The_Times__6_March_2020

48 2GM Friday March 6 2020 | the times

BusinessMarkets

news in brief

Wilko cutting sick pay

Wilko, the family-owned

hardware chain, is cutting sick

pay for its staff as cost pressures

rise. The retailer, which sells

goods including paint, curtains

and fence panels, employs 21,000

workers in 400 stores. It is

understood to be cutting

entitlement down to the legal

minimum if employees are sick

more than once within a year

unless they are “seriously ill”. A

spokesman said its sick pay was

generous and Wilko had a much

higher rate of absence than its

competitors. Exceptions would be

made for Covid-19.

High street sales down

High street retailers suffered

another weak February as

concerns about the coronavirus

and bad weather weighed on

sales. Like-for-like sales fell by 0.9

per cent compared with a year

ago, according to the BDO sales

tracker. This was the seventh

consecutive fall for the month but

an improvement on the -3.7 per

cent registered in February last

year. Internet sales were also

weak, growing by only 6 per cent,

which was their worst

performance since 2010.

Domino’s stocks up

Domino’s Pizza has expanded its

inventory back to no-deal Brexit

levels to head off potential supply

chain disruption from Covid-19.

David Wild, the chief executive,

said the company could receive a

boost to sales if more people

stayed at home, but there had

been no sign of any impact so far.

In the year to December 29, UK

like-for-like sales grew 3.7 per

cent, with underlying pre-tax

profits falling 1.2 per cent to

£98.8 million. Profit fell from

£43.9 million to £2.8 million.

Kier gets grip on losses

Kier Group, one of Britain’s

biggest contractors, has reported

a smaller first-half loss, benefiting

from efforts to cut costs by

simplifying its operations. The

company, which has reduced staff

numbers, shut offices and sold

some units, said pre-tax losses in

the six months to the end of

December had fallen to

£41.2 million from £45.3 million.

Revenue dipped to £1.9 billion

from £2 billion and there was no

dividend. The shares rose 28½p,

or 28.1 per cent, to 130p.

March, up from £4.9 million a year

earlier. It had a surplus of £251,117

after making £109,134 of donations

toward social impact activities.

The bonds will have a ten-year

term and will pay a fixed rate annual

interest of 5 per cent. There is a

minimum initial subscription

amount of £500 and they are

available in multiples of £100

thereafter. The offer period is

expected to close on March 20 and

the bonds are due to be admitted to

trading on the London Stock

Exchange on or around March 30.

The charity said that at any time

during the life of the bonds, investors

would be able to sell the bonds

through the open market, although

Percy, the Duchess of

Northumberland, who has previously

complained that she can’t get

lottery funding because of her

aristocratic title.

The Alnwick Garden attracted

350,000 visitors last year and it

anticipates that the all-weather play

village will increase annual footfall

by about 250,000 paying visitors.

The income generated by the garden

is used by the charity to deliver a

range of community programmes on

site that are designed to directly

tackle isolation and loneliness,

unemployment and exclusion, and

support young people. The trust

reported a stable revenue of

£5 million in the year to the end of

S

avers interested in providing

funding to charities while

making a return on their money

have a new retail charity bond to

consider (Louisa Clarence-Smith

writes).

The Alnwick Garden Trust, a

charity founded in 2002 that

manages a 67-acre garden and visitor

attraction in Northumberland, is

launching a bond to raise funds to

invest in its community programmes

and develop a vast play village.

Trustees of the charity include Jane

Tempus

Buy, sell or hold: today’s best share tips

This steady insurer has you covered

D

avid Stevens, the

outgoing chief executive

of Admiral, says the

company is “going like a

freight train” (Katherine

Griffiths writes). It is, he says, an apt

description: “Not racy, not glamorous

— who needs a glamorous insurance

company — but progressing ever

onwards with a relentless, implacable

forward momentum.”

Mr Stevens, who co-founded

Admiral 27 years ago, said yesterday

he wanted to retire in a year’s time.

He will be the second big figure out

the door — his partner in setting up

the scrappy insurer, Henry

Engelhardt, left in 2016.

