Maitland/AMO Morning Monitor – Thursday 19 November 2020

19th November 2020

In the news

  • Rishi Sunak's outlook for the UK economy expected to contain the largest downgrade in economic performance and public finances since WW2
  • Cineworld is considering a CVA as lockdown restrictions heaps pressure on the company
  • Oxford coronavirus vaccine shows encouraging results, particularly for adults in their 60s and 70s

Politics today

  • Boris Johnson to provide an update on the Integrated Review today, where he is expected to announce the largest military investment in 30 years

Stock market moves

  • In Europe, the FTSE 100 and Eurostoxx 600 have both opened down.
  • Markets have been mixed across Asia this morning, with the Shanghai Composite up 0.47% but the Hang Seng and Nikkei both down.
  • US futures were little changed overnight following a market slide on Wednesday.
  • Sterling has marginally fallen to both the euro and the dollar.

Corporate announcements

* Maitland Client

Johnson Matthey PLC Half Year Results
  • Reported revenue increased 2% driven by higher average precious metal prices.
  • Reported operating profit declined 74% driven by lower demand in Clean Air and major impairment and restructuring charges of £78m.
  • Reported EPS declined 87%, reflecting lower reported operating profit and higher net finance charges.
  • Robert MacLeod, CEO, said: “I am excited by our medium term growth prospects driven by accelerating global trends and we are purpose led to reduce the impact of climate change. We are investing for our future and remain focused on executing our growth opportunities including battery materials, fuel cells and our hydrogen production technologies.”
Halma PLC Half Year Results
  • Revenue and Adjusted Profit before Taxation declined by 5%, both including a 6% positive contribution from prior year acquisitions.
  • Organic constant currency revenue was 11% lower, reflecting the net negative impact of the COVID-19 pandemic.
  • Notwithstanding the continued uncertainty in the Group’s major markets, including in relation to the current COVID-19 pandemic and the wider macroeconomic environment, the Board now expects Adjusted profit before tax for FY 2020/21 to be around 5% below FY 2019/20, compared to prior guidance of 5% to 10% below FY 2019/20. 
  • Andrew Williams, CEO, said: “We have had a good start to the second half, with order intake ahead of revenue and up on the same period last year. Our improving trading performance, together with our strong cash position, will enable us to accelerate strategic investments in the second half of the year. As a result of our progress so far this year, we now expect Adjusted profit before tax for FY 2020/21 to be around 5% below FY 2019/20, compared to prior guidance of 5% to 10% below FY 2019/20.”
Kingfisher PLC Q3 Trading Update
  • Q3 20/21 total Group sales of £3.5bn, up 17.6% in constant currency; Group LFL sales up 17.4%.
  • Q4 20/21 Group LFL sales (to 14 November 2020) up 12.6%, largely reflecting the impact of more recent temporary lockdown measures. 
  • Continuing to make good progress against ‘Powered by Kingfisher’ strategic priorities.
  • Thierry Garnier, CEO, said: “Overall, we believe that the renewed focus on homes is supportive for our markets. Furthermore, we are confident that the strategic and operational actions we have taken so far are helping us to build a strong foundation for long-term growth.
Royal Mail PLC Half-year Report
  • Group revenue up 9.8%, driven by strong parcel growth at both Royal Mail and GLS.
  • Group reported operating loss of £20m; Group adjusted operating profit of £37m, growth in GLS profit more than offset by loss in Royal Mail.
  • Uncertainty remains, particularly for Q4. Royal Mail revenue now projected to be £380 to £580m higher year on year.
  • Keith Williams, Interim Executive Chair, said: “We have updated our scenario for the full year. As parcel volumes at both Royal Mail and GLS have continued to be robust year to date, revenue performance in the scenario has improved. It remains difficult to give precise guidance but parcel growth is expected to remain robust in Q3, with more uncertainty over trends in Q4 due to the development of the COVID-19 pandemic, further recessionary impacts and trends in international volumes.”
Close Brothers Group PLC* Scheduled Trading Update
  • The group delivered strong performance in the quarter.
  • In Banking, the loan book increased 5.6% to £8.0bn (31 July 2020: £7.6bn), reflecting continued high levels of customer activity.
  • Strong demand for SME business loans issued under the UK government support scheme, which is due to end on 31 January 2021.
  • The Asset Management division generated annualised net inflows of 7%. Managed assets increased to £12.8bn (31 July 2020: £12.6bn) and total client assets increased to £13.8bn (31 July 2020: £13.7bn).
  • Winterflood continued to benefit from high levels of market activity, with average daily bargains remaining elevated at 83k, although below the level seen in the second half of the 2020 financial year at 108k.
  • Adrian Sainsbury, CEO, said: “The group has performed well in the first quarter, with strong new business volumes in Banking, reflecting increased customer activity, continued net inflows in the Asset Management division and elevated trading volumes in Winterflood. Our operational capabilities and financial resources have enabled us to continue to build on the positive momentum seen in the last months of the 2020 financial year.”
Investec PLC Half Year Report
  • Adjusted operating profit was down 48.4% to £142.5m (1H2020: £276.3m).
  • Total revenue declined by 24.0% (17.8% in neutral currency) compared to 1H2020. Net interest income decreased by 15.6% impacted primarily by lower interest rates.
  • Wealth & Investment reported net inflows of £336m and growth in funds under management of 14.9% since 31 March 2020 to £51.1bn.
  • Fani Titi, CEO, said: “The first half of the financial year has been characterised by difficult and volatile market and economic conditions attributed primarily to COVID-19. As a result, group adjusted operating profit of £142.5m was 48.4% behind the prior period and adjusted basic earnings per share of 11.2p was 50.0% behind the prior period, albeit ahead of pre-close guidance. We are encouraged by the resilience of our loan book, the performance of our core franchises against a tough backdrop and progress made on our strategic objectives. Tangible net asset value per share increased by an annualised 10.4% and a dividend of 5.5p has been declared.”
