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MARKET REPORT: Travel firms take off as Britons book trips to the Med



market report travel firms take off as britons book trips to the med

Travel company shares took off after a buoyant update from budget airline easyJet.

Demand for last-minute summer holidays has been so much better than expected that the company has expanded its schedule.

It had been planning to operate at about 30 per cent of its capacity between July and September.

Take-off: Demand for last-minute summer holidays has been so much better than expected that budget airline Easyjet has now expanded its schedule

Take-off: Demand for last-minute summer holidays has been so much better than expected that budget airline Easyjet has now expanded its schedule

Take-off: Demand for last-minute summer holidays has been so much better than expected that budget airline Easyjet has now expanded its schedule

But it will now bump this up to 40 per cent, and will be running 1,000 or so flights a day in August. Some of the most popular destinations have been Nice in the south of France and Faro in Portugal, even though Portugal has not yet been included in any air bridge agreements.

Chief executive Johan Lundgren said customers still have ‘an underlying desire and willingness to book and travel’, especially to get away on a beach break.

He also said the UK’s swift decision last month to impose a two-week quarantine on those arriving from Spain hadn’t caused customers to cancel their plans en masse – but said that late bookers were just looking elsewhere at places such as Greece and Croatia.

Stock Watch – Genedrive 

31567384 8593051 image a 1 1596576313807

31567384 8593051 image a 1 1596576313807

Genedrive surged after the diagnostics firm said it was working on technology to speed up coronavirus testing.

The London-listed company said its collaboration with US-based Beckman Coulter Life Sciences would involve automating the laboratory process to deliver faster results, aiming to process 1,000 tests in eight hours.

Genedrive boss David Budd said he hoped the technology could be introduced in labs in six weeks’ time. Shares rose 27.5 per cent, or 19.5p, to 90.5p.  

Unsurprisingly, the fact that it ran a mere 709 flights in the three months to June, compared with 165,656 a year ago, pushed it to a £325million loss.

This was down from a £174million profit in 2019.

But these figures weren’t what the stock market was focused on.

The change in tone about summer holidays, following news rivals were curbing services to Spain and being hammered by the shock quarantine, was exactly what traders wanted to hear.

EasyJet rose 8.8 per cent, or 44.4p, to 551.6p – and it brought the rest of the sector up too. 

British Airways owner IAG climbed by 7.1 per cent, or 11.55p, to 175.4p on the FTSE 100 index, while Tui rocketed 9.1 per cent, or 26.3p, to 314.2p on the mid-cap index.

The rally helped keep both of London’s top indexes in the black, though only just.

The Footsie rose 0.05 per cent, or 3.15 points, to 6036, while the FTSE 250 rose 0.9 per cent, or 149.58 points, to 17307.7.

The blue-chip index also got a boost from GKN-owner Melrose, which managed to thrash out new terms with its banks that it says will give it ‘considerable headroom and flexibility’.

The company, which makes parts for the hard-hit car making and aerospace sectors, has already scrapped its dividend and says job cuts are inevitable.

But the breathing room sent shares 9.4 per cent higher, up 8.28p, to 96.5p – and straight to the top of the Footsie leaderboard.

Defence contractor Babcock International had a more difficult start to the week.

The company won’t pay a dividend for the past year after profits took a 40 per cent knock in its most recent quarter and revenues fell.

It said this was an ‘appropriate’ decision given that it had been tapping into the Government’s coronavirus furlough scheme.

Doing the honourable thing didn’t do much for its shares, though, with its stock falling 9.4 per cent, or 27.2p, to 261.8p.

Direct Line and Centamin both unveiled better news on dividends. Insurer Direct Line rose 5.3 per cent, or 16.4p, to 324p after pledging a 7.4p per share half-year payout and a one-off 14.4p divi to replace the annual one that it previously suspended.

It came as the number of motor claims dropped by as much as 70 per cent at the peak of lockdown.

And gold miner Centamin rose 2.1 per cent, or 4.3p, to 211.8p, after the coronavirus-driven surge in gold prices so far this year helped push first-half profits from £45.6million last year to £146million.

It increased its divi by 50 per cent to around 4.6p per share.

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Financier Lord Spencer leads £4m fintech fundraiser




financier lord spencer leads 4m fintech fundraiser

Financier Lord Spencer has doubled down on his investment in a technology company shaking up the bond market. 

The former Conservative party treasurer has led a £4.3m fundraise for Digital Debt Capital Markets (DDCM), a London-based firm making it easier for companies to manage bond sales. 

Grandee: Former Conservative party treasurer Lord Spencer has led a £4.3m fundraise for Digital Debt Capital Markets

Grandee: Former Conservative party treasurer Lord Spencer has led a £4.3m fundraise for Digital Debt Capital Markets

He had already invested in the company’s first £2.5m seed fundraising personally, and this time has invested through his private investment group IPGL, along with David Rutter, the chief executive of US technology company R3. 

DDCM’s Agora software streamlines the way bonds are managed, from their issuance to their repayment. 

Many firms still use clunky systems and spreadsheets to manage bonds, and several jobs are inadvertently duplicated by bankers and lawyers. 

Backing from Spencer, founder of inter-dealer broker Icap, will help DDCM as it builds its software and attracts customers. 

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Second coronavirus wave fear engulfs markets




second coronavirus wave fear engulfs markets

Business leaders last night pleaded with Boris Johnson for more support as fears of more lockdowns wiped £52billion off the value of Britain’s biggest firms. 