So it will be a significant changing

of the guard when Mr Stevens, 58,

will be succeeded by Milena Mondini

de Focatiis, 42, the group’s head of

UK and European insurance, after 27

years building it from scratch. But

the signs are it will be business as

usual at the predominantly motor

insurance business whose operations

span Britain, continental Europe and

the US. It also includes its

Confused.com price comparison

website and a savings arm.

When Admiral floated in 2004 at

275p a share, it was worth

£711 million. It is now valued at

£6.5 billion, with its shares closing up

57p, or 2.6 per cent, to £22.38.

The company posted a 10 per cent

jump in 2019 pre-tax profit to

£522.6 million and its combined

ratio, which measures claims and

other expenses compared with

premiums, was 88.6 per cent. A ratio

below 100 denotes profitability.

The results benefited from

Admiral’s conservative reserving in

previous years, which allowed it to

release some of those funds when

claims were not as high as expected.

The release was particularly

significant for 2019, as it came when

the government settled the rate it

imposes on settlements for very

serious injuries, known as the Ogden

rate, at minus 0.25 per cent. The

negative figure means victims of

catastrophic injuries receive slightly

less than their headline settlement to

account for inflation over time.

Certainty about the rate has allowed

a backlog of cases to be finalised,

further increasing Admiral’s reserves.

Even without Ogden, releases are

a regular feature of Admiral’s results,

reflecting its choice to recognise

more profit later rather than upfront

and, encouragingly, it said it was on

track for more releases this year.

Looking shipshape

Share price

2006 08 10 12 14 16 18 2020

Source: Refinitiv

2,500

2,000

1,500

1,000

500

0

p

Active customer base

2016

2017

2018

2019

0.47m

0.66m

0.87m

1.01m

Car repair costs inflation (year on year)

4%

4%

7%

6%

7%

4%

2016

2017

2014

2015

2018

2019

Admiral, like other big motor

insurers, faces some big challenges.

The increasing amount of

technology and safety features in

cars are good news for reducing

traffic accidents, but make the

vehicles of people who run into

trouble more expensive to repair.

Since Brexit there has been the

added cost for British insurers of

buying parts from overseas in

weakened sterling.

Another worry for the industry is

the Financial Conduct Authority’s

study of the general insurance

market, which found in its interim

report in October that one in three

people were not getting a good deal

and could save about £1.2 billion

annually. The imminent final report

could force insurers to provide better

terms to renewing customers and

make it easier to switch.

On the bright side there will be

reform of personal injury claims

aimed at cutting the cost of whiplash

compensation.

Admiral, which employs more

than 7,000 people in South Wales,

prides itself on a happy workforce

and strong culture. It announced a

one-time bonus of £500 for staff,

costing £6 million. That may be a

factor in its consistently strong

results, steady management and the

fact it has been able to find its new

chief executive from within this time

and last. Admiral’s higher earnings

were in contrast to falls in its rivals

Direct Line and Hastings this month

and it increased its full-year dividend

by 11 per cent to 140p.

ADVICE Buy

WHY Highly valued but

remains a strong bet in the

insurance sector in long term

this is caveated with a clause that

said this would only apply “in normal

market conditions”. While the bonds

offer a substantial return, investors

need to be aware of the risks. If the

charity becomes insolvent or goes

out of business, investors may lose

some or all of their investment.

ADVICE Avoid for now

WHY An attractive alternative

method of donating to a

charity but comes with

significant risk. Wait and see

how it plays out

admiral

2019 dividend

140p

Solvency ratio

190%

alnwick garden trust

Annual fixed rate

interest 5%

Min initial

subscription £500

Commodities

ICIS pricing (London 7.30pm)

Crude Oils ($/barrel FOB)

Brent Physical 50.01 -1.13

BFOE(May) 50.10 -1.15

BFOE(Jun) 50.34 -1.09

WTI(May) 46.06 -0.89

WTI(Jun) 46.21 -0.90

Products ($/MT)

Spot CIF NW Europe (prompt delivery)

