Coronavirus - Hidden value
25 June 2020
Ministers are finalising plans for a series of ‘travel corridors’ that will mean people arriving in the UK will not need to self-isolate. This should help support the tourism industry, which is vital to many in the UK and Europe. The value of supporting our and other economies should not be underestimated. However, many were ridiculed for legally going to the beach in the UK last weekend and it now seems that every new release requires an individual to make their own moral judgement, and everybody is watching.
• US Labor Department reports 1.4 million new unemployment claims.
• Qantas to cut 6,000 jobs.
• Royal Mail to cut 2,000 jobs.
• Updated list of CCFF
Buildings & Construction
• Norcros – “The impact of Covid-19 has been significant, fast and unprecedented. The safety and wellbeing of our staff has been paramount in our considerations along with our key principle of doing the right thing at the right time for all our key stakeholders. Our operating model and business continuity plans have proved to be highly effective during this period and our people have responded admirably to this challenge.
We have responded swiftly after ‘lockdowns’ designed to slow the spread of the virus were announced in our major markets by mothballing all of our facilities, safeguarding our employees and operating our businesses with a skeleton staff working predominantly from their homes. Whilst the majority of our customer base suspended their operations, it is pleasing that all our channels have now recommenced trading.
We have utilised all the relevant Government support in the UK, Ireland and South Africa and moved immediately to implement a cost reduction and cash conservation plan across the Group. The Group's strong balance sheet coming into this crisis and the swift actions taken to reduce costs and preserve cash, provide confidence that we have sufficient liquidity to enable the Group to withstand an extended period of reduced trading activity.
Dividend – Based on the unprecedented Covid-19 pandemic situation and the lack of certainty in both the short term trading outlook and the speed and timing of any longer term recovery, the Board believes that preservation of cash needs to remain a priority at this time and is therefore not proposing a final dividend for the year (2019: 5.6p per share).The interim dividend of 3.1p (2019: 2.8p) per share, which was paid on 11 January 2020, makes a total dividend for the year of 3.1p (2019: 8.4p) per share. The Board recognises the importance of dividends to shareholders and intends to return, at the appropriate time, to the progressive dividend policy that was in place prior to the Covid-19 pandemic, and will take into account the expectation of future cash flow generation and the long term earnings potential of the Group.”
• Savills – “In the Asia Pacific region, we experienced the most significant impact in the early part of the period with lockdowns in Greater China (including Hong Kong), Japan, Korea, Australia and Singapore substantially reducing advisory activity. As a number of these countries emerged from lockdown through Q2, we have seen clear signs of recovery in activity, particularly in Korea, Mainland China and Hong Kong, albeit off a low base. Throughout the period our substantial Property and Facilities Management business in the region has performed well.
In the UK, our performance has been very resilient despite significant reductions in transactional activity during lock down. This is due to the strength and breadth of our less transactional businesses in an environment where clients of all types have needed high quality advice and property management services. We have also concluded a number of significant transactions which generally reflected the strength of our pipeline coming into 2020. Since the recent lifting of estate agency restrictions in England, we have seen substantial increases in all measures of activity in our Residential Transaction business, although it is too early to determine the relative effects of the realisation of pent-up demand built over the lock down period and new business through genuinely improved sentiment.
In Continental Europe and the Middle East, where Savills is more dependent upon transactional activity, we have benefited from a strong pipeline in Germany, Spain, the Netherlands and Belgium, which collectively partially mitigated the effect of reduced transaction volumes across the region.
In North America, where the Group is substantially dependent upon leasing activity by corporate occupiers, our business performance has been significantly affected by lock downs, particularly in the major metropolis markets of New York, Chicago and San Francisco. In general, Occupier decisions around office space are being delayed in favour of shorter term roll over of current arrangements. Our US Government advisory business and our Logistics business have been two positive exceptions to this general trend.
Savills Investment Management has performed largely in line with the same period last year with management fee growth mitigating the reduction in performance fees period on period. We have benefited from being one of the largest managers of logistics assets in Europe, a sector which remains much in demand by investors. In addition DRC Capital, the real estate debt manager in which we hold a 25% interest, is performing well in a market which is conducive to debt investment strategies.
