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UK MIDDAY BRIEFING: Balfour Beatty, Carillion Talks End In Dispute(Alliance News Via Acquire Media NewsEdge) LONDON (Alliance News) - Balfour Beatty has Thursday ended its merger talks with peer Carillion because Carillion suddenly demanded that Balfour halted its planned sale of US project management business Parsons Brinckerhoff.In a tersely worded statement just a week after news of the potential GBP3.05 billion merger of the British infrastructure and construction companies broke, Balfour accused Carillion of misleading it, saying the new demand was both unexpected and contrary to earlier agreements. It said it would continue with the sale of Parsons Brinckerhoff.Carillion said it was surprised by Balfour Beatty's reaction. It said it had decided on Wednesday that it could only do a deal if Parsons Brinkerhoff was included."The board of Carillion yesterday concluded, on the basis of analysis to date, that for the combination to satisfy Carillion's requirements ... it would be essential to retain the stability and dependability of Parsons Brinckerhoff's earnings," it said in its own statement.In the biggest day of the UK earnings season so far, Royal Dutch Shell is the biggest gainer on the FTSE 100 after its rise in second-quarter profits beat market expectations. Current cost of supply earnings excluding items rose by a third to USD6.1 billion, from USD4.6 billion, buoyed partly by higher liquids production and prices. It booked USD1.98 billion of impairments, mainly related to US gas assets, but this was partly offset by the gains on recent divestments.AstraZeneca, fresh from fighting off Pfizer's takeover approach, has raised its full-year revenue and earnings guidance, despite seeing profit fall sharply in the half year to end-June. The company now expects revenue for the full year to be in line with 2013 at constant currency, up from its previous guidance for a low-to-mid single digit percentage decline. Core earnings per share are expected to decrease in low double digits at constant currency, improved from previous guidance of a percentage decrease in the teens. The pharmaceutical giant posted a pretax profit of USD1.50 billion in the half year, down from USD2.39 billion in the same period a year before, as higher costs, mainly related to taking full control of its diabetes portfolio, offset a revenue increase to USD12.87 billion, from UDS12.62 billion.Sales of its biggest drugs, cholesterol treatment Crestor and acid reflux treatment Nexium, continued to decline, but AstraZeneca said it was making progress with its pipeline, advancing 19 projects to the next phase in the second quarter. Products like asthma and chronic obstructive pulmonary disease treatment Symbicort, acute coronary syndrome treatment Brilinta, and type 2 diabetes drug Onglyza all posted strong sales growth.---------FTSE 100: down 0.2% at 6,757.70FTSE 250: down 0.9% at 15,491.94AIM ALL-SHARE: down 0.3% at 770.23GBP-USD: down at 1.6867EUR-USD: down at 1.3384GOLD: down at USD1,286.87 an ounceOIL (Brent): up at USD106.29 a barrel---------Other Top UK Corporate News----------Lloyds Banking Group reported a 60% decline in pretax profit to GBP863.0 million in the first half of the year as it was hit by yet more provisions for previous mis-selling and the costs of spinning off TSB Banking Group PLC. It has now booked over GBP10.4 billion in provisions for mis-selling payment protection insurance after setting aside another GBP600 million in the half. Excluding these items, pretax profit rose 32% to GBP3.82 billion due partly to a 58% reduction in impairment charges for things like bad loans, and its shares have risen. Lloyds reiterated that it will apply the Bank of England's Prudential Regulation Authority in the second-half to restart dividend payments.----------Centrica, the parent company of British Gas, said its pretax profit dropped in its first half as higher revenues were offset by a jump in costs due to extreme weather in the US and a fall in performance at British Gas. Centrica said its pretax profit fell 40% to GBP890 million for the six months ended June 30 from GBP1.49 billion the previous year, with a decline expected by shareholders after two separate profit warnings by the company earlier in 2014. The company increased its interim dividend by 4% to 5.10 pence.----------BG Group said its pretax profit soared in its second quarter due to a strong performance at its liquefied natural gas division, allowing the company to increase its interim dividend by 10%. The natural gas company said its pretax profit jumped 47% to USD2.13 billion for the three months ended June 30, from USD1.45 billion the previous year, as revenue increased 25% to USD5.51 billion from USD4.41 billion.----------Alcoholic beverage giant Diageo posted a fall in both profit and sales in its last financial year, hit by a combination of weaker consumer demand, a hefty slowdown in Asia and other emerging markets, currency rate movements, and de-stocking in Asia. Diageo, the world's largest spirits producer and a major producer of beer and wine, reported a pretax profit of GBP2.71 billion for the financial year ended June 30, lower than the GBP3.06 billion profit it recorded a year earlier. Still, it declared a 9% increase in its final dividend for the year to 32.0 pence.