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Prudential demerges, Morrisons upbeat

Prudential retirementPrudential, the insurance giant, has announced that it will demerge its fund management business.

The company said M&G Prudential will be separately listed. It added: “On completion of the demerger, shareholders will hold interests in both Prudential plc and M&G Prudential.”

Full-year profits for 2017 rose to £2.39bn from £1.9bn.

Chief executive Mike Wells said the rise was “led by double-digit growth in our Asia business”.

He added that splitting the two businesses would allow the Pru “to focus on the attractive returns and growth potential of its market-leading businesses in Asia and the US”.

Russ Mould, investment director at AJ Bell, said: “There has been speculation for years that the company’s Asian and US operations would be divorced from the UK business and that’s now been confirmed.

“Prudential argues that its UK business will have more control over its business strategy and capital allocation as a standalone entity.

“This is an interesting demerger situation. Investors will end up with shares in two separately listed businesses on the London Stock Exchange; both are expected to qualify for the FTSE 100 index.

“One may assume the UK operations, to be known as M&G Prudential, will be less appealing to investors as the non-UK interests have experienced faster growth. However, history suggests the demerged component of a business can still do well on the stock market.

“A study in 2003 by the Krannert School of Management found that subsidiaries spun out of companies outperformed their former parent by more than 20% over the first three years following the demerger; with most of the excess returns within the first 12 months of trading.”

Morrisons shows strong growth

MorrisonsUnderlying pre-tax profits rose by 11% to £374m, ahead of analysts’ forecasts of a 10% rise to £371m.

The UK’s fourth largest supermarket chain admitted that there had been challenges during the year “particularly the impact of higher imported cost of goods inflation and other cost headwinds”.

However, it said: “Our core supermarkets are showing strong annual growth on growth as we enter a fourth year of turnaround, driven by more customers and more volume.”

Chief executive David Potts, said: “We had a strong year, becoming more competitive and increasingly differentiating Morrisons for all stakeholders.”

A proposed final ordinary dividend of 4.43p takes the full year ordinary dividend up 12.2% to 6.09p (2016/17: 5.43p).

Balfour Beatty picks up Carillion workers

Carillion’s collapse helped Britain’s biggest engineering firm, said chief executive Leo Quinn.

Balfour has taken on 150 former Carillion workers. “These are people that we’ve worked side-by-side with on joint ventures,” he said.

The company reported a sharp rise in pre-tax profits to £117m for 2017, up from £10m the previous year. Annual revenue was flat at £6.9bn.

It has recommended a final dividend of 2.4p per share; full year 3.6p per share (2016: full year 2.7 pence).


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