The UK government has been criticised for what some call a confusing exit strategy.
However, a clear message would need to be a one size fits all approach; that does not work on a country-by-country basis, let alone on a person-by-person one. Sweden’s government has resolutely refused to put its country into lockdown, an approach that has been widely criticised by other nations; still, it has seen its R0 value plateau and its daily cases follow a very similar profile to many countries in lockdown, including the UK. Societies operate differently and part of the strategy will be seeing how society reacts to the new measures.
• UK furlough scheme extended until October.
• Russia has the second highest number of cases behind the US.
• Italy to reopen bars and restaurants earlier than anticipated.
• Spain orders 14-day quarantine for overseas travellers.
• French economic activity down 27% in April.
• AIB Group – “As the sudden and severe impact of Covid-19 became apparent towards the end of Q1, AIB reacted swiftly by implementing a series of measures to support customers and I am proud of the way that my colleagues have risen to the challenge. These customer measures involved the implementation of close to 50,000 payment breaks for mortgage, personal and business customers, enhanced flexible credit lines and keeping our branch network open in communities across the country.
Critical to our ability to support individuals and businesses through the crisis is AIB's robust capital and liquidity position and the strength of our business model. We delivered a solid underlying operational performance in Q1 and whilst 2020 will be an uncertain and difficult year, we will retain our relentless focus on our customers and are confident we can generate value to shareholders over the medium term.
Within our Corporate, Institutional and Business Banking (CIB) segment, close to 700 customer connections have contacted their dedicated relationship manager to request a modification of their existing banking facilities. Circa 500 are in the medium SME cohort and their primary request is a payment moratorium (total value of modifications c.€1bn) while requests in the Corporate and Real Estate Finance vary from payment moratorium to covenant resets and some requests for new working capital facilities (total value of modifications c.€2.6bn). The Syndicated and International Unit participates in large European or US banking syndicates and has received very few requests to date for modifications due to the nature of this portfolio.
In the UK, we have proactively contacted all our business customers with loans >£1m. We have put in place over 5,000 modifications for our retail, business and corporate customers with a value of €1.5bn, with c. 80% related to payment breaks. AIB is a qualified lender under the Coronavirus Business Interruption Loan Scheme (CBILS) and continues to support its customers both in Northern Ireland and Great Britain.
Customers have also been adapting to the current situation and amending their banking and spending behaviour. We have seen high levels of usage across our digital channels; we recently had our highest ever level of daily logins on our mobile app, over 32% higher than the previous record set in the run up to Christmas. We have also seen a significant growth in contactless payments with Irish consumers spending over 29% more per transaction using contactless on their debit cards since the limit was increased on 1 April and 33% more per transaction using digital wallets (Apple Pay, Google Pay, Fitbit Pay) compared to January 2020.
Customers are spending 28% less overall, but in particular sectors they are spending more, for example groceries spend is up over 40% in April versus January 2020. Customers are also shifting their spend online with increased spend in many areas for example: online groceries +121%, online electrical goods +71%, online clothing +56% and online takeaways +43%.
The Irish Government has outlined a roadmap for a lifting of Covid-19 restrictions and a reopening of the economy and society on a staged basis. Throughout the crisis, the Government has introduced a number of measures to support individuals and businesses impacted by the Covid-19 pandemic.
On 2 May 2020 the Government announced a further package of business-oriented support measures valued at €6.5bn which was in addition to the €2bn of supports previously announced. The recently announced measures are targeted at supporting the business community, across various sizes, and aiding the economic recovery efforts. These included:
• Micro businesses – a €250m Restart Fund providing grants up to €10,000
• Small businesses – a €2 billion Covid-19 Credit Guarantee Scheme to guarantee 80% on lending to SMEs until the end of 2020, for terms between 3 months and 6 years for amounts between €10,000 and €1 million
• Medium and large enterprises – a €2 billion Pandemic Stabilisation and Recovery Fund within the Ireland Strategic Investment Fund (ISIF) investing across the capital stack
• Other measures such as a three-month waiver of commercial rates for impacted businesses, and a warehousing of tax liabilities for a period of 12 months after trading recommences.
In the UK, AIB is a qualified lender under the Coronavirus Business Interruption Loan Scheme (CBILS) and continues to support its customers both in Northern Ireland and Great Britain.
Given our physical and digital distribution, we are well-positioned to administer schemes such as SBCI and the Covid-19 Credit Guarantee Scheme, which will aid in the rebooting of the economy. We are maintaining our dialogue with the various stakeholders and will play our part to support the economic recovery efforts.
The economic impact of Covid-19 on the labour market was sharp and severe. It is estimated that employment may have fallen by as much as 25%, with the unemployment rate forecast by the Department of Finance to average circa 22% in Q2. The State has introduced emergency income support through the Temporary Wage Subsidy Scheme and the Pandemic Unemployment Payment with a high take-up.”
