Beazley shares lead FTSE 250 fallers as it doubles Covid insurance claims estimate

Jamie Gordon
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Beazley shares lead FTSE 250 fallers as it doubles Covid insurance claims estimate
FTSE 250 listed specialist insurance firm Beazley (LON:BEZ) booked an almost 11% fall in its share price on Tuesday, as it announced it would have to revise its original Covid insurance claims cost estimate, to double its previous prediction. In April, the company estimated that that the cost of Covid claims for its first party business (contingency, accident and health, marine, property and reinsurance) would be around US$170 million of reinsurance. Within this, the company said, they had assumed that events would resume in September, which would lead to a normalisation in contingency claims. Instead, the situation with Covid and the potential for a second lockdown, means this is no longer the case.

With the bulk of Beazley’s business coming by way of US and UK-based conferences, and with most events being called off due to restrictions, the company has increased its loss estimates, with further further claims anticipated based on its exposure for events in 2021.

Due to these factors, the company said that its total estimate for first party Covid claims has been moved from US$170m to US$340m net of reinsurance, with Beazley attributing all of this increase to further event cancellations.

The company added that this revised estimate assumes that some semblance of normality will resume in the second half of 2021, though if this is not the case, it estimates it could add a further US$50 million of further claims net of reinsurance.

Beazley keeps a brave face

Speaking on the company’s forward-looking opportunities, its Statement read:

“We continue to see improving growth prospects across our portfolios of business. This is primarily driven by continuing rate improvements, with an overall rate change of 13% at the end of August. We estimate that the overall growth for 2020 will be in the mid-teens.”

“Looking towards next year we expect these rate improvements to continue, and are again planning for double digit growth in 2021. We have contemplated this growth within our capital planning and, following the equity raise and LOC extension earlier this year, are able to take full advantage of the opportunity that lies ahead of us.”

“Investments returned US$136m (or 2.2%) up to the end of August. Whilst we have benefited from recent improvements in investment markets, we remain relatively cautious on taking investment risk given the continued uncertainty surrounding the global economy.”

Investor notes

Following the announcement, Beazley shares dipped by 10.87% or 42.40p, to 347.60p a share 22/09/20 11:30 GMT. This is ahead of the company’s year-to-date nadir of 323.00p, but well short of analysts’ median 12-month price target of 501.68p. The current price is also more than 42% below the company’s share price on the same day last year. Beazley currently has a p/e ratio of 11.21 and a dividend yield of 3.49%.  

Billington shares slip as profits fall 77% and it cancels its dividend

Jamie Gordon
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Billington shares slip as profits fall 77% and it cancels its dividend
Structural steel and construction safety specialists Billington Holdings (AIM:BILN) saw its shares slide by over 6% on Tuesday, with half year results severely impacted by ‘exceptional’ pandemic trading conditions. With severe restrictions on construction sector activity, company revenues fell 30.5% year-on-year, to £32.78 million. This led a 55.2% on-year decline in EBITDA, down to £1.59 million, and a 77.2% free-fall in profit before tax, from £2.68 million to £0.61 million. The situation was equally bleak for Billington shareholders, with earnings per share slipping by 77.0%, from 17.8p, to 4.1p. Further, the company declared a final dividend of 13.0p at the end of H1 2019, and at the end of H1 2020 declared they would be cancelling the dividend in order to conserve cash. One piece of positive news was that its cash and cash equivalents were up 74.6%, to £17.48 million, likely due to reduced opportunities for investment and reduced operational activity. This, along with yesterday’s news that the company had secured £21m in contracts, gives it a pipeline of future potential, save for further lockdown disruption.

Billington response

Commenting on a difficult period of trading, company CEO, Mark Smith, said:

“Following an exceptional 2019, the first half of the year has been dominated by the impact of the Covid-19 pandemic on the construction sector and the consequential restrictions on site access, project delays and cancellations.”

“We have seen a significant impact on our first half revenue, however with all Group operations having now returned to near full capacity and with the majority of projects having restarted, we look forward to the remainder of the year with cautious optimism. We anticipate improved Group financial performance in the second half of the year, before hopefully moving to more normal trading conditions in 2021 assuming the economy stabilises and commences its recovery from the pandemic.”

Investor notes

Following the announcement, Billington shares took a chunk out of their 10% Monday rally, falling 6.35% or 20.00p, to 295.00p 22/09/20 10:20 BST. It currently has a 59.28% ‘outperform’ rating set by a poll of Marketbeat‘s community, with 115 votes for ‘outperform’ and 79 for ‘underperform’. It has a p/e ratio of 7.91, which means it is trading at a less expensive rate than most of its industrial sector products peers, who have an average p/e ratio of 21.06.

