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Headlines

• Disney to lay off 28,000 employees

• Shell to cut up to 9,000 jobs

• The Air Transport Action Group says 4.8m jobs under threat

• ONS revises UK GDP fall in Q2 from 20.4% to 19.8%

Company news

Food, Drinks & Household

Compass Group – “Performance in North America improved as clients in Education began to reopen for the school year and Business & Industry slowly started to recover. Healthcare remained strong, whilst our Sports & Leisure business was still closed.

We have made some changes to our management structure in Europe. As of the fourth quarter, our Middle East business has been managed within our European business.

In Europe - now including the Middle East - we saw continued good performance in Healthcare and a meaningful increase in clients reopening in both Business & Industry and Education across the region. Our Sports & Leisure sector remained mostly closed.

In Rest of World – now excluding the Middle East - we saw an improvement in Education in our Asia Pacific business, however we did not see a material change in reopening rate in the rest of the sectors around the region.”

Healthcare

Sensyne Health# – “The group made adjusted operating losses before tax for the year ended 30 April 2020 of £16.0m (2019: £11.5m) and had cash balances at 30 April 2020 of £31.7m (2019: £49.3m) with an underlying cash burn during the year of £17.6m (2019: cash inflow of £44.7m following an IPO that raised net proceeds of £61.8m). In assessing the appropriateness of the going concern assumption, the Board has considered the availability of funding alongside the possible cash requirements of the group and Company, taking into account the unprecedented circumstances caused by the Covid-19 pandemic.”

Industrials

Qinetiq – “In the second quarter we successfully shifted focus to driving our recovery performance, having taken decisive action as we entered the Covid-19 crisis to build the resilience of the company to protect critical skills and capabilities and drive medium- to long-term growth. Order intake throughout the first half continued to be particularly strong. Our focus on recovery delivered good revenue and profit performance during the second quarter resulting in us finishing close to our original targets, despite Covid-19 impact in the first quarter. Cash performance was also strong due to our proactive and robust cost management actions. As we enter the second half, we are now renewing our focus on driving sustainable growth, whilst being mindful of the potential risk of further impact due to the pandemic.

On 1 April 2020 we announced the postponement of the decision on the dividend and the withdrawal of guidance until later in the year when there would be greater clarity. Having successfully managed to reduce the impact of Covid-19 on the group and with normal operations resuming, we have started to release some of our short-term resilience actions including senior leader salary reductions and limited company-funded furlough. We therefore announce today the Board’s decision to pay the deferred final dividend from FY20 as well as the reinstatement of guidance.”

Media

• M&C Saatchi – “We are now nine months into the 2020 financial year and are encouraged by the resilience of the business, operationally and financially, in the face of the Covid-19 pandemic.

Further to its trading update on 27 August 2020, the company has continued to trade well and profitably in the second half of the year. New business and client retention have been strong across both geographies and disciplines.

The performance is considerably stronger than anticipated at the outset of the Covid-19 pandemic.”

Time Out – “The group’s net revenue decline of 36% to £15.8m (2019: £24.7m) was primarily driven by Media, as travel and leisure advertising campaigns were postponed, resulting in the temporary suspension of all print editions. Market revenue YoY is not comparable as new markets first opened in May 2019. The prior period principally comprises the operation of Time Out Market Lisbon.

As expected, adjusted EBITDA decreased sharply due to the fall in revenue. In response to the impact on trading the group took action to manage the impact on cash. All 2020 salary increases were reversed, all 2020 bonus schemes were cancelled, up to 30% of staff were furloughed across the group and the senior management team took a temporary pay cut of 25%. Within the Market division immediate cash savings were identified through a focused review of contracts, with all non-essential spending suspended and all material lease agreements reviewed with the landlords to secure rent deferrals. The group successfully completed an equity placing raising gross proceeds of £47.1m to strengthen the balance sheet and all capital expenditure related to the Time Out Market roll-out has been delayed until 2021.”

Retail

boohoo – “Group revenue growth for the year to 28 February 2021 is expected to be 28% to 32%, up from approximately 25% as previously guided, with adjusted EBITDA margin for the year at around 10%, increased from the 9.5% to 10% as previously guided. The group has made a good start to the second half of the year, with momentum continuing into September. At this stage we feel it is prudent to continue to plan for a period of economic uncertainty in the second half of the financial year, including possible reduced consumer spending. It is also prudent to plan for return rates returning to normal levels, continued near-term carriage inflation in some of our overseas markets and increased marketing spend likely in the second half. Capital expenditure is expected to be higher than previously anticipated, in the region of £80-100m, reflecting the step-up of investments into automation at our Sheffield facility, further expansion of existing automation at the Burnley facility and significant IT projects to support the growth of the business and improve efficiency.”

