header
search-icon
mobile-menu-icon search-icon

RESEARCH

Clients can browse and search the Peel Hunt research library and archive.

TRADING

A tool for our clients to submit and manage orders with Peel Hunt. 

REGISTER FOR OUR RESEARCH PORTAL

Thank you, your registration has been received.
We will be in contact with you shortly.

I'm interested in (tick all that apply)

SEARCH

PEOPLE
SERVICES
NEWS

Advisory and broking services to UK mid & small-cap companies

Comprehensive coverage of over 350 companies

Investment ideas and execution for institutional investors

Complete UK pricing coverage and worldwide access

Our joined-up approach allows us to consistently deliver value

A wealth of experience, strong collegiate ethos underpinning our joined-up approach

Our principles define the relationship between our people, our departments and our clients

We are committed to making a difference in the communities we live and work in

An environment committed to the development of our colleagues

An internship programme for undergraduates as part of their study

Insight Image

Ocado today reported 40% growth in retail sales since the start of March. Growth was expected to accelerate but the rate of progress is a surprise, demonstrating both the scale of demand and Ocado’s ability to step-up capacity. Many people will be new technology adopters or materially increasing their online footprint. Consumer behavioural changes are likely to accelerate more, the longer restrictions remain. Some changes will be obvious, others more subtle. As lockdowns across the globe begin to lift it will be interesting to see what consumers hold onto.
Headlines

• The UK has the most total deaths in Europe but behind Belgium, Spain and Italy, in per capita numbers.

• The White House has reversed its decision to wind-up the Covid-19 task force.

• In India more than 120 million jobs have been lost.

• Boris Johnson pledges to reach 200,000 lab tests per day.

• Schools reopen in China's virus epicentre Wuhan.

• One million under-25s “face unemployment” in the UK (Resolution Foundation).

Company news

Financial

Metro Bank – “During this challenging time for the UK our priority remains supporting our customers, our colleagues and our communities. All our stores have remained open. Colleagues are working with customers whose personal or business finances have been impacted to ensure they benefit from the most appropriate support. The bank has also put in place new processes for more vulnerable customers to access cash and dedicated times to call. The business has proved its resiliency, with digital services and back office functions continuing to perform well throughout.



Covid-19. The bank is supporting customers' requests for repayment holidays, participating in the Coronavirus Business Interruption Loan Scheme and applying to participate in the Bounce Back Loan Scheme.

The impact of Covid-19 has been, and continues to be, rapidly evolving and difficult to predict with any certainty. An update on the impacts of the pandemic and its economic consequences will be provided at the H1 results.”

OneSavings Bank – “Today issues its trading update for the period from the 1st January 2020 to date.



Highlights

• Organic originations of £1.5bn in the first three months of 2020 (Q1 2019 statutory: £799m for OSB and £710m for Charter Court Financial Services Group (‘CCFS’)).

• Underlying1 net loans and advances increased by 5% in the first quarter, excluding the impact of structured asset sales. On an underlying1 basis, after structured asset sales, net loans and advances as at 31 March 2020 remained unchanged at £18.2bn (31 December 2019: pro forma underlying2 £18.2bn). On a statutory basis, net loans and advances were £18.4bn (31 December 2019: £18.4bn).

• Underlying1 and statutory retail deposits of £16.3bn as at 31 March 2020 (31 December 2019: pro forma underlying2 £16.2bn, statutory £16.3bn).

• Underlying1 net interest margin (‘NIM’) for the first three months of 2020 broadly flat to full year 2019 pro forma underlying2 NIM of 266bps.

• On a pro forma basis the CET1 ratio would have been 17.2% as at the end of December 2019 (reported 16.0%), after removing the final dividend and reducing risk weighted assets (‘RWAs’) by c. £287m relating to structured asset sales in January 2020.

• Strong operational resilience across both the UK and India.



1. Underlying refers to results and ratios which exclude exceptional items, integration costs and other acquisition-related items arising from the Combination with CCFS.

2. Pro forma underlying refers to ratios and results which assume that the Combination with CCFS occurred on 1 January 2018 and include 12 months of results from CCFS and exclude exceptional items, integration costs and other acquisition-related items arising from the Combination with CCFS.

Operational resilience – Our current priority is to assist our customers to the best of our ability through the coronavirus crisis, and it is paramount to protect the safety and wellbeing of our employees. More than 75% of our employees, including 85% in India, are currently working from home, supported by appropriate technology. Our small branch network remains open, and those who work in offices are doing so under strict distancing protocols. In India, we have been granted a number of Government licences for critical staff to attend offices in three locations, further enhancing our operational resilience.

As expected, the Group saw an increased level of enquiries relating to both mortgage and savings products as soon as the crisis began. Resources were redeployed to best respond to additional call volumes from mortgage borrowers requesting our assistance in providing payment holidays. We are pleased with how quickly we were able to act, and mortgage call volumes have now reduced to normal levels.

Integration – We are making good progress on the integration with CCFS. There are detailed plans for each workstream in place with a number of them already completed. An early success is the integration of the capital markets team, who delivered three successful securitisations and two remunerative structured asset sales during the first quarter.

Capital and liquidity – A strong capital and liquidity position is crucial in the current uncertain economic environment in order for us to maintain our position as a leading specialist lender and to continue to support all of our stakeholders.

OSB entered 2020 with an extremely strong CET1 ratio of 16.0% (pro forma CET1 of 17.2% as at 31 December 2019, after removing the final 2019 dividend and reducing RWAs by c. £287m relating to structured asset sales in January 2020).

The Group remains highly liquid and in March took early action to increase liquidity given the uncertain economic outlook, by drawing an additional £645m through the Index Long-Term Repo (‘ILTR’) scheme on 19 March. We closed the first quarter with total drawings under the scheme of £855m. To date, we have also seen steady net retail deposit inflows for both Kent Reliance and Charter Savings Bank, with strong demand during the ISA season and high levels of retention amongst customers with maturing fixed rate products.

The liquidity coverage ratios increased during the first quarter to 247% and 170% for OSB and Charter Court Financial Services, respectively (31 December 2019: 199% and 145%, respectively).