Global equities post mild rebound on Tuesday morning

Jamie Gordon
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Global equities post mild rebound on Tuesday morning
Somewhat predictably, global equities sprung back from Monday’s painful losses, with European indices booking some modest gains in the early stages of trading. Up 0.74% to 12,635 points, the DAX led the tired charge, having posted the biggest loss on Monday, down 4.37%. Following them was the CAC, up 0.13% to 4,798 points, having dropped 3.74% the day before. Nestling its way in-between its European cousins was the FTSE, up 0.22% to 5,817. Having fallen by 3.38% on Monday, it appears unlikely the FTSE 100 will regain its 6,000 point footing in the coming days, save for some change in fortune as far as a looming Covid second wave is concerned. Perhaps more accurately representing the economic situation and the sentiment in global equities as a whole, the FTSE 250 opened to a 0.50% drop, before recovering to minus 0.34%. This tells the story of a hospitality sector under unprecedented pressure, with the new 10pm pubs and restaurants curfew, and the possibility of a second lockdown likely to be more than many businesses can shoulder. Today, the mood of the FTSE indexes reflected the mixed set of results being published – for instance those posted by Kingfisher (LON:KGF) and Whitbread (LON:WTB). Speaking on the two companies, Spreadex Financial Analyst, Connor Campbell, said:

“Two Tuesday updates captured the varying fortunes of UK firms on a sector-by-sector basis. Whitbread – which covers not one, but two badly hit areas with its hotel and restaurant chains – revealed it was cutting 6000 jobs after an 80% first half drop in sales. Investors sent the stock 3% lower in response.”

“In contrast, B&Q-owner Kingfisher blasted past first half forecasts, posting a 23% surge in adjusted pre-tax profit to £415 million – £36 million more than analysts had estimated – as like-for-like sales aggressively rebounded in Q2, climbing 19.5% after a 24.8% contraction in Q1. Crucially that momentum also has carried into Q3 (to date), with LFLs up 16.6%. This as UK customers were drawn to DIY for a variety of reasons, from turning the home into an office and/or classroom, to simply finding something to do. With investors understandably impressed by Kingfisher’s handiwork, the stock jumped close to 7%.”

Elsewhere in global equities, the Dow Jones clawed back some its 800 point decline but nonetheless closed at minus 500 points on Monday night. Prospects of these losses being recouped are also slim, with futures suggesting a flat open for the US index. Also, having been more subdued in their losses on Monday, Asian markets remained in the red on Tuesday, with the SSE Composite falling 1.29%, to 3,274 points, and the Hang Seng dropping 0.98%, to 23,716. Meanwhile, Japan’s TOPIX posted another morning of gains, up 0.49% to 1,646 points.

Live Company shares fall on “challenging” trading environment

Safiya Bashir
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Live Company shares fall on “challenging” trading environment
Live Company Group shares (LON: LVCG) fell on Tuesday’s opening £5.37m loss in the six months ending 30 June 2020. Despite the loss in profits, the group has told investors that it expects strong demand in 2021 and revenues are expected to increase over the next two quarters. A new long-term contract has been signed for BRICKOSAURS in Israel. Live Company Group took advantage of the government’s furlough scheme, which saved the company £0.9m. “It has been an extremely challenging first half of the year for the Group with COVID-19 halting the majority of our business for four months,” said David Ciclitira, Chairman of the group. “We have successfully raised a combination of debt and equity over GBP2.5 million, enabling us to survive and re-launch our touring business. We have also been able to replace our relationship with RiverFort. We have taken our time to restructure the cost base of the business, permanently reducing our costs by GBP0.9m per annum. “We have successfully maintained the relationships with our key partners and begun to build new properties for the significant demand in 2021 and beyond. We have introduced new senior management, which I expect to assist the Group in its profitable growth in forthcoming years,” Ciclitira added. Live Company Group shares (LON: LVCG) are trading -6.70% at 8,63 (1011GMT).

