23rd Aug 2016 10:12
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Interim results from FTSE-100 listed Persimmon pulled up shares across the housebuilding sector, following comments that demand for housing was currently robust, with little impact from the UK's vote to leave the European Union. Persimmon noted the result of the referendum had created increased economic uncertainty which it cautioned may cause a tightening of the availability of construction skills. Persimmon posted a 29% rise in first-half pretax profit after it sold more homes at a higher price, and said lending supply has continued to prove strong and customer demand is still robust. The group said its pretax profit for the six months to the end of June was GBP352.3 million, up from GBP272.8 million a year earlier, after revenue grew to GBP1.49 billion from GBP1.33 billion. The group said it sold 7,238 homes in the half, from 6,855 a year earlier, with the average selling price of those homes GBP205,762, 6.0% ahead of the prior year.
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National Grid said it is "disappointed" with a ruling made by the UK energy regulator that the company must pay GBP17.7 million towards a contract signed with Drax Group. Ofgem has decided National Grid, which owns and operates the UK's energy networks, cannot pass those costs onto power generators and suppliers as per usual, but said it is allowed to recoup all of the costs incurred under another contract awarded to SSE's Fiddler's Ferry station. The two major contracts with Drax and SSE led to National Grid incurring total costs of GBP113.0 million and National Grid was hoping to be able to pass on all of those to suppliers and generators so it could be be reimbursed - but Ofgem is only allowing GBP95.5 million to be passed on. National Grid is responsible for awarding Black Start contracts to power generators, which are essentially insurance policies to help mitigate problems in the unlikely event that the transmission system in the UK suffers from a complete or partial shutdown.
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The UK's big four supermarkets all saw sales fall in the 12 weeks to August 16, data from Kantar Worldpanel showed on Tuesday, with Wal-Mart Stores Inc-owned Asda the worst performer. Asda saw sales decline 5.5% year-on-year in the 12-week period, the same decline it had registered in the Kantar reported four weeks earlier. Its market share dipped to 15.7% from 16.6% a year prior. Tesco, the market leader, saw sales decline 0.4% and its market share dip to 28.1% from 28.3%, but the story was much the same with its UK-listed rivals. J Sainsbury, which had been the star performer in recent Kantar grocery sales data, saw sales fall 0.6% year-on-year and its market share decline to 16.1% from 16.3%, though Asda's continued woes mean Sainsbury's remains firmly entrenched as the second-largest grocer by market share. Wm Morrison Supermarkets, meanwhile, saw sales fall 1.8% and its market share decline to 10.6% from 10.8%.
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Rank Group said it expects little or no direct impact on its business from Brexit as it delivered higher profit and a marginal uptick in revenue for the year to the end of June. The company said trading since the UK's vote to leave the European Union has been in line with its expectations. Rank said it is predominantly a UK-facing business with limited non-sterling exposure on costs and earnings, meaning the UK departing from the EU will have little impact on its operations. However, it warned any impact which could emerge would emanate from a downturn in macroeconomic conditions in the UK and a loss of consumer confidence or spending power. Rank said its pretax profit for the year to June 30 was GBP85.5 million, up 15% from GBP74.5 million a year earlier. Operating profit for the company, before one-off costs and remote gaming duty costs in the UK, was up 4.0% to GBP94.0 million from GBP90.6 million, though this dipped 2.0% when the remote gaming duty costs are included.
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JRP Group, the result of a merger between annuities providers Just Retirement and Partnership Assurance, said trading has remained in line with its expectations and its merger is progressing to plan. The company said trading in the quarter to the end of July was in line with its expectations in its defined benefit de-risking, individual guaranteed income for life and lifetime mortgages units. JRP added its Solvency II ratio at the end of June was around 130%, meaning it remains well-capitalised. The merger also continued to progress to plan and the group said it will provide a further update on its push to hit its targeted GBP40.0 million in annual cost savings in due course.
