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Scientists from the University of Innsbruck tested 80% of the population of Ischgl, the Tyrolean skiing resort that has been described as a possible “ground zero” for the pandemic in Europe. Some 1,259 adults and 214 children were tested and 42.5% of residents were found to have developed Covid-19 antibodies. Most interestingly, of those infected, only 15% had experienced any sort of symptoms, which means as many as 85% were asymptomatic. If these results are reflective of the wider population, the strategies of many governments may need to be revised.

Headlines

• Texas and Florida to pause reopening plans.

• CDC estimates 20 million people in the US infected.

• Shopping centre owner Intu goes into administration.

• WHO needs $31.3bn over 12 months for vaccine.

Company news

Food, Drinks & Household

Tesco – “Total sales in our UK & ROI business increased by 9.2%. Growth was most marked in online with sales up 48.5% for the quarter as a whole and the rate of growth increasing to nearly 100% by the end of May. Sales in our convenience business grew by 9.5% including a particularly strong performance from One Stop. Our 896 large stores were well-placed to serve customers seeking to shop less frequently and buy more on each visit, with sales up 5.4%.



Throughout this period, we continued to invest in our everyday value proposition including the launch of ‘Aldi Price Match’ in March. As a result of this, in combination with the strength and relevance of our overall proposition, we saw net switching gains to Tesco from Aldi for the first time in over a decade. Customers who saw our ‘Aldi Price Match’ campaign were more likely to visit our shops (+6%), rated our brand more highly (NPS +10%) and perceived Tesco as better value (+8%)3. We are extending ‘Aldi Price Match’ to nearly 500 Tesco and branded products and will continue to seek further opportunities to bring even greater everyday value to customers at this challenging time.

As we refocused our offer on availability and everyday low prices, promotional participation reduced from 28% to 14%. We also saw major shifts in product and category mix as customers focused more of their purchases on essential items. In the UK, food sales grew at c.12%, whereas more discretionary categories such as clothing saw sales declines of c.(20)%. Following a sharp initial reduction, sales in general merchandise recovered through the quarter with some categories – toys, home, stationery and electrical – growing strongly year-on-year, as customers increasingly looked to add these items to their weekly shop. Fuel sales, which are excluded from our headline sales performance, declined by c.(50)%.

As a result of improvements in customer perceptions of Tesco across all key areas, including value +5.0pts and quality +3.7pts, the strength of our brand reached its highest level since 2014. Following our focus on ensuring customer safety, 90% of our customers believe our stores are a safe place to shop.

Responding to the significantly increased demand for our online offer, we have grown that part of our business as quickly as possible. In just five weeks we doubled our online capacity and are now fulfilling over 1.3 million orders per week. Across the quarter as a whole, we delivered 12.6 million orders, including to a priority list of 590,000 vulnerable customers. In addition to providing more delivery slots for customers, we have also increased the availability of our click and collect service, which now represents around a quarter of online orders. As a result of the changes we have made, our online grocery business has grown from c.9% to over 16% of our total UK sales.

We originally set out a plan to double the capacity of our online business in the medium term, including the development of at least 25 urban fulfilment centres (UFCs). Whilst the construction of our first UFC in West Bromwich Extra was paused in March due to government restrictions, we were able to complete the work in June and our first customer order will be delivered next month. We are well positioned to capture market growth beyond our original ambition and will continue with the roll out of the UFC programme as we respond to the accelerated shift in customer demand.

Our response to Covid-19 has required significant changes to our operations which have led to a substantial increase in costs, with the main impact in the UK. The majority of these costs relate to payroll which includes the provision of twelve weeks' paid leave to 26,000 vulnerable colleagues, in addition to the recruitment of 47,000 temporary colleagues to cover absence and meet increased demand. We have also incurred costs in areas such as distribution, where we have needed to re-open previously mothballed distribution centres and property, where we have incurred costs to adapt the store environment and temporarily lost tenant income. The provision of safety-related consumables and personal protective equipment across all of our 3,628 stores in itself results in a charge of c.£(65)m. In total, our latest estimate of incremental costs for the UK for the full year is c.£(840)m. These costs will be partially mitigated by the UK business rates relief of £532m and a contribution from additional food sales.

