Maitland/AMO Morning Monitor – Wednesday 13 May 2020

13th May 2020

In the news

  • The UK housing market will start emerging from almost two months in lockdown. New regulations which come into force today will allow estate agents to open and mean buyers and renters will be able to view properties in person provided they observe social distancing rules. An estimated 450,000 people have been forced to put their plans for moving on hold with around £80bn worth of sales on ice.
  • Ministers will have to raise taxes sharply in the coming months to deal with an estimated £337bn deficit in the current financial year – up from £55bn forecast in the March Budget. The figures are in a Treasury document leaked to The Daily Telegraph.
  • Kingfisher was the biggest riser in the FTSE-250 yesterday, jumping almost 10%. The rise came after the group, which owns B&Q and Screwfix in the UK and Castorama in France, said it had now re-opened all its UK stores and online sales were booming. So now we know what lots of people are doing with their spare time at home.
  • Uber has made a bid to swallow food deliver company Grubhub. The move led to a spike in Grubhub’s shares of up to 25% taking its value to more than $5.4bn – a tasty morsel for Uber whose market cap is more than 10 times as much.
  • Land Securities, one of the UK’s largest property companies, has revealed a £1.2bn drop in the value of its estate and warned the economy is unlikely to recover to pre-virus levels before 2022.

Politics today

  • UK citizens to enjoy greater freedoms as the easing of some lockdown restrictions come into action
  • Treasury opens scheme to help self-employed through coronavirus pandemic two weeks early

Stock market moves

  • Stocks across Asia Pacific fell, under pressure from rising US-China tension and concerns over the timeline for reopening the world’s largest economy after the coronavirus pandemic. China’s benchmark CSI 300 index of Shanghai- and Shenzhen-listed stocks dropped 0.3%, while Japan’s Topix index shed 0.2% and Australia’s S&P/ASX 200 fell 0.4%. Hong Kong’s benchmark Hang Seng index was flat.
  • The broader drop for Asian stocks followed a poor showing on Wall Street, where the S&P 500 snapped a six-day run of gains to close 2.1% lower.
  • Gold held steady on Wednesday as market participants stayed away from making big bets ahead of a speech by Federal Reserve Chairman Jerome Powell amid rising speculation the United States could one day adopt negative interest rates.
  • In Europe, the FTSE 100 is trading down 1% in early hours, while Euro Stoxx 600 is down 1.2%.

