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Headlines
• France plans €100bn stimulus
• US unemployment registrations fall from 1m to 881k
• Amazon to create 7,000 UK jobs
• Costa Coffee warns up to 1,650 jobs are at risk
• Spain to carry on furlough scheme ‘indefinitely


Company news

Financial
• CMC Markets – “The group’s consistently strong trading performance across the business has continued, with net operating income run rate for the two month period only slightly below Q1 2021, and client income has continued to be in excess of the same period in the prior year. In addition, client income retention has remained particularly strong and well in excess of the guidance of above 80%. The stockbroking business also continues to perform strongly.
As a result, the board is confident that with the strong underlying performance and diversity of the business, FY 2021 net operating income will exceed the upper end of current market consensus.
The higher revenue performance since the start of the financial year has been driven by existing clients trading more as well as the platform continuing to attract new clients. This has led to an increase in variable operating costs, predominantly driven by higher client onboarding costs and the more efficient acquisition of new clients.”


Food, Drinks & Household
• Headlam – “Trading post the period-end has been pleasing given the economic backdrop. July 2020 revenue was above that of July 2019, driven by a strong residential sector performance, and August 2020, which is traditionally more weighted to commercial sector activity primarily related to refurbishment in the educational sector, being only marginally below the prior year. Additionally, as referenced above, cash collections are continuing to exceed expectations.
Given the company’s limited visibility on order book, it is difficult to predict the revenue profile and financial performance for the second half of the year. Historically, the company’s trading activity is second-half weighted, with the most important trading period being the fourth quarter, when redecoration in residential accommodation occurs in the run-up to the Christmas period. Notwithstanding that overall demand is typically influenced by the general economic environment, should there be a substantial resurgence of Covid-19 that further disrupts the economy this would have a negative impact on revenue and thereby profit. However, as detailed within this announcement, the company has already undertaken mitigating actions and has others in place to help limit the downside should this happen, including the lowering of the cost base through the Operational Improvement Programme.”

Healthcare
• Sensyne Health#– “Sensyne has signed its first agreement with Chelsea & Westminster Hospital NHS Foundation Trust for an algorithm produced by the SENSE system. The algorithm, called SYNE-COV, aims to provide more personalised care for patients with Covid-19, integrating data into an existing real-time dashboard allowing clinicians to augment their clinical decisions with near real time risk prediction for three outcomes: risk of ICU admission, the need for mechanical ventilation and in-hospital mortality.”

Industrials
• Melrose Industrial – “As the July update made clear, the group has faced numerous challenges presented by the global outbreak of Covid-19 and this is reflected in these results. The decision to favour cash generation over profit in 2020 has been highly successful in not only protecting but building further headroom in our committed bank facilities to just under £1.2bn, with cash in hand of a further £339m. It was a significant achievement by our businesses to generate over £200m of cash, before restructuring spend, in this period.
As we announced on 4 August, an agreement has been reached with our banking syndicate to amend our banking facilities to reset the financial covenants for a further two years, which will provide us with the time and the flexibility to make the changes needed to create value in our businesses. Once again, we thank them for their support.
This balance sheet strength has allowed us to commence the reshaping of our businesses according to their new market realities and good progress has been made already. Managing significant reorganisations against difficult market backdrops has always been part of the fundamental Melrose skill set. We demonstrated this with the FKI acquisition at the time of the 2008 financial crisis and we are confident of doing this again with the GKN businesses.
While GKN businesses are focused on reorganisations, Nortek Air Management has navigated the challenges of the first half very successfully. The delivery of their market leading StatePoint cooling systems is on track and is generating significant interest in their wider data centre applications, boosting their pipeline of projects. We are excited about their potential. The Board will review strategic options for this business in early 2021.
Pleasingly, trading for our Automotive, Powder Metallurgy and key Nortek Air Management businesses since the end of the period has been at the higher end of our expectations, with the USA and China continuing to show recovery and Europe also improving. Whilst we cannot be certain this will continue the signs are currently positive. Unfortunately, GKN Aerospace is yet to see the same positive signs of improved trading since the end of the Period.”
• Severfield – “Despite the current ongoing market uncertainty, the strength of our order book, our encouraging pipeline of opportunities, our strong balance sheet position, our expertise in managing complex projects and our long-standing client relationships enable us to feel cautiously optimistic in our outlook for the 2021 financial year.”

