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Thursday Update

DB Live: BA; BP; Morrisons; Menzies; DeepMatter; Breedon

4.30pm: London close

The index of leading shares managed to stay above the 6,000 threshold as the ECB kept policy unchanged and US jobs data was largely benign. Traders also hoped EU threats of legal action against the UK government would bring the two sides closer on the Brexit talks.

The FTSE 100 closed 9.52 points (0.16%) lower at 6,003.32.

Supermarket chain Morrisons was in the red by 4.62% after it said first-half like-for-like sales rose 8.7% but revenue declined 1.1% and pre-tax profit was down 28.2%.

Oilfield services provider Petrofac lost 4.58% after a downgrade to ‘underperform’ at Bernstein.

British Airways parent IAG was barely moved after announcing a heavily-discounted and well-trailed rights issue to raise €2.74bn to help bolster its finances (see below).

On the way up were housebuilders, boosted by the RICS survey, with Persimmon 2.75% higher, Taylor Wimpey rising 1.11%, Barratt Developments adding 2.28%, and Berkeley up by 0.99%.

4pm: EU legal threat to UK

The EU has threatened the UK government with legal action if it does not drop a bill to override key parts of the Brexit divorce deal “by the end of the month”.

Full story here

12.30pm: No date for offices or stadiums to reopen

The first minister says Scotland is “not yet able to move to Phase 4 of the route map out of lockdown.”

Nicola Sturgeon says a return to offices and more people travelling by public transport would “accelerate” the risk of infection.

Latest on lockdown measures here

10.30am: BP heads into wind

Wind farm contributed

Oil and gas group BP has taken its first major step into the offshore wind industry with the acquisition of a $1.1bn (£850m) stake in two US offshore wind projects being developed by Norwegian state oil company Equinor.

The companies will also team up to develop more wind farms off the US coast after agreeing a strategic partnership.

BP aims to develop 50GW of renewable energy by 2030.

Equinor, formerly known as Statoil, began its own shift towards cleaner energy sources about a decade ago.

10am: EWM considers brand sale

Philip Day’s Edinburgh Woollen Group is believed to be weighing up the sale of some of its brands after it was approached by several interested buyers.

Full story here

9.30am: Lloyd’s claims

Lloyd’s of London, the insurance syndicate, will pay out £2.4bn in claims for pandemic related claims it said as it recorded a first half lossof £438m compared to a £2.3bn profit last time.

8.15am: Market slips

The FTSE 100’s mini-rally faded as investors awaited the European Central Bank’s (ECB) latest interest rate decision.

London’s blue-chip index fell 0.3% in early trading to 5,994 points

On Aim, shares in DeepMatter Group fell despite its half-year results (see below) showing smaller losses and revenues continuing to build. 

7am: British Airways owner to raise capital

British Airways pic

International Consolidated Airlines Group, owner of British Airways, is raising €2.741 billion through a rights issue.

The subscription price will be €0.92 for each new share, representing a 35.9% discount to the TERP (theoretical ex-rights price) based on the closing price of the shares on 9 September.

As previously announced, Qatar Airways Group, IAG’s largest shareholder (25.1% holding), will subscribe for its pro-rata entitlement.

For each existing share of IAG, its holder is entitled to one subscription right and 2 subscription rights are required to subscribe for 3 new shares.

Iomart chief to retire

Angus MacSween 2

Angus MacSween is to retire as chief executive of Scottish cloud computing firm iomart Group after more than 20 years in the job.

Full story here

Morrisons hit by safety costs

Morrisons-paper-bags

Supermarket chain Morrisons has reported a strong uplift in sales in the second quarter, but profits took a hit from extra Covid measures.

Sales rose 12.3% excluding fuel in the second quarter, and 8.7% over the first half when fuel was stripped out.

Fuel sales dived during lockdown with cars off the road, dragging total first half revenue down 1.1% to £8.73 billion, but the retailer said this is now “rebuilding”. Excluding fuel revenues rose 8.8% to £7.55 billion.

Pre-tax profits fell 28.2% to £202m after the £155m cost of fitting out stores and staff with Covid safety measures. A £93m business rates relief tax break brought net costs down to £62m.

The group has declared an interim dividend of 2.04p but its already-deferred special dividend decision has been put on hold until next year.

It confirmed reports that it would hire thousands more staff to cope with rising online deliveries during the coronavirus pandemic. 

Menzies heads for loss

Trading at the Edinburgh-based airport handler has remained challenging and a c.33% revenue decline has had a significant impact on profitability. The group will make a loss in the first half.

The company says it is re-starting operations and seeing a partial return of flight schedules. Cargo volumes continue to be more resilient and its cargo brokerage is trading ahead of expectations given the current lack of available capacity.

The group has agreed a revised banking covenant structure which will provide additional flexibility to support the group as the aviation industry recovers from the impact of the COVID-19 pandemic. 

Breedon welcomes CMA verdict

Breedon has welcomed today’s announcement from the Competition and Markets Authority accepting its offer to sell assets in connection with its acquisition of assets and operations from CEMEX , or a modified version of them. 

It will mean selling two quarries and a cement terminal in Scotland, as well as a small number of ready-mixed concrete plants and an asphalt plant in England.

Breedon said it expects to finalise the undertakings in the near future, paving the way for the integration of the remaining former CEMEX assets into the group later this year. 

Until that time they will continue to be held separate from Breedon and operated as Pinnacle Construction Materials.

Saga raises capital

Travel and financial services company Saga is raising £150 million through a placing an open offer to strengthen its balance sheet, improve liquidity and support the execution of its reinvigorated strategy under its strengthened management team.

This is underpinned by a pledge of up to £100m by Sir Roger De Haan, Saga’s former chief executive and the son of the founder of the business.

Deep Matter

The AIM-quoted Glasgow company focusing on digitising chemistry has entered into a series of engagements with top ten pharma, life science providers, research and academic institutions and blue-chip technology partners.

Mark Warne, CEO, said: “Over the last year we have achieved encouraging growth in our revenue which has continued into the first half of 2020, despite the challenges imposed by COVID-19.

“The outlook for our DigitalGlassware platform remains positive as pharmaceutical and academic organisations seek solutions for working remotely and in a socially distanced environment.

“We remain cautiously optimistic for the sector in which we operate, observing that M&A activity has bounced back in recent months with pharmaceutical companies collaborating with AI and technology, and we are confident that our enhanced focus on sales will be well received and will contribute to the growth of the business.”

Financial Highlights

* Revenue of £0.54m (30 June 2019: £0.22m) 

* Loss from continuing operations after tax of £1.17m (30 June 2019: loss of £1.62m)

* Cash at 30 June 2020 of £2.01m (31 December 2019: £2.61m)

Today’s Agenda

First Minister Nicola Sturgeon will announce the latest review of the lockdown measures

Today’s Daily Business headlines

Hires move McColl’s Alba Bank closer to launch

Lloyds to axe 865 insurance and wealth jobs



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