Maitland/AMO Morning Monitor – Thursday 15 October 2020

15th October 2020

In the news

  • Beijing’s first bond offer to US investors draws record demand
  • Boris Johnson’s virus strategy threatened by regional revolt
  • France and Netherlands join forces to back EU move against tech giants
  • Thailand declares state of emergency and cracks down on demonstrators

Politics today

  • Health Secretary Matt Hancock will deliver a ministerial statement at 11.30 a.m.
  • The European Council summit kicks off today in Brussels, with Brexit under discussion.

Stock market moves

  • In Europe, the FTSE 100 opened down 1.5% and the STOXX 600 opened down 1.4%.
  • In Asia-Pacific, MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.6% while Japan’s Nikkei .N225 dropped 0.5%.
  • U.S. S&P 500 futures sagged 0.25% in Asia after major U.S. stock indexes ended the previous session lower.
  • Overnight in the US, all three major stock indexes slid from their highs in a choppy trading session, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite ending in the red for a second consecutive day.

Corporate announcements

* Maitland Client

Marston's PLC Year-end Trading Update
  • Group sales for the year were £821 million, 30% below last year.
  • Following recent additional restrictions the Company has reluctantly concluded that around 2,150 pub-based roles currently subject to furlough are going to be impacted.
  • Ralph Findlay, CEO, said: “There is much uncertainty ahead, the majority of which is outside of our control, however we will continue to focus on the safety of our teams and guests. Looking beyond the immediate challenges, we look forward to our future as a focused pub operator, returning to growth when trading conditions allow and realising the opportunities which are open to us over the medium to longer term.”
British American Tobacco PLC BAT To Appoint New Chairman
  • The Group today announces that Luc Jobin will succeed Richard Burrows as Chairman of British American Tobacco PLC.
  • This will take effect from the conclusion of the Company’s AGM on 28 April 2021.
  • In order to ensure an effective transition of the leadership of the Board, Mr Jobin will be appointed as Chairman Designate of BAT effective 1 March 2021.
  • Current Chairman, Richard Burrows said: “I am delighted that the Board has appointed Luc as the incoming Chairman for BAT. Luc brings with him significant financial, regulatory and M&A experience. He has been an outstanding non-executive director over the last three years, providing consistent support, insight and constructive challenge through the development of strategy. I am sure that BAT will go from strength to strength with Luc as Chairman and Jack Bowles as Chief Executive Officer.”
Schroders PLC Q3 2020 update
  • Total AUM over the quarter rose to £536.3bn (1 July 2020: £525.8bn).
  • Wealth Management AUM increased to £66.8bn (1 July 2020: £65.7bn).
  • Asset Management AUM increased to £469.5bn (1 July 2020: £460.1bn).
Mondi PLC Trading Update
  • Underlying EBITDA for the third quarter of 2020 was €306m, down 20% on the comparable prior year period (Q3 2019: €383m), as lower average selling prices and negative currency effects more than offset lower costs.
  • Good volume growth in uncoated fine paper and fibre-based packaging products and ongoing strong cost control were more than offset by the impact of planned maintenance shuts, negative currency effects and lower average selling prices.
  • The macro-economic outlook continues to be uncertain, however the Group is confident that it will continue to demonstrate its resilience, while remaining well-positioned for when the recovery takes place.
  • Andrew King, Group CEO, commented “The decisive action we took in the early stages of the COVID-19 pandemic helped to protect our people, maintain supply of essential products and services, and deliver a resilient performance. Our people have demonstrated their enterprise and commitment, taking care of colleagues, communities and customers in these unprecedented times.”
Hays PLC First Quarter Trading Update
  • Like-for-like net fees in Temp (62% of Group fees) and Perm (38% of Group fees) declined by 25% and 35% respectively.
  • Overall, our largest specialism of IT (26% of Group fees) fell by 22%, Construction & Property fell by 33% and Accountancy & Finance by 34%.
  • The Group’s net fee exit rate, down 26%, was modestly better than the overall net fee decline in the quarter.
  • Cash collection remained strong, with net cash of c.£350m.
  • Alistair Cox, CEO, said: “The pandemic continues to significantly impact our markets, although encouragingly our Temp business remains stable and we have seen improvements in Perm, particularly in markets that had previously been hardest-hit by lockdowns. ANZ delivered a relatively resilient performance, and Germany was stable. Countries with previously stringent lockdowns, such as the UK, France and Spain, saw improvement, and Asia and the Americas were broadly flat sequentially. I would again like to thank our colleagues worldwide for their tremendous innovation and steadfastness which they continue to demonstrate every day.”
Dunelm Group PLC First quarter trading update
  • Total sales in the quarter were £359.1m, an increase of £96.5m year over year, as the Group continues to win market share in a buoyant homewares market.
  • Net cash was £175.2m as at 26 September 2020 (FY20: net debt £24.0m).
