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South Korea has tightened restrictions in the metropolitan area of Seoul after a spike in infections. Restrictions were lifted across the country on 6 May after the outbreak appeared to be under control. However, officials have recorded the biggest spike in infections in nearly two months, prompting the closure of museums, parks and art galleries in the Seoul area for two weeks from Friday. The numbers are small but it shows the inevitability of localised outbreaks as lockdowns lift. The UK’s new contact tracing system, which launched today, will be essential in keeping outbreaks contained and avoid returning to complete lockdown.

Headlines

• Contact tracing starts in the UK.

• 2.1m filed for unemployment in the US last week.

• 850,000 job losses in France in April.

• Scotland moves to its second stage of lockdown lifting.

• Premier League to restart on 17 June.

Company news

Buildings & Construction

Epwin Group – “As announced on 25 March 2020, Group operations were suspended following the Government announcements of that week in response to Covid-19, as the Group prioritised the health, safety and wellbeing of its employees, customers and suppliers.



Since suspending operations, the Group has sought to maintain a low level of supply where it has been safe to do so for those customers that have continued to operate – a number of whom have been involved in the efforts to establish new Covid-19 test centres or hospital facilities.

After the implementation of enhanced health and safety procedures to follow Government guidelines and continue to safeguard our employees, customers and suppliers, the Group's main operating sites have been reopening over the past three weeks. All will be back in production by the end of this week, albeit at much reduced levels as activity is matched with demand. The Group will cautiously ramp up production as demand levels recover.

Balance sheet and liquidity – The Group's balance sheet remains strong. As a consequence of previously announced cost and cash conservation measures, available cash and facility headroom as at 28 May 2020 remains at c.£45 million – unchanged from the level as at 31 March 2020 reported in the Group's final results announcement of 23 April 2020.

The Group’s banking facilities, which were increased last year, total £75 million. The Board has not sought to increase these bank facilities further nor access other sources of funding, as it believes its available headroom provides sufficient liquidity based on current analysis.

Outlook – As stated on 23rd April, the impact of Covid-19 will inevitably have a material impact on trading for the current year and it is still too soon to quantify this at this stage. Therefore, in line with other businesses in the sector, all market guidance and forecasts remain withdrawn.”

Financial

Charles Stanley# – “Covid-19 is now the major challenge for everyone globally. I am pleased to report that the Group responded swiftly to safeguard the well-being of all our staff through remote-working while also maintaining a very high level of service to clients.



Trading results for the new financial year are expected to be significantly impacted by the crisis, with lower stockmarket valuations and reduced interest rates. However, Charles Stanley is well positioned to navigate through the challenges and to emerge strongly. We have a very robust balance sheet with significant cash balances, and we will continue to focus on transformation and growth initiatives.

The new financial year is likely to be challenging and there are significant uncertainties ahead, reflecting the still unfolding effects of the Covid-19 pandemic. Market values have declined sharply and interest rates have been cut. However, the steep market sell-off has led to greater market volatility and increased trading, so commission income is currently holding up well.

There are also opportunities for us in areas such as Financial Planning as people seek to deal with the current change in circumstances, and at Charles Stanley Direct, reflecting the increased move to digital services.”

Paypoint – “PayPoint continues to provide its vital services to local communities during this un-precedented period of uncertainty. Our priority is to ensure our business continues to function effectively and safely enabling continued support for our clients and retailer partners so that communities can access required services. Our network continues to function with over 96% of our retailer partners remaining open during the lockdown period and our contact centre remains fully operational. We have made our network available to local authorities to provide financial support, through our CashOut service, to the most vulnerable in their local communities. We have also increased

resources and provided a dedicated call line in our Contact Centre to further support these consumers. We have proactively worked with our retailer partners to ensure our network coverage remains best in class and can continue to deliver for our clients and their consumers.

PayPoint moved to an operating model which combines remote working, continued activity in the field, to support our retailer partner network, and some essential office based activity. We are actively minimising the disruption to services and the support we provide clients and retailer partners whilst taking the appropriate steps to safeguard our people. Currently we have not furloughed any of our people and have not accessed any available government assistance. Instead, we have reviewed and reduced third party expenditure, suspended annual salary reviews and cancelled management bonuses for the financial year ended 31 March 2020.

A number of measures have been implemented to support the convenience retail community amid the Covid-19 outbreak. The initiatives include a campaign to celebrate Retail Heroes, a £25,000 contribution to the NFRN Covid-19 Hardship Fund, service fee changes, including waving annual increase, and a new partnership with Deliveroo.

PayPoint’s Retail Heroes is being launched in May with the aim of recognising retailer partners in the PayPoint network that have gone ‘above and beyond’ to serve their local communities during the Covid-19 pandemic. The winning retailer partners will be showcased across PayPoint’s social media channels, receive a certificate and a £500 donation to a charity of their choice. In addition, a donation will be made to the NFRN Covid-19 Hardship Fund, which offers financial assistance to members struggling with cash flow during the coronavirus pandemic. The fund has raised more than £200,000 to date and PayPoint is proud to contribute a further £25,000.