Covid-19 Mitigating Actions – Our primary concern has been the well-being of our staff, clients and suppliers both in respect of our own businesses and, as a substantial Property Manager, in respect of the occupiers and users of the portfolio under our management. Such activities and advice have become ever more important as we have overcome the specific issues enabling a return to work. Today, over 90% of our offices around the world are open and either working on a rota system or fully staffed.
Similar to our approach during the Global Financial Crisis in 2008/9 (‘GFC’), in an environment where the outlook is constantly changing, for reasons outside our control, and thus where traditional near term forecasting is extremely compromised, we have focused on liquidity and cash management and have evaluated our actions against a live Covid-19 liquidity model.
Overarching this, we have adopted the same principle as in the GFC, which is to maintain our staffing levels to ensure that we can continue to provide comprehensive, high quality, timely real estate advice in circumstances where clients have needed it more than ever. This is only possible because of our conservative financing structure and is designed both to minimise the impact on staff and to position the Group to outperform in the recovery phases as they emerge across the regions in which we operate.
Examples of specific actions taken include:
• Senior Management salary cuts for 2020 of 20% across the Group;
• Reductions in discretionary expenditure;
• Reductions and deferment of Capital Expenditure save in respect of long term data and digitisation projects;
• Cancellation of the 2019 Final Dividend and the postponement of any decision on shareholder distributions until our likely 2020 outcome and the trajectory of recovery becomes clearer; and
• Limited acceptance of Government Support Schemes, restricted to those business lines expressly prevented from operating during lockdown, principally our UK Residential Transaction business. The majority of team members have now returned from furlough.
We have continued to focus on growing our business across all our regions, primarily through recruitment of individuals and teams who are attracted to our culture, our proprietary Global network, and the opportunities that it creates, and our relative financial security.
Outlook – Whilst our Less Transactional businesses have provided a solid platform for the Group during the pandemic, our overall performance for the year will be highly dependent upon the extent to which regional transactional markets recover in the second half. The wider context for real estate investment is largely positive with the expectation of low interest rates for longer and continued, or enhanced, investor demand for income reflected in increased allocation to Real Asset backed strategies.
As a consequence of Covid-19, the environment remains highly uncertain, chiefly in respect of expected recovery trajectories across the world and the risk of second wave outbreaks causing further lock downs. In addition, it is unclear how significantly the longer term economic impact of Covid-19 will weigh on corporate and investor sentiment.
We are confident in the Group's capability to withstand all modelled scenarios for the year and to continue to execute our growth strategies and deliver a profitable performance in 2020. However, given the wide range of potential outcomes at this stage, it is not currently possible to provide meaningful guidance for the year.”
• Cenkos – “The Company’s revenues in the first five months of this year are ahead of the same period for last year.
In the latter part of 2019 following the unfavourable market backdrop (before Covid-19), the Board implemented steps to reduce the Company's cost base. As a result, Cenkos’ annual fixed cost base today is significantly lower than in 2019, although most of these savings will come through in the second half of 2020.
The Company has a strong balance sheet and financial resources well in excess of its regulatory requirements.”
Food, Drinks & Household
• Anpario# – “The Group has delivered a strong sales performance and a corresponding improvement in our profit margins in the first half as some customers increased stock levels and previous business development initiatives came to fruition.
We continue to operate our contingency plans, with a split production system, remote working and using technology to support our global sales teams and customers and expect to continue to operate in this way for a number of months yet. Furthermore, the Company has not and does not expect to use any of the UK Government's Covid-19 financial support measures.
We are conscious of the continued uncertainty around the world due to the pandemic and are monitoring the potential impact it could have on business as we enter the second half of the year. The first half has seen particularly strong growth in Asia, Europe and the Americas, whilst the Middle East experienced a weak first half as the absence of tourists and religious celebrations affected food consumption. In the US we are maintaining sales despite meat processing facilities experiencing closures which has led to temporary delays in populating farms with livestock. Encouragingly, sales in China are now showing signs of recovery as farmers are re-stocking their pig operations following the African Swine Fever epidemic and also a ban on the use of anti-biotic growth promoters (AGPs) in animal feed is expected to come into force in July.”
• Science in Sport – “As previously announced, the Company had conducted a number of scenario analyses which modelled the impact of Covid-19 on revenues for the current financial year and into 2021. Trading is currently in line with the base scenario developed as part of our contingency planning. As expected, retail sales in all markets remain adversely affected compared with normal levels. However, we are making very strong progress with our e-commerce business, with our own PhD and SiS platforms performing well, and our Amazon business outperforming. Pricing improvements and supply chain synergies are delivering an improved gross margin. This, together with
planned Covid-19 cost cutting measures now implemented, is protecting our strong cash position.