----------BAE Systems reported lower profits and sales in its first-half, as reduced defense spending in the US continued to weigh on the company. Its operating profit in the six months to June 30 fell to GBP689 million, from GBP752 million, as revenue dropped to GBP7.61 billion, from GBP8.49 billion. It retained its guidance for a 5% to 10% fall in its full-year earnings per share, although it warned that sterling's strength would wipe about 1 pence off EPS assuming an average exchange rate of USD1.70. The company said sales would be weighted to the second half of the year. ----------Aircraft and marine engine maker Rolls-Royce Holdings reported lower profits for the first half of the year as it had predicted, blaming lower defence spending and weaker trading in marine, and said its recovery would take time as it invested in revamping its plants and delivering its order book. Its profit before tax and financing fell GBP491 million for the six months to June 30, from GBP848 million a year earlier, as revenue dropped to GBP6.63 billion, from GBP7.35 billion. It actually swung to a net profit for the period of GBP544 million, from a loss of GBP385 million a year earlier, but this was almost completely down to a GBP1.4 billion increase in the mark-to-market value of derivative contracts it holds.----------BT Group maintained its outlook for the full-year, as it saw pretax profit rise in its first quarter to the end of June on lower costs, despite seeing a decline in revenue. The telecommunications company posted a pretax profit of GBP546 million, up from GBP449 million, even though revenue declined to GBP4.35 billion from GBP4.45 billion, partly due to GBP71 million hit from the strength of sterling and a GBP46 million reduction in transit revenue.----------Oil and gas explorer and producer Afren saw its shares slump after its board suspended the chief executive and chief operating officer pending an investigation into alleged evidence of unauthorised payments that were potentially for the benefit of the executives. In a statement, the company said that in the course of an independent review on the board's behalf by Willkie Farr & Gallagher (UK) LLP of the potential need for disclosure of certain previous transactions to the market, evidence had been identified of the receipt of unauthorised payments potentially for the benefit of CEO Osman Shahenshah and COO Shahid Ullah.----------Schroders reported a rise in its assets under management over the course of the first-half, as net inflows and investment returns continued into the second-quarter. In a statement, Schroders reported GBP271.5 billion of assets under management at the end of June, a 1.3% increase during second-quarter and a 3.3% increase across all of the first half. The FTSE 100 asset manager reported net inflows into institutional, intermediary, asset management, and wealth management over the first-half, though institutional saw a GBP300.0 million net outflow in the second-quarter alone. First-half pretax profit increased to GBP233.9 million from GBP221.7 million. Schroders increased its interim dividend to 24.0 pence from 16.0p.----------Kazakhmys said its copper production fell in its second quarter and first half as it reduced activity as part of its ongoing restructuring plan. The miner said its copper cathode equivalent production fell 2.8% to 69,700 tonnes for the three months ended June 30, from 71,700 tonnes a year earlier, with particular falls in production at its Khezkazgan region in Kazakhstan as mining activity was reduced in its high cost zones. However, the company said its copper in concentrate production increased 1.9% to 79,600 tonnes, and the average grade it received for copper during the three month period increased to 1.01% from 0.94%.----------Thomas Cook Group said it continued to see strong demand in the UK, Germany and Northern Europe in the third quarter of its financial year, helping to improve both underlying profits and margins, although it reported lower revenue and a bigger loss on a statutory basis due partly to restructuring costs. The UK-based travel operator said all of its businesses delivered improved results in the quarter excluding restructuring costs and provisions for onerous contracts and legal disputes, contributing to a GBP32 million increase in underlying group earnings before interest and taxes. Its EBIT margin increased to 1.5%, having been non-existent the year earlier.----------Merlin Entertainments declared its maiden interim dividend after swinging to a profit in the first half of the year, boosted by a flood of visitors through its gates. The group said profit and revenue growth in the first-half was driven by growth from its existing estate along with the continued international roll out of its brands. Besides that, Merlin Entertainments said profits were boosted by better weather in Northern Europe and throngs at its LEGOLAND parks, following successful promotional activity around the release of 'The LEGO Movie. Merlin Entertainments reported a pretax profit of GBP29 million, compared to a pretax loss of GBP1 million the prior year. The group declared a maiden interim dividend as a listed company of 2.0 pence per share, and gave a positive outlook for the remainder of the year.