News Column

UK MORNING BRIEFING: FTSE 250 Outperforms As Perform Group Leaps

September 1, 2014

Tom Waite



LONDON (Alliance News) - UK shares have opened mixed Monday, amid growing concerns about Russian involvement in eastern Ukraine.



The mid-cap FTSE 250 is outperforming, led by Perform Group, whose shares are up 26% after Access Industries Group made a final cash offer to acquire all shares in the company it does not already own for the premium price of 260 pence per share, valuing the company at GBP701.6 million.



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

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MARKETS

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FTSE 100: down 0.2% at 6,808.84

FTSE 250: up 0.2% at 15,923.99

AIM ALL-SHARE: up 0.1% at 781.01

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Hang Seng: down 0.1% at 24,727.35

Nikkei 225: closed up 0.3% at 15,476.60

DJIA: closed up 0.1% at 17,098.45

S&P 500: closed up 0.3% at 2,003.37

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GBP-USD: up at USD1.6626

EUR-USD: down at USD1.3132



GOLD: up at USD1,288.59 per ounce

OIL (Brent): down at USD102.89 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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Monday's Key Economic Events still to come

(all times British Summer Time)



holiday US Labor Day

holiday Canada Labour Day

08:45 Italy Markit Manufacturing PMI

08:50 France Markit Manufacturing PMI

08:55 Germany Markit Manufacturing PMI

09:00 EU Markit Manufacturing PMI

09:30 UK Markit Manufacturing PMI

09:30 UK Mortgage Approvals, Consumer Credit and M4 Money Supply

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Russian President Vladimir Putin on Sunday called for talks between the Ukrainian government and pro-Russian separatists fighting in the east of the country, including on the issue of "statehood". "There must be substantial negotations beginning immediately, not on technical issues but on issues regarding the political organization of society and the statehood of south-eastern Ukraine," Putin told Russian state television. The goal, he added, was to protect the interests of people in eastern Ukraine. Putin repeatedly called the embattled area "Novorossiya," or New Russia. Responding to media reactions to the broadcast, government spokesman Dmitry Peskov said that Putin was not advocating for the founding of a new state, according to Itar-Tass news agency.

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EU leaders on Saturday decided to "urgently" prepare a new round of sanctions against Russia, in response to Moscow's military role in neighbouring Ukraine. They accused Russia of "aggression" and called on Moscow to "immediately withdraw all its military assets and forces from Ukraine." Ukrainian President Petro Poroshenko alleged that "thousands of foreign troops and hundreds of foreign tanks" were on his country's territory.

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EU leaders on Saturday also appointed Polish Prime Minister Donald Tusk as the bloc's next president and selected Italian Foreign Minister Federica Mogherini to be its new top diplomat. The EU is undergoing a leadership change after elections across its 28 countries in May. Saturday's appointments end months of haggling over the two posts, currently held by Herman Van Rompuy and Catherine Ashton.

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China's final manufacturing purchasing managers' index was revised down in August, defying expectations of economists to confirm the flash reading, results of a survey by Markit Economics and HSBC Bank showed Monday. The final HSBC Manufacturing PMI decreased to 50.2 in August from the flash estimate of 50.3. Economists had expected no change. In July, the index was at a 17-month high of 51.7.

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The German economy contracted as estimated in the second quarter, a revised report from Destatis showed. Gross domestic product fell 0.2% sequentially, reversing the 0.7% growth in the first quarter. This was the first decline since the first quarter of 2013. On a yearly basis, GDP advanced by calendar adjusted 1.2%, which was slower than the 2.3% expansion seen in the first quarter.

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Ireland's manufacturing activity expanded at a faster rate in August, survey figures from Markit Economics showed. The seasonally adjusted Investec purchasing managers' index, or PMI, rose to 57.3 in August from 55.4 in July. This marked the sharpest monthly increase in manufacturing activity since December 1999. The latest figure also marked the fifteenth consecutive month of expansion.

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The manufacturing sector in Japan expanded at an accelerated pace in August, the latest survey from Markit Economics revealed on Monday with a purchasing managers' index score of 52.2. That missed forecasts for 52.4, although it's up significantly from 50.5 in July.

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The Iraqi military retook control of the northern town of Amerli on Sunday from Islamic State militants, who had besieged it for two months. Military spokesman Qassem Atta said soldiers backed by Shiite militiamen entered Amerli, 170 kilometres north of Baghdad, after forcing the militants to end their blockade of the mainly Shiite Turkmen town.

