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Thursday Update

DB Live: Phoenix ‘resilient’; Aviva reinstates divi; Savills; ITV

6pm: Travelex axes 1,300 jobs

Foreign exchange firm Travelex has gone into administration with the loss of more than 1,300 UK jobs.

Administrators PwC said a cyber-attack earlier this year followed by the coronavirus crisis had “acutely” hit the firm.

PwC said a restructuring deal had been reached which had saved 1,800 UK jobs.

4.45pm: London close

The FTSE 100 closed down 77.78 points (1.27%) at 6,026.94 as traders turned negative over the Bank of England’s forecast of a longer than expected recovery phase.

8.30am: Construction expands

Output in the UK construction sector expanded in July at its steepest pace since October 2015 but more jobs were lost.

The Markit/CIPS construction purchasing managers’ index rose to 58.1 from 55.3 in June, beating expectations for a reading of 57.0.

8.15am: London falls

Stocks fell in early trade as traders reacted negatively to the warning of a longer than expected recovery from the Bank of England.

They set aside a report that the downturn would be ‘less severe’ to focus on the drag on output. The FTSE 100 was 38.55 points (0.63%) lower at 6,066.17.

7am: Phoenix ‘resilient’

Standard Life house

Group operating profit came in at £361 million in the first half against £325m last time and the Edinburgh-based business said its resilience enabled it to declare an interim dividend of 23.4p per share.

Assets under administration were static at £248 billion.

The company has not accessed any government support schemes and employees are all receiving full pay with none furloughed.

CEO Andy Briggs said: “COVID-19 has resulted in an unprecedented global crisis which has challenged each and every one of us.

“The resilience of Phoenix’s business model has been evidenced through this period and ensured the continued delivery of cash and growth, which underpins our ability to continue to pay dividends in accordance with our stable and sustainable dividend policy.

“Despite the challenges of COVID-19 we have successfully completed the ReAssure acquisition, which establishes Phoenix as the UK’s largest long-term savings and retirement business.

“Although there remains much uncertainty as the pandemic continues to unfold, I am confident that Phoenix remains well positioned to continue to deliver cash, resilience and growth.

Aviva reinstates dividend

Aviva

Insurer Aviva reinstated its dividend (6p) but said it would review its payout policy as half-year operating profit fell to £1.25bn from £1.38bn.

Profit before tax dropped 30% on year to £1.08bn in the six months to 30 June from £1.52bn in the same period last year.

The company took a £165m hit from Covid-19 on general insurance claims.

Its general insurance arm suffered the biggest year-on-year decline, of 35%, to rake in £194m for the first six months of 2020.

But Aviva’s retirement division also slumped 21% to £356m of revenue, while Europe sank 29% to £217m. The insurer’s Asia arm rose 28% to £97m.

Russ Mould, investment director at AJ Bell, said: “The new CEO of insurance firm Aviva is not hanging about. A month after taking charge Amanda Blanc uses today’s first half results to announce a plan to focus on its core businesses in UK, Ireland and Canada. 

“Speculation that the company might split its life and general insurance units seems to have been quashed for now but it looks like there will be retrenchment overseas.

“The decision to maintain an approach which sees Aviva offer everything from life policies to pet insurance is interesting as her predecessor Maurice Tulloch attracted ire from shareholders over his failure to consider a break up of these different lines of business.

“Some confidence is also signalled in the future as Aviva resumes dividends – albeit on a modest scale ahead of a decision at the end of the year which it seems is likely to involve rebasing the dividend.

“This could make the payout more sustainable in the long term and if the company does end up selling off assets there could even be the prospect of special dividends funded by the proceeds.”

Economic decline to be ‘less bad’

Bank of England

The UK’s economic downturn this year will be less severe than initially feared, according to the Bank of England.

Full story here

ITV

ITV

ITV has reported a sharp decline in earnings for its first half as the broadcaster suffered a sharp drop off in advertiser demand during the coronavirus pandemic.

