29th Jun 2016 10:17
LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Telecommunications giant Vodafone Group said it is considering moving its headquarters out of the UK, after the UK voters last week elected to leave the EU. The company noted that it gained many benefits through the UK's EU membership, including the bloc's free movement of people and the benefits of a single legal framework throughout Europe. The company said it isn't yet possible to gauge how these positive attributes of EU membership would be affected after the UK leaves the EU, a process that could take two years or more, making it impossible "to draw any firm conclusions regarding the long-term location for the headquarters of the group." Vodafone is based in Newbury, Berkshire, west of London, and employs more than 13,000 people across the UK.
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Dixons Carphone reported lower profit in its recently ended financial year due to non-recurring costs of restructuring its store portfolio, declaring it will remain "the leader in the UK market" despite expected volatility arising from the UK Brexit vote. The mobile phones and electronics retailer said pretax profit in the year ended April 30 decreased to GBP263 million from GBP287 million the year before, despite revenue rising to GBP9.74 billion from GBP8.26 billion. Headline pretax profit, which excludes non-recurring items such as acquisitions and merger costs, rose to GBP447 million from GBP381 million, in line with analyst and company expectations. Dixons Carphone will pay a total dividend of 9.75 pence for the year, up 15% from 8.50p the year before.
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Advertising and marketing group WPP said it has struck a partnership with Chinese internet services company Tencent to establish the "China Social Marketing Lab". The pair have signed a memorandum of understanding and entered a strategic alliance to create the lab, which will develop new online advertising services for clients. "This partnership combines the best of talent and technology within WPP and Tencent. Fostering innovation in the social sphere is key in today's world of hyper-connectivity. Collaborating with partners and clients is a strategic way forward for WPP and our agencies to create stronger products for better engaging end-users," said Martin Sorrell, WPP's chief executive.
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Distribution and outsourcing group Bunzl said trading in the first half of 2016 has been in line with its expectations as it made two new acquisitions. The company said revenue for the first half of 2016 is set to be up by around 9.0%, driven largely by acquisitions the company has made. Stripping out the acquisition contributions, underlying revenue is seen broadly flat year-on-year.
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Ratings agency Moody's Investors Service has downgraded its outlook on the UK banking sector and its ratings on 12 banks and building societies following the UK vote to leave the EU. Moody's said it changed its outlook on the UK banking system to Negative from Stable, following on from the referendum outcome and subsequent downgrade by the ratings agency to its outlook for the UK Aa1 government bond rating. Within the changes, Moody's downgraded eight banks and building societies to Negative from Stable. This covers Barclays, HSBC Bank, Santander UK, Coventry Building Society, Leeds Building Society, Nationwide Building Society, Nottingham Building Society and TSB Bank. Moody's also cut the outlook Lloyds Banking Group and Principality Building Society to Stable from Positive and changed the outlook on the UK government-guaranteed senior unsecured debt instruments for Lloyds, Barclays, Bradford & Bingley and NRAM (No1) Ltd to Negative from Stable.
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Stagecoach Group reported a decline in pretax profit due to higher finance charges and weaker margins over the year which offset revenue growth, and it announced the sale of the retail operations of its Megabus Europe coach business. Stagecoach said pretax profit for its financial year to April 30 was GBP104.4 million, down from GBP165.2 million the year before, pushed lower by higher finance charges and more costs incurred from investments in improving the customer experience on bus and rail services. This offset growth in revenue to GBP3.87 billion from GBP3.20 billion, helped by the contribution from the Virgin Trains East Coast rail franchise, which started in March 2015. Stagecoach will pay a final dividend of 7.9 pence per share, up from 7.3p, taking its total dividend up 8.6% to 11.4p from 10.5p.
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Cobham said it has poached its new chief financial officer from fellow FTSE 250 defence technology company QinetiQ Group. Cobham said David Mellors will join as chief financial officer, the same position he currently holds at QinetiQ, no later than January 1, 2017. Prior to taking up his position at QinetiQ, Mellors was deputy CFO at Logica, a UK-based IT and management consultancy. Simon Nicholls, who resigned from his role at Cobham in January, will leave the business "at an appropriate point" later in 2016, Cobham said. Nicholls was supposed to join Wolseley as CFO, but that decision was reversed in May after a profit warning and rights issue by Cobham in April.
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Retirement housebuilder McCarthy & Stone noted its strong order book which, in normal conditions, would be sufficient to deliver its targeted 20% increase in sales volumes for the full year, but cautioned uncertainty resulting from last week's UK voted to leave the European Union may impact the conversion of its order book to completions. McCarthy & Stone said its order book of forward sales at June 24 was GBP426.0 million, a 23% rise from the GBP328.0 million recorded at the same time a year earlier.
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Greene King reported growth in profit in its recently-ended financial year boosted by a strong rise in revenue, but warned that consumer confidence going forward will be hit by the EU referendum result. The pub operator and brewer said its pretax profit in the year ended May 1 grew by more than half to GBP189.9 million from GBP118.2 million the year before, as revenue also rose by more than half to GBP2.07 billion from GBP1.32 billion. The growth was driven by the integration of smaller rival Spirit Pub Co.
