BT profits and revenue down again

Liam Roche
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BT profits and revenue down again

BT saw a slight easing in profits decline

BT’s revenue has fallen by £16bn through the first three quarters of the financial year. 

The telecommunications company put the 7% dip down to the coronavirus pandemic. 

For the same period, BT’s profit fell by 17% to just under £1.6bn. 

In May 2020 BT announced it would not be paying a dividend to its shareholders until 2022, when it will be cut to 7.7p per share.  

The company’s last dividend was an interim payment of 4.62p per share paid out to shareholders last March.

Chief executive of BT Philip Jansen expects for the company to perform well in the face of continued lockdowns through 2021. 

“During the current Covid-19 pandemic, BT has continued to deliver for our customers and invest in our networks, our modernisation programme, and our products and services in recognition of the ever increasing need for improved and faster connectivity. 

We delivered results in line with our expectations for the third quarter and remain on track to deliver our 2020/21 outlook despite even greater Covid-19 restrictions than previously forecast.”

Jansen does not think Brexit impacted BT’s recent performance and is confident in the company’s EBITDA expectation for 2022/23. 

“With no material impact expected from the Brexit deal and our resilient results so far this year I remain confident in our EBITDA expectation of at least £7.9bn for 2022/23.”

Despite the confidence of the BT board around performance in 2022/23 analysts highlighted underperformance in the past year. 

“It feels like BT should have fared better than it did through the course of the last year. You would have expected a properly structured business which faced a relatively modest impact from both Brexit and Covid to have outperformed rather than underperformed the wider market,” said Russ Mould, investment director at AJ Bell. 

“However, BT faces fairly severe structural challenges including an unhelpful regulatory backdrop, big spending commitments and yawning black hole in its pension scheme.

At least today’s update did reveal a coronavirus-related boost for its Openreach infrastructure unit as lockdown generated massive demand for fibre broadband,” said Mould.

Shell increases dividend despite swinging to $21bn loss

Liam Roche
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Shell increases dividend despite swinging to $21bn loss

Shell’s performance badly impacted by pandemic

Shell announced a $21bn loss for the year as the pandemic decimated demand for oil.

The results are a significant drop-off from 2019 when the company made a profit of $15bn.

Shell’s results followed its rival BP which confirmed an overall loss of $5.69bn in 2020 earlier this week. 

Shell’s Q4 profit was down by 87% year-on-year as energy consumption remained low. 

In mid-morning trade Shell’s share price was largely flat, down to 1,330p. The Shell share price was as high as 1,503p in January 2020. 

Shell has been constrained by the collapse in oil demand throughout the year which pushed prices below zero for the first time in history. 

Having cut its dividend in April for the first time since the second world war, the company expects its interim dividend to be $0.1735 per share.  

The first quarter dividend for 2021 is expected to be announced on April 29. 

Chief executive officer of Shell Ben van Beurden reassured shareholders of Shell’s commitment to its payouts. 

“We are committed to our progressive dividend policy and expect to grow our US dollar dividend per share by around 4% as of the first quarter 2021.”

van Beurden reflected on the company’s performance following a testing year.  

“2020 was an extraordinary year. We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy,” he said.

In better news for the industry, oil prices rose by just under 2% this week as reports showed US crude stockpiles to be at the lowest point since March. 

The oil market was also aided by news that Joe Biden’s $1.9trn stimulus package is making progress in the US Congress.

Paypal profits surge over 200%

Safiya Bashir
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Paypal profits surge over 200%

Thanks to a surge in online shopping over the past year, Paypal reported a rise in Q4 profits.

For the last three months of the year, the group’s profits increased by 209% to $1.6bn (£1.2bn). Revenues also surged by 22% to $6.1bn.

Paypal added 73m net new active accounts and total payment volumes hit $936bn.

President and chief executive Dan Schulman commented: “Paypal delivered record performance in 2020 as businesses of all sizes have digitized in the wake of the pandemic. In this historic year, we released more products than ever before and have dramatically scaled our acceptance worldwide, giving our 377m consumer and merchant accounts even more reasons to use our platform.”

