Rolls-Royce withdraws from Boeing engine competition

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Rolls-Royce has announced that it has withdrawn from the competition to power Boeing’s new mid-sized airplane. It has pulled out of the competition because it is unable to commit to the proposed timetable. Shares in the company are trading over 3% lower today. Its Trent 1000 engine powers the Boeing Dreamliner 787 jet. Rolls-Royce makes engines for large civil aircrafts, military planes, ships, trains and other industries. It has, however, faces durability issues with its Trent 1000 engines. Last year, a fault with the company’s Trent 1000 engines grounded British Airways and other airlines to a halt. Rolls-Royce said it had made good progress with the technical fixes of its engines. The company said that it had increased the charge it had taken on resolving the issues with its Trent 1000 engines to £790 million. “This is the right decision for Rolls-Royce and the best approach for Boeing. Delivering on our promises to customers is vital to us and we do not want to promise to support Boeing’s new platform if we do not have every confidence that we can deliver to their schedule,” President of the Rolls-Royce Civil Aerospace division, Chris Cholerton, said. The British luxury car and aero manufacturing business posted a pre-tax loss of £2.9 billion for the 2018 financial year. This is down from a £3.89 billion profit the previous year. Underlying operating profit increased 71% to £633 million, up from £317 million the year prior. The rest of the business is performing well following its latest restructuring which caused the loss of 4,000 jobs last year. It has forecasted an operating profit of £700 million (+/- £100 million) for 2019, with its Civil Aerospace division expected to grow around 10%. “Despite the challenges we faced on Trent 1000 in-service issues, solid progress has been made realizing our ambition to make 2018 a breakthrough year,” Chief Executive Warren East commented. At 13:27 GMT Today, shares in Rolls-Royce Holding PLC (LON:RR) were trading at -3.38%.

Digitalbox set for acquisitive AIM future

New AIM company Digitalbox’s two digital publications, Entertainment Daily and The Daily Mash satirical website, have profitable track records and provide a solid base for the reversal into AIM shell Polemos. The key to the prosperity of the business is securing additional acquisitions and building up a much larger, cash generative group.
It appears that the profit of The Daily Mash, whose purchase will be completed next week, has declined in the past three years and is important that Digitalbox shows that it can make the mobile-focused model that has been honed on Entertainment Daily work for...

Italy’s public debt is a risk to the euro region, EU warns

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The European Commission has warned that Italy’s huge public debt poses a threat to the entire Eurozone, and it is only being exacerbated by the policies of its populist government. The Eurozone’s third largest economy slipped into its third recession in a decade last month. It entered a technical recession after contracting for two consecutive quarters. “Italy is experiencing excessive imbalances. High government debt and protracted weak productivity dynamics imply risks with cross-border relevance, in a context of still high level non-performing loans and high unemployment,” the European Commission said. Italy faces high unemployment rates, particularly among its youth. “The government debt ratio is not expected to decline in the coming years, as the weak macroeconomic outlook and the government’s current fiscal plans, though less expansionary than its initial plans for 2019, will entail a deterioration of the primary surplus,” it said. Italy’s debt ratio is more than twice the EU limit, and looks like it wont be declining any time soon. “Italy is in a special situation because it is a country with a very high debt level and it is critical that debt does not start growing again,” Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, announced at a news conference. In an unprecedented turn of events, the European Commission rejected Italy’s original 2019 draft budget last October. Its controversial budget plans sparked months of quarrelling with Brussels over the ambitious proposal that breached rules on government borrowing. It wasn’t until December that the populist government reached an agreement with the European Commission on the 2019 budget, with its deficit target reduced. The recession that it faces means that the country’s growth targets, approved under its budget, are highly unrealistic. In an interview with Bloomberg News, the French Finance Minister Bruno Le Maire said last week that the situation in Italy “will have a significant impact on growth in Europe and can impact France”. EUR/USD was last trading at 1.1388.

The problematic Northern Powerhouse

The main problem with the ‘Northern Powerhouse’ is the dichotomy between the picture it is trying to paint and the present-day reality – it is a piece of rhetoric wheeled out by politicians trying to divert attention from the London-centric political and economic bubble. It plays upon Thatcherite tropes of London-centred financial service development over industry and the ‘North-South’ divide, without appreciating that it is a ‘London and home counties versus everywhere else’ divide. It betrays the complex sociology, anthropology and economics that go into centuries (if not millennia) of city-building, and the simple fact that London owes some of its success to its external networks, but largely that it has the internal industries, culture and administrative bodies to make it a draw for the entire world.