N Brown – “Product revenue trajectory has continued to improve through the second quarter from the sudden and significant decline experienced in the first quarter as Covid-19 lockdown restrictions were introduced. Apparel sales have continued to recover from mid-March levels and demand for Home & Gift, supported by the launch of our new Home Essentials brand on 1 April, continued to be well above the prior year. All Womenswear and Menswear brands performed better in the second quarter, in particular JD Williams and Jacamo.

As expected, lower product revenue, regulatory changes and a smaller debtor book resulted in lower Financial Services revenue. A very small number of customers required forbearance as a result of FCA Covid-19 guidance and as at 29 August 2020 less than 1% of debtor balances remained on a Covid-19 related payment holiday, down from a peak of 3% in May 2020.”

Topps Tiles# – “Retail trading over the fourth quarter remained strongly positive and reflected both a robust home improvement market and the strength of the Topps business model. Retail like-for-like sales grew by 16.5% in the 13 weeks to 26 September 2020.

The strong finish to the year, with the Retail like-for-like sales performance being robustly ahead of the comparative period, gives the board confidence that the group will generate a modest level of adjusted profit before tax for the 52 weeks ended 26 September 2020.”

Support Services

• Andrew Sykes – “Our main hire and sales businesses in Europe had mixed fortunes. Turnover at Andrews Sykes Hire in the UK improved by 4.8% compared with the same period in 2019. However, our businesses in the rest of Europe were significantly affected by a combination of the coronavirus pandemic and mild weather. Consequently, the combined operating profit for these businesses in the first half was £1.0m below the level achieved in 2019.”

• Gama Aviation – “Q3 trading to end-September was stable and in line with management expectations. Encouraging pipeline for special missions contracts and improved demand levels at the Bournemouth UK facility for jet and turboprop engineering activities.

Recognising the uncertainty inherent in the ongoing pandemic, underlying performance in the second half is expected to be broadly similar to the first half, however results will be impacted by reduced government support.”

• Studio Retail – “The active customer base has grown by 15% in the last 12 months, currently standing at 2.1m customers, of which just under 1.4m customers have an active credit account.

Online sales now represent over 90% of total orders, with the Studio App having been downloaded more than 700k times in under a year since its launch. YoY online growth in our Home & Leisure ranges in FY21 has been 80%, with online Clothing & Footwear sales growing by 22% despite an active decision to de-risk more seasonal clothing ranges at the start of lockdown. We did see some decline in our legacy telephone and written ordering channels but these now account for less than 10% of the business.

The de-risking of clothing ranges allowed us to exit the Spring/Summer season with a clean stock position. The impact of this, alongside mix effects across the overall product ranges, led to the margin rate achieved in H1 being broadly flat against the prior year.

The value of credit receivables eligible for securitisation funding has grown by 16% over the last year, so we are pleased to have recently agreed an increase of £25m in the securitisation facility, which now stands at £225m committed until the end of December 2022. Financial services revenue has grown by c.5.5% in H1 and we have yet to see a material change to the collections performance, although we continue to anticipate more challenging conditions for our customers later in the year or early 2021. As a result, our liquidity remains strong and well ahead of normal seasonal patterns.

The peak trading period of Q3 covering Black Friday and Christmas is still ahead of us, which historically accounts for around 40% of the full year’s product sales. Notwithstanding the inherent uncertainties that continue to be presented by Covid-19, we currently expect the adjusted profit before tax from continuing operations (including the impact of IFRS 16) for FY21 to be ahead of our previous internal expectations.

Findel Education has seen its trading performance return to normal seasonal levels in recent weeks. We are continuing to support YPO in achieving clearance from the Competition & Markets Authority for the sale of the business and the parties have agreed to extend the longstop date within the sale agreement to 11.59pm on 30 October 2020.”

Technology

Quixant – “Gradual improvement in Gaming division revenues since venues began to reopen in May, with early signs of recommencement in orders and deliveries and new business wins early in the second half. Leveraging our strong customer relationships to seek new opportunities, which will drive the recovery of Gaming division revenues.

Densitron remains resilient despite Covid-19 and we expect to post growth in the broadcast and medical markets in 2020.

Expect a return to profitable trading in the second half, offsetting some of the reported loss experienced in the first half, with this recovery continuing into 2021, excepting the impact of any further widespread global lockdowns as a result of Covid-19.”

• Sumo – “Market backdrop is extremely positive, with increased growth in the numbers of people playing video games due to the Covid-19 lockdown and demand for high quality, interactive content is very strong

Further increase in headcount to 853 at 31 August 2020, largely achieved by remote interviews

Actively pursuing further acquisition opportunities

Significant weighting of results expected in H2 20, as in prior year

Strong visibility with nearly 88.9% of forecast development fee revenue for FY 20 contracted or near-contracted.”

