Deliveroo losses narrow ahead of London listing

Liam Roche
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Deliveroo losses narrow ahead of London listing

Deliveroo to give top riders £10,000 each following the IPO

Deliveroo has revealed plans for its initial public offering (IPO), while confirming a 54% growth in sales and £224m of losses in 2020.

The online food retailer announced its intention to float on Monday with shares expected to begin trading by early April.

Deliveroo’s public announcement comes days after the UK government committed to altering a ruling so that founders would be able maintain control of their companies despite selling shares to investors on the stock market.

Will Shu, co-founder of Deliveroo and chief executive, will have 20 votes per share, while every other shareholder will have one vote per share, in line with the dual-class share structure included in Monday’s filing.

Shu has confirmed he will offer the company’s top riders £10,000 each following the IPO, which is expected to earn the founder a significant payday.

Deliveroo has its sights set on a $10bn valuation ahead of its initial public offering, which would be the highest valued new listing in London for a number of years.

Russ Mould, investment director at AJ Bell, refocused attention on the company’s loss during the pandemic, despite favourable market conditions.

“After the fanfare of how Deliveroo is going to reward drivers with bonuses and give customers a chance to buy the shares, here comes the hard facts. The most important point is how the company remains loss-making despite experiencing a surge in business going through its platform during the pandemic.

“It’s hard to see it’ll have another year when market factors were so much in its favour. Lockdowns kept people at home for months at a time and online grocery slots were hard to come by, so demand for takeaways shot up. A cynic might ask, if Deliveroo couldn’t deliver a profit against that backdrop, when will it?”

“Fans of the business will point out that it has narrowed its losses by nearly 30% and that its underlying gross profit has shot up, both in absolute terms and as a percentage of the gross transaction value. That’s likely to be enough to fuel interest for many people in the shares when they come to the London market.”

FTSE 100 makes early gains following attack on oil facility in Saudi Arabia

Liam Roche
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FTSE 100 makes early gains following attack on oil facility in Saudi Arabia

Following an early rise to 6,673.21, the FTSE 100 retreate below Friday’s close to 6,626.95, down 0.0.54%. The index has so far been propped up by oil prices following an attack on a facility in Saudi Arabia.

“The FTSE 100 made a solid start to the week underpinned by renewed gains for oil off the back of attacks on facilities in Saudi Arabia over the weekend,” said AJ Bell investment director Russ Mould.

“This lifted index heavyweights BP and Royal Dutch Shell as the black stuff traded above $70 per barrel for the first time since January 2020 when tensions between Iran and the US were rapidly escalating.”

“The only problem is the rise in oil will only add to the key concern which is dogging markets – namely the risk of runaway inflation and a resulting increase in interest rates,” said Mould.

“The other key driver for positive sentiment this morning is also a double-edged sword with the news that the US has signed off its long-awaited $1.9 trillion stimulus package. This is also seen as a major catalyst for rising prices,” Mould said.

FTSE 100 Top Movers

Pearson (3.32%), Lloyds (2.64%) and Pershing Square Holdings (2.47%) are Monday’s top movers on the FTSE 100 so far.

London Stock Exchange Group (-5.15%), Ocado Group (-4.24%) and BT Group (-3.59%) are the day’s biggest fallers.

Phoenix Group

Phoenix Group reported a substantial increase in operating profit for 2020, and said it is in a strong position to leverage the key industry drivers of growth. 

The FTSE 100 company confirmed an operating profit of £1.2bn, up from £810m the year before.

Pearson

Pearson confirmed on Monday that it will maintain its dividend for the year as the education company expects a recovery after its sales took a hit during the pandemic. 

The FTSE 100 firm has proposed a final dividend of 13.5p per share. This brings the full-year figure to 19.5p, in line with 2019.

Shoe Zone scraps dividend as stores remain closed

Liam Roche
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Shoe Zone scraps dividend as stores remain closed

Shoe Zone posts pre-tax loss of £14.6m

Shoe Zone (LON:SHOE), the footwear seller, swung to a loss in 2020 and scrapped its dividend, as nationwide lockdowns took a toll on the company’s sales.

