Legal & General investors booked profits on Wednesday as the company confirmed positive results for 2022 which included a 12% jump in operating profit and a 5% dividend hike to 19.37p.

Legal & General shares were 2% lower on Wednesday after the company’s shares yesterday touched the highest level since the Liz Truss Gilt debacle last year.

L&G shares are roughly 30% higher from the intraday lows recorded in October 2022.

Their higher group operating profit pays testament to L&G’s risk management as they successfully navigated the mini-budget gilt market volatility without suffering a significant level of disruption to their investment business. Legal & General Investment Management operating profit slipped 19% to £340m and Assets under management also fell.

Despite weakness in the investment management business, Legal & General’s cash generation rose 14% to £1.9bn.

“The outlook for the group looks positive, regardless of the impact of last year’s bond market rout. The group are bringing in new assets at pace and pension funds are increasingly looking to L&G to assume their liabilities in exchange for substantial premiums. The group’s Capital business is growing strongly and has maintained asset quality at high levels to date,” said Steve Clayton, Head of Equity Funds at Hargreaves Lansdown.

“The dividend is set to rise 5% this year and next, in line with the group’s stated policy. That puts L&G onto a yield of approaching 7.8%. It is rare to find businesses that can sustain that level of dividend pay-out, but in L&G’s case, the dividend is well covered by earnings and capital generation.”

Admiral shares were sharply lower on Wednesday after the insurance group said profit before tax slumped 39% to £469m due to higher claims and costs.

The group turnover rose 5% to £3.68bn but it wasn’t enough to offset higher average claims and total insurance claims and claims handling expenses of £2.08bn, an increase from £1.5bn last year.

Admiral shares were down around 5% at the time of writing, have recovered from the worst levels of the session.

Discounting the impact of higher insurance claims, Admiral’s top line activities were far stronger than last year with growth in customer numbers to 9.28m.

However, the softer profit ultimately meant a lower full year dividend of 223p per share compared to 247p last year.

“Markets have punished Admiral shares after a 5% miss on profit before tax, and shares were down around 7% in early trading. Higher claims and an increase in the cost of servicing those claims weighed on performance, though to some degree that was already priced in,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

“What spooked markets was the performance of the international business, which management described as having “very low” average premiums, specifically from Italy and Spain. The result for underwriting is an unprofitable position, with total costs exceeding premiums – though Admiral’s unlikely to be the only insurer navigating choppy waters.”

The FTSE 100 was trading slightly higher as we approached the testimony by the Federal Reserve Chair to Congress on Tuesday.

After weeks of company updates, corporate news flow is beginning to wane as most companies have already reported recent results to the market.

The void of major company earnings has paved the way for macroeconomics to become the focus of markets this week and all eyes will be on the Fed Chair and economic data set for release later this week.

Powell has the opportunity to set the market narrative for the coming weeks in his delivery today.

“With investors on tenterhooks about just how far interest rates will rise, and what effect this will have on the world’s largest economy, Fed chair Jerome Powell’s words in Washington as he speaks to senators later are likely to set off a ripple effect through indices,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Any hint that he’s swirling the latest data and is finding a pattern of inflation that’s stubbornly hard to shift, could trigger fresh falls in equities, and may see bond yields edge up.”

The FTSE 100 was trading 7,957 at the time of writing.

GBP/USD was trading marginally lower as traders bid the dollar higher in anticipation of potentially hawkish comments from Jerome Powell later today.

Recent robust economic data has started to build a consensus the next Fed rate hike will be a 50bps increase – higher than the 25bps hoped for by equity traders at the beginning of 2023.

The lower cable rate provided some support for the FTSE 100s overseas earners. AstraZeneca, Diageo and HSBC were up between 0.5% and 1% on Tuesday.

Melrose was the FTSE 100’s top riser, up 3.6%, ahead of its ex-dividend date this Thursday.

Greatland Gold (LON:GGP) is a mining development and exploration company that is focused upon precious and base metals.

The company’s flagship asset is centred upon its 30% interest in the ‘world-class’ Havieron gold-copper deposit in the Paterson region of Western Australia, that was discovered by Greatland and is presently under development in a Joint Venture with the ASX gold major Newcrest Mining.

Havieron is located some 45km east of Newcrest’s operating Telfer mine, which has been operating for over 37 years.

In September 2016 Greatland acquired the prospect from a private miner for A$250,000.

The Havieron licence area, was previously relinquished by Newcrest after some exploration activity in the late 1990’s had intersected mineralisation.

Subsequently the company identified around 50 iron oxide copper gold targets in the area and reported its first drill results in 2018.

In March 2019 Newcrest, Australia’s largest gold producer, agreed a $65m farm-in agreement, taking in exploration work and the delivery of a Prefeasibility Study to assess the potential of a mining project.

It is intended to leverage the existing Telfer infrastructure and processing plant, giving access to Telfer will de-risk the development, helping to reduce capital expenditure and lowering the project’s carbon footprint.

