11th Mar 2016 11:18
LONDON (Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Old Mutual said there is "limited rationale" for its four main divisions to be part of the same group, confirming that it intends to separate them by the end of 2018 in a move to cut debt, costs and complexity. Bruce Hemphill, a former executive at African lender Standard Bank Group, said the review he began when he succeeded Julian Roberts as Old Mutual's chief executive in November 2015 showed that there is "very little commonality" between the businesses. The group's four divisions include holdings in two publicly listed entities: a 66% stake in New York-listed OM Asset Management and a 54% stake in Nedbank. The separation "may involve equity market activity" for Old Mutual's UK-focused wealth management arm and its emerging markets business based in South Africa. Old Mutual will consider returning excess capital generated from asset sales and the separation.
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Glencore said a third body has been found at the Katanga mine in the Democratic Republic of Congo following the geotechnical fault which occurred at the site earlier this week. A geotechnical failure at the north wall of the KOV open pit mine at the operation had already led to two confirmed deaths, but Glencore said Thursday Katanga Mining, which operates the mine and in which Glencore holds a 75% stake, had uncovered a third body on the site. It said the search for the remaining individuals is ongoing and it has allocated all available resources to the search.
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Just Retirement Group and Partnership Assurance Group said they remain confident of achieving at least GBP40.0 million of cost savings through the GBP1.6 billion merger of the life insurers. The pair said they expect their merger to complete in April, with the aim of creating JRP Group, as they separately reported earnings. Just Retirement said it swung to a first-half pretax profit of GBP26.1 million in the six months ended December 31, from a GBP9.2 million pretax loss in the corresponding period of 2014. Partnership swung to a full-year pretax loss of GBP16.5 million in 2015, from a GBP24.1 million pretax profit in 2014, saying it was hit by one-off costs, particularly the new Solvency II rules for insurers across the EU, and lower sales volumes.
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Marshalls said investments in product development helped its pretax profit surge in 2015 and enabled the payment of a special dividend, as it outlined plans to make bolt-on acquisitions for its water maintenance and street furniture divisions. Marshalls posted a pretax profit of GBP35.3 million for the year ended December 31, up 57% from GBP22.4 million in 2014. It said revenue rose 8.0% to GBP386.2 million from GBP358.5 million, with 66% of sales derived from its public sector and commercial market sales. Marshalls Chief Executive Martyn Coffey told Alliance News on Friday the paving stone group had outperformed the construction industry as a whole due to investments made in new product development.
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Oil services company Petrofac said it has secured a deal to act as the duty holder supporting Anasuria Operating Co, the joint venture operating the Anasuria cluster licences in the North Sea east of Aberdeen. Petrofac said the five-year deal is worth an initial USD250.0 million and will secure 65 jobs. Petrofac will handle the floating petroleum storage and offloading vessel at Anasuria, along with monitoring the pipelines.
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JD Wetherspoon reported a fall in profit in the first half of its financial year as its operating margin took a further hit from wage increases, and the pub chain's Chairman Tim Martin expressed his view that the UK should leave the European Union. Wetherspoons said pretax profit in the 26 weeks ended January 24 edged down to GBP36.6 million from GBP37.5 million, as its operating margin shrank to 6.3% from 7.4% a year before, due to a lower gross margin and higher rates of pay for pub staff. Martin argued that a return of power to the national parliament will "increase the level of democracy and accountability".
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Computacenter saw its 2015 pretax profit was boosted by a one-off gain and lower restructuring costs in 2015, but warned its profit for the first half of 2016 will fall behind that seen in 2015 as its its UK business faces a "more challenging year". The company said pretax profit jumped 66% to GBP126.8 million for the year to the end of December from GBP76.4 million in 2014. The increase was driven by a one-off gain made from the sale of Computacenter's RD Trading recycling subsidiary and from lower restructuring costs related to a redundancy programme in France. On an adjusted basis, stripping out this one-off gain as well as amortisation and other exceptional costs, pretax profit rose to GBP86.9 million from 81.1 million.
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Safestore Holdings said it has agreed a deal to acquire smaller peer Space Maker for up to GBP44.4 million. The FTSE 250-listed company said it will pay GBP43.0 million initially in cash, with a further GBP1.4 million in deferred consideration to be payable in the three years following completion, dependent on certain performance targets being hit. Space Maker is the ninth-largest self-storage portfolio in the UK, Safestore said, with 12 stores across the country. Safestore has managed the portfolio under a management services agreement since 2010.
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MARKETS
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UK indices were in the green as the dust settled from European Central Bank President Mario Draghi's stimulus measures on Thursday. Financial stocks were among the gainers. Brent oil rallied back above USD40 a barrel. Wall Street was pointed to a higher open.
