5th May 2016 10:11
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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BT Group reported a rise in pretax profit for its most recently ended financial year, and set out its guidance for the next two years, as the firm outlined plans to invest around GBP6 billion in broadband and 4G coverage in the UK over the next three years. BT reported a pretax profit of GBP3.03 billion for the year to end-March, up from GBP2.65 billion the year before, as revenue rose to GBP19.04 billion from GBP17.98 billion. It reported earnings before interest, tax, depreciation and amortisation of GBP6.37 billion, up from GBP6.02 billion. BT said it expects to report Ebitda of around GBP7.9 billion in the coming financial year, and further growth in the year after. BT also set out plans to invest further in the UK, saying its Openreach and EE businesses will make around GBP6 billion in capital expenditure over the next three years in the first phase of a plan to extend superfast broadband and 4G coverage beyond 95% of the country by 2020.
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Centrica, the British Gas parent, said it intends to issue shares to institutional investors to raise funds. Centrica said it plans to issue around 350.0 million shares, equating to around 7.0% of its current issued share capital. It will be conducted through a bookbuild process which will determine the price, but Centrica already hinted it wants to raise at least GBP750.0 million. Centrica said the placing will allow it to complete two acquisitions worth a total of GBP350.0 million and to lower net debt by GBP400.0 million, reducing the pressure on Centrica's investment-grade credit ratings.
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Inmarsat revised down its 2016 guidance for revenue after it amended its cooperation agreement in the US with Ligado Networks and reported a fall in pretax profit for the first quarter of the year. Inmarsat reported a pretax profit of USD58.5 million in the three months to end-March, down from USD96.3 million a year before, on revenue of USD298.6 million, down from USD304.8 million. The company said that the underlying trading environment in 2016 has continued to be tough, and demand weakened in the first quarter. Inmarsat has revised its revenue guidance, excluding revenue from Ligado, for 2016 downwards by USD50 million to USD1.18 billion to USD1.25 billion. All of its other financial guidance remains unchanged, Inmarsat said
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RSA Insurance Group said it saw good underwriting results in the first quarter, driving up operating profit, as it benefited from benign weather conditions and as underlying results continued to indicate an improving picture. The insurer said insurance market conditions in the first quarter, to the end of March, were broadly unchanged against the same period in 2015. Slow growth in the market and strong competition has driven sharp price-volume trade-offs, the group said, in line with its expectations. Group net written premiums in the quarter were flat year-on-year, reflecting the impact of the disposal of non-core operations RSA has undertaken.
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Barclays said it has sold around 12% of its holding in Barclays Africa through the share placing announced late Wednesday, raising around GBP603.0 million in the process. The lender said it has sold 103.6 million Barclays Africa shares at ZAR126 per share through an accelerated bookbuild, raising gross sale proceeds of around ZAR13.05 billion, or GBP603.0 million. Following the sale, Barclays will hold 424.7 million shares in Barclays Africa, or a 50.1% stake. The bank previously had announced its intention to reduce its holding in its African banking subsidiary.
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Sub-prime lender Provident Financial said it made a good start to the year across its divisions, with good growth in its Vanquis credit-card arm and in its consumer credit unit. The group said receivables for Vanquis grew 13% year-on-year in the first quarter to the end of March, with profit slightly ahead of expectations thanks to robust margins and lower funding costs. Provident said it expects another good performance for the full year in 2016, with trading in line or ahead of internal expectations thus far and credit quality sound across the business.
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Old Mutual said its majority-owned South African banking subsidiary Nedbank Group reiterated guidance for 2016, as it saw funds under management rise in its Old Mutual Wealth business. Old Mutual Wealth's funds under management rose 3% since the start of 2016 to GBP107.1 billion, it said, from GBP104.4 billion in the fourth quarter of 2015. It saw strong net client cash flows of GBP1.8 billion in the quarter, up 80% compared to the first quarter of 2015, whilst gross sales rose by 17% to GBP5.4 billion from GBP4.6 billion a year before.
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Wm Morrison Supermarkets reported a fall in total sales but growth in like-for-like sales in the first quarter of its financial year, as it warned it expects continued deflation in the UK grocery market. The supermarket chain said total sales excluding fuel in the 13 weeks ended May fell by 1.8% year-on-year, while falling by 0.9% including fuel. On a like-for-like basis, sales excluding fuel grew by 0.7% and by 1.2% including fuel.