The Group has applied for the Bank of England’s Term Funding Scheme for SMEs (‘TFSME’) and anticipates an initial borrowing allowance of c. £1.7bn. It is intended to use the funding from the initial allowance to refinance and extend the duration of drawings under the Bank of England’s ILTR scheme and the previous TFS scheme.

In March 2020 the Group securitised £1bn of organically-originated mortgage assets under the Canterbury Finance programme retaining all of the notes, including £860m of AAA rated senior bonds. This transaction provides a sizeable pool of collateral that significantly increases the contingent wholesale funding options available to us through commercial repo transactions. Once approved, the bonds can also be used, in place of whole loan mortgage collateral, against the Bank of England ILTR, TFS and TFSME facilities at significantly reduced haircuts.

Net interest margin (‘NIM’) – Underlying NIM for the first quarter of 2020 was broadly flat to full year 2019 pro forma underlying NIM2 of 266bps. However the cost of the additional liquidity the Group is prudently holding, and delays in the retail savings market passing on the base rate cuts in full, are a current and potential future drag on NIM. In partial mitigation, rates in the retail savings market are continuing to fall and the Group has kept pricing on fixed rate mortgages unchanged and also expects to benefit from the Bank of England TFSME scheme. The Group intends to use the TFSME to refinance its drawings under the TFS scheme for another four years and to refinance drawings under the ILTR scheme at a lower rate. The Group had previously planned to start repaying the original TFS scheme in 2020. In addition, NIM may also be impacted by changes in borrower behaviour, leading to revised prepayment rate, expected life and redemption profile assumptions in EIR income recognition.

New business – We are continuing to focus on serving our customers as well as we can, despite the wider standstill and impact of Government restrictions on the housing market. Towards the end of March and throughout April, we concentrated on our existing pipeline of applications, and ensured that resources were available to support those customers who wished to take a payment holiday.

OSB continues to support existing and new customers by accepting applications across our core businesses. However, given the current uncertain economic situation, we are operating with tightened criteria for LTVs and loan sizes to remain within our risk appetite, and meet valuer criteria for enhanced desktop valuations whilst physical property valuations remain unavailable. We continue to offer product transfers to qualifying customers whose mortgages approach maturity.

Payment holidays – OSB has responded rapidly to support our customers who may be facing financial difficulty by offering self-certified payment holidays of up to three months. Take-up levels have been high, but many people requesting payment holidays are doing so to prudently safeguard cash flow. Market research amongst Buy-to-Let landlords conducted on behalf of OSB indicates that rents are still being received, with only 12-15% of landlords who have requested a payment holiday giving the reason as “tenants having stopped paying rent’

As at the end of April 2020, the Group granted payment holidays to c.24k accounts, equivalent to 26.7% of the Group’s mortgage book by value4. Volumes of requests were high when the scheme was first announced, but have since reduced significantly.

Credit – The percentage of loans and advances in three months plus arrears as at the end of March, was 1.3% for OSB and 0.4% for CCFS (31 December 2019: 1.3% and 0.3%, respectively). We have a high quality secured lending book with strong LTVs, with the weighted average LTV of the loan book at 68% for OSB and 70% for CCFS as at 31 December 2019.

The Group, in line with the industry and guidance from regulators, does not consider payment holidays as an automatic transfer from stage 1 to stage 2 under IFRS 9. It is too early to predict how borrowers will behave after the end of the payment holiday or what the potential macroeconomic impact of the current crisis will be. However the Group receives updated macroeconomic scenarios from its advisors on a regular basis, the latest version of which is shown in the table below. Applying these updated scenarios as at 31 March 2020 would result in an approximate doubling of the Group’s expected credit loss provision balance versus the balance of £42.9m as at 31 December 2019.”

Healthcare

Avacta Group – “The recent announcement of our collaboration with Cytiva (formerly GE Healthcare Life Sciences) to develop a rapid Covid-19 antigen test for mass population screening, and then our immediate success in generating a large number of Affimer reagents that detect the virus spike protein, has shone a spotlight on the power and performance of the Affimer platform. We believe that the technical risk of developing a Covid-19 diagnostic is significantly reduced now that we have a large number Affimer reagents to work with, and our objective is to have a saliva test ready for production as early as possible in the summer. This individual opportunity is significant; there will be a medium-term need for very high volume Covid-19 antigen testing to support the global process of exiting lockdown and getting healthy people back to work. There will also be a long-term need for antigen testing as the disease will remain in some societies for many years. Outside of this opportunity which has raised the profile of the Affimer platform dramatically, there remains significant commercial potential for Affimer diagnostics to deliver long term sustainable revenues.



In addition, the company has announced a collaboration with Adeptrix (Beverly, MA, USA) to develop and manufacture an Affimer-based BAMS (bead-assisted mass spectrometry) coronavirus antigen test that will provide clinicians with a significant expansion of the available testing capacity for Covid-19 infection in hospitals. The diagnostic test will allow hospitals around the world to utilise their existing installed base of mass spectrometers that are not currently used for Covid-19 testing, thus contributing significantly to the increase in global testing capacity. Avacta's recently developed Affimer reagents that bind the SARS-COV-2 spike protein will be used to provide the capture and enrichment of the virus particle from the sample which could be saliva, nasopharyngeal swabs or serum.”

Inspiration Healthcare Group – “The Group has enjoyed very strong trading in the first quarter of its financial year with revenues up by 27% on the comparative period last year. This increase in revenues does not include the contracts won for the supply of ventilators to the UK National Health Service announced on the 16th and 20th March 2020 which, when combined, are worth over £5 million of additional revenue and are expected to be accounted for in the second quarter of the financial year. Without these exceptional orders, the company's order book remains strong and the company is receiving considerable interest in its products.”



Oxford Biomedica# – “The Group has conducted an assessment of the potential financial and operational risks to the business and has implemented a daily senior management working group to monitor current Covid-19 developments, GOV.UK guidance and to direct the Group's phased response.