PayPoint is also introducing changes to its service fees and billing process. The first component of this is waiving the yearly inflation increase to service fees, which will remain consistent with last year’s amounts. This will be coupled with a permanent move to service fee billing in arrears, benefitting retailer partners’ monthly cash flows, and the option for those forced to close their stores to claim a service fee refund for the closure period.

Finally, PayPoint recently announced an innovative partnership with Deliveroo, the UK’s leading online food delivery company. The collaboration allows retailer partners to apply for fast-track access to the Deliveroo system so members of the local community can order products to be delivered contact-free in as little as 30 minutes.

In response to the Covid-19 outbreak, and in line with the related public health guidance and legislation issued by the UK Government, the Board will be running this year’s AGM as a closed meeting and shareholders will not be able to attend in person. Further details will be available in the 2019/20 annual report.

Whilst it is still too early to have visibility on the longer-term consequences that will ensue following Covid-19, the impact of consumers avoiding cash and remaining at home has significantly reduced ATM transactions and parcel volumes. Parcels have also been impacted by some carriers suspending their redirect to local store services during this period. Card payments have benefitted as consumers tended to use their local convenience stores more and in replacement of going to restaurants and entertainment venues. Bill payment transactions have reduced as energy companies have provided pre-pay consumers with credit, services including transport have significantly reduced, clients have encouraged digital payments and consumers increased their average top-up amounts.

Food, Drinks & Household

Animalcare Group – “The Group entered the pandemic period in a strong financial position. In recent weeks we have seen an inevitable impact on the markets where we operate and a resulting downturn in demand starting in the second quarter.



While it’s too early to accurately assess the economic impact on the Group, the uncertain future impact of Covid-19 has been considered as part of the Group’s adoption of the going concern basis.

The Group has run a series of future trading scenarios to June 2021 to factor in a range of downside revenue estimates with mitigating actions on cost and cash flow. On revenue we modelled a rolling 12-month downturn of between 13% and 22% compared to 2019, with the most significant impact during a quarter in which lockdown measures are enforced. In the downside scenarios, a prolonged lockdown of six months, or a second wave mirroring Q2 2020, both with subsequent slower recovery, were considered.

To maintain our operational and financial resilience, we have already taken a number of steps to reduce or defer costs to align with revenue, carefully manage inventory in light of demand shifts and implement a capital expenditure freeze for all but essential projects, including key development programmes and manufacturing transfers.

As announced in our trading update of 25 March 2020, the Board deferred the payment of the final dividend. This decision will be reviewed later in the year once we have more clarity about the ongoing effects of the pandemic on our business. At that point the Board will consider what actions are in the best interests of all shareholders.

The results of these scenarios indicate that the Group would operate well within its committed revolving credit facility of €41.5m and maintain headroom against all covenant obligations throughout the period to June 2021.

The Directors do, however, note the inherent uncertainty as to the future effect of Covid-19. A potential more prolonged impact outside of those modelled in our future trading scenarios could result in a potential breach of the leverage covenant. In the event that a covenant test is breached, we would need to work with our banking syndicate to obtain a covenant relaxation or waiver in order for the borrowing facilities to continue to be available. The Directors note that this could represent a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. However, the Directors are confident that they would be able to obtain this covenant waiver if required and, therefore, the Directors have a reasonable expectation that the Group will have sufficient cash flow and available resources to continue operating for at least 12 months from the approval date of these Financial Statements. Accordingly, the Directors continue to adopt the going concern basis of preparation.

Summary and outlook – We have made strong progress against our strategic objective of strengthening our financial base and are pleased to report a significant improvement in cash performance, improving operating margins and substantial reduction in net debt versus 2018. Our business is becoming more agile and efficient, giving us confidence to increase investment to leverage our stronger base to deliver future growth.

In reflecting on the advances made in 2019, we could not have anticipated the economic uncertainty that would be caused by Covid-19. Performance over the first three months of the year was strong, helped by customer stockpiling ahead of the pandemic. The anticipated downturn in demand became visible from April, particularly in the Companion Animal sector where government measures restricted both veterinary practice and the mobility of owners. By contrast, the Production Animal sector has been relatively resilient, partially offsetting the rate of decline in demand. Forecasting the economic impact across 2020 with any accuracy is difficult, but data from countries that have been operating with fewer restrictions through the pandemic, such as Germany, clearly show that the driver of recovery will be vets returning to normal working patterns. We have noted the early start of a return in some other countries more recently.

As announced in our trading update of 25 March 2020, we have taken steps to protect our employees as we continue to support our customers during this period. We've also moved quickly to preserve cash and to re-align SG&A spending to reflect the rapidly changing trading environment, maintaining the Group's financial resilience and preserving the ability to invest as we progress towards a recovery. At 30 April 2020, both net debt and the net debt to underlying EBITDA leverage ratio were at similar levels to 31 December 2019.

Whatever challenges 2020 presents, we are confident that the Group's strong finances and its focus on a clear growth strategy means Animalcare will continue to be well placed to take advantage of opportunities in a market with attractive fundamentals.”