• Numis Corporation – “Numis delivered good revenue growth against an unpredictable market backdrop which proved beneficial for our equities business but our Investment Banking division was impacted by lower deal volumes. Overall, revenues increased 13% to £63.1m (2019: £55.7m) and Underlying Operating profit increased 12% to £9.1m (2019: £8.1m). Profit before tax was in line with the comparative period and includes £1.9m of losses recognised on investments held outside of our market making business (2019: £1.4m loss). Our balance sheet remains resilient, and our liquidity position strengthened over the period in response to the market environment; cash balances increased by 21% to £95.3m (2019: £78.9m).
Market conditions – Equity markets experienced a dramatic and largely unprecedented 6 month period, the FTSE 100 and FTSE250 were down 23.4% and 24.3% respectively.
The three-month period ended 31 December 2019 featured subdued equity markets and weak corporate activity in advance of the UK General Election. Subsequently markets delivered strong gains and UK equity market activity improved significantly. However, there was insufficient opportunity for deal flow to recover in response to the General Election result as the second quarter was swiftly dominated by the Covid-19 pandemic, which caused an unprecedented decline in global markets and extraordinary volatility levels. Transaction volumes across both ECM and M&A declined significantly through the second quarter as a result. ECM remains our largest revenue contributor and whilst market volumes in the comparative period were particularly weak relative to historic levels, this 6-month period witnessed volumes decline a further 10%.
During the final weeks of the period we started to see ECM issuance increase as a result of companies responding to liquidity stresses created by Covid-19. We expect this trend to continue, however the near term outlook for M&A and Private markets transactions will likely remain challenging.”
Food, Drinks & Household
• Inspecs Group# – “In light of the current situation, we have decided not to pay a dividend until the full effects of the pandemic on the business are known.
The Executive Directors have taken a 60% cut to their salaries, and we have implemented a four-day week with a 20% cut in salaries across UK and USA locations until further notice.
Our factories in China and Vietnam are almost back to full production capacity, although most of our customers have been forced to close during the lockdown. Opticians were among the first to be closed due to the close proximity to their customers. Shipping to key accounts is proving to be a challenge, as their distribution centres are currently closed.
Although our factories are continuing to produce existing orders received in the early part of the year, the continued lack of sales by our locked-down retail customers means that stock levels remain static, and requests for delays in delivering stock are more frequent. Where we can ship stock by sea, we do so, as it saves cost and adds four weeks to the lead time, which will help phase in the new collections at an appropriate time for the market.
We expect a very active Q4 and possibly Q3 when the effects of the virus on the industry will be clearer. People will still need vision correction, and the likelihood is that there will be greater demand from more value-driven retailers, which encompasses our main key accounts.
Our design teams in the UK, Portugal and HK continue to produce new designs, which are being prototyped in time for the recovery. Many companies in our sector are simply delaying the seasons, but we have taken the decision to power though with new collections appropriate to the seasons to come including several value house brands.
We have managed to engage with a number of large new customers, who are planning to utilise our Vietnam factory for their 2021 collections. If this comes to fruition, we should see continued expansion of the Group in the future once the macro economic situation has returned to previous levels. This would mean that we would be well on track to double production in Vietnam, as well as increasing specialist titanium production in our Chinese facility.
Our focus has always been on being good to deal with, and remaining flexible, and during the early part of 2020 we have focused on supporting our clients and supply chain. It is our normal mode to consider our costs constantly, and we have further cut expenses where it is sensible to do so, to preserve cash and galvanise our resilience during a difficult time for the industry and wider economy. It is my belief that companies who stick to their core values and really live them throughout this crisis will emerge leaner, more efficient, and well-trusted by their customers.”
• Kingfisher – “Based on government advice and learnings from the operating protocols set by Castorama in Poland and major food retailers across Europe, all reopened Kingfisher stores are operating with strict social distancing and safety measures. The measures put in place to protect customers and colleagues include: • The provision of gloves, visors and masks to colleagues
• Limiting the number of customers in store
• Safe queuing before entering the store
• Sanitiser stations throughout the store
• Floor navigational markers to help enforce social distancing
• Perspex screens at checkouts
• Contactless or card payments only(5)
Similar measures are also in place at our distribution and fulfilment centres, and training has been provided to colleagues to help support and implement these changes to their work environment.
In most cases, the measures applied have gone beyond government recommendations in each market. Furthermore, we have set up formal and regular internal audits of the application of health, hygiene and safety rules. To date these measures have been met with strong approval by both customers and colleagues and we will continue to both monitor and improve the effectiveness of these on a day-to-day basis.
• On 23 March the UK government ordered the closure of all shops selling 'non-essential' goods.
• Hardware shops have been categorised as 'essential', and therefore B&Q and Screwfix are eligible to remain open.
• Despite this, from 23 March, we took the decision to close all B&Q and Screwfix stores to customers for browsing and in-store purchasing while we established the safe store operating protocols described above.
• To ensure the continued supply of essential goods, from 24 March we progressively introduced a contactless click & collect service for our B&Q and Screwfix customers, alongside a home delivery service.
• On 17 April we trialled the reopening of 14 B&Q stores, listening to feedback from our store colleagues and adapting our approach as a result. Following the success of this trial we progressively reopened further B&Q stores (288, to date).