The Group takes comfort from:

• The day to day changes in working practices put in place to protect our employees seem to be effective, with work continuing on in an as near to normal way as possible

• Revenues and their subsequent receipts are based on long term contracts with financially sound and resilient companies

• The Group has a stronger and more diversified customer base than it has had previously

• The Group has key worker status which allows us to continue providing services to our customers throughout the lockdown period

While the Group is yet to experience any significant impact from the virus, there may be an impact on revenue, supply chain and operating facilities if the situation continues or worsens. Management continues to constantly monitor the ongoing situation.”

Smith & Nephew – “Response to Covid-19 – Smith+Nephew has been responding to Covid-19 since January 2020, first in China, and then across all of our markets globally. Throughout this period we have prioritised the health and safety of employees and protecting jobs, supporting our customers and communities, and ensuring the business is well prepared to respond as elective surgeries start to return.



Employees – No jobs have been lost amongst our 17,500 strong workforce as a result of Covid-19. We have continued to manufacture our critical products and supply customers as they strive to improve the quality of life of patients.

We have taken many measures to safeguard employees, including temporarily closing offices and supporting working from home wherever possible, restricting travel and meetings, and implementing split shifts and temperature checks at our manufacturing facilities. We have delivered remote working tools including employee well-being resources, and created a "My Remote Life" social channel.

For our sales force, for whom a proportion of their income is typically commission based, we are ensuring that they retain a significant percentage of regular income and have enhanced digital training on technical product knowledge and business skills.

Whilst workplace restrictions may be lifted at the city, state or country level, we will re-open our offices only when we are confident that we can maintain what we feel are satisfactory standards to ensure the health and safety of our employees and customers.

Customers – We have continued to serve customers to the best of our ability while respecting any local restrictions. In particular, our Trauma and Reconstruction teams have supported urgent patient cases, and our Advanced Wound Management teams have kept product flowing to customers in both hospital and community care settings.

We have also launched new services for customers. For example, in March we launched a new digital education programme designed to support the development of surgeons by providing educational webinars on the safe and effective use of Smith+Nephew products as well as surgical techniques. More than 11,000 healthcare professionals attended in the first month. In the US we have launched a 24/7 helpline where both patients and clinicians can access information on our Advanced Wound Management portfolio and get immediate answers to questions on the proper use of our products as well as wound-related education, with the intent of easing the burden on healthcare providers.

Communities – Smith+Nephew is actively engaging in its communities, making donations of product and personal protective equipment, and supporting employee volunteering, including registered healthcare professionals who wish to return to front line care.

We are using our manufacturing expertise to support the fight against Covid-19. For example, in the UK we have been working with the University of Oxford and King's College London to develop a low-cost ventilator, and in the US we have repurposed part of our manufacturing facility in Memphis to assemble face shields.

Cost control – In response to Covid-19, Smith+Nephew initiated actions to realise significant savings of up to $200 million from areas such as travel, events, advertising, promotion and consultancy, as well as freezing all but the most crucial new hires. We are also slowing some planned capital expenditure.

In April, we extended these measures to include temporarily reducing production at some manufacturing facilities to manage stock levels. We have introduced special “pandemic leave' to help ensure employees are not financially disadvantaged as a result.

At this stage we are protecting the majority of R&D investment and remain committed to developing and launching meaningful innovation this year and beyond.

We continue to monitor market developments, and have identified additional potential savings if they become required.

Strong balance sheet and good liquidity – Smith+Nephew has a strong balance sheet with access to significant liquidity. At the end of the first quarter, the Group had net debt of $1.8 billion (excluding lease liabilities), compared to already committed facilities of $2.9 billion, as well as a further $550 million of Senior Notes which will be drawn down in June 2020. The Group has no debt maturing in 2020. The $200 million increase in net debt since the year-end reflects acquisitions and seasonal working capital movements.

Smith+Nephew's principal covenant, which relates only to our private placement debt, is leverage ratio <3.5x. This is measured on a rolling 12-month basis at the half-year and year-end. At 31 December 2019 our leverage ratio was 1.2x (see note 15 of the 2019 Annual Report, and the Group's 20-F filings, for further details of Smith+Nephew's financing).

April trading and preparing for the future – Smith+Nephew's underlying revenue declined approximately -47% in April. This reflects the impact of restriction of movement orders and suspension of elective surgeries in most of our markets, somewhat offset by improved performance in China where elective procedures have started again but have not yet reached pre-Covid-19 levels.

As we enter May there is considerable variation regarding the pace of reintroduction of elective procedures. While a number of US states and European countries have slowly started to reintroduce these, and some more have announced plans to do so in the near future, others have not and some parts of the world are even tightening lock-down restrictions.

Smith+Nephew is closely tracking this variation in approach across our markets and preparing accordingly. This includes adapting to new working practices regarding access to site of care settings, the use of personal protective equipment, and utilising digital technologies to provide support remotely.

We also have a number of initiatives underway to assist customers as they return to more normal activities. These include a major online showcase of our Sports Medicine and Orthopaedic portfolios and the launch of our new robotics platform. We are also focusing on supporting healthcare providers seeking to increase access to orthopaedic cases in ambulatory surgery centers (ASCs). Our recently launched Positive Connections ASC service gives us an innovative offering in this area as we expect this shift to accelerate with patients choosing the ASC over inpatient stays.”

Industrials

Accrol Group – “Covid-19 update



The Group initiated a rapid and early response to the global spread of Covid-19, implementing a management strategy throughout the business to protect the health and wellbeing of its people:

• All at risk employees were self-isolated at home from 20 February 2020;

• Social distancing was implemented for factory-based employees;

• Increased cleansing facilities and protocols were established across all sites; and

• All office-based staff were moved to working from home at lockdown.



The Board is pleased to report that this strategy is working well and that strong levels of productivity have been maintained throughout the lockdown restrictions. There has been no requirement to furlough employees.

Outlook – With margins significantly recovered and core revenues at record levels in FY20, the Group has entered the new financial year in a stronger position than ever before and is well positioned to continue delivering sustainable profitable growth.

Further improvements to quality and service have been made in recent months. The Board is confident that this will help Accrol secure higher-value business over the longer term. In addition, the Group's rapid response to the unprecedented consumer demand experienced in March, as lockdown measures tightened, has reinforced its strengthening relationships across its UK retail customer base. Whilst some increases in input costs are expected in the near term, as a result of the Covid-19 pandemic, the Board is confident that the Group's new business model is robust and structured to enable the swift management of fluctuating prices.