Syncona Limited Half-year Report
  • Net assets of £1,366.7m (31 March 2020: £1,246.5m), 203.4p per share (31 March 2020: 185.6p), a NAV total return of 9.6% in the period.
  • Life science portfolio valued at £666.6m (31 March 2020: £479.5m), a return of 24.8% in the period.
  • Martin Murphy, CEO, said: “Syncona has delivered a robust performance, underpinned by a strong balance sheet and disciplined capital allocation. We have recently founded and invested in two exciting new companies with ambitions to deliver transformational treatments to patients. We also made an investment in an exceptional emerging cell therapy company and continued to invest and support our portfolio companies as they achieved key clinical and financial milestones, despite the unprecedented backdrop of the COVID-19 pandemic. Driven by our purpose to invest to extend and enhance human life, we remain focused on the long-term as we seek to build a dynamic portfolio of 15-20 companies in innovative areas of healthcare.”
LondonMetric Property PLC Half Year Report
  • Net rental income up 12% to £61.3m, on an IFRS basis net rental income increased 14%.
  • EPRA earnings up 20% to £42.3m, +4% on a per share basis.
  • Dividend progression of 5% to 4.2p, 113% covered, including Q2 dividend declared of 2.1p.
  • Rent collection strong with less than 1% forgiven or outstanding for the period.
  • Andrew Jones, CEO, said: “Whilst we remain vigilant to the impact of Covid-19, our focus on owning the right assets in the winning sectors that can generate a secure and growing dividend, positions us well for the future. We will continue to assess and anticipate the wider macro changes in helping to frame the shape of our future portfolio.”
Charles Stanley Group PLC Interim Results
  • Revenue decreased by 4.1% to £81.9m (H1 2020: £85.4m), reflecting the impact of COVID-19 on funds under management and administration and lower interest rates. 
  • Revenue margin increased to 74.3 bps (H1 2020: 69.9 bps).
  • Underlying profit before tax reduced by 27.5% to £6.6m (H1 2020: £9.1m).
  • Paul Abberley, CEO, said: “These are resilient results in the face of the exceptionally difficult trading conditions caused by the COVID-19 pandemic, with revenue and profits at encouraging levels. Charles Stanley reacted rapidly and effectively to the unique challenges. We maintained our normal high level of service to clients while ensuring staff safety. Although the effects of the pandemic will be with us for some time, Charles Stanley remains well-positioned. We have a strong balance sheet, with no debt and good cash flows. This will allow us to continue to provide clients with an excellent service and to make further progress with our strategic objectives.”
Euromoney Institutional InvestorPLC Final Results
  • Reduction in Group revenue by 17% reflecting covid-19 impact on events.
  • Operating profit fell 60% to £33.6m.
  • Outlook: Demand for price reporting and essential market intelligence remains strong with good visibility for Pricing and DMI subscriptions.
  • Andrew Rashbass, CEO, said: “Despite covid-19, Euromoney continues to make strategic progress as a 3.0 information-services business. Strong subscriptions growth in Pricing and Data Market Intelligence underpins the resilience and good prospects of the Group. Euromoney’s performance, the cash-generative nature of the business even during the pandemic and the Board’s confidence in the outlook mean we are able to invest in growth and recommend the resumption of dividend payments. These results in difficult times, and our plans, are testament to the skill and determination of our people and the quality of our brands and businesses.”
Grainger PLC Full-Year Audited Financial Results
  • Net rental income up +16% to £73.6m (FY19: £63.5m).
  • Average rent collection for the year of 97% paid on time and 99% for the month of September.
  • +3.0% like-for-like rental growth across its portfolio (FY19: 3.6%).
  • Helen Gordon, CEO, said: “We have continued to invest, grow and improve the business, while delivering strong results and attractive returns for our shareholders. This year has emphasised the importance of a good home like never before, and Grainger’s unrelenting focus on providing good quality, safe homes with great customer service, has proved as relevant as ever during these challenging times.”
Capital & Counties Properties Plc Exchangeable Bond Offering
  • Capital & Counties Properties today announces the launch of an offering of approximately £250m of Secured Exchangeable Bonds due 2026, exchangeable for ordinary shares of Shaftesbury PLC.
  • Capco intends to use the net proceeds of the Offering for general corporate purposes and to reduce its borrowings under the Covent Garden revolving credit facility.
  • Capco believes that the Offering will enhance Capco’s financial position, providing a more appropriate funding balance across the group while also allowing it to diversify medium term sources of finance, extend its maturity profile and keep its cost of debt low.
CMC Markets Plc Interim results
  • Record H1 trading performance, with net operating income up £128.6m (126%) to £230.9m (H1 2020: £102.3m).
  • CFD gross client income up 68%, representing increased client trading and demand from new and existing clients.
  • CFD revenue per active client up 66% to £3,392, with an unwavering strategic focus on high quality clients.
  • Peter Cruddas, CEO, said: “Looking ahead, while it is still too early to know the full extent of the changes in client trading demand, we have had the ability to demonstrate the strength of our offering and are confident in retaining the high-quality clients we target. I believe that CMC is in an excellent position. We have many opportunities to leverage our technological innovation, quality client service and platform strength, and these will allow us to expand our product portfolio and deliver further profitable growth for the Group. I believe that, based on these competitive advantages, we will be able to provide highly attractive returns for our shareholders over the coming years.”