The AIM-listed company also announced the appointment of a new finance director, Terry Boot, as Peter Foot stepped aside after seven months.

Shoe Zone made a loss before tax for the year which amounted to £14.6m, down from £6.7m the year before. The company’s revenue also fell by 24% to £122.6m.

Shoe Zone’s gross margin contracted to 61.4% from 62.7%.

The shoe seller confirmed its stores remained closed and said it was unable to forecast accurately due to ongoing uncertainties.

Anthony Smith, chief executive at Shoe Zone, commented on the the results, as well as looking ahead.

“In my second year back as Chief Executive, it is disappointing I am reporting on a year impacted by COVID-19. Despite this, there are positives such as the continued growth of digital and the commitment and focus of our loyal employees. The financial pressure caused by COVID-19 has meant we now have debt on the balance sheet for the first time in over 15 years.”

“The business model of digital, big box, hybrid and town centre stores remains the same although the percentage contributions of each area are changing fast due to lockdown restrictions, some of which will be a permanent shift.”

Phoenix Group sees profits surge in 2020

Liam Roche
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Phoenix Group sees profits surge in 2020

Phoenix Group assets under management at £338bn

Phoenix Group (LON:PHNX) reported a substantial increase in operating profit for 2020, and said it is in a strong position to leverage the key industry drivers of growth.

The FTSE 100 company confirmed an operating profit of £1.2bn, up from £810m the year before.

The insurance firm also recorded a rise in its assets under management from £248bn in 2019 to £338bn.

Phoenix Group’s board declared a final dividend of 24.1p per share, bringing the full-year dividend up to 47.5p per share. This is up from 46.8p per share in 2019.

After an hour of trading, the company’s share price was up by 2.34% to 744p per share.

Commenting on the results, Group CEO, Andy Briggs said:

“2020 was a landmark year for Phoenix during which we completed the acquisition of ReAssure and became the UK’s largest long-term savings and retirement business. We delivered record cash generation of £1.7 billion, our Solvency balance sheet remained resilient, we delivered our highest ever year of Open business growth, and we have recommended a 3% increase in our 2020 final dividend.”

“We are led by our purpose of ‘helping people secure a life of possibilities’ to deliver for all of our stakeholders and are putting sustainability at the heart of our business. During the year we have focused on delivering better outcomes for our customers, investing in our people, supporting our local communities, and have made a commitment to be net-zero carbon across our operations by 2025 and our investment portfolio by 2050. COVID-19 has challenged each and every one of us and I am very grateful for the outstanding dedication and professionalism of my colleagues which ensured we protected our customers throughout.”

“Looking ahead to 2021, we will continue to optimise our in-force Heritage business for cash and resilience, while the recent acquisition of the Standard Life brand will support us in accelerating our Open business growth strategy.”

Diversified Gas and Oil CEO “exceptionally pleased” with full-year results

Liam Roche
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Diversified Gas and Oil CEO “exceptionally pleased” with full-year results

Diversified Gas and Oil posts record production levels

Diversified Gas and Oil (LON:DGOC) released its full-year results for 2020 on Monday as chief executive Rusty Hutson revealed his delight at the group’s resilience.

Adjusted earnings increased by 1% to $301mn for the year, helped by hedge cash settlements of $145m, which offset lower gas prices during 2020.

Total revenue, including the hedge cash settlements, came to $533m, an 8% rise on 2019’s figure.

Diversified Gas and Oil confirmed a net loss of $23m, a swing from $99m in net income the year before.

The oil company posted record production levels, as its exit rate for 2020 came in at around 100,000 barrels per day. This is 18% above the volume recorded at the end of 2019.

Diversified Oil and Gas proposed a final quarterly dividend of $0.04 per share, bringing the full-year 2020 dividend to $0.1525 per share, 10% higher than 2019 ($0.1392 per share), supported by accretive growth of its low-decline, long-life assets.