Overall Booker's sales grew by 6.1% including a c.5% contribution from Best Food Logistics, which was acquired in early March. Booker saw a significant uplift in its retail business with sales growing by 24% partially offset by a significant reduction in customer footfall for our catering business with sales falling by (32)%. In catering, we are already starting to see our competitive position strengthen and expect to exit the crisis with market share well beyond original levels. Booker has provided invaluable support to our grocery online business including by providing more than 100k additional click and collect slots and directly supplying nearly 18,000 deliveries to over 1,000 care homes.

In Central Europe, sales growth excluding Poland was +3.3%. Changes to customer shopping behaviour in the region were similar to the UK, with high demand for online grocery and a change in mix of sales towards more essential food items. In addition to the impact of similar operational changes to those we have made in the UK, financial performance in Central Europe will also be affected by the loss of income from the temporary closure of shopping malls from March to May.

Tesco Bank sales fell (26.5)% as activity in banking and money services reduced, including the temporary closure of our travel money business and significantly reduced ATM income.

Looking ahead – Our priority remains ensuring the safety of our customers and colleagues, and the consistent availability of food.

Whilst any forecast is inherently uncertain, based on an assumption of a continued easing of lockdown restrictions in the UK, our current expectation is that Retail operating profit in the current year is likely to be at a similar level to 2019/20 on a continuing operations basis.

Following revised macro-economic assumptions regarding GDP and unemployment levels, we have increased our provision for potential bad debts at Tesco Bank and we now expect to report a loss for the Bank of between £(175)m and £(200)m for the 2020/21 financial year. We will continue to review any changes made to macro-economic forecasts and this could result in releases from or additions to this provision. Whilst headline profitability is impacted in the short term, the Bank's capital ratios and liquidity remain strong.”

Warpaint London – “Whilst trading conditions remain challenging as a result of the Covid-19 pandemic, sales in the first half of 2020 have been at a higher level than anticipated, albeit significantly below the first half of 2019. There has been an improvement in margin, no erosion of cash and a positive EBITDA for the first 6 months of the current year.”



Industrials

Aston Martin Lagonda – “While trading remains challenging in many markets due to Covid-19 and it is difficult to predict trends, the business is starting to return to more normal operation:



The primary concern remains the health and safety of our colleagues and their families, business partners and the local communities and we continue to provide all the support possible. Public health measures advised by governments are being followed in support of their efforts to contain the spread of the virus.

As expected, due to Covid-19 disruption, retail sales (dealer sales to customers) and wholesales are expected to be lower in Q2 than in Q1 and wholesale average selling price (ASP) to continue to be impacted by the de-stocking process. However:

• More than 90% of the global dealer network is now open, with 50% fully open and others operating with some limited capacity. Only 10 dealers are not operational (principally in India and South America) and including new appointments in the Middle East (2) and China (1).

• All 18 dealers in China have been open since mid-May and early signs are positive, with good market share maintained and an acceleration of de-stocking on low volumes.

• Strong DBX order book maintained ahead of July media launch aligned with deliveries on track to start in July.

• For the full year total wholesales are currently expected to be broadly evenly balanced between sports cars and DBX.



Testing and development of Aston Martin Valkyrie has resumed after the Covid-19 related closure of test facilities and deliveries are now expected to start in 2021.

DB5 Goldfinger Continuation production has started at Aston Martin Works, Newport Pagnell.

Strong financial discipline is being applied throughout the business.

• Cost efficiencies are being delivered in-line with plans. Actions to preserve profitability such as furloughing employees due to Covid-19 business interruption, with the Gaydon manufacturing facility currently remaining closed, and re-phasing marketing spend support lower operating costs year-on-year.

• Capital expenditure and R&D investment year-to-date was focused on DBX and Aston Martin Valkyrie shifting towards core sports car mid-cycle refreshes, DBX variant and mid-engine development as the year progresses. H1 capex and R&D is expected to be c.£155m, as the majority of spend arises in H1 as planned.

• At 31 May 2020, cash was £244m and net debt £883m (including lease liabilities of £109m following the adoption of IFRS16 in the prior year), balances reflect reduced payables and DBX capital expenditure prior to deliveries starting in H2.



As disclosed in May, the Company continues review of all future funding and refinancing options to increase liquidity, particularly in light of the ongoing uncertainty presented by Covid-19. Today, the Company announces:

• It has received approval for a Coronavirus Large Business Interruption Loan Scheme (CLBILS) loan of £20m, subject to documentation;

• plans to draw approximately $68m of the delayed draw senior secured notes due 2022 at 12% coupon having exceeded the order condition required to draw the notes; and

• a non-pre-emptive equity raise of up to 19.99% of the Company's current issued ordinary share capital (see separate announcement released today for detail).



