Maitland/AMO Morning Monitor – Thursday 14 May 2020

14th May 2020

In the news

  • A test to find out whether people have been infected with coronavirus in the past has been approved by health officials in England.
  • More than 110,000 people applied for help within hours of the launch of a new government scheme to support the UK’s army of self-employed. The scheme provides a grant worth 80% of average monthly trading profits but, like the furlough scheme, is capped at a maximum of £2,500 per month. The value of claims made on the first morning totalled around £340m according to HMRC.
  • Online media firm Buzzfeed is to close its UK and Australian operations. The US company, which set up in London in 2013, said the decision had been made for “both economic and strategic reasons”
  • US tech giant Twitter has announced that employees will be allowed to keep working from home ‘forever’ if they choose. The past few months have proved people can “work from anywhere” they said
  • Marks & Spencer is to reopen almost 50 of its cafes across the UK from today for takeaways. It follows similar moves by Pret a Manger and Caffe Nero while fast food chains McDonald’s and Burger King are opening drive-through sites, leading to huge queues in some areas
  • Sony has said that it will push ahead with plans to launch its new PlayStation 5 console in time for Christmas as the lockdown has seen an industry-wide jump in sales of online gaming
  • Taxi firms Uber and Addison Lee are to fit perspex partition screens between drivers and passengers in 4,000 vehicles next week as demand increases from people keen to avoid public transport when returning to work
  • Customers queued through the night to get a hair cut when barbers re-opened in New Zealand

Politics today

  • No scheduled activity apart from the daily 5pm press conference

Stock market moves

  • In Europe, the Eurostoxx 600 and FTSE 100 have both fallen 1.1% and 1.4% respectively this morning.
  • Stocks across Asia have fallen this morning after the head of the US central bank Jerome Powell warned of long-term economic impacts on the country.
  • As of 8:15BST, US futures point to a dip at the open.
  • West Texas Intermediate crude is up 1.62%, while Brent Crude is up 0.93%.
  • Sterling has marginally fallen to both the euro and dollar.

