UK Index Drops 2.2%; Retail Sales Rise

Arthi Gupta, Mayank Mehta and Sanjay Barot
20 May, 2010
New York City

UK indexes dropped more than 2% after European markets declined between 2% and 3%. The pound declines amid U.K. retail trade report. National Grid rights issue is estimated to raise

[R]4:20 PM London, 11:20 AM New York – UK indexes dropped more than 2% after European markets declined between 2% and 3%. The pound declines amid U.K. retail trade report. National Grid rights issue is estimated to raise £3.2 billion. Great Portland Estates and Starwood are in a joint venture. SABMiller fiscal 2010 pre-tax profit declines.][/R]

U.K. stocks rallied at the opening and fell sharply in the afternoon as the European indexes closed lower and U.S. stocks and commodities declined. The pound declined following the retail trade report.

National Grid rights issue to raise about £3.2 billion. Great Portland Estates announces creation of a joint venture and SABMiller fiscal year 2010 pre-tax profit declines.

The pound edged slightly lower against most of its major rivals following the release of'' April retail sales data. The pound traded at 131.10 against the yen, 1.4367 against the US dollar, 0.8623 versus the euro and 1.6530 against the Swiss franc.

The UK retail sales volume, including automotive fuel, rose 1.8% in April from the same period a year ago, according to the Office for National Statistics. Retail sales growth matched consensus forecast.

Month-on-month rise in retail sales was 0.3% in April, slightly bigger than the expected 0.2% increase, but smaller than March''s revised 0.5% increase. Predominantly food stores sales increased 1.7%. The largest increase was textile, clothing and footwear stores at 9.5%. Total sales volume for three months to April increased 2.0%.

National Grid plc announced on 20 May 2010 that it is proposing to raise approximately £3.2 billion, net of expenses, 990.44 million new ordinary shares at 335 pence per new share on the basis of 2 new ordinary shares for every 5 existing ordinary shares.

The issue price represents a 43.7% discount to the closing middle market price per ordinary share, adjusted for the recommended final dividend for 2009/10 of 24.84 pence, on 19 May 2010 and a discount of 35.7% to the theoretical ex-rights price on the same basis.

The proceeds from the rights issue, expected to be approximately £3.2 billion, net of expenses, will be used to fund a portion of National Grid''s UK capital investment program and for general corporate purposes.

Great Portland Estates announced the creation of a new equally owned joint venture with an affiliate of Starwood Capital Group Global, L.P. to own City Tower, 40 Basinghall Street, EC2, valued at £35 million. GPE has simultaneously purchased a adjacent building, City Place House, 55 Basinghall Street, EC2 for £94 million for cash and plans to contribute this asset into GSP.

SABMiller plc in its preliminary results for fiscal 2010 reported a decrease in its pre-tax profit and proposed a final dividend. In addition, the company said a broader recovery in consumer spending is not expected before the second half of fiscal 2011.

In London FTSE 100 Index traded declined 110.71 or 2.2% to 5,047.37 and the pound edged lower to close at $1.438 and to close at €1.159.

Gainers & Losers

Alliance Trust PLC, the self-managed investment company rose 0.8% to 324.90 pence.

BP PLC, the oil and gas company rose 2.3% to 45.27 pence.

Cairn Energy PLC, the oil explorer rose 1.4% to 388.70 pence.

Grainger plc fell 0.09% to 114.90 pence. The internet software & services company said first half revenues rose 5% to £126.3 million from £120.3 million a year ago. Net profit for the first half was £2.6 million or 0.74 pence per diluted share compared to net loss of £104.1 million or 43.5 pence per share a year ago.

Great Portland Estates plc rose 1.1% to 301.30 pence after the property investment and Development Company said fiscal year 2010 net rental income rose 6% to £44.7 million from £42.3 million a year ago. Net profit for the year was £156.4 million or 55.5 pence per diluted share compared to net loss of £436.1 million or 180.0 pence per share a year ago.

Investec plc rose 1.2% to 493.00 pence after the international specialist bank and asset manager said tier 1 ratios rose for Investec plc and Investec Limited in the year till March 31 to 11.3% and 12.1%, respectively, while cash and near cash balances rose 87.4% to £9.1 billion and customer deposits increased by 50.5% to £21.9 billion.

Intec Telecom Systems PLC rose 0.4% to 56.75 pence. The provider of business support system solutions said first half revenues fell 13% to £70.0 million from £80.3 million a year ago. Net profit for the first half fell 42.6% to £3.9 million or 1.20 pence per diluted share compared to net profit of £6.8 million or 2.15 pence per share a year ago.

Marston’s PLC fell 1.1% to 96.90 pence. The independent brewing and pub retailing company said first half revenues rose 0.6% to £309.2 million from £307.5 million a year ago. Net profit for the first half rose 57% to £20.7 million or 3.6 pence per diluted share compared to net profit of £13.2 million or 3.5 pence per share a year ago

Mothercare PLC fell 0.8% to 542.50 pence. The maternity specialist said fiscal year 2010 revenues rose 6% to £766.4 million from £723.6 million a year ago. Net profit for the year fell 22% to £23.6 million or 27.3 pence per diluted share compared to net profit of £30.2 million or 35.0 pence per share a year ago

Rotork p.l.c., the manufacturer of electric, pneumatic and hydraulic valve actuators fell 0.2% to 1,404.00 pence.

SABMiller plc, the brewer decreased 5.6% to 1,921.00 pence.

Yell Group plc increased 7.4% to 36.20 pence after the yellow pages publisher announced that it has acquired Trusted Places Limited, the company behind the UK local reviews website trustedplaces.com.