Discussions are also ongoing to secure up to £50m of trade financing in addition to inventory financing arrangements currently in place. (30 March 2020: £39.7m).”


Weir – “Covid-19 and Current Trading

The safety of our people, their families and wider communities remains the Group’s number one priority and this focus has allowed us to continue to fully serve our customers through this period. Our mining markets have remained robust during Q2 with some disruptions to mining production levels in April and May, although these appear to be easing through June.

Minerals has continued to show its resilience throughout the pandemic period. Aftermarket orders in Q2 have been similar to Q1 in absolute terms despite the impact of Covid-19 restrictions. Year-on-year comparisons will be impacted by a particularly strong Q2 in 2019 which was an all-time record. Original equipment orders have also continued at Q1 levels in absolute terms, with a number of larger gold project orders offsetting general delays across other commodities. Divisional margins have remained within their normal 17%-20% range supported by cost mitigation actions.

Demand for ESCO’s core mining GET has also been resilient, although it has seen a greater impact from some customers running down ore stockpiles and reduced activity in North American iron ore. The division’s infrastructure markets, which represent around a third of divisional orders, have been more significantly disrupted as a result of the shutdown in large parts of construction activity in North America and Europe, which have now started to recover gradually. Divisional margins have remained robust supported by delivery of the final acquisition cost synergies and previously announced cost mitigation actions.

In Oil & Gas, as expected, we have experienced a significant step-down in North American activity levels in Q2. Cost mitigation actions have been successfully executed and we continue to expect the division to be cash generative for the full year. The Group is continuing to explore options to maximise value from the division at the right time.

As announced on 26 March 2020, the Group has withdrawn its full year guidance due to the ongoing uncertainty as a result of Covid-19. The Board will reinstate guidance when it has sufficient confidence on the outlook for the rest of the year. We will publish our interim results, for the six months to 30 June 2020, on 29 July 2020.

New US$950m RCF and £200m Term Loan agreed – The Group has completed the refinancing of its main banking facilities, with a syndicate of 12 global banks. These facilities comprise a new US$950m Revolving Credit Facility (RCF) which will mature in June 2023 with the option to extend for up to a further two years and a new £200m Term Loan which will mature in March 2022. The margin on the new facilities is slightly higher than current levels reflecting market conditions but remains highly competitive and significantly lower than the Group's existing long-term bonds. Covenant terms remain unchanged. Both the RCF and Term Loan replace existing facilities which were due to mature on or before September 2021.

The Group continues to be highly cash generative and its strong liquidity position includes c.£500m of immediately available committed facilities and cash balances, now with an extended maturity profile. In addition, it is approved to access up to £300m as part of the UK Government's CCFF programme, which remains unutilised, and has a further c.£80m in uncommitted facilities.”

Leisure

888 Holdings – “Over recent months the Group has remained mindful of the ongoing uncertainty and restrictions facing many consumers across 888’s global markets as a result of the Covid-19 pandemic. 888 has continued to prioritise preventing gambling-related harm by proactively communicating with customers regarding safe gambling and leveraging its unique Observer monitoring system in order to protect customers and help them stay in control of their betting activity.



As announced in the Group's trading update dated 24 March 2020, 888 traded well during the first quarter of 2020. The Board is pleased to confirm that 888 has continued to trade well since that date and despite some moderation to revenue growth in recent weeks, average daily revenue in the year to date has been 34% higher than the prior year. This performance reflects the Group's increased levels of customer acquisition during the second half of 2019 across several regulated markets. In addition, the Group has benefited from the structural shift towards online services that has accelerated across several consumer-facing industries during recent months.

As a result of the Group’s trading during the year to date the Board now anticipates that 888 will achieve an adjusted EBITDA outcome for 2020 significantly ahead of its prior expectations.

Whilst the Group has encouraging momentum, the Board is mindful of possible headwinds in the second half of the year including the potential for a period of prolonged global macro-economic uncertainty that could impact consumers’ discretionary spending. Despite this, the Board remains confident that 888, underpinned by its unique technology and diversification across product verticals and geographic markets, remains well positioned to deliver further strategic progress in the second half of 2020 and beyond.”