----------Countrywide saw its shares rise strongly after promising bigger payouts to its shareholders, and as the recovery in the UK housing market fueled a three-fold jump in pretax profit before exceptional items in the first half of the year. The company reported a pretax, pre-items profit of GBP37.1 million for the six months to June 30, up from GBP12.3 million a year earlier. It swung to a pretax profit of GBP33.3 million, compared with a loss of GBP10.1 million in the first half of 2013, as it also booked a GBP14.6 million profit on the disposal of most of its stake in property website Zoopla when that company did an initial public offering last month. It will pay an interim dividend of 5.0 pence, up from 2.0 pence last year, alongside the special dividend of 9.0 pence that will return the procceds of the Zoopla stake sale. It also said it is now targeting an ordinary dividend of between 35% and 45% of annual reported profit after tax but before amortisation, up from the 25% to 35% target it had set at the time of its IPO.----------Shopping centre owner Intu Properties saw its shares rise after strong investment demand for prime shopping centres drove up property valuations, and it said the UK's economic recovery was encouraging retailers to let more space. The company's net asset value per share rose to 372 pence on June 30, from 346 pence a year earlier, buoyed by a GBP573 million, or 44 pence a share, property valuation gain. That represented a 7.6% like-for-like valuation gain, ahead of the benchmark IPD monthly index, retail, which was up 3.5% on the year.----------AIM MOVERS----------Ariana Resources has jumped after it secured a financing agreement to bring the Kiziltepe Gold-Silver Mine in western Turkey into production. Croma Security Solutions is doing well after it said its results for the financial year to the end of June would be ahead of market expectations. Chamberlin is also up after it said it expects profitability for the full-year to come in significantly above current market expectations as its cost cutting programme yields results and first-quarter trading met management hopes. Pure Wafer is up after it said trading in the year to the end of June was in line with market expectations and it will pay a maiden dividend. Gulfsands Petroleum is another gainer after it discovered a strong region of gas at its Lalla Yetou Updip-1 well at the Rharb Centre permit in northern Morocco. Redhall Group is down after it warned that lower volumes in its nuclear contracting business will lead to "significant" losses in the current year, causing it to lower its forecasts for a third time this year. It is now expecting operational profit to broadly break even. Global Energy Development is also down after a blockage caused only low fluid recovery after fracking at its Catalina #1 Simiti formation in the northern section of the Magdalena Valley in Colombia. Arden Partners is down after it swung to a loss on the back of lower revenues in a first half, hit by two separate transactions which impacted its fee revenue. Sula Iron & Gold is another faller, even though it said its Ferensola Project in Sierra Leone has not been impacted by the outbreak of ebola in West Africa. Sula also noted the Ferensola Project, located in Diang Chiefdom, will be closed in August to coincide with the heavy rains expected in the area. It is currently on care and maintenance status and will recommence exploration in early September.----------Top Economics And General----------Eurozone inflation slowed in July to the lowest in four-and-a-half years largely due to a fall in energy prices, data showed. Inflation slowed to 0.4% in July from 0.5% in June, flash data from Eurostat revealed. It was expected to remain unchanged at 0.5%. It is the lowest rate after prices started rising since November 2009. Core inflation excluding energy, food, alcohol and tobacco, held steady at 0.8% in July. Energy prices were down 1% and food, alcohol and tobacco prices slipped 0.3%. At the same time, non-energy industrial goods remained flat and cost of services advanced 1.3%.----------Consumer confidence in the UK took a hit in July, research firm GfK said on Thursday, with an index score of -2. That was well shy of forecasts for +2, and it was down from +1 in June. The July reading marked the first decline in six months. "The almost relentless rise of the last six months couldn't continue indefinitely, and the government will be hoping this is just a temporary setback rather than the forerunner of a wider decline in confidence," Nick Moon, managing director of GfK NOP Social Research, said in a statement.