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Headlines
• 884,000 jobless benefits clams in the US last week.
• Scotland’s new contact tracing app goes live.
• Jakarta to go back into lockdown.
• Lloyd's of London predicts £5bn Covid pay-out.
• Ban on gatherings of 6+ in Scotland.


Company news
Buildings & Construction
• Epwin Group – “Demand stronger than anticipated from customers serving the RMI market, which represents around 70% of historic Group revenues.
Overall Group revenue on like for like sales for the month:
• July up 2%.
• August up 3%.
Strong bounce back in the window systems and cellular extrusions businesses, which form part of the Extrusion and Moulding segment of the Group. Like for like sales for the month on the prior year:
• July up 12%.
• August up 7%.
Capacity continues to be reviewed and adjusted to meet changing levels of demand across the Group’s operations.
Demand for window systems extrusions has been particularly strong and sustained, such that lead times have increased significantly and materials supply chains are now under pressure.
New build and Social Housing sectors’ demand was initially slower to return, but call-offs now increasing steadily as build programmes and refurbishment schemes are re-established.
As previously stated, the impact of Covid-19 will inevitably have a material impact on trading for the current year as a whole, however, at this stage the effect is anticipated to be less than the initially expected, with the Board expecting significantly improved performance in H2.”

• Forterra – “Trading since emerging from lockdown has exceeded management’s expectations. The current recovery in the housing market supported by Government intervention in the form of the SDLT holiday is encouraging although it is unclear how the market will respond post 31 March 2021 when the SDLT holiday ends along with the tapering of the Help to Buy scheme.
The recovery of our key markets and revenues seen in May and June continued through July and August. Revenues in July were 89% of 2019 and 82% in August with the Brick and Block segment exceeding 90% in both months, highlighting the continued encouraging recovery. Initially the recovery was driven by our distributors which will have included an element of catch up that we now see stabilising. Demand from our housebuilding customers was slightly slower to recover although sales to this channel increased in July and August. Sales of our precast concrete floor beams, which we view as a leading indicator of housing starts, have been slower to recover than many of our other products although in September we are now seeing a further recovery in the order book for these floor beams suggesting that new housing starts are continuing to recover.
We have restarted production at all of our manufacturing facilities and by the end of August the vast majority of our employees had returned from furlough.”


Food, Drinks & Household


• Games Workshop# – “Announces today that trading for the three months to 30 August 2020 was ahead of the Board’s expectations. Current estimates show sales of c.£90 million in the Period against a prior year of £78 million for the same period. Operating profit for the Period before royalty income is estimated to be c.£45 million (2019: £28 million) and royalty income is estimated to be c.£3 million (2019: £2 million). This has been driven by healthy growth in our online and trade channels. However, our retail channel is still recovering from the Covi-19 closures earlier in 2020. The longer term impact on the Group as a result of the ongoing pandemic is still unknown.”
• Morrisons – “As previously described, Covid-19 has led us to incur many extra direct costs as we help feed the nation. In total these extra direct costs were c.£155m during the first half, as listed in Figure 1. They were part-mitigated by four months of business rates relief of £93m, meaning a net first half Covid-19 cost of £62m which is reported within profit before tax and exceptionals. In May we estimated that the costs relating directly to Covid-19 during 2020/21 would be broadly offset by the in-year business rates cost saving. This remains our expectation: we anticipate that the £62m first-half net cost will be offset by a similar second-half net benefit, with extra Covid-19 specific costs at around half the level of the first half and a full six months of rates relief of c.£137m.
As well as the timing of direct Covid-19 costs/lower business rates, the mix of the very strong first-half sales growth was weighted towards online channels and lower margin categories. In addition, fuel sales growth was very negative, our cafés were temporarily closed, and we invested in supporting our colleagues, NHS workers and farmers with extra discounts. We also continued to invest in price cuts, and delayed planned productivity initiatives to focus on our response to Covid-19. While some of these margin impacts may persist into the second half, we are confident that we have a plan for continued LFL growth and that our ongoing programme of significant price cuts and investment in service for customers will drive continued operational gearing.”

• Victoria# – “Trading has continued to be resilient since it last updated the market in July and demand has recovered in all its principal markets. This is reflected in the Board’s view that consumers are prioritising spending on improving and refreshing their homes following the lockdown. The Group continues to carefully manage expenses and cash flow to ensure it maintains its strong balance sheet given the current economic conditions.”


