News Column

UK MORNING BRIEFING: Aggreko Leads London Opening Gains

August 5, 2014

Tom Waite



LONDON (Alliance News) - Aggreko, Weir Group and Standard Life are leading UK shares to a higher open Tuesday, following late gains on Wall Street Monday.



Aggreko, up 4.7%, said pretax profit fell in the first half of 2014, but it continues to expect full-year underlying trading profit to be similar to last year.



Meanwhile, Meggitt is the FTSE 100 laggard, off 7.9%, after reporting lower profit and revenue for the first half of the year as it was hit by weaker demand for its military goods and the strong pound.



Here is what you need to know at the UK market open:

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MARKETS

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FTSE 100: up 0.4% at 6,706.05

FTSE 250: up 0.3% at 15,409.10

AIM ALL-SHARE: up 0.1% at 765.75

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Hang Seng: flat at 24,607.93

Nikkei 225: closed down 1.0% at 15,320.31

DJIA: closed up 0.5% at 16,569.28

S&P 500: closed up 0.7% at 1,938.99

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GBP-USD: flat at USD1.6853

EUR-USD: flat at USD1.3422



GOLD: up at USD1,292.39 per ounce

OIL (Brent): down at USD105.25 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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Tuesday's Key Economic Events still to come

(all times British Summer Time)



08:45 Italy Markit Services PMI

08:50 France Markit Services PMI

08:55 Germany Markit Services PMI

09:00 EU Markit Services and Composite PMI

09:30 UK Markit Services PMI

10:00 EU Retail Sales (YoY)

13:55 US Redbook index

14:45 US Markit Services and Composite PMI

15:00 US Factory Orders

15:00 US IBD/TIPP Economic Optimism

15:00 US ISM Non-Manufacturing PMI

16:30 US 4-Week Bill Auction

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Economic growth in the UK is getting entrenched and the GDP growth is expected to accelerate to 3% in 2014, the National Institute of Economic and Social Research, or NIESR, said Tuesday. The GDP growth is estimated at 3%, an upward revision from the previous growth forecast of 2.9% and follows an estimated 1.7% expansion in 2013. In 2015, GDP growth is expected to slow to 2.2%. "The UK economy has finally recovered its pre-crisis size just over six years after the onset of the downturn", the think tank said.

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The services sector in China slid to no change in July, the latest survey from Markit Economics revealed on Tuesday in its latest performance of service index - which came in with a score of 50.0.

That's down from 53.1 in June. Total new business placed at manufacturers rose solidly in July, while new order growth at service providers was the weakest in over five-and-a-half years and fractional overall. Employment trends continued to diverge across both the manufacturing and service sectors during July.

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The services sector in Japan swung to expansion in July, the latest survey from Markit Economics revealed on Tuesday in its latest performance of service index - which came in with a score of 50.4.

That's up from 49.0 in June. Output returned to growth territory for the first time in four months, while new orders grew at a modest pace for the second consecutive month. Consequently, payroll numbers increased from a previous month of decline. Both input and selling prices rose in July, with a hike in purchases and employment costs being the main contributors to inflation.

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A 72-hour Egypt-brokered truce has gone into effect in the Gaza Strip and Israel. The start of the truce was preceded by a barrages of rockets from Gaza, with air raids sirens howling throughout southern Israel, including in the cities of Ashdod, Ashkelon and Beersheba, as well as around Jerusalem. In minutes before the truce, Israel launched air strikes on Gaza City and on southern and central parts of the strip in response to the rockets.

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Russia announced major air defence exercises along the border with Ukraine, further raising military tensions in the region. More than 100 aircraft are taking part in the five-day exercises, between Monday and Friday, the Interfax news agency reported, citing Russian Air Force spokesman Igor Klimov. The report said that the exercises were unprecedented by ranging across three military districts. Fighter jets and attack helicopters would train by attacking targets in the air and on the ground, it said. The move comes as the standoff between Moscow and the West over Ukraine has reached new heights in the wake of last month's Malaysia Airlines flight MH17 disaster.

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An American doctor suffering from Ebola was improving at an Atlanta hospital, officials said, as reports emerged Monday that he had received an experimental serum while still in Africa and near death. The doctor, Kent Brantly, received a dose of an experimental serum before he left Liberia on Saturday, the Christian charity he was working for said in a statement. Another American aid worker, Nancy Writebol, who also fell ill in Liberia after exposure to the Ebola virus, also received the serum, Samaritan's Purse said. Her condition has improved and she is due to be flown to the US on Tuesday.

