Legal & General has suffered a further reduction in assets under management in the first half of 2023 as operating profit fell.

The Legal & General Investment Management unit suffered the biggest fall in operating profit on a percentage basis with profits falling 29% to £142m. Their retail business suffered a 22% drop in operating profit.

Legal & General was a victim of the mini-budget debacle last year and there have been questions about the health of the business ever since.

Group assets under management were around 10% in the half year to 30th June with Legal & General Investment Management AuM falling to £1.15bn from £1.29bn.

Despite the poor performance, Legal & General increased their dividend by 5%. The company now yields in the region of 8%.

Legal & General shares were down 4% at the time of writing.

“Life insurer Legal & General may be on track from its own perspective as it beat expectations but the reaction of the market suggests investors aren’t fully on board. The company is one of the biggest investors in the UK stock market and what may be creating disquiet is the material drop in assets under management,” said AJ Bell investment director Russ Mould.

“This is a result of both market conditions but also net outflows. As a domestic facing stock Legal & General could also be vulnerable thanks to the latest wage growth data suggesting inflation is becoming more entrenched. 

“Rising interest rates are a double-edged sword for Legal & General. Higher rates have led to an improvement in the funding situation of final salary pension schemes and this has enabled them to offload their pension risk to insurers like Legal & General through what is known as a bulk annuity agreement more readily. This is helping to generate growth in this part of Legal & General’s business.”

Marks & Spencer was the FTSE 350’s best performer at the time of writing on Tuesday after increasing their profit guidance for the year following a period of strong performance.

M&S has reported strong sales growth in the first 19 weeks of the year, led by its Food business. Food has been an area of strength for M&S for years and investors will be pleased to see the momentum continues.

Like-for-like Food sales grew over 11%, helped by price investments in its ‘Remarksable Value’ range.

Clothing & Home sales also grew by over 6% like-for-like. Growth was higher in stores compared to online. The company said sell through rates have been strong and less stock is going into sales than planned.

While M&S said economic uncertainties remain, they now expect full-year profits to grow compared to 2022-23. The interim results are also expected to show significant improvement versus previous expectations.

M&S said operating margins were being supported by strong performance and its store rotation programme.

“Following on the heels from Next’s recent profit upgrade, M&S has also announced that it expects profit for the year to be above expectations. This is evidence that the UK consumer is still spending, despite the gloomy economic headlines,” said Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club.

“The results are also testament to the group’s progress against its strategy, launched last year. This aims to improve brand perception and designs, reduce discounting, and improve the online offering, while taking a knife to costs and instilling a more entrepreneurial culture. Today’s trading update suggests this plan is resonating with consumers with M&S continuing to increase its market share in clothing and home.

“M&S cautions that there are still “considerable uncertainties about the economic outlook”. 

“Nevertheless, there are more reasons for optimism now than there have been for some time.”

PHSC shares were sharply higher on Tuesday after the health and safety consultancy and services company commenced a £200,000 share buyback programme.

Under the terms of the buyback, the company can repurchase up to 105% of the average share price over the previous 5 business days prior to the announcement. The program will run until September 27, 2023. This is the day before the company’s Annual General Meeting where the buyback authority is expected to be renewed.

The company stated the program will be reviewed on September 27 to determine if it should be extended. A further announcement will be made at that time if the program is continued.

PHSC said the buyback program aims to return value to shareholders by reducing the number of outstanding shares.

PHSC shares were 35% higher at the time of writing on Thursday.

The £28m capitalised Canadian Overseas Petroleum Limited (LON:COPL) group has announced its Second Quarter 2023 Operational and Financial Highlights to end June.

COPL is an international oil and gas exploration, development, and production company actively pursuing opportunities in the United States with operations in Wyoming.

The company operates two production Units: Cole Creek 100% Working Interest, Barron Flats Shannon (Miscible) 85% WI and in addition to 85%-100% WI non-unitised lands between the production Unit boundaries.

The company’s Wyoming operations are one of the most environmentally responsible with minimal gas flaring and methane emissions combined with electricity sourced from a neighbouring wind farm to power production facilities.

The Q2 Update

The Q2 2023 Highlights stated that the upgrading of its gas gathering system, which was the subject of debottleneck restrictions at certain well locations, is now functioning and was commissioned on time and under budget in July 2023. 

Q2 crude oil sales before royalties averaged 1,103 bbls/d as compared to 974 bbls/d in the first quarter of 2023.

Petroleum sales net of royalties were $5.6m as compared to $5.2m in the first quarter of 2023. The increase is due mainly to the increase in oil production partially offset by a reduction in the realised sales price of oil of $71.75/bbl as compared to $74.94/bbl in the first quarter of 2023.

There was a realised hedging gain of $0.1m on butane hedge contracts as compared to $0.5m in the first quarter of 2023.

The Q2 operating netback was $20.93/bbl, before the net realised gain on butane hedge contracts as compared to $17.19/bbl, in the first quarter of 2023. The Q2 figure was boosted by a reduction in operating expenses of $6.98/bbl.