Corporate announcements

* Maitland Client

Persimmon PLC COVID-19 Update
  • The ability to recommence operations swiftly has been made possible by the Group’s decision not to furlough staff and to continue to pay all colleagues in full throughout the shutdown period, without recourse to Government assistance.
  • In the eight weeks ended 10 May 2020 the Group secured 1,351 gross private sales reservations, with a total of 1,300 legal completions being made in the same period. Cancellation levels remain in line with historic trends.
  • David Jenkinson, CEO, said: “Persimmon decided not to access any form of Government support during the shutdown period and has maintained its commitments to its colleagues and communities in full throughout. Now, as we re-start activity, this decision is also enabling us to get back to work swiftly and safely. Persimmon is open for business and we are looking forward to welcoming customers back to site and continuing to play our part in rebuilding Britain’s economy.”
3i Group PLC Results for the year to 31 March 2020
  • Total return of £253m or 3% on opening shareholders’ funds (March 2019: £1,252m, 18%). 
  • NAV per share of 804 pence (31 March 2019: 815 pence) after paying 37.5 pence of dividends in the year.
  • Action traded strongly in 2019 and in the first two months of 2020, but COVID-19 caused major short-term disruption to the business, as it was forced to implement total or partial temporary store closures in a number of countries.
  • Simon Borrows, CEO, said: “We enter our new financial year with a carefully assembled portfolio of private equity and infrastructure companies and an experienced team that has proved adept at managing these investments against a deteriorating macro-economic backdrop. We have been cautious investors for some years and have maintained a strong balance sheet since our restructuring in 2012. This conservative approach will help us to navigate the challenging months ahead minimising significant interruptions so that we can continue to generate attractive returns for our investors through the cycle.”
Lloyds Of London Lloyd's market to pay up to US$4.3bn to customers
  • Lloyd’s, the world’s leading (re)insurance market, today revealed that it will pay out in the range of $3bn to $4.3bn to its global customers as a result of the far-reaching impacts of COVID-19. This is on a par with 9/11 in 2001 and the combined impact of hurricanes Harvey, Irma and Maria in 2017, all of which led to similar pay outs by the Lloyd’s market.
  • Lloyd’s believes that once the scale and complexity of the social and economic impact of COVID-19 is fully understood, the overall cost to the global insurance non-life industry is likely to be far in excess of those historical events.
  • The estimated 2020 underwriting losses covered by the industry as a result of COVID-19 are approximately $107bn.
  • John Neal, CEO of Lloyd’s, said: “The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by COVID-19. The Lloyd’s market alone is currently expected to pay claims amounting to some $4.3bn, making it one of the market’s largest pay-outs ever. What makes COVID-19 unique is the not just the devastating continuing human and social impact, but also the economic shock. Taking all those factors together will challenge the industry as never before, but we will keep focused on supporting our customers and continuing to pay claims over the weeks and months ahead.”
Hargreaves Lansdown PLC Trading Statement
  • Net new business of £4.0bn in the period.
  • Assets under administration of £96.7bn as at 30 April 2020.
  • Year-to-date total revenue of £448.1m, up 13%, supported by record dealing volumes
  • Chris Hill, CEO, said: “There remains much uncertainty in the coming months and hence, like many businesses, we cannot predict levels of new business or client activity. However, we are confident that the strategy we have invested in, with our focus on the needs of UK investors and savers and delivering the highest level of client service, means that we are well positioned to deliver continued attractive long-term growth.”
Grainger PLC Half Year Results
  • Net rental income up +27%.
  • Like-for-like rental growth up +3.4%.
  • Dividend policy maintained, +6% on a per share basis.
  • Helen Gordon, CEO, said: “Grainger is in a strong position financially and our portfolio is performing as expected, showing a high degree of resilience during these uncertain times. We have achieved high rent collection, strong rental growth and maintained occupancy levels over 97%. We have continued to grow our business, serve our customers and deliver new rental homes. Our business has been focused on three key areas since the coronavirus lockdown: Innovate, Communicate and Improve. We have implemented new ways of serving our customers remotely and enabling safe interactions and property transactions using technology and virtual viewings. We have increased our contact with and support for our customers, suppliers and partners. And we have been investing in training for our employees so that we can emerge from this global crisis stronger.
Just Group PLC AGM statement and trading update
  • The group expects to deliver positive organic capital generation in 2020 and beyond.
  • The Group’s excess capital has grown by £60m in the first four months of the year, demonstrating the resilience of its balance sheet.
  • David Richardson, CEO, said: “Since the start of the Covid-19 lockdown we have continued to work towards capital self-sufficiency whilst supporting our customers by making changes to our products, and managing our credit portfolio, which is performing well, to reduce the risk of downgrades. Our total Retirement Income sales in the first quarter are in line with expectations and we continue to maintain pricing discipline. Finally, I remain committed to ensuring the well-being of our colleagues and would like to thank them all for their continued hard work and how well they have adapted to the changes we have had to embrace.”
Countryside Properties PLC Unaudited Half Year Results
  • Solid trading performance from October to February with net reservation rate 31% ahead of the prior year.
  • Adjusted revenue fell 6% to £530.9m (2019: £563.7m).
  • The group has been encouraged by virtual interest from potential customers and its mixed-tenure business model positions it well with continued strong demand from partners for affordable and PRS homes.