DP Poland– “Trading in 2020 has started broadly in line with management's expectations. Covid-19 has had relatively little impact on our business in comparison to other businesses in our industry as we have been able to keep open all our stores and our 2 commissaries operating without interruption. As previously reported, from Saturday, 14 March 2020, the Polish government imposed ‘lock down’ restrictions across the country. As a result, like-for-like (‘LFL’) System Sales and System Sales were down 14% and 10% respectively for the month of March. However, performance recovered in the following months, with LFL System Sales up by 3% and System Sales up by 6% in each of the months of April and May.



A positive impact of Covid-19 has been a reduction in our food and labour costs and in some of our rent costs. In addition, the recruitment market has improved for us, in terms of both availability of staff and labour costs. However we have also incurred some additional costs, principally in connection with safety and cleaning, across our operations to meet the requirements necessitated by Covid-19 regulations.”

Marston’s – “The first half-year results have been significantly impacted by the Covid-19 outbreak in March 2020. However, following the transformational Beer Company transaction outlined below, we will have a significantly strengthened balance sheet, and a high quality freehold pub estate well placed to recover from the impact of the current position.



Generally, underlying trading was solid over the first few months, after which we saw an adverse trading impact from the storms in February and subsequently a material impact on trading in the latter half of March as the impact of Covid-19 took hold. Sales in the period to the end of February were broadly in line with the prior year and the circa £40 million shortfall in sales arose in March.

Encouragingly, despite this, we made good progress on cash generation in the period, demonstrating our commitment to our previously stated debt reduction plans, which were ahead of schedule, with net cash flow up £55 million on last year including £61 million proceeds from the disposal of 168 pubs in the period.

Overall, underlying trading prior to 16 March was solid, including strong Christmas and New Year trading, despite the impact of the severe and widespread flooding in November, and again in February. Like-for-like sales in pubs for the 24 weeks to 14 March were down 1% and beer volumes were in line with expectations. After 16 March, trading deteriorated sharply and all pubs were closed in line with Government guidance.

In addition, the results for the period reflect the adoption of IFRS 16 ‘Leases’ for the first time, details of which are set out in note 16 of the accounts. In summary, as previously guided, this change to the accounting rules has visibly reduced reported earnings, and net debt has increased to reflect lease liabilities not previously recognised as debt on the balance sheet.

Total revenue of £510.5 million was below last year (2019: £553.1 million), principally reflecting the impact of Covid-19 on both Pubs and Bars as well as Marston’s Beer Company. Group underlying operating margins at 11.3% were 2.0% behind last year, principally reflecting this reduced revenue. Underlying operating profit was £57.8 million (2019: £73.3 million). At the end of February revenues were broadly in line with last year. The revenue impact of Covid-19 is therefore estimated to be circa £40 million.

Underlying profit before tax was £9.4 million (2019: £34.2 million). Basic underlying earnings per share for the period were 1.2 pence per share (2019: 4.6 pence per share).

On a statutory basis, the Group generated a loss before tax of £33.2 million (2019: £16.3 million profit). The difference between the statutory and underlying profit principally reflects around £26 million of non-cash items (which were disclosed at the time we announced the disposals) relating to losses on the disposal of certain non-core assets and interest rate swap fair value adjustments, as well as approximately £16 million of Covid-19 related costs including debt provisions and stock valuation adjustments. The basic loss per share was 4.4 pence per share (2019: 2.2 pence earnings per share).

Net cash flow for the period of £3 million was £55 million higher than in 2019, this improvement reflects reduced capital expenditure and disposals as part of our longer-term debt reduction plans. Operating cash flow of £58 million is below last year (2019: £67 million) reflecting reduced earnings.

Net debt excluding lease liabilities of £1,379 million has improved and is £39 million lower than last year. Additionally, lease liabilities of £295 million have been recognised on adoption of IFRS 16. As previously guided, given the ongoing uncertainty, we are unable to quantify the impact of Covid-19 on our financial and trading performance at this stage, however we naturally anticipate a reduction in our expectations for financial year 2020.

In response to the temporary closure of pubs mandated by Government, our focus has been to minimise the level of cash-burn within the organisation, which currently stands at approximately £10 million per month. Actions include:

• Reducing all expenditure, including capital spend, to essential spend only.

• Taking advantage of the Government furlough scheme with 93% of employees being furloughed and remaining employees taking a 20% reduction in salary.

• We have managed to retain all employees and maintain a mental well-being programme to support affected employees.

• Accessed government grants and reliefs, including supporting our tenants in assisting them to gain access to those reliefs.