Healthcare

N4 Pharma – “As previously announced, the Company appointed Evotec International Gmbh (‘Evotec’) to undertake the Nuvec® proof of concept work. The Company can confirm that the first phase of the project has been carried out, within the expected timeframe, and that the plasmid DNA has been successfully amplified to produce sufficient material for the rest of the

project and has been tested to confirm it matches the required specification. Evotec has also used this batch of the plasmid DNA to express the Covid-19 spike protein to be used as a positive control for the studies. Evotec will now move to the second phase of the work and start the in-vitro testing of Nuvec® as planned, during the first week of June 2020. This phase is expected to last approximately ten weeks.

The third phase of the in-vivo protein expression testing will be to undertake an initial pre in-vivo study to demonstrate expression of the spike protein in target cells in a murine target. Following the recent fundraise, announced on 13 May 2020, the Company is now also exploring ways in which it can bring forward the start of certain areas of this third phase to run alongside the in-vitro work.”

PureTech Health – “Today announced plans to advance its wholly-owned clinical-stage product candidate LYT-100 (deupirfenidone) as a potential treatment for serious respiratory complications, including inflammation and fibrosis, that persist following the resolution of SARS-CoV-2 (Covid-19) infection. LYT-100 employs a multimodal mechanism of action to potentially reduce, delay or prevent the lung dysfunction that has recently been documented in Covid-19 patients, including those who have recovered from the infection. The global, randomised, placebo-controlled trial is expected to begin in Q3 2020 and will evaluate LYT-100 in non-critical Covid-19 patients with respiratory complications. Patients will continue treatment for up to three months.”



Industrials

Bodycote – “Activity levels were relatively normal through to the third week of March with the exception of China, where there was significant disruption in February with business since returning to pre-Covid-19 levels.



From the third week of March, the business outside of China has been severely impacted by Covid-related lockdowns across a wide variety of geographies. In terms of our market sectors, since the Covid-19 related crisis has taken hold, we have seen the biggest immediate impact in our automotive and civil aerospace businesses, as many OEMs have had extended production halts. Bodycote's diversification by market sector and geography has been a benefit.

It is worth a reminder that Bodycote holds no inventory and supplies directly into our customers’ inventories. Accordingly, when customers are running down their inventories, Bodycote tends to see a sharp revenue decrease that is typically more pronounced than the revenue falls our customers see themselves. Once they stop destocking Bodycote revenues rebound to the ongoing levels of production at the customers’ facilities. When our customers restock the rebound of Bodycote's revenues tends to be strong. At this stage, it is too early to reliably predict the trajectory of end-market demand and our customers' production, destocking and restocking patterns.

Total Group revenue for the first four months was 12% lower at £216m (down 11% at constant currency and 13% excluding the impact of acquisitions). The month of April experienced constant currency revenues 30% lower than in April last year (35% lower, excluding the impact of acquisitions).

By swift and decisive action, we have significantly mitigated the impact of the revenue decline on the Group’s profitability, with the Group having positive Headline Operating Profit and generating net cash in each of the first four months of the year, including April.

Management actions – The pre-Covid-19 restructuring plan announced in March focused on our Classical Heat Treatment activities in Western Europe. With the onset of the Covid-19 pandemic, this restructuring plan has been extended in both scale and geography. Manning levels have been permanently reduced at facilities where the level of business is not expected to return to previous levels in the medium to longer term. Some facilities are being eliminated, with equipment redeployed to other sites. Overall, the production capacity in the Group will be largely unaffected but will be situated where there is greater long term demand and where it can be more efficiently utilised.

The restructuring activities underway will reduce full-time employees by more than 700 – some 13% of total headcount. Together with savings in infrastructure from closed plants, c.£45m of annualised costs will be permanently eliminated from the business. Savings from the restructuring program will be realised progressively through 2020, with most being completed by year-end and the full annualised savings in place from Q2 2021. The cash cost of the expanded restructuring program is now expected to be c.£25m, versus the c.£15m announced at the Full Year results.

The restructuring activity is designed to right-size our business, so that we will emerge from the current downturn in a strong position, with good, sustainable profitability and cash flow generation, as well as healthy margins and returns.

Bodycote has also looked to contain costs by a further temporary reduction in full-time employees and careful management of ongoing expenditure on utilities, consumables and other overheads. The current level of cost containment measures represents savings of c.£7m per month, which is over and above that achieved so far through the restructuring program.

Financial position and liquidity – Net debt as at 30 April 2020 was £44m (excluding lease liabilities), compared with net cash of £21m at 31 December 2019, after paying £94m in part settlement of the Ellison Surface Technologies acquisition on April 3. Free cash flow of £38m during the period compares favourably with free cash generation of £5m in the comparable period last year, reflecting both strong control over costs and a net working capital inflow.

With £80m currently drawn on its facility, the Group has [£170m] of facility headroom, having recently agreed an extension until 2025 to our revolving credit facility on favourable terms, which reflect the Group's credit strength. The Group also has cash in hand of over £40m. As indicated in our announcement last month, the Group is keeping the proposal for the final 2019 dividend under review and will update on this later in the year.

Summary and Outlook – The Group has moved rapidly to adjust its cost base in response to lower demand deriving from the Covid-19 crisis. Based on what we have seen to date, we are confident that the restructuring and cost reduction actions we are taking should enable us to operate profitably through the downturn and that we will emerge stronger as end markets recover.”

