BUSINESS LIVE: Royal Mail’s IDS fined over delivery failures; BAE Systems sales jump; British Land rents soar


The FTSE 100 is up 0.5 per cent in afternoon trading. Among the companies with reports and trading updates today are Royal Mail, BAE Systems, British Land, Phoenix Group and Heathrow Airport. Read the Monday 13 November Business Live blog below.

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Phoenix Group ups cash target as insurance brand merger completes

Phoenix Group has upgraded its cash generation target after finalising a merger of two insurance brands.

Britain’s largest long-term retirement savings firm has just consolidated the Standard Life and Phoenix Life Assurance divisions into a single business called Phoenix Life.

The Footsie closes soon

Just before close, the FTSE 100 was 0.74% up at 7,415.30.

Meanwhile, the FTSE 250 was 0.20% higher at 17,888.34.

UK gaming trade body names former library association boss

(PA) – The UK’s gaming industry trade body has named the former head of the library trade association as its new chief executive.

Ukie (the Association of UK Interactive Entertainment) said Nick Poole would take over on April 1 next year to help lead the body through what it called its next transformational decade.

Mr Poole’s appointment comes after long-standing chief executive Dr Jo Twist left Ukie after 11 years in the role earlier this year.

He has been chief executive at the Chartered Institute of Library and Information Professionals (Cilip) for the last eight years.

Ukie chairman Tim Woodley said the role was a “once-in-a-generation opportunity” as the video games industry in the UK continues to grow to “unimagined heights” and embraces its “newfound legitimacy within the corridors of power”.

Video games have become an increasingly lucrative area of the economy in recent years, with some of the biggest gaming franchises, such as Call Of Duty, now sitting among the highest-earning entertainment franchises in the world.

“Ukie as an organisation is still largely the same size, shape and structure as it was when the industry was half the size it is today, so the time is ripe for fresh eyes to take the brakes off and build on the solid foundations which Jo established,” Mr Woodley said.

“After a rigorous six-month process, we are thrilled that we have found in Nick the right combination of CEO experience, a growth driver, a heavyweight lobbyist and an acute sense of how to lead an organisation with mission, purpose and equality.

Lloyd’s of London scraps SPAC investment vehicle

A special purpose acquisition company, or SPAC, set up to open up investment access to the Lloyds of London insurance market is set to enter liquidation.

Financials Acquisition Corp will enter liquidation as it scraps a planned merger with its newly formed insurance venture, citing ‘insufficient’ cash commitments due to volatile capital markets.

Johnson Matthey shares top FTSE 350 fallers

Top 15 falling FTSE 350 firms 13112023

Phoenix Group shares top FTSE 350 charts

Top 15 rising FTSE 350 firms 13112023

British Land losses almost double despite booming rents

British Land saw first-half losses nearly double but the property developer expects full-year rental growth to be towards the top end of its guided range.

The real estate developer reported a £61million loss in the six months to September, against £32million in the equivalent period last year, as high interest rates continued to hit property values.

Revolut hikes monthly fees to as much as £15 a month

Revolut will hike prices on its paid-for accounts to as much as £14.99 per month.

Under the new changes, customers with a Plus plan – which was £2.99 a month – will now pay £3.99 a month.

Will Chancellor slash inheritance tax? He could be mulling cut to 20%

Families wealthy enough to pay inheritance tax could save a total £15.4billion over the next three years if the rate was slashed to 20 per cent, it is estimated.

If it was cut from 40 per cent to 30 per cent instead, the saving to people inheriting larger estates would cost the Treasury £7.7billion.

Dried-up deals markets leaves Takeover Panel with its first deficit in years

(PA) – The body which regulates company acquisitions in the UK has recorded its first financial deficit in several years after a large decline in the number of deals being sealed.

The Takeover Panel, which is funded by a levy on deals, said it had a deficit of £3.8million after interest and tax during the last financial year. It was down from a surplus of £1.7million a year earlier.

The body said that in the second part of the year – the six months to March – there was a “significant decline” in the flow of deals in the UK.

It blamed “a difficult economic environment and challenging debt markets” for the issue.

It said that there had been 48 firm offers in the year as a whole, 12 of which were valued at above £1billion. None of the billion-pound deals were announced in the second half of the year.

“This substantial decline in market activity, coupled with exceptional legal costs this year, has led to the panel recording its first deficit for several years,” said chairman Chris Saul.

“The start of the year to March 2024 has shown some increase in activity although it is not yet clear how strong or sustained this will be.”

Asda owner EG Group to acquire Tesla Superchargers

Petrol station giant EG Group will acquire electric car manufacturer Tesla’s network of ultra-fast chargers.

The Blackburn-based group, which also owns Asda, said the chargers will be branded ‘evpoint’ and will be available to all electric vehicle drivers.

BAE Systems orders surge as nations ramp-up military spending

BAE Systems has reiterated its recently upgraded annual guidance after securing around £10billion in orders over the past few months.

Royal Mail fined £5.6m for delivery target failures

Ofcom has fined Royal Mail for failing to meet its first and second class delivery targets over the last financial year.

The postal service, which is now owned by FTSE 250-listed International Distribution Services, has been fined £5.6million for not meeting the watchdog’s targets.

David Attenborough leads British TV’s £1.9 billion export bonanza

Exports of British TV shows such as Frozen Planet II and Top Gear have hit record levels.

The clamour from overseas for our programming meant sales hit nearly £1.9billion last year, up 22 per cent annually.

Whistleblower reports to HMRC surge amid Covid-19 fraud concerns

Whistleblower reports to HMRC have surged by 47 per cent rise in the last year, with experts attributing the rise to fraud related to Government Covid-19 support.

