Coronavirus - Misdirection

Lockdown restrictions across the world are beginning to ease, both in terms of national restrictions and cross border travel.

However, Dr Mike Ryan, the WHO’s head of emergencies, has sounded a further warning, telling a briefing on Monday: “We cannot make assumptions that just because the disease is on the way down now that it’s going to keep going down.” While he optimistically pointed out there would be a number of months to prepare for a second peak, most companies, individuals and governments have their eyes fixed on reopening plans, but few will be planning for a second wave of the infection.


• The WHO suspends testing of hydroxychloroquine as a possible Covid-19 treatment

• US brings forward travel restrictions on Brazil by two days

• Singapore now expects its GDP to contract 4-7%, previously 1-4%

• UK excess deaths approach 60,000

• NYSE to reopen its trading floor

• Germany plans to end its travel warning for trips to 31 European countries from 15 June, including the UK

• Remdesivir is being made available on the NHS.

Company news

Buildings & Construction

 Foxtons – “Following the recent Government announcement on the re-opening of the housing market, the Company plans to start re-opening its branches over the course of this week, with all branches expected to open by 1 June 2020. We will be bringing furloughed employees back to work on a gradual basis from the same date.

The safety and well-being of our employees and customers is of paramount importance to the Company. We have undertaken comprehensive risk assessments at all of our branches as well as our head office in consultation with employee representatives. Each of our workplaces has now been modified to be in line with recent guidance issued by both the government and Propertymark, the estate agency industry body.

The additional measures implemented in our branches include: social distancing procedures throughout; enhanced hygiene and office cleans; and, mandatory Covid-19 training for all employees to engage appropriately with customers.

Physical viewings and valuations will recommence over the same timeframe under tightly controlled conditions with social distancing in place. Customers will be encouraged to view properties virtually in the first instance, and for any physical viewings to meet directly at the property. There will be a restriction on the number of people attending viewings with participants only able to attend if they confirm in advance they are not infected or displaying symptoms of Covid-19. Foxtons agents will be using appropriate PPE including hand sanitiser, face coverings and gloves when visiting properties.

A number of employees will continue to work from home where it is possible to do so effectively.

Business Performance – The business has continued to support customers online and over the telephone since the lockdown period began. Commissions earned in the eight weeks between Monday 23 March 2020 and Friday 15 May were down 44% on the prior year. Lettings commissions have proven to be more resilient than sales commissions, down 40% and 61%, respectively. Mortgage broking revenues were down 2%.

Following the successful completion of the share placing of equity capital on 17 April, the Company ended April with a net cash balance excluding lease liabilities of £37.1m

It is still too early to predict what the full impact of the Covid-19 pandemic will be on Foxtons' full year results. There remains significant uncertainty over how long the London residential sales and lettings market will continue to be impacted by the pandemic. Nonetheless, the Board is pleased with the resilience that the business has shown given such a disruptive backdrop.”

 Hunters Property – “In accordance with Government guidance we physically closed our branch network on 24 March but remained open for business through our capability to work remotely. We have been very pleased with the level of work we have been able to continue because of the quality of our network and the investment and quality in our systems and technology. We firmly believe the future of this business is based on professional, well-served and technology-based solutions.

We have worked closely with our network and where they have needed additional help, I am pleased to report we have been able to step in and guide them through the myriad of complications this unprecedented situation has generated.

Covid-19 has significantly altered our outlook for 2020 although, having said that we remain ahead of where we had expected to be in lettings and in mitigating the effect on tenant fees. Though it is pleasing to see the lockdown partially lifted it is too early to forecast the impact on the wider economy. We have however adopted plans to deal with the situation, taken advantage of a range of Government introduced schemes and secured a significant finance facility to allow us to look positively to the future. We continue to speak with good prospect enquiries and we look forward to welcoming them to the network in due course.”


