Energy price cap soars 178% to £3,549

Natasha Doris
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Energy price cap soars 178% to £3,549

The latest Ofgem energy price cap has risen to a bone-chilling £3,549 for customers on a direct debt, representing a 178% spike since October 2021’s limit of £1,277.

“After all the estimations, predictions and finger-in-the-air sums we finally know the extent of the energy price hike everyone is going to endure in October,” said AJ Bell head of personal finance Laura Suter.

“The price cap has risen to £3,549 for everyone paying by direct debit, a whopping 178% increase on last October’s average annual bill of £1,277.”

“Last October we saw an increase of £139 in the average annual bill as a result of the price cap, but this year’s jump is more than 11 times higher at £1,578.”  

The shocking figure comes on the tail end of the Covid pandemic, and with many households still struggling to shake off the impact of two years of lockdowns, the latest price cap news is set to make this Christmas a true winter of discontent.

The war in Ukraine has put a chokehold on energy supplies from Russia, with the rest of Europe bracing for three days of gas shortages via the Nord Stream 1 pipeline as Russia shuts down supplies for unscheduled maintenance.

“There’s no doubt that for many households a bleak winter is ahead – particularly with another price hike on the horizon in January after the regulator pushed ahead with its controversial reformed price cap. Many households can’t afford energy bills at their current level, let alone bills that are thousands of pounds a year more,” said Suter.

“With average annual energy bills at £3,549  that means energy costs are well over a third of the annual state pension of £9,628. Even pensioners getting the full government support available to them of £1,500, are still facing paying more than £2,000 for their energy bills, which many simply won’t be able to afford.”  

Households across the UK are facing surging prices they will not be able to afford, with typical advice to switch off electronics at the base or reduce energy use as much as possible bearing meagre fruit for struggling consumers in the face of eye-watering bill increases.

“Frustratingly for those struggling with energy costs there are no easy hacks or tricks to significantly cut their bills – advice to turn off chargers, or devices not in use, will save pennies and is insulting to families facing such staggering price increases,” said Suter.

“What’s more, with standing charges having risen slightly, it now costs £5.18 per week before you’ve even used a unit of energy.”

“The only option is to cut energy usage as much as possible and hope for further Government support for those struggling the most.”

Are Lloyds shares good value at their current price?

Natasha Doris
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Are Lloyds shares good value at their current price?

Lloyds shares might be losing some momentum heading into the end of summer, however the stock still offers some value in the face of economic uncertainty.

Lloyds has a share price of 44.5p and has fallen 6.8% year-to-date, marking a potential opportunity to swoop in and grab the banking share at decent value.

The stock has a current PE ratio of 5.7 and a forward PE ratio of 6.1, suggesting a slight decline in earnings going forward.

However, Lloyds also has a generous dividend yield of 4.5% and a highly sufficient dividend cover of 3.9, providing capacity for shareholder payouts even in a turbulent market environment.

The banking giant lifted its FY 2022 guidance on its strong HY1 2022 results, including a banking net interest margin expected in excess of 280 basis points from 277 basis points, alongside a return on tangible equity projection of 13%.

Interest rates

The Bank of England is expected to hike interest rates further in an attempt to tame soaring inflation, however this double-edged sword could cut down some of Lloyds shares’ appeal.

Interest rates are likely to rise beyond the current level of 1.75%, and all eyes will be on the Jackson Hole convention this week to see which direction US Federal Reserve chair Jerome Powell will go, potentially setting the tone for the Bank of England at its next interest rates meeting, too.

Rising interest rates mean higher charges for loans, including mortgages, of which Lloyds currently stands as the UK’s largest lender.

However, the cost of living crisis is becoming intense, more sectors are going on strike, consumers are looking at inflation estimates as high as 18% according to Citibank, and Lloyds could be facing a massive volume of defaults and a housing market which is showing signs of a slowdown.

The Nationwide Housing Price Index for July reported a rise in yearly house price growth to 11% against 10.7% in June, displaying a surprising level of momentum for the housing market despite rising inflation.

