Deliveroo confirmed on Monday morning that it will sell £1bn ($1.4bn) in new shares ahead of its initial public offering (IPO) on the London Stock Exchange.
The confirmed also announced in a statement that its listing would also include the sale of shares by some existing shareholders.
Deliveroo confirmed there will be two separate classes of shares. Founder and chief executive Will Shu will be the only holder of “class B” stock, which means each of his shares gets 20 votes, while all other shares will get one vote.
The takeaway company will open the listing up to retail investors, making £50m worth of shares available to customers. Each person will be able to apply for up to £1,000 worth of shares.
Shu has confirmed he will offer the company’s top riders £10,000 each following the IPO, as part of a £16m “thank you” fund.
Just last week Deliveroo revealed plans for its initial public offering (IPO), while confirming a 54% growth in sales and £224m of losses in 2020.
Transactions surged to over £4bn during the pandemic however Deliveroo is still a loss making business.
Oilex (LON:OEX) confirmed on Monday that the company made a post-tax profit for the six months up to 31 December 2020 of $418,881, up from a loss of $2,023,782 the year before.
Oilex reduced its explorations costs by over 50% to $256,917, as well as its care and maintenance costs to $63,765, and its administration costs to $424,297.
The cash and cash equivalents held by the AIM-listed company fell to $102,901 from $173,816 at the end of June 2020.
Oilex confirmed in its report that its objective is to maximise shareholder value from its principal asset in the Cambay Basin, located onshore Gujarat State in India, whilst also continuing to review other opportunities to create value and diversify risk by adding new assets to the company’s project portfolio.
The company’s plans at Cambay are well advanced and include the drilling of up to two vertical wells, subject to, among other things, securing the necessary funding.
The Oilex share price is down by 1.25% to 0.16p on early morning trading. In mid-February the company’s share price jumped from 0.10p to 0.21p.
Oilex has performed well on the AIM exchange recently as oil and gas companies have specifically benefitted from the resurgence in oil prices.
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From an all-time high of 5,470p in February 2020, Berkeley Group’s share price plummeted to 3,131p before the end of March, as the pandemic took a stranglehold of the UK economy. Since then the housebuilder’s stock has recovered steadily, reaching as high as 4,889p in December, before coming back down to 4,286p in March.
Government Support for Homebuilders
Property companies received a great deal of support from Rishi Sunak’s budget announcement that could see them to the end of the pandemic.
The Chancellor pledged to “stand behind home buyers”, extending the stamp duty holiday to June. The point at which stamp duty will be paid will remain at £250,000, double its standard level, until the end of September. The budget also included assurance that the government will guarantee mortgages up to 95% of a home’s value.
The policies, in particular the stamp duty waiver, proved to be a success before the pandemic as house prices hit record numbers.
Mark Peck, director at Cheffins, commented on the impact of Sunak’s announcements on the property industry.
“Stamp duty has long been the Treasury’s golden goose and has filled government coffers for centuries, and whilst the lack of stamp duty paid over the past year will have been felt by the government in terms of income, this extension will ensure that the property industry continues its current bull run over the next three months,” Peck said.
The continued support by the government, in addition to the UK economy emerging from lockdown, could make Berkley Group an attractive proposition over the coming months.
Risks
Berkley Group shares took a tumble on Friday as the company’s forecasted profit was downgraded.
The developer predicts it will record a profit of about £504m for the year ending in April, around the same level it generated in 2020, but £20m lower than initially expected.
Berkeley Group also confirmed its reservations are set to fall by 20% during the current financial year as the housebuilder delayed opening sites due to lockdowns.
This is in contrast to its rivals that have wasted no time in building sites to capitalise on the sector’s bright outlook. Russ Mould, investment director at AJ Bell, suggested the stock was less well positioned than its competitors.
“Of all the housebuilders Berkeley seems the least bullish. A flat performance in its financial year to February 2021 is testament to how impressively the business recovered from the pandemic in the second half.
“But while Berkeley still has strong levels of enquiry it is phasing developments to coincide with a reopening of the economy. This may look very clever in time if it sees Berkeley deliver a smoother flow of profit and cash flow than its peers, many of which seem to be operating at 100 miles an hour.
While Berkeley is well poised to capitalise from favourable policies and perpetual demand for housing, the company does risk being outperformed by its competitors over the coming months.
The FTSE 100 dipped 0.35% to 6,713.40 on Friday morning. “Strength among banking and energy stocks wasn’t enough to offset weakness in miners and housebuilders, the latter falling after a gloomy update from Berkeley Group,” says Russ Mould, investment director at AJ Bell.
“It’s not quite the end to the week that investors had hoped, with markets across Europe failing to sustain yesterday’s positive momentum,” “However, markets are still ahead on the week and the recent sell-off in tech stocks looks like it has stabilised which is important for investor sentiment,” Mould adds.
FTSE 100 Top Movers
Burberry (6.07%) headed up the FTSE 100 on Friday, followed by Barclays (2.51%) and M&G (2.10%).
Berkley (-5.91%), Fresnillo (-3.52%) and WPP Group (-2.71%) were the index’s biggest fallers prior to Friday lunchtime.
Burberry
Burberry has said it expects its full-year profits to exceed expectations following a resurgence in its sales over recent months. In an impromptu trading update on Friday the luxury brand confirmed its same-store retail sales are expected to be between 28% and 32% higher compared to the year prior. Burberry also confirmed it anticipates its full-year revenue to fall between 10% and 11%. Analysts forecasted a 13% decline at constant exchange rates.
Shares in the FTSE 100 company were up over 8 per cent in early London trading.