The Company’s financial position remains robust given performance in line with our base scenario. The proceeds from the £4.5 million placing in April 2020 means the Company has substantial headroom and can exit the current trading environment well placed to deliver on its long-term growth strategy. As a further contingency we put in place an £8.0 million invoice financing debt facility, which remains unused.
Despite the continued high degree of uncertainty from the Covid-19 pandemic and associated economic impact, our strategy remains unchanged, focusing on science-led innovation, building brand equity, taking our share of e-commerce business and developing global markets. We are confident that we are well prepared to deliver on this strategy and will provide further details on progress in our half year results announcement on 16 September 2020.”
• United Carpets – “Following Government guidelines, the store network is now fully re-open, with new retail protocols in place to maintain social distancing, alongside increased sanitizing measures to protect customers and staff. Whilst the Board expects that it will take time for activity levels to normalize, early indications have been encouraging and appear to reflect some initial pent up demand.
Losses during the period of enforced store closures have been mitigated as far as possible. However, cash conservation has been the primary focus in order to ensure appropriate liquidity for the Group and its franchisees. The Group is also in the advanced stages of negotiating additional funding under the Coronavirus Business Interruption Loan Scheme and as a consequence, the Board believes the business will have sufficient liquidity to meet its requirements going forward during this extraordinary period.
With minimum staffing levels focused on cash management, accessing available support and safely re-opening stores, the Group has reviewed its reporting timetable. The Board concluded that it would be advantageous to change the Group's accounting reference date, extending the current accounting period from 31 March to 31 September. The majority of the impact from Covid-19 should be confined within that extended accounting period whilst, going forwards, the new accounting reference date will place the key trading months in the first quarter of each new financial year, enabling greater flexibility in the management of the business for the remainder of the financial year.”
• Victoria# – “The Board is pleased to advise that in every geography trading has exceeded management expectations following the re-start of operations.
Following a dramatic decline in revenues in March and April due to government-mandated closure of all of our manufacturing operations (with the exception of Australia, which is about 14% of our normal revenues) and many of our customers' shops across Europe, sales began to recover in mid-May with the easing of restrictions in some countries. The benefit of our geographic diversification in both manufacturing and customer locations was readily apparent, as different countries ended their lockdowns at varying times.
The Group has methodically re-opened its manufacturing and distribution operations in all geographies, to meet the current high acceleration in demand whilst ensuring that costs are not incurred unnecessarily. Group revenues have, as a result, steadily increased and over the last three weeks were approximately 85% of management's pre-Covid-19 budget. Further recovery is expected as orders begin to flow to Victoria from UK retailers, who were the last to start trading as they were only allowed to re-open last week
It is important to remember that much of our product is exported outside of its country of manufacture. It is very encouraging that consumers within countries which did not lock down have shown consistent demand throughout the period, and those that exited lock down first (Germany and Austria, for example, who re-opened retail two months ago) have maintained very good demand following the initial rapid increase after we restarted operations. That said, our operations across all divisions remain prepared to react quickly to any future changes in demand.
Finally, the Board would like to remind shareholders that Victoria's supply chain is highly diversified and invariably localised to the key manufacturing plants. Our access to raw materials has remained secure throughout the period and we will be able to meet demand as it arises.”
• BAE Systems – “As expected, the pandemic has impacted the business in the second quarter, with sites in the Air and Maritime sectors and our US commercial avionics business being most affected. However, as a result of the actions taken, productivity levels in June have improved within our defence businesses (which account for around 90% of the Group’s revenues). Many of these operations now have well over 90% of employees working. This includes a high proportion working from home and critical on-site workers having returned under adjusted protective safety measures in response to the pandemic. In parallel the business continues to drive cost control measures.
Within our UK-based Air and Maritime sectors, second quarter disruptions have particularly impacted cost recoveries and sales volumes, offset to some degree by strong underlying operational performance and cost control measures. Product delivery levels in MBDA have also been impacted given the European locations of its factories.
Our US-based Controls and Avionics business has been and is expected to be impacted for the near-term, especially in the commercial aftermarket and product delivery lines. The Power and Propulsion business has been impacted by the reduced demand for mass transit in recent months, and commercial cyber operations have also seen reduced trading levels.
