Maitland/AMO Morning Monitor – Thursday 21 May 2020

21st May 2020

In the news

  • A new restructuring route for saving large businesses and a moratorium on creditor action that risks pushing companies into bankruptcy were among measures in an overhaul of insolvency rules introduced in parliament yesterday.
  • Samsung Electronics announced construction of an $8 billion processor chips production line in South Korea and an $8 billion expansion of its memory-chip factory in China.
  • McDonald’s has reopened 33 UK restaurants to drive-through customers. Staff will be temperature checked on arrival at work, operate in smaller teams and provide a reduced menu with a £25 limit per car.
  • Lufthansa is in talks with the German government over a €9bn (US$10bn) rescue.
  • Oxfam International is to lay off almost 1,500 staff and close operations in 18 countries.
  • International imports and exports have fallen to their lowest level for at least four years, according to World Trade Organization figures.
  • Education, health and living standards are set to decline for the first time in 30 years, the United Nations Development Programme has warned, because of coronavirus lockdowns.
  • The head of the pilots’ union Balpa told MPs yesterday that airlines are “exaggerating” the scale of the problem so they can cut jobs.
  • Bloomsbury Publishing warned that sales of physical books could drop up to 65 per cent if lockdown continues well into the summer.
  • British universities face a potential £760m blow to their funding after about one in five students said they would not enrol in the next academic year if classes were delivered online and other activities curtailed.
  • Rishi Sunak is working with the Financial Conduct Authority on a plan to prolong the mortgage payment holiday scheme for several more months. The relief is due to finish at the end of June.
  • Greece plans to re-open on June 15 to tourists from a group of 20 countries "with a good track record" of containing the coronavirus epidemic. No health checks will be required.
  • The number of coronavirus patients in hospital in England has fallen below 10,000 for the first time since March.

Politics today

  • Jacob Rees-Mogg, the Leader of the Commons, confirmed that MPs will abandon their mostly virtual proceedings when they return after the half-term recess on 2 June. He said the Speaker had tested a new voting system that allows MPs to vote while remaining six feet apart. Conservative backbencher Robert Halfon said returning to a physical parliament will in effect “euthanise” MPs who are sick, shielding and self-isolating.
  • The Liberal Democrats are to hold their postponed leadership election this summer to choose a replacement for Jo Swinson, who lost her seat in the general election. Sir Ed Davey, the acting leader, and Layla Moran, the education spokeswoman, are seen as the main candidates.
  • Commons: Not sitting.
  • Director of Public Prosecutions giving evidence to the House of Commons justice committee (9am).
  • Gregor Smith, interim chief medical officer for Scotland, giving evidence to the House of Commons Scottish affairs committee (2pm).

Stock market moves

  • Asia-Pacific stocks struggled to gain traction today as disappointing trade data from South Korea added to concerns over a slump in international demand. Japan’s benchmark Topix index dipped 0.2 per cent and Hong Kong’s Hang Seng shed 0.4 per cent.
  • Global markets had pushed higher on Wednesday as investors took heart from promises of support from central banks. The S&P 500 rose 1.7 per cent to its highest level since the first week of March, while the Nasdaq rose 2.1 per cent to its highest point since mid-February.
  • European equities reversed early losses to make strong gains in the last hour. The FTSE 100 in London closed up 1.1 per cent and the regional benchmark Stoxx 600 finished almost 1 per cent higher.