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Iraqi Kurdish forces Monday said they had regained ground from jihadist extremists, as Kurdistan President Massoud Barzani vowed to protect the Yezidi minority from the Islamic State group. Herkold Hikmat, spokesman for the Kurdish Peshmerga military, said the Peshmerga had recaptured the Sinjar area west of Mosul, home to much of Iraq's Yezidi minority. Tens of thousands of Yezidis, a Kurdish-speaking minority viewed as infidels by Islamists, fled when the jihadists overran the area on Sunday.

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Formula One chief Bernie Ecclestone's bribery trial could end as early as Tuesday when a Munich court responds to his USD100-million settlement offer. The trial is set to resume on Tuesday, but the court has already told witnesses scheduled to give evidence not to turn up for the proceedings. The 83-year-old last week raised his settlement offer from an initial EUR25 million to USD100 million, according to Germany's daily Sueddeutsche Zeitung. If the court agrees to the settlement, it would allow Ecclestone to retain control of the sport that he turned into a multi-billion dollar business after acquiring the global television rights for Formula One in the 1970's.

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BROKER RATING CHANGES

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UBS RAISES HSBC PRICE TARGET TO 645 (630) PENCE - 'NEUTRAL'

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DEUTSCHE BANK RAISES HSBC PRICE TARGET TO 640 (593) PENCE

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CREDIT SUISSE CUTS ROYAL MAIL PRICE TARGET TO 360 (460) PENCE - 'UNDERPERFORM'

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JPMORGAN RAISES INTERTEK TO 'OVERWEIGHT' ('NEUTRAL')

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TRADERS: LIBERUM RAISES IMAGINATION TECHNOLOGIES TO 'BUY' ('HOLD')

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UBS CUTS AFREN PRICE TARGET TO 135 (200) PENCE - 'BUY'

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COMPANIES - FTSE 100

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Intercontinental Hotels Group PLC reported lower profit and revenue for the first half of the year due partly to the refurbishment of a Paris hotel and investments in Asia, but the company reported growth in most of its portfolio thanks to the economic recovery in the US and UK and continued strong growth in some Asian markets. The company reported a pretax profit of USD377 million for the six months to end-June, down from GBP462 million a year earlier, as revenue declined to USD908 million, from USD936 million. Its underlying operating profit rose in the Americas, but declined in Europe due mainly to the refurbishment of the InterContinental Paris-Le Grand and in Asia as it invested in its hotels and trading was weak in Thailand. Intercontinental Hotels returned USD750 million to shareholders with a special dividend in July, and also completed a USD500 million share buyback in the first half. On Tuesday, it raised its interim dividend to 25.0 cents a share, from 23.0 cents last year, a move it said reflected its confidence in its strategy.

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Aggreko PLC said pretax profit fell in the first half of 2014, and it continues to expect full-year underlying trading profit to be similar to last year, as revenue growth was offset by currency headwinds. The temporary power company said its pretax profit fell 9% to GBP132 million for the six months ended June 30 from GBP146 million the previous year. The company said its revenues were up 1% to GBP768 million from GBP760 million due to strong growth in its Europe, Middle East and Africa and Americas operations, and the company saw an underlying revenue increase of 12%, which doesn't include currency movements and pass-through fuel costs. It added that it saw double digit growth in its Local business on an underlying level, with FIFA World Cup and Commonwealth Games contracts executed successfully. Aggreko increased its interim dividend by 3.0% to 9.38 pence from 9.11 pence the previous year.

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Meggitt PLC reported lower profit and revenue for the first half of the year as it was hit by weaker demand for its military goods, but the company said it was confident of strong organic revenue growth in the second half and a recovery in its margins as orders rose. It became the latest in a long list of British companies reporting a significant hit from the recent strength of sterling, warning that exchange rates would likely continue to be a drag in the second half of the year. The aerospace, defence and energy sector engineer reported a pretax profit of GBP98.2 million for the six months to end-June, down from GBP122.4 million a year earlier, as revenue declined to GBP718.9 million, from GBP810.1 million and its operating margin was hit as it sold more less-profitable goods and said revenue would be weighted to the second half of the year. The company raised its interim dividend to 4.25 pence, from 3.95 pence, a move it said reflects its confidence in its prospects.

