Next raises profit guidance as online sales sees it through pandemic

Liam Roche
-
0
Next raises profit guidance as online sales sees it through pandemic

Next grew its online customer base by 40% to 8.4m last year

Next (LON:NXT) navigated the coronavirus pandemic by growing the scope of its online business which accounted for nearly 50% of the company’s revenue.

The fashion retailer confirmed that its online sales have exceed estimates during the first eight weeks of the year, up 60% compared to two years ago. Subsequently the FTSE 100 company is raising its profit guidance by £30m to £700m.

Next also said it grew its online customer base by 40% to 8.4m last year, thanks to online sales which amounted to nearly 50% of the company’s turnover.

Pre-tax profit was recorder at £342m, matching a trading update by the company in January, while brand full price sales for the year fell by 15% and total sales were down by 17% from the year before.

Despite shops remaining closed for most of the year Next cut its net debt by £502m to £610m. In addition, the company said it will further reduce its net debt to £435m by generating £175m of surplus cash.

Next said it would not pay a final dividend for the year “given the continuing uncertainty” after suspending payouts last April.

Michael Roney, chairman of Next, commented on the company’s ability to weather the storm caused by the pandemic, as well as outlining future trends for the industry.

“In last year’s Full Year Results, published just as the UK went into lockdown, we stated that our sector was facing a crisis unprecedented in living memory. We also stated that our strong balance sheet and profit margins would allow us to weather the storm,” Roney said.

“We expect the shift in consumer behaviour towards Online sales to continue for some time and one of our priorities during the year has been to continue the development of our Online platform. We accelerated part of our planned capital expenditure in the Online business, spending £121m on warehousing and systems.”

“Rather than proposing a dividend at this time, the directors consider it sensible to wait and see how the business performs once the current lockdown comes to an end and COVID restrictions are lifted.”

Sumo growth covered by contracts

Andrew Hore
-
0
Sumo growth covered by contracts

Demand for the expertise of video games services provider Sumo Group (LON: SUMO) remains high with the current year forecast practically underpinned by work that is already contracted.
The UK games market is worth £7bn a year, up 30% in 2020, and there is increasing need for creative talent. The global games market is expected to be valued at $196bn this year.
2020
In 2020, revenues increased from £49m to £68.9m, while underlying pre-tax profit improved from £12.6m to £14.8m. There were contributions from acquisitions, but there was also organic revenue growth of 24%.
Sumo’s development teams ...

ONS: Economy expanded by 16.9% and 1.3% in Q3 and Q4 of 2020

Liam Roche
-
0
ONS: Economy expanded by 16.9% and 1.3% in Q3 and Q4 of 2020

2020 UK economy’s worst performance in over 300 years

The recovery of the UK economy has been stronger than expected, according to data released by the Office for National Statistics (ONS), demonstrating higher household savings than figures previously suggested.

The ONS said the British economy grew by 16.9% in Q3 of 2020 and 1.3% in Q4%, up from its initial forecasts of 16.1% and 1%.

Analysts are saying that the stronger than expected recovery is a signal that the UK could grow more during the current year.

However, while the ONS described a strong second half of 2020, it also said the recession during the first half of the year was more substantial than previously thought.

GDP fell by 19.5% in the second quarter of 2020, more than the initial forecast of 19%.

Over the course of the year, the UK economy shrank by 9.8%, 0.1% lower than expected by the ONS, but still the UK’s worst performance for over 300 years.

Disposable incomes held steady in 2020, up by only 0.1%, having been adjusted for inflation. The lack of opportunities to spend money due to lockdowns meant that many homes gathered savings that exceeded the ONS’s initial estimates.

Cash saved as a proportion of disposable income, otherwise known as the savings rate, rose from 14.3% in Q3 of 2020 to 16.1% in Q4.

Philip Shaw, an economist at the investment firm Investec, commented: “Our estimate of excess or pent-up savings now stands at £121bn, equivalent to close to 10% of total household consumption in cash terms last year.”

This could mean that households spending will surge from its position as the weakest sector of the economy to the strongest.

Shaw told The Guardian that he expects the third lockdown to push down GDP by 1.8% in Q1 of 2021, to be followed by a rebound that would push GDP 7.3% higher in 2021 as a whole.

The UK economy recorded among the largest contractions of all the large countries in the Organisation for Economic Cooperation and Development, with only Spain and Argentina reporting steeper falls.

Arrival Share Price: the future of electric commercial vehicles?

Liam Roche
-
0
Arrival Share Price: the future of electric commercial vehicles?

