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Seven Days: 20 November 2020

A round-up of the biggest business stories of the past week
Seven Days: 20 November 2020

Vaccine Day 2 

Moderna emerges

The week kicked off with more vaccine news, as biotechnology group Moderna (US:MRNA) announced that its Covid-19 jab was 95 per cent effective in a first interim analysis. The announcement followed a similar result from Pfizer (US:PFE) and BioNTech (US:BNTX) last week, but global stocks still rallied, with both the S&P 500 and the FTSE 100 gaining 2 per cent on the day of the release. More data released by Pfizer suggests that its vaccine candidate protects 94 per cent of adults over 65 years old. 

Apple halves app fee

Small developers only

Apple has bowed to pressure on its 30 per cent app store fee, also known as the ‘Apple Tax’, cutting it in half for developers who earn less than $1m in revenue each year. The new rule will apply to the majority of developers who use Apple’s platform, but not for big wigs like Netflix (US:NFLX) or Spotify (US:SPOT) – the latter of which co-founded a ‘Coaliton for App Fairness’ with Fortnite-maker Epic Games. The change will be in effect from the beginning of 2021, and will help Apple’s case against growing scrutiny from antitrust regulators in Washington. 


L&G resets dividend

Payouts paused in 2020

Legal & General (LGEN) has laid out a five-year plan to boost cash, earnings and surplus generation in a new growth strategy. The financial services giant said that it intends to generate between £8bn and £9bn in cash and capital in aggregate until 2024. But the group will pause its dividend at 17.57p per share, before resuming progressive annual increases of between 3 and 6 per cent, according to chief financial officer Jeff Davies. The company expects operating profits this year to meet the £2.3bn logged in 2019. 


2030 petrol and diesel ban

Hybrids banned from 2035 

The government will ban the sale of petrol and diesel cars from 2030, with hybrid cars taken off the UK market from 2035. The announcement this week followed a plan from Prime Minister Boris Johnson to boost the nation’s offshore wind generation as well as its investment in hydrogen technology. Mr Johnson wrote in the Financial Times that up to £500m would be used to develop local battery manufacturing. Meanwhile, investors will be watching how platinum specialists, whose precious metals feature in electric vehicles, fare in the transition that lies ahead. 


SpeedyHire profits plunge 

But spies a recovery ahead 

Tool hire specialist SpeedyHire’s (SDY) pre-tax profits nosedived by more than 90 per cent to £1.4m in its first half, as the group struggled to shake off an industry-wide decline in construction. But management has kept a tight control over costs, through staff redundancies, access to the furlough scheme and rent holidays. As such, the company’s asset utilisation rate had recovered to pre-pandemic levels by the end of September. So far, there has been no negative impact on trading following the second lockdown in England. 


Music-makers upbeat 

Lockdown sales surge 

Focusrite (TUNE) and Gear4music (G4M) both reported big jumps in sales this week, as recording artists bought themselves new gear during lockdown. Revenues grew by more than 50 per cent at the former in 2020 to £130m, while the latter logged a 42 per cent increase to £70m in its first half. Aim-traded Focusrite, which develops music and audio products, said that the number of product registrations leaped from 2,000 to more than 5,000 at the height of lockdown. But operating profit dropped 40 per cent to £7.9m, led by a £10m write-down on a recently acquired live music equipment business. 


Airbnb revs up for IPO 

Prospectus reveals Covid-19 hit

Airbnb’s prospectus for its stock market listing has revealed the impact of the pandemic on the business, as the group logged a $576m loss in the second quarter, although swung to a profit of $219m in the third thanks to heavy cost-cutting. Indeed, the company shrunk its employee base by a quarter, as well as freezing marketing expenditure. The San Francisco-based group was aiming to raise around $3bn in an initial public offering late this year, which would value it somewhere between $25bn and $30bn.


The government has trained less than 1 per cent of the estimated border agents it needs after Brexit. Read Oliver Telling’s analysis of how this could affect chemical and pharmaceutical companies.