Since the initial inferred mineral resource estimate of 4.2Moz in Q4 2020, the mineral resource has grown considerably, advancing over 50% by Q1 2022 to 6.5Moz at 2.2 g/t Au-eq which underpins a long mine life.

The box cut and decline to the orebody commenced in February 2021 and continued to accelerate with record advancement achieved in the December 2022 quarter.

In August 2022, Newcrest released an updated Mineral Resource for Havieron for 85Mt at 2.0g/t Au and 0.26% Cu for a total of 5.5Moz of Au and 222kt of Cu, based on a November 2021 drilling cut-off date. 

Other Interests

The company has multiple projects across Australia with a strategy to become a multi-commodity mining company of significant scale. It is focused on safe, low-risk jurisdictions and is strategically positioned in the highly prospective Paterson region.

The group has a 49% interest in the Juri Joint Venture, which consists of the Black Hills and Paterson Range East exploration licences in the prospective Paterson region and is operated by Greatland under a joint venture with Newcrest.

Newcrest has the right to earn up to 75% in the project by spending up to A$20m in total as part of a two-stage farm-in over five years.

Scallywag, 100%, is adjacent to the Havieron mining lease and contains 20 km of strike of the Yeneena Group metasediments directly north-west of Havieron.

The Greater Paterson, 100%, includes the Rudall, Canning, Pascalle, Wanman and Salvation Well exploration licences. The licences collectively cover more than 1,000 sq km of ground which is considered prospective for intrusion-related gold-copper systems and Havieron and Telfer-style deposits.

Ernest Giles, 100%, is located in central Western Australia, covering an area of approximately 1,950 sq km with approximately 180 km of gold prospective geology. The eastern Yilgarn Craton is one of the most highly mineralised areas in Western Australia and is considered prospective for large gold deposits.

Panorama, 100%, consists of three adjoining exploration licences, covering 157 sq km in the Pilbara region of Western Australia. The tenure is considered to be highly prospective for gold and cobalt.

Bromus, 100%, is located 25 km South-West of Norseman in the southern Yilgarn region of Western Australia. Bromus consists of two licences, covering 87 sq km of under-explored greenstone and intrusive granites of the Archean Yilgarn Block at the southern end of the Kalgoorlie-Norseman belt.

Firetower and Warrentinna, Tasmania, 100%. Firetower is located in central north Tasmania and covers an area of 62 sq km. Warrentinna is located 60 km North-East of Launceston in north-eastern Tasmania and covers an area of 37 sq km with 15 km of strike prospective for gold.

Newcrest and Newmont – bid situation

On 6 February 2023, Newcrest announced that it had received a conditional and non-binding indicative proposal from the Newmont Corporation to acquire 100% of the issued shares of Newcrest by way of a scheme arrangement. 

It is claimed that foreign ownership of the Australian gold industry could exceed 50% if Newmont succeeds in its takeover of Newcrest.

Wyloo Metals – strategic placement

On 12 September 2022, Greatland entered into an agreement for a strategic equity investment with Wyloo Metals, a privately owned minerals investment company. Wyloo subscribed for 430,024,390 shares for A$60m (£33.5m), at 8.2p per share, Settlement occurred on 14 October 2022 at a converted share price of 7.8p per share.

As part of the equity subscription, a further £35m may be raised from Wyloo in the future through the conversion of warrants with a strike price of 10p per share.

Latest Results – Interims 6^th March 2023

The company reported that the six months to end December 2022 saw the group cash position at £59.8m (June 2022 £10.4m) which reflected the fund raising in the period.

Gross equity proceeds in the first half year were £63.3m, which included £33.5m from Wyloo Metals, the private mineral investment company.

In the period the group signed off a debt commitment letter for £130m with ANZ, HSBC and ING in order to support the future Havieron development.

Total debt was £43.5m (June 2022 £43.1m), while investment in the development of Havieron was £12.2m, with exploration expenditure of £2.7m (£3.1m).

The operating loss was £3.5m (£2.9m), while the statutory loss was £13.3m.

The group’s net assets stood at £62.8m at the end of the first half.

A further £0.4m was spent on exploration and evaluation for drilling to test geophysical targets outside the known Havieron system.

A total of 283,084 metres from 342 holes have now been drilled to date, with all the latest completed holes continuing to intersect mineralisation, and 19 reporting significant mineralisation.

Analyst Opinion – Target Price range 19p – 20p

Analysts Richard Hatch and Charlie Rothbarth, at Berenberg, view the results as neutral and do not expect them to move the share price.

They consider that Greatland Gold offers near-term catalysts, both around Havieron (ie a feasibility study, drilling results and resource expansion potential) and elsewhere (exploration in the Paterson region, business development).

They base their 19p Target Price on the Newcrest evaluation and the assumption of further ounce delineation.

“Given that Greatland is at the development stage of the asset cycle, there is little in the financial results that will move the shares, we think.”

