News Column

UK MIDDAY BRIEFING: Standard Life, SuperGroup Top Indices

September 4, 2014



LONDON (Alliance News) - Standard Life sits atop the FTSE 100 Thursday after it said it expects to return GBP1.75 billion to its shareholders after selling its Canadian business for GBP2.2 billion.



Standard Life is selling its Canadian long-term savings and retirement, individual and group insurance business and Canadian investment management business to The Manufacturers Life Insurance Co, a subsidiary of Manulife Financial Corp for CAD4.0 billion at closing.



The long-term savings and investment business said the remaining GBP450.0 million of the sale proceeds will be retained for general corporate purposes. It is expected to generate a one-off gain of GBP1.2 billion for Standard Life.



Additionally, Standard Life's asset management business, Standard Life Investments, has entered into a global collaboration agreement with Manulife, through which Manulife will distribute Standard Life Investments' funds in Canada, the US and Asia.



"We have transformed our Canadian operations into a business which has consistently delivered strong results, contributing to the overall success of the group," said Chief Executive David Nish in a statement. "As a result, the Canadian business is now a much more attractive proposition and the sale allows us to realise fully the value of the business for our shareholders."



Standard Life shares trade 8.6% higher at 419.415 pence per share.



SuperGroup leads the FTSE 250 after the retailer said it remains on track to deliver profitable growth in the full year. It posted a rise in revenue in the first quarter of its fiscal year, with positive performances from its wholesale and retail arms and a gradual improvement in like-for-like retail sales against strong comparatives.



It also said it has seen an improvement in the first five weeks of its fiscal second quarter, with like-for-like sales looking stronger amid the transition to autumn/winter ranges



The Superdry brand owner said revenue for the period between April 27 and July 26 hit GBP87 million, up 16% from the GBP75.1 million posted a year earlier, and retail revenue rose 14% in the period to GBP60.4 million, against GBP53.2 million a year ago.



As anticipated, like-for-like retail sales were down, dropping 3.7% against a strong comparative for the first quarter of last year, when sales increased 8.5%. It said like-for-like performance has continued to be held back by the same issues cited in its fourth quarter, including shortages for key summer lines and a competitive market.



"With our strong pipeline of new stores, particularly in mainland Europe, the continued evolution of the ranges and our improved infrastructure we remain confident that we have the platform to deliver profitable growth in the current year," said Chief Executive Julian Dunkerton.



SuperGroup shares are up 10% at 1,153.00 pence per share.



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Markets: UK indices are largely mixed on Thursday morning as investors wait for the Bank of England's interest rate decision at midday, ahead of the much-anticipated European Central Bank interest rate decision and press conference.



The US futures indicate a cautious open on Wall Street. In the previous session, the major averages eventually closed mixed for the second consecutive day. The tech-heavy Nasdaq fell 0.6% and the S&P 500 edged down 0.1%, while the Dow crept up 0.1%.



FTSE 100: up 0.1% at 6,883.29

FTSE 250: down 0.3% at 15,945.84

AIM ALL-SHARE: down 0.3% at 776.22

GBP-USD: flat at 1.6452

EUR-USD: down at 1.3139

GOLD: up at USD1,272.36 an ounce

OIL (Brent): up at USD102.51 a barrel

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Other Top UK Corporate News

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Centrica said its earnings per share for 2014 will be hit harder than expected by the boiler inspection undertaken by EDF Energy at the Heysham 1 and Hartlepool nuclear power stations. Centrica holds a 20% stake in EDF Energy's existing nuclear operations. On the basis of the latest estimates for returning the reactors to service, and the associated costs, Centrica's 2014 earnings per share are now expected to lower by between 0.6 and 0.9 pence per share, including the 0.3 pence per share announced on August 11, Centrica said.

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WPP said its JWT unit has acquired a majority stake in Cairos Usabilidade Eireli, known at Try, in Brazil for an undisclosed amount. Try is a user experience agency which designs and develops custom web, mobile, desktop and touch-enabled applications.

