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Headlines
• Hong Kong shuts bars and restaurants for third time
• Russia says its Sputnik vaccine is 95% effective
• Annual global airline revenues fall 60%, IATA
• Passengers arriving in England can cut quarantine by paying for tests from 15 Dec



Company news

Food, Drinks & Household
• Cranswick – “Total revenue in the six months was £931.6m, 21.0% higher than the £770.0m in the corresponding period last year. Katsouris Brothers was acquired at the end of July 2019 and its results were included for just two months in the comparative period. Adjusting for this, and other acquisitions made in the prior year, the increase in sales on a like-for-like basis was 17.3%.
Despite this investment and continued focus on employee wellbeing, outbreaks continue to arise nationwide, including in the communities in which we operate. These localised outbreaks disrupted operations, for short periods, at a small number of our sites. We closed our Ballymena, Northern Ireland, primary processing facility for 14 days to protect our colleagues following an outbreak in the local community which affected a small number of our site team. We have also voluntarily, temporarily suspended the site’s China export licence. More recently, after the period end, production at our Watton primary processing site was briefly disrupted following confirmation of a number of positive cases. This time however we were able to continue operating, albeit on a reduced basis. Again, we have voluntarily, temporarily suspended the site’s China export licence. Given the diversity of sites across the Group, we have been able to manage this disruption to minimise the impact on our customers and to protect the welfare of our colleagues and our livestock. We are hopeful of recommencing exports to China from our Ballymena site shortly and from our Watton site in the near future.”


• Greencore
– “Further mobility restrictions were reintroduced in early November for a planned four-week period of nationwide lockdown. The impact of these restrictions, while not as severe as that experienced in the first lockdown, has further impacted food to go demand. Revenue in the Group’s food to go categories was approximately 26% below prior year levels in the first two trading weeks affected by the nationwide lockdown, while performance in the Group’s other convenience categories was approximately 1% below prior year levels.
Greencore secured agreement with its bank lending syndicate in May 2020 and its Private Placement Note Holders in July 2020 to waive the Net Debt: EBITDA covenant condition for the September 2020 and March 2021 test periods. The Group announces today that it has secured further support from its bank lending syndicate and its Private Placement Note holders. Of the key features, the Group has:
• Extended the maturity of its £75m revolving credit bank facility by two years to March 2023.
• Refinanced the Group’s £50m bilateral loan for a new three year term maturing in January 2024.
• Amended the EBITDA: Interest covenant condition for the March 2021 test period from 3.0x to 2.0x.
• Amended the Net Debt: EBITDA covenant test at June 2021 from 4.25x to 5.0x.
• Reduced the minimum liquidity requirement on cash and undrawn facilities to £70m for FY21, from a range of £100m-£125m.
• Increased the maximum net debt requirement to £550m to May 2021, and £500m to September 2021, from a range of £450m-£550m.
The Covid Corporate Financing Facility (‘CCFF’) remains a potential source of liquidity for the Group however, since year end the scheme is now subject to additional qualifying conditions and review prior to any prospective issuance. The Group has not reconfirmed its continued eligibility for the scheme under these new qualifying conditions. The scheme has a closing date for issuing commercial paper of 22 March 2021.

The Group has separately announced today a non-pre-emptive equity placing of new ordinary share targeting gross proceeds of up to £90m as part of the suite of operational financing measures to protect and support growth in the business. The Group consulted with a number of its major shareholders on the rationale for, and the structure of, the proposed Placing prior to this announcement. The Placing structure has been chosen as it minimises cost, time to completion and management distraction during an unprecedented time for the Group.

The consultation has confirmed the Board's unanimous view that the Placing is in the best interest of shareholders, as well as wider stakeholders in Greencore. Directors and members of the Group’s senior management team will be participating alongside the placing and intend to contribute around £0.7m in total.”


• Treatt – “As economies begin to re-open and lockdown restrictions ease across our key markets, we expect to see demand and consumption slowly improve and we began to see this during our fourth quarter, albeit from a low base. Though it’s very difficult to predict, it would be a surprise if demand across all segments returned to normal levels before the end of 2021 or into 2022.”

Leisure
• Carnival – P&O will not resume cruise sailings until at least April next year. The company ended its cruises in March.