At Canaccord Genuity their analysts, Alex Bedwany and Paul Howard, have a 20p Target Price. They consider that the results are of limited value given the pre-production status of the Havieron gold project.

They note that progress on the Havieron decline continues and, in their view, the project is fully-funded.

“The key upcoming catalysts/pieces of news flow are:

1) the completion of the DFS (which we note will likely only represent a microcosm of the project’s ultimate potential),

2) continued drilling to expand the resource size (currently sitting at 85 Mt @ 2.0 g/t & 0.26% Cu), and

3) a potential agreement in the Newmont-Newcrest takeover discussions, which may render the Telfer plant as peripheral to the overall portfolio and offer GGP the chance to acquire the plant and 100% of the Havieron project.”

Conclusion – climbing back above 10p

With experienced management this group is now scaling up its interests. It has strengthened up its operations.

With solid strategic partnerships that have put forward long-term funding, the group now has sufficient debt facilities for its future development.

There is no doubt that the company has massive potential, but it will take some time to come to fruition – but then nothing is quick in the mining business.

It is going to take a long time for the group’s shares to recover to its December 2020 peak of 37p, however at the current 7.4p they should really gain more investor interest.

A year ago, they were trading at around the 17p level and there is so much more to the company than this time last year.

The group’s planned listing on the Australian Stock Exchange this year should prove beneficial to its overall marketability.

A climb back above the 10p line appears very possible, in anticipation of the declaration of its Feasibility Study due later this year.

Greggs total sales for 2022 grew 23% to £1,513m compared to 2021 levels as keeping stores open later into the evening helped boost sales as customers sought out cheaper on-the-go dining options.

Growth in products such as pizzas and chicken goujons were integral to Greggs’ group sales increase as customers returned to their stores in greater numbers.

Greggs 2022 like-for-like sale grew 17.8% and operating profit for the year rose 1.8% to £148.3m.

The bakery chain continued their expansion strategy with 147 net new openings to total 2,328 shops at the end of 2022. Key new sites include central locations including Liverpool Street Station and Leicester Square. Greggs now has 500 shops open until 8pm or later.

In terms of their supply chain, the company alluded to a challenging cost environment this year and last. To combat this, the group has passed on cost to customers where possible, conscious of their pricing and attractiveness to a wide audience.

“It’s not just sausage rolls that are flying off Greggs’ shelves these days, pizza and chicken goujons join the party, as later shop openings and a push in the delivery game yield results. It’s later in the day that Greggs is seeing the strongest sales growth and it’s leveraging the trend well, with 500 shops open until 8pm and plans to extend that further over 2023,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

“Delivery volumes have been normalising to approximately 5% of sales, but management remains confident longer-term opportunity remains intact – we’re inclined to agree. Click + Collect will be a key focus in 2023, and the Greggs app should help drive engagement with customers, which is seeing strong growth with 1.1 million active customers in Q4.”

Greggs has invested in a new pizza production plant in Enfield and is expanding their pastry capacity.

Global markets are gearing up for a major week of economic data and central bank speeches which have the potential to rock equity markets after the strong start to 2023.

Federal Reserve Chair Jerome Powell will deliver a two-day testimony to Congress this week and will be pressed on the scale of future rate hikes. Then on Friday, markets will receive the latest jobs numbers from the United States.

Equity markets have rallied sharply from the October low on hopes the Fed will pivot to slower rate hikes and eventually rate cuts. The timing of this pivot is crucial to sustaining the current rally.

If the Fed Chair suggests equity traders have prematurely priced in this pivot, one would expect equity volatility to increase. Friday’s jobs number will provide insight into the health of the US economy and will feature heavily in the Fed’s thinking around the next rate decision.

A strong US jobs number reduces the chance of slower rate hikes and increases the chance of disgruntled equity investors.

With this near-term risk on the horizon, the FTSE 100 fell 0.6% to 7,899 in early trade on Monday. US equity futures were pointing to a lower open.

China GDP

The FTSE 100 underperformed Europe as miners dragged the index after China said they were targeting 5% GDP growth.

Miners were among the worst fallers with Anglo American taking 4.2% and Rio Tinto giving up 3.6% of their value.

“Mining stocks helped hold the FTSE 100 back at the start of the week – reflecting disappointment around China flagging a lower-than-expected 5% target for economic growth, and, with its customary lack of transparency, giving no details on how exactly it is going to get there,” said AJ Bell investment director Russ Mould.

Although a 5% growth rate is less than markets are accustomed to, the context of this growth forecasts and lengthy COVID restrictions are put into perspective by RBC Wealth Management as they highlight an increase in underlying economic activity.

“A flurry of activity, to the surprise of many, has returned in China. Public transit ridership and airline travel are increasing, coinciding with lower COVID-19 cases. As the momentum continues, we think benefits for the global economy and select equities will emerge,” said Jasmine Duan, Investment Strategist at RBC Wealth Management.