Coronavirus - Robbing Peter to pay Paul
2 June 2020
Figures today from the Bank of England show £7.4bn of consumer credit was repaid during the first full month of lockdown, including £5bn of credit card debt. This reflects the record fall in retail spending in April. Some of this repayment will have been covered by the government’s furlough scheme as a result transferring debt from the individual to the state. The government will be hoping this transfer is temporary and it’s paid back by a pick-up in GDP as lockdown lifts and spending resumes. However, spending habits may have changed forever, with the public now mindful of how quickly circumstances can change.
Weekly ONS death rate
Buildings & Construction
•McCarthy & Stone# – “ The Group took several decisive actions from mid-March onwards to help ensure the safety and wellbeing of its homeowners and staff with a full list of measures outlined in the AGM and business update statement issued on 25 March 2020.
As a result, the Group has seen fewer cases of Covid-19 within its 441 retirement communities, than has been seen within the general over 65s UK population. The unique nature of its communities, which provide independent living in private apartments with a tailored level of care and support, means the Group’s homeowners have been safer and more supported than if they had been living alone during this period.
Phased remobilisation – Throughout the duration of the Government’s lockdown, the Group's sales offices and construction sites have been closed.
Following the easing of some restrictions by the Government, the Group has taken a gradual and measured approach to re-mobilisation of both sales and build, which are scheduled to commence in phases from 8 June.The Group is putting the health and safety of its customers, who are potentially more vulnerable to Covid-19 given their age, and employees at the centre of its planning process.
The Group has conducted a full and detailed review of sales and construction processes and developed a new set of guidelines and protocols for working practices to meet and enhance the Government's guidelines.
The Group's initial focus is on restarting sales activities on its already completed developments, as the Group currently has c.1,350 units (c.£325m –measured at cost) of available finished stock. Its sales offices have been reconfigured to ensure that strict social distancing measures are adhered to using an appointment-based visiting system.
Build activities will restart gradually, commencing with the reopening of sites that are closest to completion, with a new set of operating procedures in place that will help to ensure the safety of the Group's staff and supply chain by implementing extended working hours and safe site working practices.
Financial position – The Group is pleased to announce that it has secured access to the HM Treasury and Bank of England Covid Corporate Financing Facility (‘CCFF’) and has put in place a £300m commercial paper programme under this scheme.
The facility will be used to provide additional liquidity should it be required.The Group continues to maintain a strong balance sheet and, as at 30 April, its available cash balance was c.£146m (after drawdown of its £200m Revolving Credit Facility).”
•Novacyt – “ As of 1 June 2020, sales of the Primerdesign Covid-19 test are €45 million (£40 million). In addition, Primerdesign has received orders for, or been contracted to deliver, a further €90 million (£80 million) of its Covid-19 test. Therefore, currently the total sales and confirmed orders are €135 million (£120 million).
During the second half of the year, additional Covid-19 related sales are expected from the Company's new products, Exsig™ Direct and Exsig™ Mag, and from the Company's mobile testing solution (see further detail below). Novacyt is now selling its Covid-19 test into more than 130 countries, with the top two countries being the UK and Germany.
Novacyt is also pleased with the progress it is making in the US market and expects to update the market in due course.”
•Electrocomponents – “ The supply side of our business remains robust and tightly managed with all our distribution centres (DCs) open and operating effectively. However, demand levels have been negatively impacted as the Covid-19 lockdown measures became more extensive across our key markets throughout April and May.
Group like-for-like revenue declined 14% during the first eight weeks of the new year ending 31 March 2021.
•EMEA saw a decline of 18% with Northern Europe declining by 19%, Southern Europe declining by 21% and Central Europe declining by 13%.
•Asia Pacific saw a like-for-like revenue decline of 2%.
At a Group level the rate of revenue decline moderated slightly during May as lockdown restrictions began to ease in some of our key markets. We continue to focus on measures to stabilise and improve gross margin.
The drop through impact of lost revenue to adjusted operating profit for our business is typically in the mid-thirties, pre mitigating actions.