Commenting on the results, CEO Rusty Hutson, Jr. said:

“I am exceptionally pleased with our results in 2020 as they reflect the resilience of our business model and its proven ability to consistently deliver shareholder value and returns, even in the most challenging of markets. Our commitment to value-accretive growth, operational excellence, cost discipline, and risk mitigation drove the Group’s solid performance through turbulent times. Our long-standing strategy of focusing on low-risk assets and reliable cash flows position DGO for further growth, and enables us to maintain our firm commitment to shareholder returns, evidenced by the increase in our per-share dividend, which we raised twice, or 14%, during the year.”

“With a business model grounded in asset and environmental stewardship, we made significant strides in developing plans and adopting disclosure frameworks aimed at improving our environmental footprint. Additionally, we strengthened our track record of accretive growth with the successful acquisitions of both upstream and midstream assets, contributing to a consistent, strong cash margin and enlarging our portfolio of Smarter Asset Management opportunities on a base of assets with an exceptionally low corporate decline rate of ~7%. Our commitment to acquire low-decline assets enables us to replace production declines with approximately 10% of our Adjusted EBITDA while meeting our operating and ESG commitments, reducing our debt and making consistent quarterly dividend payments to shareholders.”

Pearson to maintain dividend despite school closures impacting sales

Liam Roche
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0
Pearson to maintain dividend despite school closures impacting sales

Pearson to focus on high-growth areas in 2021

Pearson (LON:PSON) confirmed on Monday that it will maintain its dividend for the year as the education company expects a recovery after its sales took a hit during the pandemic.

The FTSE 100 firm has proposed a final dividend of 13.5p per share. This brings the full-year figure to 19.5p, in line with 2019.

Pearson also confirmed that sales during 2020 fell by 12% to £3.4bn. Underlying profits dipped by 46% to £315m, while underlying revenue dropped by 10%.

The company’s results came about following widespread closures of schools and cancellations of exams.

Looking forward, Pearson will now look to focus on fast-growing areas: Online and digital learning; English language tuition; workforce skills and accreditation and certification.

Russ Mould, investment director at AJ Bell, drew attention to the company’s move towards home working.

“Another interesting feature of Pearson’s new strategy is a big reduction in its property footprint as it plans to adapt to more home working.”

“Pearson’s move follows in the footsteps of other major companies such as banking firms Lloyds and Barclays and could well send a chill through the office property space.”

Andy Bird, chief executive of Pearson, commented on the company’s results and outlook:

“Our purpose has never been so relevant: we exist to help everyone achieve their potential through learning. I have witnessed this first-hand every day since joining Pearson, having spent time with customers, employees and other key stakeholders. I have enormous optimism in the future and our ability to unlock our potential and drive sustainable growth.”

“Pearson’s strategy is now geared around three key demand-led global market opportunities which play to all our strengths: the rise in online and digital learning; addressing the workforce skills gap; and meeting the growing demand for dependable accreditation and certification. Our existing assets, strong balance sheet, new organisational structure and priorities will enable us to seize these opportunities. As the global leader in learning, nobody else has the breadth and depth of experience, scale, expertise and relationships across the entire lifelong learning spectrum.”

“Following significant investments in technology and comprehensive restructuring, Pearson is moving at pace and ready to enter a new era as a digital-first company, focused on delivering sustainable revenue and profit growth for the benefit of all company stakeholders.”

BrewDog bookings come to a head

Bronte Carvalho
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BrewDog bookings come to a head

Scotland-based brewery and pub chain BrewDog is revelling in the news that the UK’s national lockdown is set to come to an end this summer.

The company reported it has had its busiest day for bookings on record after Prime Minister Boris Johnson announced the easing of restrictions in the coming months.

Beer gardens are set to open to the public from the 12th of April and all coronavirus restrictions are poised to wrap up in June, although the government has stressed that these dates are provisional and dependent on the rate of infection tailing off.

“Tens of thousands” of eager customers have already booked tables at BrewDog sites across the UK, according to a post published on LinkedIn by the brand’s CEO and co-founder, James Watt.