Nissan – The company outlined plans to reduce the range of models of cars and trucks available in order to cut costs. It said it would reduce the number of models from 69 to about 55 over the next few years, focusing instead on electric vehicles and sports cars. It is closing its factory in Barcelona with the loss of about 2,800 jobs, according to the Spanish government.

Nissan said that worldwide sales of its vehicles between January and April had dropped by 31.1% in comparison with the same period last year.

Leisure

Cineworld – “Is pleased to announce that its lenders have agreed to waive the leverage covenant in respect of its credit facility for the June 2020 testing date and has increased its leverage covenant to 9.0x Net Debt to EBITDA for the December 2020 testing date.



The Group has also agreed the terms of $110m of additional liquidity through an increase in its revolving credit facility. In addition, the Company has secured credit committee approval to apply for an additional $45m through the CLBILS loan scheme in the UK and expects shortly to commence a process to access $25m through the US government CARES Act. Cineworld expects that this additional liquidity, to the extent required, will provide it with sufficient headroom to support the Group even in the unlikely event cinemas remain closed until the end of the year.

Cineworld currently anticipates that government restrictions related to cinemas will be lifted in each of its territories by July. Subject to this and confirmation of the schedule for film releases, Cineworld anticipates the reopening of all of its cinemas in July. Cineworld has put in place procedures to ensure a safe and enjoyable cinema experience for its employees and customers.

Cineworld is excited by the great movie line up to follow the reopening of cinemas, starting with the highly anticipated new Chris Nolan movie Tenet and immediately after that with Mulan, a new Disney adventure movie.

Cineworld, as always, greatly believes in the theatrical experience and is fully committed to be the best place to watch a movie.”

Media

DMGT – “The Board does not consider it helpful, in normal circumstances, to provide information on short-term trading. However, given the exceptional nature and uncertain duration of the Covid-19 crisis, some financial information for the month of April 2020 is being provided in this instance to inform investors of recent trading dynamics.



In April, Group revenues decreased by an underlying 23% compared to the prior year and DMGT made an adjusted operating loss of £3m in the month, compared to a £5m adjusted operating profit in April 2019. The Insurance Risk, US Property Information and EdTech businesses remain resilient and grew an underlying 5% in April. The Covid-19 pandemic is adversely affecting the Consumer Media, UK Property Information and Events & Exhibitions businesses and their combined revenues decreased by an underlying 36% in the month.

Consumer Media is experiencing a particularly difficult advertising market as well as reduced circulation volumes due to the UK's lockdown restrictions. Consumer Media revenues were down an underlying 33% in April and are estimated to be down an underlying 30% in the four weeks to 24 May 2020. The weak revenues resulted in a Consumer Media operating loss in April and a negative adjusted operating margin in the mid-single digits in the month, though the business is currently expected to improve to a small loss in May 2020. UK property transaction volumes are exceptionally low currently due to the effect on property viewings of the lockdown measures introduced in late March. The restrictions on the residential market were eased on 13 May 2020 but it will take time before the benefit flows through to a rise in housing transactions. The revenues of Landmark, the UK Property Information business, are directly affected by these depressed transaction volumes and were down an underlying 44% in April and the business made an operating loss in the month.

The Events and Exhibitions business has cancelled or postponed all events scheduled from March through to August as well as the Gastech event previously scheduled for September 2020. Some relatively minor events are still scheduled to be held in September but this may change. dmg events will continue to incur costs during the second half of FY 2020 and while the business is expected to benefit from the insurance cover that it has in place, the timing is uncertain.

Operational actions: A number of operational actions have been implemented in response to Covid-19. A scheme has been introduced across Consumer Media, Landmark and the Corporate centre to replace a portion of the April to June 2020 salary of higher earners with equity in DMGT. While the cost implications are not material, this action will support the Group’s cash generation and the scheme will help align employees’ and shareholders; interests. DMGT has not taken any government financial support and no employees have been furloughed.

Variable costs have decreased naturally, notably in Consumer Media and UK Property Information, due to reduced revenues. There have also been measured reductions in discretionary spending, further supporting the Group's cash generation. DMGT continues to pursue its disciplined investment programme and has reviewed it carefully in light of the current environment. Investment initiatives have been re-prioritised, reflecting changing expected returns and the focus on ROI, particularly as sectors experience faster digitisation trends. Each business has individual contingency plans in place, encompassing operational and strategic measures, which will be deployed in reaction to the evolving circumstances.”

Retail

Tandem Group – “The impact of Covid-19 on the Group’s trading has been mixed. Bicycle sales have been materially higher with year to date revenue 77% ahead of the prior year and the forward order book significantly higher than last year to date. This has invariably placed a strain on the supply chain where we are working hard to replenish stocks as quickly as possible which has been hampered by the various degrees of lockdown in our countries of supply.



Online sales, both direct to consumer and with our national retailer partners have also been strong. Outdoor products, including Hedstrom and Airwave outdoor play, Kickmaster football training, Airwave trampolines, spas, gazebos and parasols have sold well as have a number of our Jack Stonehouse domestic electrical appliances. Although the supply chain from China suffered in the early part of the year, this is now broadly back to normal with regular supplies being received.

