Far from improving and streamlining its service, UK Mail’s new hub near Coventry has, at least for the time being, caused the parcel delivery company losses of profits, customers and company value as the share price has dipped in the wake of their problems.
The fully-automated facility in Coventry – which UK Mail moved into from their previous premises in Birmingham – has incurred unexpected additional costs after the new site was shown to be ‘incompatible’ with a large number of the parcels it handles.
Extra costs to try and solve the new site’s problems and lower profit margins have combined to cause the company’s current financial woes; profits have reduced to just under £8 million, although revenues are up. Profits from letter delivery also fell by some 17% down to just over £5 million despite revenues rising.
The mail delivery market is highly competitive for UK Mail at present; they’ve cut prices to win contracts and are locked in a fierce battle with Royal Mail. There’s also the declining demand as people are using email and social media rather than traditional paper mail.
Parcel delivery companies are facing challenging times even though volumes are high, largely thanks to the ever rising demand due to online shopping. City Link collapsed during the 2014 Christmas period, and the DX Group issued a profits warning recently citing a combination of price pressure and the increased costs of recruiting drivers. Also, with new service providers such as Quick Envelopes appearing, it is becoming harder for mail companies to profit through selling extras such as stationary and envelopes.
Ironically, the collapse of rivals such as City Link didn’t really help UK Mail. Although it led to a rise in the number of parcels it dealt with in the first quarter of 2105, it couldn’t efficiently handle the extra workload with its existing resources which led to an increase in costs.
The company has cut its dividend and warned that profits will be lower than expected this year and next – they were down by half in the first six months of the 2015 accounting year (to the end of September). Pre-tax profits fell markedly from £11.2 million in the previous year to £4.9 million, and the company cut its dividend to 5.5p a share from 7.3p.
The company’s chief executive said profits this year would likely meet the reduced forecasts, but next year’s results would be worse than expected due to the “timescales required to fully resolve the challenges”.
The company maintain that its new Coventry site will benefit UK Mail’s business long term despite the difficulties experienced. The company’s chief executive has previously commented that the new hub is the largest strategic development in their corporate history, and that it will help the company become one of the most competitive and efficient operators in their market.
UK Mail has been in business over 40 years having started life in 1971 as a taxi company. It is still under its original chairman, Peter Kane, and now operates out of 52 national depots and runs a fleet of over 2,000 delivery vans.
If you have received cold calls from people claiming to be carrying out pension surveys you may have been told that your name is on the “public investors list”. It is always a little worrying to hear that you are on yet another list that is selling your details to cold callers. So, what is this list?
When I got a call my first thought was does it really exist? I Googled “Public Investors List” and failed to find anything comprehensive. If you submit information to some companies you can elect to opt out, eg “Don’t show my name on the public investors list“, but this does not help us to understand what the list is.
So far I have had to conclude that there is in fact no such thing. Cold callers just say this to make it sound official, and make you think “oh, OK, if I am on the list you must be free to call me”……
Or, do you know that the Public Investors List is actually real – do you work for them, or know of an official page on the web about them?
If you own UK stocks and hold the certs yourself then it is very likely that your registrar is one of the following. Registrars keep the record of who owns company shares. They also record how many shares are owned by each shareholder, where they live. This information is needed to contact shareholders regarding company meetings and other corporate actions, and to arrange the replacement of lost, damaged or new certificates.
Today ThisIsMoney.co.uk reported that only 38% of fund managers actually out-perform the market. What is worse, many actively managed funds are under-performing. Investors are not only losing out on stock market losses, but also wasting money on management fees.
The data was published by Which? They looked at the performance of 96 actively managed funds which specifically aim to beat the FTSE All-Share index over the last 10 years. Of these, only 37 managed to beat the FTSE All-Share Index.
So, if fund managers are not actually making good investment decisions on your behalf, what is the alternative?
There has been a rise of tracker funds in the last decade. These funds simply track the stock market and buy shares as they rise and sell as they fall. This reduces risk, although also reduces the potential big increases too. But for many people risk minimisation is more important. This all sounds like a good idea, but …. who are the tracker funds tracking?