BrewDog have not been the only ones to see a surge in bookings following Johnson’s announcement, with the Inn Collection Group – which has 15 venues across the north – revealing it had seen a “300 per cent spike in bookings” over the last fortnight.

“There’s no doubt there’s a massive pent-up enthusiasm,” Christian Burns, owner of six pubs in Bishop Auckland, told The Independent over the weekend. “People have seen enough of their back gardens or kitchen tables and they want to get out. If the weather’s good, for those pubs with outdoor facilities it could be an astounding April”.

Last month, brewery bosses and landlords told the Evening Standard that they were ‘in a battle to save the Great British pub’. Bars and drinking establishments have been especially hard hit by the pandemic, with lockdown restrictions all but wiping out business, but the government’s promise of outdoor dining is not enough for some.

Chief Executive of the British Beer and Pub Association (BBPA), Emma McClarkin, has already warned that as many as 29,000 pubs will not be able to welcome customers because they simply do not have a beer garden or outdoor space to accommodate them.

“If pubs do open outdoors only in April – we believe just 17% of UK pub capacity will actually open. This would result in a loss of turnover to the sector of £1.5 billion when compared to trading in normal times. That is far from reopening and recovering”.

The BBPA acknowledged that 75% of UK pubs reportedly have a beer garden or outdoor space, but said that it found just 40% of those were likely to have outdoor space adequately large enough to operate a socially-distanced service. 

It also added that even larger beer gardens could “struggle to break even, as they would still have vastly reduced capacity and significant practical challenges”.

BrewDog has excelled in popularity in recent years with its vast offering of craft ales and funky product designs. The brand’s famous Punk IPA is the #1 craft beer in the UK.

It was also the first company to join Crowdcube’s exclusive Unicorn Club, with a pre-money valuation sitting at £1.8bn, and is currently being touted for an IPO on the London Stock Exchange at some point this year.

Expensive Parsley Box meal for investors

Andrew Hore
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Expensive Parsley Box meal for investors

Parsley Box Group is set to join AIM in the next few weeks, and it appears that its pre-money valuation may be more than £70m, if the most recent fundraising by the main subsidiary is anything to go by.
As usual, the intention to float announcement was all puff and no pastry. No valuation was put in the announcement. There was no stated profit or loss, but it appears that the company is currently losing money.
Scotland-based Parsley Box provides ambient ready meals to people 60 years old and over. It was founded by Adrienne and Gordon MacAulay in 2017 and there were 154,000 active customers at...

ThinkSmart valuation increases

Andrew Hore
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ThinkSmart valuation increases

Although there has been criticism of buy now, pay later finance Australia-based provider Afterpay continues to go from strength to strength. That is good news for ThinkSmart (LON: TSL) which retains a residual stake in the UK-based Clearpay, which it sold to Afterpay. This is the main source of value for the shares and the stake has significantly increased in value.
There was a 10% stake retained in Clearpay, but employees will receive some of the shares, so the net stake is 6.5%. The stake is currently valued at £106.6m according to independent valuers.
The growth in active customer numbers a...

Gold slumps to a near nine-month low following non-farm payroll figures

Liam Roche
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0
Gold slumps to a near nine-month low following non-farm payroll figures

Gold trading below $1,700

Gold prices dipped below $1,700 on Friday as US non-farm payroll figures surpassed expectations.

America added 379,000 jobs in February, significantly more than the 180,000 forecasted by economists.

The market for the precious metal fell under pressure ahead of the employment statistics and lost ground in the immediate aftermath. The last time gold traded below $1,700 was in June 2020, just under nine months ago.

Gold price

In addition to better than forecasted job growth in February, the unemployment rate fell to 6.2%, from 6.3%.

The precious metal’s price has also been dented recently by rises in US bond yields and increasing optimism around an economic recovery.

“We see the rising bond yields as a sign of economic optimism, which has also prompted investors to sell some of their positions,” said Carsten Menke of Julius Baer.

The precious metal is also facing pressure from cryptocurrencies such as bitcoin, otherwise known as “digital gold”.

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