The Covid-19 crisis is changing consumer behaviour as people across the globe become used to working, communicating and transacting online. We believe it will accelerate the pace of digital transition within our own industry and we are well positioned to benefit from this trend. During the first eight weeks of 2021, while demand levels have slowed, our website visits have seen close to double-digit growth, with new online customer numbers also increasing. We are accelerating initiatives to drive further differentiation in our digital proposition to convert and retain these new customers. We are also working to enhance our online experience and marketing in the Americas. During our first half of 2021, we will launch our rebuilt RS mobile-first responsive website - this will drive a step change in online experience and enable us to better realise the continued growth of mobile search. We are also accelerating the roll out of new technology across the globe to optimise and improve returns on paid customer acquisition and investing to step change our marketing, website personalisation and customer retention activities, with increased use of data and automation.
Looking forward, we will look to take the best of what we have learned from different ways of working during the Covid-19 crisis to make our organisation more nimble and efficient. We will also continue our work to simplify our organisation and build a lean and scalable operating model. We are on a journey to create a market beating proposition capable of disrupting our markets and accelerating share gains. During the year we have made further progress on this front with our three regions aligning around a common value proposition and go-to-market approach. This common approach allows us to further simplify the way we operate and, where possible, do things only once for the Group which will help us move faster and drive significant further savings in the longer term.”
• Gooch & Housego – “As previously reported two of our US sites, Fremont and Cleveland were closed in March in compliance with State ‘stay at home’ orders but are now operating at close to full capacity as those restrictions have been progressively relaxed.
In the UK all of our five manufacturing sites have remained open though the unique nature of our Torquay facility is such that it will need to operate at a reduced capacity in order to adhere to the Government's Covid-19 guidelines. Work is ongoing to enable a return to full capacity by the end of FY2020.
The Group implemented a number of measures to control cash and costs, including taking advantage of the UK Government's Coronavirus Job Retention Scheme, as well as other tax deferment arrangements. The Group has been focused on retaining its highly skilled workforce and maintaining its infrastructure and capabilities to enable future growth post the Covid-19 emergency.
Performance Overview – Trading conditions in the first six months of our 2020 financial year were challenging due to the ongoing Covid-19 emergency and the continuing cyclical downturn in the industrial laser market. The emergency reduced demand initially from our Asian markets and then towards the end of the reporting period from our European and North American markets. The impact of the Covid-19 emergency was most significantly felt in our Industrial market facing businesses. Our Life Science and Aerospace & Defence businesses were substantially unaffected given the nature of the products and services supplied, as well as the physical characteristics of our sites from which we supply those markets. However, overall half year revenue declined by 3.9%, or 4.1% excluding the impact of foreign exchange.
The demand picture in the industrial laser markets remains below 'normalised' levels, though our fibre optic module and hi-reliability fibre coupler order book remains strong. We have started to see recent recovery in the levels of orders from our Asian customers as that market reopens following lockdown. However, in Europe and North America customers remain slow to commit to significant new orders, though we note that customer facilities are now starting to reopen.
Demand for our Life Sciences and A&D businesses has remained robust through the Covid-19 emergency and we believe both businesses will perform in line with management expectations for the remainder of the current financial year. Our Life Sciences business delivered revenue growth of 5% in the first half compared with the prior year. The recently acquired ITL business performed strongly. In Aerospace & Defence, revenues progressed from the previous year and important milestones were completed, paving the way for improvement in profitability levels in that business in the second half of the current financial year.
Cost reduction measures implemented in the second quarter of the financial year will deliver an overall reduction in our cost base for FY2020. We are also progressing with the previously announced plan to streamline our acousto optic and precision optic manufacturing which will start to deliver significant benefits in FY2021. These measures will help deliver a lower and more flexible cost base for the future.
The order book at 31 March 2020 stood at £91.7 m, close to the order book of £93.2m in the prior year. In Q1 order intake progressed well, up 11.5% compared with Q1 FY2019. This included recovery in segments of the industrial laser market, such as semi-conductors, but as the Covid-19 situation developed intake in Q2 fell 14% below the levels achieved in the first quarter. Overall the book to bill ratio for the first half was 0.93.