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MARKETS
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London shares were higher as investors regained some confidence in equities, with financial stocks and housebuilders among the gainers. The pound was stable. Wall Street was pointed to a higher open.
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FTSE 100: up 2.3% at 6,278.70
FTSE 250: up 1.7% at 15,758.72
AIM ALL-SHARE: up 0.7% at 693.61
GBP: flat at USD1.3375 (USD1.3318)
EUR: flat at USD1.1061 (USD1.1048)
GOLD: up at USD1,318.66 per ounce (USD1,313.83)
OIL (Brent): up at USD48.97 a barrel (USD47.81)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The first departures took off from Istanbul's Ataturk international airport Wednesday, as the major international transit hub partially resumed operations following a deadly attack, killing 36 people, with Islamic State the top suspect. Planes had already begun landing just before dawn, after the airport - one of the largest in the region - had been totally shut for several hours following the attack the previous evening which was focused on the arrivals terminal. Delays remained widespread after hundreds of flights were cancelled or postponed immediately after the attack. Turkish airlines, which had to cancel more than 340 flights, was offering refunds or alternative tickets, but there still was chaos for many travellers.
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European Union leaders are meeting in Brussels on Wednesday without UK Prime Minister David Cameron, in a highly symbolic portent of things to come. After bidding an emotional farewell to EU summitry after his last trip to the Belgian capital as PM on Tuesday evening, Cameron was not invited to join the prime ministers and presidents of the other 27 EU nations as they returned to the table to discuss how they will deal with the fallout from last week's Brexit vote in the UK. A clearly emotional Prime Minister said that there was "sadness and regret" among the 28 leaders around the table at the European Council that the UK was leaving the EU after 43 years, coupled with an acceptance that the decision of voters must be respected.
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Scottish First Minister Nicola Sturgeon will hold talks with European Parliament president Martin Schulz in Brussels on Wednesday as she attempts to keep Scotland in the EU. The First Minister is also expected to meet with Guy Verhofstadt, the former Belgian prime minister and leader of the Liberal group at the European Parliament. It is understood European Council president Donald Tusk has no plans to meet with Sturgeon because he does not consider it to be the right time.
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UK house price growth accelerated more than expected in June, data from the Nationwide Building Society showed. House prices climbed 5.1% annually, following a 4.7% rise in May. Economists had forecast prices to grow 4.9%. This was also the fastest growth in three months. "It has become difficult to gauge the underlying pace of demand in recent months, due to the surge in house purchase activity in March ahead of the introduction of Stamp Duty on second homes on 1 April," Robert Gardner, Nationwide's chief economist, said. It is too early to assess the impact of the referendum vote on the economy, the economist noted.
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UK mortgage approvals increased in May and secured lending accelerated from April, the Bank of England said. The number of loans approved for house purchases rose to 67,042 from 66,205 in April. It was expected to fall to 65,000. Total lending to individuals increased by GBP4.3 billion in May, compared to the average of GBP5.1 billion over the previous six months. Within total lending, secured lending grew GBP2.8 billion, bigger than the expected growth of GBP2.3 billion and a GBP0.1 billion rise seen in April. Consumer credit increased by GBP1.5 billion in May, in line with expectations, and above April's GBP1.3 billion rise.
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The head of the UK Independence Party Nigel Farage, a leading voice for the successful referendum campaign to pull Britain out of the EU, said he would not give up his seat in the bloc's legislature. "The European Parliament is going to have a say that will be part of the Brexit debate. I lead the biggest British delegation in the European Parliament, I am not going to run away," Farage said on the sidelines of an EU summit in Brussels on the so-called Brexit.
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US President Barack Obama warned Tuesday against "hysteria" over Britain's vote to leave the EU last week. "I would not overstate it," Obama said in a National Public Radio interview. "There's been a little bit of hysteria post-Brexit vote, as if somehow NATO's gone, the trans-Atlantic alliance is dissolving, and every country is rushing off to its own corner. That's not what's happening." Instead, Obama said the vote should be viewed as "a pause button" on "the project of full European integration." He said the vote could be seen as a reaction to the growth of the EU "that was probably moving faster and without as much consensus as it should have."
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A wide-ranging trade deal between Canada and the EU should not require approval from the bloc's national parliaments, European Commission President Jean-Claude Juncker told EU leaders on Tuesday, despite pressure from member states. The deal, reached in October 2013, was at the time described by the EU as a "landmark achievement for the transatlantic economy" and a stepping stone for a free trade agreement with the US. It is the largest such accord ever pursued by Canada. Canada and the EU now hope to sign the deal in October, once it has undergone the necessary approvals on both sides of the Atlantic.
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Republican presidential candidate Donald Trump argued for scrapping a 12-nation Pacific trade deal, calling it the "greatest danger yet" to US jobs. Trump said he would withdraw the US from the Tran-Pacific Partnership, which was agreed last year but has yet to be ratified by the US Congress, and also railed against the North America Free Trade Agreement between the US, Mexico and Canada that went into effect during Bill Clinton's presidency.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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