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FTSE 100: up 1.6% at 6,132.16
FTSE 250: up 1.2% at 16,578.26
AIM ALL-SHARE: up 0.5% at 701.11
GBP: up at USD1.4300 (USD1.4293)
EUR: down at USD1.1092 (USD1.1161)
GOLD: down at USD1,264.08 per ounce (USD1,265.21)
OIL (Brent): up at USD40.80 a barrel (USD39.78)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK visible trade deficit narrowed in January due to a decrease in imports, the Office for National Statistics showed. The deficit on trade in goods decreased to GBP10.3 billion, in line with expectations, from GBP10.5 billion in December. The narrowing was driven by a GBP0.2 billion decrease in imports. At the same time, the surplus on services trade remained unchanged at GBP6.8 billion. As a result, the overall trade deficit including goods and services fell to GBP3.5 billion from GBP3.7 billion in December. The expected level of deficit was GBP2.65 billion.
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UK construction output dropped in January due to a decline in all new work, the Office for National Statistics said. Construction output decreased 0.2% in January from December as expected by economists. All new work dropped 0.8%, while all repair and maintenance increased 0.8%. On a yearly basis, construction output fell 0.8% in January but slower than an expected 1.7% decline. There were decreases in both all new work and repair and maintenance of 0.4% and 1.4% respectively.
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The British Chambers of Commerce downgraded its economic growth outlook citing weaker than expected expansion across most sectors, reflecting a general global slowdown. In its Quarterly Economic Forecast, the BCC lowered its UK GDP growth forecast to 2.2% from 2.5% this year. For 2017, the lobby forecast 2.3% growth instead of 2.5%. Lower than predicted actual growth in the fourth quarter of 2015, and downward revisions of earlier ONS figures for the first three quarters of 2015, also contributed to the downgrade, BCC said. The lobby expects the Bank of England to hike its interest rate in the fourth quarter of this year to 0.75% from a record low 0.50%.
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The value of the US and UK's special relationship has been reaffirmed in the wake of US president Barack Obama's criticism of UK Prime Minister David Cameron for his actions over Libya. The president was critical of European nations, including the UK, which joined the US in military action to prevent a massacre in Libya in 2011, but then failed to prevent the north African country becoming a "mess" in the aftermath of war. In a lengthy interview in The Atlantic magazine, Obama said Cameron became "distracted" from Libya by other priorities. But the Prime Minister was described as a "close partner" of Obama in a statement from a US National Security Council spokesman in the wake of the interview.
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During a welcoming ceremony for Canadian Prime Minister Justin Trudeau, Obama praised the often overlooked relationship between the US and Canada. In remarks from the south lawn of the White House, Obama said the friendship between the US and Canada is not expressed often enough, in part because of the two country's national characters. Obama and Trudeau are widely expected to have a better relationship than the president had with former Canadian leader Stephen Harper.
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The US military has carried out strikes on suspected Islamic State chemical weapons sites, the Pentagon confirmed. Information about the sites came from Sleiman Daoud al-Afari, a former chemical and biological weapons expert under Saddam Hussein's regime, who was captured by US forces several weeks ago. He has since been turned over to the Iraqi government, Pentagon spokesman Peter Cook said. Cook declined to provide exact details about the strikes but said: "We are confident that the strikes have disrupted their capability."
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The remaining four Republican candidates vying to become their party's nominee to run for US president opened the 12th debate of the campaign Thursday, answering questions on trade, education and social benefits for the elderly. The candidates gathered for the debate in Miami for the last debate before crucial make-or-break primaries in five states on Tuesday. The candidates disagreed on trade policy, with front-runner Donald Trump complaining about existing trade deals.
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The new Irish parliament opened on Thursday with no immediate prospect of a government being formed following last month's inconclusive general election. Outgoing prime minister Enda Kenny and his biggest rival, opposition Fianna Fail leader Micheal Martin, both failed to win enough support in parliament to become the new prime minister, as the vote split along party lines. Kenny received 57 votes in the 158-seat parliament, while 43 members voted for Martin and 24 voted for Gerry Adams, the leader of nationalist party Sinn Fein. Kenny's Fine Gael party remains the largest party in the Dail, or lower house of parliament, with 50 seats, despite losing 24 seats in the election on February 26.
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Germany's consumer prices remained unchanged in February from a year ago as initially estimated, final data from Destatis showed. The consumer price index was unchanged after rising 0.5% in January and 0.3% in December. Meanwhile, Germany's wholesale prices declined at the fastest pace in a year in February largely due to a sharp decrease in fuel prices, Destatis said. Wholesale prices dropped 1.9% year-on-year versus 1% decrease in January.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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