If everybody put their savings into tracker funds and then sat back and let the complex algorithms take over, what exactly would the computers be tracking? We need dealers and traders, fund managers and small investors to take risks and research new businesses, to try to determine which stocks are going to succeed, and which may be failing. Without some element of research, analysis, guess work and gut feeling, the market would surely grind to a halt. The tracker funds would have nothing to track, and all possibility of making a profit from the stock market would end.
The debate over whether you should go passive or active will no doubt continue for many more years. However, be warned – if too many people put their money in passive funds, the stock market will itself become pacified.
Maybe a better solution is to manage your own funds. You could place 50% of your investment into a passive fund to reduce overall risk, and then have some “fun” trying to beat the top earning fund managers at their own game. If you need to tips, just watch Trading Places. Or read our yet-to-be-written article (coming soon ….).
Investors could be wasting millions on fund managers as ‘just 38% beat the market over the last decade’ – ThisIsMoney.co.uk, 23 April 2013.
Most active fund managers fail to beat the market – Which? research shows just 38% beat FTSE All Share
Should dealers and traders monitor Twitter? Today a fake tweet was posted saying the the White House had been bombed and that president Obama injured.
The Tweet appeared on the Associated Press Twitter page first, which read “Breaking: Two Explosions in the White House and Barack Obama is injured“.
According to CNet.com, the Associated Press Twitter feed was hacked. However, it is important note that in truth, it may just be a case that the password was guessed after many automated attempts, and no actual “hacking” took place. Although we have not been able to confirm this yet. What we do know is that the main @AP Twitter account is current suspended, probably while Twitter admins reset all the passwords and clean out any false Tweets.
Of course, the nature of Twitter is that such “news” was quickly re-tweeted (the Anonymous Tweet had been re-tweeted 582 times by 8.30pm on 23rd April 2013) and many people beleived that this to be true. The result was stock market panic and traders started dumping stocks, fearing a repeat of the market collapse that followed the 11th September 2001 attacks in America.
Both @kingsthings (Larry King) and @NewsBreaker announced “HACKED: Face tweet about explosions at White House & injured #Obama sends stock market plummeting”
Newsbreaker site update: BREAKING: Stocks Freefall After False Reports of Explosions at White House, President Injured
It is amazing how quickly the mainstream media and blogs picked up this news and published. Just to reiterate – this was made up, it did not happen. There have been no attacks on the White House. Stop dumping your stocks and shares, stop panicking, carry on.
Of course, one question that may remain unanswered – did the hackers predict the fall in the stock market, and did they capitalise on it by purchasing falling stocks and then selling once they recovered again later in the day?
The budget has said that there will be £130 billion of new mortgages issued to boost housing market. Will this work?
The plan will allow people to borrow up to 95% of the value of a house. There will still be some means testing to ensure that people can pay back mortgages.
With the average price of a house now being £238,293, this means that around 5180 people will be able to get mortgages in the next year when the policy kicks in.
Great news for renters, as while mortgages are hard to get, most people who are renting are paying far more in rent for their house than they would pay if they owned it.
A new fund to support charities and social entrepreneurs who have struggled to obtain lending from the traditional banks has been set up by the coalition government.
Money is sourced from dormant bank accounts, which are bank accounts that have been left usused for over 15 years. There is around £400 million in these accounts. The other £200 will come from the Merlin banks.
The funds will support social entrepreneurs and charities. The idea is that the find will offer long-term loans at good rates. The social enterprises will still have to prove that they generate adequate income to repay the loan at the agreed rate, but in theory these loans should be more favourable and easier to obtain than the current source of lending.
The money is specifically for enterprises which make no profits, i.e. Not For Profit organisations, which fall under different rules to charities and often find it harder to receive funding or donations. CharityInsight.com explain the difference here: What is the difference between charity and social enterprise?
Some critics have suggested that some of the enterprises that will be eligible for this funding are not in a position to manage a large sum of money efficiently.
The Big Society Trust will control 60% of the shares in the fund. The Big Society Trust is a new private limited company that is managed by a team of business leaders from charities, commerce and politics. The chairman is the venture capitalist Sir Ronald Cohen and Nick O’Donohoe, the former head of research at JPMorgan Chase, is the executive officer.
