Coronavirus - Once bitten

A number of European countries have begun to reopen parts of their economies hoping to start the return to normality without seeing a resurgence in the infection rate.

Some have had clear success in reducing infection rates and feel they are past the peak; others do not want to be far behind. The UK extended its lockdown for a further three weeks on Friday, with no easing of restrictions. Having a prime minister with first-hand experience of the virus is likely to drive a more cautious approach to lifting the lockdown. At least this gives an opportunity to observe and learn from others rather than leading blindly from the front.


• Germany starts to reopen smaller shops;

• US oil prices drop to 21-year low;

• UK begins using blood from survivors to treat patient;

• Public Health England will begin tracking cases by ethnicity amid disproportionately high number of black, Asian and minority ethnic (BAME) deaths.

Company news

Buildings & Construction

 Countryside Properties – “Announces that, in light of the Covid-19 crisis and its impact on the communities we serve, we are establishing a £1 million fund to support the most vulnerable people in our communities. These funds will help support local charities and groups, food banks and others providing essential local services in locations where Countryside operates across the country.
In addition, all of the Executive Committee and the Board of Directors have agreed to a voluntary 20% reduction in base salary and fees from 1 April 2020 until at least 1 June 2020, with the equivalent cash amount to be added to the Communities Fund.
Along with other businesses in the UK, Countryside is signing up to the Covid-19 Business Pledge as we continue to support our employees, customers and communities through this crisis.”

 Redrow# – “Redrow plc is providing a further update to that issued on 9 April 2020, on actions being taken to mitigate the impact of the Covid-19 pandemic on the business.
Banking – Further to the statement on 9 April that Redrow has been confirmed as an eligible issuer for the Covid-19 Corporate Financing Facility with an issuer limit of £300m, we are pleased to announce Redrow has also now successfully concluded negotiations with its six relationship banks regarding the request for £100m additional funding under its existing Revolving Credit Facility (RCF). The company now has £350m of committed facilities under the RCF, which matures at the end of December 2022.
Board update – As a consequence of the unprecedented impact of Covid-19 on the business and the housebuilding industry, John Tutte has agreed to delay the step back to non-executive Chairman from 30th June until the company's AGM in November 2020. John will support the senior management team to ensure an orderly return to operations when the business is satisfied it is safe to do so. It remains John's intention to retire from the Board ahead of the AGM in 2021. As previously announced, Matthew Pratt will take up the position of Group Chief Executive with effect from 1st July 2020.

 SigmaRoc – “Since the end of February 2020, we have been working to prepare our business for scenarios that I do not think anyone could have anticipated, namely, those brought about by the impact of the coronavirus pandemic. Fortunately, as a team, we believe were ahead of most and found ourselves in a good position to help protect our staff and our business from the potential consequences of Covid-19. With this message, I intend to give you some insight into how we are approaching this challenge.

(a) Preparation and uniform approach – In early March 2020, it became apparent that the coronavirus would pose a serious challenge to all of us. To prepare for this challenge, we instructed our Health and Safety Director, Clint White, and the Group MDs to immediately start coordinating our response across the entire business. A Group-wide campaign on how to prevent contracting the virus, based on scientific and government advice, was started. At the time of writing, this has been successful, with all our operations remaining free of confirmed or probable coronavirus cases.
(b) Increasing our readiness – As time passed, it quickly became apparent that basic hygiene rules would not be enough and that we needed to do more; we needed strict social distancing. As a business, we are fortunate in that we mostly work in the open air, on sites with plenty of space and carry out jobs that can be reconfigured to be performed alone, indicating a relatively lower risk profile.
However, across the Group we also have administrative offices, porta cabins, breakrooms and toilets. We have made sure to ventilate these spaces well where possible, otherwise deciding to limit access, or closing them completely. We have also enhanced cleaning routines and surfaces touched by staff are now cleaned more frequently. Those who could work from home were instructed to do so, in order to respect the social distancing instructions. In addition, a programme was put in place to ensure those working from home did so in the right setup and environment.
(c) Financial preparation – As a team, we also looked carefully at the possible financial implications to our business resulting from coronavirus. I am happy to report that, at an early stage of pandemic, we developed contingency plans that prepared our business well for the possible consequences of this virus. Simulations were run to understand how long we could survive with zero revenue, how much revenue loss we could stand to remain cash positive, how much revenue could be lost before banking covenants were breached and what would need to be done to make our financial position as secure as possible.
The plans we developed were reassuring. Our cash balance was robust and would allow us to operate for over six months with zero revenue and without drawing any further debt. We have access to further bank facilities if required. Even more encouraging is the fact that these plans were prepared, finalised and presented to the Board well before the UK and Belgium governments announced the various financial support packages. When it became clear how such financial support could help us if required, we felt we were in an excellent position as a Group to deal with the challenges ahead.