Overall, the company is in a much-improved financial position with considerable headroom on its banking covenants. The reduction in net debt is expected to continue and remain comfortably below 2x net debt to EBITDA in the full year ending 30 April 2021 ("FY21").

The Board views the future with increasing confidence but remains mindful of the uncertainty and challenges which the Covid-19 pandemic continues to place on organisations globally. What is clear however, is that demand for the Group's new range of higher-value products, combined with further improved quality and consistently high level of service, put the company in a strong position as it enters FY21.”



• Ricardo – “is today providing a trading update in respect of the year ending 30 June 2020. This includes an update on the operational impact of Covid-19 on the business and the actions that it has taken to increase liquidity and near-term funding, as well as the steps that it has taken to support frontline staff in local care homes and NHS trusts with vital personal protective equipment ('PPE').

Funding and liquidity – We have modelled a wide range of scenarios regarding the potential impact of Covid-19 on the liquidity of the Group. Whilst we have no immediate concern, we have taken action to strengthen the Group's funding to provide further headroom against the risk of the more pessimistic scenarios materialising.

At 30 April 2020, net debt was £80.8m, with £20m of our £150m RCF undrawn and available. We held Liquid Cash reserves of £66.0m as well as uncommitted overdrafts of £16.4m. The level of liquid cash reserves held has been increased as part of our treasury management policy in response to Covid-19.

On 5 May 2020, the Group exercised £50m of the accordion option of its banking facilities, thereby increasing the RCF to £200m and increasing the amount undrawn and available to £70m. This provides the Group with increased committed funding available for the remaining term through to July 2023.

In addition to the increased committed funding available, the Adjusted Leverage (defined as net debt over underlying EBITDA) covenant was increased from 3.0x to 3.75x for the next two test dates of 30 June 2020 and 31 December 2020. The covenant will return to 3.0x for the following test date on 30 June 2021. The only other financial covenant is Interest Cover, which remains at 4.0x for each test date. There have been no other changes to the terms of this multi-currency facility, which has a variable interest rate ranging from 1.4% to 2.2% above LIBOR and varies according to the Group's Adjusted Leverage.

We thank each of our relationship banks NatWest, HSBC, Bank of Ireland and Lloyds for their continued support for Ricardo during these unprecedented times.

Across the Group, we have also acted quickly to reduce expenditure and preserve cash. This includes careful management of employee costs, as well as maintaining tight control of all capital expenditure and discretionary operating costs.

Trading update – Order intake in the quarter to 31 March 2020 (Q3) was good at £30 million per month and the Group secured a further £19m of orders in April 2020. Against the backdrop of Covid-19, some of our businesses continue to perform well whilst others have been more adversely impacted.

Trading in our Energy & Environment and Defense businesses was good in Q3, both benefiting from a largely public sector customer base. Our Defense operations have been deemed essential by the US Government, with c.600 Anti-lock Brake System ('ABS') kits delivered in Q3. Given the current climate, we expect some re-scheduling of Ambulance ABS deliveries from our Q4 to the next financial year as the US Government redirects some if its funding. Discussions on the wider HMMWV fleet ABS retrofit programme remain positive and continue in line with our expectations.

Further to our February guidance, our Automotive-related and Rail businesses in Europe and the US have experienced some slow-down in project delivery due to customers either closing down their operations or working remotely due to various lockdown restrictions. Following the easing of restrictions, our China businesses have now returned to work at their offices. The delivery of high-performance engines and transmissions by our Performance Products business is being impacted by the recent closure of some of our customers' production lines.

Despite the continued good order intake over the past quarter, there is considerable uncertainty and economic volatility ahead. With this in mind, it is difficult to forecast with a reasonable degree of accuracy and we are therefore withdrawing guidance until we see more stability in the economic backdrop.”

Insurance

Direct Line – “Gross written premium in Q1 2020 increased by 4.7% compared with Q1 2019, with own brands growth of 5.6%. This was driven by a positive Motor performance, up 6.2%, alongside continued growth in Green Flag of 11.3% and Commercial of 10.1%.



During these difficult times we are committed to doing the right thing for our customers, people and society. We expect to incur around £70 million of cost in implementing a range of measures to provide peace of mind to our stakeholders. This includes supporting customers in financial difficulty, pausing all redundancies until at least the autumn and providing all NHS workers with free breakdown services.

Assuming the Foreign and Commonwealth Office (FCO) travel restrictions remain in place until the end of September we estimate the impact of Covid-19 disruption to our Travel business will be approximately £44 million. After estimated reinsurance recoveries of around £18.5 million, we expect the net impact to be approximately £25 million in excess of the normal level of claims.

In Motor, Covid-19 restrictions have led to a reduction in claims notifications of approximately 70% during April, with average severity expected to increase as average repair durations lengthen and credit hire costs increase. We will continue to track these trends closely as we start to exit from the most severe lockdown restrictions.

We successfully moved all office-based colleagues to remote working. Our repair centres are still open, operating with much reduced staffing to repair cars for those with essential travel needs such as key workers.

We also maintained our focus on the transformation agenda, with Darwin going live on Confused.com, the launch of Van and Tradesperson on the Direct Line for Business (DL4B) platform and the start of roll-out for a new Rescue claims system.

Our estimated solvency capital ratio at 31 March 2020 was 174% increasing to an estimated 177% on 1 May 2020, towards the top of our 140% to 180% risk appetite range. In recognition of the regulatory guidance and heightened uncertainty in the macroeconomic environment, on 8 April the Board announced that it would no longer be recommending the final dividend for the year ended 31 December 2019. We intend to review the dividend position alongside the half year results and then on an ongoing basis once it is possible to have a better understanding of the impacts of Covid-19.

Subject to uncertainties arising from Covid-19, we reiterate our targets of achieving a combined operating ratio in the range of 93% to 95% normalised for weather in 2020, improving our operating expense ratio to 20% by 2023 and our long-term target of achieving at least a 15% return on tangible equity per annum.

