Maitland/AMO Morning Monitor – Thursday 18 June 2020

18th June 2020

In the news

  • The US government wants a high-capacity undersea data cable system to bypass Hong Kong – its worried about its national security as China exerts greater control in the territory
  • The Bank of England is expected to “build back its war-chest” for fighting the coronavirus crisis by announcing an increase of at least £100bn in its bond-buying programme
  • More than 1,600 paediatricians have called on PM Boris Johnson to reopen schools or risk "scarring the life chances" of a generation
  • UK taxpayers could pay at least £3.5bn to bail out train companies – a figure that’s expected to rise significantly if the industry uses state support for at least another year
  • New climate data suggests that modelling for worst-case scenarios may not go far enough and that the climate is considerably more sensitive to carbon emissions than thought
  • Hertz, the car rental group, has suspended a controversial $500m share sale after facing scrutiny from US securities regulators

Politics today

  • French President Emmanuel Macron will visit London to mark 80 years since World War II French General Charles de Gaulle made a historic broadcast to occupied France from British shores. He will head to the Commons at 10.30am
  • 11am - the Department of Health will be publishing new stats from the second week of test and trace
  • 12pm – the Bank of England will announce the outcome of its latest policy meeting
  • 2.30pm - Michael Gove and Brandon Lewis give evidence to the Commons Northern Ireland affairs committee on customs arrangements post-Brexit

Stock market moves

  • In Europe, the FTSE 100 and Eurostoxx 600 have both opened down this morning.
  • Asian stocks have fallen, as new coronavirus cases across the US and China continue to weigh on investor’s confidence. Japan’s Topix fell 0.2%, while the Hang Seng was down 0.9%.
  • US futures as of 8:15am BST suggest a flat open on Wall Street, with the S&P 500 predicted to open 0.9% up.
  • Sterling is down to both the euro and dollar respectively.

Corporate announcements

* Maitland Client

National Grid PLC Final Results
  • Underlying operating profit up 1% to £3.5bn.
  • Underlying EPS down 1% to 58.2p reflecting improved regulated performance.
  • COVID-19 impact on earnings, primarily driven by a £117m increased provision for US bad debts.
  • John Pettigrew, CEO, said: “Looking ahead, whilst COVID-19 will impact our financial performance in FY21, we expect this to be largely recoverable over future years and therefore anticipate no material economic impact on the Group in the long-term. We continue to target asset growth of 5-7% in the near term and with an efficient balance sheet that underpins asset and dividend growth, the Group is well positioned to create value for shareholders.”
Taylor Wimpey PLC Results of the Placing
  • Taylor Wimpey announces the successful completion of the non-pre-emptive placing of new ordinary shares in the capital of the Company announced yesterday.
  • A total of 355,000,000 new ordinary shares of 1 pence each in the capital of the Company have been placed by Citigroup Global Markets Limited and Credit Suisse Securities Limited, at a price of 145 pence per Placing Share, representing gross proceeds from the Placing of approximately £515m.
Coca-Cola HBC AG CFO to step down in the first quarter of 2021
  • Coca-Cola HBC has announced that Michalis Imellos, Chief Financial Officer, has informed the Company of his intention to step down from the role at the end of the first quarter of 2021.
  • Michalis Imellos, CFO, said: “It has been a privilege to be part of the Coca-Cola HBC success for the past 12 years. I am grateful to the talented people I worked with and proud of our achievements throughout these years. I am committed to facilitating a handover and transition that will ensure that Coca-Cola HBC continues to capture the exciting opportunities ahead, from a position of strength.”
Tesco PLC Tesco agrees sale of business in Poland
  • Tesco today announces the sale of its business in Poland to Salling Group A/S.
  • The transaction, which is subject to antitrust approval, includes the sale of 301 stores together with the associated distribution centres and head office.
  • Dave Lewis, CEO, said: “We have seen significant progress in our business in Central Europe, but continue to see market challenges in Poland. Today’s announcement allows us to focus in the region on our business in Czech Republic, Hungary and Slovakia, where we have stronger market positions with good growth prospects and achieve margins, cashflows and returns which are accretive to the Group. I would like to thank all of our Tesco Poland colleagues for their dedication to serving customers in Poland over many years. The energy and commitment they have shown over the past two years transforming Tesco Poland to a two-format business has been incredibly impressive. We see this transaction as the best way to secure the future of the business for our colleagues and customers in Poland”.
Wincanton PLC New Morrisons contract win
  • Wincanton today announces that it has successfully extended its relationship with Morrison Supermarkets PLC.
  • Morrisons has awarded Wincanton the management of their transport and VMU operations at Willow Green, Bridgwater, which will commence later this year.
  • James Wroath, CEO of Wincanton, said: “In these challenging circumstances affecting businesses across the UK, we are delighted to build upon our reputation for excellent implementation and quickly extend the scope of Wincanton’s much valued partnership with Morrisons.”
Safestore Holdings PLC Half-year Report
  • Group revenue up 8.5% (9.0% at CER).
  • Statutory Profit before tax up to £99.7m from £38.2m in 2019 driven by increased gain on investment properties of £64.0m (2019: gain of £7.9m).
  • Adjusted Diluted EPRA EPS up 7.4% at 14.5p.
  • Despite COVID-19, the group has stated that move-in and move-out activity during lockdowns, its proven business model and balanced approach to revenue management has driven resilient operational performance.
  • Frederic Vecchioli, CEO, said: “We believe the resilient characteristics of the self-storage industry, together with our leading market positions across the UK and Paris, place the business in a strong position to withstand the economic uncertainty arising from COVID-19. Safestore’s scale continues to allow us to invest in our digital marketing platforms and service proposition, and this remains a key competitive advantage in a fragmented industry. Our balance sheet remains strong and efficient, with a low cost of debt, £158m of available bank facilities, significant covenant headroom and no imminent refinancing required. This financing capacity, combined with the strong free cash generation of the business, allows us to continue to target selected development and acquisition opportunities.”
  • The group announces that its day-to-day operations have been largely unaffected in the year to date.
  • The Group remains well financed and, as at 31 May 2020, had gross cash of £256.6m following record realisations in the year to date of £113.8m compared with £79.5m for the whole of 2019.
  • The Group continues to assess and respond to the impacts of COVID-19 on its portfolio, which includes world-changing businesses that it believes will deliver impact and significant benefits to society at large. 
Stagecoach Group PLC Covenant Waiver
  • Stagecoach Group plc continues to take appropriate action to maximise financial flexibility as it negotiates the continuing challenges and uncertainty around COVID-19 and the UK’s recovery.
  • The group has taken the precautionary measure of agreeing a covenant waiver for the periods ending 31 October 2020 and 1 May 2021 with its group of lending banks for its facilities expiring March 2025.
  • As an alternative to the covenants, the group has agreed minimum liquidity thresholds at 31 October 2020 and 1 May 2021.
NewRiver REIT PLC Full Year Results
  • Underlying Funds From Operations of £52.1m (FY19: £55.1m).
  • Total dividend per share declared of 16.2p (FY19: 21.6p).
  • EPRA NAV per share of 201p (March 2019: 261p).
  • Allan Lockhart, CEO, said: “The structural changes in UK retail that were already underway have been accelerated by COVID-19. It is clear that much existing retail space in the UK needs to be repurposed and we have been at the forefront of creating this change through developing mixed-use schemes in town centres. We believe that with our skill set and expertise, our management team, and our capital partnerships, we are well-positioned to respond to both the structural challenges and to the changing dynamics of the communities in which our assets are located. This will, we believe, continue to create sustainable long-term value for our shareholders.”