• For all 683 Screwfix stores, we continue successfully to offer a contactless click & collect service under similarly strict social distancing and safety measures.
Republic of Ireland:
• Since 28 March, all stores in Ireland (eight B&Q and five Screwfix) have been closed following the Irish government's lockdown restrictions, which apply until 18 May.
• Hardware shops were categorised as 'online only', and therefore not eligible to remain open.
• The government announced plans on 1 May to ease lockdown restrictions. We are actively monitoring our position with regards to potential store reopenings.
• In the meantime, Screwfix is offering a home delivery service from its stores.
• On 14 March the French government ordered the closure of all shops selling 'non-essential' goods during the confinement period, which ended on 11 May.
• Kingfisher's 220 stores in France were categorised as 'essential', and therefore were eligible to remain open during this period.
• To establish safe store operating protocols, from 15 March all stores were closed to customers for browsing and in-store purchasing. A contactless click & collect service via 'drive-through' was gradually introduced from 23 March, alongside a home delivery service.
• Home delivery from stores commenced during the third week of April.
• Following consultation with trade union representatives in stores and head offices, from 24 April we started to reopen Castorama and Brico Dépôt stores in phases, with a 'self-service' range only and under the strict social distancing and safety measures described above.
• As of 11 May, all 99 Castorama stores and 121 Brico Dépôt stores have reopened, under the same strict measures.
• All 81 stores in Poland remain open, operating with strict social distancing and safety measures.
• Contactless click & collect and home delivery services remain available.
• In addition to the existing Sunday trading ban, all stores in Poland were temporarily required to close on Saturdays. This restriction was lifted on 4 May.
• All 35 stores in Romania remain open, operating under strict social distancing and safety measures.
• All 28 stores in Spain remain closed following the government's declaration of a state of emergency on 14 March. Stores could reopen from late May, in line with the government's plan to ease lockdown restrictions as announced on 28 April.
• A home delivery service in Spain was made available in late March, and a click & collect service for tradespeople was launched in late April.
• Our three stores in Portugal remain open, operating under strict social distancing and safety measures.
• 14 out of 18 stores are closed for browsing and in-store purchasing, with one store open and three partly reopened.
• A contactless click & collect service is available in 14 stores and 'click & delivery' is available from all stores.”
• Morrisons (Wm) Supermarkets – “Trading during the individual weeks of Q1 was highly volatile, with stocking up, then the initial impact of lockdown and weak Easter trading, followed by a significant improvement in recent weeks.
For Q1 (the 14-week period from 3 February to 10 May*), Group LFL excluding fuel was up 5.7%, comprising contributions from retail of 5.1% and wholesale of 0.6%. Inflation during the period was broadly flat. Group LFL including fuel was down 3.9%, with fuel LFL down 39.3%, and down c70% since lockdown, as customers are currently taking significantly fewer car journeys. Total sales were up 5.7% excluding fuel, and down 4.0% including fuel. Two new stores were opened in the period, in Amble and Bradwell.
As previously announced, retail contribution to LFL was 5.0% for the first six weeks of 2020/21. Sales had been on an improving trend since the start of 2020 and improved again, before the impact of Covid-19, to flat for the first four weeks of 2020/21. For our weeks five to seven during early/mid-March there was considerable stocking up and sales pull-forward.
Lockdown began in our week eight, with reduced trading hours plus extensive social distancing and reconfiguration measures introduced. This included capping in-store customer numbers, and temporarily only opening every second checkout. In addition, Easter in lockdown was not the normal occasion, so sales were significantly down year on year. As a result, retail contribution to LFL was negative for weeks eight to 11.
In the most recent weeks, we have gradually returned to normal trading hours, introduced more protective screens to enable all checkouts to open safely at the same time, and availability has continued to improve. Customers have become more accustomed to the social distancing protocol in stores, and are spreading their shopping trips throughout the week rather than focusing on the traditional weekend peak. Retail contribution to LFL for weeks 12-14 was 9.6%.
Our online offer is expanding significantly and at pace, providing different home delivery options especially for those customers most vulnerable and in need.
For Morrisons.com, we have more than doubled the number of weekly home delivery slots, well in excess of the 60% increase we initially planned for. This has been achieved, together with our partner Ocado, through a substantial increase in the number of store-pick stores. We have also further stretched the capacity of the Dordon customer fulfilment centre. In addition, from a trial of just six stores in March, we will offer click-and-collect pick-up from almost 280 Morrisons stores by mid-June. We are confident we can again significantly increase the number of Morrisons.com home delivery slots over the coming weeks.
Home delivery for customers has been further extended beyond Morrisons.com. We very quickly set up production facilities at four of our food manufacturing sites to prepare food boxes, which are delivered direct to customers' houses by a third party. Ten different home delivery food boxes have been introduced so far, available either online or via a telephone call, aimed initially at providing essentials to vulnerable and self-isolating people, and recently extended to other options such as British meat, gluten free, BBQ, and Ramadan. In addition, we have formed a partnership with Deliveroo to deliver groceries in as little as 30 minutes to customers by courier from 130 Morrisons stores. The service is proving popular with customers, and has been extended to more deliveries and items, including a selection of beer and wine.