Corporate announcements

* Maitland Client

Sage Group PLC Half-year Report
  • Organic total revenue increased by 5.7% to £935m (2019: £885m), reflecting growth in recurring revenue of 10.3% to £826m (2019: £849m). 
  • Organic operating margin decreased 0.6p to 22.8% (2019: 23.4%), reflecting ongoing investment to accelerate strategic execution. 
  • Resilient balance sheet, with c. £1.3bn of cash and available liquidity; net debt to EBITDA ratio of 0.5x.
  • Steve Hare, CEO, said: “Sage has had a strong first half, sustaining last year’s growth momentum as we continue to focus on recurring revenue growth, and making good progress in strategic execution.I am proud of how colleagues have reacted, and how they have supported each other and our customers. Despite the near-term uncertainties, I believe our continuing investment into Sage Business Cloud, together with our focus on customers, colleagues and innovation, form a strong base for the future performance of Sage.”
Spirax-Sarco Engineering PLC AGM Statement - Trading Update
  • Organic sales for the Group in the first four months of the year declined 5%, with reported sales down 3%. In the three months to March, the organic decline in sales was 4%, while in April it was 8% as the full effects of the global pandemic were felt.
  • In order to help contain costs during the more critical months of demand weakness, the Board and over one hundred senior managers across the Group agreed in March to pay reductions ranging from 20% to 7%.
  • At 30th April 2020 net debt was £288 million.
  • As a result of cost containment and efficiency improvement initiatives that have been put in place, the Group currently anticipates that the full year drop through of total revenue decline to operating profit in 2020 will be contained to around 45%.
Ferguson PLC Q3 2020 Trading Update
  • The Group generated revenue in the ongoing businesses of $4,750m (2019: $4,707m) in the third quarter, 0.9% ahead of last year or 1.7% behind on an organic basis.
  • Gross margins were 40 basis points lower at 29.8% in the quarter with underlying trading profit of $334m, $5m behind last year.
  • During the quarter there were cash outflows of $202m relating to acquisitions, $74m relating to capital expenditure and $101m of share buy backs.
  • Ferguson remains well positioned for long-term success operating in attractive and fragmented markets with a robust business model and backed by a strong balance sheet and liquidity position.
TUI AG* Half-yearly Results
  • Group Underlying EBIT for the five months to February delivered a strong result, up €62m versus prior year excluding one-offs, driven by Markets & Airlines.
  • H1 Group Underlying EBIT loss of €813m, down €512m on prior year as a result of loss of contribution and costs arising from COVID-19 shutdown as well as costs from Boeing 737 Max grounding.
  • Targeting 30% overhead cost reduction across the Group.
  • Available liquidity (as of 10 May 2020): 2.1 billion euros
  • The group states that the COVID-19 pandemic is unquestionably the greatest crisis the industry and TUI has ever faced.
  • However, the group stresses that it is a resilient business and will be stronger, much leaner and more flexible post COVID-19.
Aston Martin Lagonda Global Hld PLC 1st Quarter Results
  • Revenue declined to £79m as COVID-19 impacted dealer demand, amplifying the impact of strategic decision to lower wholesales to reduce dealer inventory towards a luxury norm; and, reflected lower average selling price (ASP)
  • Core retail sales declined 31% year-on-year but ahead of wholesales in unit terms as COVID-19 impacted customer demand and the Company destocked dealers; dealer inventories down 428 units since December 2019 (FY 2019: 190 decrease). 
  • APAC (-74%), Americas (-57%), EMEA (-30%) and UK (-3%); China down 86% with no wholesales in January and February, as planned to re-balance dealer inventories. 
  • Lawrencre Stroll, Chairman, said: “My immediate priority is to rebalance supply and demand, reducing dealer stock. Although nearly all our dealers are compromised and our factories were closed, we are focused on achieving results and delivering our plan.  We have made very good progress very quickly, with dealer inventory down 428 units in just one quarter, more than double the level achieved in the whole of 2019.”
Airtel Africa PLC Full Year Results
  •  Revenue increased by 11.2% to $3,422m, with Q4 revenue growth up 15.1%
  • Underlying EBITDA up 13.8% to $1,515m, with underlying EBITDA growth in constant currency at 16.3%
  • The Board recommended a final dividend of $3 cents per share, to a total dividend of $6 cents per share.
  • Raghunath Mandava, CEO, said: “These are a strong set of results which delivered against our aspirations set out at the time of the IPO, with performance sequentially improving during the year. Revenue increased by 11.2%, 13.8% in constant currency, and underlying EBITDA by 13.8%, 16.3% in constant currency, to a reported $1,515m, underpinned by significant improvement in our Free cash flow generation and reduced leverage. These results also demonstrate the strength and resilience of our business and the effectiveness of our strategy – with all three business services, voice, data and mobile money, contributing to revenue growth.”
Vesuvius PLC AGM Trading Update