Arrival Share Price

Arrival (NASDAQ:ARVL), a British manufacturer of electric commercial vehicles, made its stock market debut at $22 per share on 25 March, raising around $660m, which valued the company at $13.6bn (£9.5bn). Since then it has come down to $18.12 per share. This followed Arrival completing its merger with SPAC company CIIG on Thursday 25 March. Arrival has said its listing is the biggest by a UK tech company in history.

Outlook

Arrival is expecting to record $1bn in revenue in 2022, increasing to $14billion by 2024, while aiming to become profitable in 2023. While the electric vehicles company has not met all of its pre-orders, it has established $1.2 billion worth of orders from United Parcel Service.

In order to meet the orders, Arrival confirmed it is constructing an additional micro-factory in Charlotte, North Carolina. President of Arrival, Avinash Rugoobur, said that the vertically integrated micro-factories would require less space and investment than traditional manufacturing bases, thereby lowering the company’s long-term cost base.

Electric Vehicles

Founder and chief executive Denis Sverdlov – a former deputy telecoms minister of Russia – said: “We believe that all vehicles will soon be electric, because it is better for people, the planet and business.”

“Arrival’s invention of a unique new method to design and produce vehicles using local Microfactories makes it possible to build highly desirable yet affordable electric vehicles – designed for your city and made in your city,” Sverdlov added.

In February Arrival began trials of its zero-emission Bus with First Bus, one of the UK’s largest transport operators. The trials, which will see Arrival buses navigating existing First Bus routes in the UK, will begin this Autumn. The new partnership comes just seven months after First Bus announced their commitment to purchase no diesel buses after 2022 and to operate a fully zero- emission fleet by 2035.

In addition, earlier in March the company unveiled specs, images and video of the next phase in the development of its electric van which will be starting public road trials with key customers this summer. Arrival believes it has set a new standard for commercial vehicles by introducing a fully electric van that excels across both payload (1975kg) and cargo volume (2.4m3 per metre in length) at a price comparable with fossil fuel vehicles, and with a substantially lower Total Cost of Ownership (TCO).

While the company is clearly making inroads in the growing industry of electric commercial vehicles, it has been ambitiously priced. Therefore investors may be more bullish if the stock comes down a bit more.

“If it comes down below $17.50, you can buy it hand over fist, because this one has the best claim to be the son of Tesla — or daughter, to break the tyranny of that awful cliche,” said Jim Cramer, host of CNBC’s Mad Money.

“We’re still in the early innings of this story, but it’s much more compelling than some of these other small-time electric-vehicle start-ups,” Cramer added.

Wetherspoon sets out plans for £145m post-lockdown investment

Liam Roche
-
0
Wetherspoon sets out plans for £145m post-lockdown investment

Wetherspoon chairman criticises possible vaccine passport

JD Wetherspoon (LON:JDW) has disclosed plans for a £145m investment aimed at expanding and upgrading its pubs – providing there is not another lockdown.

The FTSE 250 company has confirmed that the 75 projects would take over a year to complete and provide 2,000 new jobs. Over the coming decade the group is looking at investing an additional £750m, which would create a further 20,000 jobs.

The initial funding, set to begin this summer, will see 18 new pubs as well as 57 “significant” upgrades and extensions to existing sites.

Tim Martin, the Wetherspoon founder and chairman, said: “Our immediate investment will provide work for architects, contractors and builders as well as resulting in 2,000 new jobs for staff in our pubs.”

Martin reaffirmed his commitment to its long-term investment programme over the coming years but warned it is not a certainty.

“The investment is conditional on the UK opening back up again on a long-term basis, with no further lockdowns or the constant changing of rules,” Martin said.

“Since the great majority of our capital expenditure has always been funded by free cash flow, it would be reckless to proceed with major investment without a firm pledge that the lockdown and restrictions era is over. Excluding any capital expenditure whatsoever, the pub industry had a negative cash flow in the last year — investment without cashflow is Goodnight, Irene.”

The Wetherspoon also raised concerns over the possible introduction of coronavirus health certificates as England’s lockdown is eased in a Telegraph column.

The chairman of the pub chain said: “For many pubs, hanging on for dear life and devastated by G-force changes of direction, a complex and controversial passport scheme would be the last straw.

“It would inevitably put pub staff in the frontline of a bitter civil liberties war, with some customers unwilling to be vaccinated or unable to have a jab for medical reasons.”

Parsley Box off to slow start on AIM

Liam Roche
-
0
Parsley Box off to slow start on AIM

Parsley Box directors now control around 31.2% of company

Parsley Box, provider of long-life ready meals to older customers, is down by 10.7% per share on its opening day of trading to 187.5p per share. This followed an early rise to 211.8p from a flotation price of 200p as the company made its debut on AIM.