During the period, we also significantly expanded the Morrisons store on Amazon Prime Now, the ultra-fast, same-day online home delivery service. At the time of the 2019/20 preliminary results in March, the service operated from 17 Morrisons stores in eight cities. By the end of May, it will have been extended nationwide to over 40 stores, covering most major cities and many towns. New areas covered include Edinburgh, Cardiff, Bristol, Portsmouth, and most of the major conurbations of the West and East Midlands. In addition, more London stores have been added, now expanding delivery coverage to over 90% of Greater London postcodes.
In wholesale, there has been a significant recent increase in our sales to our convenience store operator partners, particularly since the start of the lockdown period. Also, we have recently started to supply local councils, care homes, and some charities (such as The Salvation Army) across Britain with great-value bulk supplies for distribution to those in need in the local community.
Within the 0.6% wholesale contribution to Group LFL in Q1, weeks 1-6 were 0.2% and weeks seven to 14 were 0.9%. In addition, as we stated at our recent preliminary results, McColl's has over 240 remaining ex-Co-op stores, which will transition to Morrisons wholesale supply during 2020.
Throughout the period our manufacturing businesses and supply chain coped well, often under extreme pressure, with the unprecedented volatility of demand, colleague absences, and the challenges of so many new initiatives.
Morrisons continues to operate from a very robust financial position, with a strong balance sheet, low debt and strong debt maturity profile. During Q1, we took the opportunity to further improve our liquidity. On attractive financial terms, we extended one £100m revolving credit facility (RCF) from July, and put in place another three new £100m RCFs, taking our total RCF facilities from £1.45bn to £1.75bn. Of the £1.75bn, £1.35bn runs until 2024 with an option to extend by a year, and the four £100m facilities run for a year with two having options to extend by six months. As at the end of Q1, we were £70m drawn on our RCF and, while we expect this to increase during Q2, all our scenario planning suggests we will sustain very significant liquidity headroom.
Outlook – All our efforts are fully focused on deploying our assets in the best way to enable our colleagues to help feed the nation. Our longer-term strategy remains to continue building a broader, stronger, and more popular and accessible new Morrisons, and to be guided by the principles of our capital allocation framework.
At this stage, the impact of Covid-19 remains uncertain. The outlook for our sales is also uncertain, although we are adapting well to the new day-to-day circumstances, while being both proactive and reactive in taking new opportunities. In addition, we are confident that we can satisfy any ongoing increased demand if the eat-at-home market continues to be temporarily larger than usual.
Day-to-day operations and challenges are currently very different from normal, and we are operating in a more volatile trading environment, which is costly. In addition, many of the payroll, bonus, seasonal waste and markdown, distribution, community, and colleague and customer protection initiatives described above come at considerable cost. For example, at times we have been experiencing temporary absence rates running at up to 20,000 colleagues.
We continue to monitor various 2020/21 sales, profit and cash flow scenarios, but have minimal certainty or visibility around a precise outcome. At this stage, our best estimate is that the 2020/21 costs relating directly to Covid-19 are likely to be broadly offset by the in-year business rates cost saving**, but the actual net effect is highly dependent on the length of the crisis and how customers respond as lockdown eases. In addition, there are other current impacts on profit such as the temporary closure of our significant café business, and the considerably lower fuel sales. As these costs and profit impacts are more weighted to the first half of our financial year and the rates relief benefit more to the second half, we expect the net adverse impact on profit to be considerably more weighted to the first half.
As we stated at our preliminary results in March, with sales on an improving trend, profit growing for a fourth consecutive year, and both free cash flow and liquidity continuing to be strong, we had anticipated announcing another special dividend for 2019/20. Instead, given the unprecedented nature of events around Covid-19, we determined it would be prudent to defer the decision. This continues to be the case, and we are keeping our capital allocation options under review, giving us maximum future flexibility around how we prioritise uses of our strong cash flow. In the near term, the negative fuel LFL is having a temporary impact on working capital and net debt, which we expect to reverse quickly when fuel sales normalise.”
• Renishaw – “Revenue for the first three quarters of the current financial year was £389.9m, compared to £431.1m for the corresponding period last year.
In our metrology business revenue amounted to £365.9m compared to £404.5m last year and in our healthcare business revenue was £24.0m compared with £26.6m last year.
Adjusted profit before tax for the first three quarters amounted to £31.8m compared with £79.6m last year and the statutory profit before tax amounted to £19.7m (2019: £84.8m).
Adjusted profit in the third quarter benefitted from reduced operating costs, primarily arising from initiatives undertaken before the outbreak of the global pandemic, and a favourable currency impact from forward contracts compared to the first half year.
The global macroeconomic environment has been challenging for the Group during this nine-month period. Even before the pandemic, we were facing trading challenges including the ongoing uncertainty caused by the trade tensions between the USA and China and weaker demand in the machine tool sector. We also faced tough comparators with the 2019 trading year, which benefitted from a number of large orders from end-user manufacturers of consumer electronic products in the APAC region that have not been repeated this year. However, despite subdued demand conditions overall, we have seen growth in our optical and laser encoder product lines due to a recovery in the semiconductor market.