Corporate announcements

* Maitland Client

Whitbread PLC Preliminary Results Announcement
  • Statutory revenue up 1.1% to £2,072m (FY19: £2,049m).
  • Adjusted profit before tax decreased by 8.2% to £358m (FY19: £30m).
  • Statutory basic EPS increased 50.9% to 145.9p (FY19: 96.7p).
  • Dividend payment suspended.
  • Covenant waivers granted from lenders for 18 months.
  • Strong balance sheet as the Group entered FY21; Cash of £503m and undrawn Revolving Credit Facility (RCF) of £950m.
Whitbread PLC Rights Issue
  • The Group today announces that it proposes to raise gross proceeds of approximately £1,009m by way of a rights issue.
  • The actions Whitbread has taken have ensured its business can withstand a prolonged period of closures and/or low demand.
  • The Group believes the Rights Issue will allow it to invest with confidence and flexibility in its strategy: opening its committed pipeline in the United Kingdom, accessing the significant opportunity in Germany and keeping its offering ahead of the competition, and provide further liquidity headroom in the event of a resurgence of the COVID-19 pandemic.
Aviva PLC Q1 operating update
  • Life new business sales rose 28% to £12.3bn (1Q19: £9.bn) and value of new business grew 18% to £311m (1Q19: £26m).
  • General insurance net written premium gained 3% to £2.4bn (1Q19: £2.bn).
  • Based on analysis as at 30 April, the Group’s estimate of COVID-19 related claims in its general insurance businesses, incorporating notified and projected claims, is £160m net of reinsurance.
Intertek Group PLC Trading Statement
  • Revenue of £882m, down 4.6% YoY both at constant and actual rates, with LfL revenue down 4.9% YoY at constant currency: Product -6.6%, Trade -5.9%, Resources +2.4%.
  • Well diversified revenue streams, high-margin, strong cash generative earnings model with a track record of sustainable value creation and a strong balance sheet with year-end net financial debt currently expected to be in the range of £650-700m.
  • Well positioned to benefit from the increased needs of employees, consumers and governments for Health, Safety and Wellbeing Assurance solutions, creating additional growth opportunity in the attractive Global Quality Assurance market.
easyJet PLC easyJet announces resumption of flights from 15 June along with new biosecurity measures
  • The Group announces that a small number of flights will restart on routes where it believes there is sufficient customer demand to support profitable flying.
  • The initial schedule will comprise mainly domestic flying in the UK and France. Further routes will be announced over the coming weeks as customer demand increases and lockdown measures across Europe are relaxed.
  • Alongside the resumption of services, easyJet has announced a range of new measures to help ensure the health and wellbeing of both customers and crew onboard. These include: Customers, cabin and ground crew will be required to wear masks; Enhanced cleaning and disinfection of easyJet aircraft; Availability of disinfectant wipes and hand sanitiser onboard; Initially, no onboard food service.
Essentra PLC Further COVID-19 Update
  • Group LFL revenue declined 7% for the Q1 period; Group LFL revenue declined 17% in April.
  • The Company has available liquidity of c£225m, which was made up of undrawn committed bank facilities of c£100m.
  • The Company has successfully repaid a US$80m USPP (US Private Placement) facility, which matured on 29 April 2020.
Pets At Home Group PLC* Full Year Results
  • Record revenue up 10.2% to £1,058.8m – passing £1bn for the first time in the company’s history.
  • Retail LFL revenue up 9.4% helped by Q4 LFL +15.9%.
  • Vet Group LFL revenue up 5.6%.
  • The number of VIP customers buying products and services up almost a quarter YoY.
  • FY dividend maintained at 7.5p.
  • Paid a £1.9m ‘thank you’ bonus to frontline staff.
  • Peter Pritchard, CEO, said: “These are clearly unprecedented times and Pets at Home will not be immune to the challenges that we collectively face. We have had to respond quickly and make significant changes to the way we operate our business, and will undoubtedly need to remain focused yet agile as we respond to pandemic-driven issues and opportunities alike. I am proud to be surrounded by an experienced and adaptable management team who, with the support of our fantastic colleagues who have continued to work tirelessly in adverse circumstances, providing essential products and healthcare services for the nation’s pets, are determined to create a stronger pet care business in a post-pandemic future.”
Investec PLC Results for the year ended 31 March 2020
  • Group adjusted operating profit of £608.9m was 16.8% behind the prior year (2019: £731.m).
  • Total operating income (before impairments) decreased 7.5% to £1,806.8m (2019: £1,953.8m).
  • Net asset value per share at 31 March 2020 was 414.3p (31 March 2019: 434.1p).
