TOP NEWS SUMMARY: China Promises Reform As Trump Threatens EU On Trade

LONDON (Alliance News) - The following is a summary of top news stories ...

Alliance News 15 March, 2019 | 11:26AM
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LONDON (Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Restaurant Group reported a significant fall in its annual profit despite describing the year of 2018 as "pivotal". For the year to December 30, the restaurant franchise operator posted pretax profit of GBP13.9 million, more than halved from GBP28.2 million a year ago. This included a GBP39.2 million exceptional charge due to an onerous lease review and a GBP14.8 million charge related to the Wagamama acquisition. Revenue meanwhile was up 1.0% to GBP686.0 million from GBP679.3 million a year prior, while total sales increase 1.0%. On a like-for-like basis, annual sales were down 2.0%. Higher administration costs rising to GBP42.1 million from GBP36.0 million and increased interests payable of GBP2.7 million from GBP1.7 million contributed to the profit fall. At the year end, net debt stood at GBP291.1 million, significantly increased from GBP23.1 million following the Wagamama deal. The noodle chain was acquired last November in a GBP357 million deal, formally completed on December 24. Restaurant Group proposed a final 1.47 pence per share dividend. In the ten weeks to March 10, Restaurant Group's like-for-like sales are up 2.8%, in line with management expectations.
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JD Wetherspoon reported a significant drop in profit for the first half of its financial year, hampered by higher costs, and warned of a similar outcome for the full year to July. For the six months to January 27, Wetherspoon's pretax profit fell 19% to GBP50.3 million from GBP62.0 million in the comparative period a year ago. Revenue was up 7.1% to GBP889.6 million from GBP830.4 million, with like-for-like sales increased 6.3%. The company attributed the fall in profit to cost increases in areas including labour, up by GBP33.0 million. Meanwhile, repairs increased GBP3.7 million, utilities by GBP2.5 million, and interest & depreciation by GBP5.7 million. The pub chain held its interim dividend at 4.0 pence per share. Looking ahead, Wetherspoon reported that in the six weeks to March 10, like-for-like sales increased by 9.6%, helped by "excellent weather" compared with snow and cold freezing temperatures last year. Total sales increased by 11%.
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Investec said its annual profit is expected ahead of last year, supported by growth in assets under management and robust inflows. Investec said it expects operating profit for the year ending March 31 to be ahead of the year before, while revenue is expected to be in line with the prior year. The Bank & Wealth business is expected to report results ahead of the year before, while the Asset Management unit is expected to post results below that achieved last year. Within Bank & Wealth, the Specialist Banking business is expected to post results "well ahead" of the prior year. Investec expects a credit loss ratio between 0.30% to 0.35%, versus 0.61% at the end of the last year. Modest cost growth is expected, while Investec said its results have been hit by the deprecation of the rand against the pound in the year. For the period ranging March 31, 2018, to the end of February 2019, third party assets under management increased 1.9% to GBP163.7 billion, while the firm generated GBP6.9 billion in net inflows. Core loans and advances decreased 0.9% to GBP24.9 billion in the period, while customer deposits were up 1.1% to GBP31.3 billion. The bank added that the proposed demerger and separate listing of Investec Asset Management remains on track, subject to approval from shareholders and regulators.
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Berkeley Group reiterated its guidance for its current financial year ended April 30 and the two years after that due to a stable trading environment. "The trading environment for Berkeley remains consistent with that experienced over the last two years. This stability allows Berkeley to reiterate the updated pre-tax profit guidance it provided with its interim results in December 2018 for this, and the next two years, which represented an increase of around 8% in the guidance for the current year," the company said. The housebuilder's guidance at the end of its previous financial year was for a pretax profit for the two years to April 30 of at least GBP1.58 billion, with guidance for the five years ending 30 April 2021 of at least GBP3.38 billion. Then, in its interim results, the company upgraded its pretax profit forecast for the current year "by more than 5%" with the split between its first and second half likely to be similar to its previous results, which were weighted 55% toward the first half. Its guidance for the next two years, however, was unchanged. The company had committed to returning GBP139.7 million by the end of March 2019, and completed this early via its 7.12 pence per share dividend paid January 16. Berkeley has committed to returning another GBP139.7 million to shareholders by the end of September 2019, this far having returned GBP5.2 million via buybacks.
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MARKETS
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Shares in London were higher after the Commons voted to delay Brexit at the end of a busy week of parliamentary votes on the issue that left investors little wiser of the final shape of the UK's relationship with the EU. The US is pointed higher as China, amid ongoing trade talks with the US, the country promised to improve conditions for foreign firms and pass "heavyweight" reforms to shore up its economy, Premier Li Keqiang said Friday at the end of the annual parliamentary session.
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FTSE 100: up 0.5% at 7,218.34
FTSE 250: up 0.6% at 19,396.20
AIM ALL-SHARE: up 0.1% at 914.30