(d) Brace for impact – As coronavirus started to spread and Belgium, the UK and the Channel Islands started reporting a significant number of cases, the implementation of our contingency plans became the priority. Several additional steps were taken:

 Daily calls: To coordinate activity across all businesses and facilitate a uniform approach across the Group, daily calls with all managers were set up to report on the situation in each business.

 Continuing to operate: The next dilemma became whether to stay open or shut our sites. Government regulations in the UK and Belgium indicated our activities could continue, as long as all health recommendations were followed. In the Channel Islands, the indications changed over time. As a management team, we debated the matter extensively, to conclude that if we could guarantee correct social distancing and hygiene measures, staying open where permitted was the right answer. While keeping our staff out of harm was our key focus, our second priority had to be supporting our local economies and communities by paying our bills and supplying materials required for projects such as hospitals and road infrastructure. If we could continue to operate and trade, we were not a burden to the economy, but in fact, contributing to it. This ultimately felt like the right approach.

As a result, the Group had to close all but essential infrastructure maintenance operations, in both Guernsey and Jersey, for a period of 14 days commencing effective from 26 March 2020 and 4 April 2020 respectively. Guernsey has remained closed up until the publication of these Accounts, however, there is an expectation of an easing of restrictions and a controlled restart of business activity during the week commencing 20 April 2020. The Jersey Government has implemented a permitting system that is progressively facilitating the reopening of accredited construction sites and small works. At the time of writing modest supplies have commenced, with an acceleration in the Group's operations expected to commence from 20 April 2020.

In the UK, the Group remains active across all sites, albeit at reduced volume levels, supplying product where doing so is an economically viable proposition for its customers. In this context, the Group has decided to suspend some of its production capacity and supply from stock. In Wales, G.D. Harries remains active across a number of civil engineering and road maintenance contracts, having reduced production and haulage capacity in-line with current local demand.

The Group's Belgian businesses also remain operational with the support of staff and unions, supplying bluestone to a reduced number of active customers. The Group's partner in the sale of aggregates from its Soignies quarry has decided to close its production entirely until further notice. However, the Group continues to supply customers from its other aggregate quarries near the town of Huy.

 Consultation with unions and staff: In order to ensure our operations could continue, a dialogue with staff commenced at each production site. Those who were considered to potentially be at risk (for example those that had a pre-existing medical condition), those who had any symptoms similar to those experienced by people suffering from Covid-19, or those who were in contact with Covid-19 patients, were instructed to go home and isolate. Surveys were conducted to understand requirements to stay home with children, providing management with a good understanding of the pressures on our staff.
In Belgium and in Jersey, where the workforces are unionised, a dialogue was started with the unions, who in every case were proactive, supportive and understanding that, as long as staff could be kept safe, there was a local community and economy to consider, as well as the future of the business. The union representatives showed true leadership and vision during those discussions. 

 Facemasks: A topic that followed from our staff consultations was the need for facemasks. After failing to secure the required number, we decided to hire a team of seamstresses and make them ourselves. 2,000 facemasks have been ordered of which 1,000 have been received and distributed to members of staff. The remaining 1,000 are planned to be donated to local hospitals. Appropriate instructions were given to each staff member to ensure proper use of the masks.

 Paying our bills and helping the community: The next challenge became the management of our cash in a climate where more and more customers were signalling that they would not be making timely payment of their outstanding liabilities. Daily cash monitoring and bi-weekly calls were set up between all accounting and credit control teams to ensure we managed

our cash prudently. Through discussions with our customers and suppliers, we were able to continue to pay our bills and maintain our cash position without significant erosion. In the end, our mission has been to be a supportive business, helping its local communities where it could while not endangering its own liquidity position.

Food, Drinks & Household

 Premier Food# – “Following the progress made with this strategy, the Board now expects to report Trading profit for the 52 weeks ended 28 March 2020 at the top end of market expectations. The trading performance in the fourth quarter continued the positive momentum seen in previous quarters and volumes in March rose sharply to fulfil increased consumer demand during the outbreak of Covid-19. As a result, Group sales in the fourth quarter are expected to have grown approximately 3.6% compared to the prior year and approximately 10.5% in March. In the UK, sales are expected to have increased around 7.3% in the fourth quarter and 15.1% in March.