In addition, as previously announced, the Board believes that given the uncertainty surrounding Covid-19 it would be prudent to plan for no dividends to be paid in respect of financial year 2020. We recognise that the dividend is important to many of our shareholders and we plan to revisit the payment of dividends only when the business is generating sufficient cash flow to cover the dividend and it is appropriate to do so.

We are encouraged that there is now confirmation from Government that pubs are allowed to reopen on 4 July and the operational guidelines we will be required to adhere to. In advance of reopening, we have prepared comprehensive plans for our employees to be able to operate safely within the guidance, and for our pubs to trade efficiently and profitably given restrictions still in place. We look forward to welcoming our customers back into our pubs, albeit the trajectory of both revenue and earnings in this initial period are uncertain. As previously announced, we will not be proposing dividends in respect of financial year 2020 given the uncertainty that still exists.

The Financing section below describes the additional bank facilities and covenant waivers put in place with our banks and bondholders, which provide us with sufficient flexibility to manage through an unanticipated period of pub closure which extends significantly beyond current expectations of re-opening. In addition, as part of the work underpinning the circular for the joint venture transaction with Carlsberg UK described above, the Board has considered a ‘reasonable worst case scenario’ which assumes a period of pub closures to the end of September 2020. In this ‘reasonable worst case scenario’, if the transaction were not to happen, the Board would be required to seek alternative funding or develop alternative plans for the Group’s future financing. Even if the transaction does complete then in this scenario the Group would need to obtain further covenant waivers from its bondholders. Both these matters represent material uncertainties over the Group’s ability to continue to trade as a going concern over the foreseeable future being a period of at least 12 months from the date of the interim financial information. The Board are confident however that in this worst case scenario we would be able to pursue mitigating strategies, including the potential to access funds from a range of sources, underpinned by the significant freehold tenure of the pub estate.

Looking forward, it is clear that there will be contraction of supply in the eating and drinking out market as a consequence of Covid-19. Our predominately freehold pub estate is less exposed than many of our peers to city centres where we believe the long-term impact of Covid-19 may be more pronounced. Given the composition of our pub estate, together with a significantly strengthened balance sheet arising from the proceeds from the Beer Company transaction, we are well placed to fully exploit the recovery of trade over the longer term.”

Real Estate

Intu – “On 23 June 2020, intu properties plc (‘intu’) provided an update on discussions with key stakeholders to progress its standstill strategy ahead of the revolving credit facility covenant waiver expiry at 11:59 p.m. this evening, 26 June 2020.



Since that update, discussions have continued with the intu Group’s creditors in relation to the terms of standstill-based agreements. Unfortunately, insufficient alignment and agreement has been achieved on such terms.

The Board is therefore considering the position of intu with a view to protecting the interests of its stakeholders. This is likely to involve the appointment of administrators.

A further announcement will be made as soon as possible.”

Lifting restrictions

• Ireland will move to Phase 3 of lifting its lockdown on Monday. Churches, cinemas, cafes and restaurants will reopen and a 14-day quarantine will be lifted for visitors from a ‘green list’ of countries from 9 July.



Other

• The US state of Texas has paused the reopening of its economy, as the number of cases surge. Businesses that are already open will not be shut but no further openings will be allowed.

• Australian supermarkets have reintroduced national rationing of essential groceries after panic buying resumed in some states, provoked by a rise in cases in Victoria.

• Two major providers of self-catering accommodation – Cottages.com and Hoseasons – reported record one-day sales in the wake of the reopening announcement on Tuesday.

• Campsite booking website coolcamping.com experienced a 750% increase in bookings compared with this time last year.

• In the US, data gathered by Fitbit suggests young adults are lagging behind older age groups in returning to the same steps as before the coronavirus outbreak. Other data, including resting heart rates and vigorous movement, also suggests young adults are less active than older people this month.

• A Norwegian study suggests there’s no increased risk of infection in gyms and fitness centres if good hygiene and social distancing are observed. Norway’s gyms reopened on 15 June.

• Portugal will re-impose a lockdown from 1 July on parts of Greater Lisbon because of high infection rates. Residents in 19 parishes will have to stay at home unless absolutely necessary.

• US government experts at the CDC believe more than 20 million Americans could have contracted coronavirus – the CDC said that for every diagnosis of coronavirus in the US, it is likely that 10 more people are or have been infected, based on serology testing used to determine the presence of antibodies that show whether an individual has had the disease.



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