Maitland/AMO Morning Monitor – Wednesday 20 May 2020

20th May 2020

In the news

  • The rate of inflation has fallen to its lowest level since August 2016 as retailers are forced to discount due to the coronavirus shutdown. The rate is now 0.8%, down from 1.5% in March 2020. ONS said falling energy and fuel pump prices had also contributed.
  • Ovo Energy is cutting 2,600 jobs and closing several offices around the UK, claiming the lockdown has forced it to accelerate cost-cutting plans. Ovo bought SSE's retail division four months ago, making it Britain's second biggest energy supplier. The redundancies will be focused on meter readers and back-office staff.
  • The number of vacancies in the UK has halved in April. Preliminary labour market data shows there were roughly 350,000 unfilled positions across the economy last month, down from 750,000 in March, and even lower than during the depths of the financial crisis. Large slumps in vacancies were reported in food service, entertainment and retail.
  • Facebook made a new attempt to build an online shopping empire with the launch of an ecommerce platform spanning its three leading apps yesterday. Facebook Shops lets retailers upload product catalogues to their Facebook pages and Instagram profiles. It is also investing in other ecommerce features, such as shopping through live video streams on Instagram.
  • Wagamama is to reopen dozens of restaurants following successful trials in London and Leeds. 24 sites will reopen tomorrow and a further 20 next week. Pizza Express will also start delivering from 13 London sites over the next 10 days. Service station business Moto will reopen seven Costa drive-throughs and have 27 Burger Kings open for takeaway from tomorrow.
  • UK luggage brand Antler has fallen into administration after suffering a slump in demand for its suitcases, carry-on bags and travel sets since travel restrictions were imposed. The company employed nearly 200 people and 164 have been made redundant by restructuring firm KPMG.
  • The National Trust expects to take a £200m hit to its finances after closing all its properties during the lockdown. The figure represents nearly a third of the charity’s total income in the last financial year.
  • Britons could enjoy an extra bank holiday this year as the Government considers plans for another day to help domestic tourism. The plan for an October bank holiday was put forward by the UK's tourism agency Visit Britain amid warnings about the billions being lost because of the pandemic. The government will urge British people to holiday at home this summer as uncertainty about international travel persists.

Politics today

  • Labour’s annual party conference, Sir Keir Starmer’s first as leader, has been cancelled due to the pandemic. The conference was due to be attended by 13,000 people in Liverpool in September and will be replaced with online events.
  • Commons: starting with Scotland questions (11.30am).
  • PMQs: Boris Johnson and Keir Starmer face off at Prime Minister’s Questions (noon).
  • MPs due to vote on chairmanship of the Liaison committee.
  • Governor of the Bank of England Andrew Bailey to give evidence to the Treasury committee on the economic impact of coronavirus (2pm).

Stock market moves

  • After a mixed days trading, most European stock markets closed lower. The FTSE 100 and Euro Stoxx 600 have both opened marginally down in early trading.
  • David Madden of CMC Markets says stock market bulls ‘took a breather’, partly due to signs of resistance to the Franco-German proposal of a new Covid-19 recovery package.
  • US benchmark S&P 500 closed 1% lower following a report from Stat that questioned the strength of the early results from Moderna’s vaccine trial. Futures as of 8:30 BST point to a positive open this afternoon.
  • Asia-Pacific stocks dipped after Wall Street pulled back. Japan’s Topix edged 0.1% lower, while the Kospi in South Korea and Australia’s S&P/ASX 200 both slipped 0.3%.