Berkley
Russ Mould commented on Berkley’s resilient performance during the pandemic.
“Of all the housebuilders Berkeley seems the least bullish. A flat performance in its financial year to February 2021 is testament to how impressively the business recovered from the pandemic in the second half.”
“But while Berkeley still has strong levels of enquiry it is phasing developments to coincide with a reopening of the economy. This may look very clever in time if it sees Berkeley deliver a smoother flow of profit and cash flow than its peers, many of which seem to be operating at 100 miles an hour.”
Burberry has said it expects its full-year profits to exceed expectations following a resurgence in its sales over recent months.
In an impromptu trading update on Friday the luxury brand confirmed its same-store retail sales are expected to be between 28% and 32% higher compared to the year prior.
Burberry also confirmed it anticipates its full-year revenue to fall between 10% and 11%. Analysts forecasted a 13% decline at constant exchange rates. The FTSE 100 company’s operating margin is expected to come in around 16%, higher than the margin implied by forecasts.
Shares in the FTSE 100 company were up over 8 per cent in early London trading.
Russ Mould, investment director at AJ Bell, suggested the business will pick up further when international travel resumes.
“Burberry has been strutting down the catwalk with quite a pose since the latter part of 2020 as its earnings recovery takes shape. Its latest update shows that trading is better than expected which is impressive given that this is likely to be just the first stage in a multi-phase bounce back,” Mould said.
“A lot of its business has historically come from Asian tourists taking trips across Europe. They like to spend big and its products are highly desirable. The restrictions on international travel are only in the nascent stages of being lifted and the return of tourist-related sales may not pick up in earnest until 2022.”
Mould also feels that Burberry could be benefit from a Roaring Twenties like economic boom.
“Therefore, current sales are likely to be driven by domestic customers. In January it flagged good full-price sales in places like the Americas, mainland China and Korea.”
“As more regions start to come out of lockdown restrictions, there is a sense that we could see a huge spending spree as a lot of people fortunate to have been working throughout the pandemic may have amassed considerable spare cash.”
“The idea that we could see the Roaring Twenties is very real and luxury goods companies such as Burberry could be major beneficiaries.”
Property prices in rural areas surged during to pandemic
The average price of a rural property has risen by 20.8% over the last five years, 3.3% higher than in urban areas, according to the 2021 Rural Property Report by Coulters Property.
There was a surge of 6.22% in the price of rural property between 2019 and 2020, as demand increased for homes in rural areas during the pandemic.
“Over the last year, we’ve seen an increasing amount of people relocating from cities to the countryside, due to factors such as more green space, fresher air and a slower pace of life,” the report said.
Rank
Local Authority
2015
2020
Five-year increase
1
Harborough
£245,582
£328,172
33.6%
2
East Northamptonshire
£188,598
£250,497
32.8%
3
Rutland
£254,328
£335,024
31.7%
4
Hinckley and Bosworth
£181,410
£238,220
31.3%
5
High Peak
£168,050
£218,996
30.3%
5
Mendip
£219,217
£285,616
30.3%
7
Swale
£202,145
£263,271
30.2%
7
Staffordshire Moorlands
£156,219
£203,403
30.2%
7
Derbyshire
£235,059
£305,997
30.2%
10
Forest of Dean
£200,227
£259,473
29.6%
The rural areas with the biggest price increases
Property prices in Harborough, Leicestershire, have increased by 33.6% over the last five years, with the average house price reaching £328,172 in 2020.
The most expensive rural area, according to the report, is Waverley, Surrey, where the average house price is £473,536.
While County Durham is the most affordable countryside location to purchase a property, with an average house price of £109,980.
Predominantly urban areas have the highest average property prices (£302,710) in the country. However, the top ten most expensive areas to buy a house are all in London, where house prices are notoriously high due to their high demand.
This January saw house prices fall for the first time in six months.
The house price index from Nationwide reported a 0.3% fall in the average UK property price to £229,748.
Rishi Sunak announced today that UK GDP fell by 2.9%, putting the figure down to the economic impact of the coronavirus pandemic.
“Today’s figures highlight the impact the pandemic continued to have on our economy at the start of the year as we tackled the new variant of the virus – and I know this is a cause of concern for many,” the Chancellor said.
The Office for National Statistics (ONS) said on Friday that the dip on GDP came about as a result of declines in retail sales and education as the UK aimed to halt the spread of Covid-19. The UK economy is 9% smaller than it was prior to pandemic which began over a year ago, the ONS added.
Manufacturing fell for the first time since April due to a fall in exports as the UK adapted to its new arrangements with the EU, according to the ONS.
Exports to the bloc dropped by 41% in January, as imports from the EU fell by 28.8%.
Commenting on UK GDP falling by 2.9%, Ian Warwick, managing partner at Deepbridge Capital, said:
“The numbers reflect the UK’s difficult start to the year, amidst ongoing Brexit and Covid uncertainty. However, there are now clear glimmers of light at the end of what has been a long journey. The UK has already administered more than 23 million coronavirus vaccinations and the number of daily infections is falling.”
Rupert Thompson, chief investment officer at Kingswood, drew attention to other factors at play:
“The lockdown took a smaller toll on the UK economy in January than expected with GDP falling 2.9% over the month rather than 4.9% as had been expected.”
Thompson also reflected on the longer-term impact of the UK leaving the European Union.
“However, more notable was the sharp drop in EU Trade with exports and imports down 41% and 29% respectively. Only time will tell how much of this was down to the lockdown, how much was down to Brexit and more importantly, how much of the latter just reflects teething problems and will be soon reversed.”