Leisure
• PPHE Hotel Group – “Since reopening, the group has noted that the first segment to return is domestic leisure travel or travel from surrounding countries, with strong weekend demand experienced in Amsterdam and London in particular with its flagship hotels reaching occupancy levels of 80%-90% on weekends. The current customer mix includes couples, groups of friends, guests visiting friends and family and families with children.
The period of reopening for the group coincided with the leisure season and as a result, visibility on the recovery of the business travel segment is more limited. To fully capitalise on leisure demand, the group entered into an exclusive partnership with Merlin Entertainments, offering guests attractive package options.
Due to the sudden impact that lockdowns, quarantine measures and restrictions may have, customers tend to make last-minute buying decisions, typically giving preference to flexible booking conditions.
Customers welcomed at our properties since reopening value our stringent health and safety protocols and we will continue to adapt our operations and offering accordingly to changes in customer preferences and health and safety guidelines.
Following property closures in Q2, the group has in July reopened most of its properties, albeit many continue to operate with limited services due to social distancing guidelines. It is currently operating 84% of its 45 properties across Europe (with Hotel Brioni closed for repositioning), with many of the hotels outperforming their local markets in July.
As hotels have reopened, the group’s strategy has been to rebuild momentum and optimise occupancy, offering guests attractive and fully flexible rates with a view to building the average room rate as guest confidence returns, travel restrictions ease and international travel resumes, resulting in an increase in the level of enquiries on long lead-time bookings.
In the United Kingdom, government restrictions on hotels were lifted on 4 July and the group started to reopen its properties. Currently, eight out of the group’s ten UK hotels are in operation. In the Netherlands, as of June the group is operating five out of six hotels. The group’s operations in London and Amsterdam, core markets for the group, have outperformed the market since reopening.
In Germany and Hungary, all eight hotels have resumed operations. In Croatia, three hotels, one resort and all campsites, including the repositioned Arena Grand Kažela Campsite, reopened in May and June, with operations aligned to actual and expected guest volumes and current market dynamics.
Four Croatian hotels and resorts remain closed, including Hotel Brioni, Pula, which is currently going through a repositioning programme. With the summer season coming to an end in Croatia, the group continues to carefully monitor the impact that recent travel restrictions may have on trading.
All of the group’s operations strictly adhere to the relevant local and the World Health Organisation advice, as well as the group’s new health and safety programmes launched to protect guests and team members’ safety – “Reassuring Moments” by Park Plaza and “Be bold, be creative, be safe” by art’otel.
The group is closely monitoring changes to government support, border controls and quarantine rules in the respective regions, and it continues to adapt to market conditions in a manner that preserves cash, long-term growth prospects and is mindful of the culture and values of the group.
Given the fast-moving nature of the Covid-19 pandemic and the resulting ongoing uncertainty regarding disruption to the hospitality industry and our markets, it is not possible to provide meaningful guidance for the current financial year.
However, during this challenging period the group has demonstrated its ability to adapt quickly to changes in the external environment. This agility, combined with the broad appeal of the group’s products, its strong relationships and the implementation of various measures to protect its cash position, ensure that the group is well-positioned to not only withstand a continued and significant decrease in business activity, but also to take full advantage of the recovery in each of its markets as and when this commences.”
• Revolution Bars# – “The group had reopened 18 bars by the end of July, and as of Monday 25 August 2020, 39 bars were trading. Trading in the period since reopening has been ahead of the board’s expectations, in part as a result of the Eat Out To Help Out (“EOTHO”) scheme. Comparable venue sales in the eight weeks to 29 August 2020 were 72.5% of last year. In the first four weeks of the period (to 1 August 2020) comparable venue sales were 60.0% of last year but in the last four weeks (to 29 August 2020), during which time the EOTHO scheme has been operating, comparable venue sales were 77.5% of last year. EOTHO has been a big success in the last four weeks, driving Monday to Wednesday comparable venue sales to 188.4% of last year.
These comparable venue sales performances are higher than indicated in the ‘Fundraising, Proposed Delisting and AIM Admission’ announcement issued on 5 June 2020, which referred to a base case scenario of venues reopening in August and delivering% of prior year sales, with only marginal improvement in September and October. As a result of the positive response to the EOTHO in August, the group announced last week that it would continue to run EOTHO at its own cost at least through September.
A further 10 bars have opened this week and a further 13 are currently planned to reopen on Monday 7 September 2020. This leaves 11 bars that are unlikely to reopen until social distancing restrictions are further relaxed. The group has agreed to surrender the lease of Revolution Liverpool – Cavern Quarter effective 30 September 2020, and consequently this venue will not reopen.
The group remains focused on reducing costs whilst trade is constrained by social distancing restrictions. The board is grateful to the support of landlords at 23 of its venues for granting rent waivers to share the burden of rent through this difficult period in accordance with the UK Government’s Code of Practice. The Board believes that ongoing discussions with landlords at 16 other venues could reach an acceptable outcome before the September quarter date, but is disappointed that almost half of its landlords have refused to enter into meaningful discussions at this time.
Senior management’s priorities remain reopening venues and operating responsibly to ensure the health and safety of both staff and customers and attempting to engage with landlords in a meaningful way to resolve the outstanding rent issues. This, together with the gradual process of bringing central support team members out of furlough as venues reopen and the logistical challenges of a remote audit process, means that the preliminary announcement of the annual results is not expected to take place until the end of November 2020. The Company will announce a definitive date for the preliminary announcement in due course.”