Industrials

• Ricardo – “The Group’s overall order intake reduced by 4% to £368.7m in the year, reflecting the challenging trading conditions, with delays in orders being placed during the Covid-19 pandemic. Order intake averaged £27m per month in the second half of the year, compared to £35m in the first half. The closing order book was £314.0m (FY 2018/19: £314.0m), demonstrating that the Group continues to win work during these challenging conditions. Order intake includes £16.3m in respect of Transport Engineering (renamed Ricardo Rail Australia, or ‘RRA’) and PLC Consulting (renamed Ricardo Energy, Environment and Planning, or ‘REEP’) which were acquired on 31 May 2019 and 31 July 2019, respectively.”

• TT Electronics – “Notes the announcement made today by iAbra in relation to the successful trial and launch of Virolens®, its Covid-19 screening device. TT has been working with British start up iAbra, and its partners including Intel, to design, develop and test the prototype Virolens® system and to specify and design the manufacturing processes for its commercial launch.
Description of the Virolens® screening device
The Virolens® Covid-19 screening device uses microscopic holographic imaging and artificial intelligence (AI) software technology to detect the presence of the Covid-19 virus from a non-intrusive saliva swab test within 20 seconds. The device does not need to be administered by healthcare professionals and is expected to be used in airports, offices, sports venues and many other locations where people need to be in close proximity to each other.
Virolens® will enable safer access for everyone to places of work, transport and events by providing a quick, easy, repeatable and low-cost Covid-19 test, allowing hundreds of tests per machine each day. It will allow people to get on with their everyday lives in the knowledge they are in a safe environment. In partnership with Heathrow Airport, the system has successfully completed a first round of testing and is about to embark on clinical trials which would be necessary for it to be certified for medical use.
Initial commercial launch and potential
TT has been appointed exclusive manufacturing partner for the commercial launch of Virolens®, which incorporates a number of TT proprietary products. TT has received initial orders for devices and testing cartridges which will be delivered to potential launch customers in September and October 2020 with a value of circa £2 million. Whilst the range of potential outcomes remains very broad, as an early indication of the potential value of Virolens to TT, iAbra has indicated its intent to purchase further devices and cartridges with associated revenue to TT of circa £280 million. This is based on expressions of interest from more than a dozen end customers whose assessment of Virolens® are at varying stages. This additional revenue is dependent on iAbra's end customers converting their expressions of interest into firm orders and subject to Virolens® meeting regulatory authority requirements. Delivery of these further orders could commence in Q4 2020 and would continue into 2021.”


Insurance


• Saga – “The Group has continued to make good progress in the first half, with Insurance performing well. Our Travel business remains suspended due to the ongoing impact of Covid-19 but our customers continue to show strong loyalty with retention in our Cruise business above 65%.
The Group has continued to simplify and focus on efficiency, and this has accelerated in light of the impact of Covid-19. In total, over £35m of cash has been generated from the disposal of non-core businesses, with Bennetts completing in early August. As previously announced, we have achieved £15m of run-rate cost savings, with plans in a place for an additional £5m across the business.
£150m equity raise and strategic investment by Sir Roger De Haan
The Group continues to monitor the impact of the Covid-19 pandemic on its business and has taken actions to reduce its costs, in particular in the Travel business. While the future impact of Covid-19 remains highly uncertain, there is an increased risk of disruption of the Cruise and Tour Operations businesses well into 2021. While the Group has significant available liquidity and is expected to remain in compliance with all banking covenants through at least the next six months in all reasonable scenarios and before any additional actions are taken to improve financial flexibility, such an outcome would have a potentially significant adverse impact on the position beyond this date. Specifically, there is a risk that the Group would not comply with all of its financial covenants as at 31 July 2021 in the absence of such further actions being taken.”


Leisure


• Fuller Smith & Turner – “Sales in those Managed Pubs and Hotels that have reopened since 4 July 2020 have grown steadily and are 80% of last year’s on a like for like basis. Trading across the Fuller’s estate in August was buoyed by the Government’s Eat Out to Help Out scheme, which grew trade and encouraged consumers to come back to the pub, reinstating it in their routine. Business has also been strong in Cotswold Inns & Hotels, which Fuller’s acquired in October 2019, where staycationers have led to near full occupancy.”


