Maitland/AMO Morning Monitor – Monday 21 September 2020

21st September 2020

In the news

  • Chancellor Rishi Sunak is to extend the Treasury's business support programme with a focus on curbing social interaction as opposed to business closures
  • Donald Trump has said he expects a Covid-19 vaccine to be available for all Americans by April, a more optimistic timeline that that of many scientists
  • Trump has also announced that he will be nominating a new female successor for US Supreme Court justice Ruth Bader Ginsberg this week
  • Madrid has ordered 850,000 people not to leave their neighbourhoods from midnight today as they struggle with Europe's highest regional coronavirus infection rate

Politics today

  • Shadow Chancellor Anneliese Dodds will address the UK opposition's virtual conference today
  • The government’s chief scientific and medical advisers will provide Covid-19 updates and warnings at a televised press conference

Stock market moves

  • In Europe, the FTSE 100 and Eurostoxx 600 have both opened down.
  • Asian markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.57% while the Hang Seng is down 1.51%.
  • US stocks closed down on Friday with future optimism about further US government stimulus looking low.

Corporate announcements

* Maitland Client

DCC PLC DCC expands LPG business in the US and Netherlands
  • DCC LPG has expanded its US LPG business through the acquisition of the NES Group and has also reached agreement with SHV Energy to acquire its Dutch LPG business, Primagaz Nederland B.V., subject to competition authority approval.
  • DCC now has operations across 14 states in the US and is well positioned to continue to grow and develop a significant LPG business in the large and fragmented US market.
  • DCC recently agreed to acquire Primagaz from SHV Energy, subject to competition authority approval. The business is highly complementary to DCC LPG’s existing business in the Benelux region.
  • Donal Murphy, CEO, said: “These transactions, which were originated, diligenced and executed during a period of ongoing Covid-19 restrictions, demonstrate our ability to successfully build our business in an uncertain environment. The Group continues to have the platforms, opportunities and capability for further development across each of our four divisions.”
Informa PLC Half-Year Results & COVID-19 Action Plan
  • Adjusted Operating Profit decreased to £118.6m (H1 2019: £435.7m).
  • Revenues decreased to £814.4m (H1 2019: £1,407.6m), amid significant pandemic-impact on physical Events business.
  • The Group has announced the next stage of its ongoing COVID-19 Action Plan to support Colleagues, stabilise the business and secure baseline full-year revenues of c.£1.7bn/£1.7bn-, including extending The Postponement Programme to mid/late Spring 2021 and expansion of the Cost Management Programme to deliver more than £600m+ of savings by year-end.
  • Stephen A. Carter, CEO, said: “The combination of our resilient Subscriptions-led businesses and the actions we are taking position Informa securely through to the end of 2021. We remain confident that Informa will emerge from the pandemic with Stability and Security, delivering long-term sustainable growth and shareholder value.”
FirstGroup PLC Further rail agreements with UK Government
  • FirstGroup is pleased to announce that the Department for Transport has extended the emergency funding arrangements for the UK rail industry for the next six to 18 months.
  • New Emergency Recovery Measures Agreements came into force yesterday for the company’s South Western Railway, TransPennine Express, and West Coast Partnership operations.
  • The ERMAs replace the Emergency Measures Agreements, which were put in place by the DfT in March to provide continuity for rail passengers and the industry during the coronavirus pandemic, and are similar in operation. During the term of the ERMAs, the DfT will continue to waive the revenue, cost and contingent capital risk of the train operating companies and will pay them a fixed management fee.
  • Matthew Gregory, CEO, said: “Together with the earlier GWR extension, these agreements reinforce our balance sheet position and provide a potential path for our rail business to move onto a new contractual footing over time, with a more appropriate balance of risk and reward for all parties.”
Go-Ahead Group PLC New GTR contract to run to September 2021
  • The Department for Transport has announced that GTR’s Emergency Measures Agreement, which ended on 20 September 2020, has been replaced by an Emergency Recovery Measures Agreement.
  • GTR will operate under its ERMA until the end of its contract term in September 2021, with the potential for a further extension.
  • GTR’s ERMA, which generates a margin of up to 1.5%, is a management contract with no exposure to changes in passenger demand or ancillary revenue, such as car parking and retail commission.
  • David Brown, CEO, said: “This contract reaffirms the Government’s recognition of the important role rail plays in driving economic growth and in connecting communities.”
G4S PLC Trading Update
  • Following a strong performance in the first half of 2020, the Group’s revenues have remained resilient through the first eight months of the year.
  • Secure Solutions revenues, which account for 93% of Group revenues, were broadly in line with 2019.
  • Group revenues were just 1.9% lower overall and this was more than offset by tight direct and indirect cost control and reduced interest costs, the latter reflecting both refinancing benefits and the Group’s improving net debt position.
  • As a result, the Group’s underlying earnings, which were in line with 2019 at the six months stage, are now ahead of the prior year for the first eight months of 2020.
  • Ashley Almanza, CEO, said: “G4S today is a focused global business delivering technology-enabled security solutions. The benefits of our strategy, strong execution and timely response to Covid-19 continue to be reflected in the Group’s results during 2020 with resilient revenue, earnings and cash flow.”