RBS swing into profit, financial position improves

Raymond Jones
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2,579
RBS swing into profit, financial position improves

Royal Bank of Scotland (LON:RBS) have continued their already positive year with a third successive quarter of profit. For the third quarter RBS made a profit of £392 million, pushing their profit for the year up to £1.33 billion.

Some quarters have suggested this leaves RBS in a strong position to finish the full-year in profit for the first time since their state funded bailout in 2008. RBS themselves have however expressed caution as they are yet to conclude a number of litigation cases in the US, as well as being under a fresh investigation by the Financial Conduct Authority over mistreatment of small business customers. The firm have already made provisions for these cases, whilst also warning that there may be the need for further substantial provisions. RBS has seen their net interest margin decline for both the third quarter and first nine months of the year, compared to the year previous. In the third quarter net interest margin fell five basis points to 2.12% and fell 2 basis points for the first nine months to 2.16% One off payments for PPI claims was £115 million for the quarter, leaving them with £979 million of provisions. This is an increase in payments from £81 million in Q2 2017, which was expected as new FCA media campaigns has had a significant impact on the number of claims. RBS’ long term target for Common Equity Tier 1 ratio is 13%, managing to be above this target for the quarter as it increased by 70 basis points to 15.5%. This strong performance reflected “continued RWA (Risk-Weighted Asset) reduction, the attributable profit and a reduction in the prudential valuation capital deduction, broadly offsetting the Capital Resolution losses taken in the quarter”. The group, that also owns Natwest, stated firm progress in all four of the target areas they have identified. Income has grown 7.5% for the year to date, operating expenses has been reduced by £708 million, capital usage has been reduced and they are moving toward resolving legacy issues.  

RBS shares have remained close to their opening price, increasing 0.4% to 282p at the time of writing, despite early strong performance.

Shire Pharmaceutical gains approval from European Commission

Raymond Jones
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1
Shire Pharmaceutical gains approval from European Commission

The biotechnology company Shire PLC (LON:SHP) has had a label extension approved by the European Commission. The label extension grants a new indication for FIRAZYR, allowing it to be used by adolescents and children aged two and older.

FIRAZYR is used to treat people with hereditary angioedema (HAE), which is a rare genetic diseases that specifically causes attacks of localised oedema. HAE is thought to affect one in 10,000-50,000 people worldwide.

Despite the label extension of FIRAZYR Shire have seen their share price drop 2% to 3517p. This is in anticipation of Shire delivering their third quarter results for 2017 tomorrow (October 27).

Analysts expect revenue for the rare disease specialist to rise 8% and earnings per share to increases by 15% on the previous year. Shire drugs Cinryze and Lialda may however perform worse than expected. Cinryze has suffered from a supply shortage and Lialda has been experiencing competition from Zydus.

How might the Autumn Budget affect AIM companies?

Miranda Wadham
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0
How might the Autumn Budget affect AIM companies?
Chancellor Philip Hammond is set to reveal his Autumn Budget next month, with all eyes on his announcements as the government struggles to deal with Brexit negotiations. A freeze on tuition fees and a £250 million spend on Brexit are rumoured to form a major part of the Budget – but what about the finance sector? According to Helena Kanczula, Corporate Tax Director at Blick Rothenberg, there could be a large impact on AIM companies.
Some changes may be on the cards for the Enterprise Investment Scheme, including speculation that the relief available for investors through the scheme may be restricted. Investments in AIM-listed groups will often benefit from EIS relief where the necessary conditions are met, and this acts as a significant incentive to wealthy investors who might wish to invest in this market; therefore, the withdrawal or reduction of relief could therefore make it harder for smaller AIM-listed groups to raise the finance necessary for growth and job creation. Another area that may affect AIM companies in particular is a change to corporation tax. For AIM-listed groups, the costs and resource involved with tax compliance represents a significant burden. “Until recently many AIM-listed groups had a dedicated HMRC relationship manager”, said Kanczula, “but the withdrawal of this facility for all but the largest groups has increased compliance costs for many companies. The reintroduction of an interface between businesses and HMRC would be greatly welcomed by AIM-listed groups and their advisors”. The Apprenticeship Levy has also had a significant impact on larger AIM-listed groups. Evidence suggests that many companies in the AIM market are unable to access the funds necessary to train apprentices and so the Levy merely represents an additional tax burden. “More flexibility around the structure of training carried out by apprentices would be welcomed as many groups are keen to take on apprentices but operate in industries that do not require the level of structured training currently necessary to qualify”, Kanczula said.