Understanding a city

After studying Plato’s Republic and Marcel Henaff’s The City in the Making, I have adopted a more nuanced stance on the complicated and co-dependent networks and developments upon which a city is built, and London does not have to be a standalone case. From its birth, London has been burned down and rebuilt, swollen and expanded. It is in the city’s very nature to grow, change and be in a constant state of flux – and this has brought about three characteristics which at present, make London unique within the UK. First, it is uniquely diverse. Not in the hold hands Kum Ba Yah sense of the word, but rather a violent and constant state of layering – especially since the industrial revolution – where new cultures and ideas come to the city in search of a new way of life. What this does, according to the likes of Henaff, is boost the odds of innovation. New and constantly competing ideas and perspectives are not only faced off against one-another, but they are taught that only the best survive, and so the reciprocal relationship between economic and political entrepreneurship is allowed to blossom. While diversity is visible in any metropolitan trading hub, London has arguably developed a reciprocal relationship between diversity and innovation. Not only does diversity spark innovation, but London’s readiness to change and revolutionise in order to prosper has cemented its status as the first port of call for those coming from overseas seeking to work hard to secure a better quality of life. Second, its ability to fall and adapt and grow. If anyone has ever had the ill fortune to come across a proud Londoner, we might tell you that London has an ethos that sets it apart from other places – or a worse cliché like, ‘it’s the people that make it what it is’, without much sense of community or fellowship existing. What some may mean is that – failing to adequately articulate the sentiment – there is a realisation that they are part of something bigger than themselves. London is not a series of buildings, nor an orthodox city, but an urban sprawl, capable of harbouring its most profitable industries and cultural beacons at its core but with a seemingly bottomless capacity to expand, not just regarding social and architectural hardware, but also software. It is its ability to not just grow organically, but revolt and change seismically in an instant, that makes London a global city, and currently the only one of its kind in the UK. Third and arguably most obvious – and important – it almost embodies the simple formula that makes a city successful; a strong relationship between administrative and productive forces. In less cryptic terms, The City and Westminster are just down the road from one-another. Financial services are our primary export and Westminster is the home of the UK’s primary political institutions – the explicit link between the two arguably being stronger than ever with professionals more-often-than-not occupying most positions of political office, and many politicians going on to work in The City. While the link I’m drawing is frustratingly opaque, what I’m pointing to is not a quid quo pro between the City and Westminster, just that London has the balance between an entrenched administrative body and economic output, which makes it a uniquely productive node in the UK. Going beyond this and owing to its capacity for innovation, London is the home of financial services built upon knowledge economics, not just in the UK but the world-over. Rather than adequately remodel other cities in the image of the London, a sort of half-hearted set of initiatives has been under way to encourage other cities to emulate London’s success. Without major restructuring, London’s financial services will remain the stalwart of the UK economy (the inflated living costs and house price bubble of course owing to this success and the fact that it has yet to be challenged by other UK cities).

What has been done wrong?

For those committed enough to reach this point, or to those who have come to this point immediately, I will keep the faults of incumbent policymakers brief. The bottom line is that ‘The Northern Powerhouse’ refers to six cities (Liverpool, Manchester, Newcastle, Hull, Sheffield and Leeds). This leaves us with two options, realise that ‘The North’ is a culturally and industrially disparate area and approach cities individually, or tackle a third of the English landmass as a single entity and improve infrastructure between cities, before they contain the internal expertise or infrastructure necessary to incite substantive change. I hate to sound like an old record, but the fact that MPs have so far found the second option more favourable appears to show a lack of understanding for how to encourage the growth of a prospering city. The fact that I bitterly allude to HS2 isn’t because it’s a bad idea, but because it appears to be the only meaningful show of intent to bolster development of Northern cities. What is sorely needed, primarily, are structural changes to cities outside of the capital. Meaningful structural change; devolution of administrative capacities along with economic plans to develop the comparative advantage of a city. Ultimately, a strong, specialised administrative body and productive potential, not an assorted flinging of graduate schemes and weak incentives in the hope that one of them sticks. The moving of BBC operations to Manchester is a start, but wholesale adjustment is needed. While a diverse and mixed economy is healthy, the UK economy has for the last three to four decades focused primarily on the comparative advantage of financial services. While Manchester has increased its stake in this industry, it is meagre in comparison to the monopoly held by London. Quite rightly we should lament the shrinking of industry and the outsourcing of not only labour but also the supply of goods that we consume, but we should accept that as a country now largely profiting off of international flows of capital, our cities need to modernise to fulfil their maximum productive potential. This is not to say that a monoculture should be created, but that there is something to be said about maximising the profit-making capabilities of our urban spaces which are home to the largest concentrations of qualified individuals and technological capabilities – London should not be our only global city.

What could be done for Northern cities?