In the US, our defence manufacturing facilities and shipyards have continued to operate following implementation of appropriate safe working measures. There has been some disruption to manufacturing operations primarily due to the pandemic's impact on the supply chain, as well as some intermittent production delays in our own lines where precautionary measures to reduce Covid-19 exposure were necessary.
Demand for our capabilities remains high with order intake in line with our original expectations for the year.
Sales for the half year are expected to be broadly stable year on year whilst half year profit is expected be c.15% lower than last year primarily due to cost under recoveries in the period, significantly reduced volumes in higher margin commercial work and the sales mix year on year. As we return towards full operational tempo we expect the business performance in the second half to be much stronger than in the first half, assuming no new significant Covid-19 related disruptions.
The liquidity of the Group remains strong. As in prior years, cash has a significant first half working capital outflow. Despite some additional profit to cash impacts from Covid-19 disruptions, operating business cash flow in the half-year remains broadly in line with expectations and, excluding the one-off £1bn injection into the UK pension scheme, is likely to be consistent with the first half cash profiles seen in the last two years.”
• Northbridge Industrial Services– “We already have evidence that the easing of lockdown regulations on a worldwide basis has begun to benefit transactional rental business, particularly in Crestchic, and we expect this to strengthen further from the third quarter. Tasman also expects some previously delayed contracts to start within this timescale. The underlying sentiment in most of our markets for power reliability, renewables and natural gas extraction remains positive and we expect that to continue beyond the impact of Covid-19.
We anticipate that the overall performance of the Group in the first half will be similar to that of the first half of last year, but it is still too early at this stage to give reliable guidance for the year as a whole.”
• Auto Trader – “Since 1 June, when retailers were able to re-open their showrooms, both visitors and enquiries have rebounded strongly and are now at record levels. With high levels of demand in the market, used car pricing has remained strong.
Despite an increased number of vehicles on our platforms, the number of retailers has declined by 3%. Whilst we retained more retailers than during the same period last year, this was not offset by the normal levels of new business.
We have been seeing a higher than average pipeline of customers exercising their 30-day notice period to leave the platform. Up until now, this has not translated into increased levels of cancellations.
Following a period of reduced revenue through which we supported our customers, we will to return to full rates from 1 July 2020. Based on current trends we would expect July retailer revenue to be down by mid-single digits on the same month last year.
Total Group costs are likely to decline at a rate of low-mid single digits as cost saving measures were taken in response to Covid-19. This was largely through reduced marketing and other smaller discretionary spend.
Given the situation, it is difficult sensibly to provide guidance on what the number of retailer forecourts or the level of stock might be over the coming months.
The reduction in stock levels and the stability in used car prices are a sign of industry health, which although negative for our stock on site at the moment, is positive for our customer base. The Covid-19 outbreak is likely to result in an increase in the level of exclusive use vehicle ownership. We believe the current environment will only accelerate the shift towards greater digitalisation of the car buying process. The Board therefore remains confident in Auto Trader's long-term growth prospects.”
• Next Fifteen – “Next 15 is pleased to report that, despite the impact of Covid-19 on the marketing industry, it expects to deliver modest growth for the first half of this financial year at both the revenue and profit levels. The company’s balance sheet also remains strong with net debt currently standing at approximately £5m. Overall trading remains consistent with the update provided in April, the new business pipeline remaining largely positive with a number of new assignments being won recently including work from Ernst & Young, the World Health Organization, Photobox and Sainsbury’s Argos as well as additional assignments from Amazon, Google and Salesforce.
The Group believes it has done a good job in managing the impact of Covid-19 as it relates to our people, our customers and our business performance. Many of our senior management team along with the board, are taking salary reductions, and some staff are being furloughed. The move to working from home was managed seamlessly and we have progressed a series of initiatives that have focused on emerging from this crisis with healthier operating margins. As can be seen by our current level of net debt, we have also focused heavily on cash conversion.
However, we still feel it is prudent to assume that any real recovery will not be seen until the latter part of the fiscal year. The group has remained relatively insulated from the impact of Covid-19 on the economy. This is in part because of our geographic spread, in part because of the limited exposure we have to highly affected areas such as travel and hospitality and lastly because over half of our revenues come from the technology sector. We think this client, product and geographic mix will be important as we emerge from the economic impact of the pandemic.”
