Coronavirus - Complacency will kill
10 August 2020
“Greece has formally entered a second wave of the epidemic”, according to one of the country’s top infectious disease experts, Dr Magiorkinis. While he pointed out reopening and tourism partly played a role for the sudden increase, he mostly attributed the resurgence to lax observance of hygiene protocols by Greeks, particularly younger generations, who have flooded bars and beaches in recent weeks. This is a familiar story across Europe and the UK. Simple social distancing and personal hygiene routines will need to be followed closer than ever as restrictions lift to stave off a second wave.
• WHO has just 10% of the Covid-19 funding it requires
• New Zealand reaches 101 days without a local case
• Face covering mandatory across parts of Paris
• Hospitals in Bolivia are running low on oxygen
• Morses Club# – “The Company has continued to make progress in July, despite the challenges of Covid-19. Collections in the HCC division for July increased to 98% of normal historic expectations when measured against expected terms, an increase from 91% at the end of June, and are anticipated to reach pre-Covid-19 levels by the end of August 2020, as previously reported. Cash in July has improved slightly to 82.3% of the level achieved in 2019. Sales were 80.9% of the levels for the same period in 2019 again an improving trend whilst customer satisfaction has been maintained at 97% or above during the period.
Response to the launch of remote lending to new customers has been positive with demand building strongly. Payment to terms for the initial cohort of new customers is 100%, reflecting high-quality lending. Payment to terms for new lending to existing customers currently stands at 97%.
The Company is encouraged by continued growth in customer interest in the online customer portal, which now has over 110,000 customers registered, compared with c.78,000 at the end of FY20, demonstrating the accelerated roll-out of our digital strategy despite the Covid-19 environment.
The Group has continued to implement structural changes to the business with employees and agents continuing to work from home until the end of the year. Further restructuring of the Group’s property portfolio is progressing as a result and we are encouraged that agent vacancy rates are now at the lowest level in the Company’s history.
During July, progress in Shelby Finance, the Group’s digital division, has continued, with growing levels of lending and an encouraging uplift in demand for longer-term lending products evident. Collections have strengthened at above 80% to terms, which is an improvement on the level prior to Covid-19, with the level of demand for the e-banking current account product remaining stable.”
• Lok’n’store – “Trading was strong with self-storage revenue up 6.3%. At 31 July 2020 occupancy was up 5.9% and price per let sq. ft. was slightly down 0.3% compared to the same date twelve months ago. Following more subdued trading during the full lockdown, May, June and July have been stronger with new enquiries and move-ins at an all-time high in July.
We opened two new stores in Oldbury and Gloucester in the year and our new landmark store in Leicester on 1 August 2020 immediately after the period end. Early trading at all three stores has been encouraging.”
• Superdry – “Current trading in Q1 has been better than our initial expectations, however, disruption from Covid-19 continues to materially impact our performance year on year.
Total group revenue for the period is down 24.1% YoY, largely due to the impact of store closures as a result of Covid-19. Gradual reopening began at the start of FY21 and c.95% of our stores have now re-opened, with store revenue down 58.1% in Q1 versus FY20, equivalent to a 32.3% LFL decline.
Our Wholesale partners, particularly franchisees, have suffered the same headwinds and challenges as our owned stores, down 31.0% year on year. We are pleased to see Ecommerce has continued to perform well, up 93.2% in Q1, normalising in recent weeks as stores re-open and we trade against the promotional stance in the comparative period last year.”
• Clarkson – “Given the impact of Covid-19 on global GDP and short-term trade shock, we anticipate some impact on activity in the second half, with each of the markets at different stages of reaction/rebalancing and the impact of logistical delays, storage, increased scrapping, layup and docking also having an effect on localised demand and supply balances. GDP growth, spurred by the raft of global financial stimulus packages being rapidly rolled out by governments around the world, together with an end to the pandemic, will create the foundations for a sustained recovery.
It is also important to note that the world is looking to a cleaner future in terms of supply of tonnage. Although there is currently a heavily depressed newbuilding market, it is perhaps most significant that 23pct of the global order book today is alternative fuel, compared to only 3pct of the existing fleet. Clarksons is proud to have played a significant role in a number of these initiatives and the impact from a cleaner future on the order book and scrapping of the older existing fleet will be positive to demand / supply in the medium and longer term.
Capital markets have been challenging for some time, and Covid-19 has worsened investor sentiment. Growing concerns about the impact from the pandemic exacerbated the dearth of transactions and meant that the Financial division made a loss in the first half. Following a review undertaken at the end of last year, we have identified and actioned several areas in which the division can improve efficiencies and lower costs. Given a return to more normalised markets, we are confident that Financial can return to a position of profitability in the second half of the year.
Demand for our research capabilities and market insights has undoubtedly been bolstered by clients’ ever-increasing requirements for information and data amidst the volatile macroeconomic backdrop, which helped the Research division deliver an increase in both profit and margin over the same period last year.