The other 40% of the shares are held by Barclays, HSBC, Lloyds Banking Group and the Royal Bank of Scotland – the Merlin Banks.
The idea for the Big Society Trust started to develop in 2005 when a project was undertaken by Sir Ronald to look at how dormant bank accounts could be used to improve society. The policy recommendation was for the formation of a social investment bank, and in 2008 the Dormant Bank and Building Society Accounts Act was passed.
The Big Lottery Fund manages all dormant funds and is responsible for the distribution and accounting of the bank accounts.
All dormant funds will immediately be returned to their owners should they activate the account at any time.
This is a continuation of David Cameron’s Big Society project. David Cameron says that The City needs to support social enterprises just as it supports business. For the economy to grow and the “broken society” to mend, financial support is required.
David Cameron seems to be a prime minister who wants to leave a legacy behind, something that people will remember him for in years to come. Big Society is more than an idea, it his is mission.
It is expected that government funding for charities will decline further over the forthcoming years and there is a concern that the Big Society Capital Fund will not even cover the fall in government investment.
However, David Cameron is confident that the fund will provide not-for-profit enterprises with all the funding that they will need. It is still an investment though, and like any investment there is inherent risk associated with it.
The Big Society Trust aims to not only provide a small financial return (it has to make some money to allow it to operate) but also the improve in society, i.e. to make social investments to get a social return. Social returns can be measured by improvements in education, welfare, health and mobility, along with many other measures.
How successful the venture is going to be is hard to predict, and as it is so hard to measure the success it will undoubtedly be hard to determine if this is a failure or success in a few years time. Government spin will ensure that it sounds like a success no matter what the bank balance states.
The wide range of mortgage rates on the market has always been confusing, but the picture is complicated by the fact that the Bank of England base rate has now been at a record low of 0.5% since March 2009. That doesn’t mean there’s an undisputed “right” answer as to which rate type is best for you, but it does change some of the factors you need to take into account.
The Standard Variable Rate is the simplest type of mortgage and means that the lender decides what your interest rate is at any time. This is usually decided by a combination of the Bank of England base rate and the competition in the mortgage market. Traditionally the advice has been to go for this if you don’t mind taking the risk that rates will rise. In today’s climate, the standard rate is still very affordable for many people, and there’s no sign of it changing soon: the most recent Monetary Policy Committee meeting saw a unanimous 9-0 vote to keep the rate unchanged. Bear in mind, though, that while the timing is uncertain, it’s as certain as can be that the rate will change in the long run, and there’s only one direction it’s going to move in: up.
What about a fixed rate? Well, it’s still a form of gamble as you are effectively predicting the variable rate won’t go below this fixed rate. While lenders may offer a fixed rate at any time, it’s most common at the start of a loan, for anything between one and five years. Before taking out such a deal, you should find out whether there are any penalties if you decide to pay it off early, for example by re-mortgaging with another lender for a lower rate. You’ll also need to check what happens to the rate at the end of the fixed period: usually it shoots up to the variable rate, which could mean a significant hike in your monthly costs if the Bank of England has decided it’s time to tackle inflation by then.
You could also opt for a tracker rate, in which the rate you pay is directly linked to the Bank of England base rate, for example being half a percentage point higher. The effect is that your costs can be affected by the Bank of England’s decisions, but not by the bank’s own variations. Given that banks have been so hesitant to take risks on loans that there’s not as much competition in the market as usual, you can effectively look at this in the same way as the standard variable rate.
Another option is the cap and collar, another fixed-variable hybrid. A cap rate means you have a variable rate but, during a specified time, it can only rise up to a certain level. A cap and collar rate works the same way, but there’s also a minimum level, meaning you don’t benefit even if market rates go below this. For some borrowers this can be an effective compromise between having relatively low rates but reducing uncertainty.
All in all, the mortgage rate game remains as much of a game of predictions as ever. Fixed rates offer more certainty, while variable rates are a more explicit gamble, with tracker or cap/collar rates somewhere in between. Right now the premium you pay for a fixed rate (and thus the savings that come with the variable rate) is relatively low. That said, even if you make a rate decision based on the on-going low Bank of England base rate, you should still at least consider how you’d cope if your payments rose rapidly.