  • The Company’s first quarter performance was marginally ahead of the previous quarter, reflecting the subdued market environment that has persisted since the end of 2019 and little of the COVID-19 impact.
  • In response to the pandemic, the Company has implemented several cost reduction plans to deliver savings of around £10m per quarter during the crisis, starting in Q2, in addition to the £19.4m of recurring savings from its ongoing restructuring programme which it is targeting to deliver this year.
  • The Company has further boosted its liquidity, which stood at £375m at the end of March 2020, by an additional £314m through the issuance of US Private Placement notes and accessing the Bank of England’s Covid Corporate Financing Facility programme.
  • Patrick André, CEO, said: “Our first priority in the current crisis is the health and safety of our employees, as reflected in the actions we have taken across the Group. In parallel, whilst the extent of the impact of COVID-19 on our business remains uncertain, we are confident that the measures we have taken to aggressively cut costs and preserve liquidity not only ensure that we can operate through a prolonged downturn but also emerge stronger once end markets recover.”
Brewin Dolphin Holdings PLC Interim Management Report For the Half Year Ended 31 March 2020
  • Total income for the period increased by 8.3% to £175.8m (H1 2019: £162.3m). Excluding income from acquisitions of £9.3m, income increased by 2.6%.
  • Estimated operating cost savings in FY 2020 of £6m-£8m through disciplined cost management into H2 2020 based on values-led decision making.
  • The Board declares an interim dividend of 4.4p per share. The interim dividend is payable on 12 June 2020 to shareholders on the register at the close of business on 22 May 2020 with an ex-dividend date of 21 May 2020.
  • David Nicol, CEO, said: “In the first half of 2020, we delivered a resilient set of results, notwithstanding the negative impact of COVID-19 on global markets towards the end of the second quarter. We saw a greater level of direct inflows in the first half, with strong demand for integrated wealth management service. We have a strong balance sheet and good cash generation although we need to be mindful of the high level of uncertainty for the remainder of the financial year. We continue to monitor the impacts on the business and maintain strong cost discipline.
TP ICAP PLC* Trading Update Q1 2020
  • Revenue in the Period of £547m was 17% higher than the £469m revenue reported for the equivalent period last year and 17% higher on a constant currency basis. Revenue growth reflected higher client volumes due to the volatile market conditions caused by the COVID-19 pandemic at the end of the Period.
  • As at the end of the Period, £250m of the Group’s Revolving Credit Facility, which matures in December 2022, remains undrawn. This facility remains available to meet the Group’s liquidity needs and this can be used for general corporate purposes. The Group has no bond maturities until 2024.
  • While the Group has performed strongly in the Period, its full year guidance of low single-digit revenue growth remains unchanged at this point.  The Group believes that it is too early to fully assess the impact of the COVID-19 pandemic on TP ICAP and its customers.
  • Nicolas Breteau, CEO, said: “Thanks to the support of our staff and our clients, our Group, as a systemically important market infrastructure provider, has been able to continue to support and provide the essential liquidity to keep the wholesale financial and commodities markets in which we operate open and functioning in an orderly manner.”
Marshalls PLC Trading Statement
  • The Group has now signed final agreements with each of NatWest, Lloyds and HSBC for an additional £30m, 12 month committed revolving credit facility with each, with a 12-month extension option. 
  • As at 30 April the Group had net debt of £69 million, on a pre-IFRS 16 basis.
  • In addition, the Group has been confirmed as being eligible for the Covid Corporate Financing Facility with an issuer limit of £200m.
  • As a result of the impact of the COVID-19 crisis, sales in the first four months through to 30 April were down 27 per cent at £131m (2019: £180m).
Crest Nicholson Holdings PLC COVID-19 Update
  •  From 18 May 2020 the Group will start to remobilise activity on its sites in a phased and controlled manner.
  • The Group was awarded five-star status by the HBF customer satisfaction scheme in March this year
  • As at half year, 30 April 2020, net debt was £93.6m (HY2019: £68.3m) and the Company had £255.2m cash at bank. The increased cash position, up from available cash of £185.3m announced on 19 March 2020, reflects a strong focus on receipt collections, disciplined build spend as activity was wound down, and where possible deferral of land spend.
  • Net debt is higher than the prior half year as a result of the impact of COVID-19 and the strong contribution from joint ventures and partnerships in the first half comparative of last year.
HgCapital Trust PLC AGM Results and Directorate Change
  • The Company announces that with effect from the close of the AGM on 12 May 2020, Mr Roger Mountford has retired as a Non-Executive Director and Chairman of the Board, and has been succeeded by Dr Jim Strang.