Support Services
• MPAC – “All facilities have remained open during the pandemic and no orders have been cancelled. Some prospective projects in our sales pipeline, which were expected to be secured in the first half of 2020, have been delayed due to the pandemic. However, as the essential Healthcare, Pharmaceutical and Food and Beverage sectors are expected to be broadly shielded from the impact of the economic crisis, we believe that we are well positioned to continue to meet our longer-term strategic growth objectives. A review of our current prospects indicates that approximately 75% are associated with essential consumer products.
The financial performance in the first half of the year was sound, positive cash was generated and we enter the second half of the year with a good-quality and robust order book, underpinned by long-term growth factors in our target markets.
The group has both the financial and managerial resources available to develop its business, with the prime focus being on organic growth, through leveraging of its global position, development of its products and most particularly through an improved service offering to its customers. In conjunction with this, we are looking at a number of acquisition opportunities, which will be complementary to the group’s existing operations.
We anticipate that current general market uncertainty will remain for the foreseeable future and whilst the current order book and prospect pipeline provide assurance for trading in the short term, the longer-term outlook remains difficult to predict. We are, however, well placed, serving markets with good underlying demand and therefore the Board believes that the group’s long-term prospects remain positive.”
• RPS Group – “Q1 2020 started well as we continued to make solid progress against our strategic priorities in building a resilient, sustainable business with significant upside. In March we acted quickly and decisively to counter the impact of the Covid-19 pandemic. As a result, we had a strong H1 cash performance and have significant headroom on our debt facilities.
Looking ahead, our businesses serving government and quasi-government organisations have strong order books. Those servicing the private sector are well positioned to recover when lockdown and travel restrictions ease. The disruption of Covid-19 will continue into the second half of the year but we believe that we will see some recovery. While the pace of recovery is uncertain, we will continue to demonstrate the resilience of our business by managing the uncertainty and taking advantage of opportunities as they arise.
With a strong cash position and significant available debt facilities, RPS is well placed to deal with the challenges that the continuing effect of Covid-19 will bring, although as the working capital benefits of H1 unwind and as the group returns to growth, it will start to absorb working capital. The diverse nature of RPS, coupled with our expertise and global reach, positions us well for any recovery in our end markets. We remain focused on building a business that can deliver mid-single digit rates of organic growth and a double-digit operating margin in the medium term and are confident about our ability to do so.”