During the outbreak of Covid-19, the Group's first priority is the health and wellbeing of its colleagues, customers and other stakeholders. The Group also takes its responsibility as a major UK food manufacturer very seriously and is working closely with its customers to ensure maximum availability of its product ranges for consumers. During this challenging time, the company's manufacturing and distribution operations are working at maximum capacity and coping well with this recent elevated level of demand, and customer service levels continue to be high.

As outlined above, the Group experienced a dramatic short-term peak in volumes across many of its categories during March. Volumes have started to reduce from the exceptional levels seen in March, although are still expected to continue to be higher than average patterns of demand. This reflects more meals being eaten at home than usual due to recent measures set out by HM Government and hence increased demand for the Group's product ranges.


 4d Pharma – “Announces that the company has received expedited acceptance from the UK Medicines and Healthcare products Regulatory Agency (MHRA) to commence a Phase II study of MRx-4DP0004 in patients with Covid-19.”

 Abcam – “Since reporting our half year results on 9 March 2020, we have continued to closely monitor and respond to the rapidly changing global situation, including guidance and policy changes implemented by governments around the world.

Above all, our priority remains the health and wellbeing of our colleagues and the continued support of our customers, some of whom are directly engaged in the effort to develop diagnostic tests, vaccines and treatments for Covid-19. While our teams are currently working remotely wherever possible, our efforts to contribute to the critical work of those customers has continued, including:

• boosting our supply chain and manufacturing flexibility to support increased demand for existing products used for SARS-CoV-2/Covid-19 research;
• joining more than 20 collaborations across the UK, US, and China focused on SARS-CoV-2 drug and vaccine development; and
• donating critical supplies (e.g. PCR equipment used for testing).

Abcam has not furloughed any staff, nor has it participated in any of the other Covid-19 related government assistance schemes that have been implemented globally.

The Group has a strong balance sheet and liquidity position, with proforma net cash1 of approximately £80 million. In addition, the Group has a £200 million revolving credit facility providing additional flexibility.

As announced in our half year results, sales for the fiscal year as of 9 March, had been approximately £3 million lower than plan, reflecting the impact of the early stages of the pandemic, predominantly in China. Since then, conditions in China have recovered gradually, however policy actions taken by governments around the world to limit the spread of Covid-19 have begun to have an effect on customers in other markets, including across North America and EMEA. Consequently, the Group estimates that as a result of the impact of Covid-19, revenue for FY2020, as of 17 April 2020, was approximately £14-16 million lower than plan.

Over the last few days, we have begun to see the reopening of labs in certain countries within Europe, and a gradual increase in customer activity and revenue as a result. However, it is not feasible to give accurate guidance on future sales until there is greater clarity about the full duration and impact of the pandemic.

We are continuing to monitor developments and will provide further updates as appropriate, including as part of our usual reporting cycle in July and September.

 Genedrive# – “Announces it has entered into an agreement with Cytiva (formerly GE Healthcare Life Sciences) for the development of its Genedrive® 96 SARS-CoV-2 assay for use on lab-based PCR instruments. This is one of two assay programmes the company is developing following an announcement made on 25 March 2020.

The Genedrive® 96 SARS-CoV-2 assay combines Genedrive's PCR chemistry integrated with Cytiva's LyoStable® stabilisation technology. The combination would allow for high throughput manufacturing of over 10,000 tests per hour in a 96-well, temperature-stable plate format that could be transported globally without the need for refrigeration. The one-step test features a single PCR bead that once mixed with a patient's sample, can be performed on a variety of existing open PCR platforms from manufactures such as Roche and ABI (Thermo Fisher).

As the global spread of coronavirus infection increases, it is likely that a variety of diagnostic tools will be needed for direct clinical care via specialist laboratories, central hospital labs and in the community. It is likely that millions of people will need to be tested, and high throughput PCR molecular testing will play a central role. Genedrive aims to deliver clinically verified, consistent and reproducible assays that are easy to use and can be manufactured and delivered globally in high volume. Working with Cytiva will help us achieve this goal.

 Omega Diagnostics Group – “Announces that it has signed a Material Transfer Agreement ("MTA") with Mologic Ltd ("Mologic") to formalise a partnership to provide manufacturing capability for Mologic's Covid-19 first generation ELISA1 diagnostics test, the development of which has been funded in part by the UK government. Once ready, the antibody test will be

capable of playing a key part towards identifying people that have built up immunity to coronavirus.

