopol, which houses the Russian Black Sea fleet.

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FTSE 100: Down 0.3% at 6,781.83
FTSE 250: Down 0.1% at 16,457.53
AIM ALL-SHARE: Down 0.1% at 885.99
GBP-USD: 1.6673
EUR-USD: 1.3673
GOLD: USD1,331.60 an ounce
OIL (Brent): USD108.73 a barrel

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KEY UK CORPORATE NEWS:

FTSE 100: British American Tobacco reported higher profits for 2013 as sales of its key brands continued to grow and it managed to raise prices, though unfavourable exchange rate movements took a chunk out of the profit gains. Standard Life reported a 13% decline in pretax operating profit in 2013, after its 2012 results were inflated by a number of gains, but assets under administration increased by 12% to GBP244.2 billion. HSBC Holdings is in talks with a potential new buyer of its Pakistan operations, as the banking group continues to dispose of businesses it considers non-core. Reed Elsevier raised its dividend and said it will maintain its share buyback programme after reporting higher earnings in 2013 thanks to acquisitions and disposals it made. It said it expects further growth this year at constant currency rates.

FTSE 250: Kazakhmys swung to a pretax loss in 2013 as revenues fell 7.5%, hit by lower commodity prices. It shares rose because it beat even lower expectations, and after Chief Executive Oleg Novachuk said the Kazakhstan-based miner is considering a broader restructuring programme. Man Group swung to a profit in 2013, net outflows halved, client redemptions declined and its investment performance improved. Bodycote 2013 profits and revenue rose, boosted by acquisitions in the face of mixed market conditions. Barratt Developments profits more than doubled in the first half of its financial year, the latest housebuilder to report a continued recovery in UK housing markets. Jupiter Fund Management has reported a 55% increase in 2013 pretax profit and raised its dividend, after stronger net inflows boosted revenues. Spirent Communications signalled confidence in its new strategy to return to high single-digit organic growth in 2014 as it raised its full-year dividend, despite seeing pretax profit decline in 2013. Howden Joinery Group's latest full-year profits and revenues also rose thanks to the recovery in housing and construction markets and it raised its dividend. UDG Healthcare will buy the healthcare communications business of KnowledgePoint360 for USD144 million in cash, a deal that will boost earnings immediately and sets it up to further expand its healthcare communications business outside the US and Europe. RPS Group pretax profit increased in 2013 as revenues rose, buoyed by consultancy sales to the energy sector, and it expects a good performance in 2014 driven by the acquisitions it made. Domino's Pizza Group reported lower pretax profit for its last financial year due to the costs of restructuring its German business, but excluding these, profits rose as it continued to grow quickly and report higher sales from existing stores, particularly in the UK. Kier Group reported a 90% increase in profit for the recent half year, boosted by the acquisition of May Gurney and recovery in the UK construction market. Spectris raised its total dividend as pretax profit increased in 2013, bolstered by the sale of its Fusion business in December. Estate agency group Countrywide swung to profit in its maiden set of annual results since its re-listing, but Chief Executive Grenville Turner said he will step down this year and become non-executive chairman. Colt Group profits and revenues declined after it was hit by the strength of sterling and regulatory price declines in its voice business. Derwent London reported an increase in profit and revenue for 2013 as it achieved record new lettings of 643,200 square feet at a gross rent of GBP21.8 million a year. National Express Group hiked its dividend after profits and revenue rose in 2013 and it beat its target for free cashflow. Redrow will pay its first interim dividend in six years, after recording a 107% increase in pretax profit for its recent half year, underpinned by an improved UK housing market. Merlin Entertainments reported strong growth in profits in its maiden annual results since listing, driven by growth in its existing estate and as it rolled out new attractions.

AIM: Totally has jumped after its health unit was awarded a deal by the Waltham Forest Clinical Commissioning Group to undertake a clinical health coaching programme focused on the management of long-term conditions, a first deal with a London commissioning group and one the company hopes will lead to further contracts. Snoozebox Holdings is doing well after it was given planning permission to build a 240 bedroom portable hotel for the TT races on the Isle of Man on a permanent basis. Clear Leisure is up after it said it will pay a special dividend worth GBP4 million if the Italian courts allow its Mediapolis SpA subsidiary to complete a proposed debt restructuring, allowing Clear Leisure to sell its stake in the unit to one of two bidders. SolGold is continuing a run, hitting a four-and-a-half month high after latest results from drilling at its Cascabel copper-gold porphyry exploration project in Ecuador showed further exceptional grades. Zytronic is another gainer after it said trading in the first half its financial year has so far been considerably ahead of a year ago. It said improving orders and sales of touch sensors meant revenues and margins so far in the first half of the year were at similar levels to the second half of last year and in line with management expectations. Digital Barriers is down after it warned that its full-year pretax loss will be around 40% wider than the previous year, as revenue is expected to drop "slightly" due to delays in procuring customers and in releasing new products to meet demand. Plus500 is down after the founders decided to sell another 17.4% stake in the contracts-for-difference trading platform, after the shares hit a record high Wednesday, giving it a valuation of over GBP600 million, or USD1 billion. It said founders Alon Gonen, Gal Haber, Elad Ben-Izhak, Omer Elazari and Shlomi Weizmann had decided to sell 20 million existing shares in the business at 500 pence each, potentially raising them a further GBP1 billion and leaving them with a combined 35.6% stake in the business.

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AFTERNOON WATCHLIST: Janet Yellen Speech, EIA Natural Gas Storage Change, US Kansas Fed Manufacturing Activity, Japan Consumer Price Index, Japan Unemployment Rate, Japan Industrial Production, Japan Retail Trade Data

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Friday's Key UK Corporate Events

Mondi Full Year Results
Old Mutual Full Year Results
Interserve Full Year Results
Berendsen Full Year Results
Candover Investments Full Year Results
Laird Full Year Results
Colt Full Year Results
Pearson Full Year Results
Interserve Full Year Results
Intu Properties Full Year Results
Pantheon International Participations Full Year Results
William Hill Full Year Results
Rentokil Full Year Results
Rightmove Full Year Results
Stagecoach Group Interim Management Statement
Synthomer Trading statement
UBM Full Year Results
Just Retirement Group Full Year Results
Beale Full Year Results

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Friday's Key Economic Events

00:01 UK Gfk Consumer Confidence
04:00 Japan Vehicle Production
05:00 Japan Housing Starts
05:00 Japan Annualized Housing Starts
05:00 Japan Construction Orders
07:00 UK Nationwide Housing Prices
07:00 Germany Retail Sales
07:45 France Consumer Spending
07:45 France Producer Prices
09:00 Italy Unemployment
10:00 Italy Consumer Price Index
10:00 EU Consumer Price Index
10:00 EU Unemployment Rate
13:30 US Gross Domestic Product
14:45 US Chicago Purchasing Managers' Index
14:55 US Reuters/Michigan Consumer Sentiment Index
15:00 US Pending Home Sales
15:15 US Fed Minneapolis's Narayana Kocherlakota speech
15:15 US FOMC Member Stein Speech
15:30 UK BOE's Governor Carney speech

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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1

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