Maitland/AMO Morning Monitor – Wednesday 27 May 2020
In the news
- UK regulator OFCOM is investigating whether Chinese state international broadcaster CGTN broke impartiality rules reporting Hong Kong unrest last year.
- Investment-grade corporates like Disney Apple and ExxonMobil have raised $1tr of debt in the last five months compared to around $1.3tr annually since 2015. Boeing, Oracle and AT&T were the biggest issuers.
- The International Energy Agency believes investment in energy will plunge $400bn (20%) this year, the biggest fall ever.
- London restaurants fear covid will spell the end of lucrative city lunches. There are 439 in the City and Mayfair.
- Greggs is to open 800 shops from mid-June. John Lewis’ plans are more modest – a phased reopening. Still worries persist over how much trade will return. Europe’s experience as shops reopen is fewer customers spending more.
- The return of the rave? Live gigs will become sanitised and expensive according to the FT (and unprofitable) with 1100 seat venues holding just 239. At the other end of the spectrum will be unlicensed gigs. BBC plans to screen historic Glastonbury sets such as Beyonce and David Bowie, presumably with viewers glamping from their sofas.
- Google plans to reopen offices with 30% capacity by September….but it is also giving employees $1,000 to buy home office equipment since most will work from home through 2020.
- Reuters reports the Russian energy minister met oil majors to discuss extension of production cuts beyond June. UK has missed its target of recruiting an extra 50,000 customs agents ahead of Brexit taking effect.
- Education committee: Education experts discuss the impact of COVID-19 on education. (0900h)
- Brexit committee: Cabinet Minister Michael Gove and the U.K.’s Brexit Chief Negotiator to give evidence on the progress of the talks on the future relationship with the EU (1300h)
Stock market moves
- Easing lockdown restrictions saw global markets move higher with the S&P above 3000 for first time in 3 months and the NYSE reopening bits of its trading floor. Travel and leisure stocks bravely led the way as investors showed willingness to move away from haven assets.
- In Asia Japan again led the region with a 2.6% gain. While Hong Kong’s Hang Seng rebounded 1.9% yesterday it fell 1% today ahead of expected protests against China’s national security legislation.
- The UK FTSE 250 closed up 3.3% yesterday, while Germany’s DAX rose 1% and France’s CAC 1.5%. The rally continued this morning with the FTSE 100 and Euro Stoxx 600 both trading up 0.9% in the early hours.
- US Futures as of 8:15BST point to a positive open this afternoon.
- Sterling moved up 1% against the dollar on the news of shops reopening and that UK economic activity returned to nearly 80% of normality week commencing 11 May.
Corporate announcements* Maitland Client
British Land Co PLC Full Year Results
- Portfolio at valuation down 10% at £11,157m (2019: £12,316m).
- Underlying profit down 10% at £306m (2019: £340m).
- Pre-tax loss of £1,114m.
- Dividend per share down 48.5% at 15.95p (2019: 31p).
- Chris Grigg, CEO, said: “Like businesses around the world, in recent months our focus has been on responding to the unprecedented challenges brought about by Covid-19. We have acted quickly and effectively to support our customers, partners and local communities and to protect the long term value of our business. Throughout this time, the safety and wellbeing of our team has been our key priority […] Our financial position is robust with debt low, significant covenant headroom and access to £1.3bn of undrawn facilities and cash so we are well placed to weather today’s challenges and succeed in the long term .”
- Closing funds under management increased to £108.83bn (2019: £107.19bn).
- Gross inflows for April decreased to £1.17bn (2019: £1.35bn).
- Andrew Croft, CEO, said: “We are encouraged by the robust gross and net inflows we have continued to experience during May, though the short to medium-term impact of government measures and economic volatility on our flows remains uncertain.”
- The government’s guidance on 25 May confirmed that vehicle retailers in England can reopen from 1 June.