The number of whistleblower reports to HMRC rose from 106,920 in 2021/22 to 157,270 in 2022/23, according to new research from international law firm RPC.

Adam Craggs, partner and head of RPC’s tax disputes, financial crime and regulatory team, said the vast scale of fraud against the Government’s Covid-19 assistance schemes might be a major driver of the jump.

Heathrow sees 7m passengers in October

Victoria Scholar, head of investment at Interactive Investor, comments on Heathrow’s latest monthly passenger figures:

It was a blockbuster summer for air travel, laid bare by the impressive results from the airlines like IAG, EasyJet and Ryanair. Heathrow has still enjoyed further strength in passenger traffic figures in October with expectations for a boost over the busy Christmas school holidays. Heathrow is launching a range of retail offerings to support the holiday peaks.

While recreational travel has proven to be remarkably resilient amid the cost-of-living crisis, the risk of recession in the UK could weigh on passenger traffic next year. And business travel remains lower than pre-covid levels as video conferencing meetings continue to be the new norm.

Market open: FTSE 100 up 0.%; FTSE 250 down 0.2%

The FTSE 100 has started the week trading higher, led by a rise in industrial metal mining stocks as prices of copper rose, while insurer Phoenix Group has lifted the life insurance index on forecast upgrade.

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window)

FTSE 100 up 0.4%, FTSE 250 adds 0.2%

Nov 13 (Reuters) – The UK’s FTSE 100 started the week higher, led by a rise in industrial metal mining stocks as prices of copper rose, while insurer Phoenix Group lifted the life insurance index on forecast upgrade.

Industrial metal miners have climbed 0.9 per cent, helped by a rise in copper prices on a softer dollar.

Phoenix Group raised its full-year cash generation forecast after it completed the merger of two of its insurance brands, with its shares risisng 8.6 per cent.

British Land has estimated its annual rental value growth at the top end of its previous forecast range, taking its shares up 5.5 per cent.

Hope for stamp duty and inheritance tax cuts in Autumn Statement

Inheritance tax and stamp duty could be cut in the Autumn Statement following positive projections about the state of public finances.

The cuts are being considered by Jeremy Hunt after he was told that he has more fiscal ‘headroom’ than expected.

Top City law firm launches probe into links with slave trade

‘Elevated threat environment’ boosts BAE Systems

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘BAE occupies a key space in the defence market, and another promising update proves why the group’s so highly regarded in the defence space. With some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker.

‘Given the elevated threat environment, demand for BAE’s products and services has remained strong with around £10bn of order intakes since the half-year mark. That takes the year-to-date figure up to around £30bn, and because these are typically long-cycle orders, with payments spread over several years, it gives BAE multi-year revenue visibility.

‘That’s given management the confidence to reiterate all recently upgraded full-year guidance, which is something of a novelty for most businesses in the current uncertain environment.

‘The regulatory process around BAE’s mammoth $5.55bn acquisition of Ball Aerospace is progressing well and is set to close in the first half of 2024, and it looks like a good fit for BAE. Ball Aerospace provides mission-critical space systems and defence technologies across air, land and sea – complementing BAE’s suite of products nicely.

‘The acquisition should add around $2.2bn in revenue to BAE’s top line, before growing at a compound rate of around 10% annually over the next 5 years. And given the similarities between the two businesses, there’s clear scope to streamline operations, cut costs and boost profit margins.’

British Land rents soar

British Land now expects annual rental growth at the top end of its previous forecast range, but yields on assets remain under pressure in a high interest rate environment.

Aggressive rate hikes have hit the investment business of British landlords, even as strong operational performance has fuelled a tentative sector recovery from pandemic lows.

British Land expects strong occupational fundamentals in its sub-markets despite the uncertain macro-economic environment, with its portfolio yield now more than 6 per cent and an increased chance of UK base rates approaching their peak.

BAE Systems sales jump

BAE Systems has maintained its guidance for annual earnings to rise as much as 12 per cent as orders for military kit continued to flow at a time of heightened geopolitical risk, benefiting Britain’s biggest defence company.

BAE upgraded its forecast in August, guiding that earnings per share would grow by 10 to 12 per cent in 2023 after orders soared following Russia’s invasion of Ukraine last year.

Since then, Israel’s invasion of Gaza in the wake of the 7 October Hamas attack has upsettled stability in the Middle East.

BAE booked £10billion of orders since the end of June, including £3.9billion of funding for the next phase of the AUKUS submarine programme between Australia, Britain and the United States.

‘Order flow on new and existing programmes, renewals on incumbent positions and progress with our opportunity pipeline remains strong,’ chief executive Charles Woodburn said in a statement.

High hopes Burberry can end the luxury slump

Royal Mail’s IDS fined over delivery failures

Britain’s communications watchdog has slapped Royal Mail owner International Distribution Services with a £5.6million fine over failures to meet delivery targets over the last year.

Ofcom said in May it was probing the company over its failure to meet delivery targets in for the year to end-March, 2023.

Ian Strawhorne, Ofcom director of enforcement, said: ‘Royal Mail’s role in our lives carries huge responsibility and we know from our research that customers value reliability and consistency.

‘Clearly, the pandemic had a significant impact on Royal Mail’s operations in previous years. But we warned the company it could no longer use that as an excuse, and it just hasn’t got things back on track since.

‘The company’s let consumers down, and today’s fine should act as a wake-up call – it must take its responsibilities more seriously. We’ll continue to hold Royal Mail to account to make sure it improves service levels.’

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