Greatland Gold share price sink despite discovery of new gold potential at Panama project

Miranda Wadham
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1
Greatland Gold share price sink despite discovery of new gold potential at Panama project
Precious and base metals exploration company Greatland Gold (LON:GGP) saw shares fall nearly 2 percent on Tuesday, despite announcing the discovery of additional gold potential at their Panorama project. The project, located in the Pilbara region of Western Australia, covers a total area of 130 square kilometres and is prospective for both gold and cobalt mineralisation. In its Northern license area, it found multiple historic rock chip samples with an elevated gold response along a 3.2 kilometre zone including results of 10.5g/t, 14.0g/t, 14.5g/t, 20.0g/t and 66.0g/t gold. Greatland’s technical team has completed field reconnaissance along this zone and has confirmed that visual indications of mineralisation are present. In its Southern license area , detailed government geological mapping confirms the presence of lower Fortescue Group coarse grained sandstones and conglomerates at two locations. Gervaise Heddle, Chief Executive Officer, commented: “Historic rock chip and stream sampling results suggest that there is a 3.2 kilometre long zone of gold mineralisation in the northern licence area that extends along strike from historical gold mines immediately to the north of our northern licence application. “In addition, a review of detailed government geological mapping has confirmed the presence of coarse grained sandstones and conglomerates adjacent to the Mt Roe Basalt at two locations in the southern licence application. This is the equivalent geological setting to that of the Purdy’s Reward and Comet Well prospects currently under the operation of Novo Resources Corp. (TSV-V:NVO).” Shares in Greatland Gold are currently trading down 1.68 percent at 2.34 (1243GMT).

Carillion share price leaps 20pc after update on progress

Miranda Wadham
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0
Carillion share price leaps 20pc after update on progress
Carillion shares soared over 20 percent on Tuesday, after it updated investors that it had agreed new credit facilities and deferrals on some of its debt repayments. The troubled company said on Tuesday that it had agreed facilities totaling £140 million, which was “fully available to draw down now”. The new funds comprise a £40 million senior secured revolving facility maturing on 27 April 2018, secured over shares in certain of the group’s subsidiaries and over certain of the group’s assets, and a £100 million senior unsecured revolving facility maturing on 1 January 2019. Carillion also announced that it has sold a “large part” of its UK healthcare facilities in a deal worth £50.1 million, adding that it hopes to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018 in an effort to get the group’s finances back on track. CEO Keith Cochrane said: “We remain focused on executing our disposals and cost savings programmes while continuing our discussions with our lenders and other stakeholders to explore further ways of strengthening Carillion’s balance sheet.” The outsourcing group has seen its share price sink of late, plunging further last month after it reported a £1.15 billion loss to investors. Its share price rose on Tuesday in the wake of the announcement, and is currently trading up 9.49 percent at 47.90 (1054GMT).

Unilever shares sink 5pc as poor weather affects Q3 sales

Miranda Wadham
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0
Unilever shares sink 5pc as poor weather affects Q3 sales
Unilever’s (LON:ULVR) share price fell over 5 percent on Thursday, after natural disasters in the Americas and poor weather in Europe negatively affected its third quarter figures. The company reported a 1.6 percent decline in turnover to €13.2 billion in the third quarter, with the stronger euro having a currency impact of 5.1 percent. Underlying sales growth rose 2.6 percent, weaker than the previous quarter’s 3 percent rise and below analysts expectations. However the company experienced a surge of growth in its Emerging Markets division, in which underlying sales rose by 6.3 percent. In a statement, Unilever’s CEO Paul Polman said: “For the full year, we continue to expect underlying sales growth within the 3 – 5% range, an improvement in underlying operating margin of at least 100 basis points and strong cash flow.”\ Shares in Unilever, who recently fought off a takeover from American food giant Kraft Heinz, are currently trading down 4.99 percent at 4,321.17 (1516GMT).

Interserve shares plunge over 30pc on second profit warning

Miranda Wadham
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0
Interserve shares plunge over 30pc on second profit warning
Construction company Interserve (LON:IRV) saw shares tumble over 30 percent on Thursday, after a slow third quarter led to a profit warning. Interserve said it now expected profits for the second hald of the year to be about half of those in the same period last year, adding that there was be a “realistic prospect” it will breach its banking covenants. “We now believe there is a realistic prospect that we will not meet the net debt to ebitda test contained in our financial covenants for 31 December 2017,” Interserve said on Thursday, causing the stock to plunge over 30 percent in early morning trading. The stock has now fallen by over 80 percent this year, after the company issued a first profit warning last month. However, chief executive Debbie White remained confident about the group’s potential, saying on a conference call with analysts that there was “considerable potential for business improvement across the company”. Interserve shares are currently trading down 25.56 percent at 67.00 (1501GMT).

