UK stocks extended losses on Tuesday afternoon as the economic realities of paying for the pandemic loomed large after the government hiked taxes to pay for increased costs in the NHS.

A new social care tax of 1.25% will be levied on individuals and businesses while investors earnings more than the £2,000 a year tax free limit from dividends will pay an extra 1.25%.

At the close the FTSE 100 index of leading shares lost 0.5% to 7,153 points.

COMPANY NEWS

Late in the afternoon shares in Engineering company Meggitt (MGGT) slumped 12% to 839.2p after one of the bidders for the company TransDigm said it didn’t intend to make an offer.

The directors said they continued to unanimously recommend the offer from Parker, announced on the 2 August.

Packaging firm DS Smith (SMDS) released a trading update ahead of today’s annual general meeting showing strong growth in volumes against last year and 2019, especially in the US and Southern Europe.

The firm also said it was seeing ‘notable increases’ in energy and transport costs but thanks to strong demand for its products it was making ‘good progress’ in pushing through price increases to its customers. The shares added 2.6% to 461.3p to top the FTSE leader board.

House builder Vistry (VTY) posted forecast-beating first half results thanks to the continued boom in demand for new homes. Revenues for the six months to June were £1.26 billion, slightly ahead of the comparable period in 2019, while pre-tax profits hit £166 million and return on capital employed rebounded to 19.4% against 14.4% last year.

The firm also announced a 20p per share interim dividend and said it would accelerate its pay-out ratio this year thanks to strong cash flow generation and a lower average net debt position. The shares nudged-up 0.1% to £12.24.

Oil and gas exploration firm Cairn Energy (CNE) gave investors further details of its transformation. Along with the proposed return of up to $700 million in special dividends and share buybacks following the resolution of its tax dispute with the Indian government, Cairn is expanding into Egypt with a significant investment in gas-producing assets while plans are progressing to dispose of its North Sea assets by the end of this year. The shares added 0.6% to 196.1p.

Broking firm TP ICAP (TCAP) published a fairly unremarkable set of first half results with reported revenues down 5.5% to £936 million due to ‘subdued secondary markets’ and a strong prior-year comparison.

In spite of much-touted cost savings, earnings before interest and taxes dropped 44% to £57 million, giving a margin on sales of just 6.1% against 10.2% in the first half of last year. The shares sank 10.7% to 176p.

Clothing brand Ted Baker (TED), which has had its ups and downs over the past year, reported a 50% increase in sales for the second quarter to mid-August and said its transformation plan was on track.

Pleasingly, full-price sales improved which significantly boosted the trading margin, but fewer discounts meant online sales were lower. Also, the firm admitted it was struggling with some technical aspects of its new e-commerce platform, forcing it to delay its ‘go live’ date until early next year meaning it will miss the key pre-Christmas selling period.

Despite rallying more than 8% yesterday in anticipation of a positive update, the shares added a further 0.2% to 167p.

SMALL-CAP NEWS

Lighting firm Luceco (LUCE), a running Great Idea, reported a sharp increase in first half revenues and earnings thanks to a healthy UK residential repair, maintenance and improvement market and improving demand from commercial and overseas customers.

Revenues of £108 million were 51% higher than a year ago while pre-tax profits of £16.6 million were almost double last year’s level as the firm was able to pass on cost inflation through ‘proactive’ price updates and hedging. The shares dropped 9.8% to 426.1p.

Shares in Michelmersh Brick Holdings (MBH) gained 0.1% to 147.7p after the firm posted a 33% jump in first half revenues to £29.9 million and a 150% increase in pre-tax earnings to £5 million due to continued strong demand from the new housing and RMI markets.

With a strong order book and given the good start to the second half, the firm has reinstated the interim dividend and said it expects to ‘modestly’ top full year expectations.

Shares in prepared food delivery firm Parsley Box (MEAL:AIM), which have languished since stock market their debut in March after the company warned of a slowdown in sales, plunged 11.9% lower to 107p after the firm posted a wider first half loss.

Despite a 26% rise in first half revenues, due to a sharp rise in customer numbers, the firm continues to lose money with pre-tax losses of £5.4 million for the six months to June against a loss of £1 million in the same period last year.

FOR A LIST OF FTSE 100 RISERS AND FALLERS SEE HERE

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Issue Date: 07 Sep 2021