• Rank Group# – “Our Mecca venues have been reopening over the course of July and August. 72 of our 77 venues have now reopened with venues typically achieving 70% of prior year revenue and with visit numbers now typically at 55% of prior year levels. As a result, Mecca achieved cash break even in August. With Grosvenor’s casinos in England only being permitted to reopen from 15 August there is more limited trading experience. Venues outside of London are typically achieving 75% of prior year revenue levels and consequently are cash positive. In common with other hospitality businesses, trading in our London venues is weak, with revenue at around 40% of prior year levels. With 49 Grosvenor venues now open, Grosvenor is likely to be cash generative from September. Enracha venues are operating at approximately 65% of prior year levels and are cash generative.
Building on the double-digit revenue growth at the year end, our Digital businesses are performing broadly in line with expectations. Mecca, Yo and the Stride non-proprietary brands are performing well. The Stride proprietary brands continue to perform below expectations following harmonisation of safer gambling controls across the Digital businesses. Grosvenor revenue has also softened reflecting the lengthy closure of our venues and the consequent impact on the benefits available to multichannel customers. With cost reduction measures being applied across the business, and assuming no material disruptions, we expect the Group to be at cash breakeven or above in September before the impact of repaying deferred duty and rent.
We expect to rebuild our revenues through the year with an increase in footfall expected once social distancing and other supply constraints reduce and customer confidence returns. The pace at which revenues return will determine our ability to restore the dividend and invest in the transformation of Rank.”


Real Estate


• Safestore – “I am pleased to report a solid performance in the third quarter despite strong comparative quarters in both 2018 and 2019. I would like to thank our staff for the tremendous effort and resilience demonstrated over recent months, the result of which is that the business has responded well to the Covid-19 lockdown. Occupancy performances in June and July, as lockdown eased, were strong driving like-for-like closing occupancy for the Group above prior year levels. Our top priority is to build on the post lockdown recovery and deliver the significant organic growth opportunity represented by the 1.7m square feet of unlet space in our existing fully invested estate.”

• U + I Group# – “As confidence is slowly returning to the market, we have resumed conversations, previously on hold due to the Covid-19 pandemic, across a number of schemes. At The Arts Building, Finsbury Park, we have satisfied the planning condition in the agreement for lease with Lidl for the Ground Floor, a significant milestone for this project. The agreement remains subject to Lidl receiving one final statutory consent. Sales progress at St Mark’s Square in Bromley has continued well over the summer with twenty one residential unit sales completing since 31 March 2020, resulting in the repayment of approximately £10 million of the associated debt. At 399 Edgware Road, since 31 March 2020, we have completed thirty one unit sales. There are currently fifty two unsold units remaining, of which nineteen are already under offer.
Rent Collection – Our rent collection continues to improve. Of the total June quarter rent demanded so far, 74% has either been collected or had alternative payment terms agreed with occupiers.”


Retail


• Dixons Carphone – “UK & Ireland Electricals like-for-like revenue +12%.
Online sales more than tripled year-on-year while stores were closed, and have continued at more than double last year's sales since stores reopened.
Online market share gains every month and overall share gains since stores reopened.
Sales down c.90% in Dixons Travel stores which mostly remain closed, impacting UK & Ireland Electricals like-for-like and total sales by c.5%.
Strong online sales and loss of higher margin Travel sales have, as expected, lowered gross margin during the period.
International like-for-like revenue +16%, Nordics +17%, Greece +12%.
Nordic online sales +49%, Greek online sales +115%.
Stores open throughout period with in-store sales growing each month.
Grew market share in Nordics and Greece.
Gross margin down slightly given shift to online.
UK & Ireland Mobile total revenue -56%.
Sales and cash flow in line with our plans following closure of UK standalone stores.”

• Dunelm# – “Strong performance in an unprecedented environment.
Response to the crisis highlighted the resilience of our business model, the strength of our balance sheet, the importance of our shared values and our digitally enabled Customer 1st strategy, allowing us to innovate at pace.
Total sales increased in the eight months to February by 6.8%, supported by an 8.8% increase in rolling 12-month unique active customer numbers.
Online (home delivery) sales grew 105.6% in the fourth quarter.
Gross margin of 50.3% up 70 bps year on year, with gains from sourcing initiatives partially offset by increased clearance activity following the store closure period.
Full year reduction in PBT reflects impact of Covid-19 and the store closure period.
Free cash flow generation of £174.7m, including c.£80m of exceptional working capital benefits related to our response to Covid-19, which are expected to largely reverse in FY21.
Robust balance sheet with year-end net cash of £45.4m, access to £175m of approved banking facilities, and confirmed Covid-19 Corporate Financing Facility (‘CCFF’) eligibility.
With our stores re-opened, we have not made claims under the Job Retention Scheme (JRS) in FY21 and will not claim the ‘JRS Bonus’.
Well positioned in a resilient homewares market, despite ongoing uncertainty – Strong recent trading with total year on year sales growth of 59% in July and 24% in August, partly as a result of pent up demand and the timing of our Summer Sale and reflecting a resilient homewares market.
For the first two months of FY21 store footfall has been positive and digital sales were 31% of total sales, with online (home delivery) sales growth of c.130% compared to the prior year.”