Office company IWG share price plunges 34pc

Miranda Wadham
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0
Office company IWG share price plunges 34pc
Workspace company IWG (LON:IWG) saw shares plummeted over 30 percent on Thursday morning, after saying profit for 2017 would come in “materially below market expectations”. Trading in London was hit by “weakness”, with the firm, formerly known as Regus, struggling to beat off competition from newer co-working spaces such as WeWork. The company is now predicting full-year operating profits of between £160 million and £170 million, saying that spending plans may impact on the company’s short term growth. In a trading update, IWG said sales had not been as high as expected over the quarter and that “the year to date reduction in mature revenues to 30 September 2017 has remained similar to that of the first half, with a decline of 1.9 per cent at constant currency.” “This is disappointing, although the very strong uplift in sales activity so far in October, would suggest that this is in part potentially a timing issue”.
Shares in IWG are currently trading down 34 percent at 210.60 (1428GMT).

What is David Cameron up to now?

Miranda Wadham
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0
What is David Cameron up to now?
More than a year after David Cameron stepped down from his post in the wake of a crushing referendum defeat, little has been seen or heard of the ex-Prime Minister. So how does the man who was once tasked with running the country fill his days?

President of Alzheimer’s Research UK

One of the most high-profile jobs announced by Cameron in the wake of his resignation was his presidency of Alzheimer’s Research, which he took at the beginning of 2017. During his time in power Cameron had publicly supported the charity, launching a five-year £100 million Defeat Dementia fundraising campaign at a G7 event in 2014. “Tackling dementia was a major focus while I was Prime Minister, and although improvements in attention and research innovation have been rapid, it remains one of our greatest health challenges,” Cameron said of the announcement. The position is unpaid.

Autobiography

Cameron has also signed a book deal to write an autobiography – previously, all other books about Cameron have been unofficial accounts. The deal is with publisher William Collins, part of the HarperCollins empire, is said to be worth up to £800,000. “I am looking forward to having the opportunity to explain the decisions I took and why I took them. I will be frank about what worked and what didn’t,” David Cameron said of his decision.

National Citizens Service chairman

Shortly after tendering his resignation as Prime Minister, David Cameron announced a role at the National Citizens Service. Cameron championed the beginning of the NCS, a voluntary personal and social development programme for 15–17 year olds, during his premiership, making it legal with the National Citizens Service Act in 2017. This role is also unpaid.

What is the new MiFID II legislation and does it affect me?

Miranda Wadham
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1
What is the new MiFID II legislation and does it affect me?
With impending changes to the finance sector looming, it’s important for both businesses and investors to get to grips with the latest Markets in Financial Instruments Directive, or MiFID II. The EU legislation is the second part of original legislation introduced in 2007, designed to regulates firms who provide services to clients linked to ‘financial instruments’. This includes shares, bonds, units in collective investment schemes and derivative, as well as the venues where those instruments are traded. The changes are currently set to take effect from 3 January 2018, with the end goal of increasing transparency in the sector, lowering the costs of market data and improving efficiency in trading behaviour. As a wide-ranging piece of legislation, MiFID II has the potential to affect a large proportion of firms in the sector.

What does the legislation do?

  The legislation hopes to make the industry more transparent, approachable and increase trust in the sector. The price of financial advice often puts off potential investors, especially millennials; most advisory services charge a standard 3 percent, but there can be hidden ongoing charges of 0.5 to 1 per cent on top. MiFID II will mean firms will have to be clearer about their charge, and provide investors with a complete breakdown of their costs and charges as well as costs associated with managing your investments. They will also need to be more careful about the financial advice they give out, assessing the suitability of their advice and reassessing whether it is still suitable at least once a year. They also need to be more open about how independent they are, and whether they have any conflicts of interest. The recording of both mobile and landline calls will become obligatory, with the information needing to be kept secure for five year period in a secure and professional manner.

How does it affect investors?

As part of the legislation, investment managers are required to keep up-to-date information on their clients. In the next few months before the legislation comes into force, your investment management team will ask your for updated personal details – if you don’t reply to their request, you will be prevented from trading as of January 3rd.
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