The Board remains confident in the long term growth potential of the business, but the short term impact of the Covid-19 emergency remains uncertain. As such, the Board does not recommend an interim dividend and will consider the level of any final dividend in light of full year trading performance and market trading conditions at that time.”
• Xaar – “Overall trading in the first four months of the new financial year has been in line with the expectation we established before the Covid-19 outbreak. Sales have been weaker in Europe and North America but stronger in Asia where economies have come out of lockdown sooner. Our short-term order book is healthy but the outlook for the second half of the year remains uncertain and it is too early to assess the impact of the pandemic on the results for the full year 2020 and into 2021.
The board will re-establish guidance on expectations as more economies emerge from lockdown and there is greater certainty surrounding economic conditions. We remain confident and focused on our medium-term strategy to return the business to profitability and growth.”
• Zotefoams# – “As anticipated and reflecting the disruption arising from the Covid-19 outbreak on a number of markets, demand conditions have been more challenging during April and May. The Group has taken successful
action to manage cost and continues to expect overall trading for the second quarter to be consistent with Board's expectations as at the time of the preliminary results announced on 7 April 2020.
Notwithstanding the more challenging conditions in the short term, Zotefoams has been proactive in seeking to identify new business opportunities and is pleased to announce that it will supply Plastazote® polyolefin foams for a substantial new contract awarded to its largest UK customer. The project, which starts immediately and is expected to run for a period of 26 weeks, involves the provision of foam for the UK Government's PPE initiative. This will significantly supplement existing AZOTE® volumes, particularly in the second half of 2020, and reinforces the benefits of the diverse range of applications and markets for the Group’s products.
While the backdrop remains too uncertain to provide detailed financial guidance at this time, the Board continues to expect a stronger performance in the second half of the year, underpinned by more resilient demand for High-Performance Products. The current outlook for both footwear and T-FIT® technical insulation products in the second half remains positive, while conditions in the commercial aviation market are expected to remain weak.”
• Warehouse REIT# – “Current trading and outlook – Good progress with collection of March 2020 contracted rents, with payments made or agreed for 94.0% of contracted rent as at 27 May 2020. We continue to work with the remaining tenants to secure payment as soon as possible.
The business is resilient and well placed to continue to navigate short-term market disruption. As we progress through the quarter to June 2020, we continue to review the quarterly earnings available for distribution, in line with the REIT obligations to pay 90% of earnings as dividends. We continue to target a total dividend per share of 6.2 pence for the year ending 31 March 2021 and will monitor this as the impact of Covid-19 is better understood. We intend to declare the dividend for the first quarter of the year ending 31 March 2021 in August 2020, as usual.
We have a strong focus on preserving our balance sheet strength over the coming months. At 31 March 2020, we had available cash of £5.5 million and £33.5 million headroom in our undrawn facilities, and were operating well within our banking covenants.
Looking further ahead, we see potential for further market rental growth, continued value creation through asset management and an attractive acquisition pipeline. Prior to the onset of Covid-19, we had identified a significant pipeline of attractive acquisitions. We still see good opportunities to continue with our investment strategy, with much of this pipeline still in place, and a proportion of it now at potentially more attractive values, as well as several new opportunities emerging in recent months. The pipeline, which has an increased focus on e-commerce opportunities, amounts to approximately £350.0 million, of which over £100.0 million are in exclusive or final negotiations or have solicitors instructed and approximately a further £250.0 million are in detailed negotiations
We are focused on continuing to increase our exposure to the digital economy through the assets we acquire and the tenants we work with as well as further lengthening the WAULT on our portfolio. The Company is again considering an equity fundraising to enable it to capitalise on its pipeline and is commencing a period of engagement with existing and potential new investors.”
• Card Factory – “As announced on 6 May 2020, whilst our stores have been closed we have continued to trade both of our online businesses, manage our expenses and cash flow and support our 3rd party partners who remain trading during this time.
