For someone who runs a stock exchange, Xavier Rolet is a big believer in bonds. One of the most prominent acts of the new chief executive of the London Stock Exchange since he took over in May has been the purchase by his family trust of £3.2 million worth of his employer’s 2019 bonds, which bear an enticing 9.125 per cent yield.

But such fixed-income securities could figure in his thinking in other ways — specifically as one of the areas into which the LSE might expand. Its Borsa Italiana offshoot already operates a retail corporate bonds market, MOT, which could be usefully transplanted to London. So, too, could the breadth of equity derivatives traded on its Idem exchange in Milan, a natural next step given the presence of the LSE’s EDX platform in Russian and Scandinavian futures and options.

Elsewhere, Mr Rolet has a clear opportunity to push into post-trade activities, specifically clearing and settlement, where the LSE is a minnow relative to NYSE Liffe and Deutsche Börse, its overseas rivals.

With Mr Rolet only eight weeks in the job, the LSE’s shareholders will have to wait a little longer for his strategic pronouncements. But for now, yesterday’s first-quarter update provided grounds for quiet encouragement. At an above-forecast £162 million, revenues in the three months to June 30 were down 8 per cent on the year, but up 5 per cent on the previous quarter. Post-trade activities in Italy provided much of the boost, with the LSE’s move to cut fees at Idem increasing derivatives volumes by 41 per cent, with a corresponding benefit to clearing. That change raises hopes that the LSE’s lower tariffs for UK equity trading, which come into effect in September, will be similarly well-received.

Of course, the LSE’s wider fortunes remain geared to stock market levels, while revenues from data services are sensitive to City job cuts. But competition from rivals such as Chi-X has been muted to date, the scope for capturing share of the over-the-counter derivatives market is huge, and Mr Rolet is heavily incentivised to succeed. At 676p, or 11 times earnings, buy on weakness.

Business Post

Deliverers of letters change their name at their peril — as the Post Office found out in its short-lived switch to Consignia.

But the decision of Business Post to rebrand itself as UK Mail from October should cause less alarm. The company’s private mail operation continues to grow — it handles an average of 15 million items a day, or about 17 per cent of the UK postal market — such that, at the present pace, its profits will soon eclipse those from parcels. Equally, Business Post has already rebranded its vehicle fleet as UK Mail, so extending that makeover to the company itself would appear the logical next step.

Neither was there much to upset in yesterday’s first-quarter numbers. Underlying revenues were flat, which was modestly better than forecast given the sensitivity of letter and package volumes to movements in GDP. Similarly, although parcel revenues are still down on last year, the trend is improving and they have yet to feel the full effect of three big recent contract wins.

The difficulty is that the three months to June 30 is one of Business Post’s quieter periods: it will not be until November’s first-half results, which will also provide clear year-on-year comparisons with last autumn’s economic turmoil, that stronger trends should emerge. There are also short-term challenges, not least the potential escalation of tomorrow’s planned postal strike.

Although UK Mail might appear a beneficiary of Royal Mail disruption, it relies on its rival to make the final doorstep delivery, meaning that its customers are affected, too. Such stoppages also tend to boost e-mail at the expense of its hard-copy alternatives. Yesterday’s departure of the head of Rentokil-owned City Link, its parcels arch-rival, suggests that it is taking market share. Meanwhile, the controlling stake of the founding Kane brothers indicates that the 6.3 per cent dividend yield is secure. At 275p, or 13 times earnings, buy for income.

Blacks Leisure

Neil Gillis, the chief executive of Blacks Leisure, is one of those retailers who is loath to put too much store on the weather. The impact of seasonal differences in temperature and rainfall is less important than having the right goods on the shelves at the right prices, he will say.

However, it is hard not to detect the effect of a hotter-than-average June in yesterday’s first-quarter figures from the group. Like-for-like sales in its outdoor division, the Blacks and Millets outlets that make much of their revenue from waterproof clothing, became markedly worse over the past seven weeks — down by an implied 6.4 per cent, after a 1.2 per cent gain in the previous 12 weeks. Conversely, Blacks’ persistently underperforming boardwear operation — the surfwear brands O’Neill and Freespirit — appears to have won a reprieve as a result of the warmer weather, with like-for-likes up 8.6 per cent, after a 10.1 per cent fall.

True, the figures have been helped by the conversion of struggling boardwear stores into outdoor outlets — seven out of fifty of which have so far been changed. But the wider trend is unfavourable: overall like-for-likes down 4 per cent over the past seven weeks, against 0.1 per cent before and despite weak comparatives last year. That is unhelpful, given that Blacks is in the midst of renewing a £35 million banking facility and is seeking an additional £10 million to fund its conversion programme.

At 49p, the shares would respond well to a successful refinancing. However, with a discounted equity raising a distinct possibility and with Blacks forecast to stay loss-making for a further two years, they are a buy only for the brave.

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