After strong results, the Royal Mail has promised a £400m to shareholders.
The group saw a pandemic boom and adjusted operating profits surged to £404m for the six months ended in September. Royal Mail has forecast full-year profits of £500m.
“The pandemic has resulted in a structural shift and accelerated the trends we have been seeing,” said chief executive, Simon Thompson.
“Domestic parcel volumes, excluding international, are up around a third since the pandemic, whilst addressed letter volumes, excluding elections, are down around a fifth.”
“This reaffirms that our strategy to rebalance our offering more towards parcels is the right one, and demonstrates the need to start defining what a sustainable Universal Service is for the future.
“I want to thank our teams for what we have delivered so far: it is an impressive start but there is still much more to do together,” he added.
Investec profits have more than doubled in the first half of its new financial year.
Increased client activity and lower funding costs boosted profits at the FTSE 250 group, which is offering 15% of its 25% stake in asset manager Ninety One in shares to its shareholders.
Investec has announced an interim dividend of 11p.
CEO Fani Titi said: “We’re in the process of reducing our group portfolio to add further value to shareholders, now that we’ve seen a recovery in the level of uncertainty in the market, paired with our significant earnings recovery.”
“Due to that recovery, this 15 per cent was the surplus capital we could deploy, and we remain flexible about what we will do with the remaining 10 per cent in the future.”
“We maintain a level of conservatism for factors that remain difficult to model,” Titi told reporters, highlighting the firm’s caution around the remaining uncertainties in the economy’s recovery from Covid and expected market volatility.
“The changes made to simplify and focus the group are bearing fruit, positioning us well for the future.”
Flutter Entertainment has said it will buy bingo group Tombola in a £402m deal.
The owner of Paddy Power and Betfair has purchased the group and the deal will be completed early next year.
Tombola has around 400,000 monthly users and is based in Sunderland and Gibraltar. It had revenues of £164m in the year to the end of April.
“Tombola is a business we have long admired for its product expertise, highly recreational customer base and focus on sustainable play,” said Peter Jackson, chief executive of Flutter.
“The brand aligns closely with Flutter’s safer gambling strategy, a key area of focus for us.”
“As the time comes for Phil to hand over the reins, I would like to thank him for building the success story that the business is today and I look forward to welcoming the Tombola team to Flutter and growing a sustainable business for the future together,” he added.
Managed IT and networking services provider AdEPT Technology (LON: ADT) achieved a one-fifth increase in interim revenues to £34.3m. The prospects appear to be good as more companies move to cloud telephony, but the share price does not reflect this
Managed services revenues accounted for 87% of total revenues, which could have been higher, but delays meant that £900,000 was not recognised in the period and this should be included in the second half. Fixed line revenues are declining, although they are lower margin. There was a slightly lower overall gross margin because there were more hardwa...
Technology Minerals (LON: TM1) was set up as investment company and after Stranger Holdings (LON: STPH) decided not to proceed with the acquisition of Technology Minerals and related assets the new company stepped in. Stranger Holdings has turned its attention to a uranium project in South Africa.
The strategy is to build a business that covers the battery cycle from exploration and mining to recycling. The acquired projects are all involved in exploration, and they are on three continents.
The share price opened at 2.6p and at one point was as high as 3.75p. It ended the day at 3.25p and ther...
The cost of used cars in the UK have soared as inflation also hits record highs.
The average price for a used car in the UK jumped 26.9% to almost £20,000, according to Auto Trader.
Auto Trader’s data and insights director Richard Walker commented: “To see such a huge increase in car prices in such a short period of time is truly remarkable and is indicative of the current perfect storm of exceptionally high levels of consumer demand coupled with very constrained new and used supply channels.”
“Although inflation will always pose a threat to demand, based on the positive consumer metrics we’re tracking across the retail market, as well as broader economic factors such as the record number of job vacancies reported just this week, we don’t anticipate any significant easing beyond normal seasonal trends.”
Commenting on the cost of transport and travel amid the new inflation figures, Laura Suter, head of personal finance at AJ Bell, said:
“Inflation has soared to a 10-year high and everyone is feeling the pinch, whether it’s in their weekly shop, their energy bills or when they’re heading out to buy a new car. But not everything has risen in price and some areas of our lives are getting pricier than others.
“The single biggest price rise of the year will dismay DIY fans or anyone working on a home renovation: MDF (or Medium-density fibreboard). The man-made wood has got 63% more expensive since the start of the year, as supply chain issues and a surge of people doing up their homes has put it in strong demand. And the biggest faller of the year? Computer games, which are a third cheaper than the start of the year, following a boom in demand during the pandemic that has died away now.”
The FTSE 100 gave up ground on Wednesday as the market digested inflation data that makes it near impossible for the Bank of England to avoid hiking rates in December.