 Pantheon International – “As at 30 April 2020, 8% of the valuations received from PIP's private equity managers were dated 31 March 2020 and 2% represented new investments held at cost. Consequently, 90% of April's valuations are based on information that is unchanged from the information included in the NAV reported in respect of 31 March 2020. The valuations that have been received dated 31 March 2020 are reflected in the valuation losses (-12.4pps, -0.4% of NAV) for April against their previously unadjusted valuations. The Manager noted the recovery that has been seen in the public equity markets during April but in view of the very limited amount of new valuation information received from the underlying private equity managers over the same period, and the continuing uncertainty surrounding the economic impact of the global slowdown relating to Covid-19, the Manager considered it appropriate to leave the Manager's Provision that was introduced in March unchanged at £122m. As more substantial information relating to valuations as at 31 March 2020 and subsequent quarters is received, this will be reflected in the future announcements of monthly NAVs and the need for the Manager's Provision reviewed accordingly.”

Food, Drinks & Household

 Aryzta – “Group reported revenue in the quarter was €644.2m, representing a (21.5)% organic decline versus Q3 2019 as the effects of Covid-19 impacted revenue in the period, particularly in the second half of March and in April.

The Group responded rapidly to the changed consumer environment. The primary focus was on protecting employees and supporting our customers, while maintaining a strong liquidity position during this very challenging period.

Since mid-March the Group took decisive actions to maximise cash and reduce costs, resulting in increased liquidity since the beginning of the crisis.

Q3 trading patterns had been in line with guidance up until 15 March. However, market conditions and prospects deteriorated sharply since that date, leading to a negative organic revenue evolution of (49)% in April. It is now clear that Covid-19 will have a material impact on Group performance in FY20. We cannot yet fully gauge the consequences that will result from the situation as the short and longer-term impact cannot be fully assessed at this point in time.

Trading conditions in the month of May have seen some early signs of recovery and are now showing three consecutive weeks of revenue improvement leading to an organic evolution of c. (33)% vs prior year. In particular, improvements have been seen in the QSR and retail channels, while Foodservice continues to remain subdued due to continued restrictions in key markets.”

 Tata Consumer Products – “The Company along with its subsidiaries and affiliates continues to manufacture and supply essential food and beverage items in domestic and international markets even in the current Covid environment. The demand for the group's food and beverage products for in home consumption continues with some short term stocking up. However, extended lock down conditions have caused some adverse impact on sales due to disruptions in the market openings and supply chain with the impact being more pronounced in out of home sectors. Impact on future operations would to a large extent depend on how the pandemic develops and the resultant impact on businesses.”


 4d Pharma – “In 2020 the global Covid-19 pandemic hit the UK affecting almost all aspects of the economy, the pharmaceutical industry and 4D pharma included. In response we have been proactive, putting the safety of staff and patients first. We have made good use of technology to minimise disruption to our operations while protecting our staff. However, as has been seen across the biopharma industry, there have been unavoidable impacts on certain activities, resulting in some potential delays to expected clinical readouts. We continue to monitor the situation closely and will provide updates as and when the expected resolution of the situation becomes clearer.

In light of this unprecedented situation, the Board has carefully re-evaluated the Company's strategic priorities and near-to-mid-term objectives. We have taken measures to streamline the business, including changes to management structure and reducing staffing requirements, primarily relating to manufacturing, research and administrative services. The Board has also prioritised allocation of capital and resources to key programmes such as oncology, set to deliver key clinical value drivers for our shareholders in the coming year, including launching a Phase II clinical trial of an orally administered immunomodulatory LBP in Covid-19 in the second quarter of 2020.”

 EMMAC Life Sciences – “Is pleased to announce that Medalchemy, the Group's GMP certified manufacturing site in Alicante, Spain, will manufacture product for a clinical trial as part of a Consortium led by the University of Valencia. The clinical trial in Covid-19 patients will use the T12 molecule to prevent disease progression towards Adult Respiratory Distress Syndrome ('ARDS'), which is believed to be the leading cause of death in Covid-19 patients. The T12 molecule targets Goodpasture antigen-binding protein ('GPBP'), an extracellular protein kinase overexpressed in the lung, of Covid-19 patients which is suspected to enlarge alveolar septum causing poor blood oxygenation in ARDS induced by other pathogens.”