Corporate announcements

* Maitland Client

Experian PLC Full-year financial report
  • Full year organic revenue growth of 8%, with Q4 organic revenue growth of 10%.
  • Operating profit increased 2% to $1,185m (2019 $1,162m).
  • For the month of April, the Group experienced a decline in organic revenue of (5)%. Should current trading trends continue throughout the first quarter, the company estimates that Q1 organic revenue will decline in a range of 5-10%.
  • Brian Cassin, CEO, said: “We are confident that, once the crisis abates, we will be well placed to continue to deliver on our growth agenda.”
Rolls-Royce Holdings PLC Rolls-Royce Proposes Major Reorganisation to Adress Medium-Term Impact of COVID-19
  • The company expects the loss of at least 9,000 roles from its global workforce of 52,000.
  • In addition to the savings generated from this headcount reduction, the company will also cut expenditure across plant and property, capital and other indirect cost areas.
  • The proposed reorganisation is expected to generate annualised savings of more than £1.3bn, of which the company expects headcount to contribute around £700m.
  • The cash restructuring costs related to these actions are likely to be around £800m, with outflows incurred across 2020 to 2022.
  • Warren East, CEO, said: “Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simply not there.”
Severn Trent PLC Preliminary Announcement of Annual Results
  • Group turnover of £1,844m, up £76m (4.3%).
  • Proposed final dividend of 60.05 pence, in line with policy.
  • Despite these challenging times, the company remains confident it can deliver positive net outperformance payments this year, and across the AMP.
  • Liv Garfield, CEO, said: “Our business remains strong and we have made further progress against the things that really matter to our customers with leakage, supply interruptions and water quality complaints all improving.”
Great Portland Estates PLC Annual Results
  • Total property return of 3.7%, with capital return of 0.3% v MSCI Central London (quarterly index) of -0.8%.
  • EPRA earnings of £57.0m, up 6.1% on 2019. Total accounting return of 3.2% (2019: 2.3%).
  • 71.0% of March quarter rents collected (62.9% within seven working days), two-thirds of balance relates to occupiers from RHL sectors; seven occupier delinquencies since April 2019 (1.3% of rent roll); £25.8m held in rent deposits/bank guarantees.
  • Toby Courtald, CEO, said: “Guided by our strong purpose and unifying values, we have positioned GPE for any market eventuality; our low leverage is both defensive and gives us significant capacity for growth; our portfolio is virtually fully let, off low rents and has material upside potential from our extensive development pipeline; and our talented team with its deep market knowledge, combined with our financial strength, gives us the ability to choose our path to deliver on all our ambitions.”
Playtech PLC Trading and COVID-19 update
  • Playtech took early and decisive action in response to COVID-19 and has performed better than envisaged in its update on 19 March 2020.
  • Strong Q1 with Adjusted EBITDA of €117m.
  • Over €600m of cash available including fully drawn RCF; covenant light debt.
  • Claire Milne appointed as Interim Chairman to provide continuity and stability.
Marks & Spencer Group PLC Full Year Results
  • Group revenue decreased 1.9% to £10,181.9m (2019: £10,377.3m).
  • Progress against transformation priorities, helping the business to withstand the crisis.
  • Acquired 50% of Ocado Retail, a valuable investment in online grocery which transforms the growth potential of M&S Food. Ocado Retail delivered 40.4% revenue growth for the 9 weeks to 3 May.
  • Steve Rowe, CEO, said: “The way our people have rallied to support our customers and communities has been awe-inspiring. From the outset we recognised that we were facing a crisis whose effects and aftershocks will endure for the coming year and beyond: Whilst some customer habits will return to normal others have changed forever, the trend towards digital has been accelerated, and changes to the shape of the high street brought forward. “
Ninety One PLC Annual Results
  • The company delivered net inflows of £6.0bn, in line with the prior year, representing a torque ratio of 5.4%.
  • Assets under management reduced 7% to £103.4bn.
  • Basic earnings per share increased 11% and adjusted earnings per share increased 10%.
  • Hendrik du Toit, CEO, said: “Ninety One is committed to doing its best for all stakeholders in the ongoing battle against this pandemic and its devastating economic consequences.”
HICL Infrastructure PLC Annual Results
  • The target dividend of 8.25p per share for the year ended 31 March 2020 has been declared and is fully cash covered.
  • Solid underlying portfolio performance was offset by a combination of external factors: the exceptional impact of Covid-19 on HICL’s demand-based assets; and changes to macro-economic assumptions.
  • The Directors’ valuation of the portfolio on an Investment Basis is £2,888.5m (2019: £2,998.9m), and £2,837.9m (2019: £4,821.2m) on an IFRS Basis.
  • Ian Russell, Chairman, said: “The Company, supported by its Investment Manager, is committed to its vision of being a pre-eminent core infrastructure investor, seeking out new and sustainable investment opportunities in essential infrastructure, with good quality, predictable cash flows and a protected market position.”
Coats Group PLC Trading Update
  • Group sales for the period down 17% year-on-year.
  • April sales down around 50%, as anticipated in the company’s base scenario, due to demand and supply impacts from COVID-19 which included c.15 manufacturing sites under enforced government closure (now only 2).
  • Balance Sheet remains strong with comfortable liquidity and headroom.
TBC Bank Group PLC 1Q 2020 Unaudited Consolidated Financial Results
  • Profit for the period without COVID-19 impact amounted to GEL 152.4m (1Q 2019: GEL 133.3m).
  • Total assets amounted to GEL 20,030.6m as of 31 March 2020, up by 32.0% YoY.
  • Gross loans and advances to customers stood at GEL 13,929.6m as of 31 March 2020, up by 34.4% YoY or at 19.6% on a constant currency basis.
Vistry Group PLC Trading Update
  • The company is operating across all of its 73 contracting sites and continue to increase the future pipeline.  The contracting forward order book totals £827m.
  • The Group has a strong forward sales position, with housebuilding reservations (including Vistry Partnerships development activity) totalling £1.5bn (including joint ventures).
  • The Group remains financially strong.  As at 18 May, the Group had net debt of £476m (21 April 2020: £440m) and committed banking facilities totalling £770m, with well spread maturities out to 2027.
  •  Greg Fitzgerald, CEO, said: “We are pleased by how effectively our site management and health and safety teams have adapted to the new operating procedures.  As a result, we currently have more than 5,600 operatives working safely across our developments and expect productivity to continue to increase.”