Support Services


• John Menzies# – “As expected, trading has remained challenging due to the ongoing impact of Covid-19, however we are now re-starting operations and seeing a partial return of flight schedules. Cargo volumes continue to be more resilient and our AMI business, a cargo brokerage, is trading ahead of expectations given the current lack of available capacity.
As a result of the very challenging conditions experienced by the industry, revenue to the half year was down approximately 33%, in constant currency, on the prior year. The revenue decline has had a significant impact on profitability and will lead to the Group being loss making in the first half, although the extent of this has been limited by the speed and effectiveness of our cost management actions. In the second half, profitability will benefit from a more significant contribution by various government support programmes and continuing tight cost management. Net debt as at 30 June 2020 pre IFRS 16 was £160m (£336m on an IFRS 16 basis) which reflects the very tight cash management by the business and the benefit of additional government support programmes.
Despite the crisis we have made very encouraging commercial progress winning significant new business.
In the first six months we added £27m of net annualised revenue from commercial activities. Since the half year end we have won the ground handling and cabin cleaning business of Air France/KLM in Toronto, Canada and further strengthened our relationship with Qatar Airways securing new cargo handling contracts at six locations across three countries together with ground handling contracts at four of these locations.”


• Speedy Hire – “Revenue has continued to improve over recent months as customers have returned to work and activity levels have increased. In response to customer demand, we relaunched our 4-hour delivery promise in UK and Ireland on 1 September covering an expanded range of 350 products. UK and Ireland core hire revenues for September to date are c.8% lower than the prior year. Group revenues, pre disposals, for the year to date are c.23% lower than the prior year.
Utilisation rates have improved steadily throughout the first half as activity levels have increased and capital expenditure has been reduced. At 4 September 2020, utilisation rates in the UK and Ireland were 52.9% (2019: 54.6%).
Overhead costs have been tightly controlled during the first half following the decisive actions taken in response to the Covid-19 pandemic. UK and Ireland staff numbers at 31 August 2020 were 3,222 (31 March 2020: 3,464), a reduction of c.7% from the year end, and a further 50 colleagues were placed at risk of redundancy during September. Approximately 200 colleagues (c.6%) remained on furlough at 31 August 2020. We have permanently closed 13 depots in the UK and further depots will be consolidated into larger operating locations. The costs of staff redundancies and depot closures will be recognised as exceptional items in the results for the current year.”



Technology


• Team 17 – “Games sector resilience through the Covid pandemic also reflected in Team 17’s performance.
Clear benefit to H1 results from these extraordinary ‘one-off’ circumstances and as a result, the Board now expects revenue and adjusted EBITDA to be ahead of market expectations for the year ended 31 December 2020.
H2 results will undoubtedly continue to be influenced by ‘normalisation’ of the global economic environment and consumer behaviours.”


Other

• In the US, the number of people applying for unemployment benefits was unchanged on last week at 884,000.
• Shipping a coronavirus vaccine around the world will be the “largest transport challenge ever”, according to the airline industry. The equivalent of 8,000 Boeing 747s will be needed, according to the International Air Transport Association (IATA).
• Scotland’s new contact tracing app has gone live. The Protect Scotland app lets people know if they have been in close contact with someone who later tests positive and can be downloaded for free onto a smart phone from Apple’s App Store or Google Play.
• Germany’s foreign ministry has advised tourists against travelling to a number of European destinations, including Prague, Geneva, Dubrovnik and Corsica.
• Insurance market Lloyd's of London has said it expects to pay out up to £5bn for coronavirus-related claims.
• IAG is cutting more flights over the next three months as it adjusts to the continuing collapse in demand for air travel. Quarantine restrictions has led to 60% capacity reduction this autumn below 2019.
• The disruption to hospitals in England during the pandemic has meant the number of patients facing long waits for routine operations has risen to more than two million people – half the total have been waiting more than 18 weeks, the highest since records began in 2007.