The UK has been the home of a number of thriving businesses over past years, but how long have some of the oldest ones been trading for? It may be hard to imagine, but a number of businesses have been present for hundreds of years – so what are they and how have they managed to stand the test of time?
Old businesses are an important part of the British culture and a number of long-trading establishments form the backbone of our personal identities. Some of the oldest businesses in the UK have been trading for over a hundred years, proving that business ventures really can be fruitful.
Brooke’s Mill was established as far back as 1541 as a wool cloth mill. The Brooke family founded the mill and it is thought to be the oldest family business in the UK.
Length of Trade: Still trading today, the Brooke’s Mill has been around for an astounding 470 years.
Owners: The original owners of the business were John Brooke and sons. The mill has had a number of owners over the years but continues to function under the Brooke & Sons business name, with five generations continuing within the business.
How have they lasted? The Brooke’s Mill has managed to survive the test of time through diversification and expansion. Embracing new technology, such as the steam engine in the late 18th Century and power looms in 1836, enabled the business to continue to thrive and stay ahead of the competition. The family-run business also focused on the community element of their business, helping to build a local school and church in 1835 and 1848 respectively. Nowadays the Mill has ceased to be an area of textile manufacturing (after a closure in 1987) and has become a heritage park. The Oxford Heritage Park houses a number of businesses including one of the largest independent film studios and an art gallery.
Entered in the Guinness Book of Records, Whitechapel Bell Foundry stands as Britain’s oldest manufacturing company. It was established in 1570.
How have they lasted? The Whitechapel Bell Foundry has continued to manufacture bells and their associated fittings for a number of years. Dedicating themselves to meticulously high standards of work, the business gained fame for producing world renowned bells such as the Liberty Bell and Big Ben.
The London Gazette was established in 1665 following two key historical events: the Great Plague (1665-1666) and the decision of Charles II to move his court, and effectively the government, to Oxford. The London Gazette was originally published as The Oxford Gazette, changing its name in 1666 when the King returned to London.
Length of Trade: The gazette has been trading for an impressive 346 years, although in a different capacity to its original format.
Owners: Over the year, the paper has had multiple owners and writers, with famous scribes such as Lord Byron and Charles Dickens acknowledging the newspaper in their work. The first owner was Henry Muddiman.
How have they lasted? The London Gazette has managed to survive by diversifying with growing trends. Originally a private publication sent to subscribers, the gazette has now become a well-known newspaper publication.
Today the FTSE 100 Index crashed (ok, “dipped”) after Merv King’s warning that the country was not going to grow and also on the back of the news that France could lose is AAA rating.
The Bank of England has predicted a rise in inflation to 5% later this year and growth in the economy is unlikely to exceed 2%. It looks like interest rates will remain stable at 0.5% for the foreseeable future.
Only yesterday the FTSE 100 appeared to be just missed out on benefiting from the global recovery (albeit a small and brief one) because of the new pension crisis. However, it still managed to finish the day up slightly, which was a first in a while. In fact, for the last 7 days the FTSE 100 had fallen.
Also in the news today, Hong Kong exchange has been attacked by computer hackers resulting in 7 companies having their shares suspended from trading. The computer attack stopped the Hong Kong Stock Exchange (HKEx) computers from providing updated information to investors and analysts. The motive for the attack is still not know.
Wall Street continues to have a bad time of it too. The Federal Reserve have said that interest rates will remain low for the next 2 years, pretty much in line with Bank of England expectations. The Dow Jones opened 250 points down as a result.
Also news that HSBC is planning to sell of its credit card business to Capital One seemed to fuel more selling and doubt in the financial markets.
To cap it all the rioting and looting in London and other spots around the UK has caused a major downturn in retail spending. Many shops remain closed and it is expected that some will never recover. In addition to this we have news that supermarkets are going to be fined £50 million by the Office of Fair Trading (OFT) for price fixing. The price fixing has been focused on the dairy markets and this fine follows an 8 year investigation.