UK Inflation 3.1%; Resolution Ltd Up

Arthi Gupta
17 Aug, 2010
New York City

The UK indexes climbed after a rise in mining and banking stocks. The BoE Governor Mervyn King warned inflation to remain above 2% till 2011. RBS agreed to sell

[R]4:30 PM London – The UK indexes climbed after a rise in mining and banking stocks. The BoE Governor Mervyn King warned inflation to remain above 2% till 2011. RBS agreed to sell €1.4 billion of senior loans to ICG. Compass Group agreed to buy Tirumala Hospitality Services.[/R]

Servoca acquired Phoenix Employment Services and BP completed Devon Energy transaction in the Caspian.

In London, FTSE 100 Index traded higher 53.57 or 1.02% to 5,334.02 and the pound edged lower to close at $1.5603.

The UK inflation is likely to remain above the 2% target until the end of 2011, the Bank of England Governor Mervyn King said in a letter to Chancellor George Osborne today.

The Office for National Statistics said annual inflation eased to 3.1% in July from 3.2% in June, but more than one percentage point above the Bank of England''s 2% target.

In his letter, the Governor said the recent strength of inflation had ""surprised"" the monetary policy committee. ""There remains a significant probability that I will need to write further open letters to you in the coming months,"" King said.

He blamed rising fuel prices, the rise in the VAT rate and the fall in the value of the sterling for the rising trend in inflation.

Royal Bank of Scotland Group Plc agreed to the sale of a €1.4 billion portfolio of primarily senior loans to a fund managed by Intermediate Capital Group Plc. The transaction is expected to complete by the end of August 2010.

Servoca Plc acquired the business, trade and assets of Phoenix Employment Services Ltd. Servoca would pay cash consideration of £0.99 million, of which £0.78 million relates to the debtor book, £0.17 million for goodwill and the remaining £0.04 million is in respect of the business, trade and other assets of Phoenix.

The company estimates the acquisition will be earnings enhancing and will allow it to grow its service offering in the healthcare market and in domiciliary care market.

Compass Group Plc acquired Tirumala Hospitality Services Private Ltd. from Ramkrishna Mankari and his family. The gross assets of the business acquired were £1.4 million as at March 31, 2010 with revenue for the 12 months to March 31, 2010 of £3.7 million.

Tirumala Hospitality Services is a strong regional player in the foodservice industry in Western India, specializing in the provision of catering services to the business and industry sector.

Barclays Plc reached a $298 million settlement deal with U.S. prosecutors to close an investigation into criminal charges that the bank facilitated financial payments for parties and countries facing U.S. sanctions.

As per reports, between March 1995 and September 2006, the bank facilitated about $500 million in illegal payments and hid transactions for banks and other entities in countries facing economic sanctions, including Cuba, Iran, Libya, Sudan and Burma. Prosecutors also alleged that Barclays employed several methods to disguise the processing of payments from these entities. The Washington, D.C. federal court reports stated that Barclays will pay $149 million pursuant to an agreement with the U.S. Justice Department and another $149 million in a separate agreement with the New York County District Attorney''s office.

As part of the settlement, Barclays is said to be subject to a two-year deferred prosecution agreement.

BP announced the completion of its purchase from Devon Energy of an additional interest in the BP-operated Azeri-Chirag-Gunashli oilfield development in the Azerbaijan sector of the Caspian Sea.

Devon Energy’s 5.63% stake in the ACG development will be split between BP (3.29%) and the following parties which have exercised preferential rights in relation to the transaction – Chevron (0.99%), Inpex (0.96%) and Itochu (0.38%).

Bglobal Plc signed a contract to install electricity smart meters, gas AMR solutions, and provide associated data services across Thomas Cook UK''s retail outlet portfolio. The contract involves the installation of approximately 800 smart meters and 35 gas AMR solutions, and is expected to commence in August 2010.

Gainers & Losers

Maple Energy plc rose 1.85% to 55.00 pence after the energy company entered into ethanol distribution agreement with a subsidiary of Mitsui & Co., Ltd. for ethanol.

Sepura Plc climbed 0.58% to 43.25 pence after the designer and developer of digital radios for the emergency services appointed Paul Goodridge as its Chief Financial Officer.

Resolution Limited soared 3.66% to 255.00 pence after the insurance firm reported first half total revenue of £1.88 billion. Profit before tax from continuing operations was £139 million for the six months ended June 30, 2010.

ROK Plc surged 3.90% to 20.00 pence after the property repair and maintenance company stated first half revenue fell 15.5% to £308.1 million from £364.5 million in the comparable period. Pre-tax loss for the period was £3.8 million versus a profit of £6.0 million last year. Loss for the period was £3.8 million, as against a profit of 2.8 million in the prior year.

Totally Plc slumped 24.57% to 0.396 pence after the publishing company said first half pre-tax profit slipped 28% to £63,000 from £88,000 last year. Earnings per share for the six-month period remained flat at 0.0005 pence. Group turnover for the six months decreased 0.9% to £894,000 from £903,000, as restated, in the comparable period.

Witan Investment Trust plc gained 1.04% to 438.50 pence after the investment company reported first half pre-tax loss widened 129% to £20.08 million compared to £8.77 million last year. Loss attributable to equity holders of the parent company increased 113.6% to £21.25 million or 10.63 pence per share versus £9.95 million or 4.66 pence per share a year ago. The board declared an interim dividend of 4.4 pence per share, an increase of 2.3% from the prior year.