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Israel announced Sunday that it plans to expropriate 400 hectares of land near Bethlehem in the Israeli-occupied West Bank. The Palestinian owners of the land have 45 days to contest the decision to Israel's Military Appeals Committee, a government spokesman said in Tel Aviv. Israeli advocacy group Peace Now said it expects Israel to use the land, located in the outpost of Gva'ot, to expand housing units in a nearby settlement.

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At least three people were killed and hundreds injured when Pakistani police fired rubber bullets and tear gas at protesters calling for the resignation of Prime Minister Nawaz Sharif, officials said Sunday. The violence took place during pitched battles in Islamabad between protesters led by opposition politician Imran Khan and Pakistani-Canadian cleric Tahirul Qadri, and police. More than 500 people, including children and police officers, were injured as protesters marched towards Sharif's official residence. The two-week-long protests raised fears of a military coup in a country that has been ruled by generals for half of its history, political analyst Hasan A Rizvi said.

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Thousands of demonstrators gathered Sunday night outside China's central government offices in Hong Kong to protest Beijing's refusal to allow free elections in the territory. Activists pledged to launch a wave of protests, culminating in the occupation of the city's business district. Organizers said 5,000 people turned out while police said 2,600 demonstrated. The protest followed a decision released Sunday afternoon by China's top legislative body to place restrictions on the right of Hong Kong residents to elect their next leader in 2017 through universal suffrage.

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Icelandic authorities on Sunday downgraded an aviation alert level to orange, the second-highest level, for a small area in the south-east of the island, despite an ongoing fissure eruption near the Bardarbunga volcano. Visibility has improved at the eruption area in the Holuhraun lava field, north of the Vatnajokull glacier, and there were no signs of ash in the air, the Icelandic Meteorological Office said.

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BROKER RATING CHANGES

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EXANE BNP CUTS OCADO TO 'UNDERPERFORM' ('NEUTRAL') - TARGET 265 (300) PENCE

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EXANE BNP CUTS TESCO PRICE TARGET TO 225 (295) PENCE - 'NEUTRAL'

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EXANE BNP CUTS SAINSBURY PRICE TARGET TO 295 (345) PENCE - 'NEUTRAL'

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EXANE BNP CUTS MORRISON PRICE TARGET TO 150 (155) PENCE - 'UNDERPERFORM'

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COMPANIES - FTSE 100

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Barclays on Sunday said it has agreed to sell its retail banking, wealth and investment management, and corporate banking businesses in Spain to CaixaBank SA, as the British lender continues to put into action its plan to scale back in areas that don't meet its targeted returns. In a statement, Barclays said it is selling the Spanish businesses, which have EUR22.2 billion in assets and EUR20.5 billion of liabilities, for EUR800.0 million in cash, though the final amount is subject to adjustment based on statutory net asset value on December 31. The investment bank and Barclaycard operations are not part of the disposal, and Barclays said it is committed to the retained businesses.

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A major shareholder in Tesco has sold off nearly two-thirds of its stake amid concerns the retailer has become "too risky", the Sunday Telegraph reported. David Herro, the chief executive of Harris Associates, the US investment fund, said he had cut his investment from around 3% to 1% due to the absence of a clear strategy, according to the Sunday Telegraph.

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Phones 4U Finance said its subsidiary Phones 4U Ltd's UK network agreement with Vodafone Group will be terminated in February 2015. Phones 4u has been in discussions with Vodafone about a renewal of the agreement. However, it said it has become apparent that the renewal will not happen. The company expressed surprise and disappointment with Vodafone's decision.

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British Land said its mixed-use campus, Regents Place, at 30 Brock Street, London is now fully let, after The Guinness Partnership agreed to take up the remaining space on a ten-year lease. The Guinness Partnership is a charitable housing association. The letting means the completed campus of 1.5 million square foot is now fully occupied.

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GlaxoSmithKline faces a potential shareholder revolt from investors calling for Chairman Chris Gent to leave more quickly, the Sunday Times reported Sunday, citing a senior City source. Gent has said he will stand down next year, and is likely to be succeeded by Royal Bank of Scotland Group PLC Chairman Philip Hampton.

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COMPANIES - FTSE 250

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Perform Group saw its shares surge in early trade after Access Industries Group made a final cash offer to acquire all shares in the company it does not already own for 260 pence per share, valuing the company at GBP701.6 million. Access Industries said its AI PG LLC unit would bid 260 pence per share for the 57.5% of the company it does not already own. The bid is a 28% premium on the closing price of 203.8 pence per share in Perform on Friday and is a premium of approximately 21.7% on the average price of Perform shares in the month prior to the offer being made. Access said the bid was final and would not be increased.

