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Headlines
• UK unemployment rises to 4.1%
• Retail sales in China grow 0.5% YoY
• Marseille & Bordeaux announce new restrictions
• 20% of South Africans may have been infected, new study shows
• Domino’s Pizza has announced 5,000 new jobs • High Court rules insurers should pay some business interruption claims

Company news

Buildings & Construction

Marshalls# – “Marshalls’ revenue for the six months ended 30 June 2020 was £210.5m (2019: £280.1m) which represents a decrease of 25% YoY. Revenue in June was down 7% compared with the prior year, on a like for like basis. This result represented a significant improvement from the early part of the Covid-19 outbreak and compares with sales in April, which were 66% down. Trading has improved further since the half-year end with revenue in the month of July at 94% of the 2019 comparative period and in the month of August at 100% of the 2019 comparative period.



All continuing manufacturing sites are now fully operational and our priority continues to be the safety and well-being of all our employees, suppliers and customers. Our health and safety practices are in line or, in many cases, exceed the recommended guidelines.

Although business confidence and market demand remain uncertain, recent trading has been better than expected and continues to improve. Our restructuring programme is now complete and the new bank facilities have further strengthened the group. The decisive actions that have been taken have improved the efficiency and flexibility of our plants and will help Marshalls to emerge from the current market difficulties in a stronger competitive position.”

Polypipe – “Trading overall for the period has been resilient with revenue 22% below prior year. There has been progressive improvement from April’s low point revenue of 66% below prior year, with June revenue being 19% below prior year and on an improving trend into July and August.

At our lowest point, we had 1,771 employees furloughed. Restructuring actions have now been completed to position the business for expected future demand. This included 104 redundancies, significantly fewer than the 250 at risk positions announced in July. All other employees have now returned to work.

Job Retention Scheme money will be reimbursed to the Government for those employees made redundant (£0.7m) and the Group will not utilise the Job Retention Bonus Scheme planned to be available from February 2021.

Trading since the end of the first half has continued to recover with July and August revenue 6% and 3% below 2019 levels respectively, tracking well-ahead of the operating scenario set out at the time of the Group’s equity raise in May.”





Industrials

Chemring – “Despite the challenging environment, trading in the period has progressed as planned. The expected outturn for the year ending 31 October 2020 is towards the upper end of current analyst expectations.*



Order intake to 31 August 2020 was up 4% on the same period last year and the group’s order book at the same date was £452m (31 October 2019: £449m), providing full visibility for the remainder of the current financial year based on expected delivery schedules. Order cover for FY21 is building, with Countermeasures & Energetics having 82% order cover of expected revenue and the shorter cycle Sensors & Information sector having 47% cover.”





Retail

Eve Sleep – “As detailed in the statement released on 3 September 2020 the company raised full year guidance following continued strong trading momentum through July and August. The board now expects revenues of at least £22m, notwithstanding some important trading periods in the remaining four months of the financial year.”



Support Services

Mountfield – “The sharp recession that resulted from the steps taken to limit the spread of the virus has impacted the construction business generally, having had a significant, negative effect on the demand for construction services and in activity levels in the industry generally. The group has also suffered because both group companies offer specialist services to small segments of their respective markets.



Whilst the current drop in the UK’s GDP is expected to be reversible in the medium to long term the changes in working practices caused by the virus are likely to result in major changes in the overall demand for construction services and particularly for those services provided by the group companies. The increasing extent to which companies will rely upon home-based workers has and will continue to reduce demand for city centre located office space and in turn, for the flooring of large new or refurbished office premises within the City or in neighbouring areas.”



Smart Metering Systems – “Covid-19 slowed the smart meter installation run rate for the entire UK industry, but it also reduced the capital expenditure requirement over the period, providing further support to the group’s liquidity. Furthermore, because of this temporary deceleration in the smart meter exchange programme, the group’s traditional meter portfolio has remained in place for longer than anticipated and has continued to generate revenue from both meter rental and transactional emergency work. The group’s strong liquidity profile ensures that the group will be able to fund its c.2 million contracted domestic smart meter order pipeline, with further opportunities from existing customers.

The group recommenced non-essential meter exchange activity on 1 June and adopted an appropriately phased and progressive approach. Meter installations are beginning to return to a pre-Covid-19 level. This is expected to be achieved in Q4, albeit ongoing local lockdowns continue to be monitored. The Enrolment and Adoption process for SMETS1 meters is progressing well and implementation is underway for the group’s largest cohort of SMETS1 meters.

At 31 August 2020 ILARR from the Group’s meter and data assets stood at £76.6m (30 June 2020: £75.9m) and total meter and data assets under management had increased to 3.80 million (30 June 2020: 3.74 million).

