Investors in two of the country's biggest insurers toasted financial results today from Legal & General (LGEN) and Admiral (ADM) as they announced large dividend hikes. The two companies are both raising their dividends by 20% which has helped to strengthen their share prices.
Legal & General nudged up 1.35% to 164.9p as operating profit increased to £1,087 million from £1,053 million in 2011. The UK’s ageing population and a decline in state welfare spending helped drive growth at the £9.5 billion cap.
Admiral jumped 3.9% to £13.16 as it reported £345 million pre-tax profit. This represents a 15% gain on the previous year. But there was bad news. Its combined ratio, the difference between premiums received and its pay-outs, increased slightly to 96.6%, Admiral’s third successive annual rise and getting dangerously close to loss territory.
Mulberry (MUL: AIM), the English luxury handbags firm which spooked the market with a profits warnings last year (23 Oct), moved 7% higher to £13.90 on bid speculation. Rumours are rife that French luxury goods manufacturer Hermes (EURONEXT: RMS) could be lining up a £1.5 billion, or £25 a share, cash offer for the company whose chief executive officer Bruno Guillon joined from Hermes in 2011. Any takeover however would need to get the nod from Ong Beng Seng and Christina Ong, the Singaporean billionaires who own 56% of the equity, to proceed.
Cash-generative funeral services star Dignity (DTY) put on 13p at £13.12p on the delivery of final results showing strong performances from both the funeral and crematoria businesses. Following the numbers, which showed an 11% rise in pre-tax profits to £46.1 million and a 10% final dividend hike to 10.75p, broker Panmure Gordon reiterated its 'buy' rating and lifted its price target from £13.12 to £15.55. Investec Securities, which noted Dignity's recent (25 Jan) £58.3 million acquisition of Yew will lead to a couple of years of 'super-normal' growth, ratcheted up its price target from £11.77 to £14.04.
Education software-to-service group Tribal (TRB) is significantly ahead of analyst earnings expectations, sending its shares up 16.5% to 134p. The Paddington-based group says 2012 pre-tax profit would be £12.8 million. This is even greater than the £12 million pre-tax profit forecast by the City for 2013. Analysts had previously expected Tribal to make £9.8 million pre-tax profit in 2012.
Shares in motor dealer Lookers (LOOK) advanced by 2.25p to 87p as the £329 million cap reported forecast-busting 2012 numbers representing its fourth consecutive year of record results. Driven by impressive performances in both used and new car sales, as we discuss here, taxable profits grew 9% to £36.8 million in testing market conditions, prompting analysts to upgrade their 2013 and 2014 estimates.
Cameroon-based oil explorer Bowleven (BLVN) gained 8.7% to 86.7p after the group announced a significant increase in the estimated resources attributable to its IM field. The natural gas estimate increased from 128 billion cubic feet (bcf) to 531 bcf, while the estimate for liquid hydrocarbons was revised upwards from 19 million barrels to 184 million barrels.
Industrial services play Cape (CIU) was up 16.8% at 272.1p despite announcing a swing from pre-tax profits of £61.9 million to a pre-tax loss of £140.1 million. Investors were cheered after the dividend was maintained at 9.5p but broker Northland Capital remains cautious and says: 'While the management team has started to get to grips with the issues it is still too early to predict a material improvement in performance.'
Engineering turnaround specialist Melrose (MRO) was in gear – up 5.2% at 273.6p – after announcing a 38% increase in 2012 pre-tax profits to £214.3 million, broadly in-line with forecasts. According to broker Liberum Capital an improvement plan for German manufacturer Elster, acquired in a £1.5 billion deal last August, is running a year ahead of schedule.
International Personal Finance (IPF), the globally diversified doorstep lender spun out of Provident Financial (PFG) in 2007, has advanced 7.4% to 436p. The group's pre-tax profits, at £95.1 million, although short of analyst expectations, still demonstrated extremely strong growth in the underlying business. The profits number was up 20.2% year-on-year on a like-for-like basis. The star of the portfolio was Mexico which generated 240% profits growth, while core territories Poland and Hungary saw profits expand by 16% and 45% respectively.
Finals from marketing communications group Chime Communications (CHW) were an endorsement of the group's decision to spin out its public relations assets and focus on sports marketing. Analysts at Numis Securities have decided to take a 'prudent approach' and maintain 2013 forecasts despite 2012's numbers exceeding expectations, prompting a 2% early gain to 252p. Numis points to the fact that Chime has been appointed by FIFA to do signage and branding for the 2013 Confederations Cup and the 2014 World Cup in Brazil. These are key contracts and as more detail emerges about these deals the group's numbers could be upgraded.
News that Entertainment One (ETO) is to expand its Peppa Pig franchise into Russia was welcomed by the market. Shares nudged up 0.3% to 187p. International exhibitions group Tarsus (TRS) nudged up 0.6% to 217p. Investors responded warmly to confirmation 50% of revenues are now derived from emerging markets.
Operational problems continue to dog ZincOx (ZOX:AIM), down 4.8% to 29.5p after saying that its metals recycling plant in Korea is still not working properly. In addition to power restrictions across the country for industrial users, ZincOx is struggling with corrosion issues.
A rare UK mining story, Wolf Minerals (WLFE:AIM) soared 8.6% to 22p after awarding a £75 million contract to GR Engineering (GNG:ASX) to build a processing plant for its Hemerdon tungsten and tin mine in Devon. Investors welcomed the announcement as it shows that progress continues to be made at the West Country project.
Little mobile payments play Earthport (EPO:AIM) has jumped 11.8% to 22.5p after plugging in a payments deal with US credit card giant American Express (AXP:NYSE). The £70 million forex payments specialist will help expand Amex's international payments services, with a launch expected in the second half of 2013. No financials details were made public but this likely transaction-based revenue stream may not make Earthport any real revenues for at least 12-to-18 months, although it could speed up a profits breakthrough, possibly on a monthly basis by late next year.
Sub-scale and getting rapidly smaller is IT managed services minnow Enables IT (EIT:AIM) which has just lost its biggest customer, Hill & Knowlton, part of the WPP (WPP) advertising empire and worth 25% of its revenues. Management is putting a brave face on the loss, talking up overhead cost cuts, but the shares tanked 37% to 8.5p, slashing its already tiny market value from £2.14 million to just £1.35 million.