Travel & Leisure

• 888 Holdings – “Covid-19 has also had a material impact on the lives of our customers across many global markets. Restrictions on people’s movements and leisure activities has accelerated the ongoing structural shift towards online services across multiple consumer-facing industries. As a purely online operator, 888 remains well positioned to continue to benefit from this shift.

We recognised early in the Covid-19 pandemic that, with people spending more time at home and with potentially increased levels of stress, our vigilance on safe gambling and preventing gambling-related harm was even more important than ever. The group acted swiftly in accordance with this responsibility as follows:

We proactively introduced new algorithms to our Observer system – our proprietary software which monitors every customer’s deposits, withdrawals, bets, and communications to identify behaviours that may be a potential risk. These new features identified and flagged potential warning signs as a result of increases in a customer ’s activity during the lockdown period and, where relevant, prompted intervention from our expert safer gambling team.

We ensured that no customer communications included incentives that may be related to Covid -19.

We conducted a programme of targeted communication to ensure our customers continue to enjoy safe gambling across our brands. This has involved proactive emails to all customers about how to stay in control of their gambling during the lockdown period.

We re-launched our “Too much is too much” safer gambling campaign on social media to continue to develop awareness to the risks associated with excessive gambling.

During H1, we significantly increased the volume of interactions our safer gambling team initiated with customers and more than doubled the number of accounts upon which we placed restrictions in order to protect customers ’ wellbeing. This reflected our more cautious approach to monitoring player affordability.

At a global level, we continue to pool learnings from around the world to deliver a safe environment for our players. In addition, we have fully complied with special measures brought into effect by regulators in Spain and Sweden during the pandemic.

In the UK, we temporarily froze all bonus offers to any customers who are displaying indicators of harm and prevented all customers from reversing withdrawals from our sites. In addition, our safer gambling team has conducted an ongoing review of relevant customers to ensure that they continue to gamble safely and that their financial situation has not altered since the beginning of the pandemic. ”

City Pub Group – “The group owns and operates 48 trading pubs and has four sites in development. Most of our pubs have outdoor seating spaces and are not located in shopping centres or in areas surrounded predominantly by offices. On 4 July 2020, when the pubs could reopen, 24 of our pubs did so, which gradually increased to 37 as of today’s date.

Since lockdown, we are now achieving sales of around 80% of last year for those pubs that have re -opened. Given the lack of large bookings, sporting events, other entertainment and reduced opening hours, this has been an incredible performance. In addition, the group has improved gross profit margins by having less suppliers, and improved operating margins due to having less labour and overhead costs, as well as reductions in head office costs. This excellent performance has delivered profitable, positive cash flows, allowing us to maintain our strong financial position. ”

• Everyman Media – “Began phased reopening of venues from 4 July, with all venues opened by 21 August

Opened new venue on King ’s Road, Chelsea, on 24 July and Lincoln on 21 August, both of which have performed strong enough to place in the top half of our portfolio

Following reopening, performance indicators have been encouraging:

• Admissions at c.40% level of same period in 2019

• Average food and beverage (‘F&B’) spend of £10.55, up 41% on the same period last year

The release of Tenet in August demonstrated continued demand for great content in a cinema setting, with Everyman achieving a 10% market share, and UK Box Office for the film in line with other similar releases preCovid-19.”

Other

• Walt Disney has announced it will lay off 28,000 employees, mostly at its US theme parks. Disney cited the parks’ limited visitor capacity and uncertainty about how long the coronavirus pandemic would last, as reasons for the layoffs.

• New York City Mayor Bill de Blasio says anyone refusing to wear a mask in public could face fines of up to $1,000.

• Breast Cancer Now estimates that a total of 986,000 women across the UK missed their mammograms due to breast screening programmes being paused. The charity calculates that around 8,600 women who have not had a scan have undetected breast cancer. The scanning programme is running again, but social distancing measures have reduced capacity.

• The ONS has revised the fall in UK GDP in the second quarter from an earlier estimate of 20.4% to 19.8%, while updated figures also showed a steeper contraction of 2.5% between January and March. It previously estimated that GDP fell 2.2% in the first quarter.

• Spain’s health ministry has agreed lockdown terms with Madrid officials that will apply to all cities of more than 100,000 people. Citywide restrictions will be enforced where cases top 500 per 100,000 of the population, the rate of positive tests reaches 10%, and over 35% of intensive care beds full. Madrid has hit all those limits.

• Norway will allow most amateur team sports to resume and larger crowds at matches in mid-October, as the government eases nationwide restrictions.

• The Air Transport Action Group (ATAG) predicted that the travel slump and a slow recovery will threaten 4.8 million aviation workers and more than half of the 87.7 million total jobs supported directly or indirectly by the sector, in related leisure industries and supply chains.

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