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Rolls-Royce Holdings said trading in the first few months of 2016 has been in line with its expectations and its outlook for the full year is unchanged. The jet engine maker said profit, before any financing charges, will be significantly weighted to the second half, in line with previous guidance. The outlook for the second half, Rolls-Royce said, reflects increased large-engine deliveries, good underlying growth in aftermarket revenue and incremental benefits from its restructuring programme.
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Smith & Nephew said overall revenue has grown during the first quarter of 2016 with the majority of its divisions reporting a rise in the period, and said its full year targets remain unchanged. The medical devices business said overall revenue in the first quarter of the year rose 3.0% to USD1.13 billion from USD1.10 billion a year earlier, with that revenue rising 4.0% on an underlying basis.
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The Sage Group said it has agreed to buy a 20.7% stake in software firm Fairsail for GBP10 million, as it reported a fall in pretax profit for its first half. Sage reported a pretax profit of GBP142.1 million for the half year to end-March, down from GBP177.6 million, as a rise in revenue to GBP746.6 million from GBP717.3 million was offset by GBP31 million in one-off costs related to the company's business transformation strategy, it said.
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MARKETS
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UK stock indices were flat to higher amid a raft of corporate updates, with BT leading the gainers. The pound took a hit but has since recovered against the dollar after service sector growth slumped to three-year low. Wall Street was pointed to a higher open.
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FTSE 100: flat at 6,114.21
FTSE 250: up 0.2% at 16,694.06
AIM ALL-SHARE: up 0.1% at 724.35
GBP: flat at USD1.4491 (USD1.4476)
EUR: flat at USD1.1438 (USD1.1475)
GOLD: down at USD1,276.27 per ounce (USD1,280.54)
OIL (Brent): up at USD45.71 a barrel (USD44.81)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK service sector activity expanded at the slowest pace in more than three years in April, survey data from Markit showed. The Chartered Institute of Procurement & Supply/Markit services Purchasing Managers' Index fell to 52.3 in April from 53.7 in March. A reading above 50 indicates expansion. The rate of expansion slowed for the third time in the past five months and reached its lowest since February 2013. It also stayed below the expected score of 53.5. Although new business growth picked up slightly, it remained relatively subdued and business optimism was the joint-weakest in over three years.
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David Cameron was forced to defend his work renegotiating Britain's European Union membership against criticism from a Commons committee, while another international intervention in the Brexit debate is due in the form of a visit from the Japanese prime minister. The prime minister said his renegotiation of Britain's EU membership has secured "fundamental reforms" which would remove Britain from the commitment to an "ever-closer union", guarantee equity of treatment for sterling, and address concerns over migrant welfare. Cameron was answering criticisms levelled by William Cash, a Eurosceptic member of the House of Commons Liaisons Committee, of "cheating" referendum voters as the outcome of the renegotiation did not allow Cameron to guarantee change in the EU treaties before votes are cast on June 23.
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Voters are heading to the polls across the UK in the biggest test of political opinion since the general election a year ago. The bitter battle to be London mayor and the fight for control of the Scottish parliament, have attracted most attention, but 16 million people are eligible to vote in council elections across England - though turnout is expected to be low. The elections mark the first nationwide test for Jeremy Corbyn since he stormed to victory with massive grass-roots support as Labour leader last September.
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Ireland's service sector activity expanded at the weakest pace in fourteen months in April, survey figures from Markit Economics showed. The seasonally adjusted Purchasing Managers' Index, or PMI, fell to 59.8 in April from 62.8 in March, though any reading above 50 indicates expansion.
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Private sector activity in China expanded for the second straight month in April driven by services, while output broadly stagnated at manufacturers. The Caixin composite output index fell to 50.8 in April from 51.3 in March, survey data published by Markit showed. A score above 50 indicates expansion but the latest reading signals a slowdown in growth. The services Purchasing Managers' Index came in at 51.8, down from 52.2 a month ago. This suggested that the pace of service sector expansion remained modest overall and slower than the historical series average.
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Donald Trump is the last Republican standing in the centre-right's presidential contest as his last remaining opponent, Ohio Governor John Kasich, said he is dropping out. Trump's victory in the Indiana primary a day earlier virtually assured the business mogul will be the party's nominee. Kasich had only won his home state of Ohio, but had vowed Tuesday night to remain in the race until Trump actually reached the 1,237 delegates needed to win the nomination.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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