Business Update

Covid-19 response – Our focus for the last few weeks has been on supporting our customers and protecting our people while making a difference in the wider community and we've implemented initiatives across the business at an expected cost of in the region of £70 million.

Customers:

Recognising that our customers' individual circumstances have changed we are offering greater flexibility to provide additional value during this period. For example, we are refunding premiums to motor customers who wish to reduce their annual mileage or cancel foreign use and refunding travel customers with multi-trip policies on a pro-rata basis.

We are also providing additional measures for those in financial difficulty by waiving cancellation fees if people have lost their job or seen reduced hours and offering payment deferrals.

In recognition of the commitment of all NHS workers, we are providing free Green Flag rescue cover. In addition, for our NHS customers we are offering free home emergencies cover and personal protection cover together with a fast track claims system.

Green Flag continues to help customers with essential travel needs to stay mobile, refunding premiums to customers reducing their cover in line with reduced driving habits as well as free cancellations due to financial hardship.

Our network of 22 owned accident repair centres continues to repair cars to help those providing essential services to the country such as key workers, or those reliant on their car to buy food or seek medical assistance.

We have also increased the period we offer full cover on commercial premises that are unoccupied due to the lockdown, from 20/30 days to 90 days.

People:

We quickly moved to home working, including frontline colleagues, guaranteeing colleagues their usual pay regardless of whether their specific working practices changed whilst working from home. All roles are to be protected through to the autumn.

We are not accessing the UK Government furlough or other support schemes.

Society:

We have implemented a range of measures to support our local communities.

Colleagues have been given the flexibility to volunteer for the NHS and support their Covid-19 community support groups.

We have committed £7.1 million to charity, including £3.5 million to a DLG community fund which has been established to support vulnerable people in the communities in which we are based.

We are supporting suppliers through accelerating payments and in Rescue directly supporting small-to-medium sized enterprises (SME) roadside assistance firms.

Motor:

Motor gross written premiums grew by 6.2% compared with Q1 2019 as the positive trading conditions in H2 2019 continued. In-force policies were stable compared to the end of 2019, supported by strong retention. Claims inflation was in line within our 3% to 5% long-term expectations.

Following the implementation of Covid-19 restrictions, Motor trading has seen fewer new business customers in the market following a slowdown in car transactions and the temporary suspension of phone sales from 25 March until 16 April to support operational resilience. Retention has remained strong.

We have experienced a reduction in Motor claims notifications of around 70% in April compared to the same period in 2019. This reduction in claims costs is expected to be partially offset by increased claims severity as average repair durations lengthen and credit hire costs increase.

We will continue to track these trends closely as we start to exit from the most severe lockdown restrictions and we are already seeing a modest increase in miles driven in early May compared to April.

Home:

Home gross written premium was 2.4% lower than Q1 2019, while own brands premium was broadly stable, and partnership premium lower due to the continued run-off of some accounts. Home continued to see improvement in escape of water (EoW) claims following the actions taken some time ago. Claims associated with storms Ciara and Dennis are estimated at £18 million net of Flood Re recoveries.

Since the implementation of Covid-19 restrictions, Home has experienced lower new business volumes due to reduced customer shopping for policies alongside the temporary suspension of phone sales from 25 March until 16 April to support operational resilience. This has been partially offset by improved retention. While it is too early to estimate the impact of Covid-19 on Home claims, we have seen an initial reduction in claims frequency although it is not clear whether this reduction, at least in part, is genuine or due to delays in claims reporting.

Rescue:

Rescue and other personal lines increased premiums by 2.8% driven by the strong growth in Green Flag of 11.3%.

Following the Covid-19 restrictions, Rescue has experienced a material reduction in new business volumes due to less customer shopping alongside the suspension of phone sales from 27 March until 9 April to support operational resilience. Rescue has seen a reduction in claims notifications of around 40% but has also begun to see an increase in call outs in early May compared to April.

Travel:

Assuming the Foreign and Commonwealth Office (FCO) travel restrictions remain in place until the end of September, we estimate the net impact on Travel from the Covid-19 disruption will be approximately £25 million in excess of the normal level of claims.

These estimates assume customers will continue to seek refunds or redress from airlines, tour operators and credit card providers where possible.

Commercial:

Commercial grew premiums by 10.1%, reflecting strong growth across Direct Line for Business (DL4B), Churchill for Business and NIG. Weather losses from storms Ciara and Dennis are estimated at £13 million.

We provide Business Interruption (BI) cover to our SME customers across NIG and DL4B. Our standard business interruption policy wordings, on which over 99.5% of policies are written, provide cover only for certain specified diseases and do not provide cover for losses due to the Covid-19 pandemic.

For those policies not on our standard wordings, we estimate claims costs of approximately £10 million.

Investments:

Our investment portfolio remains high quality and well diversified. Widening of credit spreads has impacted our available-for-sale (AFS) asset valuations. As at 31 March 2020 the AFS reserve was £(138) million net of tax, having moved in line with disclosed sensitivities. Since the end of Q1 2020, credit spreads have tightened and at 1 May 2020 the AFS reserve was approximately £(55) million, net of tax.

At 31 March 2020 we held £3,814 million of debt securities with £3,436 million of these investment grade quality. The residual £378 million of debt securities were high yield debt securities with a benchmark duration of 2.5 years, less than 10% of which are exposed to sectors most impacted by Covid-19.

Our liquidity remains strong with around 19% of our investment portfolio at 31 March 2020 held in cash and cash equivalents.

Falling interest rates mean that we now expect net investment income yield to be approximately 1.8% in 2020, compared with 2.0% expected at 2019 year-end.

Capital:

Notwithstanding our strong capital position, in recognition of the regulatory guidance and heightened uncertainty in the macroeconomic environment, on 8 April the Board announced that it would no longer be recommending the final dividend for the year ended 31 December 2019.

The Board reiterates that it will review this position alongside the half year results and on an ongoing basis once it is possible to have a better understanding of the impacts of Covid-19.

Our estimated solvency capital ratio at 31 March 2020 was 174%, increasing to an estimated 177% on 1 May 2020, towards the top of our 140% to 180% risk appetite range.