GBP: flat at USD1.3274 (USD1.3277)
EUR: up at USD1.1323 (USD1.1301)

GOLD: up at USD1,302.90 per ounce (USD1,295.47)
OIL (Brent): down at USD67.04 a barrel (USD67.32)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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China promised to improve conditions for foreign firms and pass "heavyweight" reforms to shore up its economy, Premier Li Keqiang said at the end of the annual parliamentary session. China will treat foreign and domestic firms "as equals", Li said hours after the parliament voted to approve a foreign investment law intended to appease international criticism of China's trade practices and market barriers. The law states the Chinese government will protect the intellectual property rights of foreign investors and ensure foreign and domestic companies can compete on equal terms. But it also maintains a "blacklist" of sectors where foreign investment is banned or restricted, ranging from oil and gas exploration to news media. Li promised China would gradually shorten that list. The delegates, gathered at Beijing's Great Hall of the People, also approved a government work report setting a 6.0% to 6.5% economic growth target for 2019 - China's lowest in almost three decades - and a measure raising defence spending by 7.5%. Li promised China will not resort to lending and deficit spending to shore up its slowing economy. Instead, it wants to "energize" the market to generate growth. On the China-US relationship, Li said it will continue to "forge ahead" despite the "twists and turns" brought by a months-long trade war. Li said he hopes for "good outcomes" from consultations between Chinese and US trade teams to solve the trade conflict.
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The Bank of Japan decided to maintain its ultra-loose monetary policy to overcome stubborn deflation and prop up the world's third-largest economy. "Japan's economy is expanding moderately, with a virtuous cycle from income to spending operating, although exports and production have been affected by the slowdown in overseas economies," the central bank said in a statement issued after a two-day monetary policy meeting. The policy board of the BoJ voted 7-2 to purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent. The board maintained interest rates at negative 0.1% on current accounts that financial institutions maintain at the bank.
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US President Donald Trump warned the European Union that failure to engage in talks over a new trade deal would lead to "pretty severe" measures against the bloc. "If they don't talk to us, we're going to do something that's going to be pretty severe economically. We're going to tariff a lot of their products coming in," Trump said Thursday at the White House, sitting next to visiting Irish Prime Minister Leo Varadkar. Trump accused the Europeans of having refused to engage in trade negotiations with previous presidents. It was unclear what he meant, as talks had taken place with leaders from the bloc during former president Barack Obama's term, though a deal was not concluded. Trump was speaking just as lawmakers in Europe made a symbolic vote declining to actively approve the start trade talks with the US.
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Eurozone inflation accelerated as initially estimated in February, with a strong contribution coming from services and food, according to final data from Eurostat. Inflation in the euro area accelerated to 1.5% in February, returning to the same level seen in December 2018 following a slowdown to 1.4% in January. The highest contribution to annual euro area inflation rate came from services, which rose by 0.6%, followed by food, alcohol & tobacco that rose by 0.4%, by energy which grew by 0.4% and by non-energy industrial goods, which registered a growth of 0.1%.
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UK members of Parliament voted Thursday to delay Brexit beyond the scheduled date of March 29 in dramatic parliamentary scenes which saw the Conservative Party split down the middle. More than half of Tory MPs – including seven Cabinet ministers, at least 33 other ministers and whips, and five party vice-chairs – voted against UK Prime Minister Theresa May's motion to put back the date when Britain leaves the EU. Downing Street sources denied that May had lost control of her Cabinet or her party, insisting that the results were a "natural consequence" of the prime minister's decision to offer a free vote on an issue where many hold strong views. The vote to delay Brexit came after May's Withdrawal Agreement was rejected for the second time on Tuesday and MPs voted the following day to rule out no-deal. A motion in May's name, authorising the prime minister to request an extension to the two-year Article 50 negotiation process, was passed by 413 votes to 202 – a majority of 211. In Europe, leaders are considering whether to agree to UK calls for Brexit to be delayed. But any delay will require the agreement of the other 27 EU members, with talks about any conditions for an extension set to begin before leaders gather at a summit next week. European Council President Donald Tusk was meeting Dutch Prime Minister Mark Rutte in The Hague on Friday before talks with the bloc's key power brokers Angela Merkel and Emmanuel Macron on Monday. On Tuesday Tusk will travel to Dublin to meet Leo Varadkar before the summit in Brussels on Thursday.
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