UK Annual Inflation 3.7%; Pearson Increases Stake in TutorVista

Arthi Gupta
18 Jan, 2011
New York City

The UK indexes climbed after consumer confidence and annual inflation rose in December. RBS agreed to sell its unit to Advent International for

[R]4:00 PM London – The UK indexes climbed after consumer confidence and annual inflation rose in December. RBS agreed to sell its unit to Advent International for £925 million. Pearson increased its stake in India-based TutorVista.[/R]

In London, FTSE 100 Index gained 61.52 or 1.03% to 6,047.42 and the pound edged higher to close at $1.6006.

UK Home Prices Fall

Home prices in Britain fell again in November, demonstrating continuing weakness in the market, according to the latest data from the Department for Communities and Local Government.

The annual increase in November declined to 4% from the 5.5% rise in October. The average cost of a home was £208,585 during the month.

Home prices increased 4.7% in England, 3% in Wales, but dropped 11.3% in Northern Ireland and 2.4% in Scotland.

Other housing data today, from the Royal Institution of Chartered Surveyors'' showed a mixed outlook for the UK housing market.

The Royal Institution of Chartered Surveyors'' seasonally adjusted house price balance improved for a second month to -39 in December from -44 in November, but that means 39% more surveyors still saw prices fall rather than rise.

UK Consumer Confidence Rises

The UK consumer confidence index rose to 53 in December, from 45 in November, a fresh survey showed on Tuesday.

A gauge of future economic conditions rose 12 points to 73, while the present situation index climbed 3 points to 24 in December.

UK CPI Increases

British annual inflation accelerated to an eight-month high in December, boosted by food and fuel prices.

UK consumer price annual inflation in December rose to 3.7% from 3.3% in November, the Office for National Statistics said today. Inflation stayed above the central bank''s 2% target for 13 consecutive months.

On a monthly basis, consumer prices rose 1% in December. The 1% change this year was a record increase for a November to December period, the ONS said.

Retail price annual inflation increased slightly to 4.8% in December from 4.7% in November.

RBS Sells Priory Group

The Royal Bank of Scotland Group Plc reached an agreement for the sale of the Priory Group, an independent provider of mental health and specialist care services to private equity firm Advent International for an enterprise value of up to £925 million.

After the settlement of outstanding debt, Royal Bank of Scotland expects to receive gross equity proceeds of up to £133 million in cash from the sale of its minority equity stake in the Priory Group.

Pearson Increases Stake In India-based TutorVista

Pearson PLC increased its shareholding in TutorVista to a controlling 76% stake for a consideration of $127 million. The transaction makes Pearson''s total equity investment in the company to about $139 million.

Bangalore-based TutorVista''s main activities are in the fields of technology, online tutoring, test preparation and tuition, and K-12 schools services. The acquisition will enhance the company''s presence in the school market in India.

Gainers & Losers

ARM Holdings plc surged 3.98% to 535.00 pence after the technology company and International Business Machines Corp. have reached an agreement to extend their collaboration on advanced semiconductor technologies to enable the rapid development of next generation mobile products optimized for performance and power efficiency.

Burberry Group plc soared 5.19% to 1,114.00 pence after the luxury fashion house, manufacturing clothing, fragrance, and fashion accessories said that third quarter total revenue, on underlying basis, was up 27%. On reported basis, revenues rose 30%.

Chemring Group Plc fell 1.50% to 3,207.00 pence after the military decoy flares and mine detection firm reported a decline in profit for the fiscal year 2010, hurt mainly by a loss on fair value movements on derivatives, despite 18% growth in revenues.

Total revenues for the year increased 18% to £597.1 million from £503.9 million in the prior year. For the full year, the company''s profit before tax declined 7% to £89.1 million from £95.8 million in the previous year.

Essar Energy PLC plunged 4.57% to 532.00 pence after the Indian-focused energy company announced the launch of an offering of approximately $500 million of convertible bonds due 2016. Essar intends to use the net proceeds primarily to pursue acquisition opportunities of power, coal and oil and gas assets.

GlaxoSmithKline Plc fell 2.57% to 1,174.00 pence after the drug maker said it expects to take a legal charge in 2010 of £2.2 billion or $3.4 billion for the fourth quarter, with relation to an inquiry into the company''s U.S. sales and promotional practices as well as cases regarding diabetes drug Avandia. Excluding tax, the charge is expected at £1.8 billion.

Petrofac Ltd. gained 3.65% to 1,677.00 pence after the oil services group said it received $1.2 billion lump-sum engineering, procurement and construction contract from In Salah Gas, an association between Sonatrach, BP and Statoil to develop southern fields in the In Salah development.

SABMiller plc rose 1.36% to 2,201.50 pence after the global brewing and bottling company issued its interim management statement for the third quarter ended December 31, 2010.

The company noted that on an organic basis, lager volumes for the third quarter were 3% higher than the prior year and 2% higher than last year for the first nine months of the financial year.

Soft drinks volumes increased 5% in the quarter on an organic basis and were 3% higher for the first nine months.