For 2021, Paypal has forecast profits of $25bn. Shares increased in after-hours trading by over 5% to 265,82. Shares in PayPal have gained 40% over the past three months.

Wolfe Research analyst Darrin Peller wrote in a note: “We see the (net-new active) guidance as key given concerns among some investors that the (over 70 million) added in 2020 was a pull-forward and would cause a material retrenchment in 2021.”

KPMG partners set to take an 11% pay cut

Liam Roche
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KPMG partners set to take an 11% pay cut

Firm planning move from Canary Wharf headquarters

KPMG will reduce the pay of its partners by 11% to alleviate the impact of the coronavirus pandemic. 

The financial services company also expects to downsize a number of its offices including its Canary Wharf headquarters. 

KPMG announced today that its profit fell by 6% to £288m from £306m the year before. 

The average pay for its partners dropped from £640,000 to £572,000 as job protection remained a priority for the Big Four accounting firm. 

KPMG chose not to furlough any members of staff at the height of the pandemic and even continued to hire at all levels of the business. The costs around moving UK staff to home working also took its toll on the company’s balance sheet. 

Prior to the lockdowns coming into effect, KPMG was experiencing “high single-digit growth”. 

However, many of the firm’s services, including consulting and deals advisory, are now less in demand, as the pandemic takes its toll in the UK economy. 

Audit was the only division within the firm to see a revenue increase to £606m, up 3% from the year before.

Bill Michael, senior partner and chair of KPMG, maintained a positive outlook while asserting the company’s commitment to protecting its staff. 

“I am more optimistic than I was two months ago but the business is being as prudent as possible and making sure partners take a bigger hit than anyone else. It is about the wellbeing of our staff and our people,” Michael said.

Partners from across the sector have taken similar pay cuts amid the Covid slowdown.

In September of 2020 partner pay at Deloitte fell by 17% despite revenues increasing by 10%. While PwC announced towards the tail end of last year that partners would be taking 10% pay cuts.

Great Point Entertainment Income Trust to harness TV and Film productions with £200m IPO

UK Investor Magazine
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Great Point Entertainment Income Trust to harness TV and Film productions with £200m IPO

Great Point Entertainment Income Trust is set to raise £200m in an IPO for a first of its kind trust focussed on TV and Film productions.

The trust will be managed by Great Point Investments who will utilise a wealth of experience in the sector, investing £488m in projects such as Doc Martin for ITV, Line of Duty for BBC and Brexit for Channel 4 since 2013.

The Trust will provide investors with exposure to the productions from broadcasters like the BBC, ITV, Sky and Channel 4 in addition to streaming platforms such as Netflix and Amazon Prime Video.

Great Point Entertainment Income Trust will build a portfolio of senior debt secured against pre-sold IP rights.

The income mandate of the trust is highlighted with a target 6% dividend yield as the trust invests the lions share of IPO proceeds over a 9 month period.

“We are excited to offer investors access to the production of film and television content through a London-listed investment trust,” said Norman Crighton, Chairman of Great Point Entertainment Income Trust PLC.

“This is the first of its kind and an opportunity for investors to tap into a market that has proved resilient to both economic downturns and COVID-19, whilst being anchored by some of the world’s biggest media and technology businesses such as Amazon, Netflix, Disney, Apple, Google and Facebook.”

“GPEIT will provide investors with an attractive income stream and modest capital growth achieved through a portfolio of senior loans secured against pre-sold IP rights to finance the production of film and television content. In doing so, GPEIT provides a robust alternative income strategy uncorrelated to traditional financial markets which is highly appealing to investors.”

“In Great Point Investments Limited, we have an investment adviser with an unrivalled expertise and track record in delivering successful projects in this sector and we are excited to offer investors access to a listed investment company under their stewardship.”