  • Iain McPherson, CEO, said: “As we move into the second half of the year, we have cautiously restarted construction on around 80% of our sites albeit with significantly reduced build rates as we adjust to new ways of working. We welcome the revised guidance from Government allowing anyone looking to move home to be able to do so. Whilst the market outlook remains highly uncertain, our resilient mixed-tenure business model and strong forward order book benefit us both operationally and financially as we work alongside our partners to restart our operations as efficiently as possible.”
Marston's PLC COVID-19 Financing and Dividend Update
  • The group continues to take a highly prudent approach in our management of the business during this period.
  • The impact of COVID-19 on its financial and trading performance will depend upon how the situation develops and over what timescale, which remains uncertain. 
  • The group has agreed £70m of additional liquidity through an increased bank facility, subject to final documentation.
Watches of Switzerland Group PLC FY20 Trading and Financing Update
  • FY20 Group revenue increased 5.9% to £819.3m, ahead of recently revised guidance range. 
  • Covid-19 related closures of all stores in the UK and US has impacted momentum in final 6 weeks of the year. 
  • Ecommerce sales up 45.8% vs prior year during store lockdown period (6 weeks to 26 April 2020).
  • Brian Duffy, CEO, said: “Prior to the Covid-19 pandemic, the Group had been on track to deliver double-digit sales growth, reflecting our strong brand partnerships, favourable market conditions and accelerating momentum in the US. Despite the current challenges, demand for luxury watches has remained strong with online sales performance ahead of our expectations.  Through our longstanding partnerships with the most prestigious Swiss watch brands, we have further enhanced the online customer experience with the introduction of additional brands which we had previously only transacted in our stores.”
Helios Towers PLC Q1 2020 Results
  • Q1 2020 Group revenue increased by 9% year-on-year to $101.8m (Q1 2019: $93.7m) driven by the continued growth in the number of sites and tenancies across the Group.
  • Q1 2020 Adjusted EBITDA increased by 11% year-on-year to $54.0m (Q1 2019: $48.8m).
  • Based on our current assessment of COVID-19 impact, guidance for 2020 remains unchanged.
  • Kash Pandya, CEO, said: “The first quarter of 2020 saw our business deliver in line with expectations, with strong top-line growth and Adjusted EBITDA performance. It demonstrates the power and leverage of our business model, the operational excellence driven by our people and the dependability of our long-term contracted revenue with our blue-chip customers. Following the outbreak of COVID-19, these attributes will serve the business well going forward. Our priority is the health and wellbeing of our people and those who are supported and connected by Helios Towers across sub-Saharan Africa. Never before has reliable connectivity been so vital, and at the heart of our sustainable business model is intrinsic infrastructure for a connected society.”
WH Smith PLC Interim Results
  • Group revenue up 7% with Group like-for-like revenue down 1%.
  • In the group’s UK Travel business, it has seen a significant decline in passenger numbers as a result of travel bans; the vast majority of its stores at airports and railway stations have been temporarily closed.
  • In April, Group total revenue was down 85% on the same period last year, as expected, with Travel revenue down 91% and High Street revenue down 74%.
  • Carl Cowling, CEO, said: “There was very little impact of Covid-19 on our first half results, however inevitably the performance in the second half will be very different.  During the first half, we continued to see strong sales growth in our Travel business with total revenue up 19%, driven by our ongoing investment and initiatives in our UK business and our growing international businesses.  Trading profit in the first half was up 11%.  Our recently acquired US business, MRG, continued to perform well and maintained its momentum of securing significant tender wins across major US airports.  Our High Street business also performed well delivering Trading profit of £44m in the period.”
Sirius Real Estate Limited Covid-19 update and dividend policy confirmation
  • April 2020 rent and service charge collection at 98.8% of normal levels.
  • No significant reduction in rent and service charge prepayments in May to date.
  • Enquiries returned to normal levels – 1,200 per month on average for March and April.
  • Andrew Coombs, CEO, said: “Our business model is built on the breadth of our offer to occupiers and the adaptability of our mix of accommodation, ranging across many different workspace segments, including conventional office, flexible office, manufacturing, commercial storage and self-storage. In addition, the portfolio is well diversified in terms of both geography and tenant base. We faced this crisis with the benefit of a strong balance sheet, significant covenant headroom and a capital structure well placed to absorb a prolonged period of uncertainty. While it is impossible to predict the course this crisis will eventually take, it is encouraging to see how the business has handled it to date, as well as the country as a whole.  We are very pleased to see our dedicated employees and those of our tenants and suppliers starting to return to their workplaces.”
Bank of Georgia Group PLC 1st Quarter Results
  • The group’s first quarter performance was robust and, unlike many banks around the world, wit has taken a significant upfront general provision to cover expected credit losses throughout the economic cycle.
  • The Group generated solid operating income before cost of risk of GEL 168.8m during first quarter of 2020, mostly driven by stable net interest income and net fee and commission income.
  • Bank of Georgia entered the situation as a highly profitable bank, with a strong market position and balance sheet.
  • Archil Gachechiladze, CEO, said: “Bank of Georgia has two clear strategic targets over time: to achieve at least 20% return on average equity, and to deliver c.15% growth of the loan book. These have not changed. Given our clear Georgia focus, our performance in the short-term will inevitably however be affected by the national state of emergency relating to COVID-19, and these targets are no longer appropriate for 2020. We will continue to update the market on a regular basis and as we get greater clarity on the significant current economic uncertainties. In the short-term, our performance and balance sheet remains very robust, asset quality is resilient and we remain comfortable, given our economic scenario stress-testing assumptions, with the incremental general provision created. The Group is also very well positioned with strong funding and liquidity, and capital resources, and we aim to ensure that this remains the case. “