Adjusted earnings (EBITA) came in at £165m (2019: £327m), while revenues shrank 17% to £1.21bn. Revenue from adverts dropped 21% to £671m in the first half.

ITV said it had paused the majority of its productions in the period as a result of new restrictions on working practices as a result of the pandemic, resulting in a 17% drop in revenues from its Studios division to £630m.

A positive in the numbers were the company’s viewing figures, which rose 4% in the period, boosted by “strong growth in streaming” as online viewing jumped 13%.

Chief Executive Carolyn McCall said it had been “one of the most challenging times” in the history of the broadcaster.

“While our two main sources of revenue – production and advertising – were down significantly in the first half of the year and the outlook remains uncertain, today we are seeing an upward trajectory with productions restarting and advertisers returning.”

AJ Bell investment director Russ Mould said: “The company may talk about nascent signs of recovery and the restarting of productions will draw some revenue but the decision to cancel the first half dividend and the lack of any forward guidance say more about how ITV perceives the outlook.”

Aggreko appoints new chairman

Aggreko

Temporary power generator Aggreko has appointed a former Barratt Developments CEO as a non-executive director and chairman designate.

Full story here

Savills slides

Property agent Savills reported a 69% slide in pre-tax profit in the six months to the end of June to £7.7m from £24.7m in the first half of last year, with revenue down 7% to £55.6m.

The company said lockdowns and the inability to travel or conduct viewings “significantly reduced” the volume of transactional activity that could be conducted in the half.

Nick Penny, head of Savills Scotland, said: “Savills Scottish region has demonstrated resilience in the face of Covid-19 and as lockdown gradually eases we are seeing residential markets benefit from pent up demand and new requirements as people re-evaluate their living space.

“Our rural teams have continued to be busy, and whilst lockdown has slowed down some areas of the commercial market we are seeing signs of increased appetite.

“Mixed used developments are progressing and bode well for the future. We are looking forward to returning to our offices when government guidance allows and benefitting from the face to face collaboration that we have missed during lockdown.”

McColl’s Retail Group 

The convenience retailer swung to a loss before tax after a 1% fall in total revenue to £604.8m in its first half, it said on Thursday, reflecting store closures and lower services revenue. Total like-for-like sales were up 8.3% for the 26 weeks ended 24 May, compared to 1% a year earlier, with growth accelerating in the second quarter.

Joules boss upbeat despite loss

Clothes retailer Joules swung to a pre-tax loss of £2 million in the 53 weeks to 31 May compared to a profit of £12.9m in the previous year.

Group revenue decreased by 12.5% to £190.8m following the impact of the Covid-19 pandemic and an ecommerce stock availability issue over the Christmas trading period.

While its ecommerce channel performed well with revenue up 11% in the year, store revenue dropped by 21.4%, although the decline was much lower at 8% in the first nine months pre-Covid-19.

Nick Jones, Joules chief executive, said its trading performance has been ahead of management’s expectations so far in the new financial year

Looking ahead, he added: “I believe that Joules is very well positioned to navigate both the existing and potential further Covid-19-related challenges and continue to invest in targeted growth opportunities. The Joules brand’s awareness and health metrics have never been stronger, and I firmly believe that, underpinned by our strong brand purpose, Joules is more relevant than ever before.”

Evraz earnings fall

Mining and steel group Evraz’s first-half earnings fell 28% as the company’s prices fell.

Earnings before interest, tax, depreciation and amortisation dropped to $1.07bn (£800m) in the six months to the end of June from $1.48bn as revenue fell 19% to $4.98bn.

The FTSE 100 company declared an interim dividend of 20 cents a share, which it said reflected the board’s confidence in the company’s financial position and outlook.

Hammerson raises capital

Shopping centre owner Hammerson said it plans to raise around £825m through a rights issue and the sale of its 50% interest in Via Outlets.

The company will raise £552m through a rights issue and £274m through the sale of Via Outlets to joint venture partner APG .

The group is introducing a new leasing model in the UK which will be more flexible and rebase rents at more affordable levels.

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