Retail
• AO World – “The material increases in demand and momentum experienced in Q1 largely continued throughout Q2. Even as lockdown measures were eased and competitors’ bricks and mortar stores re-opened, we have seen little impact on demand with our revenue capped by physical capacity. During HY21 the market for our core MDA category performed particularly strongly with the value of the UK MDA market increasing by 4.7% compared to HY20. The UK markets for non-MDA categories performed similarly well with AV, SDA and computing total market values growing by circa 12%, 17% and 43% respectively versus the prior year comparable period. While we remain watchful of the external consumer environment, the sustained sales trend throughout HY21 and beyond provides us with increased confidence that there has been a permanent shift in demand for shopping our categories online, accelerated by the impact of Covid-19, with UK MDA online market penetration averaging c.70% during HY21.”

• Pets at Home Group – “The sustained strength in performance we saw across both our Retail and Veterinary operations during Q2 has continued into our third quarter, and we continue to take market share across all channels.
While we are less seasonally-dependent than many other retailers, our final quarter last year included an exceptional period of brought forward demand, ahead of national lockdown across the UK.
Furthermore, Covid-19 continues to create a number of material uncertainties around the near-term trading environment, from a potential escalation of current restrictions on a national level, to reversion to a tiered system of localised restrictions.
We remain an ‘essential’ retailer and have adapted our operations well to be able to continue providing pet care to our customers with minimal disruption. Our stores and First Opinion practices continue to follow the protocols we introduced earlier this year around safe provision of goods and services, and we have increased our capability to engage, serve and fulfil our customers remotely. Our liquidity remains strong and our balance sheet robust.
At this stage, absent any escalation of restrictions, or other significant disruption to our operations, we now anticipate full-year underlying pre-tax profit to be in line with the prior year, with the estimated financial impact of the pandemic not fully offset by this year’s business rates relief.”



Support Services
Compass Group – “Statutory revenue decreased by 19.8% due to the impact of Covid-19 on volumes. Operating profit decreased by 81.9% as a result of the impact of Covid-19. In the fourth quarter we returned the business to profitability and are now cash neutral. This was achieved mainly through contract renegotiations to reflect the difficult trading environment, continued discipline in terms of costs and some improvement in volumes. We are executing at pace and expect the underlying operating margin in the first quarter of 2021 will be around 2.5%.
Although the prospects of a vaccine are encouraging, the resumption of lockdowns in some of our major markets shows that we have to continue to take proactive actions to control the controllable and ensure the business can thrive despite the ongoing pandemic. We are innovating and evolving our operating model to be more flexible and to provide our clients and consumers with an exciting offer that is delivered safely and provides great value. This combined with our existing scale, ability to flex costs and focus on operational execution, will allow us to return to a Group underlying margin above 7% before we return to pre-Covid volumes.”


Other
• People arriving in England will soon be able to reduce their quarantine period if they pay for a Covid-19 test. The rules are due to come into force on 15 December and the tests from private firms will cost between £65 and £120.
• A ban on public events of more than eight people has come into force in Sweden to slow the spread of Covid-19. Last week, a ban on serving alcohol after 22:00 was imposed. Private gatherings of more than eight people are still allowed.
• Three million people are reported to have travelled through US airports from Friday to Sunday – the highest volume since mid-March – but the number is around half the usual figure for Thanksgiving travel.
• Hong Kong is to shut its entertainment venues for the third time this year. Bars and nightclubs, as well as dance and karaoke halls, will close for seven days until at least 3 December.
• The latest attendance figures for schools in the UK show 22% of secondary pupils were missing from school on 19 November compared to 17% the previous week. The number of pupils sent home from secondary schools also increased to 73% from 64% the week before. Primary schools have experienced less disruption so far, with 87% of pupils attending, but the number of schools sending home one more pupils rose to 29%, compared to 22% the week before.
• Airline revenues are expected to fall by 60% this year, according to IATA. The industry is likely to see net losses of US$118.5bn, much worse than its June forecast of a US$84.3bn loss. The situation should improve next year but airlines will still be hit with a combined loss of US$38.7bn, also worse than its previous US$15.8bn estimate.
• The developers of Russia’s Sputnik V vaccine claim it has 95% efficacy and will cost less than US$10 a dose internationally. They also said the two-dose vaccine can be stored at between 2C-8C, instead of the below-freezing temperatures required for the Pfizer and Moderna vaccines.