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Kennedy Wilson Europe Real Estate said it has entered into a three-year unsecured floating rate revolving debt facility of up to GBP225 million with a syndicate of banks comprising Deutsche Bank AG and JP Morgan, with Bank of America Merrill Lynch as mandated lead arranger. Kennedy Wilson said it intends to use the funds available under the debt facility for general corporate purposes, including acquisitions of property and loan assets, meeting working capital requirements, and payment of capital expenses.

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Building merchanting and DIY business Grafton Group said it has acquired Direct Builders Merchants Ltd, a general merchanting business trading from three branches in Kent. The company did not say how much it paid for the business.

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Berkeley Group Holdings said that since the start of its current financial year, the UK housing market has reverted to normal transactions levels from the high point in 2013, while demand for its homes has continued. In an interim management statement for the period May 1 to date, the housebuilder focused on London and the South East said forward sales have been maintained at levels previously reported.

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US semiconductor producer Microchip Technology Inc said any offer made for FTSE 250 chipmmaker CSR  was likely to be solely in cash. Microchip confirmed last Friday that it had held discussions with CSR over a potential acquisition, but said that these talks were at a "very preliminary stage".

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COMPANIES - LONDON MAIN MARKET AND AIM

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Monitise said its chief information officer will step down from the role and announced the departure of two board directors, whilst also naming a new head for its Americas business. The mobile banking and payments service said Mike Keyworth would step down as CIO and from the board with immediate effect. He will remain with the company as a technology advisor. He has been with Monitise since 2004 and joined the board in 2012.

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fastjet said it has commenced flights between Dar es Salaam and Entebbe, marking the launch of its fourth international route between Tanzania and Uganda. The low-cost African airline said the new route will be the only direct air link between the two African capitals.

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XLMedia said it has acquired social and mobile gaming marketing company ExciteAd Digital Marketing Ltd for up to USD19 million in cash and shares. The acquisition is expected to add to earnings immediately. XLMedia said the acquisition was "highly complimentary" to its Media division, and cited benefits of the acquisition including social and mobile expertise, revenue streams from regulated products and markets, a new customer base and expanded geographic reach.

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IPPlus said its pretax profit for the full-year dropped, missing expectations, while revenue was higher on a pick-up in call centre traffic as overall trading was hit by its poorly performing software division. The call centre services company said pretax profit for the year to June 30, came in at GBP217,483, compared to GBP345,856 the previous year. The company said in July that it expected to report a pretax profit of GBP500,000 for the year.

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Clipper Logistics said it has won a storage and distribution contract with US tobacco group Philip Morris International Inc, covering the group's brand portfolio in the UK. The contract will see Clipper take over the storage and distribution of Philip Morris products in a phased transition over coming months, including the receipt of inbound goods at Philip Morris factories, warehousing services and national onward distribution using Clipper's high security network.

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Galasys expressed confidence for the full year, as it reported a rise in profit in the half year to end-June, in its first set of results since listing on AIM in May. Galasys provides ticketing systems and services for Asian theme parks. Galasys posted a pretax profit of CNY5.0 million, up from CNY3.7 million, as revenue rose to CNY16.4 million from CNY12.3 million, boosted by growing demand from existing customers and new contract wins including from Dalian Wanda Group Co Ltd.

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COMPANIES - INTERNATIONAL

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Chinese e-commerce giant Alibaba Group Holding Ltd. is planning to formally pitch its new York initial public offering to investors in the week of September 8, media reports said. The IPO of Alibaba, which recently reported a 46% growth in second-quarter revenues on a surge in its mobile business, is expected to be one of the biggest technology issue in the US.

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South Korean conglomerate Samsung Group's shipbuilding and engineering units will merge to strengthen the conglomerate's offshore business, the two units said Monday. Samsung Heavy Industries Co Ltd. will merge with Samsung Engineering Co Ltd. Samsung is currently on a restructuring drive, and the merger of the two units hints at an acceleration of its ongoing restructuring efforts. The company is facing difficult times due to the poor health of Chairman Lee Kun-hee, who was hospitalized following a heart attack in May.

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Apple has struck agreements with credit card companies to make the next iPhone capable of making payments at retail outlets, news reports said Sunday. Apple is expected to announce the new version of the iPhone next month. It may also report agreements with Visa, MasterCard and American Express at the same time, Bloomberg news reported, quoting a person who asked not to be identified because talks between Apple and the credit card companies are private.

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Monday's Scheduled AGMs/EGMs



Igas Energy

Ludgate Environmental Fund

Berkeley Group

Mecom Group

Retroscreen Virology Group

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Source: Alliance News


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