Online trading from our two websites has been strong with cardfactory.co.uk LFL since lockdown, at +302% and at +153% YTD. In addition, gettingpersonal.co.uk has also see a strong surge in sales and has been trading, since lockdown with LFL, at +68% and at +27% YTD. In response to this increased demand and to support social distancing we have established a second fulfilment unit in Wakefield leveraging existing capacity. In H1 FY21 we will conclude the work on the new platform and will launch our new website for cardfactory.co.uk which will enable a significantly improved customer experience and the delivery of our multi-channel roadmap. Alongside the online activity, we have continued to supply both Aldi and our Australian partner, The Reject Shop, with card ranges, with both experiencing a solid level of sales during this time.
With our stores closed, over 90% of our colleagues have been furloughed under the Government's Job Retention Scheme. Where required, our Support Centre colleagues are working effectively from home.
Given the recent announcements by the Government we are planning to open 10% of our stores around the 15th June, ensuring that we are compliant with the requirements for ‘Covid-Secure’ to enable us to test trading under these new conditions. We have worked through the detail of social distancing in our stores, received appropriate PPE and other equipment. Subject to our early learnings, we have plans for further openings of stores ensuring that we do so with customers and colleagues safety at the forefront of our approach. It is clear that in some shops social distancing will impact the number of transactions that we are able to deal with; however our teams are looking to introduce innovative ways to process customer transactions to optimise sales in stores including helping customers reduce the frequency of their visits, but increase the average basket value in each shop. We will conclude the learnings from our trial stores and then rollout future store openings in line with Government guidance.
Whilst the audit report will contain an emphasis of matter in respect of Covid-19, the Board is confident that the Group has access to sufficient liquidity for navigating the times ahead. This has been driven by management focusing on cash conservation, its current banking facilities and the additional available support from the Bank of England. The cash conservation measures have included utilising relevant government schemes where applicable, managing stock intake and supplier terms and controlling the cost base. Capital investment has been focused on a small number of key projects that remain important to the Group's long-term strategic objectives. The business has in place an existing £200m Revolving Credit Facility ("RCF") maturing in October 2023 with our commercial banks, who have remained supportive of the business during this period. Alongside the current bank facilities, the Bank of England have confirmed access to additional funding under the Covid Corporate Financing Facility (‘CCFF’).
Outlook – Before the impact of Covid-19, we had made a satisfactory start to the year. In the first major season of the year, Valentine's Day, we achieved our fourth consecutive year of record sales growth in both volume and value. However, the Covid-19 pandemic has impacted trading and, given the uncertain economic backdrop, we do not think it is appropriate to provide financial guidance for FY21.
Our four pillar strategy has been a simple and effective part of delivering the growth of the business to date. However, as customer buying habits evolve and the consumer landscape changes, we are planning for a new stage of growth. We have tested price positioning and new ranges and are well progressed on the implementation of a new multi-channel enabling online platform ensuring ongoing growth in the UK business. We have already established some key retail partnerships within the UK and overseas, leveraging our industry leading position and vertically integrated business model. We will continue to look at new, similar opportunities both within the UK and beyond.
The combination of the new growth strategy with Card Factory's market position, vertically integrated business model and management team means that we are confident we will continue to grow our market leading position. We have clear investment plans to support the delivery of our strategy and remain focused on delivering strong returns for our shareholders. We are looking forward to sharing this new strategy with you in due course, as the situation with Covid-19 becomes clearer.”
• Clipper Logistics – “The Group has continued to trade well throughout the year and financial performance was broadly in line with expectations, delivering an EBITA of circa £24.0m for the year to 30 April 2020, an increase of nearly 19% on the prior year. From the onset of lockdown on 23 March, there was a period of disruption within the Group’s operations for bricks-and-mortar retailers, which was impacted as customers closed their stores. Retail activity saw a period of hiatus, as consumer confidence was adversely impacted.