Reddit market frenzy: lessons and implications for investors

UK Investor Magazine
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Reddit market frenzy: lessons and implications for investors

GameStop has dominated headlines over the past week having staged a tremendous rally driven by Reddit forums. This rally has now violently reversed and we reflect on the implications for investors.

Alan Green joins the Podcast to explore the notion of herd mentality in markets and how relationships between financial institutions played out during this period of heightened volatility.

We look at whether the Reddit share frenzy was a consequence of frothy valuations elsewhere in the market or a stand alone phenomenon.

We also pay attention to three UK shares in Bidstack (LON:BIDS), Power Metal Resources (LON:POW) and Lexington Gold (LON:LEX).

Lloyds share price: dividend hopes as full year results near

Liam Roche
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Lloyds share price: dividend hopes as full year results near

As Lloyds (LON:LLOY) prepares to report its financial results on 24 February 2021, there is continued speculation on what the outlook is for the bank over the coming year. Investors will be playing close attention to announcements around dividend payouts and the effects of the coronavirus pandemic on the bank.

Lloyds share price

Lloyds shares are sitting at 34p, down from just under 60p per share a year ago. The Lloyds share price is also down from a more recent high of 39.5p in November 2020. While Lloyds shares have not performed well since the turn of the year, there are causes for optimism due to renewed hope for shareholder payouts, in addition to the rollout of vaccines across the UK.

Lloyds dividend

In April 2020, as lockdowns came into effect across the UK, Lloyds did not make any quarterly or interim dividend payments to its shareholders. The company reasoned that this was to “serve the needs of the businesses and households through extraordinary challenges presented by Covid-19”. 

The bank’s last dividend of 1.12p per share was paid out to shareholders on December 31 2019. Lloyds’ dividend yield, the ratio which shows how much a company pays out in dividends relative to its stock price, was at 1.8%. This was down from 6.2% at the end of 2018. 

Nine months ago, Lloyds was required to halt dividends in order to maintain capital levels by the Bank of England. However, the regulator has now given Lloyds the go-ahead to make shareholder payouts as vaccines give hope to the UK economy. 

It is not quite full-steam ahead for Lloyds and the other big banks, whose payouts will be scrutinised by the Prudential Regulation Authority (PRA). The regulator will be keeping a close eye on the Lloyds to ensure it has abided by its “rigorous remuneration regime in an appropriate fashion”.

Amazon founder Jeff Bezos steps down as CEO

Liam Roche
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Amazon founder Jeff Bezos steps down as CEO

Bezos ‘to focus my energies and attention on new products and early initiatives’

Founder of Amazon Jeff Bezos has stepped down as chief executive of the company he founded nearly three decades ago from a garage. 

Bezos, 57, said the decision will give him “time and energy” to focus on other initiatives. 

The richest man in the world will be replaced by Andy Jassy, who heads up the company’s cloud computing unit, Amazon Web Services. 

In an email sent to the company’s workforce, Bezos announced the transition, and rallied behind his successor. 

“I’m excited to announce that this Q3 I’ll transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO. In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. 

Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.”

Jeff Bezos turned amazon into one of the most formidable companies in the world. 

From its inception as an online book retailer in 1994, Amazon now employs around 1.3 million staff across the world.

The company continues to defy expectations, posting revenues of $125.6bn in Q4, a rise of more than 40% compared to one year before.  

“When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition,” Bezos said.

Andy Jassy, who will replace Bezos at the helm, joined Amazon in 1997 following his MBA from Harvard University, where he graduated cum laude.

Jassy founded Amazon Web Services, a set of global cloud-based products that creates infrastructure used by millions of governments, companies and schools.

GSK enters collaboration to develop new vaccine

Liam Roche
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GSK enters collaboration to develop new vaccine

The vaccine aims to address various strains of Covid-19

GSK’s share price rose by 0.75% at opening on Monday upon news that the company would be developing a vaccine. 

GSK and CureVac, the German pharmaceutical company, have joined forces to develop the next generation of mRNA Covid-19 vaccines.

The company is targeting availability in 2022, subject to regulatory approval, with development to begin immediately. 

