Share Prices & Company Research


01 September 2017

Provident and Royal Mail crash out of FTSE 100

Provident Financial and Royal Mail have been relegated from the FTSE 100 in the index’s quarterly reshuffle.

This comes less than two weeks after Bradford-based lender Provident Financial issued its second profit warning in three months, with chief executive Peter Crook announcing his resignation. The company’s share price fell around 66 per cent following the news, although it did go on to recover some of its losses. Adding further to the company’s woes, the Financial Conduct Authority announced its investigation into a product sold by one of the bank’s subsidiaries, Vanquis Bank.

Keith Loudon, Senior Partner at investment management and stockbroking firm Redmayne-Bentley, said: “I’m sad Provident Financial has dropped out of the FTSE 100. The company has developed from a doorstep lender in the industrial North to a leading lender in sub-prime market in recent years. The development of Vanquis Bank was a bold and successful initiative. The complex moves have been made skilfully and without mishap. However, the effort to move from a virtually self-employed collection of staff to salaried employees has been mishandled. This has been exacerbated by the malfunction of a new computer system and proves the maxim ‘use before you buy’! The two facts have brought about this disastrous situation. The company and investors have faced the whirlwind.

“There is still a possibility that the situation can be retrieved. It would be sad to see a formerly great example of Yorkshire initiative and enterprise remain in this parlous state.”

Once the darling of the stock market, Royal Mail has also dropped into the FTSE 250, in the face of a drop in its letter deliveries and ongoing union disputes around its pension scheme. Royal Mail’s share price has fluctuated considerably since the company floated on the London Stock Exchange at 330p a share, peaking at more than 600p in 2014 - leading to speculation at the time that the Government had sold it on the cheap. At close of trading on 31st August 2017, shares were 389.79p each.

Berkeley Group Holdings is back in the FTSE 100, a year after being demoted from the index. The housebuilder’s share price is now back to pre-Brexit vote levels after being hit by the EU Referendum result last year, with sentiment around the sector said to be improving.

Joining it in the top index is United Arab Emirates healthcare provider NMC. In 2012, NMC became the first company from Abu Dhabi to float on the London Stock Exchange. The company was founded in 1973, when founder Dr Bavaguthu Raghuram Shetty arrived in Abu Dhabi with just $8 to his name. Today, NMC has a stock market value of £5.5bn.

Also being promoted into the FTSE 250 are asset finance software developer Alfa Financial Software Holdings, gambling company 888 Holdings and the Sequoia Economic Infrastructure Income Fund.

However, dropping out of the FTSE 250 are miner Petra Diamonds, van and commercial vehicle hire firm Northgate and construction company Carillion, whose chief executive Richard Howson stepped down following a profit warning in July.

Please note, investments and income arising from them can fall as well as rise in value and you may get back less than you originally invested. Past performance and forecasts are not reliable indicators of future results or performance.  Our view does not constitute a recommendation to buy or sell the shares of the investments mentioned.

Provident and Royal Mail crash out of FTSE 100
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