During the third quarter we initially experienced reduced demand in China due to the Chinese Government's actions to deal with the Covid-19 outbreak, but we have since seen a good recovery as factories have reopened. In our EMEA and Americas markets we did not experience a significant change in demand as a result of the pandemic during the quarter, but we believe that the effects will begin to be felt in the coming months.
Despite the challenges to global supply chains caused by the pandemic, we did not have any significant issues supplying our customers, although it was necessary to delay shipments of some capital goods, including additive manufacturing and spectroscopy products, due to customer site closures.
Financial position – During this period of high uncertainty, the Board has focused on cash preservation with capital expenditure being significantly lower in the third quarter and with stock levels lower than at the half year. As communicated on 25 March, the Board decided to cancel the 14.0p interim dividend. The interim dividend was expected to result in a payment of £5.1m, which reflects the previously announced decision for all Directors to waive their rights to this interim dividend
The Group balance sheet remains strong with net cash balances of £94.0m as at 31 March 2020 (30 June 2019: £106.8m).
Covid-19 update – Renishaw's number one priority continues to be the health and welfare of our employees, their families and the wider communities in which we operate. Since January we have implemented a wide range of measures to protect against the spread of Covid-19 at our sites around the world and we continue to monitor the impact of the pandemic, including a response and mitigation committee, which has met daily since February.
All our manufacturing facilities around the world are open, although most are operating at lower capacity due to reductions in staff numbers caused by a combination of school closures, shielding due to health conditions, or local operating restrictions. At all manufacturing sites we have implemented robust measures to protect the welfare of our employees and mitigate against business risk. We have been able to maintain supply to customers during this challenging period, but this is a constantly evolving situation and we continue to monitor closely all aspects of our supply chain and are taking mitigating actions where necessary.
In March, Renishaw became a founder member of Ventilator Challenge UK, a consortium of companies that is producing 20,000 ventilators for the UK's National Health Service, to treat serious cases of Covid-19. Our main role has been to produce machined components at our Stonehouse and Miskin sites, where staff have been working seven days a week to meet the urgent deadlines.
To manage costs closely and to mitigate against the risks of redundancies, the majority of our non-manufacturing staff across the Group are either working reduced hours (in some cases supported by local Government support schemes) or are part of the UK Government's Coronavirus Job Retention Scheme. Where possible staff are working from home and our people have adapted well and are working productively.
The members of the Renishaw Board and the senior management team across the Group have all agreed to have their salaries reduced during the period that employees have reduced working hours. This includes co-founders, Sir David McMurtry and John Deer, who will take no salary/fees during this period.”
• Escape Hunt – “The impact of Covid-19 on the UK leisure and hospitality sector has been dramatic. Trading held up well in early March, but as the pandemic became more widely spread and advice on social distancing was implemented, we began to feel the impact, culminating on 20 March when the UK Government mandated closure of all restaurants, bars, clubs, gyms and leisure facilities. The vast majority of our franchise network has also been affected by similar mandatory closures in other parts of the world. Anticipating the closures, we took early action to cut costs significantly and preserve cash. The UK Government's measures to assist businesses such as ours have also provided help. We were greatly relieved to be able to retain our staff as a result of the Coronavirus Job Protection Scheme. We are very fortunate to have a very loyal and dedicated workforce. As I write, 125 (87%) of our staff are on furlough leave and will receive up to 80% of their normal pay through the Government scheme, subject to the applicable rules. All other staff have accepted temporary pay reductions, with senior management accepting a 25% pay reduction and the Non-Executive Directors waiving all fees whilst the lockdown conditions persist. Our teams are the Group's most valuable asset and their universal understanding of the situation and willingness to support our efforts to ensure we are able to bounce back from this crisis have been humbling.
The UK Government's decision to offer a rates holiday for 2020/2021 to eligible retail, hospitality and leisure businesses was welcomed and will make a material difference to our property costs over the next 12 months. We have also benefitted from the £25,000 grants being made available at a number of our UK sites. A number of our landlords have been incredibly supportive giving consent to defer rent. For that we thank them. However, there are exceptions and certain landlords have chosen to take an aggressive stance that has been both frustrating and disappointing in the circumstances.
We have put on hold all capital expenditure and the majority of our third-party expenditure leading to delays in our planned new site openings in Norwich and Basingstoke. Many of these suppliers have been important supporters of Escape Hunt and it is therefore difficult to see them being impacted through our decisions where we have had little choice. Through these initiatives, we have been able to enact a very significant reduction in our monthly cash costs, some of which is deferred rather than a permanent reduction, but nevertheless these actions provide adequate headroom for us to survive an anticipated 3-6 month period of closure.”
• Hollywood Bowl – “Hollywood Bowl Group PLC, the UK's market leading ten-pin bowling operator, today provides an update regarding its financial position.
As announced on 2 April 2020, the Group's lenders had agreed to a £10m revolving credit facility ("RCF") extension to its £35m banking facility, amended the leverage covenants and waived the cash flow covenants for the rest of FY2020.