Clipper embraced the opportunity to reach out to both new and existing customers to offer assistance, and since that initial period of disruption there has been an accelerating level of trading activity. Clipper's long-standing track record for innovative solutions, combined with its existing infrastructure to support online retailers in driving growth, cost efficiency and customer service excellence placed us in a prime position to enable retailers to seize opportunities despite the challenging business environment. The positive feedback from customers on the levels of support Clipper has been able to provide during lockdown is a testament to Clipper's agility and ability to provide adaptable services in short timescales.
COVID-19 UPDATE – Following the initial period of disruption, Clipper has experienced strong levels of activity from both new and existing clients. In particular, the Company has provided support to online retailers with high e-fulfilment volumes, as some online retailers experienced extremely high levels of demand, regularly outstripping that seen over the Black Friday period last year. We are witnessing volume increases of over 100% on a like-for-like basis with some customers.
April 2020 saw Clipper roll-out additional services for several grocery-related customers, including Tesco, Asda and Morrisons as they mobilised their operations to address the challenges of Covid-19. Importantly, April also saw us begin our supply chain support to NHS frontline staff, including the warehousing and distribution of PPE to hospitals.
The Company has been working alongside the NHS on two new initiatives. The first, a separate channel to deliver PPE to hospitals; the second has seen Clipper develop an online portal for fulfilling orders for PPE to GP surgeries, small care homes and home care providers.
In total, the new activities brought on since lockdown, coupled with new contracts coming on stream in Q1 FY21, will add a further 1.5 million square feet of space to Clipper's pre-existing 10 million sq. ft. infrastructure. The Group has also seen a significant increase in its tender pipeline; the annualised revenue of the probability-weighted pipeline stood at over £50 million as at 18 May 2020, a significant increase on the same period last year.
OUTLOOK – The Board is confident about Clipper's prospects for the new full financial year. It expects the Company to benefit from evolving trends in the retail sector, as Covid-19 accelerates the shift to online retail:
• as a market leader in e-fulfilment and returns management services, the Group is already seeing an increase in demand as outlined above;
• the Group is also seeing increased interest in outsourcing; following the successful implementation of a new first-time outsourcing contract for one major fashion retailer, Clipper is now in discussions with a further leading UK high street retailer to take over their in-house operation for the first time; and
• the Board also believes that Clipper's Clicklink service is likely to see increased demand as the UK Government looks to encourage the use of Click & Collect initiatives as a means to kick-starting activity on the UK's high street, whilst reducing congestion.
In response to the changing requirements of bricks-and-mortar retailers, Clipper is also in the vanguard of developing shared user transport networks. This will enable Clipper to service multiple retailers on any given high street. Such initiatives are likely to be key to supporting a wide range of retailers as they reassess supply chain needs. Clipper's broad spread of existing customers, and the agility of its forward-thinking solutions will place it in an excellent position to support this.
Meanwhile, Clipper's European business continues to grow rapidly, driven by a growing presence in e-fulfilment and returns management. Revenue in Europe grew by 41.3% in FY19 and by a further 33.7% in FY20.
The Company-compiled consensus for EBITA for FY21 is £25.8m. Whilst Covid-19 still presents some risk, the Board believes that EBITA will be comfortably ahead of these expectations.”
• Inspired Energy# – “In March 2020 we successfully implemented our business continuity plan and c.80% of our workforce are currently working remotely. The team has adapted extremely well to the challenges faced and continue to deliver excellent levels of service to our valued clients.
The Group is in the fortunate position of having a robust balance sheet and resilient revenue streams underpinned by the strength of its Corporate Order Book, and the diversity of its 2,800 Corporate customers that operate across all segments of the UK and ROI economies. The year-end Corporate Order Book stood at £57.5 million and increased to £60.1 million as at 30 April 2020. The first quarter of 2020 saw no impact on the assurance and advisory services provided by the core Corporate division, which represented c.89% of 2019 Group revenues.
The Group's SME division, which represents c.11% of 2019 Group revenue, is experiencing a reduction in demand for energy supplier switching services. In response, a significant number of staff in this division have been placed on furlough, utilising the Government's Coronavirus Job Retention Scheme, in order to mitigate the immediate financial impact on the Group. A core team of employees continue to service our SME clients.
