Wednesday Update

DB Live: Persimmon; Iomart; Brooks Macdonald; Petrofac

10pm: Wall Street closes lower

Wall Street closed sharply lower as traders digested news of renewed outbreaks of Covid-19 cases and quarantine orders.

At the close, the Dow Jones Industrial Average was down 2.72%, while the S&P 500 was 2.59% weaker and the Nasdaq Composite saw out the session 2.19% lower at 9,909.17.

4.45pm: London close

As the UK begins to unwind the lockdown measures stocks in London ended sharply lower amid fears about a second wave of coronavirus cases which could lead to renewed curtailment of business activity.

New coronavirus cases have risen in many US states, with Arizona, Texas and California reporting daily records of infections on Tuesday.

The FTSE 100 index closed down 196.43 points, or 3.1%, at 6,123.69. The FTSE 250 ended down 501.97 points, or 2.8%, at 17,150.83, and the AIM All-Share closed down 10.11 points, or 1.1%, at 886.35.

1pm: Airport jobs to go

Airport ground handling firm Swissport is planning to axe 4,556 jobs in the UK and Ireland – half its workforce – due to the impact of the coronavirus. About 800 of these work at Scottish airports.

Full story here

12.40pm: Scottish lockdown easing

Huxley pub and Caledonian

Latest reopenings, subject to virus conditions:

3 July: Self-catering holidays, people in Scotland able to travel more than five miles
6 July: Beer gardens
13 July Shopping centres
15 July: Hairdressers, museums, galleries, all holiday accommodation

Full story here

9.45am: Eyecare firm raises funds

Epipole, the Scottish eyecare company, has secured £1.5 million to help take its technology into the United States ophthalmic imaging market.

Full story here

9.40am Persimmon appointment ‘positive’

The announcement that National Express chief executive Dean Finch is to take over at Persimmon at the end of 2020 [see below] may ultimately be received positively at the FTSE 100 housebuilder, says Russ Mould, investment director at AJ Bell.

“For the first 10 years of his tenure he generated a total return for shareholders of 176%, outpacing the FTSE All-Share over the same timeframe.

“It seems fairer to judge him on this period than the last four months when, inevitably, the coronavirus crisis has had a disproportionate impact on the stock, as it has with most of the wider transport sector.

“Numbers out today from Persimmon’s peer Crest Nicholson provide an indication of the sort of challenge he will face in the wake of the pandemic as it guided for a 70% fall in 2020 profit.”

Persimmon’s shares were 2.24% lower in early trade in line with the overall market fall [see below].

9am: London opens lower

London stocks fell sharply in early trade following solid gains in the previous session, as a rise in coronavirus cases in the US weighed on sentiment.

The FTSE 100 was down 129 points (2%) at 6191.54.

A report suggesting that European Union countries could bar entry to Americans because the US has failed to control the pandemic was also denting the mood.

7am: Persimmon poaches Nat Express CEO

Persimmon homes

Persimmon has appointed Dean Finch from National Express to replace David Jenkinson as chief executive. Mr Jenkinsonannounced his departure in February.

Mr Finch, 53, has held the same role at transport company National Express  since 2010.

He held executive roles at London-based maintenance firm Tube Lines and at First Group.

Mr Finch is expected to take his post at the housebuilder at the end of the year on an annual base salary of £725,000 and a pension allowance of 9% of salary.

From 1 January 2021 he will be able to participate in the Company’s existing annual bonus plan up to a maximum of 200% of salary (with 50% of any bonus earned being deferred into Persimmon shares for three years), and the Performance Share Plan up to 200% of salary.

Iomart improves

Angus MacSween 2

Angus MacSween, CEO of cloud computing firm Iomart (pictured), said the switch to remote working across the world “has only accelerated the move to the cloud which we believe will be a growth driver for our business over the longer term.”

Pre-tax profit for the year rise to £16.8m from £16.2m in the previous 12 months.

Mr MacSween commented: “This is the twelfth consecutive year of growth since the transition of the business to cloud services in 2008 with the acquisition of our first data centres. Since that time, revenues and profits have grown considerably, with revenue reaching £112.6m, through the combination of continued organic growth and acquisitions.

“Our high levels of recurring revenues, breadth of customer base, industry leading profit margins and strong cash generation, mean we are confident iomart is well positioned to withstand the current challenges and deliver long-term growth.”

The company has cut its proposed final dividend to 3.93p from 5.01p. However, chairman Ian Steele said it was equivalent to the maximum pay-out ratio under the current policy of 40% of adjusted diluted earnings per share. 

“We are aware of the focus from the wider community on dividend payments in the current economic situation, but believe that, given our funding position, our decision not to apply for the government’s furlough scheme, our robust business model and our focus on being as fair and supportive as we can be to all stakeholders during the recent unprecedented events, including employees, customers and suppliers, we should recognise the support from our shareholders by continuing our dividend policy.”

Brooks Macdonald acquires Lloyds business

Wealth manager Brooks Macdonald Group said its wholly owned subsidiary Brooks Macdonald Asset Management is acquiring the Channel Islands wealth management and funds business of Lloyds Bank International in a deal worth up to £9.63 million.

The full consideration will be paid in cash from Brooks Macdonald’s existing financial resources.  Completion is expected to take place in the fourth quarter of 2020 subject to regulatory approval.

Wetherspoon confirms reopening

JD Wetherspoon

JD Wetherspoon has confirmed it will reopen its pubs in England on 4 July following yesterday’s announcement on relaxed lockdown measures by the UK government. Opening of pubs is yet to be decided in Scotland.

It also announced the approval of a new £48mln loan for companies hit by the pandemic backed by the government.

The FTSE 250 group said it does not intend to start any new development projects in the next year, although a small number of projects that were ongoing when closures were implemented will be completed.

Petrofac backlog

Oilfield services firm Petrofac said its group order backlog was $6.4bn at the end of May as it continued to suspend full year revenue and margin guidance.

The backlog was down $1bn from the end of December. The Aberdeen-based company said it was on track to reduce overhead and project support costs by at least $125m in 2020 and up to $200m in 2021.

Suspension of the final 2019 dividend payment and a 40% reduction in capital investment would conserve an incremental $145m of cash flow in the year.

Today’s agenda

* Nicola Sturgeon is expected to outline further plans for easing the lockdown

Today’s top Daily Business headlines

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