Transformation update:

We remain as focused as ever on our technology transformation. Whilst inevitably there has been some slow down in delivery as internal and supplier resources have been reprioritised onto Covid-19 related activity and have been adjusting to home working, we continue to make good progress against the 2020 plans set out at the full year 2019 results.

DL4B has rolled out Van and Tradesperson products on its new platform, Darwin has gone live on Confused.com, Green Flag has begun to deploy its new fully automated claims system while we have continued to make progress towards the roll out of Churchill and Direct Line on the new Motor platform.

Executive remuneration:

Given the continuing uncertainty resulting from Covid-19, the Group has agreed that Executive Directors will not be considered for any bonus for 2020 until dividends for ordinary shareholders resume. In addition, Penny James has chosen to donate her 2020 salary increase to the charity Fareshare.

Outlook:

Our business remains strong and we remain focused on our transformation and cost reduction plans as key drivers for our future commercial success.

For 2020, we reiterate our target of a combined operating ratio of 93% to 95% normalised for weather and anticipate our restructuring costs of £60m over 2019 and 2020 will be incurred in full as we strive to maximise the opportunity for operational efficiencies.

We remain focused on a targeted combined operating ratio of 93% to 95% normalised for weather in 2021 and over the medium term, and on improving the current-year contribution to operating profit to at least 50% by 2021, but acknowledge these will inevitably depend on the duration and uncertainties of the Covid-19 pandemic, and the pace of economic recovery and consequential impact on customer behaviour.

We expect some impact to the timing of our cost saving programme due to the actions we are taking in the face of Covid-19, including limited delays in the delivery of certain programmes, so we may not achieve the target of reducing operating expenses by £50 million by 2021.

Notwithstanding these challenges, we remain focused on the strategic and operational transformation of the business, including our target of improving our operating expense ratio to 20% by 2023. We also reiterate our target of achieving at least a 15% return on tangible equity per annum over the long term.

We continue to closely monitor the impacts and uncertainties arising out of the Covid-19 pandemic and will update further with our 2020 half year results.”

Leisure

Walt Disney Company – “Reported earnings for its second fiscal quarter ended March 28, 2020. Diluted earnings per share (EPS) from continuing operations for the quarter decreased 93% to $0.26 from $3.53 in the prior-year quarter. Excluding certain items affecting comparability(1), diluted EPS for the quarter decreased 63% to $0.60 from $1.61 in the prior-year quarter. EPS from continuing operations for the six months ended March 28, 2020 decreased 73% to $1.44 from $5.42 in the prior-year period. Excluding certain items affecting comparability (1), EPS for the six months decreased 38% to $2.14 from $3.45 in the prior-year period. Results in the quarter and six months ended March 28, 2020 were adversely impacted by the novel coronavirus (“Covid-19”) pandemic.



“While the Covid-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

The impact of Covid-19 and measures to prevent its spread are affecting our segments in a number of ways, most significantly at Parks, Experiences and Products where we have closed our theme parks and retail stores, suspended cruise ship sailings and guided tours and experienced supply chain disruptions. In addition, we have delayed, or in some cases, shortened or cancelled theatrical releases and suspended stage play performances at Studio Entertainment and have seen advertising sales impacts at Media Networks and Direct-to-Consumer & International. We have experienced disruptions in the production and availability of content, including the cancellation or deferral of certain sports events and suspension of production of most film and television content. Many of these businesses have been closed consistent with government mandates or guidance. We estimate the Covid-19 impact on operating income at our Parks, Experiences and Products segment was approximately $1.0 billion primarily due to revenue lost as a result of the closures. In total, we estimate that the Covid-19 impacts on our current quarter income from continuing operations before income taxes across all of our businesses was as much as $1.4 billion, inclusive of the impact at the Parks, Experiences and Products segment. Impacts at our other segments include lower advertising revenue at Media Networks and Direct-to-Consumer & International driven by a decrease in viewership in the current quarter reflecting Covid-19’s impact on live sports events and higher bad debt expense and a loss of revenue at Studio Entertainment due to theatre and stage play closures.” Full release

Media

ITV – “Operational and financial performance significantly impacted by Covid-19



Negative:

• Since mid-March ITV Studios has had to pause the majority of its productions globally as a result of the restrictions on working practices;

• Significant impact on the demand for advertising across most advertising categories, particularly from April which was down 42%.



Positive:

• ITV Studios Global Distribution is seeing good demand for library content internationally;

• ITV Commercial is working very closely with advertisers and agencies to create relevant and innovative marketing and advertising opportunities;

• ITV is seeing good growth for BritBox free trial starts and subscriptions;

• Interactive revenues are growing well with increased demand for ITV's competitions;

• Continuing to implement significant measures to reduce costs in 2020;

• In total we will reduce overhead costs by £60m in 2020;

• £30m previously announced and well underway;

• A further £30m of savings has been identified;

• £30m of capex savings, as previously announced, being implemented with the delay in non-business critical investments;

• At least £100m reduction in the programme budget to around £1bn, as previously guided;

• We have furloughed around 800 colleagues, broadly 15% of our UK workforce, the majority of whom work in ITV Studios. Internationally we are taking part in other schemes where appropriate;

• We have put in place a recruitment and salary freeze and taken action on Plc Board and Management Board level remuneration;

• Action taken to tightly manage cash flow in 2020;

• Withdrawal of the 2019 final dividend;

• Agreements with ITV pension trustees and tax authorities to delay at least £150m of payments out of H1 and into H2 and 2021;

• ITV has good access to liquidity. Over £100m of unrestricted cash. £630m undrawn Revolving Credit Facility (RCF) expiring in December 2023. £300m bilateral facility expiring in June 2026 of which £199m is available.

Operational update

• Throughout the crisis our News and Daytime teams have continued to keep the public informed with over ten hours of live programming every weekday. The majority of ITV staff moved seamlessly to home working and enabled ITV to continue to broadcast our six channels, offering hundreds of hours of content each week, together with ITV Hub and BritBox.

• ITV is planning a phased approach to office re-entry in consultation with external medical advisers to align with how the Government plans to approach relaxing restrictions.

• ITV is in the final stages of working with others across the industry on a return-to-production protocol and we are in active discussions with Government on this.