• Atalaya Mining# – “At the end of March, in response to a Royal Decree, the mine was placed on care and maintenance for a period that was expected to last 10 days, but following clarifications from the Spanish Government, Proyecto Riotinto recommenced on 3 April after only five days of shutdown. The Company currently maintains its production guidance for 2020 in the range of 55,000 to 58,000 tonnes. We must, however, be conscious of the need to protect our employees from the rapid evolution of the Covid-19 virus, the potential for increased measures being imposed by the Spanish Central
Government to reduce its spread, and any potential future impact of these restrictions. The Company will therefore update the market as necessary.”
• Capita – “Software – We have seen resilience in the Education, Capita One and AMT Sybex businesses but the payments business in particular has experienced a steep fall in transactions in end markets. In March we secured a seven year £19m healthcare decisions contract with a UK regional NHS service. We expect revenue for the half year, including the impact of Covid-19, to be up by around c£2m.
People Solutions – HR Solutions, Pensions Administration and Army Recruitment have been stable but Learning and Resourcing have been hard hit. There has been a small benefit from our work for NHS Returners and some eLearning contracts. We are pleased to have renewed the Teachers’ Pension Scheme for another four years, worth £60m. We expect revenue for the half year, including the impact of Covid-19, to be down by around £30m.
Customer Management – We have managed to shift to remote working basis for over 70% of the division and so maintain high service levels to our clients. Challenges have occurred in specific client end-markets (e.g. retail and gambling). Opportunities to support Covid-related projects have arisen in NHS call centre and DWP support. We have won a major new piece of work from a UK retail bank worth £33m over three years. We expect revenue for the half year, including the impact of Covid-19, to be down by around £10m.
Government – Revenues have been resilient in many verticals: Health and Welfare, Transport, Defence, Justice; but there has been an impact in Local Government (parking, leisure centres, rates collection), Entrust (outdoor education) and Fera (less testing from private companies). However, we have also supported several Covid projects such as for the DWP and various NHS schemes. We were pleased to have been awarded the Ministry of Justice Electronic Monitoring scheme contract extension worth £114m over three years. We expect revenue for the half year, including the impact of Covid-19, to be down by around £60m.
Technology Solutions – Operations in the existing business have been broadly stable but transactional revenue and new business have been affected. We have seen increasing interest in automation as a result of Covid and the team was responsible for Capita’s successful move to remote working for 35,000 colleagues. During the period we have won a £24m one-year contract to implement the TfL Emergency Services Network infrastructure. We expect revenue for the half year, including the impact of Covid-19, to be down by around £35m.
Specialist Services –The division has been significantly impacted by Covid-19, particularly in those businesses whose end markets have been severely affected (Travel and Events, Enforcement, Real Estate and Infrastructure) and 30% of our colleagues in this division are on furlough. We expect revenue for the half year, including the impact of Covid-19, to be down by around £40m.
Consulting – we have been getting good traction in certain verticals such as cyber and justice and the business is expected to grow this year. However, we are now working in the most challenging markets in recent memory. We have refocused the business to reflect this new outlook onto a smaller range of vertical markets and capabilities. We look forward to accelerating growth as demand picks up again in the future.”
• Mitie– “Although the outbreak of Covid-19 has continued to impact Mitie’s performance through the start of FY 20/21, the business is proving to be more resilient than initially expected especially on the fixed contract element of the business. Mitie operates across a diverse range of sectors for both public and private customers who have seen a varying impact on their end markets. Its public sector customers have largely been resilient however many private sector customers have experienced a volatile trading environment.
Mitie has 37,500 employees working on the frontline every day, keeping its customers' facilities operational. This reflects the strategic importance and essential nature of the Group's services and, in some instances, has led to an increase in demand for critical services. Examples include supermarkets and online retailers whilst new contracts were won with three NHS Nightingale hospitals and 11 drive-in regional Coronavirus testing centres. Conversely, discretionary variable work and engineering projects, including painting and roofing, have seen a significant slowdown, and many offices and retail outlets have been closed during lockdown, impacting revenues.
Group revenue from continuing operations for the two months ended 31 May 2020 was £301.4m, which was 12% lower than the same period in the prior year. Included in this revenue decline were revenues associated with the expected loss of two significant high margin public sector contracts – MOJ and NHS Properties – which represented 3% of the year-on-year revenue reduction, partly offset by new customers such as GSK and BMW.