In the national retailer business, however, our customers have been more cautious, with the majority of toy shops closed. Although there have been few cancellations, a number of orders have been delayed which, despite the stronger online domestic sales referred to above, has had a material impact on revenue. National retailers have also been slower to place new orders until they have greater clarity of the situation. As a result, the national retailer order book is approximately 21% behind the previous year.

Year to date Group revenue is slightly ahead of the prior year, although the overall Group order book is approximately 3% behind last year. We therefore expect Group revenue to fall behind the prior year during the Summer period as a result of the lack of national retailer FOB orders and a limited supply of bicycles.

At this stage it remains difficult to ascertain the overall impact on the full year but we will make a further update at the AGM and continue to update the market as and when we have greater visibility.”

Support Services

Clipper Logistics – “Reports that, further to its announcement regarding the creation of a new supply chain for Personal Protective Equipment (‘PPE’) for NHS Hospital Trusts on 3 April 2020, it has developed an e-fulfilment solution to allow GP surgeries and Adult Social Care providers to order items of PPE online. Clipper has worked with the NHS Supply Chain, the Ministry of Defence, and eBay to develop this solution.



To facilitate this solution, Clipper has opened a new distribution centre, to support this operation and the previously announced supply chain solution for PPE for NHS Hospital Trusts.

Working with eBay, the NHS and the Department of Health and Social Care, an e-commerce platform has been built, which will enable GPs and small social care homes and home care providers to log on and order items of PPE through this dedicated portal. Clipper will receive and fulfil these orders which will be delivered by Royal Mail.”

DX (Group) – “Following DX’s announcement on 16 April 2020 regarding the impact of the global coronavirus crisis on the business, the Company is pleased to provide a further update on current trading for the financial year ending 27 June 2020. As an essential service provider, DX has continued to maintain operations at all its depots and service centres since the Government's ‘lockdown’ measures came into effect.



The Company has experienced a slow and steady recovery in trading since 16 April. Trading in both DX Freight and DX Express has been better than the Board anticipated, although Group revenue is still approximately 10-15% below expected seasonal levels at this point in time. As a result of the improvement and taking into account the outlook for the remainder of the financial year, the Board now expects the Group to generate a small profit before tax in the second half of FY20 and for revenue and adjusted EBITDA for the full year to be ahead of current market forecasts.

In responding to lockdown conditions, the Company has adapted to the increased demand for B2C deliveries and its business mix shows a stronger weighting to B2C activity than normal, in particular for 2-Man deliveries. After an initial steep decline following lockdown restrictions, B2B activity has improved over the period as customers have adapted to conditions in their respective markets. Operationally, the Company has benefitted from reduced road traffic and from B2C customers being at home to receive deliveries, which has allowed for slightly improved delivery productivity. The Company continues to manage costs tightly, whilst re-introducing some costs into the business as volumes have recovered. It is also maintaining a good level of liquidity headroom. Net debt at 25 April 2020 was £2.0m.

A further update will be provided in mid-to-late July in a pre-close trading statement.”

TClarke – “As announced in the final results, TClarke successfully achieved its underlying operating profit target of 3% in 2019. The Company's profitability remained strong in the first quarter of 2020 with the Group maintaining the underlying operating margin of 3% on a turnover of £70m. As a result of Covid-19 many of our project sites have been closed with turnover for April falling to £10m. In spite of the fall in turnover, underlying operating profit (EBIT) is forecast to break even for Q2. Underlying operating profit for the first 6 months of 2020 is therefore expected to be circa £2m.



As part of its response to Covid-19 and to ensure the Company remains one of the most financially resilient and sustainable businesses within our sector, TClarke has undertaken a swift restructuring programme. The programme is expected to deliver savings of £4m per annum, of which approximately £2.4m is expected to be recognised during the current year.

The restructuring programme has so far resulted in one off costs of £3m which will be included in non underlying items in the half year accounts.

TClarke retains and remains fully committed to a directly employed workforce which is the cornerstone of the Group's offering. Most, if not all of our sites are expected to operational by the end of June.

The Group’s Covid-19 Response Committee supported by its Health and Safety teams have planned and implemented a complete overhaul of our offices and projects to allow a safe, phased return to work to maximise productivity whilst adhering to the current Government guidelines.

TClarke started the year with a forward order book of £403M; it currently stands at £408m. The order book for the remainder of 2020 remains robust. As well as work secured, we are currently tendering many opportunities for 2020 and beyond.

Cash and Banking Facilities – The Company has a strong balance sheet and significant liquidity headroom. Through its strict controls the business remains financially robust and has maintained a positive net cash position throughout April and May. In addition, the Company remains committed to the supply chain and is maintaining regular payments to our suppliers to ensure that their cash flow is supported.

At this important time TClarke has renewed and extended its bank facilities, on the same terms, with the £15m RCF facility extended to 31 August 2024 and the £10m overdraft facility renewed through the normal annual process.

TClarke comfortably passes all bank covenant tests during 2020 and 2021 under the possible scenarios modelled.

The strength of the Group means that it does not envisage utilising any of the government backed loan schemes.