The port services division was heavily impacted by the wider market environment with profits decreasing during the first half. This fall in profits can be largely attributed to the collapse in the oil price during the early part of the year, which severely impacted the goods and supplies market, leading to a slowdown in North Sea and offshore activity. We subsequently made cost reductions to reflect the fall in activity in this market and believe that the Support division is set for a better performance in the second half of 2020.
We are encouraged that client interest in and roll out of the Sea/ suite of technology modules provided by the team at Maritech has increased following the period of disrupted working practices arising from the pandemic. Clients and prospects highlight that Sea/ meets their needs for effective and increased levels of risk control, audit, compliance, efficiency, communication and data integrity, together with enhanced analytics and validation to enable better decision making.”Technology
• GB Group# – “We are pleased to report we have had a better-than-expected first quarter trading, recording growth for Q1 YoY. This growth was mainly underpinned by a strong performance in the US from a specific customer project, which is one-off in nature. The Group’s underlying performance has been consistent with that outlined at the time of the Group’s full year results on 30 June 20201.
The impact of Covid-19 on our customers still varies depending on geography, customer vertical and GBG solution. Encouragingly, certain figures in Q1 are still at pre-Covid-19 levels, specifically customer churn, solvency and bad debt. We have also continued to win business from new customers, albeit at a slower pace.
We remain focussed on effective cash management and maintaining operational capability. At the same time, our cash-generative model has allowed us to continue to invest in strategically important projects that will enable us to emerge from the pandemic in a stronger position.
Looking ahead, forecasting the short-term impact of Covid-19 on GBG remains challenging. This is due to the dynamic nature of lockdowns in our key geographic markets, shifting government stimulus programmes and general economic headwinds presenting difficulties in determining demands for our services. For the medium term we remain confident that certain factors will provide significant structural tailwinds, such as rapid digitalisation of business and increasing proliferation of online fraud. Our investments in product development are focussed on these themes and we also continue to review M&A opportunities in these areas.”
• First Group – “FirstGroup plc (‘FirstGroup’ or ‘the Group’) welcomes the extension of funding from the Department for Transport (‘DfT’) to support the provision of vital services by regional bus operators in England during the coronavirus pandemic. The new funding round of £218.4m for the industry under the Covid-19 Bus Service Support Grant Restart (‘CBSSG Restart’) programme extends the arrangements previously announced at the end of May for the next eight weeks. Furthermore, the government has confirmed that rolling funding of up to £27.3m per week will continue to be made available under the programme thereafter, until such time as it is no longer needed. This commitment, on substantially the same terms as previously announced, demonstrates the value placed on bus services to support the restart of local economies, get people back to work and children back to school from September.
The programme has already allowed the industry to increase bus service capacity while maintaining social distancing in support of our communities as government guidance on use of public transport services has begun to ease. First Bus operations across England have increased operated mileage from c.40% to almost 90% of pre-pandemic levels, with passenger volumes increasing from c.10% to c.40% since the low point.”
• Go-Ahead# – “In its statement issued on Saturday 8 August, the DfT announced a further eight-week £218.4m funding package, following which weekly funding of up to £27.3m will be available until such a time as funding is no longer required. This announcement reaffirms the government’s commitment to preserving the bus network for the long term and protects the vital bus services upon which so many people rely.
Alongside the funding announcement, the government announced plans to publish a National Bus Strategy, to set out how it plans to support a sustainable future for bus services across the country. The government is also actively working on ways to ensure the bus sector can operate independently and be commercially viable.”
• In Wales, gyms, swimming pools, leisure centres and children’s play centres are allowed to reopen from today.
• Facemasks must be worn in many parts of Paris from today, after authorities imposed new measures to curb a rise in infections in the French capital. Facemasks are already compulsory in enclosed public spaces in France. Anyone who breaks the rule risks a fine of €135.
• Banks are expected to lend 15.9% less to consumers via personal loans and credit cards, according to forecasts by EY Item Club, the economic forecasting arm of the accounting firm.
• China’s CPI was up 2.7% YoY last month, according to the National Bureau of Statistics. PPI shrank to 2.4%, 0.1pp below analyst forecasts. Factory gate prices had been dragged lower by the pandemic fallout, but started rising again in June, with analysts noting a recovery in industrial demand.
• A third of UK employers expect to cut jobs by October, according to a survey suggesting the economic impact of the coronavirus pandemic will accelerate in the coming weeks. About 33% of the more than 2,000 companies, charities and public sector bodies in the poll said they expected to make redundancies in 3Q20, according to figures from the Chartered Institute of Personnel and Development (CIPD) and Adecco Group, a staffing company.
• The WHO has received just 10% of the funds needed to fight Covid-19, World Health Organization chief Tedros Adhanom Ghebreyesus said.
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