News Column

UK MIDDAY BRIEFING: Glencore Rises After Raising Payouts

August 20, 2014



LONDON (Alliance News) - Glencore shares have risen Wednesday as the company raised its interim dividend and announced a share buyback of up to USD1 billion over the next seven months, after reporting first-half profits that beat market expectations.



Its closely-watched adjusted earnings before interest, tax, depreciation and amortisation rose to USD6.46 billion, from USD6.00 billion, as revenue rose to USD114.06 billion, from USD112.04 billion. Higher production offset commodity price falls and a hit from currency movements, and it is still being lifted by the synergies it is eking out of its Xstrata and Viterra acquisitions,



Glencore increased its interim dividend to USD0.06 cents per share, an 11% increase over the 2013 interim distribution, which the company said reflects its "confidence in the prospects and strength of our underlying commodities and business and cashflow profile." It also revealed the USD1 billion buyback.



Balfour Beatty has effectively closed the door on a merger with rival Carillion, saying Carillion's raised GBP2.09 billion offer proposal failed to address two key concerns that it raised last week.



Balfour is continuing to reject Carillion's insistence that its proposed sale of US project management business Parsons Brinckerhoff is ditched if a merger is agreed, and said the new proposal did not address the considerable risks associated with Carillion's proposed business plan, including the strategy to reduce the scale of the UK construction business when it is "poised to benefit from a recovery in the market"



Liberum thinks there is "little (if anything) Carillion can do ahead of [Thursday's] deadline" for a formal takeover offer. One the deadline passes, Carillion won't be able to make a new offer until next February under UK takeover rules.



The pound has risen after Bank of England rate-setters started to split over whether to raise interest rates. The markets think the central bank could start to raise rates earlier than previously predicted after the minutes of the last policy meeting showed that Ian McCafferty and Martin Weale sought a quarter point hike in the bank rate, to 0.75%, while the other seven members of the Monetary Policy Committee voted to keep the rate unchanged at 0.50%.



McCafferty and Weale said economic circumstances were sufficient to justify an immediate rise in the bank rate. Even after a rise of 25 basis points, monetary policy would remain extremely supportive, and an early rise would facilitate the committee's aspiration that the rises in bank rate should be only gradual, they said.



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Markets: UK stocks are mostly lower, with investors cautious ahead of the minutes of the July Federal Reserve meeting due later. The pound jumped after the Bank of England minutes revealed that two out of the seven members of its Monetary Policy Committee voted to raise interest rates.



US stock futures are pointing to a slightly lower open on Wall Street. The DJIA, S&P 500 and Nasdaq are all indicated to open down up to 0.2%.



FTSE 100: down 0.4% at 6,754.38

FTSE 250: down 0.7% at 15,792.38

AIM ALL-SHARE: down 0.1% at 762.82

GBP-USD: up at 1.6633

EUR-USD: down at 1.3278

GOLD: down at USD1,292.30 an ounce

OIL (Brent): up at USD102.03 a barrel

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Other Top UK Corporate News

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Miner Antofagasta said Executive Chairman Jean-Paul Luksic will become non-executive chairman at the start of September, with the head of the company's mining division, Diego HernÁndez, stepping up to become chief executive. The move means the company has fallen back into line with the UK corporate governance code which says that companies should split the chairman and chief executive roles. Luksic, who's family own 65% of the company's share capital, has been doing the CEO job since former CEO Marcelo Awad resigned in March, 2012 when the company missed production targets at a new mine.

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Hochschild Mining said its pretax loss narrowed sharply in the first half of the year, after a big impairment the previous year was not repeated and the company reined in costs across the business, although revenue was hit by lower metal prices. The precious metals producer posted a pretax loss of USD3.4 million for the six months to June 30, compared with a USD48.7 million loss in the first half of 2013 when it booked a USD61.9 million net impairment and write-off related to the Azuca project and the San Jose mine unit. Still, revenue declined to USD282.0 million, from USD308.6 million, due to lower silver and gold prices.