“Inflation at a 10-year high of 4.2% makes for uncomfortable reading and goes to show the punishing effects of higher energy and food prices on family finances. It almost certainly means the Bank of England will raise interest rates soon, potentially as soon as next month,” says Russ Mould, investment director at AJ Bell.
The Bank of England said they wanted to see further evidence of a healthy UK economy before moving on rates. Today’s inflation data and strong jobs data yesterday does just that.
With investors pricing in the chances of higher rates, the pound gained and hit shares earning significant revenue overseas. Names such as Shell, BHP, Vodafone and Unilever were all weaker.
The FTSE 100 traded at 7,309, down 0.2% as we approaching midday in London.
“The prospect of higher rates has given some support to the pound, but the movement is only mild which suggests that rising inflation is a surprise to no-one. Sterling gained 0.1% against the US dollar at $1.3440,” Russ Mould said.
“What really matters to markets is the scale of any interest rate hikes over the next year, and that will be guided by the longevity and ferocity of inflation. There is a real chance that rates keep going up by small increments and after a while this starts to make life more difficult for consumers and companies as the cost of borrowing becomes more expensive.
“NatWest and Lloyds were among the biggest risers on the FTSE as the banking sector should be a beneficiary of rising interest rates. It creates scope for them to increase net interest margins which is the difference between the interest they earn on loans and the interest they pay on savings deposits,” said Mould.
The UK Investor Magazine Podcast is joined by Alan Green to discuss UK shares and leading market themes.
We start by drilling down into the latest inflation data and what it means for shares in the medium term given the Bank of England will have little choice but to hike rates in December.
The Podcast features two FTSE 100 dividend payers that will be of great interest to UK equity income seekers in Vodafone and SSE.
Vodafone now provides not only a very respectable dividend, but after producing a 5% revenue increase in H1, there is a real prospect of capital appreciation. Vodafone rose 5% after the release of their report yesterday and retraced 2% the day after in a weak market.
Is the SSE the best play on renewable energy for UK investors looking for a blue chip company? The company has unveiled a progress report that highlights the focus on their renewables strategy with a £12.5bn strategic capital investment. Their plans have seemingly quelled short term fears of a break up pursued by activist investor Elliot.
We finally update on Blencowe Resources, including their latest funding round and an overview of their resources.
Lloyds share price (LON:LLOY) is now within touching distance of the highest levels since the beginning of the pandemic.
Indeed, at the time of writing, with shares trading at 50.56p, Lloyds shares are less 0.6p away from 51.11p and the highest level closest price of 2021.
The Lloyds share price was up over 1% in early trading on Wednesday as investors began to once more price in the impact of higher interest rates on the profitability of UK banking shares.
However, with the latest instalment of inflation data and strong UK employment data, it is now very difficult to see how the Bank of England can’t hike rates at their next meeting in December.
Record Inflation
On Tuesday, we received the latest insights into the health of the UK jobs markets which created just over 160K jobs in October.
One of the main reasons why the Bank of England didn’t hike at their last meeting was to allow time to gain further information on the health of the UK jobs market. This instalment of data showed amazing resilience in the labor market and the market began to immediately price in higher rates with GBP rising against major currencies.
“Inflation roared ahead in October, hitting its highest rate in a decade, and raising the risk that the Bank of England will step into the inflation fight and show its teeth,” said Sarah Coles, personal finance analyst, Hargreaves Lansdown.
Banks traditional enjoy higher profit margins in times higher rates and UK focused Banks Lloyds, Barclays and Natwest Group were among the FTSE 100’s top risers on Wednesday.
Investors will also be watching the drivers of inflation and the impact on household spending. While higher rates can help banking profits, households facing financial strain can undo much of the upside for banks.
Lloyds share price
Lloyds shares are up 39% in 2021 and one would think if we see the BoE deliver a rate hike, Lloyds shares will move to 2021 highs above 51.11p, if they don’t do that in the run up to the next interest rate decision.
In days prior to the pandemic’s first lockdown, Lloyds had a close of 58.03p on 13th February 2021 and this level will now be eyed by investors looking for the next major technical levels in Lloyds share price.
British Land has posted profits for the second half of the year thanks to improved rent collection.
The firm posted post-tax profits of £8370m, which was up from a £730m loss a year earlier.
Chief executive Simon Carter said: “Demand is firmly focused on the very best (office) space, with an emphasis on sustainability, wellness, shared and flexible space and excellent transport connections.”
Richard Hunter, Head of Markets at interactive investor, said: “As the property landscape evolves and with specific challenges in London, British Land is redesigning its portfolio to reflect the new environment.”
“The first relates to the inexorable rise of online shopping, boosted further during the pandemic, and the scarring this may leave on physical shopping centres and, indeed, the high street in general in future years. In addition, the longer term impact of hybrid working is yet to wash through, with staff at some companies not returning to the office at all and others on a limited basis.”
“These shadows have forced a redefinition of British Land’s strategy and there are some encouraging signs that the group is beginning to move ahead of the curve,” he added.