Kingfisher profit jumps on strong online sales, shares surge

Safiya Bashir
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Kingfisher profit jumps on strong online sales, shares surge
Kingfisher shares (LON: KGF) soared on Tuesday morning after the group revealed a strong second-quarter. Thanks to a boost in online sales at the B&Q owner, pre-tax profit for the first half of the year grew by 62.4%. Online sales at the group grew 164% and earnings per share grew 15.1p. Chief executive, Thierry Garnier, said: “The crisis has prompted more people to rediscover their homes and find pleasure in making them better. It is creating new home improvement needs, as people seek new ways to use space or adjust to working from home.” “It’s also clear that customers are becoming more comfortable with ordering online. And delivering value to consumers is imperative against a challenging economic backdrop.” “There remains considerable uncertainty around COVID-19 and our near term priorities have not changed — to provide support to the communities in which we operate, to look after our colleagues as a responsible employer, to serve our customers as a retailer of essential goods, and to protect our business for the long term. We remain proud of, and humbled by, the response of our teams to the current challenges,” said Garnier. “Looking forward, while the near term outlook is uncertain, the longer term opportunity for Kingfisher is significant. There is a lot more to do, but the new team and new plan is now established in the business and we are committed to returning Kingfisher to growth,” he added. Kingfisher shares (LON: KGF) surged 6.61% to 278,50 (0821GMT).  

Premier Inn owner Whitbread to cut 6,000 jobs – shares fall

Safiya Bashir
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Premier Inn owner Whitbread to cut 6,000 jobs – shares fall
Whitbread, the owner of Premier Inn, has revealed plans to cut 6,000 jobs. The number represents 18% of the total workforce by Whitbread (LON: WTB), the group which also owns Beefeater and Brewers Fayre restaurant chains. Sales at the group were down 77.6% in the first six months and since reopening in August, the business has remained low at Premier Inn and the restaurant chains. “With market demand expected to remain at lower levels in the short to medium-term, we have now taken the very difficult decision to announce our intention to enter into consultation on proposals that could result in up to 6,000 redundancies for our hotel and restaurant colleagues (representing 18% of our total workforce),” said the group. “We expect a significant proportion of these redundancies to be achieved voluntarily. Our priority now is to ensure that the process is fair and that impacted colleagues are supported throughout.” The company added: “This is a regrettable but necessary step to ensure that we emerge from the crisis with a lower cost base, a more flexible operating model and a stronger more resilient business,” the company added. Alison Brittain, Whitbread’s chief executive, said: “With demand for travel remaining subdued, we are now having to make some very difficult decisions, and it is with great regret that today we are announcing our intention to enter into a consultation process that could result in up to 6,000 redundancies in the UK, of which it is hoped that a significant proportion can be achieved voluntarily.” Shares in Whitbread have lost half of their value this year. Whitbread shares (LON: WTB) are currently trading -2.57% at 2.054,75 (0808GMT).

Global equities hit two-month low as Covid second wave anxiety takes hold

Jamie Gordon
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Global equities hit two-month low as Covid second wave anxiety takes hold
Enjoying a prolonged summer holiday, global equities have finally smelled the coffee, sat up and banged their heads on the Covid second wave reality check. Shedding points at will on Monday morning, the European equities horror show only worsened as the afternoon progressed, as a worse-than-expected Dow Jones open did little but stoke existing anxieties. Speaking on the open of the US index, Spreadex Financial Analyst, Connor Campbell, stated: “Though most of the headlines have been focused on Europe, the United States is having its own nightmare. To say the country is heading into a difficult period is an understatement. There’s no bipartisan fiscal stimulus in sight, an already heated election just got all the more intense following the death of Ruth Bader Ginsburg, and covid-19-related deaths are fast approaching 200,000, while daily cases creep up towards 50k.”

“Faced with all, it’s hardly a surprise that the Dow Jones, already stalled, went into a screeching reversal. Sinking [almost] 3%, or 800 points, the Dow is now barely above 26,800, its worst price since the first few days of August and around 2400 points adrift of its early-Septembers highs.”

In a percentage comparison, however, these losses appeared manageable versus those posted by Eurozone equities. For instance, the FTSE fell by 3.38%, down to 5,800, its joint lowest level in the past four months. This drop was upstaged, though, by the CAC, shedding 3.74% and falling to 4,792 points – its lowest level since the end of July. Even this notable fall however, could not match the DAX’s plummet, with the German index dropping 4.37% to 12,542, also a low-point since the end of July. While these falls may just be the markets pricing in the expected effects of a Covid second wave – and ensuing lockdown – they could also be indicative of the forward direction of travel, which may well feature a largely downward trajectory. Should this be the case, we might position ourselves to take advantage of cut-price stocks as they appear (as they did in March), and watch for a potential big tech renaissance. We can also pray that a second lockdown isn’t required, as this would kill off any hope of a Christmas rally in hospitality, travel and retail sectors.