---------The Federal Reserve is cutting its monthly purchases of government-linked bonds to USD25 billion, down from the USD35-billion level set at the central bank's last meeting in June. The latest cut continues a policy launched in January of regularly trimming the stimulus programme as it works to end its so-called quantitative easing by the end of the year. Until this year, the Fed had been buying USD85 billion of bonds every month. The US central bank noted economic activity had rebounded in the second quarter and labour conditions improved, even as "there remains a significant underutilization of labour resources." It also said household and business spending was improving, but recovery in the housing sector remained slow. The US economy grew at an annual rate of 4% in the second quarter, the Bureau of Economic Analysis said earlier Wednesday. The figure marks a turnaround after gross domestic product registered its first decline in three years in the previous quarter.----------The International Monetary Fund said China should target 6.5-7% growth for 2015, lower than the 7.5% goal for this year, and deploy stimulus only if growth were to slow significantly below the target. While most of its directors estimate 6.5-7% growth, a few others assessed a lower target as more appropriate, the IMF said in a report published late Wednesday. The Washington-based fund reiterated that the growth will slow to 7.4% in 2014 and to 7.1% next year.----------Fighting between government forces and pro-Russian separatists in eastern Ukraine continued to rage, as the international community kept up the pressure on Russia to stop meddling in the crisis. The US and EU this week issued economic sanctions against Moscow, their toughest measures yet. The Group of Seven industrialized nations warned Wednesday that they are ready to "further intensify the costs" of Russia's "adverse actions."----------Two weeks after starting its ground offensive in the Gaza Strip, Israel has mobilized 16,000 more reserve troops. Israel Radio reported Thursday they will relieve some of the troops currently operating in the strip. The Israeli security cabinet instructed the army to further expand the offensive. The full Israeli cabinet is scheduled to hold a special session Thursday to discuss the future of the offensive.----------Liberian President Ellen Johnson Sirleaf has ordered all schools closed and put non-essential government workers on leave in added emergency measures to stem the escalating Ebola crisis. In a nationwide speech, Johnson Sirleaf said the government was providing 5 million dollars to implement the expanded emergency plan to contain the spread of the deadly virus that has claimed nearly 130 lives in Liberia alone. Throughout the region, including Guinea and Sierra Leone, Ebola has claimed more than 600 lives among more than 1,000 cases.----------The US House of Representatives Wednesday voted to bring legal charges against President Barack Obama on the politically charged issue of health insurance reform. The House voted mostly along party lines 225-201 to go forward with the lawsuit in a measure initiated by US House Speaker John Boehner, a Republican. Boehner said the lawsuit would challenge Obama's "attempts to make his own laws" on the hot button issue of health insurance reform. Democrats charged that Republicans were choosing lawsuits over legislating. Democratic Representative Sander Levin reeled off a long list of issues including immigration reform that needed attention but were blocked by Republicans.----------Standard & Poor's has lowered a Argentina's credit rating to selective default, indicating that Argentina defaulted on some of its foreign currency obligations. The US private ratings agency said it took the step when the grace period expired Wednesday on a payment owed to bondholders. The country was barred from making that payment by a US court ruling unless it also paid hedge funds that hold defaulted debt. The agency said if Argentina makes the payment, it could revise its ratings on Argentina.----------Afternoon Watchlist (all times British Summer Time)14:45 US Chicago Purchasing Managers' Index15:30 US EIA Natural Gas Storage change ---------Friday's Key UK Corporate EventsDirect Line Insurance Group Half Year ResultsCapital & Counties Properties Half Year ResultsSmith & Nephew Half Year ResultsUBM Half Year ResultsMan Group Half Year ResultsRexam Half Year ResultsVesuvius Half Year ResultsWilliam Hill Half Year ResultsRentokil Initial Half Year ResultsIMI Half Year ResultsRobert Walters Half Year ResultsRoyal Bank of Scotland Group (finalised) Half Year Results---------Friday's Key Economic Events (all times British Summer Time)02:00 China NBS Manufacturing PMI 02:35 Japan Nomura/ JMMA Manufacturing Purchasing Manager Index 02:45 China HSBC Manufacturing PMI 04:30 Japan Bank of Japan Governor Kuroda Speech 06:00 Japan Vehicle Sales08:45 Italy Markit Manufacturing PMI 08:50 France Markit Manufacturing PMI 08:55 Germany Markit Manufacturing PMI 09:00 EU Markit Manufacturing PMI 09:30 UK Markit Manufacturing PMI 13:30 US Nonfarm Payrolls14:45 US Markit Manufacturing PMI 14:55 US Reuters/Michigan Consumer Sentiment Index15:00 US Construction Spending 15:00 US ISM Manufacturing PMIn/a US Total Vehicle Sales---------Contact: +44 203 668 7440; [email protected]; @AllNewsTeam |