• Thanks to the innovation of our production teams we have resumed production of Loose Women this week and have broadcast the first of the acclaimed new Isolation Stories dramas on ITV. Across our international markets we have announced the resumption of filming of The Chase and The Voice in Australia and The Chase in Germany.

• Continuing to deliver our strategic priorities.

• Continuing to implement the ITV Hub acceleration plan which delivered a very strong viewing performance in Q1.

• Further roll out of Planet V, our programmatic addressable advertising platform, to media agencies, with 30% of VOD inventory delivered through the platform in March.

• BritBox distribution deal with EE has launched, C4 content is now available on the platform and we will shortly be extending BritBox's availability on YouView and Freeview Play.

• Outlook – The outlook remains uncertain and is changing rapidly and therefore we are not giving guidance for Q2 or for the remainder of the year.

• We are using rigorous internal and external analysis and scenario planning to continue to monitor the Covid-19 situation and its impact on the business. This is informing our planning and decision making and we will take further action as necessary to manage our costs and cash tightly.”

Real Estate

Irish residential Prop REIT– “In line with measures introduced by the Irish Government, we have implemented a temporary moratorium on rent increases to 27 June 2020 as well as on termination notices. We have put in place additional processes to communicate and work with our residents on an ongoing basis during this time including in relation to payment of monthly rents and have invited residents to discuss any issues they may have in meeting their monthly rent payments. We look to provide solutions on a case-by-case basis for those residents facing financial hardship due to Covid-19. We are also looking to ensure that residents experiencing financial challenges are aware of the various Government supports available to help them. At this time, we have limited our repairs and maintenance and capital expenditures on existing properties to essential works to allow us to maintain the safety of our residents. In addition, as part of the company's social responsibility during this time of crisis, we have provided support to frontline medical workers and have continued our support to charitable organisations.



The Irish Government has introduced extensive restrictions on public movement and economic activity in order to mitigate the spread of Covid-19. The principal measures introduced were included in the Emergency Measures in the Public Interest (Covid-19) 2020 Act on 27 March 2020, which includes:

• a suspension on all notices of eviction and rent increases, in order to protect and support tenants for the duration of the Covid-19 crisis, initially for 3 months to 27 June 2020. Therefore, the current rent regulation, which provides for rent increases of up to 4% per year in Rent Pressure Zones until 31 December 2021, does not apply during this period.

• a support package for businesses and workers affected by Covid-19, which includes a Pandemic Unemployment Payment of €350 per week for workers whose employers could not retain them due to the Covid-19 crisis and a Wage Subsidy Scheme, a subsidy of up to a maximum of €410 per week (provided an employee's net salary is now less than €960 per week) to help employers retain workers during a period of reduced trading, caused by Covid-19. The schemes are due to run for an initial period of 12 weeks from their introduction. These measures should provide some assistance to tenants during these challenging times to maintain their rental payments, even if they have experienced job disruption.

• the closure of all non-essential construction sites for an initial two-week period, which was subsequently extended to 18 May 2020. This resulted in construction activity at the company's active development sites being temporarily suspended and therefore we expect delays to completion of these developments. We retain a flexible development pipeline and, where appropriate we will defer expenditure and decisions on future projects while retaining close contact with our development partners and the project teams on site. Developments impacted include:

• Hansfield Wood (95 residential units, originally anticipated to be handed over in Q2 2020);

• Merrion Road (69 residential units, originally anticipated to be handed over in Q2 2021); and

• Bakers Yard (61 residential units, originally anticipated to be handed over in Q2 2021).

The Irish Government has recently announced a five-stage plan to reopen the country for public movement and business in a gradual way, commencing from 19 May 2020.

Retail

Cambria Automobiles – “Is pleased to announce its unaudited interim results for the six months ended 29 February 2020, which show that the Group has performed ahead of the prior year and marginally ahead of management's expectations. The Group has continued to deliver on its Brand portfolio and property strategies in the period.



Financial highlights:

• Revenue reduced by 1.7% to £303.1m (H1 2019: £308.3m);

• Underlying profit before tax up 14.5% at £6.3m (H1 2019: £5.5m)

• Underlying earnings per share increased 13.3% to 5.11p (H1 2019: 4.51p);

• Underlying net profit margin of 2.07% (H1 2019: 1.79%);

• Positive operational cash flows maintained, with a cash position of £20.1m (H1 2019: £22.9m) and net debt of £6.0m (H1 2019 net debt: £3.2m);

• Strong balance sheet with net assets of £68.5m (H1 2019: £60.6m);

• Rolling twelve month return on equity* of 15.85% (H1 2019: 14.99%);

• As previously signalled, interim dividend suspended in light of Covid 19 impact (H1 2019: 0.25p).



Operational highlights:

• Units of new vehicle sales reduced by 10.1%, as anticipated, with the reduced unit impact offset by an 11.6% increase in average profit per unit following the improvement in the Group's franchise portfolio mix;

• Units of used vehicle sales up 2.8%; gross profit increased as a result of the increased volumes and a 1.8% improvement in profit per unit;

• Aftersales revenue increased by 1.1% with improvement in gross profit;

• Group's entry into the Scottish market with the acquisition of an Aston Martin dealership and its Freehold Property in Edinburgh taking the Group to 4 Aston Martin dealerships;

• Strengthening of High Luxury Segment with acquisition of Rolls-Royce Motor Cars dealership in leasehold premises in Edinburgh, welcoming this prestigious brand into the portfolio;

• Refranchising of Volvo Preston into Alfa Romeo and Jeep to create FCA Brand centre in Preston;

• Post period end completion of land purchase in Solihull for the development of Aston Martin Birmingham site relocation.



The impact of Coronavirus cannot be underestimated and despite the significant actions that we have taken to reduce costs, it will have a material negative impact on the financial performance in the second half of the financial year. We currently do not have visibility on the exit strategy from lockdown nor on the actions that we will have to take in light of the economic outturn as society has to operate in a different way. However, we are working through a number of return to work scenarios that can be initiated at the appropriate time, in line with Government guidance. "The industry was already facing some significant headwinds in relation to changing technology to meet more stringent emissions targets, an increasing cost base and disruptive supply factors. The emergence from the Covid-19 lockdown will be another challenge that we will need to contend with but we reiterate that the Group is well placed to respond to these challenges. Along with our strong balance sheet, we are confident that we have sufficient liquidity to see through the challenges that the pandemic currently presents.”

