A Review of the Financial Position of Three Stocks- RMG, HRI and CFYN

With the release of the half-yearly and final results, we will be discussing below the financial highlights of three listed stocks:

Royal Mail PLC

Royal Mail Plc was established 504 years ago in the year 1516, initially as a public corporation, facilitating postal and courier services worldwide. It is divided into two parts- UK Parcels, International & Letters (UKPIL) and General Logistics Systems (GLS). The UKPIL works on Royal Mail Core Network and Parcelforce Worldwide, delivering parcels and letters all over the world, through express parcel services. GLS provides logistic solutions.

Financial Highlights

On 17 July 2020, Royal Mail PLC released its final result for the financial year ending 29 March 2020. The Group’s revenue increased by 3.8 per cent in FY19/20 to £10,840 million, in comparison with £10,444 million in FY18/19. The adjusted operating profit was recorded at £325 million, down by 13.6 per cent (FY18/19: £376 million). The adjusted margin was down by 60 basis points to 3 per cent, primarily due to significant cost headwinds in UKPIL. The profit before tax accounted for £275 million. The company was liable to a debt of £1,132 million, which increased in FY19/20, mainly due to IFRS 16. The cash flow of the company was recorded at £556 million, resulting from working capital inflow, lower capital expenditure and positive impact of IFRS 16. The basic earnings per share were 19.6 pence.

Stock Performance

Royal Mail PLC (LON: RMG) stock traded at GBX 184.95 on 17 July 2020 at 2:33 PM. The 52-week low/high price was 124.30/250.50. It was having a market capitalisation (Mcap) of £1,818 million. The company recorded a negative return on price, which was 21.60 per cent on a YTD (Year to Date) basis. The Beta of the company stood at 1.4, indicating that the volatility of the stock is higher than the benchmark index.

Herald Investment PLC

Herald Investment Trust is a London based Investment trust whose objective is to achieve capital gains by making investments in listed companies, especially in the technology, media and telecommunications domains.

Financial Highlights

On 17 July 2020, Herald Investment PLC announced its half-yearly results for the six months ending 30 June 2020. An appreciation of 7.6 per cent to 1,795 pence was recorded in the net asset value per share during the first half of 2020 (H2 2109: 1,668.1 pence). The Company’s UK portfolio accounted for 47.8 per cent of the company’s net assets, and has delivered a negative return of 2.0 per cent in contrast to a total negative return of 19.8 per cent for the Numis Smaller Companies Index plus AIM (excluding investment companies). The Company’s North American portfolio representing 25.8 per cent of net assets, has performed outstandingly giving a return of 25.4 per cent, which compares with the total return of the Russell 2000 (small cap) Technology Index of 6.3 per cent in sterling. The Asian portfolio stood firm with a return of 26.2 per cent in sterling. The cash balances increased for the period and stood at £134 million. The Group delivered a positive return overall even during the tough situations of the Covid-19 pandemic.

Stock Performance

Herald Investment PLC (LON: HRI) stock last traded at GBX 1,606.00 on 17 July 2020 at 2:41 PM. The 52-week low/high price was 897.00/1,710.00. It was having a market capitalisation (Mcap) of £1,076.28 million. The Company recorded a positive return on price, which was 8.63 per cent on a YTD (Year to Date) basis. The Beta of the Company stood at 1.3, indicating that the volatility of the stock is higher than the benchmark index.

Caffyns PLC

UK based motor retail and after-sales company, Caffyns Plc is into the business of sale of new as well as used motor vehicles, their spare parts, services, and accessories.

Financial Highlights

On 17 July 2020, Caffyns PLC announced its preliminary results for the year ending 31 March 2020. The Group’s revenue decreased by 5.4 per cent in FY20 to £197.9 million, due to much lower levels of new car deliveries. An underlying profit before tax for the year of £0.25 million (2019: £1.45 million) was recorded because of the two events that took place- firstly, the covid-19 pandemic which led to the closure of all the car showrooms and secondly, the adverse impact on the majority of the brands, Real Driving Emissions, commonly referred to as RDE. The profit before tax for the year was £0.1 million (2019: Loss of £0.4 million). Basic loss per share was 9.4 pence (2019: minus 21.0 pence), due to the tax charge being more than the pre-tax profit. The underlying deficit per share of the Company for the year was 4.9 pence (2019: earnings of 35.3 pence).

Stock Performance

Caffyns PLC (LON: CFYN) stock last traded at GBX 299.20 on 17 July 2020 at 2:43 PM. The 52-week low/high price was 260.00/425.00. It was having a market capitalisation (Mcap) of £7.01 million. The Company recorded a negative return on price, which was 35 per cent on a YTD (Year to Date) basis. The Beta of the Company stood at 0.7, indicating that the volatility of the stock is lower than the benchmark index.

To conclude, two of the companies mentioned above, namely, Royal Mail Group PLC and Herald Investment PLC have performed well with the increase in their revenues and net asset value during FY 2020 and H1 2020 respectively. On the other hand, Caffyn PLC saw a decline in its revenue by 5.4 per cent during FY 2020. The decrease was mainly an effect of the Covid-19 pandemic scenario.