 InnovaDerma – “As previously announced, while trading in the second half of the year began positively and was in line with expectations, the UK Government's lockdown measures to stop the spread of the pandemic have significantly reduced the sale of our brands through our bricks and mortar channels. However, our DTC channel, which accounted for c60% of our revenue in FY2019, remains a key pillar of our distribution strategy. The investments we have made over the years in ecommerce and our customer lists has allowed us to accelerate the diversification of platforms, increase the number of conversations and attract many new customers. This strategy, our digital expertise and ability to leverage our multi-channel model swiftly has significantly boosted our online sales over the first four months of the second half, as consumers shifted their purchasing online. The Group is well funded, continues to benefit from strong cash flows and has sufficient levels of cash with no debt.

The Board continues to monitor Covid-19 and the impact of the pandemic carefully.”

 Synairgen – “During the calendar year 2019 we made good progress in the trial of our wholly-owned asset SNG001 in COPD. The emergence of SARS-CoV-2 has caused us to pause the COPD trial and to divert our expertise and investment to addressing the more pressing Covid-19 pandemic. Knowing that a broad spectrum antiviral agent delivered directly to the lungs may prevent the development of lower respiratory tract illness or accelerate the recovery of patients already hospitalised, we have raised additional funding of £14 million, which has enabled us to successfully initiate a trial of approximately 220 patients with Covid-19, some 100 of whom are in the hospital environment with severe respiratory symptoms, with a further 120 patients who will be dosed in the home environment upon early signs of Covid-19. Our staff and our key suppliers in both the UK and overseas have been able to continue working through lockdown. Data from the hospital trial will read out during the summer, and, if positive, the Company will work closely with regulators to determine an expeditious route to securing approval for SNG001, a treatment we believe could play an important role in addressing the current Covid-19 crisis and similar viruses in the future. In parallel, the Company is now working with manufacturers to scale up for potential demand for SNG001. The outlook for the business is positive and we look forward to updating the market on further progress in due course.”


 McLaren – “Plans to cut more than a quarter of its workforce after the company said it had been "severely affected" by the crisis. The firm employs around 4,000 people but 1,200 of those are to be made redundant, the vast majority in the UK.”


 FBD Holdings – “Following the actions taken by the Government to stop the spread of Covid 19, which resulted in the temporary closure of many businesses, FBD has received over 700 claims under the business interruption extensions of our business insurance policies. FBD is strongly of the view that our business insurance policies do not provide cover for a pandemic of this nature and we have addressed all claims accordingly.

We understand the extraordinary and unprecedented challenges our customers are experiencing as a result of the actions taken by the Government to reduce the spread of Covid-19. We are committed to helping our customers through this difficult time. To this end, we have introduced a range of support measures for our business customers who have temporarily closed their premises such as a pro-rata refund of premium relating to the business closure, maintaining full cover for unoccupied business premises without any additional premium and offering flexible premium payment arrangements for customers who are experiencing financial challenges at this time.

We acknowledge the disappointment and frustration of affected businesses that their business interruption insurance does not respond to cover pandemics. However, we are unable to provide cover for what we believe to be, and are advised is, an uninsured risk not covered by our policies.

A number of customers have challenged FBD about our interpretation of policy wordings in particular with regard to those sold to publicans. FBD have approximately 1,300 pub customers and wish to have the issues resolved as quickly as possible to achieve clarity and minimise costs for all parties. Having carefully considered the matter, FBD believes that the most expeditious and efficient way of achieving that is for proceedings to be brought, by way of test case. We can now confirm that litigation between FBD and three publican customers claiming cover for business interruption as a consequence of Covid-19 public health measures, has been scheduled for hearing in the Commercial Court in October 2020. FBD intends using these cases to seek a determination in court of the overall question of whether losses due to Covid19 related closure, claimed by public house owners, are covered by their FBD policy under the business interruption clause. The three cases in question will allow the issue of cover to be decided in a set of court proceedings, therefore avoiding each pub owner concerned having to take their own legal actions and incurring the related costs. We await the Courts determination in due course.