Premium Unld 494.00 494.00 -3.00

Gasoil EEC 453.50 455.50 -6.25

3.5 Fuel Oil 245.00 246.75 +1.00

Naphtha 403.00 424.00 +0.00

ICE Futures

Gas Oil

Mar 447.25-447.00 Jun 450.00-449.75

Apr 446.50-446.25 Jul 452.75-452.50

May 448.00-447.75 Volume: 816802

Brent (9.00pm)

May 49.99-49.97 Aug 50.45-50.43

Jun 50.17-50.15 Sep 50.63-50.60

Jul 50.31-50.27 Volume: 1935065

LIFFE

Cocoa

Mar 1864-1851 May unq

May 1900-1899 Jul unq

Jul 1895-1880 Sep unq

Sep 1889-1856

Dec 1785-1773

Mar unq Volume: 89471

RobustaCoffee

Mar 1574-1288 Nov 1331-1325

May 1276-1275 Jan 1358-1341

Jul 1302-1293

Sep 1312-1308 Volume: 13364

White Sugar (FOB)

Reuters Dec 382.20-372.10

Mar unq

May 383.40-383.30 May unq

Aug 379.10-378.00 Aug unq

Oct 374.70-373.30 Volume: 45929

PRICES

Major indices

New York
Dow Jones 26121.28 (-969.58)
Nasdaq Composite 8738.60 (-279.49)
S&P 500 3023.94 (-106.18)

Tokyo
Nikkei 225 21329.12 (+229.06)

Hong Kong
Hang Seng 26767.87 (+545.80)

Amsterdam
AEX Index 552.54 (-5.18)

Sydney
AO 6472.40 (+73.90)

Frankfurt
DAX 11944.72 (-182.97)

Singapore
Straits 3018.27 (-6.76)

Brussels
BEL20 3544.83 (-53.14)

Paris
CAC-40 5361.10 (-103.79)

Zurich

SMI Index 10143.57 (-107.82)

DJ EURO Stoxx 50 3363.58 (-56.98)

London

FTSE 100 6705.43 (-110.16)

FTSE 250 19323.13 (-419.70)

FTSE 350 3773.50 (-65.43)

FTSE Eurotop 100 2854.66 (-39.71)

FTSE All-Shares 3731.49 (-63.89)

FTSE Non Financials 4463.53 (-74.32)

techMARK 100 5577.47 (-19.83)

Bargains n/a

US$ 1.2935 (+0.0065)

Euro 1.1533 (-0.0018)

£:SDR 0.98 (+0.00)

Exchange Index 78.86 (+0.16)

Bank of England official close (4pm)

CPI 108.19 Jan (2015 = 100)

RPI 290.60 Jan (Jan 1987 = 100)

RPIX 291.20 Jan (Jan 1987 = 100)

Morningstar Long Commodity 530.22 (+0.11)

Morningstar Long/Short Commod3867.59 (-12.89)

London Financial Futures

Period Open High Low Sett Vol Open Int

Long Gilt Mar 20 136.75 137.56 136.75 137.54 1042 9430

Jun 20 135.90 136.88 135.81 136.64 240396 617014

3-Mth Sterling Mar 20 99.475 99.505 99.465 99.485 256818 707456

Jun 20 99.595 99.620 99.575 99.600 199776 780087

Sep 20 99.615 99.655 99.605 99.635 93557 582170

Dec 20 99.615 99.650 99.600 99.635 88427 657885

Mar 21

3-Mth Euribor Mar 20 100.50 100.50 100.47 100.49 120320 584247

Jun 20 100.53 100.54 100.49 100.52 151591 429645

Sep 20 100.57 100.57 100.53 100.56 109651 473991

Dec 20 100.57 100.58 100.54 100.57 98355 487827

Mar 21

3-Mth Euroswiss Mar 20 100.87 100.89 100.85 100.87 4248 27249

Jun 20 100.93 100.97 100.92 100.95 5298 44239

Sep 20 100.96 101.00 100.95 100.98 3979 41976

Dec 20 100.97 101.01 100.96 100.99 2264 37833

FTSE100 Mar 20 6827.5 6841.5 6592.0 6708.0 169128 728946

Jun 20 6726.5 6730.5 6507.5 6620.0 466 4287

FTSEurofirst 80 Mar 20 4606.5

Jun 20 4600.5

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