  • Gross margin increased by 100bps compared to Q1 FY20, mainly due to a lower proportion of discounted sales, reflecting strong demand, as well as sourcing improvements.
  • For the full year, the Group expects gross margin to be slightly positive year over year, barring any material further impacts as a result of Covid-19 related disruption or restrictions.
  • Nick Wilkinson, CEO, said: “Recent months have seen homewares become even more relevant, as people spend more time in their homes up and down the country. Our colleagues and suppliers have worked really hard to ensure our value focused, market leading proposition resonates with customers. The strength in trading at this early point in the year is testament to their exceptional commitment and adaptability.”
Domino's Pizza Group PLC Q3 Trading Statement
  • Strong UK & ROI performance, with system sales up 18.7% and LFL sales exc. splits up 17.5%.
  • Encouraging UK & ROI delivery performance continued, with orders up 11.8% and items per order and product mix both doing well.
  • Collection is up from 0.7m orders in Q2 to 3.2m in Q3, as the Group reopened collection across the majority of our estate.
  • Created 5,000 new jobs and over 1,000 work placements in support of the UK Government’s Kickstart scheme.
  • Dominic Paul, CEO, said: “We continue to work on a long-term strategic plan for the business. At the heart of our future plans is realignment with our franchisee partners and we are having detailed discussions to agree a sustainable way forward, although we continue to expect that these discussions will take some time. Despite the ongoing uncertain backdrop, we expect to report full year Underlying Group PBT in the range of £93m to £98m, in line with market consensus.”
Rathbone Brothers PLC 3rd Quarter 2020 Results
  • Total AUM increased 0.2% to £50.5bn during the first nine months of the year (31 December 2019: £50.4bn).
  • £41.8 billion in the Investment Management business (31 December 2019: £43.0 billion).
  • £8.7 billion in Rathbone Unit Trust Management (‘RUTM’) (31 December 2019: £7.4 billion).
  • Total net operating income was £87.0m for the three months ended 30 September 2020, an increase of 0.8% from the £86.3m for the three months ended 30 September 2019.
  • Paul Stockton, CEO, said: “Whilst the medium term impacts of the pandemic are likely to weigh on investor sentiment for some time, we continue to convert more client assets to our discretionary service, invest in technology, and attract high quality investment professionals to support our future growth. Our balance sheet remains robust, placing us in a strong position to support the ongoing safety and well-being of our colleagues and communities, identify inorganic opportunities that fit our culture, and deliver long term value to our clients and shareholders in a structurally growing UK wealth management market.”
Mediclinic International PLC 2021 Half-Year Trading Update
  • Revenue down 5.% to £1,515m.
  • EBITDA down 33.0% to £252m.
  • EPS marginally positive at 9.9p.
  • Dr Ronnie van der Merwe, CEO, said: “The Group delivered a robust first-half operating performance maintaining operational agility and financial strength while continuing to execute on our strategy. We have seen a good rebound in trading since May 2020, particularly in Switzerland and the United Arab Emirates, as the initial peak of the pandemic passed. However, we remain suitably cautious in the midst of uncertainty as to the severity, duration and full impact of the continuing COVID-19 pandemic, as well as its economic aftermath.”
AO World PLC Trading Statement
  • The Group expects revenue for the period to be in the region of £715m, an increase of c.57% YoY.
  • In the UK retail business, sales momentum continued from Q1 throughout Q2 despite the reopening of competitor bricks and mortar stores. The Group believes it has seen a lasting step change in online penetration.
  • The Group is confident that the German business will achieve profitability on an adjusted EBITDA monthly basis as it trades through itspeak period and will be profitable in FY22 and thereafter.
  • John Roberts, CEO, said: “The last six months of trading have been like no other during my two decades in the business. AO was in good shape coming into this financial year and the global, structural shift in customer behaviour to online, accelerated by Covid, emphasised our strengths. Whilst we remain mindful of the uncertain economic climate caused by the pandemic and Brexit, we are on track with plans and well set for our biggest ever peak trading period in the UK and Germany.”
Countryside Properties PLC FY 2020 Trading Statement
  • Ended the year in line with the Board’s expectations, delivering adjusted operating profit of approximately £54m.
  • Total completions of 4,053 homes (2019: 5,733 homes).
  • Private average selling price of £364,000 (2019: £367,000).
  • Total forward order book up 17% at £1.4bn (2019: £1.2bn).
  • Net cash of £98.2m (2019: £73.4m).
  • Iain McPherson, CEO, said: We have seen significant disruption to our business this year as a result of COVID-19 and I would like to thank all our staff for the way they have adapted to new ways of working in these unprecedented times. We have been pleased by robust customer demand throughout the second half and our mixed tenure model continues to prove resilient, positioning us well in the current market.”