Omega has provided Mologic with access to one of its manufacturing facilities (which specialises in manufacturing ELISA tests), situated in Littleport, Cambridgeshire, England and both parties have collaborated to produce pilot batches and first validation batches.

The MTA formalises Omega's access to raw materials and know-how to manufacture Mologic's diagnostic test at scale, using Omega's ELISA manufacturing facility in Littleport.

Following successful independent validation of Mologic's ELISA test by the Liverpool School of Tropical Medicine and St George's, University of London, Mologic has now submitted its test to Public Health England and NHS Scotland for formal validation. Once validated, Omega and Mologic will enter into a longer-term supply agreement with Omega manufacturing up to 46,000 Covid-19 tests per day.

Omega will also CE Mark the test under the MTA, after which both parties will work together to commercialise the test.

The arrangement with Mologic is separate from, and additional to, the announcement made by the company on 9 April 2020 relating to the UK Rapid Test Consortium (RTC), which is to jointly develop and manufacture a Point-of-care Covid-19 lateral flow antibody test which could be used 'at-home' and which will be manufactured in Omega's Alva facility in Scotland. Mologic's Covid-19 ELISA diagnostic test is also an antibody test but will be used on patient samples sent by hospitals or GPs for laboratory testing. In the current environment, there is demand for both at-home and laboratory-based tests.

 Sensyne Health# – “Today announced the launch of a new web-based Covid-19 focused software application called 'CVm-Health the 'Good Neighbour app'. The app marks Sensyne Health's first direct to consumer software application built on its new SensyneOS Clinical AI platform. This platform is built to be globally scalable, with the highest levels of cyber security and regulatory compliance.

 CVm-Health the Good Neighbour app (launched today) – The app is free to anyone in the UK, and provides a secure way for individuals and families, sick or well, to monitor and support the management of their health for Covid-19 related symptoms.

The app will also enable individuals to 'be a good neighbour' by helping remotely monitor and care for members of their family or community who are at risk from coronavirus and digitally disconnected, either those with poor technology literacy or without access to the internet. The Office of National Statistics has reported that 11.3 million people in the UK lack the basic digital skills needed to use the internet effectively, while 4.8 million people never go online at all.

Sensyne will work to build and engage with communities and aims to work alongside national and local charities and volunteer organisations.


 Marston’s – “We continue to take an extremely prudent approach in our management of the business during this period of unprecedented uncertainty, the timescale of which remains unclear pending further guidance from the UK Government as to how, and when, the current state of much reduced social activity can be relaxed and pubs allowed to re-open.

In addition to the actions which have been taken to reduce the Group's overall cost base, outlined in our previous update on 18 March, Marston's Issuer PLC has also taken the precautionary measure of securing a waiver of a breach that might arise under the 30 day suspension of business and operations provision, under the terms of the Group's secured funding platform. The waiver has been granted until 29 May 2020 with an automatic extension to 15 June 2020 in certain circumstances.

The Group is also reviewing whether there is a need to consult with bondholders about further possible covenant waivers under the secured funding platform in light of the impact of the UK Government's measures on the business.”

 Rank Group# – “We provide this trading update in the context of the unprecedented situation caused by the Covid-19 pandemic which is having a material impact on the Group. Since our update on 17 March, we have continued to make progress on our plan to ensure that we withstand this crisis and re-emerge as a strong business. Whilst we have limited forward visibility and with it the likely pace of recovery, we are preparing for difficult trading conditions when we reopen our venues businesses.

The short-term economic impact to our venues businesses has been significant, but we have acted swiftly and decisively to mitigate where appropriate. Across our UK venues and support offices, circa 7,000 colleagues, out of a UK workforce of 7,600, have been furloughed. Where relevant, Rank has topped up the UK Government's Coronavirus Job Retention Scheme ('CJRS') so that all colleagues in furlough will receive 80% of their salary. The executive and non-executive directors have volunteered a 20% reduction in salaries and fees with effect from 1 April for as long as our colleagues are in furlough. The positive cash impact of the UK's CJRS, and similar schemes in Spain and Belgium, will be approximately £8m per month. The Group also benefits by approximately £1m per month from the business rates holiday. Discussions to reduce our cash outflow are ongoing with suppliers and landlords. Our approach is to ensure that both Rank and our suppliers are able to survive the current economic crisis.