Zobi looks to raise funds to become market leader in home digital security

Jamie Gordon
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Zobi looks to raise funds to become market leader in home digital security
Cyber security specialists, Zobi, announced they would be launching a fundraising campaign on the equity crowdfunding site, Seedrs. The company is looking to raise funds as part of an investment drive which it says it will use to try and make its brand the market leader in home security and Wi-Fi. The fundraiser coincides with the company’s plans to ship its first consumer product, Hedgehog, in 2021. The product uses AI and human heuristics to seek out and block suspicious activity and devices on a home Wi-Fi network. According to Zobi, the Hedgehog allows guests to tap their gadgets onto the security device and gain immediate access to safe Wi-Fi, that prevents any of their personal details from being at risk.

With the funds it hopes to raise on its upcoming Seedrs round, Zobi aims to hire a partnerships and development team, a CTO and a Chair. It also hopes to scale up its marketing and PR activity, expand across different regions and fund prototype and additional feature development.

Speaking on the company’s outlook and growth potential, Founder, Scott Lever, stated:

“Our mission is to keep homes across the country digitally protected and we are looking for new investors who share in our vision to join us on this journey. We are delighted to have already been recognised by tech and business experts alike through several award wins, and we hope this latest round will enable us to make the next step as a brand.”

The company’s statement also boasted that within the last year, Zobi had won the Start-Up Series competition; been selected by Google out of 12,000 start-ups for its Start-Up Grind Global Conference; been invited to join KPMG as one of 11 cyber start-ups for its expert arena and venture matching programme; and even reached the semi-final of The Pitch 2020.

Various Eateries confirms AIM admission and placing to commence on Friday

Jamie Gordon
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Various Eateries confirms AIM admission and placing to commence on Friday
Further to its previous announcement – that it was seeking AIM admission – restaurant operator, Various Eateries, confirmed on Monday that it would be admitted to trading on the AIM and commence its share placing on Friday the 25th of September. The company stated that the placing would consist, “of 34,246,576 Ordinary Shares of 1 pence each (“New Shares”), at a price of 73 pence per share (the “Placing Price”).” And that, “The Placing of the New Shares will raise c.£25 million (before expenses). WH Ireland Limited (“WH Ireland”) is acting as Sole Broker and Nominated Adviser in relation to the Admission.”

It added, that based on the placing price, it expects its market cap on admission to be approximately £65 million, and stated that it will have 89,008,477 Ordinary Shares in issue and a free float of around 21.6%.

Speaking on its plans for the capital raised, Various Eateries stated that it plans to use the net proceeds to; advance its plans to roll out its Coppa Club and Tavolino brands; facilitate recruitment; raise the profile and reputation of the Group within the industry; and provide working capital, with the option of funding future activities and acquisitions. The company finished by saying that admission and commencement of dealings on AIM are expected to begin at 8:00am on Firday, with Various Eateries trading under the ticker (AIM:VARE).

Augean shares down in the dumps as profits slide 11%

Jamie Gordon
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1
Augean shares down in the dumps as profits slide 11%
Hazardous waste and disposal company, Augean (AIM:AUG) saw its share price drop on Monday morning, following the publication of its results for a difficult half year of trading. The company stated that while all of its sites remained fully operational during the first half, Covid negatively impacted all its segments, with the exception of its EfW ash segment. The worst-hit were its radioactive, biomass EfW and construction sectors, all of which were placed on hold due to lockdown restrictions. The company added that: “The North Sea service business has been heavily impacted both by the Covid-19 effect on activity levels as well as an unprecedented significant decline in the oil price as a result of Covid-19. The first quarter generated more than two thirds of the half year profits with the second quarter heavily impacted by Covid-19.”

This difficult trading was reflected in its results, with adjusted revenues down 6% year-on-year, to £41.4 million.

This led an 11% dip in adjusted profits, down from £9.6 million to £8.5 million, and a fall in adjusted EBITDA of 6%, from £14.2 million to £13.3 million.

The situation was equally bleak for the company’s shareholders, with the company once again deciding not to declare a dividend, and adjusted basic earnings falling by 12%, to 6.70p.

Augean response

Commenting on the company’s performance, Executive Chairman, Jim Meredith, commented:

“The Group has delivered a robust performance across all areas of the business despite significant headwinds in quarter two. We are working hard to recoup the impact of the lower oil price and Covid-19 over the second half and, assuming no further Covid-19 lockdowns, we anticipate that full year results will be broadly in line with market expectations.”

“The Group’s performance in difficult circumstances (Covid-19 and oil price reduction) demonstrated the resilience of our current portfolio of activities and so maintaining our growth profile”.

Investor notes

Following the update, Augean shares fell 15.26% or 29.00p, to 161.00p apiece 21/09/20 12:30 GMT. Hargreaves Lansdown currently quotes the company’s p.e ratio at being 12.39, while Marketbeat’s community currently votes 64.55% in favour of Augean being given an ‘underperform’ sentiment.
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