Maitland/AMO Morning Monitor – Wednesday 17 June 2020

17th June 2020

In the news

  • All schools in Beijing have been ordered to close and millions of people are living under renewed restrictions, as a spike in the virus cases continues
  • Trump administration has sued former national security adviser John Bolton to delay the publication of his memoir that is expected to paint an unflattering portrait of Trump’s foreign policy decision-making
  • Brazil has reported a record number of daily COVID-19 cases (34,918 new cases), bringing the number of infections to 923,189
  • Former Prime Ministers David Cameron and Tony Blair have criticised the PM for his decision to merge the Department for International Development with the Foreign Office, branding it a “big mistake”
  • In the UK, more than 2 million people who are under orders to stay home and be fully “shielded” will be told they can stop isolating at the end of July
  • Violence erupted on the streets of Paris yesterday in a day of nationwide demonstrations in support of healthcare workers

Politics today

  • 12pm – Prime Ministers Questions
  • Prime Minister Boris Johnson is to address the 1922 Committee of Conservative MPs
  • The European Commission will unveil its proposal for new powers to crack down on foreign subsidies aimed at levelling the playing field
  • The European Commission will announce its new strategy to buy vaccines in advance

Stock market moves

  • The FTSE opened up 0.42% and Europe’s STOXX 600 opened up 0.25%.
  • In Asia-Pacific trading, Japan’s Topix index fell 0.6 per cent while mainland China’s CSI 300 of Shanghai- and Shenzhen-listed shares was down 0.2 per cent. Equity benchmarks in Hong Kong and South Korea both slipped 0.1 per cent, while Australia’s S&P/ASX 200 added 0.5 per cent.
  • Overnight on Wall Street, the S&P 500 closed 1.9 per cent higher after figures showed a record rebound in US retail sales in May as states began easing coronavirus-induced lockdowns.
  • Futures markets tipped the S&P 500 to shed 0.1 per cent when trading begins later on Wednesday.