The £10m extension to the RCF, noted above, will now be provided by Lloyds Bank under the terms of the Government Coronavirus Large Business Interruption Loan Scheme ("CLBILS"), for the same amount.
|The existing banking facility (£35m) remains in place and following constructive discussions regarding ongoing support, the covenants on the existing facility have been further amended for the first half of FY2021. The new covenants for the next twelve months are as outlined below: Leverage covenants (Net debt: LTM EBIDA)
In addition to the £10.5m raised via a successful placing completed on 17 April 2020, management continues to take actions to maintain a strong cash and liquidity position, and to support team members, in order for the Group to emerge from this period of significant disruption in a robust financial and operational position.”
• Mirriad Advertising – “In early 2020 the existence of a new coronavirus (Covid-19) was confirmed. The virus had an immediate impact on the volume of business transacted with Tencent in China but no impact on revenues or cash as the Company has a guaranteed revenue stream with Tencent. The virus subsequently spread to all the markets in which the Company operates. Although activity has now picked up in China, the scale and duration of these events in other markets remains uncertain and could affect both revenue growth and cash flow. The Directors will continue to actively review the Company's cost base and take steps to preserve cash to ensure longevity throughout this period of significant uncertainty.”
Oil & Gas
• Pharos Energy – “We have taken swift and robust action to help our employees, contractors and other stakeholders to stay safe and well. Our production operations in Egypt and Vietnam have not been disrupted by Covid-19 and, in line with the government directives in Egypt, Vietnam and the UK, measures are in place to minimise the risk of any outbreak occurring. In Vietnam, in addition to following government guidelines, the HLHVJOC has implemented a policy of testing all staff for Covid-19 before transfer to offshore operations. In the event that a case of Covid-19 is identified offshore, personnel evacuation plans and other mitigation measures are in place to ensure that the impact of any outbreak is quickly contained and operations are maintained.
In Egypt, at the El Fayum base camp, Petrosilah has implemented robust health and safety and social distancing measures to mitigate the risk of any cases of Covid- 19 arising.
In the UK and Vietnam, office staff have been working from home with negligible disruption to the business. In the Cairo office, in line with Egyptian government guidelines, social distancing measures are in place; half the staff work from home and half in the office on a two-week rotation with negligible disruption to the business.”
• Landsec – “Our operational response to Covid-19 was both immediate and proactive. Our site teams continue to follow all guidelines issued by the relevant public health authorities and we are taking a stringent approach to the cleanliness and hygiene of our assets. We have worked with occupiers to allow them to access stock where safe to do so, and our frontline staff are working to keep our assets safe and secure for customers and guests.
We also acted swiftly to offer financial support to our customers and communities. In early April we established an £80m rent relief fund, targeted at our customers most in need, with a particular focus on supporting F&B customers and small and medium sized businesses. Further action will be required in the months ahead; we recognise the importance of all stakeholders working together collaboratively and are committed to playing our part.
The immediate impact of Covid-19 has been particularly significant on our Retail and Specialist segments. Only essential services like supermarkets and pharmacies remain open at our retail destinations, with four of our retail assets shut completely. Although our Office segment has seen a less pronounced immediate impact, the vast majority of our customers' employees are now working from home, with less than 10% usage of our office space. Rent collection rates in March and early April were impacted negatively across the portfolio with an average 63% collected within ten days of falling due, compared with 94% for the same period in 2019.
June rent collection rates are likely to be worse than March given that most of the negative economic impact from Covid-19 has fallen in the second quarter, notwithstanding the commendable scale and intent of the Government's economic response. The pace of subsequent recovery from hereon will vary by sector. Ongoing social distancing measures will affect certain sectors much more than others, all businesses will need time to work with their global supply chains and workforces to resume trading as normal and heightened levels of caution amongst the general public are likely to affect behaviour for many months to come. While it is too early to predict outcomes with any certainty, it seems prudent to plan for more business failures and higher vacancy rates across our portfolio, in particular leisure and retail, and we don't expect to see the economy recover to pre-Covid-19 levels before 2022 at the earliest.
Recognising that the effects of Covid-19 will be felt for some time to come, we will continue to take proactive measures to ensure that Landsec emerges from this crisis in as strong a position as possible:
• We will continue to focus on controlling operating costs, both across our business and within service charges, but are committed to doing so in a way that is sustainable and does not risk service levels in the longer term.
• We will aim to preserve balance sheet capacity and flexibility, both to ensure that we can weather a prolonged downturn but also so that we are well placed to capitalise on any opportunities that emerge over time.
• We will control capital expenditure carefully and retain optionality over our speculative development programme for as long as possible so that we can adapt our approach as the longer-term effects of Covid-19 become clearer.
• We will work proactively with our customers and partners to find solutions that derive mutual benefit at such a challenging time.
We are also mindful that Covid-19 is likely to have profound long-term effects on society and, by extension, the property sector. Understanding, anticipating and responding to these likely effects will be vital to the long-term success of Landsec and we are committed to doing so.”