A forewarning, the remainder of this article will be both dogmatic and didactic, but its core message is simple; Brexit should be an excuse for the UK to build for the future, not grit its teeth and hope small businesses hold fast while London relies on the mercy of markets. Well, if we are truly worried about what Brexit will do to our industry, make our cities an opportunity that other countries won’t want to miss. UK policymakers should now work to justify the billions of pounds spent on infrastructure in the North and encourage this trend to continue. Beyond the traditional schemes for graduates and small government endorsements, entice employers to these cities. Make Northern cities an alternative to the temptation of moving their operations and headquarters to Ireland; create corporate tax bubbles and agree tax breaks for large corporations willing to set up shop and employ a quota of local graduates, as well as offering graduates incentives not to move down South or abroad. Employ ambitious city planners such as ARUP (who have had a hand in HS2 and The Shard) and British construction and engineering firms to build new infrastructure and housing and prioritise the awarding of contracts to companies willing to provide opportunities and apprenticeships to young and unemployed tradesmen. Ultimately, spend some money in the short term to make our cities appear ready for business on the international stage and make them ready to realistically compete with London and other cities around the world. Make our cities an enticing prospect so that they attract investment and provide opportunities to the next generation of the young and learned who are likely already training their sights on London.

Webis dips with losses and lower volumes

UK-based gambling firm Webis Holdings Plc saw their share price dip during Wednesday trading with a deepening in first-half losses on-year.

Lower volumes, greater losses

The disappointing results in the latest round of figures have been attributed to a drop in betting volumes with a thinning out of traffic from betting customers. Pre-tax losses for the six months through November came to $591,000, deepening from $19,000 on-year. This came alongside revenue which was almost half of what it was the year before, falling $5.38 million with the most notable fall in activity coming from the company’s international business-to-business sector. “Performance has been steady for the new period during a normally quiet time of year for weather and lack of quality content,” Webis said in a statement. “Overall, we continue to focus on growing player numbers, whilst keeping a close control on costs and implementing further cost efficiencies across the business.”

Webis latest

Webis shares are currently trading down 8.68% or 0.23p at 2.42p per share 27/02/19 14:37 GMT.

St. James’s Place dips with full-year losses

UK-based wealth manager St. James’s Place saw its shares dip in Wednesday trading, with latest figures reporting that full-year sales had swung to a net loss on account of the diminished value of the company’s investments and lower performance fees.

Despite growth in assets under management and an improved dividend, 2018 was disappointing

Even with the company attracting investors with a hike of its dividend to 20pc per share and announcing its assets under management had grown to £100 billion, figures for 2018 reveal an underwhelming year for the British firm. The firm booked negative results with full-year pre-tax losses through December mounting to £84.6 million, which represents a considerable dip from a positive figure of £342.1 million on-year. Despite the losses, the company were optimistic – and also reported some positive figures. “I am pleased to report a good set of results for 2018, building on an exceptional outcome in 2017 and despite a difficult external environment in the last quarter of the year,” chief executive Andrew Croft said. “It is pleasing to see a recovery in the global stock markets at the start of 2019 which, together with on-going net inflows during January and February have, at the time of writing, taken our funds under management to some £102bn.”

St James’s as a portfolio candidate

Since announcing its impressive dividend, the company has since announced a final dividend of 29.73p per share, which brings total dividends for the year to 48.22p, a 12.5% jump on-year. Similarly, the company’s preferred measure of performance, EEV operating profit, saw a 9% improvement – to £1 billion. Gross inflows were also up to £15.7 billion, a growth of !.1 billion on-year. The firm’s shares are currently trading down 3.54% or 34.6p since markets opened on Wednesday, down to 942.2p per share. Goldman Sachs have reiterated their ‘Neutral’ stance on St. James’s stock, while Deutsche Bank have reiterated their ‘Hold’ stance and Peel Hunt retained their ‘Add’ rating.

Rio Tinto rallies with 56% spike in profits

Anglo-Australian mining multinational Rio Tinto plc (LON:RIO) have seen their share price rally during Wednesday trading, owing largely to its latest performance figures.

Sales boost Rio Tinto profits

Following news of the selling off of its Grasberg mine in Indonesia and technological revelations at their Australian mining operations, Rio Tinto today booked impressive performance figures. The company saw a 56% jump in annual profits on the back of asset sales, particularly in the coal space. For the year through December, net earnings climbed to $13.64 billion, while underlying earnings rose 2% to $8.81 billion. Chief Executive, J-S Jacques, said,”These strong results reflect the efforts of the team to implement our value-over-volume strategy as we continued to strengthen the portfolio and invest in future growth,” “Our world-class portfolio and strong balance sheet will serve us well in all market conditions, and underpin our ability to continue to invest in our business and deliver superior returns to shareholders in the short, medium and long term.”

