28th Nov 2019 11:11
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Virgin Money UK made a "difficult" decision to suspend dividend payments despite a "resilient" annual performance. Virgin Money was known as CYBG until the end of October, changing its name as part of a rebranding following the purchase of challenger bank Virgin Money for GBP1.7 billion in October 2018. It also owns Clydesdale Bank and Yorkshire Bank. A year ago, as CYBG, the Glasgow-headquartered lender paid a 3.1 pence dividend for the year to October 2018, up from 1.0p a year before that. However, Virgin Money will not be returning any cash for its recently ended financial year due to PPI provisions, which have amounted to GBP385 million in the fourth quarter. Extra PPI provisions a year ago had also pushed what was then CYBG to an annual loss. For its recent year, this pretax loss widened, to GBP232 million from GBP164 million.
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Life and pensions consolidator Phoenix Group said its cash generation for 2019 is ahead of target. Phoenix said it has generated GBP707 million of cash in 2019, exceeding the upper end of its GBP600 million to GBP700 million target. In 2018, cash generation amounted to GBP664 million. It also continued to meet, or exceed, customer service metrics, it said, and remains on track to deliver the GBP1.2 billion total synergy target for its Standard Life Assurance purchase. The FTSE 100-listed company generated incremental long-term cash of GBP440 million from new business, comprising GBP205 million in cash generated in the nine months to September-end and GBP235 million from the GBP1.1 billion of bulk purchase annuity liabilities contracted year-to-date.
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Ocado Group said it will build a mini customer fulfilment centre in Bristol to support growth plans of Ocado Retail. The Bristol warehouse will have a capacity for over 30,000 orders per week compared to 85,000 orders per week expected from Ocado's fifth customer fulfilment centre, which is currently being built at Purfleet, Essex. The facility is being built in an existing warehouse, Ocado said, and is expected to go live at the end of 2020 or early 2021, bringing new capacity into operation significantly faster than for purpose-built standard-sized fulfilment centres. The Bristol mini-centre, consisting of a 150,000 square feet warehouse, will be delivered by St Modwen Properties.
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Go-Ahead said its performance in both bus and rail divisions has been mixed. The company said the performance of regional bus operations has been "slightly weaker" than expected in the period from June 30 to November 27. London & International bus continued to perform well, however. The company said its regional bus revenue rose 2.5% for the period, with 0.5% increase in passenger journeys. Meanwhile London & International bus revenue rose 8%, with 4% increase in mileage. In rail, overall expectations remain unchanged with a good performance in the UK offsetting a challenging operational start to two new German contracts.
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The trade union representing postal workers is set to challenge a High Court injunction to block potential strikes by members. Royal Mail was granted an injunction to prevent members of the Communication Workers Union from taking industrial action in a dispute over job security and employment terms. Giving his ruling two weeks ago, Justice Swift said there was "improper interference" by the union with a strike ballot, because members had been encouraged to remove their voting papers from work before they were delivered to their home addresses. But CWU general secretary Dave Ward immediately vowed to challenge the decision, and the union's case will be heard by the Court of Appeal in London on Thursday.
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MARKETS
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London shares were mixed amid heightened US-China tensions after US President Donald Trump signed legislation backing Hong Kong protesters. In the FTSE 250, Virgin Money was the standout performer, up 27%. The pound was up against the dollar after a major YouGov poll pointed to a big win for the ruling Conservative Party in next month's UK general election. Financial markets in the US were closed for the Thanksgiving holiday.
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FTSE 100: down 0.4% at 7,401.80
FTSE 250: up 0.2% at 20,895.81
AIM ALL-SHARE: down 0.1% at 919.27
GBP: up at USD1.2933 (USD1.2872)
EUR: flat at USD1.1010 (USD1.1005)
GOLD: firm at USD1,457.10 per ounce (USD1,455.35)
OIL (Brent): soft at USD62.82 a barrel (USD62.92)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson is on course to win the general election with a comfortable 68-seat majority by triumphing in Labour heartlands, according to a projection poll which accurately forecast the hung parliament in 2017. The constituency-by-constituency estimate by YouGov, published in The Times, indicates that if the election was held on Thursday, the Conservative Party would win 359 seats, 42 more than they took in 2017. It would also take 43% of the vote, and in number of seats this would be its best performance since 1987. Labour, meanwhile, is set to lose 51 seats, falling from 262 seats in 2017 to 211 now, and taking 32% of the vote, a nine percentage point decrease. This would be the party's worst performance in seats won since 1983, YouGov said, adding that the opposition is on course to not take any new seats.
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Britain's powerhouse services sector saw activity fall at a steeper pace in the three months to November as Brexit and political uncertainty wrought further havoc, according to a survey. The latest CBI service sector report revealed business volumes fell at a sharper pace in the three months to November, with consumer services firms suffering their fifth straight quarter of declines.
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The number of cars built in the UK fell by over 5,600 last month compared to a year ago, highlighting the "extremely worrying" times for the industry, according to a new report. The Society of Motor Manufacturers & Traders said car production has now fallen for 16 in the last 17 months. Production only went up in August because contingencies for Brexit boosted output that month. Just over 134,750 cars rolled off production lines in October, 5,622 fewer than the same month last year, a fall of 4%.
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China's foreign ministry summoned the US ambassador, urging Washington to refrain from applying a bill supporting Hong Kong's pro-democracy movement to "avoid further damage" to relations. Chinese vice foreign minister Le Yucheng lodged a "strong protest" with Ambassador Terry Branstad after President Donald Trump signed the legislation into law. The passage of the bill comes as the world's two biggest economies are locked in negotiations to finalise a partial deal to soothe their trade war. "Le stressed that China strongly urges the US side to correct mistakes and change course," the foreign ministry said in a statement. Le also urged the US to "refrain from putting the bill into practice, and immediately stop interfering in Hong Kong affairs and China's internal affairs, so as to avoid further damage to China-US relations and bilateral cooperation in important areas". The Hong Kong Human Rights & Democracy Act requires the US president to annually review the city's favourable trade status and threatens to revoke it if the semi-autonomous territory's freedoms are quashed.
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US, Mexican and Canadian trade negotiators met on Wednesday in an effort to put the final touches on a regional free trade agreement that can pass muster in the American Congress. Democratic legislators have been asking for tougher enforcement of labour standards in the agreement formerly known as NAFTA. Mexico's top trade negotiator Jesus Seade said talks appear to be in the final stretch to win approval for the rebranded US-Mexico-Canada Agreement.
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Economic activity in the US continued its "modest" growth in the past six weeks, but trade tensions remain a concern and manufacturing was mostly flat, according to a Federal Reserve report. Nine out of the 12 Fed regions saw slight growth from October through mid-November while three, including New York, stagnated, according to the Fed's Beige Book survey of the economy. Multiple regions mentioned the negative impact created by trade tensions and tariffs, and manufacturing in the majority of regions showed no growth. The report was prepared in advance of the Fed's policy meeting December 10-11.
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