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British Land Co has sold its office block on Poland Street, London to Amazon Property in a deal worth GBP26 million, reflecting a capital value of nearly GBP1,300 per square foot. The site at 52 Poland Street, near Oxford Circus underground station, is a 20,500 square foot multi-let building. The total passing rent of GBP693,373 equates to GBP33.84 per square foot.

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UK Commercial Property Trust reported an increase in profit and net asset value in the first half of 2014, after last year's results were dented by valuation losses. The Guernsey-based company posted net profit GBP85.4 million for the six months ended June 30, up from GBP18.0 million million a year earlier, as it booked revaluation gains of GBP61.0 million, compared with the GBP5.4 million valuation loss it recorded a year earlier. Rental income, however, dipped slightly to GBP35.6 million from GBP35.8 million, reflecting changes in vacancy levels. Its net asset value per share rose 6.8% from the year-end to 78.1 pence, from 73.1 pence, mainly due to a 6.0% like-for-like increase in the capital value of the property portfolio, which is now worth GBP1.1 billion.

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Hikma Pharmaceuticals reiterated its guidance of around 5% revenue growth for 2014, as it raised its guidance for its generics business and lowered guidance for branded products, while reporting a rise in pretax profit in the half year to end-June. The pharmaceutical company maintained its interim dividend of 7.0 cents, in line with the previous year, and declared a special dividend of 4.0 cents, which it said was due to the "exceptionally strong market opportunities" secured by its US businesses during the period. Hikma posted a pretax profit of USD219 million in the recent half, up from USD111 million in the same period a year before, as revenue rose to USD738 million from USD638 million and it posted fewer exceptional costs.

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Standard Chartered said late Tuesday it has agreed a USD300 million settlement with banking regulator the New York State Department of Financial Services over deficiencies in the anti-money laundering transaction surveillance system at its New York branch. Standard Chartered said it "accepts responsibility for and regrets" the deficiencies. In addition to the penalty, the settlement also calls upon Standard Chartered to make enhancements to the transaction surveillance system at the New York office and a two-year extension to the term of the Department of Financial Services-appointed independent monitor.

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AIM MOVERS

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EG Solutions is up by more than a third after it said it expects to beat current market expectations for the full year to January 31, 2015, and it announced a new contract win. The software company said it had won a "material" new contract with an existing client, which is expected to generate initial revenues of over GBP1.2 million. It also expects to report a pretax profit of over GBP600,000 for its first half ended July 31, on revenue of around GBP4 million. Clinigen Group is also up after it acquired the global rights to cancer support therapy, Ethyol, from AstraZeneca, meaning it now has five products in its specialty pharmaceuticals portfolio.

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Other Top Economics And General

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Russian President Vladimir Putin and Ukrainian President Petro Poroshenko will meet at a summit next week in Belarus, the Kremlin said Tuesday, raising hopes for a political solution to the bloodshed in eastern Ukraine. Putin and Poroshenko will participate in an August 26 regional summit in Minsk, which will also be attended by EU officials. The Kremlin said "a number of bilateral meetings" were planned at the summit, but Putin's spokesman Dmitry Peskov said it was too early to say with whom the president will meet, the Itar-Tass news agency reported.

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A ceasefire between Israel and militants in the Gaza Strip broke down, with exchanges of fire between the sides on Wednesday as negotiators failed to agree on a deal for a longer term truce. Dozens of rockets were fired from the Gaza Strip into Israel while the Israeli military carried out retaliatory airstrikes, killing at least three people, including a young girl. Hamas denied involvement in the initial rocket which broke the ceasefire, but its armed wing claimed credit for later volleys into southern and central Israel that caused no injuries. Israeli Prime Minister Benjamin Netanyahu ordered his negotiators at indirect talks in Cairo with Palestinian militant factions to return home immediately after the rocket fire resumed on Tuesday afternoon.

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Germany's producer prices continued to decline in July, data from Destatis showed. Producer prices were down 0.8% year-on-year in July, sharper than the 0.7% fall seen in June. Economists had forecast prices to fall again by 0.7%. Month-on-month, producer prices slid 0.1% after staying flat a month ago.