The Group has a small number of long running VAT claims. At the outset of the lockdown period, Rank requested repayment from HMRC of £25.2m in relation to VAT paid on slot machine revenue between 2002 and 2005 to maximise its liquidity and this was received in early April. Subsequently on 15 April 2020, following an appeal heard in January, the Upper Tribunal ruled in favour of Rank. If HMRC is granted permission to appeal this latest decision and the Court of Appeal rules in favour of HMRC, Rank would be required to repay the £25.2m. In that scenario, we do not expect any repayment to be made for at least 12 months. In addition, we have reached agreement with HMRC to defer circa £40m of tax and duty that was due to be paid in April 2020, initially until 30 June 2020.

The Group's next dividend would typically be paid in October 2020. The Board does not intend to recommend a dividend unless all creditors, directly arising from Group actions to mitigate the economic impact of Covid-19, have been resolved and we have the necessary visibility on future cash flows following the reopening of our venues.

Assuming that all venues remain closed for the rest of the financial year to 30 June 2020, underlying operating profit for the year is expected to be between £48m to £58m after IFRS 16 (£40m to £50m before IFRS 16). As a result, we expect the Group to meet all its bank covenants at 30 June 2020.

Immediately prior to lockdown measures in the UK we estimated that during a period of full closure of all venues, monthly cash outflow before mitigation was £25m and would be reduced to £17m with mitigating actions within our control. As a result of the HM Treasury's support measures and further progress on our own mitigations, we now estimate that our monthly cash outflow rate will be reduced to approximately £10m from May 2020. As at 31 March 2020, total available cash and facilities, after deducting customer balances, was £166m with the month of April expected to be broadly cash neutral. The Group is funded by the Stride acquisition facility of £128m and undrawn Revolving Credit Facilities of £85m (of which £30m expires on 29 September 2020, £40m in 2024 and £15m in 2025).”


 Future – “We continue to monitor closely the Covid-19 pandemic and its impact on our staff, clients and operations. Our primary focus is ensuring the safety and well-being of our employees and we were able to successfully implement a global remote working policy at an early stage of the pandemic. We continue to support our clients and the communities impacted with an initiative launched to assist staff in becoming NHS volunteers, as well as providing many content insights to support communities in lockdown.

Our audience numbers remain strong, and are benefiting from additional users currently searching for advice and inspiration; March was the biggest month ever for Tom's Guide, with over 22 million users and 28 million sessions, while Live Science had 100 million sessions in the month.

Our digital revenue performance continues to be encouraging with, to date, continued strength in eCommerce, and although digital advertising is experiencing some reduction in yields this is offset in the main by audience growth.

As previously announced, all material Events that were scheduled during April to June have been moved to later in the financial year, and are subject to ongoing review, while less material Events have been cancelled for the remainder of our financial year.

High street store closures have impacted magazine sales. Whilst we expect a significant reduction in sales in the coming months, our digital copies and subscriptions are performing well.

Future has carried out a number of cost saving measures, in order to protect profitability across the Group and lessen the economic impact of Covid-19 over the coming months. This includes the reduction in supply of magazines to retail outlets, the acceleration of the closure of a number of marginal magazine titles, a reduction in the variable costs associated with Events, a 25% reduction in discretionary costs, and some salary savings, including the furlough of some staff in impacted areas. The senior management team and Board have also taken a 20% reduction in salary from March.

TI Media – TI Media is a less diversified business and therefore the impact of Covid-19 is expected to be more significant. Magazine newsstand revenues have been impacted during the period of lockdown, with UK newsstand revenues reduced by approximately 30% since the introduction of lockdown measures on 23 March. However, subscriptions have been performing well, with demand driving a material year-on-year increase in new sales. Events, most notably the Decanter World Wine Awards, have also been deferred until later in the financial year.

In order to mitigate the impact of the reduction in revenue, a number of cost savings have been implemented within TI Media, which include a reduction of promotional and discretionary costs, smaller print runs to reduce the supply of magazines, the furlough of some staff and role closures, and tiered salary reductions for all staff.

Banking facilities – The Group is also pleased to announce the signing of a new £30m multi-currency Revolving Credit Facility ("RCF"). The RCF, which will stand alongside Future's existing debt facilities, and matures in 12 months, has been arranged in order to provide the Group with additional working capital headroom to maintain the underlying growth momentum of the combined business, whilst navigating the impact of Covid-19.

The key terms of the new RCF mirror the Group's existing debt facilities, and are being provided by the Group's existing banking syndicate of HSBC, Natwest and Bank of Ireland.

The Group's current net debt is £93m following completion of the TI transaction, with available cash headroom of £69m under the new facilities.

#corporate client of Peel Hunt

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