FTSE 100 flat, utilities fall on 25% ‘targeted profits levy’

The FTSE 100 was flat in early afternoon trading on Thursday, as energy firms reacted to Rishi Sunak’s 25% “targeted profits levy” for oil and gas companies to assist struggling consumers with crushing energy bills across the country.

Utilities plummeted across the market, as United Utilities led the pack with a 4.3% decline to 1,064p following a pre-tax profit fall to £302 million in FY 2022 against £460 million in FY 2021.

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The group attributed its slide to its £174 million growth in net finance expenses related to higher inflation on its index-linked debt, which ate into its profits for the total year.

SSE shares experienced a drop of 3.4% to 1,804p, with Severn Trent declining 2.6% to 2,989p and National Grid falling 2.3% to 1,197p.

“A windfall tax is widely expected to fund the package and energy firms were weak again this morning as they awaited the detail of Chancellor Rishi Sunak’s plans with all the relish of a pupil facing a particularly tricky exam,” said AJ Bell investment director Russ Mould.

JD Sports Fashion shares slid 1.7% to 110.1p as a result of executive chair Peter Cowgill’s resignation, with non-executive directors Helen Ashton and Kath Smith set to take the positions of interim non-executive chair and interim CEO, respectively.

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The fashion group commented that it chose to “accelerate the separation” of its chair and CEO roles after an ongoing review of its internal governance, a shift which Cowgill apparently opposed prior to his departure.

“Coming just five months after a £5 million fine was issued by the regulator it appears JD is keen to get its ducks in a row and finally address corporate governance concerns by splitting the role of CEO and chair,” said Mould.

“There are reports Cowgill opposed some of these changes and investors must decide whether the apparent governance improvements were worth losing such a successful leader of the business.”

BT Group shares declined 3.1% to 183.9p as the government highlighted a national security probe to investigate Altice UK Sarl’s shareholding in the firm, following the company’s increased stake in the group from 12% to 18%.

The government exercised its powers granted by the National Security and Investment Act 2021 to enable the administration to investigate approaches conducted by overseas companies.

Altice commented that it had no intention to mount a takeover effort, and would be legally bound by its commitment through UK takeover regulations.

BT is an especially sensitive interest, as a result of its Openreach arm, which currently maintains the vast majority of the UK’s broadband network.

Meanwhile, Intermediate Capital Group shares gained 8% to 1,576p after the company announced a 12% rise in pre-tax profit to £568.8 million in its FY 2022, alongside a 36% hike in its dividend to 76p per share against 56p the year before.

“This has been a defining year for ICG both in our market standing and in our growth trajectory,” said Intermediate Capital CEO Benoît Durteste.

Auto Trader shares increased 1.8% to 576.2p after the group reported its best ever results, including a 65% revenue surge to £432.7 million in its FY 2022, and a pre-tax profit leap of 91% to £301 million.

The company bumped its dividend payout by 64% to 8.2p compared to 5p year-on-year, and mentioned a positive growth outlook for the coming year.

“Despite the current high levels of economic uncertainty and industry change, we enter the year with good reason for both confidence and optimism,” said Auto Trader CEO Nathan Coe.

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