TOP NEWS SUMMARY: May's Future As UK PM Could Be Decided On Friday

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

Alliance News 23 May, 2019 | 11:37AM
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LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Water firm United Utilities boosted its dividend after annual profit and revenue rose amid a "strong" performance against tough regulatory targets. For the year ended March, pretax profit widened 0.9% to GBP436.2 million from GBP432.1 million the year prior. This was after revenue rose 4.6% to GBP1.82 billion from GBP1.74 billion the year before. United Utilities proposed a 27.52 pence per share final dividend, up 3.9% from 26.49p the year prior. For the full year, the dividend also rose 3.9%, to 41.28p from 39.73p the year before. The company said it was increasing its additional investment by another GBP100 million, to a total GBP350 million, "to accelerate the delivery of further performance improvements and facilitate a flying start to the next regulatory period".
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Product testing firm Intertek said it has seen a good start to the year with "robust" revenue growth. Revenue was up 5.3% at constant currency to GBP924.3 million in the four months to April, with organic revenue growth of 3.3%. At reported rates, revenue was up 7.3%. Within divisions, Products saw the strongest revenue growth, up 8.2%. This was followed by Trade, up 7.6%, and then Resources, up 4.1%. "We are on track to deliver our 2019 targets of good organic revenue growth at constant rates, with moderate margin expansion and strong cash conversion. Given a good start to the year, we expect good organic revenue growth at constant currency rates in each of our three divisions: Products, Trade and Resources," said Chief Executive Andre Lacroix.
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Merlin Entertainments shareholder ValueAct Capital urged the company to evaluate a merger or go private, believing the FTSE 250 constituent's current stock price does not reflect its underlying value. The US activist investor - in an open letter to Merlin Chair John Sunderland - said: "Merlin's share price does not reflect the underlying value of the company and may not in the foreseeable future. The company's share price is down 2.7% since the 2013 IPO despite a 35.5% increase in earnings per share. Simply put: Merlin has struggled as a public company." ValueAct, which owns a 9.3% stake in the theme parks operator, said Merlin could attract a bid of around GBP4 per share in a public or private transaction, a premium of roughly 30% to the current and recent average share price. In response, Merlin said it regularly considers all options for driving shareholder value and has concluded that it remains in the best interests of all shareholders to continue its current strategy of creating a high growth, high return, family entertainment company based upon strong brands and a global portfolio.
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TalkTalk Telecom expressed confidence in the year ahead as it reported a significantly narrowed annual loss. For the financial year that ended March 31, the telecommunications company posted a pretax loss of GBP5.0 million compared to a GBP100 million loss in financial 2018. This was achieved despite revenue lowering 1.3% to GBP1.63 billion from GBP1.65 billion. Operating expenses reduced to GBP659 million from GBP731 million, and cost of sales was down 5.2% to GBP770 million, both helping the company's profitability. The FTSE 250 listed firm kept its final dividend unchanged at 1.50 pence per share, resulting in a lower total divided of 2.50p from 4.0p a year ago. Looking ahead, the telecommunications provider said it remains confident in earnings growth in the recently commenced financial year.
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B&M European Value Retail reported a positive annual performance with both revenue and profit increasing on the prior year. For the year ended March 30, the discount homewares retailer posted pretax profit up 8.7% to GBP249.4 million from GBP229.3 million a year prior. This was achieved on the back of revenue jumping 17% year-on-year to GBP3.48 billion from GBP2.97 billion. UK B&M store fascia revenue rose 8.7%, 0.7% on a like-for-like basis. Just in the fourth quarter, revenue for the company's store fascia was up 5.8%, unadjusted for Easter timing, with a 6.7% increase if adjusted. The retailer upped its final dividend 2.1% to 4.9 pence per share from 4.8p declared a year ago. This will take the company's total payout to 7.6p, up 5.7% on the prior year. Looking ahead, the company reported a "pleasing start" to the first quarter of financial 2020, with mid-single digit like-for-like growth in B&M UK fascia stores.
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AJ Bell reported a pleasing set of interim results, the company's first, which saw profit and revenue jump as the stockbroker was able to increase its number of customers - resulting in a rise in assets under management. In the six months to March 31, AJ Bell's pretax profit was up 27% to GBP17.7 million from GBP13.9 million the year before. The stockbroker's first half revenue was up 17% to GBP50.1 million from GBP42.9 million the prior year. AJ Bell declared an interim dividend of 1.50 pence per share, 2.7% higher than the 1.46p distributed the year before, in line with the company's dividend policy. The stockbroker's assets under management at the end of the period were up 3.5% from September 30, rising to GBP47.7 billion compared to GBP46.1 billion.
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QinetiQ Group raised its dividend after annual revenue grew strongly alongside a healthy order book, whilst underlying profit also edged higher. For the year ended March, pretax profit narrowed 15% to GBP123.2 million from GBP144.8 million the year prior. This was despite revenue growing 9.4% to GBP911.1 million from GBP833.0 million the year before. Profit performance was hurt by a one-off GBP22.7 million gain recorded the year prior due to the sale of property and other investments during the year. Underlying pretax profit - excluding one-off items - widened 1.6% to GBP124.0 million from GBP122.1 million the year prior. QinetiQ proposed a 4.5 pence per share final dividend, up 7.1% from 4.2p the year prior. For the full year, the dividend rose 4.8% to 6.6p from 6.3p the year before.
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MARKETS
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London shares were sharply lower amid persistent trade tensions between the US and China. The euro was down against the dollar as European Parliament elections kicked off on Thursday. The pound was hovering near four-month lows as pressure on UK Prime Minister Theresa May intensified. Wall Street was pointed to a lower open.
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FTSE 100: down 1.3% at 7,240.50
FTSE 250: down 1.3% at 19,049.21
AIM ALL-SHARE: down 0.6% at 960.08