“Demand continues to be supported by strong labour market conditions, where the unemployment rate remains near 50-year lows and with the number of job vacancies close to record highs,” said Nationwide chief economist Robert Gardner.

“At the same time, the limited stock of homes on the market has helped keep upward pressure on house prices.”

However, Garden also mentioned the hike in interest rates would eventually catch up to mortgage demand, cooling consumer interest in purchasing homes as the cost of living crisis bites.

“We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters,” said Gardner.

“Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates.”

Conclusion

The housing market slowdown does attach some risk to Lloyds shares, however the return on loans on higher interest rates, alongside the bank’s strong financial results, generous dividend yield and secure dividend cover, make Lloyds shares a reasonably well valued company for longer term investors.

Strong third quarter for Benchmark

Andrew Hore
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Strong third quarter for Benchmark

Aquaculture products supplier Benchmark (LON: BMK) increased third quarter revenues by 28% to £36.3m with a particularly strong performance by the genetics division. Management hopes to gain a Euronext Growth Oslo quotation later this year.

Sales of salmon eggs were 39% higher and shrimp sales were 164% ahead from a lower base. Investment in additional capacity in Iceland and the US is beginning to pay off.

Advanced nutrition division revenues were 5% ahead, helped by foreign exchange rate changes. China was the only area where sales were lower in the period.

The animal health division loss is much lower as CleanTreat sea lice treatment sales build up. A change in business and revenue model will hold back short-term profitability.

In the nine months to September 2022, underlying operating profit fell from £7.3m to £5.6m due to higher operating costs, although that is partly down to higher depreciation charges.

Net debt increased during the quarter, but there is still cash and available facilities of £50m. A Euronext Growth Oslo flotation would be accompanied by a small fundraising, but it would not have a large effect on debt levels.

The Euronext Growth Oslo flotation will happen in this calendar year depending on stockmarket conditions. If it happens, next year a move will be made to a full listing on the Oslo Stock Exchange. Benchmark will then consult on whether to maintain the AIM quotation.  

At 41.25p, Benchmark is capitalised at £290.4m.

PetroTal announces seventh consecutive quarter of production growth

Natasha Doris
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PetroTal announces seventh consecutive quarter of production growth

PetroTal shares soared 13.6% to 47.1p in late afternoon trading on Thursday, after the firm announced its seventh consecutive quarter of production growth.

The company reported a record of almost $100 million generated in net operating income in Q2 2022, against $29.6 million in HY1 2021.

PetroTal confirmed crude oil revenues of $118.4 million from $42.8 million, along with a net income of $84.2 million compared to $11.3 million the last year.

The energy firm highlighted an EBITDA of $93.4 million compared to $29.7 million.

PetroTal reached record quarterly production of 14,467 bopd, alongside quarterly sales of 14,616, representing a 25% growth and 5% slide, respectively.

“The outlook for PetroTal’s low sulfur oil remains incredibly robust with recent strong export demand realized,” said PetroTal CEO Manuel Pablo Zuniga-Pflucker.

“Many milestones have yet to be achieved, however, the initiatives remain on track and functioning as planned with more formal updates on this to come in H2 2022.”

US jobless claims fall for second consecutive week

Natasha Doris
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US jobless claims fall for second consecutive week

US jobless claims fell under analyst expectations for the second consecutive week, according to figures reported by the US Department of Labour today.

The organisation announced the advance figure for seasonally adjusted claims was 243,000 for the week ending August 20, representing a drop of 2,000 week-on-week.

Jobless claims for the previous week were revised down by 5,000 to 245,000.

The Department confirmed a four-week moving average of 247,000, representing a growth of 1,500 from the revised average last week.

The average for the week before was revised down by 1,250 to 245,000.

FTSE 100 pulled up by strong Asia and US markets

Natasha Doris
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0
FTSE 100 pulled up by strong Asia and US markets

Strong markets in Asia and the US pulled the FTSE 100 up 0.1% to 7,483.5 in a wave of optimism as investors held their breaths for news from the Jackson Hole convention today.

The Hang Seng soared 3.6% to 19,968.3 and the SSE Composite index gained 0.9% to 3,246.2.

