Tuesday Updates

DB Live: Johnston’s; FM’s briefing; GDP; Omega; Arrayjet


4.45pm: London close

After spending most of the day under water the FTSE 100 managed to eke out a small gain. It closed 3.56 points (0.058%) higher at 6,179.75.

3.30pm: Johnston’s sees dip in sales

Knitwear retailer Johnston’s of Elgin expects sales for 2020 to be more than 30% down because of the pandemic and is preparing for a slow recovery through 2021. 

It reported a profit before tax in 2019 of £6.4m, in line with the prior year, on a 2.5% fall in sales to £77m because of a decline in domestic demand. Exports grew by 9.5%, contributing to an improved gross margin, up by 1.6% to 31.1%,

Simon Cotton, chief executive, pictured, commented: “Since these accounts were signed in late March the impact of the coronavirus has become apparent.  Almost all our team have been furloughed for some period, as our mills and retail stores had to close during lockdown and have only recently fully re-opened.  We expect sales for 2020 to be more than 30% down and are preparing for a slow recovery through 2021. 

“Thankfully, we go into this period of uncertainty with another strong set of results and a healthy balance sheet.  We have secured an offer of funding through the Coronavirus Large Business Interruption Scheme via RBS, which will underpin our financial position as the business recovers.

“Although there will be short term challenges, we remain very confident that our great team, the fundamental strength of our luxury branded partners and the growing appreciation of our own “Johnston’s of Elgin” brand puts us in a good position to thrive in the future.”

1.30pm: FM’s daily briefing

Nicola Sturgeon said she would use any extra borrowing powers granted by Westminster for “additional stimulus” for the economy, but did not specify any particular measures she would introduce.

Asked at her daily briefing about the prospect of Boris Johnson granting the Scottish government further borrowing powers, the First Minister said it would be “common sense” to do so. However, she did not offer any priorities when asked how any new money would be spent.

Earlier, the SNP’s Shadow Chancellor Alison Thewliss renewed calls for a major fiscal stimulus package and the devolution of financial powers.

Ms Thewliss called for the UK government to show more ambition and deliver the scale of response needed to protect jobs with an £80billion fiscal stimulus package (4% GDP), the extension of the furlough scheme into 2021, and the devolution of financial powers to the Scottish Parliament “to enable a tailored response for Scotland’s economy.”

She said: “Scotland can make different choices for an investment-led recovery, which protects jobs – but we can only do that with the powers and funds needed.”

10.15am: Arrayjet wins US contract

Arrayjet, the Midlothian-based instrumentation company, has secured a second contract with US-based Proteomics company, CDI Laboratories, located in Baltimore, Maryland and Mayaguez, Puerto Rico. The contract value is circa $1million.

Gavin Boothroyd, commercial manager, North America for Arrayjet commented; “We are delighted to strengthen our partnership with CDI and to continue to play an integral part in helping them achieve their growth plans.

“The contract is a great endorsement of our technology and capabilities for accuracy, precision and quality.”

8.45am: Morton Fraser’s historic win

Morton Fraser has been appointed to deliver full service legal representation to Historic Environment Scotland for the next two years, with two possible one year extensions, following a competitive tender. 

8.30am: Lidl unveils latest stores plan

Lidl has announced that it will open 25 stores across the UK this year, including four in Scotland. It will create 220 jobs in the new and existing stores north of the border.

The supermarket chain aims to have 1,000 stores in the UK by the end of 2023.

8.15am: London opens lower

The FTSE 100 fell at the open as the return of coronavirus restrictions in the US state of California and ongoing US-China tensions unnerved investors.

London’s main stock index was 52.5 points (0.85%) lower at 6,123.73. The FTSE 250 index was down by 1.3%.

Shares in Omega Diagnostics were down 4p (10.5%) at 34p after it swung to a loss (see below).

7.30am: Spin-out raises funds

Edinburgh University medical spin-out Macomics, has raised new funds in seed financing round led by transatlantic VC Epidarex Capital, with the Scottish Investment Bank also investing.

Full story here

7am: GDP rises

Wireline industry

Britain’s economy has returned to growth but is a quarter smaller (24.5%) than before the covid-19 crisis began.

UK GDP rose by 1.8% in May, according to the latest estimate from the Office for National Statistics.

That follows the record slump of 20.3% in April, and a 6.9% decline in March.

Today’s data also shows that the UK economy shrank by 19.1% in the March-May quarter.

Jonathan Athow, ONS deputy national statistician, said of the performance: “Manufacturing and house-building showed signs of recovery as some businesses saw staff return to work.

“In the important services sector we saw some pick-up in retail, which saw record online sales.

“However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”

Omega Diagnostics outlook ‘excellent’

William Rhodes, interim non-executive chairman of Alva-based Omega, said the outlook for the coming fiscal year is “excellent”, despite the firm swinging to a full year loss.

In a statement with final results he said: “While we have decided to stop development of the allergen product lines, and the Food intolerance revenues are slowed by COVID-19, we are rapidly developing new tests, together with our partners, for COVID-19 that will need to be made and sold, ultimately, in the hundreds of thousands of units, if not millions.

“We are meeting this challenge by deploying more of our company’s resources in this area, as well as looking to expand our manufacturing capabilities to handle the tremendous increases in volume that will be needed.

“Omega has been well positioned and highly proactive in playing a key role in developing and manufacturing much needed COVID-19 tests for use throughout the world and, more specifically, to also be able to serve the needs of the people of the UK and Scotland.”

The company announced a statutory loss for the year of £6.8 million compared to a profit of £0.97m in the prior year. The main driver was the recent decision to stop development of the allergy product range. This incurred a £7.73 million net write off.

DeepMatter issue raises £2.1m

The Glasgow-based digital chemistry company raised £2.1 million from a placing of 130,830,001 shares and 11,733,334 subscription shares announced yesterday. Canaccord Genuity acted as nomad, sole bookrunner and broker.

Mark Warne, CEO of DeepMatter , said: “We are grateful for the support of existing shareholders and pleased to welcome new investors to the group. The proceeds from today’s placing provide us with a strong platform to accelerate our growth strategy and capitalise on the opportunity for DigitalGlassware.”

DFS Furniture

The home furnishings company said it had experienced “very strong” trading in stores since reopening with order intake up 69% year-on-year.

“We believe this performance materially benefited from latent demand from customers that would otherwise have completed purchases in late March, April or May and, given the wider economic uncertainty, we remain cautious on the outlook for demand.”

It said it had taken substantial cost and cash flow actions to protect the business in the face of the trading disruption. In particular, has rephased marketing spend, agreed a reduction in senior management pay, secured rent deferral agreements with its landlords and reduced its discretionary operating costs.

It expects revenue for the year to the end of December of c.£725m, down by £271m year-on-year.

Today’s agenda

Prime Minister Boris Johnson is set to ban Huawei from Britain’s 5G network (see below).

Today’s top Daily Business headlines

Johnson ready to ban Huawei from 5G network

Border breaks into home workers’ snack bar market

Liquidators probe £25m car park investment scheme

Hendersons latest Edinburgh restaurant casualty

Diageo launches world’s first paper-based bottle

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