UK Stocks Dip; Logica Profit Surges

Arthi Gupta
06 Aug, 2010
New York City

The UK indexes fall after reports showed a drop in temporary workers for the census in the U.S. The UK economy expanded 0.9% in the quarter ending July and output price inflation rose 5% in July but manufacturing output grew 0.3% in June. Inmarsat ordered three satellites from Boeing.

[R]4:30 PM London – The UK indexes fall after reports showed a drop in temporary workers for the census in the U.S. The UK economy expanded 0.9% in the quarter ending July and output price inflation rose 5% in July but manufacturing output grew 0.3% in June. Inmarsat ordered three satellites from Boeing.[/R]

BP completes cementing procedure on the leaking Gulf of Mexico oil well. Individual insolvencies drop in England and Wales.

Royal Bank of Scotland Group reported profit in its second quarter compared to prior year''s loss, mainly reflecting lower impairment charges. Looking ahead, the bank remains cautious over the near-term, although it expects to meet all the targets set for the next three years.

In a separate statement, the bank agreed to sell a controlling 80.01% interest in its Global Merchant Services business to a consortium of Advent International and Bain Capital for an enterprise value of up to £2.025 billion.

Under the terms of the agreement, RBS would continue to promote and refer the GMS product suite as a valuable part of its offering to customers. The divestment would result in a gain of about £850 million after goodwill, separation and transaction costs. The sale is expected to complete in the fourth quarter of 2010.

In London, FTSE 100 Index traded lower 45.90 or 0.86% to 5,319.88 and the pound edged higher to close at $1.5860.

The UK economy grew 0.9% during the three-month ending July, slower than the 1.1% growth recorded during the April to June period, according to data published by the National Institute of Economic and Social Research today. In the first quarter, the gross domestic product rose 0.3%.

The annual rate of growth was 3.5% during the three months through July, compared to a 4.6% growth during the three months ending in June. In the first quarter, GDP rose 1.2% annually.

The UK manufacturing output increased for a second month in a row, while maintenance work in the oil fields dragged down industrial production in June. Manufacturing output rose 0.3% month-on-month in June, unchanged from May, according to figures released by the Office for National Statistics today.

On an annual basis, manufacturing output increased 4.1% in June compared with the revised 4.2% rise in May.

The UK output prices rose 5% in July from the previous year, according to a report published by the Office for National Statistics today. Month-on-month, output prices edged up 0.1% reversing a 0.3% fall in June.

On a monthly basis, input prices dropped at a faster pace of 1% in July as against a 0.3% fall in the June. Input price annual inflation rose 10.8% compared to an increase of 10.7% in June.

The government''s Insolvency Service said today that individual insolvencies in England and Wales rose an unadjusted 5% year-on-year during the second quarter. The number of individual insolvencies for the period totaled 34,743 compared to a record 35,682 in the first three months of the year. The figure is at its lowest since the second quarter of 2009.

However, personal insolvencies fell 2.6% from the first quarter. It was the first decline since the final three months of 2007.

BP plc completed cementing operations at the damaged Gulf of Mexico well as part of the static kill procedure. The company noted that monitoring of the well is underway in order to confirm the effectiveness of the procedure.

BP reaffirmed that it is operating with the guidance and approval of the National Incident Commander and government officials to continue the ongoing relief well operations. Depending upon weather conditions, the company currently estimates mid-August as the most likely date by which the first relief well will intercept the Macondo well annulus.

National Incident Commander Admiral Thad Allen said it could take at least five to seven days after the cement dries to finish the last part of the 18,000-foot relief well that BP has been drilling for the past three months.

Inmarsat plc agreed to a contract with the Boeing Company for the delivery of three state-of-the-art 702HP Ka-band satellites. The company added that Inmarsat-5 constellation would enable Inmarsat to provide a unique global high speed mobile broadband service offering.

Under a separate arrangement, Boeing has agreed to become a distribution partner for both Inmarsat''s Ka- and L-band services and has pre-committed to capacity purchases representing more than 10% of Inmarsat''s target Ka-band revenues in the first 5 years after global service launch.

Gainers & Losers

Catlin Group Ltd. slumped 5.03% to 368.50 pence after the underwriter said total revenues for the six months ended June 30 improved 11.4% to $1.66 billion from $1.49 billion a year ago. Pre-tax profit for the six months narrowed to $86 million from $240 million a year ago.

The board of directors declared an interim dividend of 8.6 pence per share, payable on September 24 to shareholders of record on August 27.

Inmarsat plc soared 4.07% to 742.00 pence after the mobile satellite communications services provider total revenue for the six months ended June 30 advanced 12.2% to $570.7 million from $508.7 million in the comparable period. The six-month pre-tax profit increased 56% to $151.8 million from $97.0 million last year. Profit attributable to equity holders grew 44.7% to $106.9 million from $73.9 million a year earlier.

Logica plc surged 6.49% to 116.50 pence after the software group said revenue for the first half of 2010 declined marginally to £1.871 billion versus £1.876 billion in the previous year. Six-month profit attributable to owners of the parent surged 219% to £67.7 million compared to £21.2 million last year. Earnings per share rose to 4.2 pence from 1.3 pence a year ago.

Murray International Trust plc fell 1.97% to 846.00 pence after the investment trust company said return on ordinary activities before tax for the six months ended June 30 was £28.26 million compared to a loss of £1.18 million in the previous year. Return attributable to equity shareholders for the half year was £26.58 million or 27.3 pence per share versus a loss of £4.44 million or 4.9 pence per share in the previous year.

The company declared a first interim dividend for 2010 of 6.80 pence, which will be paid on August 16 to shareholders on the register on July 16. In addition, a second interim dividend for 2010 of 6.80 pence will be paid on November 15 to shareholders on the register on October 15.

Old Mutual plc declined 0.24% to 123.30 pence after the insurer agreed to sell its U.S. Life operations to affiliates of Harbinger Capital Partners LLC for a consideration of $350 million.

The company reported total revenue for the six months ended June 30 rose 9.1% to £7.2 billion from £6.6 billion. Profit attributable to equity holders of the parent was £265 million, compared to a loss of £70 million last year. Earnings per share were 4.7 pence as against a loss of 1.8 pence a year ago.

Adjusted operating profit before tax soared 43% to £735 million in the six months ended June 30 from £513 million last time.

PartyGaming Plc dropped 0.35% to 287.40 pence after the online gaming company stated total revenue for the six months ended June 30 edged higher to 29.5% to €181.2 million from €139.9 million in the previous year. Profit for the period attributable to the equity holders of the parent was €19.7 million compared to a loss of €46.5 million last year. Earnings per share were 4.6 cents, as against a loss of 11.5 cents a year ago.

Royal Bank of Scotland Group plc declined 1.27% to 16.33 pence after the bank reported a profit of £257 million, compared to a loss of £140 million last year. Basic earnings per share from continuing operations were 0.8 pence, higher than last year''s 0.1 pence.

Tomkins plc increased 0.79% to $20.54 after the engineering and manufacturing company reported sales from continuing operations for the six months ended July 3, 2010 increased 21.5% to $2.43 billion from $2.0 billion in the comparable period.

The company further stated half-year pre-tax profit was $261.1 million compared with a loss of $114.9 million a year ago. Profit for the period attributable to equity shareholders stood at $170.1 million, as against a loss of $123.9 million a year earlier.

Earnings per share for the six-month period were 19.13 cents versus a loss of 14.07 cents last year.