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Low-cost airline easyJet and Irish flag carrier Aer Lingus Group both reported higher traffic figures for August compared with a year earlier. FTSE 100-listed easyJet said it had carried 6.6 million passengers in August, up 8.4% on the year, pushing up its load factor - a measure of how full its planes are - by 1.4 percentage points to 94.2% for the month. The airline flew 64.3 million passengers in the 12 months to end-August, up 6.4% on the 60.5 million reported for the previous 12 months. Aer Lingus said its traffic, measured in revenue passenger kilometres, rose 12.7% in August, buoyed by a further 28.3% increase in long-haul traffic, and a 2.8% increase in short-haul traffic. Passenger numbers were up 5.6% on the previous year to nearly 1.1 million.

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Balfour Beatty said it has sold its US project management business Parsons Brinckerhoff to WSP Global Inc for GBP820 million in cash, a good return on the roughly GBP380 million it bought the business for in 2009 and more than analysts had expected. Parsons Brinckerhoff proved the key stumbling block to a failed merger approach by rival Carillion PLC, after Carillion's attempts to stop the sale were rejected by Balfour. Analysts had put a price tag of up to GBP650 million on Parson Brinckerhoff.

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Serco Group said it has been selected as the preferred bidder to continue providing onshore immigration services to the Australian government, a contract that has proved problematic in the past because it provided less work than initially expected. Australia'sDepartment of Immigration and Border Protection said Serco has been selected as the preferred bidder to retain its contract to provide facilities and detainee services, the company said in a statement.

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Bus and rail company Go-Ahead Group reported higher profit and revenue for its last financial year as both operations performed better than it had originally hoped, and said that the current financial year has also got off to a good start with trading in line with its hopes. The company, recently buoyed when it was awarded the huge new rail franchise covering a swathe of southeast England, reported a pretax profit of GBP91.2 million for the year ended June 28, up from GBP63.1 million a year earlier, as revenue rose to GBP2.70 billion, from GBP2.57 billion, and its operating profit margin increased. Go-Ahead raised its final dividend for the year to 59.0 pence, from 55.5 pence, bringing the total for the year to 84.5 pence, compared with 81.0 pence.

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Alent saw its shares drop after it said Steve Corbett will step down as chief executive, with Rick Ertmann becoming interim chief executive. Ertmann, currently president of the Assembly Materials Division at Alent, will take on the position in an interim capacity while the company launches the process of identifying a permanent replacement. Corbett became chief executive of Alent in 2012 following its demerger from Cookson Group, and oversaw the listing of the company.

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AIM MOVERS

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Solo Oil leads the gainers on AIM after reporting a 70% increase in gas-condensate reserves from its Ntorya well in Tanzania; the discovery has been upgraded after a recent evaluation of new seismic data. Trakm8 Holdings is also up after the company said trading for the new financial year has started well, with the value of new orders up year-on-year, and said it is confident it will meet expectations for the full year. Shares in Redde are higher after the group, formally known as Helphire Group, increased its full-year dividend to 6.85 pence from 1.65p, saying this reflects its strong cash flow, and said its new financial year has started well, with performance in the first two months in line with its expectations. President Energy trades higher after it started drilling ahead of schedule at its Lapacho well and completed the preliminary evaluation of samples from its Jacaranda well, both in Paraguay. At the other end of the market Snacktime is the biggest faller on AIM. The vending machine operator has lost a quarter of its value after it issued a profit warning for its last financial year, blaming a change in the estimated stock and cash in its machines and a more prudent approach to doubtful debt provision in its Snack in the Box brand, and also said that trading so far this year had been behind the prior year.

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Top Economics And General

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Germany's manufacturing orders rebounded strongly in July, far exceeding economists' expectations, figures from the Federal Statistical Office showed. Factory orders increased a seasonally adjusted 4.6% from June, when they fell 2.7%, revised from a 3.2% decline. Economists had expected a 1.5% gain for July.