  • COVID-19 impact: “The operational response of our business to the disruptions caused by COVID-19 has been a robust, agile transition into remote working, enabling a seamless continuation of service to our clients. Approximately 95% of our employees across the world are currently working from homeTo meet the challenges faced by our clients, we have mobilised our balance sheet and expertise to assist in finding the financial solutions or restructuring advice to help them through this period.”
Inchcape PLC Trading Update
  • Group revenue £2.1bn, down 32% reported, down 30% in constant currency, and down 25% LFL.
  • COVID-19 situation remains dynamic; taken prompt action to optimise cash flow and reduce costs.
  • Strong OEM partnerships enabling careful management of inventory and financing across markets.
  • Liquidity headroom further strengthened with confirmation of eligibility to UK CCFF scheme.
  • Further portfolio progress: sold three more UK Retail sites and completed Daimler Colombia deal.
  • Duncan Tait will join the Board as Group CEO (Designate) on 1st June, assuming his full role on 1st July.
Tate & Lyle PLC Final Results
  • +10% increase in Food & Beverage Solutions profit to £162m; +1% volume; +5% revenue.
  • +3% increase in Primary Products profit3 to £158m with Sweeteners & Starches +1%, Commodities +17%.
  • +23% increase in Group statutory profit before tax due to lower exceptional costs.
  • +8% increase in adjusted diluted EPS benefitting from lower effective tax rate of 17.9% (2019: 21.0%).
  • +£35m higher adjusted free cash flow at £247m; Net debt / EBITDA ratio 0.9x.
QinetiQ Group PLC Preliminary Results
  • Orders up 25% (excluding the LTPA amendment); largest annual order intake in 9 years.
  • Revenue up 18%, 10% on an organic basis.
  • Underlying operating profit up 7%, 2% on an organic basis, underlying EPS up 2%.
  • 133% underlying cash conversion pre-capex.
  • Guidance for Group performance and dividend decision later in the year.
Hilton Food Group PLC Trading Update
  • The Group’s trading has been in line with the Board’s expectations. During the lockdown period arising from the Covid 19 pandemic, the Group experienced increased demand and have worked closely with its market leading retail customers to meet their requirements.
  • At the same time, the Group has seen increased costs as it worked to ensure the safety of our employees by establishing a number of protocols to protect our people and minimise contact.
  • The Group’s financial position remains strong, having put in place committed facilities to cover current expansion plans, including the purchase of the assets relating to the Australian Joint Ventures from Woolworths.
Sabre Insurance Group PLC Trading Update
  • Continued focus on strategy of prioritising underwriting profitability over volume.
  • Overall trading conditions consistent with the update given with the full year results presentation of 7 April 2020.
  • Gross written premium for the 3 months to 31 March 2020 down approximately 5% year-on-year (£43.7m V £45.9m).   
  • Continued strong organic capital generation with a solvency coverage ratio of 186% (as at 31 March 2020, post payment of 2019 full year dividend), exceeding our preferred range of 140 to 160%.
  • Premium outturn for the year hard to forecast precisely due to the fast-changing COVID-19 impacted rating environment.  
  • Combined ratio for the financial year is expected to be within the target range of 70 to 80%.
Assura PLC Full Year Results
  • Strong portfolio of 576 properties with passing rent roll up 6% to £108.9m (2019: £102.7m ) and WAULT of 11.7 years (2019: 12.0 years).
  • EPRA earnings have increased by 6% to £67.5m, EPRA EPS has grown 4% to 2.8p per share (2019: £63.8m, 2.7p per share)
  • Profit before tax at £78.9m, reflecting higher net rental income following additions to the portfolio and lower positive valuation movement than prior year (2019: £84.0m).
  • As at 31 March 2020, portfolio value is up 8% to £2,139.0m (2019: £1,978.8m).
  • The Group continues to work closely with the NHS and GP tenants to support the service through the crisis, including utilising vacant space for the NHS and supporting occupiers’ needs with our premises.
  • The Group is today launching our sixbysix ambition – that by 2026 six million people will have benefitted from improvements to and through our healthcare buildings.
AJ Bell PLC Interim results for the six months ended 31 March 2020
  • Revenue up 22% to £60.9m (HY19: £50.1m).
  • PBT up 28% to £22.7m (HY19: £17.7m).
  • PBT margin up 1.9 percentage points to 37.2% (HY19: 35.3%).
  • Balance sheet strengthened, with net assets up 8% in the period to £93.3m. 
  • Interim dividend of 1.50p per share (HY19: 1.50p per share).
IntegraFin Holdings PLC Interim Results for the Six Months Ended 31 March 2020
  • Revenue up 13.0% to £53.8m (HY2019: £47.6m).
  • Profit before tax profits up 21.9% to £27.3m (HY2019: £22.4m).
  • Earnings per share up 23.6% to 6.8 pence (HY2019: 5.5p).
  • Interim dividend 2.7 pence per share (HY2019: 2.6pps).
  • Funds under direction up 1.7% to £34.99bn (HY2019: £34.41bn).
  • Gross inflows up 14.0% to £3.2bn (HY2019: £2.8bn).
  • Client numbers up 8.1% to 187k (HY2019: 173k).