Additionally, the group started several general and administrative cost reductions in Q2, worth $1.9m as compared to $2.3m in Q1. Further cost reductions are expected to be made in the balance of the current year.

Overall, these various improvements have resulted in a growing cash position, some $5.2m at end June compared to the end December 2022 $4.0m.

But still no more news of the special JV

In late July the company announced that it was preparing the basis of a Joint Venture with an established energy company to develop and exploit its oil reserves and resources at its Cole Creek project in Converse and Natrona Counties Wyoming, but which it does not include the company’s Barron Flats Shannon miscible flood EOR project.

As yet we have no further indication of the unnamed JV suitor.

In the late July announcement about the possible JV the group’s President and CEO Arthur Millholland stated that: 

“We have been working on this project for some time. We first identified the potential at Cole Creek before completion of our Atomic acquisition in March 2021. Our acquisition of the complimentary assets of Cuda in July 2022 gave our company full control of the Cole Creek project.

This Letter Of Intent is the first step completed in a process initiated in October of last year after the Cuda acquisition.

The company that has entered into the LOI with us is the best partner we could have of the ones we have considered. We look forward to updating our stakeholders when able as the process proceeds.”

The group’s shares opened 3% better at 4.20p after this morning’s news.

China was driving the FTSE 100 once more on Monday as concerns about the property sector hit London’s leading index.

While European indices such as the German Dax and French CAC carved out respectable gains, the FTSE 100 dipped 0.3% after a major property company missed a bond payment.

The FTSE 100 started the day in the red before staging a rally that was quickly sold into.

“A crisis in the Chinese real estate sector is a story the market has heard before and not one which has typically come with a happy ending for stocks,” said AJ Bell investment director Russ Mould.

“News China property giant Country Garden had missed bond payments as it racked up big losses was always likely to prompt selling in Asian markets and that’s fed through to the European open.

“This latest calamity is reflective of a recovery which has not lived up to expectations since the world’s second largest economy ditched zero-Covid measures at the end of last year. The usual catalogue of names with Chinese ties were under the pump including Burberry, Standard Chartered and Prudential. The one silver lining for the West may be a deflationary impact from China’s woes which helps in the battle against inflation.”

The FTSE 100 has managed to close above 7,500 since 19th July with the round number acting as a level of support over the past two weeks.

However, persistently downbeat news emanating from China and recent weakness in US tech stocks may culminate in further weakness for London’s leading index.

From a technical analysis perspective, the FTSE 100 is starting to form a very neat descending triangle formation which is typically bearish for stocks. A test of the 7,300 region will be fascinating to see if this key level of support can hold, or if the descending triangle is confirmed and we break lower.

UK housebuilders were among the top fallers as the highly cyclical sector faded a recent rally. UK inflation stands at 7.9% and continues to be a headache for the Bank of England who will likely hike rates again at their next meeting.

The all-important FTSE 100 natural resources sector was driving the losses on Monday with names such as Anglo American, Rio Tinto and Glencore giving up between 1%-2.5%.

Negative developments in China have been met with the selling of China-exposed stocks before hopes of stimulus reinvigorate the bulls. This pattern has been consistent, but may not last forever.

On Monday, Premier African Minerals announced the resolution was duly passed at the general meeting held in London on Saturday, and that offtake partner Canmax had agreed to an amended arrangement.

Canmax had previously issued a termination notice and Premier African Minerals were at risk of having to repay and prepayment amount, plus interest.

The amended agreement will be welcomed by shareholders but details on the new Canmax agreement were scant, and Premier African Minerals said they would issue a separate RNS containing the specific terms of the Canmax agreement.

Premier African Minerals shares were up 10% at the time of writing.

The disapplication of the pre-emption resolution proposed at the General Meeting held on 12 August 2023 passed, and Premier African Minerals now have greater flexibility to issue new shares to raise funds.

The company hasn’t announced a specific funding round, but one would expect one to follow in the not too distant future.

Tekcapital shares were higher on Monday after their portfolio company Innovative Eyewear released a new ChatGPT-enable app for their Lucyd smart eyewear.

The new 2.0 app provides users with a range of updates and experience improvements including better connectivity with ChatGPT, voice quality improvements and the addition of the ChatGPT toolbox in the Lucyd app.

Users will now be able to import ChatGPT responses to email through the newly updated Lucyd app and submit long-form queries to ChatGPT.

“We are excited to roll out a significant new upgrade to the Lucyd iPhone/iPad app just a few months after the initial release,” said Harrison Gross, CEO of Innovative Eyewear.

“The new state-of-the-art interface makes ChatGPT easier to use than ever on our smart glasses. We look forward to introducing more features such as a shop, and a pro version of the app which are planned for later in 2023. We believe this will deliver more value to our community and potentially develop an additional revenue stream from users of other hearable devices that want seamless voice access to ChatGPT.”