Russell Pointon, Edison Group director of consumer and media, shared a positive outlook for the company after its promising start on the London stock market:

“It has a differentiated product offer (the only D2C ready meal provider offering easy to prepare meals that require no cold storage) and high level of customer service (next day delivery and no subscription required) that are geared to maximising customer convenience,” Pointon said.

“It has a clear opportunity to grow its customer base and their level of spend with the company in structural growth markets. The structural growth drivers include exposure to the fastest growing age demographic, which is currently underserved by other providers, and the ongoing shift of spend on food to e-commerce.”

Parsley Box raised total gross proceeds of £17m (£5m for the company and £12m for selling shareholders) giving an implied market of £83.8m.

Pointon further outlined the next steps fo the company as it seeks to expand its customer base.

“Management plans to scale the business, which is capital light, through increasing the frequency of purchases and AOVs from repeat customers while increasing the new customer base,” said Pointon.

“To facilitate this there will further range extensions (eg more price segmentation and special dietary foods) and broader categories (eg vitamins and functional foods). In addition, management is considering geographic expansion to countries with similar age and meal choice characteristics.”

Gordon and Adrienne MacAuley, a husband and wife team, started the venture in 2017. Kevin Dorren, 52, the Scottish entrepreneur who is involved in businesses such as Diet Chef, TVSquared and Machine Labs, moved from chairman to become chief executive in 2019.

The directors of the company will now control around 32.1% as trading has begun.

FTSE 100 on course to see out Q1 of 2021 with mild session

Liam Roche
-
0
FTSE 100 on course to see out Q1 of 2021 with mild session

The FTSE 100 is on course to close out a turbulent first quarter of 2021 with a disappointing session. At early morning trading the index is down by 0.3% to 6,747 points.

Yields on US 10-year government bonds rose to a 14-month high in a sign of optimism that vaccines are getting the pandemic under control.

“The bogeyman which has haunted investors since late January – rising bond yields and what they say about inflation and interest rate risks – is rearing its head once again,” says AJ Bell investment director Russ Mould.

“This put US and Asian stocks under some modest pressure and the weak sentiment has extended to Europe on Wednesday,” Mould added.

“The other message to take from the increase in bond yields is a more positive one, namely that people are feeling more confident on a vaccine-led recovery again after a period when doubt had started to creep in amid apparent signs of vaccine nationalism.”

Barring dramatic news emerging, the FTSE 100, along with stock markets across the world, are set to see out the first quarter of the year having made reasonable gains.

FTSE 100 Top Movers

Hikma Pharmaceuticals (3.68%), BT (1.79%) and Admiral Group (1.12%) were the top three risers during the morning session.

The top fallers on the FTSE 100 were Just Eat (-2.32%), Standard Chartered (-2.18%) and Shell (-1.48%).

Deliveroo

Deliveroo (LON:ROO) plunged by 30% as the food delivery company made its debut on the London stock exchange on Wednesday, marking a disappointing start to one of the biggest IPOs in the city in the last ten years.

According to data from Refinitiv, Deliveroo was trading as low as 271p within the first 20 minutes of trading, way lower than the offering price of 390p. The UK-headquartered company priced 384.6m shares at 390p each, the bottom of its target range, meaning Deliveroo was valued at £7.6bn, which is the highest in London since Glencore in 2011.

Deliveroo down 30% on stock market debut

Liam Roche
-
0
Deliveroo down 30% on stock market debut

Deliveroo trading as low as 271p within first 20 minutes of trading

Deliveroo (LON:ROO) plunged by 30% as the food delivery company made its debut on the London stock exchange on Wednesday, marking a disappointing start to one of the biggest IPOs in the city in the last ten years.

According to data from Refinitiv, Deliveroo was trading as low as 271p within the first 20 minutes of trading, way lower than the offering price of 390p.

The UK-headquartered company priced 384.6m shares at 390p each, the bottom of its target range, meaning Deliveroo was valued at £7.6bn, which is the highest in London since Glencore in 2011.

The company, which has been backed by Amazon, raised £1.5bn from investors.

Deliveroo opted to list at the lower end of its range despite the fact it could have raised £1.77bn. The decision was made as companies with similar business models saw their share prices fall recently.

Only institutional investors are able to participate in Deliveroo’s market debut on march 31, while private investors will be able to buy stock as unconditional trading commences on April 7.

Deliveroo, founded in 2013, posted losses of £224m last year however its revenue rose by 54%, as takeaway orders surged due to pandemic lockdowns across Europe.

The food delivery company, which operates internationally, but committed to making London its “long-term home”, had its sights set on a $10bn valuation ahead of its initial public offering.

Will Shu, who founded Deliveroo in London eight years ago, said the city was “a great place to live, work, do business and eat. I’m so proud and excited about a potential listing here”.

