BAE Systems bounces back after City approves pensions proposal

Uncertainty hanging over BAE Systems and its share price was swept aside today as the defence giant unveiled a long-awaited deal with UK pension trustees.

Shares jumped by more than 2% after BAE said it would increase annual payments by £15 million to £220 million under plans to tackle a £2.1 billion deficit across its UK defined benefit pension schemes. BAE investors were also cheered by separate news that the company’s move to a new accounting system will have no impact on the way it managed its contracts.

The announcements provided a boost to new chief executive Charles Woodburn, with shares rallying out of recent weakness to stand 12p higher at 556p.

Even though Aviva joined BAE in rising by more than 2%, the FTSE 100 was down by another 26.86 points at 7366.70. The UK blue-chip index also fell by 0.9% on Wednesday as speculation of a breakthrough in Brexit talks pushed sterling higher.

The FTSE 250 fell 103.98 points to 19,955.60. Auto Trader was among the second-tier fallers, even though Peel Hunt kicked off its coverage of the stock with a Buy rating and 400p target price. The company, whose shares have fallen 22% since the summer amid fears about the health of the new-car market, was down 1.1p to 336.40p.

Oil-rig firm Lamprell fell sharply as it said this year’s earnings will be materially below market expectations, hurt by losses stemming from a contract for an East Anglia offshore windfarm project.

It admitted that the learning curve on the scheme had been steeper than anticipated, resulting in the project making a significant loss. Shares fell 6p to 64p, even though Numis Securities said the news was no reason to change its Buy rating on the stock.

Package holiday firm On The Beach warmed up investors with a 27% dividend rise as it reported that full-year profits surged 34% to £28.5 million.

The business, which was started by the present chief executive Simon Cooper in 2003, is also confident about current trading. Shares were 25.5p higher at 424.50p.

Serica Energy more than doubled in value as its shares resumed trading after last week’s acquisition of BP’s Bruce, Keith and Rhum fields in the North Sea. The shares flew up 32.38p to 60p.

FlowGroup, which supplies residential gas and electricity under the Flow Energy brand, failed to cheer investors despite unveiling a plan to bring forward profitability by six months.

It believes it can save £2.5 million by retaining a customer base of just under 250,000, the figure above which regulatory payments significantly increase.

The company’s bombed-out shares were 0.02p lower at 0.70p.