Maitland/AMO Morning Monitor – Monday 24 August 2020

24th August 2020

In the news

  • Boris Johnson has said that it is "vitally important" that children return back to school
  • The Trump administration is considering bypassing regulatory standards in order to fast-track an experimental Covid-19 vaccine ahead of the presidential election in November
  • TikTok has announced it intends to sue the Trump administration over an executive order blocking the app

Politics today

  • Health Secretary Gavin Williamson makes a school visit ahead of next week’s reopening plan

Stock market moves

  • Asia-Pacific equities rose today as traders looked ahead to the US Federal Reserve’s upcoming annual Jackson Hole meeting where discussions of the growth outlook may impact US markets.
  • Wall Street continued to rise, with the S&P 500 adding 0.3% to close at a record high at the end of last week.
  • Global dividends suffered their worst quarterly fall in over ten year with over $100bn wiped off the total value of shareholder payouts.
  • In Europe, the FTSE 100 and STOXX 600 are both trading up 1.6% and 1.2% respectively in the early hours.

Corporate announcements

* Maitland Client

Bunzl PLC Half-year Report
  • Revenue increased to £4,846.3m (2019: £4,528.4m).
  • Adjusted operating profit increased to £340.8m (2019: £302.7m).
  • Acquisition activity has resumed with the proposed acquisition of MCR Safety and Abco Kovex and a number of ongoing discussions taking place with a promising pipeline of potential opportunities.
  • Frank van Zanten, CEO, said: “Looking forward, although there remains considerable uncertainty, we expect to face challenging trading conditions during the second half of the year.  However the fundamental aspects of our business model remain attractive with the Group’s strong cash generation allowing us to maintain Bunzl’s long track record of dividend growth and continue our compounding strategy of consolidating the Group’s fragmented markets through focused acquisitions.”
Rio Tinto PLC Rio Tinto publishes board review of cultural heritage management
  • Rio Tinto today published the board review of cultural heritage management, following the destruction of the Juukan rockshelters in May 2020.
  • The review details what elements of Rio Tinto’s systems, decision-making processes and governance failed to work as they should have and sets out recommendations to prevent a similar incident occurring in the future.
  • The board review concluded that while Rio Tinto had obtained legal authority to impact the Juukan rockshelters, it fell short of the Standards and internal guidance that Rio Tinto sets for itself, over and above its legal obligations. The review found no single root cause or error that directly resulted in the destruction of the rockshelters.
  • In light of the findings of the review, the board has decided that J-S Jacques, CEO; Chris Salisbury, CEO of Iron Ore; and Simone Niven, Group Executive, Corporate Relations, will not receive a performance-related bonus for 2020 under the company’s Short-Term Incentive Plan. In addition, J-S’s 2016 Long-Term Incentive Plan award, that is due to vest in the first half of 2021, will be reduced by £1m (subject to vesting).
Pearson PLC Directorate Change
  • Pearson today announces the prospective appointment of Andy Bird as its new CEO, starting on 19th October, 2020.
  • It is intended that John Fallon will continue as CEO until that date, when he will step down from the Board and remain as an advisor until the end of the year.
  • Andy is currently a Non-Executive Director at Pearson and was appointed to the Board on 1st May, 2020.
  • Sidney Taurel, Chair, said: “Andy brings a wealth of international consumer experience, as well as significant expertise in building brands, transformational change and driving digital innovation. He is an inspirational and dynamic leader with an excellent track record of growth.
Frasers Group PLC Acquisition of Dave Whelan Sports
  • Frasers Group announces the acquisition of certain of the assets of Dave Whelan Sports Limited  from the administrators of DW for an initial cash consideration of £37m.
  • Pursuant to the Transaction, the Company has acquired certain of the assets relating to DW’s gym and fitness business, including certain stock but excluding the DW business names and IP.
  • Additional consideration (up to a maximum of £6.9m) may be payable contingent upon the number of leasehold interests eventually acquired.
  • For the year ended 31 March 2019 (the last date to which statutory accounts are available for DW and prior to the appointment of the administrators), DW had gross assets of £194.9m and made a loss of £20.0m.
Wetherspoon (JD) PLC Update Announcement
  • 844 pubs are now open, out of a total of 873.
  • LFL bar and food sales are -16.9% for the 44 days to 16 August 2020.
  • The Company remains in a sound financial position. Net debt at the end of the last financial year is estimated to have been about £825m.
  • The Company expects to make a loss for the year ending 26 July 2020, both before and after exceptional items. Some of these exceptional items will be related to the Covid pandemic.
  • Tim Martin, Chair, said: “There is a debate in the scientific community, and among observers and commentators, as to whether lockdowns are beneficial in battling Covid-19… The debate is riven with rancour and political factionalism, but I believe, on the balance of the arguments, that avoiding full lockdowns and adopting the Swedish approach, is the better solution…Risk cannot be eliminated completely in pubs, but sensible social distancing and hygiene policies, combined with continued assistance and cooperation from the authorities, should minimise it”.
Meggitt PLC Contract Win
  • Meggitt has secured a contract with MODEC, Inc. for the supply of Printed Circuit Heat Exchangers to the Bacalhau Floating Production Storage and Offloading vessel.
  • The contract will be supplied by Meggitt’s Heatric business.
  • MODEC’s Bacalhau vessel will be the largest FPSO ever delivered to Brazil with a topside designed to produce up to 220,000 barrels of crude oil per day.
Balfour Beatty PLC Contract Win
  • Balfour Beatty announces its 50:50 joint venture, Gammon, has been awarded a four-year HK$12.88bn (c. £1.27bn) contract for the expansion of Terminal 2 at Hong Kong International Airport, by the Airport Authority Hong Kong.
  • Gammon will be responsible for the expansion of the main Terminal 2 building and construction of interconnecting bridges, mechanical and electrical works as well as associated viaducts and roads.
  • In the first half of 2020, Gammon secured the HK$7.2bn (c. £760m) major tunnel contract at Hong Kong International Airport to deliver tunnels and associated works for an automatic people mover and baggage handling system on behalf of Airport Authority Hong Kong.
  • Leo Quinn, CEO, said: “This award marks Gammon’s second significant contract for the Airport Authority Hong Kong this year and the largest single contract ever awarded to Gammon.