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Kier Group said it has been awarded three major construction frameworks worth in excess of GBP5.00 billion since its last trading update in early July, providing a long-term pipeline of potential contract awards. The construction group said it has secured a place on the shortlist for the four-year, GBP4.00 billion Department of Health Procure22 framework as one of six principle supply chain partners. The framework will start in October. Kier is also one of five suppliers listed for two five-year construction frameworks worth up to GBP750.0 million at Gatwick Airport. Lastly, Kier has secured a place on the list for the two-year, GBP500.0 million framework from the University of Cambridge to provide a range of facilities including laboratories, teaching and lecture spaces and sport facilities.
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Property investor Hansteen Holdings said its pretax profit almost halved in its first half when compared with a year earlier after the large gain it made on the revaluation of its investment properties a year earlier did not repeat. The company, which invests in industrial property assets in the UK and Europe, said its pretax profit in the six months to the end of June was GBP54.8 million, down from GBP103.7 million a year earlier, despite revenue rising to GBP47.7 million from GBP42.4 million. Hansteen said this decline in profit was due to a smaller gain made on the revaluation of its properties, of GBP13.8 million, compared to the GBP79.0 million recorded a year earlier. However, normalised income profit, which excludes profits or losses from the sales of properties, rose 28% to GBP29.2 million from GBP22.8 million, Hansteen said.
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MARKETS
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London shares were in the green with housebuilders lifting the blue-chip and mid-cap indices following well received half year results from Persimmon. Oil was lower trading around the USD48 a barrel mark. Wall Street was pointed to a higher open.
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FTSE 100: up 0.6% at 6,867.76
FTSE 250: up 0.7% at 17,998.00
AIM ALL-SHARE: up 0.5% at 792.38
GBP: flat at USD1.3179 (USD1.3136)
EUR: up at USD1.1330 (USD1.1231)
GOLD: up at USD1,339.62 per ounce (USD1,338.59)
OIL (Brent): down at USD48.72 a barrel (USD49.35)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The leaders of Germany, France and Italy flew to a tiny Mediterranean island on Monday to honour a founding father of the EU before brainstorming on the bloc's present-day crises, including migration, terrorism and Brexit. Italian Prime Minister Matteo Renzi accompanied German Chancellor Angela Merkel and French President Francois Hollande to Ventotene, where Altiero Spinelli, a dissident exiled there by Fascist dictator Benito Mussolini, wrote a manifesto for European unification in 1941.
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The manufacturing sector in Japan continued to contract in August, albeit at a slower pace, the latest survey from Nikkei revealed on Tuesday with a manufacturing PMI score of 49.6. That's up from 49.3 in July, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Individually, the output index swung to expansion for the first time since February, while new orders, new export orders, stocks of purchases and stocks of finished goods all contracted at a slower rate. Employment turned to contraction after expanding in the previous month.
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Team GB are set to receive a heroes' welcome when they touch down in the UK following their best Olympics in more than a century. A Boeing 747 carrying 320 athletes and support staff will land at Heathrow airport at 10am in a gold-nosed British Airways aircraft with "victoRIOus" emblazoned on the side. After winning 67 medals at the Games and finishing second in the overall table, Team GB are returning to talk of royal honours for their success. Prime Minister Theresa May's official spokeswoman said there would be "no formal cap" on the number of honours which can be awarded to the athletes.
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The NHS may lack enough key staff to make a seven-day service work properly, leaked Health Department documents reportedly reveal. The assessments, obtained by The Guardian and Channel 4 News, are said to show senior officials have voiced concern over the lack of detailed costings, risk assessment, and limited data supporting the policy. Channel 4 News reported that one document, a "risk register" for the seven-day services programme, dated July 25, refers to the possibility that there will not be enough resources to meet the deadline for the "complete roll-out" of the policy. The documents are also reported to state that a "workforce overload" could mean it may not be possible to find enough skilled staff "meaning the full service cannot be delivered", according to the reports.
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The US State Department must review nearly 15,000 previously undisclosed emails from a private email server used by Hillary Clinton while secretary of state and determine which ones can be released, the State Department said Monday. The FBI found the 14,900 documents as part of its probe of Clinton's handling of classified information in which it cleared her of criminal wrong doing last month. Investigators returned the emails to the State Department, which has been ordered to release them as part of a public records request, spokesman Mark Toner said. But the department must first evaluate which emails are work-related and whether any information should be withheld or redacted for security reasons.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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