Financial position, liquidity and dividend – The Group has a strong balance sheet position, having recently refinanced its banking facilities to October 2023, with an option to extend to October 2024. In addition to cash and cash equivalents of £11.7 million on hand as at 30 April 2020, approximately £14.0 million of the Group's £60.0 million Revolving Credit Facility is undrawn with an additional £25.0 million accordion option available, subject to continued covenant compliance.
Clearly, the ultimate impact of the Covid-19 pandemic is difficult to predict and as such, we have considered scenarios when stress testing the base financial forecasts for the period to December 2022. We have based our stress testing on a prudent downside scenario that reflects the current unprecedented uncertainty, which we consider to be severe, of a very significant reduction in revenue in Q2 and Q3 2020, with trading recovering in Q4 2020 and continue to strengthen into 2021. In producing this downside scenario, we have also considered the publicly available information with regard to the reduction in utility consumption in countries where the impact of Covid-19 happened earlier than in the UK and ROI. In addition, we have reviewed the limited data available in the UK regarding the impact on consumption to date and based on this limited data, actual consumption by the commercial market during the month of April 2020 appears to be notably higher than the assumption applied within the downside scenario.
These projections show with the benefit of management continuing to take appropriate mitigating actions to preserve cash reserves of the Group, including the Board resolving not to recommend a final dividend for the year ended 2019, that the Group can operate without any further need to draw on the existing banking facilities over the period. However, under a more extreme scenario, there would have been a risk that the Group would breach its existing adjusted leverage covenant under the facility agreement entered in October 2019. As a result of this, in common with many other companies, the Group has undertaken discussions with its banking partners, who have approved an increase in the leverage covenant for the test dates ending 30 June 2020 through to 30 June 2021 (inclusive), to a level which provides sufficient headroom to remain compliant in the Board's prudent downside scenario.
Current trading and outlook – The Group was largely unaffected by Covid-19 until very late in March and the business delivered a strong performance in the first quarter, with trading in line with the Board's expectations at the time and ahead of the same period last year.
Whilst operational disruption has been more significant since the end of the first quarter, the business has been able to operate on a continuous basis whilst also benefiting from its significant contracted income. Swift and effective action has been taken to manage costs and preserve cash flow with the result that the Group has remained both strongly cash generative and delivered profits significantly ahead of the downside scenario during April. Whilst the impact in the SME market (11% of FY2019 Group revenues) has been more significant and visibility is still limited, the Board has been encouraged by an initial uptick in activity levels during May.
The Board has been encouraged by the performance of the business during this very challenging period and believes that the Group is well positioned to respond effectively as activity levels continue to recover. The Board is monitoring conditions on a continuous basis and should these continue to stabilise it expects to be in a position to provide financial guidance for the current year, within the next few months.
The Covid-19 crisis has presented an unprecedented challenge and the Board has taken a number of prudent actions to reinforce its financial position in the short term, so that the Group can retain its market leading offering and talent as well as ensure it has the flexibility to maintain its strategic momentum. As such and retaining its disciplined approach to assessment, the Group continues to develop its pipeline of acquisition opportunities. Inspired Energy is a leader in its markets, the evolution of which may well be accelerated by the current backdrop. The Board believes that there will continue to be significant scope to progress its successful acquisition strategy moving forward and will look to act decisively where value-enhancing opportunities are presented.”
• Quartix Holdings – “The Coronavirus pandemic has not yet had a material impact on the Company's subscription base: a slight decline in the value of the UK base over the past two months has been more-than offset by small gains in other territories. Similarly, rates of attrition have held steady at around 12% on an annualised basis. It should be noted, however, that the Company is in regular communication with a number of customers (predominantly in the UK) for which it is providing support in the form of payment relief or deferral. These customers now represent a total of approximately 6% of the total base by value. In addition to this there has been some increase in direct debit and other payment issues, although there has not yet been a significant increase in bad debt.