Our business has been performing well. Since we began our transformation three years ago to build the foundations of our business, revenue from continuing operations has increased 18%, with EBIT growth from continuing operations of 13% and EPS growth of 15%. All whilst self-financing significant investment into our technology, our service delivery, and our people. Most importantly we have put Mitie on a firm financial footing reducing net debt. Mitie is now a better quality business.
It is these strong foundations, built over the last three years, that gives us the confidence to undertake the Interserve transaction as part of our long-term vision. With our enlarged footprint we see continued growth, cost savings and increased free cash flow across our two businesses whilst maintaining our targeted low leverage.”
• NAHL Group – “Following the Covid-19 update announced on 20 April 2020, the Group's response to the pandemic continues to evolve and trading has been broadly in line with management's early scenario planning.
The Group's Critical Care division has demonstrated a reasonable level of resilience in challenging conditions. Consultants have been successfully utilising technology to deliver case management services remotely, albeit volumes have been slightly reduced, and are now restarting face to face meetings as lockdown measures ease.
The Group previously indicated that it would look to optimise the structure of the business to maximise efficiencies and has combined its Personal Injury and Residential Property businesses into a new Consumer Legal Services division, which has been significantly impacted by Covid-19. During the early weeks of the UK's lockdown, volumes dropped by between 75-90% compared to pre-Covid levels. This is a result of fewer vehicles being on the roads, the number of workers furloughed or working from home and the housing market coming to a standstill. More recently, as the UK has emerged from lockdown, conditions have improved somewhat, and we are currently experiencing volumes that are approximately 50% below pre-Covid levels. Throughout the pandemic period, we have actively recalibrated our marketing activity and are encouraged by recent improvements in our SEO performance.
The Group has proactively taken steps to manage its balance sheet and as at 31 May 2020, net debt was £21.7m with a £25m revolving credit facility committed until December 2021. As clarified at the time of the 2019 Final Results, the Group continues to have positive discussions with its bank regarding its debt facility and does not anticipate the need for further funding.
Whilst the Board acknowledges the progress being made, with the UK only recently starting to re-open, it remains too early to quantify the full impact on 2020 with any degree of certainty. That said, given the Board's experience in navigating change in difficult markets, I remain confident in the Group’s ability to emerge from this period as a sustainable business.”
• Royal Mail – Is to cut 2000 management positions about a fifth of its total management workforce. The company said the pandemic had accelerated the trend of more parcels and fewer letters being sent, and that it had not adapted quickly enough to that. The firm wants to make £130m savings.
• BATM Advanced Communications – “Further to the Group’s announcement of 30 April 2020, in which BATM provided an update on the impact of the Covid-19 outbreak on its two divisions, the Group is pleased to report that the Bio-Medical division has performed exceptionally well throughout the first half of the year. This has been based on several initiatives, such as the sale of antigen and antibody testing kits to health authorities in various countries as well as the sale of critical care ventilators. The Networking & Cyber division was only slightly impacted by Covid-19 in Q1 2020, with sales remaining higher than in Q1 2019. As previously noted, there was some slowdown in this division in the early part of Q2 2020 as lockdowns commenced across the globe. However, since late May 2020 this division has seen a return towards normal trading as some customers who had temporarily postponed certain projects have commenced discussions and, as lockdown measures are increasingly lifted, the division is recommencing the activities it could not perform previously due to the restrictions on travelling to the premise of a customer or a supplier. While it is still early days, this gives confidence to the management team that the full year impact of the pandemic on the Networking & Cyber division will now be minimal.
As a result of the considerable growth in the Bio-Medical division, which has more than offset any loss of revenues in the Networking & Cyber division, BATM now expects to report a substantial increase in FY 2020 revenues, at least 25% higher than FY 2019 and materially higher than market expectations. It also expects to report EBITDA significantly ahead of market expectations.
The growth in the Bio-Medical division is due to the substantial investment the Group has made in recent years to build a best-in-class diagnostics platform. This division is able to quickly provide solutions that include diagnostic kits for any new pathogen that appears and devices including diagnostic instruments, ventilators and pathogenic waste disposal units. As a result, this division was able to respond rapidly when it was first alerted to the potential outbreak of Covid-19. In the first half, the Group was able to launch a new diagnostics antigen molecular (RTPCR) test kit to detect Covid-19 that underwent clinical verification and evaluation by leading universities and hospitals in February and received certification at the end of March 2020. Additionally, in May 2020, the Group launched ELISA lab serological test kits that diagnose if a patient has had Covid-19 by detecting antibodies against it present in their blood. Production and sales of both kits have been ramping up and the Group has shipped several hundred thousand test kits with a backlog of over a million orders still to be delivered.