Outlook – Forecasts for the full year are dependent upon timing of sites restarting and the productivity achieved. A number of possible scenarios have been modelled, each of which results in an underlying operating profit for full year. The current uncertainty and resulting range of possible outcomes means that it is not possible to give accurate market guidance for the full year at this time. The Group will provide a further update with its half year results on 21 July 2020.”

Technology

Draper Esprit – “A substantial majority of the portfolio is well positioned to benefit from historic trends which have accelerated due to the impact of Covid-19. Companies focused on secure cloud, automation, online financial services and gaming/entertainment, digitalisation are continuing to trade well with minimal disruption. Evidence from public market activities, and funding rounds, indicates strong demand for high quality companies in these areas.



The Group reacted quickly to examine the impacts of Covid-19 on its portfolio companies and has taken steps to assist companies where necessary including:

• Appraisal of valuation metrics has been adopted where applicable to reflect the rapid shift in the economic environment.

• 42% of portfolio valuations are at last round valuations, compared with 65% at 30 September 2019, with 58% of the portfolio now valued with reference to comparable multiples.

• Lower growth forecasts for 2020 and 2021 have been assumed for companies impacted by Covid-19. The Group consistently applies multiples lower than those prevailing for comparable quoted companies to mitigate stock market volatility.

• Year-end audit process is ongoing and therefore there may be some further minor adjustments to this split.



Relative to our pre-Covid-19 expectations which were in line with our 20% portfolio growth target we have made provisions of circa £99m across the portfolio, which is equivalent to a 21% adjustment across 53% (by value post-amendment) of our portfolio. Only around one third of these adjustments related to our 18 core portfolio assets, reflecting the strong performance and positions of these businesses even when viewed through a more stringent valuation lens. The long-term potential of the portfolio remains positive and we expect the value of the portfolio to grow post Covid-19 particularly in light of the accelerated transition to digital.

The Executive Directors in Draper Esprit have elected to defer 20% of their salaries for three months and will use these deferred balances when paid to purchase Draper Esprit shares in the market. In addition, the non-Executive Directors have elected to defer any fee increases over the same period in line with the Executive Directors.

No Draper Esprit staff have been furloughed or made redundant and the Company has not applied for any of the Government funding schemes.”

Transport

easyjet – “As announced last week, easyJet will resume flying on 15 June, servicing a small number of routes where we believe there is sufficient customer demand to support profitable flying. The initial schedule will comprise mainly domestic flying in the UK and France.



Further routes will be announced as customer demand increases and government restrictions across Europe are relaxed. So far, the booking trends on the resumed flights have been encouraging, and the demand indications for summer 2020 are improving, albeit from a low base. Bookings for winter are well ahead of the equivalent point last year, which includes customers who are rebooking coronavirus-disrupted flights for later dates.

Regarding fiscal Q4 2020 capacity, current plans are that easyJet expects to fly around 30% of the planned capacity flown in Q4 2019. This will continue to be evaluated reflecting changing regulations and customer demand. Our commercial planning and data science teams continue to work through different demand scenarios as we move through summer and into winter 2020/21.

Looking further forward, easyJet expects its year end 2021 fleet size to be at the bottom end of our fleet range at around 302 aircraft, which is 51 aircraft lower than the anticipated fleet size for year end 2021 which was reported to the market prior to Covid-19. This fleet number will include c.3-4% of un-crewed standby aircraft during peak. The reduction in fleet size will be achieved through the measures previously announced, including the deferral of new aircraft deliveries and the re-delivery of leased aircraft.

In line with IATA projections, easyJet believes that the levels of market demand seen in 2019 are not likely to be reached again until 2023. Our fleet deal with Airbus gives easyJet the flexibility to react to the different circumstances and varying demand environments which we may be faced with in the coming period. However, as a low cost airline with a strong network, we believe we are well placed to benefit from customers seeking great value during that recovery period.

Rightsizing the airline and cost structure – To effect the restructure of our business, easyJet will shortly launch an employee consultation process on proposals to reduce staff numbers by up to 30%, reflecting the reduced fleet, the optimisation of our network and bases, improved productivity as well as the promotion of more efficient ways of working. We will launch the consultation process in the coming days.

easyJet is also continuing to take decisive action in other cost lines to remove cost and non-critical expenditure from the business at every level. Some of the areas of focus are:

• Airports & ground handling – our teams are in active consultation with airports and ground handlers regarding revised contracts to reduce costs.

• Maintenance – swift action was taken to defer time-dependent maintenance spend due to reduced flying and our teams are continuing discussions with suppliers.

• Selling and marketing – our commercial teams are renegotiating spend with agencies and prioritising on the most effective activities to optimise traffic and sales as we look to restart flying.



Whilst we have also undertaken cost-cutting measures within easyJet holidays, it maintains a high proportion of variable costs, which will flex with revenue, and has no inventory risk.

We also continue to focus on minimising non-essential capex spending. As previously outlined, our gross capex expectations are for c.£900m in 2020 (of which c.£350m remaining in H2), c.£600m in 2021 and c.£1,000m in 2022 (subject to auditor review). The majority of the anticipated capital expenditure in aggregate across H2 2020, FY2021 and FY2022 relates to aircraft lease payments treated as capital cash flows under IFRS 16 as well as maintenance expenditure on existing aircraft and other IT related capital expenditure. Maintenance expenditure will be subject to restart phasing, the level of FY21 and FY22 flying and the quantity of operating lease redeliveries to lessors. A significant level of IT expenditure in FY21 and FY22 is discretionary and also subject to further review.

