5th Aug 2016 10:11
LONDON (Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Royal Bank of Scotland Group ditched plans to spin-off Williams & Glyn and warned it may prove "more challenging" to meet the bank's targets for 2019. RBS has so far spent GBP1.4 billion on creating a new IT platform to spin-out its Williams & Glyn small business lending arm. It has to spin-off or sell the business as a condition of its 2008 state bailout. RBS said it will instead focus on alternative means to divest the business and said it has held talks with various parties, not named, about buying all or part of it. RBS said it swung to an operating loss in the first half of 2016. RBS, which is 73%-owned by the UK government, said it made an operating loss of GBP274.0 million in the half to the end of June, versus a GBP261.0 million profit a year prior. RBS said its adjusted operating profit for the half, which removes one-off costs along with litigation and conduct charges, was GBP1.16 billion, down from GBP2.89 billion a year before. It said that within the current low interest rate environment and amid low economic growth conditions, hitting its cost-to-income ratio and return targets by 2019 will likely prove "more challenging".
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Insurer esure Group trimmed its interim dividend, saying it wanted to retain capital in order to fund its growth plans, as pretax profit sank on one-off costs but underlying profit also was marginally lower. The mid-cap firm, which provides general insurance and owns price comparison service GoCompare, declared a 3.0 pence interim dividend, down from 4.2p a year earlier. Pretax profit for the half-year to the end of June was GBP30.7 million, down 69% from GBP97.6 million a year earlier. Underlying pretax profit, taking out the one-off effects, was essentially flat in the first half, at GBP45.6 million versus GBP46.5 million a year prior.
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William Hill reported growth in profit in the first half of 2016 as revenue grew on the back of a strong Euro 2016 football tournament for the bookmaker, but it kept its interim dividend flat as it works to improve its online business. William Hill said pretax profit in the first half rose to GBP100.7 million from GBP78.7 million in the first half of 2015, as net revenue grew to GBP814.4 million from GBP808.1 million. Despite the good results, William Hill kept its interim dividend flat at 4.1 pence, while it waits for the online business to return to stronger growth.
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Housebuilder Bellway said trading in recent weeks since the UK voted to leave the European Union had been encouraging, and said it expects to post a rise in revenue for its financial year. Bellway said it expects to report revenue of GBP2.20 billion for the year ended July 31, up 27% from the GBP1.74 billion recorded a year earlier, on the back of a 13% rise in housing completions to 8,721 and a 13% rise in average selling price to GBP252,700.
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Clay bricks manufacturer Ibstock said it has contingency plans in place to enable it to balance production with sales volumes for the remainder of the year as a response to the uncertainty resulting from the UK's vote to leave the EU. The building materials company said its key focus under these plans will be the management of stock levels and said capacity will be flexed to balance production with sales levels as necessary. Ibstock said it will manage its cost base in response to the evolution of its markets as visibility improves.
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UK private equity firm Inflexion sold a 7.7% stake in On The Beach Group in a share placing, disposing of 10.0 million shares in the holiday operator, Numis Securities said. Numis had said late on Thursday that Inflexion was looking to sell up to a 7.7% stake in an accelerated bookbuild, and the placing closed on Friday with Inflexion having sold all the shares intended. The On The Beach shares were sold at 215 pence per share, close to its closing price Thursday, to raise GBP21.5 million.
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MARKETS
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The pound was flat, but London share prices were higher, after the Bank of England's decision on Thursday to inject money into the economy and cut interest rates. Hikma Pharmaceuticals the best FTSE 100 performer on Friday as it regained ground after closing down 17% on Thursday. RBS was down 5.1% on its swing to an operating loss. Wall Street was pointed to a higher open, with focus on US nonfarm payrolls at 1330 BST.
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FTSE 100: up 0.3% at 6,761.02
FTSE 250: up 0.9% at 17,399.04
AIM ALL-SHARE: up 0.6% at 766.20
GBP: flat at USD1.3152 (USD1.3138)
EUR: flat at USD1.1146 (USD1.1134)
GOLD: flat at USD1,362.30 per ounce (USD1,363.19)
OIL (Brent): firm at USD43.77 a barrel (USD43.30)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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British house price inflation remained unchanged at a 12-month low in the three months to July, while they declined from the previous month, survey figures from the Lloyds Banking Group subsidiary Halifax showed. The Halifax house price index rose 8.4% year-on-year in the three months to July, same as in the June quarter, and the lowest since July 2015. Economists had expected an acceleration to 8.8%. Compared to the previous three months, house prices rose 1.6% in the three months to July. The average price for a British house fell to GBP214,678 from GBP216,726 in the previous month. A year ago, the price was GBP199,117.
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Labour is failing to provide a "powerful, credible opposition" to the UK's Conservative government under Jeremy Corbyn, leadership challenger Owen Smith claimed as the two men clashed in the first head-to-head debate of the campaign. In an often fiery exchange, Corbyn hit back, blaming Smith and others for undermining party unity when they quit the shadow cabinet in protest at his leadership. The challenger was booed and heckled by Corbyn supporters at the televised debate in Cardiff as he denied being part of a "coup" to oust the veteran left-winger. He accused Corbyn of presiding over an increasingly fractious Labour Party and "sloganising" rather than developing effective policies that would lead them back to power.
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Japan's leading index held steady in June, defying economists' expectations for an increase, preliminary survey data from the Cabinet Office showed. The leading index that signals the future economic activity, came in at 98.4 in June, the same reading as in the previous month. It was forecast to climb to 99.7.
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US President Barack Obama dismissed as "ridiculous" charges by Republican candidate Donald Trump that the US presidential election is going to be rigged against him. "Of course the elections will not be rigged - what does that mean?" Obama said at a press conference Thursday. Voting is overseen by local and state officials, but national officials take seriously the obligation to protect the voting process, Obama said during a press conference.
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A Brazilian Senate commission voted as anticipated in favour of impeaching President Dilma Rousseff, in a move that clears one of the final hurdles before a trial expected late this month. The 14-5 vote on the eve of the Rio 2016 Olympic Games followed two hours of debate in which a majority of senators appeared to support the case against Rousseff. The full Senate is expected to vote next week whether to proceed with a trial.
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By Lucy Heming; [email protected]
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