The €150m collaboration could lead to a vaccine with a multi-valent approach, which would be able to target multiple emerging variants. 

New variants of Covid-19 have emerged in Brazil, South Africa and the UK, as the world continues its fight against the infectious disease.

Emma Walmsley, chief executive officer of GSK, believes the vaccine that will be developed by this research project could play a leading role in the fight against the coronavirus pandemic. 

“We believe that next generation vaccines will be crucial in the continued fight against COVID-19. This new collaboration builds on our existing relationship with CureVac and means that together, we will combine our scientific expertise in mRNA and vaccine development to advance and accelerate the development of new COVID-19 vaccine candidates,” Walmsley said.

GSK will also support CureVac’s efforts to manufacture up to 100 million doses of the vaccine candidate CVnCoV IN 2021. 

Franz-Werner Haas, chief executive officer of CureVac, welcomed GSK’s expertise.

“We are very pleased to build on our existing relationship with GSK with a new agreement to jointly develop next generation mRNA-based vaccines, in addition to our current candidate CVnCoV. With the help of GSK’s proven vaccine expertise, we are equipping ourselves to tackle future health challenges with novel vaccines,” Haas said.

GSK bought a 10% stake in CureVac in 2020, in a bid to fight coronavirus and other future outbreaks.

Investing in the future of your memories

UK Investor Magazine
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Investing in the future of your memories

Sponsored by Emortal

We are all pumping out our data into the cloud. Some of it we’d like to keep forever. Emortal is the startup that wants to help you organize, protect, preserve and pass on your “digital legacy” and protect it from becoming unreadable, otherwise known as “bit-rot.”

Emortal, a UK-based digital family content solution, has so far secured more than £1.5 million through its equity crowdfunding campaign on Crowdcube. The funding round, which originally sought to raise £1 million, has already attracted over 500 Crowdcube investors and is looking to hit £3 million before the end of the raise.

Founded in 2007, Emortal enables families to preserve and pass on something very important; their digital legacies.

“How we create a sustainable business with both the technical means to preserve aging family content and the fiscal means to pay for the continuous curation of our digital legacies long after we are gone is the key issue. Emortal is the first viable solution to this concerning issue” says Colin Culross, the Founder and CEO. “The cornerstone of the Emortal proposition is to tie data preservation in with digital legacy protection to ensure that our digital memories are safe and accessible for generations to come.”

Culross also noted that the solution has been designed to integrate preservation technology with a future proof legacy fund to pay for the continuous updates needed to ensure that its “digital family heritage” lasts for generations to come.

Emortal was subject to an acquisition offer of USD$12.1 millon by Microsoft in 2010. “It is our ambition to launch in Q3 2021 – and to be able to capitalize on further big tech sector interest. Funds from the Crowdcube round will be used to continue the growth and development of the Emortal solution” says Culross.

Emortal, which has been in engineering R&D for more than 10 years, has raised £4.2 million from “friends and family.” It is now looking to raise up to £3.0 million in crowdfunding on the U.K.’s Crowdcube platform, following what it says was a successful BETA test.

The company will use Google architecture to preserve digital memories — photographs, documents, correspondence, videos, interviews and more – indefinitely into the future. The idea is that this will ensure that as operating systems, devices and tech evolves, your entire digital legacy will remain safe, secure and accessible — to only those you choose.

The platform is now set to be launched in the U.K. and U.S. in Q3 this year and will be designed for occasional considered use, for example when taking a picture at a christening, rather than saving every photo you take. It will charge a flat, standard subscription fee of £4.99 a month.

Colin Culross, founder and CEO of Emortal said: “We are keen to use the Crowdcube platform for this raise because Emortal is a service designed for ALL families. We believe the most powerful way for the business to grow is to have thousands of our customers investing in the business.”

The company intends to use the funds from the equity funding round to continue to grow and develop its solution. It operates with the ambition to launch the Emortal solution in Q3 2021 and capitalise on the big tech sector interest. Emortal will be launched in the US and UK in Q3 this year.

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