- Today, Autotrader will advise those customers of the support itwill provide as they resume trading, including a 25% discount for the month of June.
- The company will confirm any changes to its existing arrangements with its customers in Wales, Scotland and Northern Ireland at such time as their government announcements are made.
- Nathan Coe, CEO, said: “This recent government announcement is an important step forward for the automotive industry, and we will continue to support our customers as they resume trading. It is encouraging that both our marketplace data and our consumer research suggest healthy levels of demand.”
- Revenue decreased 9.1% to £698.8m (2019: £769.2m).
- Profit after tax increased 11.5% to £38.9m (2019: £34.9m).
- While confident of liquidity, Board prudently defers dividend decision to later in year, when impact of Covid-19 will be clearer.
- Simon Litherland, CEO, said: “While these times are clearly unparalleled, soft drinks has proven itself to be a resilient category time and time again. As consumers increasingly turn to trusted brands, we are confident that our long-term strategy will continue to create value for all our stakeholders.”
- Total gold production increased 22%: full year guidance met, with 517.3koz of gold produced (2018: 422.3koz), including 45.7koz produced from third-party concentrates (2018: none).
- Group revenue (including non-precious operations) increased 48% to $741.6m (2018: $499.8m) reflecting higher production volumes and a higher average gold sales price.
- Underlying EBITDA increased 45% to $264.8m (2018: $182.7m).
- Total assets under management and administration at £323bn (2019: £352bn).
- Adjusted operating profit of £134m reflected strong underlying business performance, offset by negative mark to market impacts.
- John Foley, Chief Executive, says: “While markets have recovered from their March lows, I expect volatility to continue, but as an asset owner of scale we are well positioned to acquire assets at competitive prices. In the meantime, we will continue to manage the business in a prudent way, with our usual disciplined approach to capital management.”
- ‑8.1% NAV total return for the year.
- Revenue profit after tax of £34.6m, unchanged from previous year.
- Capital losses of £207.5m, compared with profit of £163.6m last year.
- Strong balance sheet with £365m of available resources (£115m cash and £250m undrawn facilities).
- Will Wyatt, CEO, said: “It is likely that income for the current year will be lower than in 2020. However, our strong balance sheet and, in particular, our reserves of retained earnings, should give shareholders comfort that Caledonia is well placed to achieve its aims of growing net assets and dividends over the long term.”
- Regulatory capital of c.£710m at 30 April 2020, equating to a core CET1 ratio of c.33.4% and headroom of approximately £190m above the minimum regulatory requirement.
- Total headroom on committed facilities and surplus cash and liquid resources amounts to approximately £1.2bn.
- Vanquis Bank adapted well to Covid-19. By mid-April, c.80% of contact centre colleagues were working remotely. Customer spending has contracted, in line with peers, but the take-up of payment holidays has been modest.
- Malcolm Le May, CEO, said: “Despite 2020 being a difficult and unprecedented year, the combination of our customer offering, together with our robust balance sheet, mean that I remain confident in the group’s ability to become a broader banking group for the financially underserved population, whilst generating attractive returns for our shareholders over the medium-term.”
- With the agreement of the Board, David Atkins has decided to step down as chief executive of Hammerson.
- He will remain in position until spring 2021 at the latest, while the Board conducts a search for his successor.
- David Tyler, Chairman, said: “On behalf of the Board, I would like to thank David for his enormous commitment in leading Hammerson during the past decade. He has developed Hammerson significantly through the growth of our premium outlets business, the geographical diversification of our portfolio, our market leading sustainability framework and the establishment of our City Quarters strategy.”
- Revenue increased to $652m (2018: $603m).
- EBITDA increased to $284m (2018: $258m).
- Gold production increased to 480,528oz (2018: 472,418oz).
- Martin Horgan, CEO, said: “Our ability to create long-term value is underpinned by the value of our assets. Disciplined capital allocation, environmental, social and governance is rotted at the centre of our decision making framework.”