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Market News in Brief
RECKITT BENCKISER: McCormick & Co Inc said it would buy the food business of British consumer
goods conglomerate Reckitt Benckiser Group Plc for $4.2 billion to expand its footprint in the attractive
condiments category.
BP: BP Plc is considering an initial public offering of its vast U.S. Midwest and Gulf Coast pipeline
assets, the company said on Tuesday, a move that would raise cash.
BHP BILLITON: BHP Billiton's fiscal fourth quarter iron ore output rose 8 percent from a year ago,
enabling the world's third largest producer to meet its full-year guidance and set a bigger target for the
current year.
BP: Argentina's state-run oil firm YPF SA, France's Total SA , Wintershall Energa SA and BP unit Pan
American Energy LLC announced a $1.15 billion joint investment on Tuesday to increase shale gas
production.
BRITAIN INFLATION: British inflation unexpectedly slowed last month for the first time since October,
dousing expectations among investors that the Bank of England might soon raise interest rates for the
first time in a decade.
Markets Summary Last Change Proportion
FTSE 100 7390.22 -13.91 -0.19%
FTSE 250 19613.38 +92.79 +0.48%
DJIA 21574.73 -54.99 -0.25%
S&P 500 2460.61 +1.47 +0.06%
Euro Stoxx 50 3478.68 -37.67 -1.07%
Nikkei 225 20024.16 +24.25 +0.12%
Corporate Announcements
Our focus continues to put the customer at the heart of everything we do. We have made a good start
towards delivering our target net reward for 2017/18 customer ODI1 outperformance of around 23
million, whilst also continuing to work towards delivering totex2 efficiencies of 770m in AMP63.
We are making good progress on our business plan for AMP74, which will be submitted to Ofwat in
September 2018.
On 11 July 2017, Ofwat published its draft methodology consultation for PR195. As expected, PR19
looks set to be a challenging review. However, we are encouraged by the opportunities of higher
financial returns for ambitious and innovative companies.
The sale of our North American business was announced on 3 July 2017. As a consequence of that
disposal and the disposal of our Italian business on 23 February 2017, we will be restating our
accounts to classify these activities as discontinued operations and have set out the impact of this
restatement below.
As a result of the reclassification of our North American business to discontinued operations, the
guidance for the remainder of our Business Services segment has been upgraded. We now expect
growth in both revenue and profit before interest and tax in this segment, on a like-for-like basis.
Other than the above, there has been no material change to current year business performance or
outlook since the full-year 2016/17 results presentation on 23 May 2017. The Board continues to
expect that the Group will deliver full-year trading performance in-line with its expectations and prior
guidance.
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In the EMEA Services division, first quarter revenue under contract is similar to the position a year ago
but orders have been slower than expected with some customer contract award decisions deferred or
delayed.
Despite the somewhat slower start to the year for orders, we continue to expect the division to deliver
modest revenue growth in FY18. The lower baseline profit rate for single source contracts continues to
represent a headwind for operating margins, as previously advised.
Morning Report
19th July 2017
The Global Products division has shorter order cycles than EMEA Services and its performance is
dependent on the timing and shipment of key orders.
Revenue performance in Global Products during the first quarter was similar to the prior year and we
expect the division to grow in FY18 as a result of its contracted orders and pipeline of opportunities, as
well as the anticipated full year contribution from the Target Systems acquisition.
As outlined at our preliminary results, we are investing in our key contracts and their associated
facilities. FY18 cash flow will reflect this increased investment, with capex of 80m - 100m to support
the amendment to the Long Term Partnering Agreement announced in December 2016.
We continue to make good progress delivering our strategy, embedding the cultural changes needed
to improve customer focus and deliver our long-term growth aspirations.
Consequently, we are reaffirming the previous outlook outlined at our preliminary results dated 25 May
2017 and expect steady progress in FY18, excluding the non-recurring benefits in FY17, supported by
revenue growth and consistent with our strategy.
Net adds +20k with on-net base growth in both Consumer and Wholesale
Continued reduction in on-net churn to 1.2% (Q4 FY17: 1.4%)
1.3m customers now on new fixed price plans
Continued strong growth in B2B including Ethernet connections
Group revenue (ex-Carrier) -3.2%
Reiterating FY guidance (EBITDA 270m-300m)
Upgrades/Downgrades
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