US markets were positive in pre-open trading, with the Dow Jones rising 0.25% to 33,042, the NASDAQ increasing 0.6% to 13,017.7 and the S&P 500 gaining 0.5% to 4,166.5.

Analysts have been projecting a hawkish direction from US Federal Reserve chair Jerome Powell in his speech tomorrow, with markets expecting further aggressive interest rate hikes.

US inflation fell to 8.5% from 9.1% last month, ushering in some hope that the Fed would take a less intensive stance in its next interest rates meeting. However, the US is far from out of the woods, and investors are hedging their bets towards bad news from Powell tomorrow.

“The FTSE 100 took its cue from strong trading in the US and Asia to make gains on Thursday morning as investors await the crunch Jackson Hole summit in Wyoming,” said AJ Bell investment director Russ Mould.

“There’s a lot riding on US Federal Reserve chair Jerome Powell’s address tomorrow. Speculation is running so hot ahead of his remarks that it feels like even subtle variations in intonation could make a difference to jittery markets.”

“Investors appear to be factoring in a pretty aggressive stance from Powell already, anticipating rates going higher and staying there for longer to get inflation under control.”

The markets have been rather quiet over the last week, as investors await Powell’s signal on which direction to move.

“Any suggestion the Fed might ease up a bit would likely spark a very positive response in the markets, but if Powell goes the other way and is even more hawkish than many have been predicting, it could exacerbate the recent wobble in markets,” said Mould.

Energy companies

Shell shares gained 1.6% to 2,330.2p despite coming under fire following Ofgem’s report that the energy giant had overcharged 11,275 customers on prepayment accounts from January 2019 to September 2022.

The company voluntarily reported and rectified the error, and is set to pay £106,000 to UK households and £400,000 to Ofgem’s voluntary consumer redress fund, along with £30,970 in goodwill payments to impacted customers.

“Shell’s overcharging of its retail energy customers won’t have done it any favours during a crisis which is putting its mega-profits under the microscope,” said Mould.

“Tomorrow’s increase in the UK price cap will paint a fuller picture of just how acute the pressure from energy bills will be on households this winter.”

“The scale of the crisis is almost certain to demand a pretty ambitious political solution and one which the energy producers themselves might not like.”

Meanwhile, Centrica shares fell 1.3% to 81p after the British Gas parent company announced it would deliver 10% of its profits to help the most vulnerable UK families survive harsh energy prices over winter this year.

“British Gas owner Centrica is, in rather piecemeal fashion, looking to do its bit to pre-empt action from regulators and the Government, by donating 10% of profits to a fund to help ease the pain for the poorest households,” said Mould.

CRH

CRH hit the ground running as its shares gained 2.6% to 3,213.7p after the building materials company reported a 14% sales growth to $14.9 billion in HY1 2022 against $13.1 billion year-on-year.

The group also confirmed a 21% EBITDA climb to $2.2 billion and a 0.9% EBITDA margin rise, despite inflationary headwinds.

CRH hiked its dividend 4% to 24c for the interim term.

“Building materials firm CRH demonstrated its pricing power as first half earnings were up an impressive 13%, driven by double-digit price increases,” said Mould.

“The company’s exposure to big infrastructure projects provides it with some insulation against any economic downturn.”

Shell under fire for overcharging 11,275 customers

Natasha Doris
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0
Shell under fire for overcharging 11,275 customers

Shell has come under fire for overcharging customers after overcharging 11,275 prepayment customer accounts on its default tariffs.

The energy giant is set to refund £106,000 to UK consumers, which will be issued automatically to overcharged accounts.

Shell will also pay £400,000 to Ofgem’s voluntary consumer redress fund and £30,970 in goodwill payments to households, representing a total payment of £536,970.

The situation was linked to operational errors with the implementation of its default tariffs, which overcharged customers between January 2019 and September 2022.

The fault was discovered by Shell in March 2022. Tariff updates were issued to prepayment metres to alter rates in response to price cap level changes, however not all metres were correctly updated to the revised rates.

As a result, over 11,000 customers paid above rates allowed under the price cap over the period.

Customers will be refunded an average amount of £9.40 by Shell due to the error.