Technology
• Kainos – “Further to the 27 July 2020 trading update, trading in the period continues to be resilient across both business areas, supported by long-term customer relationships and diversified revenues across customers, end markets and geographic regions. As such, the company expect results for the full year ending 31 March 2021 to be in line with consensus forecasts.
Growth in Digital Services continues to be driven by demand within the NHS and Public Sector, where we continue to demonstrate our strength as a key supplier in the UK Government’s digital transformation programme.
Within the Workday Practice, we continue to benefit from the geographic spread of the business, securing significant new consulting contracts nationally and internationally. Smart, our Workday automated testing platform, continues to win new clients and drive very strong growth.
Notwithstanding this strong performance, a robust pipeline and significant backlog, we remain mindful of the current economic disruption caused by Covid-19. We maintain a close dialogue with our customers and partners, and continue to pay careful attention to the impact that Covid-19 related disruption may have on them.”
• NCC Group# – “Parts of our customer base have been impacted by uncertainty, financial pressures or logistical issues. Consequently, we have observed procurement cycles lengthen and become less predictable. In some of the more affected sectors, including Leisure and Entertainment, we expect some customers to postpone work for 12 months or more
The long-term growth prospects for the cyber resilience market continue to be excellent as the connected environment and society’s dependence on that connected environment continue to grow
Against this backdrop:
• Our trading to date has been slightly ahead of the same period last year, albeit last year was a soft comparator period and the start of this year has been boosted by some exceptional M&A support engagements
• The range of outcomes for the full financial year remains unusually broad and depends, in particular, on the speed and timing with which our customers’ buying patterns return to normal In the medium term, our financial objectives remain the same as last year: to achieve double-digit revenue growth with margin improvement in Assurance and to return Software Resilience (Escrow) to sustainable growth.”


Other
• The US Centers for Disease Control and Prevention (CDC) have told health officials that a Covid-19 vaccine could be ready for distribution to certain groups by the start of November, according to media reports.
• Low-deposit mortgage deals available to borrowers have fallen. Borrowers able to offer 10% of the value of a home as a deposit could have chosen from 779 deals at the start of March; they now have approximately 60 choices, data from Moneyfacts shows.
• The number of coronavirus infections are back to levels seen in March, according to the head of the European Union’s public health agency.
• Some 41% of working mothers in England with children under 10 cannot get – or are unsure whether they will get – enough childcare to cover the hours they need for work this September, according to a poll published by the Trades Union Congress (TUC). The survey for the TUC found that as term restarts, many mums are unable to access their usual forms of childcare. It found:
• 45% don’t have their usual help from friends and family;
• 35% cannot get places at after-school clubs;
• 28% have lost childcare provided by school breakfast clubs; and
• The same proportion do not have their usual nursery or childminder available.
• Spain’s ERTE furlough scheme will be extended for “as long as is necessary”, Labour Minister Yolanda Díaz said today.
• Greece’s GDP shrank 14% between April and June, marking the steepest quarterly contraction in at least 25 years.
• France plans to spend €100bn to stimulate its economy. The stimulus equates to 4% of GDP, meaning France is ploughing more public cash into its economy as a percentage of GDP than any other big European country. The stimulus package earmarks €35bn to make the economy more competitive, €30bn for more environmentally friendly energy policies and €25bn for supporting jobs, officials said.
• Data released by the Australian Bureau of Statistics on Thursday showed the international trade surplus of goods and services almost halved in July to $4.6bn, from $8.1bn in June. This was the result of a 4% fall in exports in the month, compared to a 7% surge in imports.
• The Australian Industry Group/Housing Industry Association construction performance index fell 4.8 points to 37.9.
• Nearly 11% of UK shops remained vacant in July, compared with 9.8% in January, with the number of empty premises rising in six out of ten UK regions, according to retail analysis firm Springboard. Greater London suffered by far the worst blow, with empty shops increasing by nearly two-thirds.
• Amazon is taking on 7,000 permanent staff in the UK and recruiting 20,000 seasonal workers as it gears up for a busy festive season. The new recruits, including engineers, IT specialists, warehouse workers and health and safety experts, will work across more than 50 sites, including Amazon’s corporate offices and two new delivery warehouses, which will open in the autumn in Durham and Sutton-in-Ashfield, Nottinghamshire.