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Japan posted a merchandise trade deficit of JPY963.99 billion in July, the Ministry of Finance said - remaining in the red for a record 25th consecutive month. The headline figure missed forecasts for a deficit of JPY713.9 billion following the JPY823.2 billion shortfall in June. Exports were up 3.9% on year to JPY6.188 trillion - slightly ahead of estimates for an increase of 3.8% following the 1.9% decline in the previous month. Imports were up an annual 2.3% to JPY7.152 trillion versus forecasts for a decline of 1.7% following the 8.4% spike a month earlier.

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The Islamic State militia released a video purporting to show the decapitation of US photojournalist James Foley, who went missing in Syria in November 2012. The gruesome video, posted on social media by the Islamists, could not be independently verified.

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Some 6,300 fighters have joined the Islamic State jihadist militants since last month in the northern Syrian provinces of Aleppo and al-Raqqa, a monitoring group said Tuesday. The Britain-based Syrian Observatory for Human Rights said the new recruits included 5,000 Syrians, 800 of them experienced fighters who switched allegiances from various rebel groups or from the Syrian al-Qaeda affiliate al-Nusra Front. The remaining 1,300 were foreigners, most of whom had entered Syria across its northern border with Turkey, said the group, which compiles its reports based on updates from a network of activists across Syria. The extremist group now counts more than 50,000 fighters, compared to only 15,000 a year ago, Observatory director Rami Abdel-Rahman told dpa.

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About 200 people suspected of being newly infected with Ebola were quarantined in northern Sierra Leone, the World Food Programme said Tuesday as the outbreak spread across West Africa. The cases had all been reported this week in the town of Lunar in Port Loko district, said Glen Myers, a representative with the UN's food aid agency. Myers said the large number of new cases were "worrisome."

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Residents of the riot-struck US city of Ferguson, Missouri should come out during the daytime to call for calm and distinguish themselves from the violent protests that resulted in 31 arrests overnight, police said Tuesday. Racially charged clashes, which have been ongoing for more than a week following the shooting of an unarmed black teenager by a white police officer, resumed late Monday after the lifting of a curfew. Meanwhile, another black man was shot and killed by police officers in nearby St Louis Tuesday. The unnamed 23-year-old allegedly stole two energy drinks and a pastry from a convenience store and then brandished a knife at the responding police officers, police said.

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Afternoon Watchlist (all times British Summer Time)



12:00 US MBA Mortgage Applications

15:30 US EIA Crude Oil Stocks change

19:00 US FOMC Minutes



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Thursday's Key UK Corporate Events



PV Crystalox Solar Half Year Results

Costain Group Half Year Results

Phoenix Group Holdings Half Year Results

London Mining Half Year Results

Premier Oil Half Year Results

Quindell Half Year Results

Skyepharma Half Year Results

New World Resources Half Year Results

Primary Health Properties Half Year Results

CloudBuy Half Year Results

Sportech Half Year Results

HgCapital Trust Half Year Results

Kazakhmys Half Year Results

Eros International Q1 Results



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Thursday's Key Economic Events (all times British Summer Time)



All Day US Jackson Hole Symposium

00:50 Japan Foreign investment in Japan stocks

02:35 Japan Nomura/ JMMA Manufacturing Purchasing Manager Index Preliminary

02:45 China HSBC Manufacturing PMI Preliminary

08:00 France Markit Manufacturing PMI Preliminary

08:00 France Markit Services PMI Preliminary

08:30 Germany Markit Manufacturing PMI Preliminary

08:30 Germany Markit Services PMI Preliminary

09:00 EU Markit Manufacturing PMI Preliminary

09:00 EU Markit Services PMI Preliminary

09:30 UK Public Sector Net Borrowing

09:30 UK Retail Sales

13:30 US Jobless Claims

14:45 US Markit Manufacturing PMI Preliminary

15:00 US CB Leading Indicator

15:00 EU Consumer Confidence Preliminary

15:00 US Existing Home Sales

15:00 US Philadelphia Fed Manufacturing Survey

15:30 US EIA Natural Gas Storage change

20:00 US American Petroleum Institute Monthly Report



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Contact: +44 203 668 7440; newsroom@alliancenews.com; @AllNewsTeam






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