UK Retail Sales Rise; Essar Energy Net Drops

Arthi Gupta
19 Aug, 2010
New York City

The UK indexes gained after retail sales rose in July. The UK M4 money supply increased, public sector net borrowing fell, and auto production dipped in July. The BoE noted mortgage lending still subdued. Hammerson agreed to sell 51% interest in O''Parinor to Korea-based National Pension Service.

[R]4:30 PM London – The UK indexes gained after retail sales rose in July. The UK M4 money supply increased, public sector net borrowing fell, and auto production dipped in July. The BoE noted mortgage lending still subdued. Hammerson agreed to sell 51% interest in O''Parinor to Korea-based National Pension Service.[/R]

Ireland new vehicle registrations rose in July. MasterCard agreed to buy DataCash for $520 million. Hochschild rebuffed Lake Shore deal.

In London, FTSE 100 Index traded lower 71.19 or 1.34% to 5,231.68 and the pound edged higher to close at $1.5666.

The seasonally adjusted retail sales volume of UK including automotive fuel rose 1.1% month-on-month in July, following the 0.7% rise in June, according a report released by the Office for National Statistics today.

On an annual basis, retail sales including automotive fuel grew 1.3% in July after rising 1.1% in June. Retail sales increased for the sixth straight month.

Excluding automotive fuel, retail sales rose 0.9% month-on-month in July, taking the annual growth to 2.4%. In June, retail sales volume had grown 1.1% on a monthly basis and 3% annually.

The broad money supply in the UK increased in July from the previous month, according to preliminary estimates by the Bank of England released today. The M4 money supply grew 0.4% on a monthly basis in July, as against a 0.1% rise in July.

On an annual basis, the M4 money supply increased 2.3% in July compared to a 3.1% growth in June.

The UK public sector net borrowing, including financial interventions totaled declined to £3.2 billion in July from £5.5 billion in the same period of last year, according to data published by the Office for National Statistics today.

Excluding financial interventions, net borrowing was £3.8 billion in July 2010 as against £6.1 billion in July 2009.

The UK mortgage lending remains subdued, according to the Bank of England''s latest Trends in Lending publication.

The bank said the flow of net mortgage lending was ""little changed"" in June. ""Gross lending for house purchase in July was similar to that in June, though approvals for house purchase edged down according to data from the major UK lenders,"" the report said.

Net lending to businesses also remained negative. Credit conditions for smaller businesses remained “tighter than for larger corporations,” with demand for bank finance generally remaining weak, the central bank said.

The flow of net consumer credit decreased in June, though the annual growth rate of the stock of lending remained broadly unchanged and near to zero.

Gross mortgage lending by British banks increased 5% month-on-month to £13.6 billion in July, the Council of Mortgage Lenders said today. However, it was a fall of 3% from £14 billion recorded a year ago.

Car production in the UK decreased 8.9% year-on-year to 98,145 units in July, according to a report by the Society of Motor Manufacturers and Traders released today.

The commercial vehicles production grew 10.7% on an annual basis to 9,494 units in July, while total engine production was down 3.4%. At the same time, total vehicles production dropped 7.5% to 107,578.

The new car registrations in the UK decreased 13.2% or 20,703 units in July compared with the same month a year ago.

Ireland’s new vehicle registrations increased in July from the previous year, according to a report published by the Central Statistics Office today.

The total number of new vehicle registrations increased 43.9% on an annual basis to 8,648 in July, compared with 6,009 vehicles registered in the previous year.

The Chartered Management Institute and XpertHR said today that salaries paid to females increased by 2.8% over the last year, compared to a 2.3% rise for men. However, the average salary for a male manager is still £10,071 more than that of a female manager.

The institute said that at the current rates of growth, women face a 57-year wait before their take-home pay is equal to that of their male colleagues. The study, conducted among 200 businesses across Britain, found that male salary exceeds female salary by 24% at the senior level.

MasterCard Inc., the credit card services provider announced a deal to acquire European payment service provider DataCash Group plc for 360 pence per share in cash. The total value of the deal is about £333 million or $520 million and the transaction is expected to close by the end of October.

MasterCard stated that the transaction is expected to be about $0.05 dilutive to its fourth-quarter earnings per share due to amortization and one-time transaction costs. The company further believes the DataCash acquisition will drive its growth in the e-commerce category and expand its MiGS gateway business currently operating in the Asia Pacific region.

DataCash develops and provides outsourced electronic payments solutions, fraud prevention, alternative payment options, back-office reconciliation and solutions for merchants.

Hammerson plc said it would sell 51% of its interest in O''Parinor shopping centre, Aulnay-sous-Bois, near Paris, to The National Pension Service of Korea. Hammerson will receive net proceeds from the sale of €217 million, after costs of €5 million.

Both companies have agreed that National Pension Service can purchase, and Hammerson can sell, a further 24% interest in autumn 2011 at a price based on the same valuation of the centre. The net proceeds from the sale of a further 24% interest are expected to be €106 million.

Lake Shore Gold Corp., which is 37% owned by Hochschild Mining plc yesterday announced a financing of around C$76 million to fund general corporate activities and working capital.

Hochschild remains supportive of Lake Shore Gold, however, the board and management team felt organic growth through investment in Hochschild´s extensive and rapidly expanding exploration pipeline was the company´s key priority.

Consequently, the company decided against participating in the proposed financing on worries that its current 37% holding in Lake Shore Gold would be diluted to about 35%.

Gainers & Losers

Essar Energy plc gained 0.10% to 409.00 pence after the Indian energy company reported first half revenue surged 66% to $4.76 billion from $2.87 billion in the prior-year period, primarily due to 20% rise in refinery sales volumes and 51% higher average refinery sales prices. Profit before tax for the first half declined 34% to $154.4 million from $233.6 million in the year-ago.

Hardy Oil & Gas Plc soared 3.53% to 220.00 pence after the oil and gas explorer first half revenues fell 5.3% to $5.49 million from $5.80 million in the prior-year period. Pre-tax loss in the period narrowed 75% to $1.35 million from $5.39 million in the previous year.

John Menzies plc surged 7.49% to 445.00 pence after the newspaper distribution and aviation handling services company stated first-half revenues grew 12.5% to £924 million from £821.3 million in the previous year. Pre-tax profit for the half-year soared 178% to £20.6 million from £7.4 million in the year-ago period.

Romag Holdings plc slumped 24.32% to 42.00 pence after the electricity generating glass maker said the company expects to report a loss for the current financial year, due to disruption caused by the death of Chief Executive Lyn Miles in June.

In a trading update, the company said the supply to the company of certain key materials and the lack of credit insurance and funding available to certain customers delayed sales.

The PV module maker will have to write down inventories because of the erosion in pricing in the photovoltaic market, particularly in standard modules.

Wellstream Holdings Plc increased 7.89% to 547.00 pence after the oil services firm reported first-half revenues fell 34% to £128.59 million from £194.87 million in the same period last year. Pre-tax profit for the period plunged 59% to £10.57 million from £25.72 million in the previous year.