As noted on 27 April, the Company believes that the full impact on its subscription base will not become apparent until the autumn, as the UK government's financial support measures are withdrawn and as the Company's SME customers potentially exhaust their cash reserves. In the meantime it will continue to focus on supporting its base and on investing in customer acquisition.
Insurance telematics – New installations for insurance were limited by both installation capacity and demand in April (612 units) but mainly by reduced demand in May (388 units). New registrations started to increase towards the end of May as insurers started to write telematics policies again and the Board expects that this should take the total for June to approximately 700 units.
Likely impact of Coronavirus on the outlook for 2020 and 2021 – As stated in the trading statement of 27 April, The Board's view is that the Covid-19 pandemic is unlikely to have a material impact on profit and cash flow in the first half of 2020 but given the uncertainty that remains, the Board is still unable to provide guidance for the financial performance in the second half of 2020 and for 2021. A further update will be provided at the end of July with the Company's Interim Results.”
• EasyJet – Has said half of its network would be reopened by the end of July, increasing to 75% during August, although the number of daily services will still be significantly down for a normal summer season. Customers and cabin crew must wear face masks, and no food will be served.
• Berlin will today allow fitness studios, casinos and dance schools to reopen for the first time since 27 March. Also, sport with a maximum of 12 participants is allowed to take place indoors for the first time and bars will also be allowed to reopen.
• Tokyo's Imperial Palace has reopened its grounds. People are allowed back into the park as of today, but the number of visitors is limited to 50 each in the morning and afternoon.
• Pakistan has lifted almost all of its lockdown measures after its Primer Minister Imran Khan said his government could not afford to continue giving cash to the poor.
• Secondary school pupils in the Netherlands have returned to classes, with social distancing in force.
• Marriott has reopened all of its hotels in China and the group says it has seen a recovery in business travel. The hotel chain has 350 outlets across China and says that the occupancy rate is now at 40%.
• Singapore has reopened its schools after closing two months ago. Students are required to wear facemasks and will have their temperature checked by teachers.
• The risk of Covid-19 infection could double if the two-metre rule is reduced in the UK, a study part-funded by the WHO and published in the Lancet has found.
• The Bank of Korea predicted its economy will shrink at least 2.0 percent in the April-June period compared to the previous three months. The economy has already declined 1.3% quarter-on-quarter in the first three months.
• South Korea is testing a new quick response (QR) code system this week to log visitors at high-risk entertainment facilities, restaurants and churches. The government has decided to mandate QR codes to register visitors’ identities after authorities struggled to trace people who had visited a number of nightclubs and bars at the centre of a virus outbreak last month after much of the information on handwritten visitor logs was found to be false or incomplete.
• Jacinda Ardern, New Zealand’s prime minister, says her government will consider sooner than planned a move to the lowest level of Covid-19 restrictions after she said the country’s quashing of the virus had progressed “ahead of schedule.”
• CBO director Phillip Swagel projected the virus will reduce US economic output by 3% through 2030, a loss of $7.9tn.
Anthony Fauci, the US government’s top public health expert and Covid-19 task force member, said he was no longer in frequent contact with the president.
• Officials in the Czech Republic have announced a new traffic light system for travel. Europe is divided into green, amber and red countries with different movement restrictions. Sweden and the UK are both designated red for now.
• Montenegro is due to declare its epidemic over. Provided no new infections are reported overnight, it will have gone 28 days without any new cases.
• Demand for lettings in the UK is up by 22% compared to last year, according to Rightmove. Lockdown break-ups, job losses and urgent relocations are thought to have led to a rise in the rental sector.
• House prices fell 1.7% in May from the previous month, the largest monthly fall for 11 years, according to the Nationwide.
• Germany’s travel warning for Europe will be lifted from tomorrow according to the foreign minister, Heiko Maas. The worldwide travel warning still applies, but for the countries of the EU and associated states, the warning will be replaced by travel advice. This will give travellers detailed information about the situation in each individual state, which should help them decide where they can plan to go on holiday and which regions they would be advised to avoid.
• Some 300,000 more UK workers have been furloughed in the past week and another 200,000 self-employed have taken up government grants.
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