In addition to the sales of the newly launched kits (reagents), the Group has received increased demand for its instruments (readers). During the summer months, the Group is adding further production capacity for its reagents and instruments to satisfy potential orders from the continued interest the Group is receiving from around the world.
As previously announced, the Group is in the process of developing, in partnership with Novamed, a rapid Covid-19 diagnostics antigen test kit for home-use, which is expected to be completed in the coming months with sales commencing in the fourth quarter of the year. The Group is also in the advanced stages of development of unique solutions that are expected to be commercially released in September 2020 in anticipation of a second wave of several respiratory pathogens, particularly flu and coronavirus.
Finally, during the first half of 2020, the Group received an order of €29m (c. $31m) from a European government to provide 1,000 critical care ventilators to support their response to Covid-19. The Group has made significant progress towards completing the delivery of the contract on time.”
• Sumo Group – “The lockdown restrictions, resulting from the Covid-19 pandemic, are positively impacting the Group’s underlying market, with video gaming activity and console purchases accelerating faster than previously forecast. Our most recent game launch was on 12 June when Little Orpheus, the brand-new adventure from award-winning studio The Chinese Room, a Sumo Digital Studio, was made available exclusively on Apple Arcade. With beautiful visuals inspired by a bygone era of adventure, Little Orpheus is an account of what happened to Soviet cosmonaut Ivan Ivanovich during his three years below the Earth's crust and has received very positive feedback. This follows the success of Spyder on Apple Arcade which has achieved consistently high user feedback ratings since launch on 20 March. On 11 June Sony announced Sackboy A Big Adventure at the PlayStation 5 reveal event.
We are generating a strong pipeline of new business development opportunities across both Client and Own-IP despite the severe restrictions on travel and face to face contact.”
• Belgium is further easing its restrictions on Thursday, reopening swimming pools and cinemas and extending the size of a social bubble from 10 to 15.
• The US Labor Department reports 1.4 million new unemployment claims were filed in the past week. There are just over 19.5 million Americans currently collecting jobless benefits.
• Secret Service agents who attended President Trump’s rally in Oklahoma last weekend have been quarantined as a precaution after some tested positive for coronavirus.
• A human trial of a new vaccine begins in the UK. About 300 volunteers are being injected with a Covid-19 vaccine over the coming weeks, as part of a trial led by Prof Robin Shattock and his colleagues at Imperial College London.
• Lockdown restrictions are back in four districts of north-east Spain after an outbreak among fruit pickers.
• Croatia has re-imposed a 14-day quarantine on arrivals from Bosnia, Kosovo, North Macedonia and Serbia after cases in those countries grew.
• Qantas will cut 6,000 jobs, equating to about a fifth of the airline’s workforce prior to the Covid-19 crisis. In March, it furloughed more than 80% of its staff.
• Florida has mandated the use of masks in all public spaces.
• Walt Disney Co said the reopening of theme parks and resort hotels in California will be delayed until Disneyland receives approval from state officials. Disney had originally planned to reopen the Disneyland Park and Disney California Adventure Park on 17 July.
• New York, New Jersey and Connecticut have asked people travelling from states where Covid-19 cases are rising to go into self-isolation for 14 days. Currently, those states are Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Texas and Utah, according to the governor of New York State Andrew Cuomo.
• More than 100,000 people in England have been asked to self-isolate by contact tracers in a bid to contain the spread of coronavirus, data from the past three weeks shows.
• The White House confirmed it will no longer fund 13 testing sites, including seven in Texas, despite that state reporting record highs in the number of coronavirus cases. Funding and support for the sites will end this month. The sites are in Texas, Illinois, New Jersey, Pennsylvania and Colorado.
• The European Medicines Agency said its human medicines committee (CHMP) has recommended conditionally approving Gilead Sciences Inc’s antiviral treatment, remdesivir, for use in adults and adolescents from 12 years of age with pneumonia who require supplemental oxygen.
#corporate client of Peel Hunt