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Standard Life H1 IFRS Pretax Profit GBP452M Vs GBP284M; Assets Under Administration Up By 4% To GBP254.1B In H1

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Fresnillo H1 Pretax Profit Down, USD208.2M Vs USD249.8M; Revenue Down 27%, USD677.1M Vs USD925.9M; H1 Silverstream Revaluation Gain USD47.3M Vs Loss USD112.5M; Declares Special Dividend USD5.0 Cents per Share; FY Production Guidance Maintained

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BTGroup PLC has been left out of a lucrative UK Government deal to upgrade the communications systems used by emergency services in Britain, The Times reports. Citing a Home Office tender document for the work, one of the biggest public sector communications in recent years, the Times said BT was not even shortlisted for the upgrade. The deal is estimated to have a combined value of nearly GBP5 billion over ten years, split across four tranches. The project involves modernising radios and communications devices used by police, fire and ambulance workers in the UK. The contract will now be fought for by O2, EE Ltd and Vodafone Group PLC, along with incumbent operator Airwave. Arqiva and UK Broadband Networks will also battle to win part of the deal.

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The Weir Group PLC has dropped Bank of America Merrill Lynch as its corporate broker, blaming an "undisclosed conflict of interest" after the bank was appointed corporate broker by a rival. Press reports said Weir rival IMI PLC had appointed Bank of America Merrill Lynch as its corporate broker. The two companies could potentially look at the same acquisition targets, meaning the broker would be conflicted. In a statement, Weir said it is retaining Swiss bank UBS as its corporate broker.

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COMPANIES - FTSE 250

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Riverstone Energy Ltd said Liberty Resources II LLC has signed an agreement with Emerald Oil Inc under which it will exchange a portion of its holdings in the North Dakota-based Williston Basin for additional acreage at the site and around USD78.4 million in cash. Liberty Resources LLC is a Denver-based oil and gas firm funded through investments from funds managed by Riverstone Holdings LLC, including Riverstone Energy Ltd. Under the deal, Liberty will get approx 4,175 net acres in Williams County, North Dakota, adding around 30 operated drilling locations to its portfolio. Liberty will then divest around 31,500 non-core acres in McKenzie County, North Dakota.

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Inmarsat H1 Pretax Profit USD168.3M, Down From USD185.5M Year Before; Revenue USD652.3M, Up From USD640.3M Year Before; Interim Dividend 18.68 Cents, Up 5%; Says Satellite Launch Delays Mean Global MSS Revenue To Be Lower Than Expected Over 2014-16; Still Expects Global MSS Revenue To Be In 8%-12% CAGR Growth Range For 2014-16

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Kier Group Secures Contracts In Services And Construction Sectors; Says One Contract With Water Firm For GBP3.5M A Year

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BBA Aviation H1 Pretax Profit USD92.0M Vs USD63.2M; Revenue USD1.15B Vs USD1.11B; Interim Dividend 4.62 Cents Vs 4.40 Cents

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Rotork H1 Pretax Profit GBP61.5M Vs GBP63.6M; Revenue GBP278.5M Vs GBP276.1M; Interim Dividend 19.2 Pence Vs 18.05 Pence; Order Book Up 7.4% Since December To GBP203M

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COMPANIES - MAIN MARKET AND AIM

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Serica Energy PLC said it has completed the farm out of UK East Irish Sea Blocks with Centrica PLC through the latter's Hydrocarbon Resources Ltd subsidiary. Under the deal, Hydrocarbon Resources has bought a 45% interest in the licence, which covers blocks 113/26b and 113/27c, with Serica to retain 20%. Hydrocarbon will take on Serica's share of the costs associated with drilling an exploration well at the site, up to a gross amount of GBP11 million. In addition, Hydrocarbon Resources will take a 15% stake and operatorship in the adjacent Block 113/22a, aligning the equity interests across the two licences.