Funding – As announced recently easyJet has signed two term loans totalling c.£400m, with both loans maturing in 2022 and secured against aircraft assets. We also successfully issued £600m of Commercial Paper through the Covid Corporate Financing Facility (CCFF) as well as fully drawing down on a $500m Revolving Credit Facility, secured against aircraft assets.

Furthermore we continue to engage with an active lessor market interested in acquiring aircraft from easyJet's fleet on a sale and leaseback basis. Announcements on the progress of these engagements will be made in due course, with anticipated proceeds now expected to be in the range of £500-£650m.

Upon closure of all these funding initiatives, we expect to have generated total additional liquidity of c.£2.0bn with our cash burn during grounding being broadly in line with our estimates published in April.

Biosecurity measures – Alongside the resumption of services, easyJet also announced a range of new measures to help ensure the health and wellbeing of both customers and crew on-board. These include:

• Customers, cabin and ground crew will be required to wear masks.

• Enhanced cleaning and disinfection of easyJet aircraft.

• Availability of disinfectant wipes and hand sanitiser on-board.

• Initially, no on-board food service.



The measures have been implemented in consultation with aviation authorities ICAO and EASA, and in line with government and medical advice.

Outlook – At this stage, given the level of continued uncertainty, it is not possible to provide financial guidance for the remainder of the FY20 financial year. However, as shown in this release, we continue to take every step necessary to reduce cost, conserve cash burn, enhance liquidity, protect the business and ensure it is best positioned on our return to flying.

easyJet will release half year results (for the six months to 31 March 2020) on 30 June 2020.”

FirstGroup – “The new Covid-19 Bus Service Support Grant Restart programme builds on the support arrangements previously announced on 3 April and which were due to expire in June.



Regional bus operators in England have initially been allocated £254m in additional funding by DfT under the programme which will allow us to increase bus service capacity in support of our communities as Government guidance on travel restrictions begins to ease. The funding amount will be kept under review to ensure that increased services can be sustained while ensuring there is enough space for passengers to observe social distancing guidelines.

The programme, which runs for an initial twelve week period backdated to 12 May, is designed to support the industry while social distancing guidelines require buses to run substantially below their potential capacity. Bus operators will be able to claim funding support for the difference between their revenue from passenger and other non-tendered contractual sources and the costs of operating the services. Recoverable costs under the programme include all reasonable operational costs as well as depreciation, pension funding and debt finance costs reasonably allocated to English local bus services. Operators will be responsible for agreeing with local authorities the level of service to provide in each area to meet local demand for bus services as the lockdown restrictions ease.

The programme builds on previous commitments from the DfT, Scottish and Welsh Governments to continue to (either themselves or by directing local authorities to) fund the Bus Service Operators Grant, concessionary fares and contracts for tendered services at levels prior to the pandemic. Discussions are taking place with both the Scottish and Welsh governments to secure the additional funding necessary to support increases in bus service capacity through the recovery period.

First Bus continues to lead the industry with the introduction of a number of measures to support adherence to government guidelines, offering safe, socially distanced space across its bus fleet. Building on the passenger counting functionality announced last week, First Bus is introducing enhancements to the live tracking feature on its app by allowing customers to check in real time how full each bus is, helping them to make more informed travel decisions. We continue to encourage cashless payments, and use of the app to purchase mTickets, to reduce the need for contact between passengers and drivers. First Bus has also deployed seat signage to help ensure passengers are appropriately distanced from each other and has established enhanced cleaning protocols to help keep our passengers and employees safe. Further enhancements will be made to First Bus’s cleaning regimes during June, including the use of a virucide designed to provide protection for up to 30 days.”

Stagecoach Group – “As the UK looks to recover from the Covid-19 pandemic, we see a key role for safe and sustainable public transport in supporting the country’s recovery and helping people reconnect. Current government guidance to public transport operators on social distancing means that the current capacity of bus services is significantly reduced. As a result, special transitional arrangements are required to allow operators to provide a more comprehensive and sustainable network of services.



We stand ready to restore bus services to closer to pre-Covid levels and we will continue to work with our local authority partners and other key stakeholders on making best use of the increased step up in services.

London bus – Transport for London has generally maintained contract revenue payments to London bus operators, adjusted down to reflect any variable cost savings achieved by operators from running a reduced level of service. The position through to 1 May 2020 has now been largely agreed with Transport for London and discussions are continuing on the determination of contract payments for periods thereafter.

Rest of England bus – The UK Government has now announced a bus restart programme with £254m made available for a phased increase in local bus services in England outside London, as steps are taken to ease lockdown measures. That is in addition to existing Covid Bus Services Support Grant (‘CBSSG’) arrangements applying from 17 March 2020.

Discussions are continuing between the UK Government and bus industry representatives regarding arrangements for the sector beyond the period covered by the latest arrangements. Scotland and Wales bus – In addition, along with other bus operators, we are in discussions with the Scottish and Welsh Governments on how an enhanced bus network can support plans in those parts of the UK.

