ITV slumps, Admiral pays 27th special dividend, Foxtons’ bleak results

“After two positive sessions this week the FTSE 100 takes a step back on Wednesday, slipping 0.4% to 7,256, dragged down by weakness in the mining sector,” says AJ Bell Investment Director Russ Mould.

ITV

“New ITV chief executive Carolyn McCall gets off to a sticky start in her new role as the free-to-air broadcaster reports its 2017 results. The shares are the worst performers on the FTSE 100 with investors perhaps reacting to the lack of a special dividend after several years of one-off payments.

“This has prompted speculation in some quarters that the company may be considering an acquisition.

“Otherwise the numbers look OK with advertising revenue down 5%, in line with guidance, and a better performance expected in 2018, supported by the football World Cup this summer.

“McCall has a pretty hard act to follow. Under her predecessor Adam Crozier adjusted pre-tax profit increased at a compound annual growth rate of nearly 30%, backed by very healthy cash generation.”

Admiral

“Admiral has paid a special dividend every year since it floated on the stock market in 2004, predominantly twice a year. It continues this tradition in the latest set of full year results with its twenty seventh special dividend declaration.

“The insurance company attributes shareholder returns as one of the reasons why its company is ‘different’, saying it believes in returning excess capital to shareholders.

“It’s a well-capitalised business and has just announced record pre-tax profit of £405m for 2017.

“However, there is always a big danger associated with paying special dividends year in, year out. Shareholders get used to this extra cash and the stock would be punished if it stopped paying ‘specials’ in the future.”

Foxtons

“Judging how the market will react to a set of results means working out what it has already been priced in. In the case of London-focused estate agent Foxtons, investors were obviously expecting a very bleak set of results and that is what they’ve got.

“Pre-tax profit is down 65% to £6.5m and the dividend has been more than cut in half. This should help shore up a balance sheet which is arguably the company’s one saving grace.

“Still cash generative and with nearly £20m in the bank, the decision to remain debt-free looks a very sensible one from management. It gives the company the chance to benefit if or when a recovery in the capital’s property market emerges.”

These articles are for information purposes only and are not a personal recommendation or advice.