• Angling Direct – “The positive trends noted in the update announced on 6 April 2020, namely encouraging levels of trade across the Company's webstores in both the UK and international markets, have continued over recent weeks. Online sales in April 2020 were up 24% against the prior year, with a further acceleration of these trends experienced in May 2020 to date. Pleasingly, additional investment made last year in our French, German and Dutch websites is already generating significant growth in international sales and improved conversion rates.
Cash at 30 April 2020 was £6.0 million, with the Company also having access to a £2.5 million undrawn credit facility until September 2020. As and when lockdown restrictions are eased, the Board expects that the Company's cash and working capital position will begin to return to more normal levels as re-stocking commences and normal supplier payment patterns are resumed.
We welcome the news from the UK Government that fishing is one of the sports where restrictions will be relaxed from Wednesday 13 May, and, in this regard, the Board is progressing its advanced planning to re-open the Group's physical stores when allowed and with appropriate safety measures in place.
In the meantime, our e-commerce channel and distribution centre remain fully operational. The Board continues to monitor the welfare of colleagues very closely and take all appropriate measures to keep them and our customers safe. The Board is highly appreciative of the way in which our employees have quickly adapted to the new environment; despite the challenging circumstances, the robust online growth trends over recent weeks are testament to their dedication and ongoing efforts.”
• FRP Advisory – “Since the outbreak of the Covid-19 pandemic, the health, safety and wellbeing of our colleagues has remained a top priority for the Board. We are pleased that our business continuity plan has enabled our team to successfully move to a working from home model and continue to provide the level of service expected by the Group's clients during this challenging time. We have not furloughed any staff and do not intend to, with our team remaining busily engaged in active projects.
The Group traded strongly during the second half of the year to 30 April 2020, continuing to grow caseloads in both size and complexity, with a number of high-profile appointments during the period in the Group's Restructuring division, including the administrations of Carluccios and Debenhams.
As a result, the Group expects to report revenues for the half year to 30 April 2020 of £31.8m, including revenues of £11.5m in the two months following the successful IPO. Profits in both these periods are ahead of the Board's expectations. The Group therefore expects to report revenues of £63.2m for the year to 30 April 2020, up 16.4% versus the same period last year (£54.3m).
The Group retains a strong balance sheet, given £19m (net) of new money proceeds from the IPO, and has an undrawn revolving credit facility of £5m.
Given the trading performance and strong balance sheet, the Group intends to pay a final dividend for the period since IPO in line with its stated dividend policy.”
• Marlowe – “As stated in our update of 31 March 2020, Covid-19 has resulted in some impact on our operations where staff were unable to gain access to certain client sites in order to complete contracted work. However, given the non-discretionary nature of our services – and the key worker designation of Marlowe's field staff under UK Government guidance – we have continued to operate effectively, whilst implementing enhanced employee safety protocols and taking cost reduction measures to mitigate the impact on profitability and optimise cash flow.
Site access issues have begun to improve in recent weeks and, given the regulations that govern the requirement for our services and ensure that our clients operate safely and compliantly, we expect the majority of works deferred by customers to be recovered in the months ahead. Parts of the Group, including employment law, HR compliance, occupational health and certain water hygiene activities, continue to experience an increased demand for services.
Across the Group Marlowe has tailored its service offering in response to Covid-19 to support our clients. The Group now provides Return to Work audits and Covid-19 risk assessments to ensure workplaces and other premises comply with the latest Government guidance. In addition, we are delivering Covid-19 surface swab testing and fever screening technology, people-counting flow control solutions to facilitate social distancing, and various Covid-19 focused occupational health and safety services.”
• AO World – “The Company expects its headline financial results excluding operations in the Netherlands (which do not continue into FY21) for Revenue and Adjusted EBITDA (pre IFRS16) to fall within the range of analyst expectations.
Shortly following the year end we re-financed our £60m Revolving Credit Facility and £20m Term Loan that were due to run until June 2021. These facilities have been consolidated into a new £80m RCF which matures in April 2023.
During the year, we made substantial progress against our four immediate strategic priorities: UK MDA growth of +10%; accelerating the journey to profitability in Germany; being cash generative; and leveraging our eco-system. We will update fully on our progress in the Preliminary Results.
Post period end and Covid-19 – The lockdown measures implemented by Governments in both the UK and Germany created a unique set of circumstances with customers forced to stay at home and relying on their electrical and electronic products like never before. Shopping online has become an unavoidable way of life during lockdown and we are proud of the part that AO has been able to play supporting our customers through this unprecedented time.
Historically, a large proportion of sales of electricals have been made through bricks and mortar stores. With the implementation of lockdown measures, overnight 100% of the market moved online. As we move towards a new normal, we would expect the online market in electricals to maintain a higher share than prior to Covid-19.”