Ofgem commented it would not be taking formal action against the energy company, as Shell self-reported the problem and resolved it “in a timely manner.”

“Ofgem expects suppliers to adhere to the terms of contracts they have with customers, particularly ensuring they pay no more than the level of the price cap,” said Ofgem director Neil Lawrence.

“Households across Britain are already struggling with rising energy bills and living costs. Overcharging by suppliers can cause additional and unnecessary stress and worry at what is already a very challenging time for consumers across the UK.”

“Ofgem is always prepared to work with suppliers who have failed to comply with their obligations, but who have self-reported and are determined to put things right, as Shell has done here. The contributions Shell has made to the redress fund will help to support vulnerable consumers with their energy bills.”

Forward Partners Venture Portfolio Value falls 26.4% on tech stock valuation headwinds

Natasha Doris
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Forward Partners Venture Portfolio Value falls 26.4% on tech stock valuation headwinds

Forward Partners shares were flat at 46p in late morning trading on Thursday, after the firm reported an expected HY1 2022 Venture Portfolio Value at no less than £92 million, inclusive of £6.3 million in new investments in its recent trading update.

The movement represents a 26.4% fall exclusive of its new investments, as previously indicated in its FY 2021 results.

Forward Partners announced an expected NAV per share not less than 83.4p per share, with cash per share expected to be 16.8p.

The company highlighted valuation headwinds from the slide in share prices at high growth tech stocks as the primary driver in the drop of its Ventures Portfolio Value.

The group confirmed the performance of its underlying portfolio remained strong, with an average forecast revenue growth of its top 15 portfolio investments by Fair Value of 40% to 60% for FY 2022.

Forward Partners added over 80% of its top 15 portfolio investments were anticipated to be on the path to breakeven without any additional fundraising, or had sufficient recourses to negate the requirement for fundraising for at least 18 months.

Meanwhile, the company made £6.3 million in investments over the financial term, including 12 follow-on investments worth £4.9 million and new investments in two high growth, early-stage technology groups, Baselime and Sonrai, at £1.4 million.

Forward Partners noted its top 15 portfolio investments accounted for 69% of its Venture Portfolio Value, with the most valuable company making up 9.8%.

The company mentioned investment in its top 15 companies to date totalled £25.8 million.

AIM movers: Greatland Gold falls after placing and ex-dividends

Andrew Hore
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AIM movers: Greatland Gold falls after placing and ex-dividends

Greatland Gold (LON: GGP) increased the proceeds from the placing announced yesterday from £25m to £29.7m. The placing price is 8.2p. Managing director Shaun Day is acquiring 714,000 placing shares, taking his stake to 1.089 million shares. The shares fell 8.6% to 8.5p.

Problems with the Saturn Banks phase 1 development have offset the initial revenues generated by Independent Oil and Gas (LON: IOG) in the six months to June 2022. This means that full year gas production guidance has been reduced from 45-60mmcf/day to 30-50mmcf/day. Operating costs will be higher. The interim revenues were £30.2m and full year revenues of £86.2m are forecast and that could generate pre-tax profit of £50m. The share price slumped 18.8% to 31.9p.

Angus Energy (LON:ANGS) is the best performer on the day with a 26% rise to 1.575p. Angus Energy has produced well head gas at its extraction and processing facility at Saltfleetby. Well B2 is producing five million standard cubic feet of gas per day, which is more than expected.

Record quarterly production of 14,467 barrels of oil a day helped PetroTal Corp (LON: PTAL) to generate net operating income of $98.6m in the second quarter of 2022. Free cash flow was $69.4m in the first six months of 2022. Production levels continue to increase, and it got near to the 26,000 barrels of oil a day capacity of the central processing facility. The PetroTal share price is 16.3% higher at 48.25p.

Rare books dealer Scholium Group (LON: SCHO) returned to profit in the year to March 2022 and it continues to trade profitably. The return of trade fairs has helped. Revenues from continuing operations improved from £5.15m to £8.13m. The pre-tax profit of £177,000 was after £240,000 of charges relating to the closure of Mayfair Philatelic. Net cash was £470,000 at the end of March 2022. NAV is 69p a share. The share price rose 7.14% to 45p.