FBD is confident in our interpretation of policy coverage and are of the view that this approach will provide clarity in an expedient manner to the customers concerned.”


 Revolution Bars# – “Is pleased to announce an extension to its debt facilities, which the Board is confident will provide the Group with sufficient liquidity for the foreseeable future.

As announced on 14 April 2020, the Group's lenders, NatWest, agreed to increase the Group's Revolving Credit Facility (the "Facility") from £21.0m to £30.0m until 31 August 2020, following which it would step down to £24.0m. NatWest also agreed to waive all financial covenant tests at March 2020 and June 2020.The Group's net debt position is currently £22m. With the Revised Facilities in place, the Board is confident that the Group will have sufficient liquidity for the foreseeable future, even taking into account the Board's downside Covid-19 trading scenario.

As part of the Revised Facilities, NatWest have also agreed to amend the Group's financial covenants to be based solely on cash headroom, set at a level based on the Group's downside Covid-19 trading scenario. In accordance with the terms and conditions of CLBILS, the payment of dividends by the Group is prohibited whilst the term loan remains outstanding.”


 Kavango Resources – “First, let me begin with the Covid-19 pandemic, which has clearly presented many challenges including volatile financial markets. Kavango has taken swift pre-emptive action to ensure the safety of all staff and senior management. All of the Company's directors, senior management and staff are working from home. The Company initiated a business continuity plan well ahead of the UK Government's initial advice on home working.

Travel has been restricted in Botswana and the United Kingdom. Botswana has dealt admirably with Covid-19 and is already easing partial travel restrictions in the country. While this currently limits our ability to conduct exploration work in the field, we had already planned extensive desktop research. This will involve further analysis and compilation of data gathered during 2019 (from drilling and surveying) together with additional data we have sourced from third parties.”


 Marshall Motor Holdings – “The Board of Marshall Motor Holdings Plc notes and welcomes the Prime Minister's announcement on 25 May that car showrooms will be permitted to re-open from 1 June 2020.

Implementation of the Company's detailed plans to re-open its showrooms were already well advanced in anticipation of this announcement. The Company has been closely involved in the industry's engagement with Government regarding the implementation of guidelines specific to the automotive retail sector.

Since the Company closed its operations on 23 March, it has undertaken comprehensive risk assessments of its sites, produced a detailed reactivation plan and engaged with and trained all colleagues returning to work on our revised operating procedures. The Board is confident that it is taking all necessary steps to ensure it is Covid-19 secure in line with current Health and Safety legislation.

The Company's aftersales facilities are now open for all customers and for all services, having previously been focused on supporting the emergency services, commercial vehicle operators, key workers and vulnerable people. Whilst still early, initial demand is encouraging as we start to ramp-up our aftersales operations.

In terms of our physical showrooms, in anticipation of a June re-opening, colleagues had been returning to showrooms and readying them for re-opening to our customers in accordance with the Government's sector guidelines. Further colleagues will be returning over the coming week to assist in the delivery of vehicles sold both before and during the lockdown following the Government's recent clarification over 'click and collect' services.”

 ScS Group – “Following government guidance on 23 March 2020, the Group temporarily closed its store and distribution network. After carefully considering recently updated government guidelines and implementing enhanced health and safety policies and procedures, to protect our people and our customers, ScS is pleased to announce that 80 of its stores in England reopened on 23 May 2020. The Group's distribution network has also reopened in England, allowing deliveries to customers to recommence.

In line with government guidance, the Group's 19 stores, and distribution networks, in Wales and Scotland remain closed. We continue to monitor the situation closely and will reopen as soon as possible.

Throughout the lockdown period, ScS continued to provide support to our customers and employees through dedicated teams, who we enabled to work remotely.

Financial position – ScS has been building a strong balance sheet. As previously announced, the Group drew down £12m from its revolving credit facility (RCF) on 17 March 2020. Including the £12m RCF, as at 25 May 2020, the Group held £48.3m in cash.

In order to protect our financial position, we have continued to review and reduce cash expenditure to protect our liquidity in the short term. The Group has continued to evaluate capital expenditure plans.”