“Deliveroo has gone from hero to zero as the much-hyped stock market debut falls flat on its face. It had better get used to the nickname ‘Flopperoo’,” says AJ Bell investment director Russ Mould.

“Initially there was a lot of fanfare about the Amazon-backed company making its shares available to the public, including the ability for customers to buy stock in the IPO offer,” Mould added.

“Sadly, the narrative took a turn for the worst when multiple fund managers came out and said they wouldn’t back the business due to concerns about working practices.”

Lloyd’s of London confirms £0.9bn loss after paying out for Covid-related claims

Liam Roche
-
0
Lloyd’s of London confirms £0.9bn loss after paying out for Covid-related claims

Lloyd’s of London to pay out £6.2bn

Lloyd’s of London confirmed a £0.9bn loss for 2020, which includes net incurred coronavirus losses amounting to £3.4bn after reinsurance recoveries.

Pay outs for Covid-19 will total £6.2bn on a gross basis according to a forecast by the insurance market, as claims due to Covid-19 will add 13.3% to the market’s combined ratio of 110.3%.

Over the last three years, Lloyd’s sustained performance improvement measures contributed to an improved underwriting result of £1.9bn and a 7.5% improvement in the combined ratio, excluding COVID-19, to 97.0%, compared to 104.5% in 2018.

Lloyd’s maintains strong capital and solvency positions, with net resources increasing to £33.9bn in 2020 and a central and market wide solvency ratios of 209% and 147% respectively.

John Neal, chief executive of Lloyd’s, commented on the impact of both the pandemic and Brexit on the insurance industry:

“Following an extremely challenging year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers with pay outs expected to total £6.2bn in COVID19 claims. The year was also marked by a high frequency of natural catastrophe claims and the UK’s formal exit from the EU, driving further losses and uncertainty.”

“Against this unprecedented backdrop we have made good progress across our performance, digitalisation, and culture transformation plans. Our disciplined underwriting approach and determination to become the world’s most advanced insurance marketplace have set us up for real success this year alongside the continued positive rate momentum that will see the market supporting growth for the first time in four years.”

Aside from losses due to the pandemic, the market delivered an underwriting profit of £0.8bn. The insurance marketplace recorded gross written premiums for the year of £35.5bn, down just slightly from £35.9bn in 2019.

Net resources increased by nearly 11 per cent to £33.9bn, demonstrating the strength of its balance sheet according to Lloyd’s, with a central solvency ratio of 209%.

Aquis Exchange posts first full-year profit amid challenging year

Liam Roche
-
0
Aquis Exchange posts first full-year profit amid challenging year

Aquis Exchange revenue up by 67%

Aquis Exchange (LON:AQX), the exchange services group, confirmed a strong performance for 2020 as the company released its financial results to 31 December 2020.

The AIM-listed company’s revenue climbed by 67% to £11.5m, up from £6.9m in 2019.

Aquis Exchange‘s EBITDA rose to £1.5m from £0.0m the year before, while its maiden full-year pre-tax profit swung to £0.5m from a £0.9m loss.

The firm’s cash and cash equivalents held steady, increasing by £1.3m to £12.3m at the year ending in December 2020.

Membership of Aquis Exchange grew to 33 in 2020, from 30 in 2019, and there was a 50% increase in the average monthly usage, in terms of chargeable orders from Q4 2019 to Q4 2020.

Aquis Technologies was chosen to deliver a world-leading proof of concept project, undertaken in collaboration with Singapore Exchange and Amazon Web Services, to create a cloud native exchange

The company’s share price is up by 4.56% to 596p in early morning trading on the release of the results.

Alasdair Haynes, chief executive of Aquis, commented on the reasons for the company’s success over the past financial year:

“For any founder it is a very proud day when you are able to announce your company’s first full year profit. The fact that Aquis has delivered this against the backdrop of COVID-19 and Brexit is even more remarkable and demonstrates the ongoing value of our offering,” Haynes said.

“We have again achieved growth in all our KPIs, and delivered financial progress across all the Group’s divisions, as our management team determinedly executes on strategy. Operationally we have achieved much this year, including the milestone acquisition of what is now Aquis Stock Exchange, our listing venue, and a world-leading proof of concept project in the technologies division. We strive to stay at the forefront of innovation in our industry and can see the reward this brings.”

“Momentum has carried into current trading, with strong performances across the Group and particularly notable progress in AQSE, which is now truly fit for purpose for modern-minded SMEs looking to float. We have a clear vision, excellent team and an exceptional drive to succeed. So, whilst the road ahead remains uncertain at a macro-economic level, we have confidence we have an exciting year in front of us.”

1...1,0161,0171,018...1,824Page 1,017 of 1,824