Corporate announcements

* Maitland Client

SSE PLC Preliminary results for the year end 31 March 2020
  •  Adjusted operating profit up 37% to £1,488.4m (2019: £1,088.7).
  •  Adjusted EPS up 35% to 83.6p (2019: 61.8p), within forecast 83p-88p range.
  • Adjusted net debt and hybrid capital at £10.5bn (2019: £9.5bn), in line with forecast.
  • Total coronavirus impacts of £51.9m.
  • Final dividend of 56p per share recommended for payment on 18 September 2020, making a full year dividend of 80p per share in line with five-year 2018/19 to 2022/23 dividend plan.
The Berkeley Group Holdings PLC Final Results
  • Revenue down 35.1% to £1,920.4 (FY2019: £2,957.4m).
  • PBT down 35.0% to £50.7m (FY 2019: £775.2m).
  • EPS down 32.5% to 3244.9p (FY 2019: 481.1p).
  • Net cash of £1,138.9 million (FY2019: £975.0 million), with total liquidity of £1.9 billion via banking facilities of £750 million in place to November 2023.
  • Statey and guidance: Return of £455m surplus capital deferred for up to two years due to the volatility presented by Covid-19 and to provide the Company with the flexibility to invest the surplus capital in incremental new land should opportunities arise which would lead to enhanced shareholder value over the cycle.
Serco Group PLC* Closed period trading update
  • Revenue growth of around 23%, including organic growth of 14%.
  • Underlying trading profit of £75m-£80m, around 50% higher than the first half of 2019, driven primarily by the Group’s overseas businesses including the impact of the acquisition in August 2019 of the Naval Systems Business Unit of Alion in North America.
  • Significant operational challenges as a result of Covid-19 but limited financial impact in the first half, as the losses in some parts of the Group have been largely offset by additional work to help our customers elsewhere.
  • Strong order intake of around £1.8bn; book-to-bill ratio expected to be around 100%.
  • Robust financial position with headroom on our committed facilities expected to be at least £300m at 30 June; adjusted net debt expected to be around £200m, and leverage around 1.0x.
  • Reinstating guidance, reflecting the resilience of our business as a supplier of critical services to governments globally.
BHP Group PLC David Lamont appointed Chief Financial Officer
  • The Company today announces the appointment of David Lamont as CFO, effective 1 December 2020. As CFO, Mr Lamont will also join BHP’s Executive Leadership Team.
  • Mr Lamont has been the CFO of the ASX-listed global biotech company CSL Limited since January 2016.
  • Mr Lamont also held senior roles at BHP between 2001 and 2006, including CFO of the company’s Carbon Steel Materials and Energy Coal businesses. 
  • Peter Beaven will continue as CFO until 30 November 2020 to provide ongoing leadership through to Mr Lamont’s commencement, and will support Mr Lamont with handover into early 2021, after which he will leave BHP.
Kingfisher PLC Final results
  • Sales down 1.5% to £11,513m (2019: £11,685m).
  • Gross profit down 1.4% to £4,255m (2019: £4,318m).
  • Statutory basic EPS down 95.6% to 0.4p (2019: 9.1p).
  • Group executive team complete including eight new appointments.
  • Initial focus on: improving operations in France, implementing new trading approaches, recalibrating balance between Group and local activities, enabling efficient store picking for click & collect and home delivery, and pausing or stopping some initiatives to focus our resources.
William Hill PLC Results of Placing
  • William Hill announces the successful pricing of the placing of new ordinary shares of 10p each in the share capital of the Company.
  • A total of 174,872,457 new ordinary shares in the Company will be issued at a price of 128p per share, raising gross proceeds of approximately £224m.
  • The Placing Shares, Subscription Shares and Retail Shares being issued together represent approximately 19.99% of the Company’s issued share capital immediately prior to the Placing.
Domino's Pizza Group PLC AGM Trading Update
  • UK LFL sales growth has been strong during the first half of the year to date. Trading in the period prior to the lockdown was robust, driven by increased order count.
  • Business in Ireland, which is a much smaller part of the Group, has seen a weaker performance, against a strong comparative last year. Weakness due to the Covid-19 lockdown being more pronounced in Ireland.
  • Throughout the period of lockdown the Group has served customers with entirely Contact Free Delivery and have ceased in-store collection. As the lockdown begins to ease, the Group is now seeing a gradual re-introduction of contact free collection across the system, although expects this to take some time to recover to prior levels.
  • The Group saw sales performance from delivery grow rapidly with an increase in order count and a growth in items per order and therefore average ticket.
The Monks Investment Trust PLC Final Results
  • Among the strongest contributors to performance were several online enabled technology businesses, including Amazon (ecommerce and cloud), Shopify (ecommerce) and Teladoc (telemedicine), all of which have seen an acceleration in demand for their services. 
  • Portfolio turnover for the 12 months was 16% and the Company’s invested gearing stood at 6.5% at the financial year end.
  • A single final dividend of 2.50p is being recommended, compared to 1.85p last year. This is the minimum required to maintain the Company’s investment trust status, reflecting its priority which is capital growth.
  • Over the period, 4,960,000 shares were issued at a premium to NAV, being 2.3% of the Company’s share capital, raising over £46m. The share price ended the year at a 4.4% premium to NAV.
Hill & Smith Hldgs PLC Trading Update
  • Group revenues for the quarter to 31 March 2020 increased organically by 4.8% to £170.7m with underlying operating profit also growing year on year.
  • Revenue for April and May was 26% lower than the same period last year, however, the Group remained profitable in both months.
  • The Group continues to be cash generative and maintain a strong liquidity headroom position with a robust balance sheet. Net debt as at 31 May 2020 was £202.0m compared with net debt of £215.3m as at 31 December 2019 and £224.5m as at 29 February 2020.
  • At 31 May 2020, the Group had £185.3m of headroom against its borrowing facilities of £354m (£341m committed, £13m on demand).
boohoo group PLC Trading Update
  • Sales up 45% to £368m (FT20: £254m).
  • Despite the uncertain backdrop, the Group has delivered a strong gross margin performance, up 60 basis points year on year to 55.6%
  • Today, the Group announces the acquisition of the online businesses and all associated intellectual property of two brands, Oasis and Warehouse, for £5.25m in cash from Hilco Capital Limited. 
  • In addition, on 15 May, the Group raised gross proceeds of £197.7m from shareholders through a placing in order to take advantage of numerous M&A opportunities that are likely to emerge in the global fashion industry over the coming months.
  • The Group continues to appraise opportunities and will update shareholders in due course. The Group finished the quarter with in excess of £350m of net cash on its balance sheet.