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Next Fifteen Communications Says Trading Remains Positive; Expects Revenue In 12-Mo To July To Be Above GBP100M

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LSL Property Services H1 Pretax Profit GBP31.4M Vs GBP8.4M; Revenue GBP139.8M Vs GBP118.8M; Major Contract Secured In Surveying Division; Increases Interim Dividend To 4.0 Pence Vs 3.3 Pence

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Rex Bionics Appoints Crispin Simon As CEO; To Formally Join In Oct 2014, Current CEO Jeremy Curnock Cook To Be Deputy Chairman; H1 Total Comprehensive Loss GBP1.2M

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Utilitywise FY Revenue And Adjusted Pretax Profit To Be In Line

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Hill & Smith H1 Pretax Profit GBP16.0M Vs GBP15.7M; Revenue GBP223.8M Vs GBP221.6M; Increases Dividend To 6.4 Pence Vs 6.0 Pence; Trading Conditions In End Markets Continued To Improve

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888 Holdings Q2 Group Revenue USD111M, Up 15% From USD97M Year Before; Says Looks Forward To Full Year With Confidence

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TClarke H1 Pretax Profit Down To GBP0.2M Vs GBP0.8M; Revenue Down To GBP109.8M Vs GBP114.7M; Interim Dividend 0.5P Vs 1.0P; Sees Signs Of Improvements, But No Positive Impact To Margins Until 2015

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Genel Energy H1 Pretax Profit Down, USD70.7M Vs USD109.1M; Revenues Up, USD192.1M Vs USD160.6M; H1 Production Up, 63,000BOEPD Vs 41,500BOEPD

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Gem Diamonds Recovers 198 Carat Diamond From Letšeng Mine; Expects Diamond To Achieve Exceptional Price

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MDM Engineering Group FY Pretax Profit USD12.2M VS USD20.4M; Group Revenue USD108.7M Vs USD137.2M; Declares Final Dividend Of USD8.00

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Solid State Wins GBP34M Contract With UK Ministry Of Justice For GPS Offender Tagging

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Phaunos Timber Says Material Uncertainty Over Liquidity Requirements; May Be Unable To Pay Liabilities In Next 3-6 Months

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NWF Group FY Pretax Profit GBP7.7M, Down From GBP8.5M; Revenue GBP537.7M, Down From GBP545.8M; Full-Year Dividend Up 6.3% To 5.1p From 4.8p

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Share H1 Pretax Profit Up 10% To GBP0.8M From GBP0.7M Year Before; Revenue Up 8% To GBP7.9M From GBP7.3M Year Before; Says H2 Has Started "Briskly", Helped By Higher ISA Allowances

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S&U Says Continues To Trade In Line With Market Expectations

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Rare Earth Minerals: JORC Resource Estimate Of 3.4M Tonnes Total Rare Earth Oxides At Yangibana Project; 290% Increase In Contained TREO Vs Non-JORC Estimate

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Westminster Group Gets Pilot Pipeline Security Project From Americas Petrochemical Company

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COMPANIES - INTERNATIONAL

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Swiss pharmaceutical giant Roche Holding AG said Monday that it has agreed to buy Denmark-based biopharmaceutical company Santaris Pharma for up to USD450 million. The company noted that the acquisition will enable it to expand discovery and development of RNA-targeting molecules. Under the terms of the deal, Roche will make an upfront cash payment of USD250 million to Santaris Pharma shareholders and also make additional contingent payments of up to USD200 million if Santaris achieves certain predetermined milestones.

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American International Group Inc reported a better-than-expected increase in second-quarter profit, aided by earnings in core insurance businesses as well as gains from the sale of its aircraft-leasing unit. Separately, AIG in a regulatory filing said it agreed to pay USD960 million as settlement against claims it misled investors over its financial health in the years leading to the 2008 financial crisis. For the second quarter, New York-based AIG posted net earnings of USD3.1 billion or USD2.10 per share, compared with USD2.7 billion or USD1.84 per share last year.

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German luxury car giant BMW Group said it has increased its sales volume, revenues and group earnings in the second quarter of 2014. For the quarter, Group profit before tax or EBT rose 31% to EUR2.66 billion, from last year's EUR2.03 billion.

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French lender Credit Agricole SA said second-quarter net income group share was EUR705 million compared to EUR1.39 in the previous year. Excluding items such as the impact of Portuguese bank BES, issuer spreads, DVA, loan hedges, underlying net income group share was EUR1.694 billion compared to EUR1.373 billion last year.

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French aerospace giant Airbus Group NV reported 705 net orders for the period between January 1 and July 31. Meanwhile, gross orders totaled 980. Total net orders for A321 was 267 and that for A320 totaled 472. Total cancellations for the period were 275.

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Tuesday's Scheduled AGMs/EGMs



Schroder UK Growth Fund

Monks Investment Trust

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