Shares in housebuilders, pub groups and travel firms all fell sharply as the UK’s chief medical adviser Chris Whitty hinted that further restrictions are crucial to combat a surge in Covid19 infections. 

With the Prime Minister expected to today announce a 10pm closing time for pubs across England as part of the Government’s latest plans to stop the spread of the virus, Whitty said: ‘If we do too little, this virus will go out of control. 

Fear: Chris Whitty (pictured) hinted that further restrictions are crucial to combat a surge in Covid-19 infections

Fear: Chris Whitty (pictured) hinted that further restrictions are crucial to combat a surge in Covid-19 infections

‘But if we go too far the other way, then we can cause damage to the economy which can feed through to unemployment, to poverty deprivation, all of which have long-term health effects.’ 

The stark warning came as a report by Capital Economics warned that even a two-week national lockdown at any point would hold back the UK’s economic recovery by a year and reduce GDP by 5 per cent. 

The threat of tough new restrictions spooked global stockmarkets, with governments struggling to tackle a second wave of the virus without crippling their economies. 

The FTSE 100 index endured its worst day in three months, falling 3.4 per cent – or £52billion – to a two week low of 5,804.29. 

Shares in British Airways owner IAG plunged 12.1 per cent, as investors feared fresh travel bans could be imposed. 

Rail operator FirstGroup and ticket retailer Trainline fell more than 12 per cent and nearly 11pc respectively, while pub group Mitchells & Butlers slid more than 15 per cent, and Wetherspoons fell 9 per cent. 

But stockmarkets across Europe were also hit, with the German Dax down 4.6 per cent, and the French Cac 40 dropping 3.9 per cent. 

And shares fell on Wall Steet, with the S&P shedding 2.4 per cent in early trading. 

Pressure is growing on Boris Johnson to get a grip on the pandemic, as cases are rising rapidly across the UK. 

But business owners and bosses are terrified that a tightening of lockdown measures could cripple firms that are only just getting back on their feet. 

Yesterday they appealed to the Government to make sure any restrictions are targeted, and come with more support for firms that are affected. 

Kate Nicholls, chief executive of trade association UK Hospitality, said her sector ‘remains on a knife-edge’, with the near-1m people employed in the industry still furloughed at risk of losing their jobs. 

She added: ‘Any restrictions that impact a sector which is already on its knees and that has shown itself to be the home of responsible and safe socialising must be targeted carefully, and come with full Government support, to minimise seismic and inevitable damage to business.’ 

Claire Walker, co-executive director of the British Chambers of Commerce, said: ‘Any new restrictions must be accompanied by a comprehensive support package for the hardest hit firms forced to close or reduce capacity through no fault of their own.’ 

It is thought that new restrictions could involve curfews on pubs and restaurants. 

More radical options which have been discussed include a two-week ‘circuit breaker’ lockdown during schools’ half-term holidays where the public is told to stay at home as much as possible, and a return to working from home where possible.

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KPMG comes under fire in Carillion audit probe




kpmg comes under fire in carillion audit probe

KPMG is in the firing line again after regulators delivered a critical report on its audits of Carillion before the construction group’s dramatic failure. 

The Big Four auditor gave Carillion a clean bill of health in March 2017, but within ten months the Government contractor’s finances had deteriorated so much that it collapsed. 

It was one of the worst corporate catastrophes in years, with the company leaving behind debts of £7billion, pension liabilities of £1billion and thousands without jobs. 

Warning signs: Thousands lost their jobs after Government contractor Carillion folded

Warning signs: Thousands lost their jobs after Government contractor Carillion folded

The Financial Reporting Council (FRC) launched a probe just two weeks later, looking into audits carried out by KPMG from 2013 to 2017. And yesterday the regulator revealed it had finished an initial report and sent it to KPMG, suggesting that rule breaches have been uncovered. After carrying out initial investigations, the FRC usually closes enforcement cases or, if rule breaches are found, delivers an initial investigation report. Auditors are then given eight weeks to respond to allegations, before the FRC decides whether to press ahead with enforcement action.

KPMG received the report on August 28, and has until October 23 to respond. It could choose to contest the findings at an independent tribunal. 

A spokesman said: ‘We believe it is important that regulators acting in the public interest review the audit work related to high profile cases such as Carillion and we are cooperating fully with the FRC’s investigation.’ 

The collapse of Carillion in January 2018 triggered widespread calls for tough reforms of the audit sector, with an inquiry by MPs accusing KPMG of being ‘complicit’ in directors’ ‘increasingly fantastical figures’. 

They said Carillion’s failure to turn a profit from key contracts was masked ‘by a continuing stream of new work’ and misleading accounting practices. 

At the same time, bosses approved ever-increasing dividends that gave the impression it was a healthy firm. But Carillion’s shares went into free-fall after a stock market announcement exposed its problems in July 2017, slashing its value from more than £2billion to £90m in months. 

MPs said KPMG was partly to blame for failing to be sceptical enough during its 19 years working for the company, which saw it amass £29m in fees. 

Along with Big Four rivals Deloitte, EY and PwC, KPMG carried out work worth £72m for Carillion in the lead up to its failure, which saw the auditors accused of ‘feasting on what was soon to become a carcass’. 

The FRC focused particularly on the financial performance of Carillion’s major contracts in the construction and services divisions, and whether this was properly reported.

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