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Market movers: Royal Mail, Albemarle & Bond, Shaft Sinkers, Wasabi Energy, Compass Group

Last updated: 03:06 27 Nov 2013 EST, First published: 04:06 27 Nov 2013 EST

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Just when it looked as though Royal Mail’s (LON:RMG) share price was in decline, impressive financial results suggest the postal service may well have been undervalued by the government.

Its first set of figures since its controversial privatisation appear to have appeased the market, sending the share price up 5% to 559p.

Underlying profit before tax in the first half jumped to £233mln from £94mln, while underlying earnings (EBITDA) before transformation costs climbed to £483mln from £405mln.

Parcel revenue now accounts for 51% of group turnover, Royal Mail revealed, as it posted a 2% increase in revenue to £4.52bn in the six months ended 29 September from £4.36bn, the year before.

The decline in addressed letter volumes moderated to 6% from 9% in the corresponding period of last year. Royal Mail introduced eye-watering increases in letter postage rates as it prepared itself for its stock market listing, which took place on 11 October 2013.

Management has been bracing itself for a decline in letter volumes, forecasting a year-on-year decline of 4-6% over the full year.

Letter revenue (including marketing mail) declined by 4% in the half-year period, though when the effects of Olympics 2012-related stamp sales are stripped out, the decline was 3%.

Shares in Royal Mail, priced at 330p when they first went on sale, have roared higher to 552p – though this is some 35p below the stock’s all-time high – with many investors getting on board because of the promise of a juicy dividend.

The board confirmed that, in the absence of unforeseen circumstances, it would pay out £133mln in dividends for the full-year, which equates to a divi of 13.3p. That puts the shares on a yield of 2.49% at the current price, or 4.03% if you are still holding shares bought at the flotation price of 330p.

The vital signs look to be worsening at AIM-listed pawnbroker Albemarle & Bond (LON:ABM), which has felt the effects of lower gold prices in 2013.

Having already warned that the gold price would hit profitability, today it warned investors to expect a loss for the first five months of the financial year.

It also said that last year’s full-year results, which are yet to be announced, are likely to disappoint the market.

An aborted rights issue is setting the company back further, while it will continue to pay its advisors as it hunts for the funds needed to keep the business running. 

“Tough trading conditions have continued to impact our results, but we are making progress controlling costs and managing within our constrained banking facilities,” recently installed chief executive Chris Gillespie argues.

Investors rushed for the exit, sparking a 40% slump from the shares to 22.9p.

Shaft Sinkers (LON:SHFT), the mine shaft excavator, climbed 4% to 19p in early deals when it was awarded more work by Lonmin (LON:LMI) at the Marikana platinum mine in South Africa, home to last year’s violent strikes.

The work will bag Shaft Sinkers a total of £11.4mln.

Noricum Gold (LON:NMG) also shone as it brought in Michael Hutchinson as its new chairman to oversee the exploration of the Rotgulden prospect in Austria.

Wasabi Energy (LON:WAS) shares were under pressure after it unveiled plans for a rights issue to raise £8.7mln.

More than half of that amount will be spent on repaying a secured loan note, while £2.25mln will be used to complete the purchase of the Tuzla geothermal power project in Turkey.

Wasabi’s stock fell 18% to 0.23p.

The FTSE 100 started on the front foot after yesterday’s 58-point fall, recovering 11 points to 6,647.

Catering specialist Compass Group (LON:CPG) and water company United Utilities (LON:UU.) topped the benchmark index as their respective results pleased the market.

Meanwhile, reports that engineer Amec (LON:AMEC) is eyeing a £5bn takeover of US peer Foster Wheeler dragged the shares to the bottom of the table.


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