• Ryanair – “Announced plans to return to 40% of normal flight schedules from Wed 1 July 2020, subject to Government restrictions on intra-EU flights being lifted, and effective public health measures being put in place at airports. Ryanair will operate a daily flight schedule of almost 1,000 flights, restoring 90% of its pre-Covid-19 route network. Full details of these routes, frequencies, flight times, and promotional prices are available on www.Ryanair.com
Since the Covid-19 flight restrictions in mid-March, Ryanair has been operating a skeleton daily schedule of 30 flights between Ireland, the UK and Europe. From July, Ryanair will restart flying from most of its 80 bases across Europe. There will be fewer daily/weekly frequencies on trunk routes, as Ryanair works to restore some services on the widest number of routes, rather than operating high frequency services on a small number.
Ryanair also released a return to flying video, (click here) or visit the www.Ryanair.com homepage, encouraging passengers to observe effective health measures to limit the Covid-19 virus. These include fewer checked bags, check in online, downloading boarding pass to the passenger smart phone, as well as undergoing temperature checks at airport entry and wearing face masks/coverings at all times in the terminal and on board aircraft. All Ryanair aircraft are fitted with HEPA air filters (similar to those used in critical hospital wards) and all aircraft interior surfaces are disinfected every night with chemicals, which are effective for over 24 hours. While temperature checks and face masks/coverings are the cornerstone of this healthy return to service, social distancing at airports and onboard aircraft will be encouraged where it is possible.
On board its aircraft, Ryanair cabin crew will wear face masks/coverings and a limited inflight service will be offered of pre-packaged snacks and drinks, but no cash sales. All onboard transactions will be cashless. Queuing for toilets will also be prohibited on board although toilet access will be made available to individual passengers upon request. Ryanair encourages passengers to regularly hand wash and use hand sanitizers in airport terminals.
As a temporary further public health measure, while EU States emerge from their respective Covid-19 lockdowns, Ryanair will require all passengers flying in July & Aug to fill in details (at the point of check in) of how long their planned visit will be, and also their address while visiting another EU country, and this contact information will be provided to EU Governments to help them to monitor any isolation regulations they require of visitors on intra-EU flights.”
• Gore Street Energy Storage Fund – “We are delighted that construction has resumed so quickly and safely at the Company's assets in Northern Ireland and that we remain on track for receiving revenue under the DS3 contracts as per our original acquisition announcement. The planning to enable us to safely resume started from the day after we closed the sites and that effort has delivered this excellent outcome. Our assets perform an essential and increasingly important service to balance grid supply in multiple markets, and those services are only expected to increase in importance. Accordingly, performance across all the Company's operational assets remains resilient and they continue to produce cash returns in line with expectations. Further, our pipeline of potential acquisitions remains robust and we look forward to updating shareholders on our pipeline progress in due course.”
• In Italy, bars, restaurants, hairdressing and beauty salons will reopen from 18 May. Regional authorities have been given the power to lift restrictions on these businesses, which had originally been due to reopen from 1 June. Retailers, museums and libraries are also due to reopen from 18 May.
• Singapore is allowing some businesses to reopen today, as it begins to ease slightly the lockdown measures introduced last month. The businesses include hairdressers, cake shops and laundry services. Staff and visitors have to check in and out using a government app to allow contact tracing.
• Indonesia is set to allow people under the age of 45 to work outside their homes to prevent more layoffs, the head of the country's virus task force has said.
• The Chinese city of Wuhan is drawing up plans to test its entire population of 11m people for Covid-19, state media reports, after a small outbreak was detected in the city.
• All mosques in Iran are due to reopen temporarily on Tuesday, as part of the government's plan to ease coronavirus restrictions. They will be open for three days to commemorate specific nights during the Muslim holy month of Ramadan.
• Japan's baseball league is due to begin in June, having been delayed since March.
• In Australia GDP is expected to shrink more than 10% (A$50bn) in the three months to June, the biggest fall on record according to Australia’s Central Bank. Also: • Unemployment will double to 10% or 1.4m people
• Air travel is down by 97%
• A third of jobs were lost in accommodation and food services, and a quarter of jobs in arts and recreation
• TfL expects to lose £4bn this year. Most services are still running, but there's been a 95% fall in people using the Tube compared with this time last year, and the number of bus passengers has dropped by 85%.
• Chancellor Rishi Sunak has extended the financial support scheme for furloughed workers until October. He stated changes will come in from the end of July, so that the burden of paying salaries will be shared between the government and employers. Some 7.5m workers are now covered by the scheme, up from 6.3m last week.
• White House staff have been ordered to wear masks in the West Wing after two aides tested positive.
• A five-stage plan for easing the lockdown in Northern Ireland has been published by the executive. The blueprint does not include a timetable for moving from one step to the next and progression will depend on when certain public health criteria are met. Link
• National Association of Head Teachers head Paul Whiteman told MPs that, as his union understood official guidance, it would not be possible to reopen primaries on the 1 June as the government planned.
• The Lebanese cabinet has just declared the country will be in “total” shutdown from Wednesday due to a resurgence of cases.
• Russian President Vladimir Putin's spokesman Dmitry Peskov has tested positive for coronavirus, local media report.
• Algeria will extend measures aimed at restricting movement by 15 days to 29 May to cope with rising coronavirus cases, the prime minister, Abdelaziz Djerad, has said.
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