Despite the effects of Covid-19, the Group continues to trade in line with the Board’s expectations and FY 2020 revenue and underlying profitability also remains in line. This reflects the resilience of the group’s business model and the defensive nature of the metering infrastructure asset class with the stable cash flows it generates.”





Technology

Cohort – “Covid-19 slowed the smart meter installation run rate for the entire UK industry, but it also reduced the capital expenditure requirement over the period, providing further support to the group’s liquidity. Furthermore, because of this temporary deceleration in the smart meter exchange programme, the group’s traditional meter portfolio has remained in place for longer than anticipated and has continued to generate revenue from both meter rental and transactional emergency work. The group’s strong liquidity profile ensures that the group will be able to fund its c.2 million contracted domestic smart meter order pipeline, with further opportunities from existing customers.



The group recommenced non-essential meter exchange activity on 1 June and adopted an appropriately phased and progressive approach. Meter installations are beginning to return to a pre-Covid-19 level. This is expected to be achieved in Q4, albeit ongoing local lockdowns continue to be monitored. The Enrolment and Adoption process for SMETS1 meters is progressing well and implementation is underway for the group’s largest cohort of SMETS1 meters.

At 31 August 2020 ILARR from the group’s meter and data assets stood at £76.6m (30 June 2020: £75.9m) and total meter and data assets under management had increased to 3.80 million (30 June 2020: 3.74 million).

Despite the effects of Covid-19, the group continues to trade in line with the Board’s expectations and FY 2020 revenue and underlying profitability also remains in line. This reflects the resilience of the group’s business model and the defensive nature of the metering infrastructure asset class with the stable cash flows it generates.”





Ocado – “Retail Revenue grew 52% as channel shift to online grocery in UK continues

Retail sales grew faster compared to Q2 as demand remained high versus a seasonally softer quarter in Q3 2019

Average order size continues to normalise from Covid-related peaks to £1411, but remains above pre-crisis levels

Orders per week have increased thanks to a combination of strong demand, a phased reopening of the website to new customers, and a normalising of shopping patterns

While uncertainties remain over the scale, and duration, of the ongoing impact of social distancing restrictions in the UK, the strong trading performance of Ocado Retail in the first three quarters of the year, combined with the impact of operational leverage in the retail business, suggest, given current trends, a full year EBITDA result for Ocado Group of at least £40m.”

Transport

FirstGroup – “Stronger-than-expected financial performance, with adjusted operating profit and cash from operations ahead of our expectations during the period, driven by better revenue recovery and strong cost control.



Governments and our customers are extending the funding measures necessary to underpin our critical services in light of ongoing social distancing rules, the delayed start of in-person teaching by many of our school customers in North America and other effects of the coronavirus pandemic.

The group is now expecting to deliver a small adjusted operating profit for the seasonally weaker first half of the financial year, ahead of our expectations earlier this summer.”

Lifting restrictions

• University, college and high school classes have resumed in Pakistan

• Casinos, skating rinks, exhibition halls, bowling alleys and soft play areas are allowed to reopen in Leicester from today in a further easing of lockdown restrictions.



Other

• Domino’s Pizza chain has announced 5,000 new jobs across the UK as it continues to benefit from a surge in demand for home deliveries

• The Royal College of Psychiatrists estimates that more than 8.4m people in England were drinking at higher-risk levels in June, up from 4.8m in February.

• Jordan has also announced some renewed measures to come into effect from Thursday, including closing schools, mosques and restaurants.

• China’s economy has started to rebound from the negative impact of the pandemic, new figures show.

• New restrictions have come into effect in the Marseille and Bordeaux areas in the South of France.

• About 695,000 UK workers have now been removed from the payrolls of British companies since March, according to the Office for National Statistics. Overall, the UK’s unemployment rate grew to 4.1%.

• ‘Developing Asia’, which groups 45 countries in Asia-Pacific, is expected to contract 0.7% this year, the Asian Development Bank said, forecasting the first negative quarterly figure since 1962. The ADB’s previous forecast in June expected 0.1% growth.

• Road traffic congestion in outer London climbed above 2019 levels in August, and has increased nearly a fifth on average above last year in roads outside the capital’s central congestion charging zone, even while it has dropped sharply in the centre of the city. The most congested day so far was Monday 7 September, when congestion was 153% of 2019 levels.

• South Africa’s Health Minister Dr Zweli Mkhize says new research estimates 12 million people – about 20% of the country’s population – could already have been infected with coronavirus.

• The High Court has ruled some insurers should have paid out to small businesses for losses caused by lockdown. The test case was brought by the Financial Conduct Authority and had the potential to affect 370,000 mostly small businesses. The insurers can appeal against the decision. Policyholders should hear from their insurer within seven days.





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