Financial performance – We estimate that our adjusted earnings per share for the year ended 2 May 2020 will be between 12.5p and 14.0p.

There remains some estimation uncertainty as to the level and scope of government payments receivable in respect of the year, particularly in relation to English local bus services. The CBSSG scheme for English local bus services is subject to further clarifications from government and also, a periodic reconciliation process, which has not yet taken place. In addition, the pending court decision on the Group’s claims regarding rail franchise disqualifications could have a bearing on earnings. Accordingly, the estimated range of adjusted earnings per share remains subject to change for these and other factors.

Separately disclosed items – We expect to report a number of ‘separately disclosed items’ in respect of the year ended 2 May 2020 in addition to the separately disclosed items reported for the half-year ended 26 October 2019. In particular:

• We are assessing assets for impairment and reviewing for onerous contracts, taking account of the effects of the Covid-19 situation. We currently estimate expenses of no greater than £25m for such items.

• We are re-assessing the fair value of the deferred payment instrument arising from the sale of the North American business, which was valued at £22.3m as at 27 April 2019. Covid-19 has adversely affected the fair value of the instrument.

• As we explained in our announcement of 3 April 2020, a consequence of the Covid-related reduction in vehicle mileage is that certain previously hedged cash flows for fuel consumption are no longer expected to occur. In relation to that, we anticipate that estimated separately disclosed items of around £14m will be recognised as expenses in the consolidated income statement.

• We anticipate reporting a tax credit of around £3m in respect of tax losses relating to expired rail franchises.



Capital expenditure – In our statement of 23 March, we outlined a number of actions we had taken in response to the impact of the Covid-19 situation on the business. Those management actions include reducing our capital expenditure. Prior to Covid-19 having an effect on the business, our capital expenditure plans for 2020/21 envisaged around £105m of cash capital expenditure and around £38m of new leases. In our statement of 3 April, we indicated that we had scaled down the planned expenditure to around £40m of cash capital expenditure and around £20m of new leases. Recognising our strong liquidity position, we have since revised that cash capital expenditure up by around £14m, principally to acquire additional vehicles available for delivery in the short-term.

Outlook – With the continuing uncertainty of the Covid-19 situation and the UK's recovery, it remains difficult to reliably predict financial performance for the new financial year ending 1 May 2021. In the short-term, the actions we have taken and the continuing support of government should ensure we continue to generate positive EBITDA and avoid significant operating losses, and we are working to re-build profitability over time. Despite the immediate challenges and risks ahead, over the longer term we believe our business and our transport markets continue to have strong fundamentals. As a major public transport provider and Britain's biggest bus and coach operator, we have opportunities to grow our business and contribute to thriving communities. We continue to believe that by working together, the private sector and our local authority partners can deliver the public transport services our customers want.”

Lifting restrictions

• In Israel, cafes and restaurants have reopened. Venues will have to comply with new restrictions, including positioning tables at least 1.5m (5ft) apart, taking customers’ temperatures and using only disposable menus.

• Officials have announced that parks and green spaces in Mexico City will reopen to a third of their capacity from 1 June. Officials are also planning to create new bike lanes to encourage residents to cycle instead of using public transport.

• The lockdown in Switzerland will be eased even further. As of Saturday, groups of up to 30 people can meet, rising from five currently.



Other

• Contact tracing in the UK starts today. 25,000 tracers working for England's NHS Test and Trace team will start by contacting the 2,013 people who tested positive for the virus on Wednesday. Tracers will text, email or call people who test positive with coronavirus and ask who they have had contact with. Any of those contacts deemed at risk of infection will be told to isolate for 14 days, even if they are not sick. Those who have already had the virus will also be asked to self-isolate. The aim of the system is to lift blanket lockdown restrictions and move towards more localised, targeted measures.

• The US Labor Department has announced that 2.1 million more Americans filed for unemployment benefits in the last week.

• English Premier League clubs have unanimously voted to resume full-contact training, with the hope of resuming the competition in June.

• Cyprus has pledged to cover the holiday costs of anyone who tests positive for the virus after travelling there.

• Scotland will move to phase one of a four-step plan to ease out of lockdown, First Minister Nicola Sturgeon has announced. From Friday, you should be able to meet another household outside in small numbers. Sunbathing is allowed, along with some outdoor activities such as golf and fishing. Garden centres and drive-through takeaways can reopen, some outdoor work can resume, and childminding services can begin.

• Gatwick Express – the fast rail service between Gatwick airport, London's Victoria Station and Brighton – has been suspended ‘until further notice’ due to a sharp fall in the number of passengers at the airport.

• In France, nearly 850,000 people became jobless in April, raising the total to more than 4.5 million.

• The number of passengers arriving in the UK by air in April was down 99% on the same month last year, according to a Home Office report.

• ONS says 79% of businesses in the UK have applied for funding under the job retention scheme.

• E.ON CEO, Johannes Teyssen, says there has been a 10% fall in power demand from most European countries.

• The Premier League season is set to restart on 17 June with Aston Villa v Sheffield United and Manchester City v Arsenal, the matches being the two games in hand. A full fixture list will then be played on the weekend of 19-21 June. There are 92 fixtures still to play.




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