Card Factory – “With appropriate safety measures and controls in place, we have continued to trade both of our online businesses. While remaining a small part of the group, we have seen significant growth in visitors, conversion and sales. The Cardfactory.co.uk web site has delivered sales growth of 267.5% since the lock-down with Gettingpersonal.co.uk at 57.5%. In response to this increased demand, and to support social distancing, we have established a second fulfilment unit in Wakefield.



Alongside the online activity, we have continued to supply both Aldi and our Australian partner, The Reject Shop, with card ranges.

With our stores remaining closed, as per government guidance, all of our store colleagues have been furloughed under the Government's Coronavirus Job Retention Scheme. Where required, our Support Centre colleagues are working effectively from home. In preparation for re-opening, we are currently working on changes to our store operations that will help ensure colleague and customer safety. We expect to be able to facilitate appropriate social distancing in the majority of our stores.”

Halfords – “As a provider of essential products and services to the UK public, we have remained open during the lockdown period. We currently have 325 retail stores open on a dark-store basis, where serving customers from the front of the store ensures our colleagues can operate in safe working conditions. We also have 346 garages open and 77 mobile vans operating. We have implemented additional safety measures across all sites to protect both our colleagues and our customers.



Our results for FY20 were boosted by better than expected sales in the final weeks of the financial year during the lockdown period. Subject to audit adjustments, we now expect that Adjusted Profit Before Tax, on a pre-IFRS16 and 52-week basis, will be at the upper end of our previously guided range of £50-55m.

Group sales for the four weeks to 1 May 2020 were 23% below last year on a like-for-like basis, which was better than we initially anticipated. This was fairly consistent across the period and reflected a strong performance in Cycling, as the public explored alternatives to public transport and looked for ways to stay healthy. In Motoring, essential categories such as batteries and battery care performed well, but overall weakness reflected a significant reduction in car journeys during the lockdown period.

Better than expected trading and the proactive measures we have taken to preserve cash have resulted in an improvement in our liquidity position. On 1 May 2020, we had approximately £159m of total liquidity available, including overdraft facilities. Despite this improvement, the severity and duration of the pandemic remain very uncertain and as such the Board will continue to take the actions necessary to preserve cash in the coming months and seek to position the Group for an easing of lockdown. We also remain in active dialogue with our existing lending syndicate to provide additional flexibility should we require it.”

Lifting restrictions

• Uruguay is beginning to resume activity in public offices and shops in the capital, Montevideo. Those who do not need to work have been asked to remain at home. The government says it was encouraged to allow more economic activity after a pilot project tested 400 construction workers and all the results came back negative.

• The Baltic states of Estonia, Latvia and Lithuania have agreed to reopen borders to each other.

• The German Chancellor, Angela Merkel, will meet state premiers from Germany's 16 states with a draft agreement on going further on lifting the nation’s lockdown. Under the plan, decisions on how fast to reopen will be handed to the states themselves rather than the federal government, but there will be a relapse clause. States have been trying to move at different speeds; Bavaria in the south plans to reopen restaurants on 18 May, while Mecklenburg-Western Pomerania in the north plans to do that on 9 May. According to the German press agency DPA, the government wants all pupils to return to school gradually by the summer holidays. If the plan is agreed, states will have to reimpose tougher restrictions if new infections go above 50 per 100,000 inhabitants within a week. This morning, Germany's RKI public health institute has reported another 947 new infections nationally and another 165 deaths.



Other

• Czech authorities say the results of a mass antibody study carried out on 23 April has revealed a tiny proportion of the population has so far been exposed to Covid-19. The authorities have not given a single nationwide result in percentage terms, rather a range for each testing location (Prague, Brno, Olomouc and several smaller towns). Nowhere does the number exceed 5%. In Prague, the figure was 1.48%.

• Italy's prime minister said he hoped Italians would be able to enjoy a summer holiday this year if the country's coronavirus epidemic stays under control.

• Germany's tourism commissioner, Thomas Bareiss, told Der Tagesspiegel newspaper earlier this week that if the outbreak stayed under control, people might be able to take foreign breaks "in the next four to eight weeks".

• A draft agreement in Germany could see the Bundesliga resume this month. The league has been suspended since mid-March.

• Disney is set to reopen its Shanghai Disneyland park on 11 May, as most of China begins getting back on track. The number of guests allowed into the park, however, will be limited and social distancing measures will be enforced on rides and in restaurants. Guests and employees will be required to wear masks, their temperatures will be screened and lines will be set up.

• The Chief Executive of Heathrow, John Holland-Kaye, has told MPs that a temperature-check system for health screening is being trialled at the airport, on people departing for countries where this type of check is a requirement.

• More than half the workforce at the Tyson Foods meat processing plant in Perry, Iowa, have tested positive for the coronavirus, officials have revealed. Some 730 employees, representing 58% of staff, have contracted the virus, the Iowa Department of Public Health told a daily news conference. Tyson's plant at Perry was one of 22 US meat factories across the US Midwest that

temporarily closed in April. A company spokesman told the Des Moines Register that it had undergone a "deep cleaning" before reopening.

• Airbnb reports a jump in bookings from Europeans hoping to get a holiday after the lockdown is eased.

• In India, the lockdown has seen 122 million Indians lose their jobs in April, according to the Centre for Monitoring the Indian Economy (CMIE). India's unemployment rate is now at a record high of 27.1%.

• UK MPs are to be allowed to vote on new laws without being present in the Commons for the first time in its history. Speaker, Sir Lindsay Hoyle, authorised the move as part of measures to cope with social distancing but said it would be temporary.

• Youth unemployment in the UK could rise by 640,000 this year – taking the total to above one million, a report from the Resolution Foundation think tank found. It says school leavers are hit the hardest by recessions. The report, called Class of 2020, said that more than one in three school leavers and one in five graduates normally found their first job, after education, in those sectors worst affected by the lockdown, such as cafes, bars and retail.

#corporate client of Peel Hunt