Support Services

 Empresaria – “The Group had a strong start to the year delivering year on year operating profit growth in each of the first three months. Net fee income for the quarter was down 5% compared to the prior year with the vast majority of this reduction coming in March as Covid-19 started to affect the Group. The strong profit performance in the first quarter was an early demonstration that the operational initiatives we put in place last year are having a positive impact on the business.

The Group remained profitable in April, the first full month of Covid-19 impact, despite net fee income being down 30% against prior year.

As previously announced, we have responded quickly and decisively to make necessary cost reductions and other changes to mitigate the impact and we are continuing to develop and adjust these measures as the situation evolves. The leadership team throughout the Group have agreed to temporary reductions in pay, and the Board has, temporarily, reduced all directors' fees by 20%.

Despite the worldwide impact of Covid-19, the Group continues to benefit from the diversity of our operations. While some areas, particularly our Professional sector, which includes our aviation, domestic services, corporate events and new home sales sectors, have seen very significant impact from Covid-19, others, such as our IT sector and our logistics business in Germany, have continued to perform well.”

 Gateley – “Following a solid trading performance in the first half of the financial year and the further strengthening and diversification of the Group's service offering through the completion of four earnings enhancing acquisitions, the Covid-19 disruption to trading constrained the pace of the Group's growth in the final two months of FY20. Despite this, the Board is pleased to report that revenue for FY20 will be not less than £108.0 million (FY19: £103.5 million).

The Board believes that this solid revenue performance reflects the breadth and depth of the Group's legal and consulting service lines and the resilient revenue streams that they yield. Many of the Group's counter-cyclical service lines are presently extremely busy, including Restructuring and Dispute Resolution, and staff from some of our transactional teams, who are less busy, have been redeployed to support this increased activity elsewhere in the Group.

Working capital position – The Board has reviewed the Group's cash position and its operating expenses and has taken swift and decisive action to minimise the financial impact caused by the Covid-19 pandemic. Alongside our careful stewardship of the Group's cash resources and low debt levels, the measures taken so far include salary sacrifices across all employees, the furloughing of a number of staff and the cancellation or deferral of all discretionary expenditure. The Board has also negotiated increased and extended working capital facilities of up to £20 million with the Group's banking partners should such facilities prove to be necessary.

As a result of these actions, the Board is confident that the Group's balance sheet is robust and able to withstand the financial impact of the pandemic and that there are sufficient working capital facilities available to the Group to withstand the financial impact of the Covid-19 pandemic.

The Board will provide an update on future dividend payments to shareholders in the FY20 results announcement.”


 Lufthansa has agreed a rescue deal worth €9bn with the German government that saves it from collapse. The German government will take a 20% stake in the firm, which it intends to sell by the end of 2023. But the deal still has to be approved by the firm's shareholders and the European Commission.

 Stagecoach – “Stagecoach Group plc ("Stagecoach") notes the UK Government's announcement of a bus, tram and light rail restart programme to facilitate a phased increased in local services in England.

Normal bus, tram and light rail networks across the UK have been paused since March as part of the response to Covid-19. UK Government guidance to public transport operators in England on social distancing means that the current capacity of services and associated passenger revenue is significantly reduced. The Government has now confirmed it plans to pay for more comprehensive services.

The Department for Transport ("DfT") has announced that it is making available a further £254 million for buses and £29 million for trams and light rail to help increase the frequency and capacity of services as steps are taken to ease lockdown measures in England. The DfT has also confirmed that the funding will be kept under review.

Discussions will continue between the Government and industry representatives regarding future arrangements, and we will assess the full detail of the Government's plans as these are confirmed.

Stagecoach Chief Executive, Martin Griffiths, said: "We are pleased that the Government has recognised the importance of safe and sustainable public transport now and for the future. We are uniquely placed to drive the country's recovery, helping rebuild our regional economies, reconnect people and their families, and support the country's long-term objectives around decarbonisation, improved air quality and better health.

"This funding is designed to help transition our public transport networks from lockdown to more normal levels. It is important the right level of resources remain in place to ensure public transport operators can continue to provide local communities with the services they need.