Positive metallurgical results from the 100%-owned Molaoi zinc deposit in Greece helped shares in Rockfire Resources (LON: ROCK) rise by 4.2% to 0.375p. Commercially saleable grades of zinc, silver, lead, germanium, copper and gold have been discovered. Zinc recoveries of 89% and lead recoveries of 74% have been achieved and these recoveries could be improved.  

Ex-dividends

Aferian (LON: AFRN) is paying a dividend of 1p a share and the share price has risen 0.5p to 131.5p.

Appreciate Group (LON: APP) is paying a final dividend of 1.2p a share and the share price has fallen 0.85p to 29.95p.

Arbuthnot Banking (LON: ARBB) is paying an interim dividend of 17p a share and the share price has declined by 12.5p to 865p.

Argentex Group (LON: AGFX) is paying a final dividend of 1.25p a share and the share price is 1.3p lower at 80.5p.

Breedon (LON: BREE) is paying an interim dividend of 0.7p a share and the share price is down 0.5p to 59.3p.

Brickability (LON: BRCK) is paying a final dividend of 2.04p a share and the share price has risen 0.3p to 81.5p.

Cake Box (LON: CBOX) is paying a final dividend of 5.1p a share and the share price is 4p lower at 181p.

Cohort (LON: CHRT) is paying a final dividend of 8.35p a share and the share price has fallen 6p to 534p.

First Property Group (LON: FPO) is paying a final dividend of 0.25p a share and the share price is unchanged at 30p.

Lendinvest (LON: LINV) is paying a maiden dividend of 4.4p a share and the share price fell 0.5p to 149.5p.

Harbour Energy shares soar on $2.6bn revenue and $2bn EBITDAX

Natasha Doris
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0
Harbour Energy shares soar on $2.6bn revenue and $2bn EBITDAX

Harbour Energy shares soared 10% to 473.6p in late morning trading on Thursday after the company announced a revenue and other income growth to $2.6 billion in HY1 2022 compared to $1.4 billion in HY1 2021.

Harbour Energy linked its higher revenue to increased realised liquid and gas prices and rising production volumes associated with a full six months of Premier production against approximately three months in HY1 2021.

The energy group reported an EBITDAX rise to $2 billion against $843 million, along with a pre-tax profit of $1.4 billion from $120 million and a post-tax profit of $984 million compared to $87 million.

Harbour Energy attributed its spiking profits to revenue growth after a full six months of Premier production, however profits were slightly offset by higher operating costs over the term.

The company highlighted an EPS of $1.1 compared to 10c the year before.

Harbour Energy also narrowed its net debt to $992 million in the interim term compared to $2.1 billion in HY1 2021.

“We delivered a strong first half performance, realising value from past acquisitions, increased production efficiency and significant investment in our asset base,” said Harbour Energy CEO Linda Z Cook.

“We improved our safety record, materially increased production, reduced GHG intensity and progressed our CCS projects while continuing to invest in our existing portfolio. Our Tolmount project alone – brought onstream in April – has increased UK domestic natural gas supply by over 5 per cent.” 

“At a time when many are struggling with high energy prices, we are increasing investment by 30 per cent compared to last year, focusing on doing what we can to deliver reliable, domestic oil and gas from our existing portfolio in a safe and responsible manner.”

Dividend and share buyback programme

Harbour Energy confirmed a HY1 2022 dividend of 11c per ordinary share. The firm also mentioned it had repurchased 11.9 million of its own shares for $53.5 million at 30 June 2022, with an extra 26.3 million shares repurchased between 1 July and 24 August for $112.5 million as part of its $200 million share buyback programme.

The company announced it had extended its programme to $300 million on 25 August 2022.

“In an environment of considerable fiscal, economic and geopolitical uncertainty, our strategy to build a global, diversified oil and gas company focused on safe and responsible operations, value creation and shareholder returns remains valid,” said Cook. 

“We are financially strong and have continued to deleverage our balance sheet at pace. As a result, we have significant optionality over our future capital allocation including for continued organic investments, meaningful M&A and additional shareholder returns.”

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