As a portfolio candidate

Following a fourth quarter operations review, production guidance for 2019 was left unrevised. Similarly, it was expected that capital expenditure would remain at approximately $6 billion in 2019, with this figure forecast to increase to $6.5 billion for the following two years. The company have also declared dividends of 307c per share, a 6% jump on-year. Shares are currently trading up 1.04% or 45.5p at 4,431.5p per share 27/02/19 16:06 GMT. Barclays Capital and Morgan Stanley have reiterated their ‘Equal Weight’ stances on Rio Tinto stock, while Goldman Sachs have upgraded their rating from ‘Neutral’ to ‘Buy’ and Credit Suisse have downgraded their rating from ‘Outperform’ to ‘Neutral’.

ITV and BBC take on Netflix with launch of ‘BritBox’

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ITV and BBC are set to launch a joint video streaming service named BritBox. In a statement, ITV said that the new venture will offer “an unrivalled collection of British boxsets and original series”, as the broadcasters look to take on the likes of Netflix (NASDAQ:NFLX) and Amazon Prime (NASDAQ:AMZN). BBC director general, Tony Hall, said: “The service will have everything from old favourites to recent shows and brand new commissions.” The service is scheduled to be in operation towards the latter half of 2019, with other partners expected to also collaborate. The announcement came alongside ITV’s full-year results for 2018, reporting a 13% rise in pre-tax profits. Despite growth, the broadcaster warned on a challenging advertising market amid “economic and political headwinds”. Both company’s enjoyed a successful year, with the launch successful programmes such as Love Island and Golden Globe winning series The Bodyguard, whilst it remains to be seen whether BritBox will indeed attract Netflix’s loyal viewer base. Netflix said it added 6.96 million new members in the three months to November 2018, taking its user base to 148 million worldwide. ITV shares (LON:ITV) are currently -2.63% as of 14:49PM (GMT).  

Nosta Terra & Oil raises £1.15 million to further Mesquite asset

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Nostra Terra & Oil (LON:NTOG) announced on Wednesday it has raised £1.15 million to further develop operations at its Mesquite asset. The oil and gas exploration company had raised the funds to ‘strengthen its position’ in the Mesquite asset in the Permian Basin, ahead of also locating a potential farm-in partner.

Matt Lofgran, Chief Executive Officer of Nostra Terra, commented on the announcement:

“Our goal with Mesquite is to find the right industry partner to work with on developing the asset. By significantly strengthening our balance sheet and welcoming institutional investment into the Company at this time, we are positioned to retain more interest in the asset going forward.

“The Board believes the Permian Basin remains one of the most attractive oil provinces globally, attracting billions of dollars in investment each year. In the Mesquite target area Nostra Terra still has first mover advantage, so it is important for a company of our size to move as quickly as it can in securing its position. We are on course to deliver substantial value to shareholders over the coming years.”

Earlier this month shares in the company rose after it announced a threefold increase in oil reserves at its assets at Pine Mills in East Texas and its Permian Basin assets in West Texas, including Mesquite. Nostra Terra Oil & Gas is an AIM-listed company. It was founded back in 2005. as well as interests US, it also operates in Egypt. Shares in the London-listed firm are currently +1.53% as of 11:43AM (GMT), as investors react to the announcement.

Taylor Wimpey hails ‘positive start’ to 2019

Taylor Wimpey said it has enjoyed a ‘positive start’ to 2019, after announcing itsfull-year results for 2018. The housebuilder reported growth in pre-tax profit of 5.5% up to £856.8 million, compared to £812.0 million posted back in 2017. Overall profit for the year totalling also rose to£656.6 million, compared to £555.3 million reported in 2017. Meanwhile, £499.5 million was paid in total dividends for the year, up from £450.5 million a year ago. Pete Redfern, Chief Executive, commented on the company’s full-year results: “2018 was another strong year for Taylor Wimpey with good progress against our strategic priorities. We delivered in line with our expectations, achieving a strong sales rate and record revenues. Despite ongoing macroeconomic and political uncertainty, we have made a very positive start to 2019 and are encouraged to see continued strong demand for our homes. We enter the year with a strong order book and a clear strategy in place to deliver long term value for shareholders.” Ed Monk, associate director from Fidelity Personal Investing’s share dealing service also commented on the figures: “It was an upbeat message from Taylor Wimpey as the housebuilder reported rising profits and margins on forecast. “All important was the builder’s outlook for the coming year and here the news was good, albeit with a the usual provisions about Brexit. “The order book metrics improved slightly and Taylor Wimpey also managed to reduce its reliance on Help-to-Buy, which is scheduled to end in 2023. Homes sold under the scheme reduced from 43% to 36%.” On Tuesday, rival housebuilder Persimmon (LON:PSN) reported its latest results, with annual profits surpassing £1 billion for the first time, largely as a result of the government help-to-buy scheme. Taylor Wimpey is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It was formed after merger between Taylor Woodrow and George Wimpey back in 2007. Shares in Taylor Wimpey (LON:TW) are currently +1.23% as of 11:22AM (GMT).