Covid-19: Corporate Updates: 20 April 2020

by Emma Burdett | 20th April 2020

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Summary

In the FTSE 350; Redrow, Marston’s, Countryside Properties and Future plc all released further Covid-19 updates this morning, having updated the market more than once in the last few weeks, in contrast to some companies who have instead relied on the view that no news is in itself an update. In these times of such uncertainty it is understandable that companies in some sectors face unprecedented change, whilst others are seeing less impact, although given equal dissemination of information, in our view the balance would seem to favour more public information rather than less in the short-term.

  • Countryside Properties – released two Covid-19 updates (25 March, 20 April)
  • Redrow – released four Covid-19 updates (24 March, 27 March, 9 April, 20 April)
  • Future plc – released two Covid-19 updates (10 March, 20 April)
  • Marston’s – released two Covid-19 updates (18 March, 20 April)

Countryside Properties announced a £1 million fund to support the most vulnerable people in their communities. These funds will help support local charities and groups, food banks and others providing essential local services in locations where Countryside operates across the country. Separately, all of the Countryside Properties executive committee and the board of directors have agreed to a voluntary 20% reduction in base salary and fees from 1 April 2020 until at least 1 June 2020, with the equivalent cash amount to be added to the Communities Fund.

Redrow provided a further update to that issued on 9 April 2020, on actions being taken to mitigate the impact of the Covid-19 pandemic on the business. “As a consequence of the unprecedented impact of COVID-19 on the business and the housebuilding industry, John Tutte has agreed to delay the step back to non-executive Chairman from 30th June until the company’s AGM in November 2020. John will support the senior management team to ensure an orderly return to operations when the business is satisfied it is safe to do so. It remains John’s intention to retire from the Board ahead of the AGM in 2021.   As previously announced, Matthew Pratt will take up the position of Group Chief Executive with effect from 1st July 2020.”

 Polymetal International released its Q1 2020 production results, “Q1 was a strong start to the year for the Company, delivering steady performance amidst unprecedented global disruption and uncertainty”, said Vitaly Nesis, Group CEO of Polymetal. “In light of the global COVID-19 pandemic we have been taking significant measures to keep our employees, suppliers, contractors, and other counterparties healthy and safe, and to maintain continuous operations. So far we have been proven to be successful in mitigating any impact”.

AGM updates, Ocado Group released an AGM statement this morning providing additional details of their upcoming AGM on the 6 May; “Under the Stay at Home measures gatherings of more than two people are prohibited and accordingly it will not be lawful for shareholders to attend the AGM in person.” Ocado shareholders are encouraged to vote by submitting a proxy in advance of the AGM and submit questions for the board in advance of the meeting.

Witan Investment Trust plc also released their AGM 2020 arrangements In normal circumstances, the Board values very highly the opportunity to meet shareholders in person at its AGM.  However, the health and safety of the Company’s shareholders, employees and directors are of paramount importance.  On this basis, and assuming the continuation of containment and/or distancing measures, shareholders will not be able to attend the Company’s 2020 AGM in person.  Any shareholders attempting to attend the AGM will be refused entry.”

Views from the investment community

  • Consumer – Surveying consumers at home: EU stock implications

Jefferies: We conducted a proprietary survey of 5,500+ consumers globally to find out what consumers are doing at home. We asked over 50 questions, covering everything from health, employment, attitudes to government policy, spending habits, personal investments, exercise and more.

  • Homebuilders/Building Products:35% of UK respondents claiming they are doing more DIY activity under the lockdown. Over 70% of UK respondents saying their view on purchasing a home in the next 1-2 years is unchanged suggests more limited risk to housing transactions.
  • Luxury: Survey appears to flag the risk to sustainable mid-term growth if middle-class house holds feel less secure financially. We thought 8-10 week tail was the right time lapse before consumers headed back to physical stores in China, survey data suggests it looks like 6-8.
  • General Retail: Most notable results from the survey include a much more pessimistic view on the financial outlook in Europe. Clear regional differences with Chinese shoppers strongly prioritising fitness related spend relative to other activities.
  • Travel & Leisure: Almost 50% of respondents in Europe (35% in UK) are less likely to book a holiday in 2021 with Covid concerns lingering. Social distancing measures mean a return to normality for leisure activities may take some time, potentially until a COVID vaccine or mitigating drug treatment is available.
  • Building & Construction – “We shape our buildings, thereafter they shape us”

Numis: C-19 has caused an abrupt halt to most construction activity and inevitably prompts short-term investor focus on liquidity and operational gearing. We outline here that, even on worst case assumptions, the sub-sectors broadly offer resilient balance sheets that will protect companies in this storm. Equally important is that the industry is likely to be at the forefront of Government plans to refloat the economy, and we believe the twin pillars of housing and infrastructure will be key points of fiscal stimulus. In our view, investors should look to have a full weighting as a key recovery play, though clearly some areas will be more attractive than others.

  • Banking – Lessons from the US: surfing an ebbing tide

Berenberg: US banks’ Q1 2020 investment bank (IB) revenues have provided rare but material support as the tide of banks’ earnings begins to retreat. We believe European banks will benefit too: a simple read across suggests that IB revenues could rise19%, in aggregate. Beyond this, however, there is little to celebrate. Most US banks recognise that the conditions that enabled Q1 2020 IB strength are exceptional and are fading rapidly. Despite near-term strength, some banks have also reduced their FY 2020 expectations. Considering this, and the relatively greater balance sheet risks faced by some European banks, the outlook remains challenging.

US banks’ results suggest that European banks’ Q12020 IB revenues could rise 19% yoy, but risks are to the downside. For instance, while this estimate accounts for European banks’ past loss of market share, this attrition has continued. Moreover, our past work suggests that European banks tend to benefit less (and less consistently) from “episodic” activity, such as that seen during Q1 2020. Funding strains and balance sheet constraints may have further limited European banks’ ability to take advantage of heightened IB activity.

Regulation and Corporate Governance

Please find the latest news on UK regulation below:

  • 20/04/2020: The Financial Times reports that ShareAction, the responsible investment charity, has called on all FTSE 100 companies to hold virtual AGMs in 2020. The charity found that two out of three of the index’s annual meetings announced so far are set to be held with just the minimum of participants, with no opportunity for shareholders to question the board in real time.
  • 20/04/2020: The Financial Times reports that regulators across Europe are asking asset managers for new information about their ability to meet investor redemptions as they seek to stave off a liquidity crunch sparked by the coronavirus market sell-off. The French and German financial watchdogs have started demanding daily updates of investor withdrawals from open-ended funds, while the regulators of Luxembourg and Ireland have also stepped up their monitoring of the sector.
  • 20/04/2020: The Times reports that some of the most senior figures in the City, including Peter Hargreaves, Andy Bell, Sir Brian Williamson and Martin Gilbert, are calling for listed companies seeking equity capital in the weeks to come to try to accommodate private investors. In an open letter to plc chiefs, to be published today, the owners of investment platforms, small investor groups and mainstream fund managers have united to express deep concern that private investors are being disadvantaged and short-changed.
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About the Author

Emma Burdett

eburdett@maitland.co.uk

Emma has worked at Maitland/AMO for 10 years and sits on the Board of the Investor Relations Society and is also Chair of the Policy Committee

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Peter Hamid

phamid@maitland.co.uk

Peter joined Maitland/AMO in 2017 as a senior consultant in the capital markets and investor relations team

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Li Zhao 赵立

lzhao@maitland.co.uk

A Chinese native, Li is a consultant in Maitland/AMO’s capital markets team. Li works closely with UK and international clients on media relations and investor relations (IR) projects, specialising in media and market research and analysis.

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