"With the comprehensive safety measures we have put in place and the support of our passengers and our employees, we stand ready to restore our services to closer to pre-Covid levels. We will continue to work with our local authority partners and other key stakeholders on making the best use of increased capacity."

Bus operators are also in discussions with the Scottish and Welsh Governments on how increases in bus services can be introduced in those parts of the UK.”

Lifting restrictions

• The Czech Republic is opening its border crossings with Austria and Germany today; however, only returning citizens, foreign residents and European Union students and business travellers will be allowed in. Police will carry out spot checks on cars, and passengers will need to provide a certificate proving they do not have Covid-19 – or else face two weeks of quarantine. From Wednesday, the border with Slovakia will reopen, but visitors from either side of the border will have to return within 48 hours.

• In India, domestic flights resumed two months after they were halted. India has stepped up preventative measures ahead of resuming domestic flights. Security officers are checking each passenger's temperature and verifying that they have downloaded the government's Covid-19 tracking app, Aarogya Setu. Other measures include disinfecting shoes and luggage.

• Saudi Arabia will lift its curfew across the country on 21 June, with the only exception being the city of Mecca – where shortened curfew hours will remain in place, from 3:00pm to 6:00am. The Saudi curfew had recently been 24 hours a day covering the Eid festival. Bans on travelling within the country, praying in mosques and going to work in both government and the private sector will be lifted on 31 May.

• Japan has lifted its state of emergency, but warned it could be reimposed if infections picked up. Limits on regional travel will be lifted on 19 June.

• The UK has announced that non-essential shops will be allowed to open from 15 June.

• Germany is considering lifting its travel warning for a number of European countries – including the UK – on 15 June. Europe effectively shut its internal border area known as Schengen at the start of the outbreak, but a number of countries are calling for the return of free movement as soon as possible.

• Denmark has modified its own border rules, and made it easier for couples to see each other again. From Sunday, your girlfriend or boyfriend could cross the border to see you provided they show proof – like texts, photos or letters – to prove a proper relationship.

• Iceland has also eased its restrictions, allowing gatherings of up to 200 people. Nightclubs and gyms are also allowed to reopen.


• US President Donald Trump has brought forward new travel restrictions for Brazil, where coronavirus cases have risen sharply in recent days. The White House said that the restrictions will come into effect today not (28 May as originally planned).

• Dr Zafar Mirza, Pakistan's, top health official, has warned that lockdown might resume as cases and deaths rise, warning that a “strict lockdown” was on the cards if infections continued to swell. Pakistan lifted its lockdown in phases, starting earlier this month.

• The Women's Super League and Women's Championship seasons have been ended immediately, with the outcome of the WSL title – and promotion and relegation issues – still to be decided.

• Singapore has cut its economic growth projection, with officials saying they expect the economy to shrink 4-7%. Previous estimates projected a contraction of 1-4%.

• Demonstrators in Ecuador have marched through cities across the country in protest at tough economic measures imposed by the government to tackle the crisis. Last week, President Lenin Moreno announced public spending cuts, which included the closure of seven state-owned companies.

• Testing of the malaria drug hydroxychloroquine as a possible treatment for coronavirus has been halted because of safety fears, the World Health Organization (WHO) says. Trials in several countries are being ‘temporarily’ suspended as a precaution. It comes after a recent medical study suggested the drug could increase the risk of patients dying from Covid-19.

• Spain says foreign visitors will no longer have to undergo a two-week quarantine from 1 July.

• The New York Stock Exchange (NYSE) is set to reopen its trading floor on today after a two-month closure. Under the new measures, only a quarter of the normal number of traders will be allowed to return to work. Traders must also avoid public transport, wear masks and follow strict social distancing rules, with newly fitted transparent barriers to keep people apart.

• Remdesivir, an anti-viral medicine originally developed to fight Ebola, is being made available on the NHS. The drug is currently undergoing clinical trials around the world, including in the UK. Dr Stephen Griffin, from the University of Leeds Medical School, said it was perhaps the most promising anti-viral for coronavirus so far.

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