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Unemployment in France increased marginally, as expected, in the second quarter, a report from statistical institute INSEE showed. The jobless rate, measured according to International Labour Organisation, or ILO, standards, edged up to 10.2% in the second quarter from 10.1% in the first quarter, in line with the consensus estimate. This was still close to the 15-year high of 10.3% recorded in the third quarter of 2013.

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US President Barack Obama and British Prime Minister David Cameron have said their countries "will not be cowed by barbaric killers," following the beheading of a second American journalist by Islamic State militants. In an opinion piece for The Times newspaper published hours before a NATO summit was due to get underway in Wales, the two leaders said it "must strengthen its alliance." Those who advocated an isolationist approach "misunderstand the nature of security in the 21st century," they wrote.

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Ukrainian President Petro Poroshenko was Thursday due to meet NATO leaders on the sidelines of a summit of the transatlantic alliance in Wales, as pro-Russian separatists and government troops continued to fight in the country's east despite the announcement of a peace deal. Artillery shelling hit the city of Donetsk, and at least one apartment house was hit, local authorities said. The city was left without mains after a sewage plant was hit. Russia's Itar-Tass news agency reported that separatist militias were still battling for control of Donetsk airport. Russian media had earlier reported that government forces, who held the airport since May, had given up. The fighting was taking place despite the announcement Wednesday of a truce deal between Russian President Vladimir Putin and Poroshenko following five months of fighting in eastern Ukraine.

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The US economy continued to expand at a "moderate to modest" pace over the summer as the labor market improved, according to the Federal Reserve's Beige Book, released late Wednesday. "Reports from the twelve Federal Reserve Districts indicated that economic activity has expanded since the previous Beige Book report; however, none of the Districts pointed to a distinct shift in the overall pace of growth," the report said.

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US banking regulators established rules Wednesday that set the quantity of liquid, high-grade assets that banks must hold in reserve against a future credit crunch. The central bankers at the Federal Reserve voted to implement the rules, which are aimed at combating lending panics similar to the 2008 Wall Street credit crisis. Wednesday's change establishes "for the first time a liquidity rule applicable to the entire balance sheet of large banking organizations," Federal Reserve Governor Daniel Tarullo said.

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Ebola fatalities have reached 1,900, an increase of about 400 over last week's gruesome tally, the World Health Organization (WHO) said Wednesday. WHO estimated that at least USD600 million in aid is needed to control the epidemic if transmission of the lethal virus is to be shut down within the next six to nine months.

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Afternoon Watchlist (all times British Summer Time)



12:00 UK BoE Interest Rate Decision

12:00 UK BoE Asset Purchase Facility

12:30 US Challenger Job Cuts

12:45 EU ECB Interest Rate Decision

13:15 US ADP Employment Change

13:30 EU ECB Monetary policy statement and press conference

13:30 US Jobless Claims

13:30 US Trade Balance

13:30 US Unit Labor Costs

13:30 US Nonfarm Productivity

14:45 US Markit Services PMI

14:45 US Markit PMI Composite

15:00 US ISM Non-Manufacturing PMI

16:00 US EIA Crude Oil Stocks change

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Friday's Key UK Corporate Events



EMIS Group Half Year Results



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



00:50 Japan JP Foreign Reserves

01:15 US Fed's Richard Fisher's speech

02:00 US Fed Minneapolis's Narayana Kocherlakota speech

06:00 Japan BoJ Monthly Economic Survey

06:00 Japan Leading Economic Index Preliminary

06:00 Japan Coincident Index Preliminary

07:00 Germany Industrial Production

07:45 France Consumer Confidence

09:30 UK Consumer Inflation Expectations

10:00 EU Gross Domestic Product

13:30 US Labor Force Participation Rate

13:30 US Nonfarm Payrolls

13:30 US Unemployment Rate

15:15 US Philadelphia Fed's Plosser speech



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






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