GBP: down at USD1.2633 (USD1.2657)
EUR: down at USD1.1131 (USD1.1156)

GOLD: flat at USD1,275.52 per ounce (USD1,274.80)
OIL (Brent): down at USD69.72 a barrel (USD71.10)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The pace of eurozone economic growth remained subdued in May amid stagnant demand, IHS Markit said, with the manufacturing sector recording another month of contraction. The eurozone flash manufacturing Purchasing Manager's Index fell further in May to 47.7 from 47.9 in April, while the services index decreased to 52.5 from 52.8. A reading above 50 indicates growth in the sector, while one below signals shrinkage. Meanwhile, the composite PMI slightly increased in May to 51.6 from 51.5 registered in April and the manufacturing PMI output index grew to 49.0 from 48.0 in April, though still remaining below the no-change level of 50.
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Germany's manufacturing PMI fell to 44.3 in May from 44.4 in April, though the composite PMI grew to 52.4 from 52.2. According to the Markit report, growth edged higher in Germany thanks to a sustained service sector upturn and an easing in the rate of decline of manufacturing output. However, new orders fell and overall jobs growth was the lowest for just over three years. Germany's factory sector remains in one of its worst spells since 2009, with a steep downturn in exports feeding through to increased job cuts in May. While the service sector remained more resilient, growth hit a four-month low and future expectations hit the joint-lowest since 2014.
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Theresa May's fate as prime minister looks set to be sealed on Friday when she meets the Tory grandee who speaks for Conservative backbenchers. As the leadership crisis intensifies, the prime minister will hold discussions with Graham Brady, chairman of the powerful 1922 Committee of Conservative MPs. Demands from Tory members of Parliament for May to resign are continuing to surge following Cabinet turmoil over her Brexit strategy. Commons Leader Andrea Leadsom stormed out of government on Thursday in protest at the PM's EU withdrawal plan. Ahead of the PM's showdown meeting with Brady, 1922 Committee treasurer Geoffrey Clifton-Brown told the Press Association on Thursday: "I want her to give a timetable for when she will go. "I think this blank denial from Number 10 today may be a smokescreen because she does not want to influence the outcome of the European elections. "Maybe she will still quit tomorrow."
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The US does not yet appear to be ready to start negotiating with the EU on tariffs, a top EU official said. EU governments last month approved the opening of talks on a limited trade deal - largely in the hope of averting a hike in tariffs on EU cars and car parts threatened by US President Donald Trump. "We are ready from the EU side to start. We have the mandate," EU Trade Commissioner Cecilia Malmstrom said after talks with US Trade Representative Robert Lighthizer in Paris. "But I don't think that the US is ready on the tariff negotiations."
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US Federal Reserve policy makers are in no rush to alter the path of interest rates, according to the minutes of the central bank's latest monetary policy meeting. The minutes showed members of the Federal Open Market Committee agreed that a patient approach to determining future adjustments to rates would likely remain appropriate for "some time". Citing an environment of moderate US economic growth and muted inflation pressures, the Fed expects to remain patient even if global economic and financial conditions continued to improve. The Fed decided to leave interest rates unchanged at the two-day meeting ended May 1, as uncertainties affecting the US and global economic outlooks had receded but inflation pressures remained muted. While the Fed noted a moderation in risks and uncertainties surrounding the economic outlook, such as trade negotiations, the meeting was held before the recent collapse of US-China trade talks. The US central bank is scheduled to hold its next monetary policy meeting on June 18 and 19.
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Prospects for cooperation in Washington took a turn for the worse Wednesday as US President Donald Trump abruptly truncated a key meeting, saying he will not cooperate on policy with the rival Democrats until they stop investigating him. Just hours later, a court in New York ruled against the president, the second such verdict this week, and ordered that Deutsche Bank and Capital One may comply with congressional subpoenas requesting information on Trump's financial records. The legal blow to Trump is likely to face an appeal, but indicates the Democrats may find a way to obtain documents that could be used in investigations, even as the White House tries to stonewall Congress, citing personal privacy and executive privilege. Nancy Pelosi and Chuck Schumer, the Democrat leaders in the House and Senate, left the White House just minutes after seeing Trump. The long-scheduled talks were supposed to focus on infrastructure.
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