Daily Business Live
Phoenix rising; Direct Line rewards staff; Deliveroo IPO
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4.40pm: LibDems back Budget
The Scottish Liberal Democrats said they would be supporting the Scottish Budget in tomorrow’s vote (see below).
4.30pm: FTSE surges
Shares surged towards the end of the session to push the FTSE 100 up 88.61 points at 6,719.13.
Education publisher Pearson’s full year numbers received an initially lukewarm welcome with the shares falling sharply after the company reported a 10% decline in full year revenues. This decline proved to be somewhat short-lived with the shares rebounding strongly to add 6.42% on the day to 808.80p, beaten to the top spot only by Rolls-Royce, which gained 7.32% to 116.50p.
10.30am: Budget deal
Agreement has been reached with the Scottish Green Party to ensure passage of the Scottish Government’s budget through parliament.
9.30am: Can Deliveroo deliver a profit?
Following confirmation of the courier service’s IPO (see below), Russ Mould, investment director at AJ Bell asks 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?”
He adds that fans of the business will buy in on the back of narrowing losses and rising underlying profit. However, he says that it shows that delivering food is not a quick win.
“It’s about building scale and there are several other firms running the same race. Deliveroo says it will continue to invest in its business which could impact profitability. It has no choice as rivals are doing the same. At some point down the line, it will have to start delivering that magic profit or investors will lose interest.”
See also: Will Shu’s comments today (below)
9am: Market uplift
The FTSE 100 rose in line with forecasts, up 43 points after the first hour of trade at 6,673.46.
BP and Royal Dutch Shell enjoyed gains as oil traded above $70 per barrel for the first time since January 2020.
The other key driver for positive sentiment this morning is that the US has signed off its long-awaited $1.9 trillion stimulus package.
7am: Phoenix rising
Phoenix said it became the UK’s largest long-term savings and retirement business last year and delivered its highest-ever year of cash generation, exceeding the upper end of its target range.
The company posted increased operating profit of £1.2 billion for the year (2019: £810 million), reflecting the contribution of the ReAssure businesses.
The board recommends a final dividend of 24.1p per share, reflecting a 3% increase on the previous year (23.4p per share) and equates to a 2020 full year dividend of 47.5p per share (2019: 46.8p per share).
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 £1.7bn, 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.”
Direct Line staff bonus
Insurance company Direct Line has award all employees shares worth £350 as a thank you for their efforts during lockdown.
It has also proposed a final dividend of 14.7p per share, up by 2.1% over 2019, and announced a share buyback of up to £100m.
The company posted an 11.4% fall in pre tax profit to £451.4 million for the year to the end of December from £509.7m in 2019.
Penny James, CEO, said: “I am proud that our people, even when working remotely, have continued both to care for our customers and to help us build an insurance company of the future.
“Thanks to their commitment we have made great progress on our transformation programme, designed to drive a step change in our competitiveness and deliver profitable growth.”
Deliveroo boss: “I never set out to be a CEO”
Courier service Deliveroo has confirmed its plan to float on the LSE with CEO Will Shu saying he will always consider himself to be just a “customer”.
Mr Shu, who stands to make upwards of £300m from the IPO, said in the document issued today: “I never set out to be a founder or a CEO. I was never into start-ups, I didn’t read TechCrunch. I’m not one of those Silicon Valley types with a million ideas.
“I had one idea. One idea born out of personal frustration. An idea that I was fanatically obsessed with: I wanted to get great food delivered from amazing London restaurants.
“At the end of the day, I started the business because I wanted something better than what was available to me. At the core, I am a customer. And that is how I will always view the world: through the lens of our customers – our riders, our restaurant & grocery merchants and our end consumers”.
Consumer review website Trustpilot, founded in Denmark in 2007, has confirmed it will float with an estimated value of $1.4 billion.
Beeks trading ‘positive’
Glasgow-based cloud computing firm for financial markets Beeks Financial Cloud reported underlying profit before tax down 8% to £0.55m (H1 2020: £0.60m) following increased investment into the business.
The company has declared an interim dividend of 0.20p (H1 2020: 0.20p).
Gordon McArthur, CEO, commented: “Current trading is positive and we have entered the second half of the year with a solid pipeline of opportunities, supported by a significantly expanded business, increased customer base, broadened product offering and continued growth of our existing Tier 1 accounts.
“We have seen increased demand for our offering during the second half of the year to date, giving us confidence in our ability to service a wide range of financial services organisations across different geographies.
“Whilst we continue to assess the ongoing impact of Covid-19 on our business and operations, we are confident that Beeks is poised for considerable growth within a rapidly developing market.”
The FTSE 100 was set for a strong start to the week following the sign-off of America’s long-awaited fiscal stimulus package.
However, stocks in the Asia-Pacific region were mostly lower as Brent crude oil prices jumped more than 2% to $70 a barrel after Saudi Arabia said its oil facilities were targeted by missiles and drones on Sunday.
The Hang Seng index in Hong Kong slipped 1.38% while the Shanghai Composite in China dropped 1.91%.
In Japan, the Nikkei 225 fell 0.42% and South Korea’s Kospi declined 1.00%.