Coronavirus - Wounded giant

3.3 million people filed claims for unemployment in the US last week as large parts of the American economy began to shut down. To put this into context, the number of new jobless claims in the prior week was 281,000. It is clear the US economy is already suffering from the behavioural change brought about by the outbreak. With widespread lockdowns a possibility in the future, the enormous stimulus package announced yesterday may already be behind the times. Headlines

• Tedros admonishment for countries not taking strong enough action.
• Malaysia – Has extended lockdown for two weeks to 14 April 14.
• PIRC – Letter to 4,000 companies to suspend all payments to executives, other than basic salary from 1 April, until the end of the financial year.
• FRC, FCA, PRA – Guidance on reporting and to auditors click link.
• FRC – Permitting an additional two months to publish annual reports click link.
• BoE – Advice to banks regarding covenant breaches click link.
• EISA – Has called for tax relief to be increased to 60% click link.
Good news
• The NHS volunteer scheme has so far had 560,000 registrations.
• A 97-year old patient has become the oldest person in South Korea to recover from the virus.

Bank of England & FCA advice
The Bank of England and the FCA have said that banks should take full account of the unprecedented support measures announced by the government and Central Bank to protect the economy. In a positive development:
• Covenant breaches and waivers caused by Covid-19 should not automatically trigger a default.
• The regulators are thinking about ways to ‘enhance the robustness of and bring greater consistency to the application of IFRS9’.
This clearly means that not only are evens that would normally require banks to recognise credit loss provisions not have that effect for now (if related to Covid-19) but that even where defaults do occur, the pro-cyclical impact of accounting for them under IFRS9 (usually full lifetime losses would need to be recognised at this point) appears likely to be moderated. This has potential to substantially reduce the requirement for provisions in 2020 (and so support profitability) and provide a cushion for loss absorption, which will protect capital (price movements in the sector have clearly reflected concerns there could be either emergency equity raises and/or bank failures). It provides further evidence that regulators and the government will continue to implement measures that will ensure the stability of the banking system as events unfold. Although such initiatives have been speculated on by investors, these statements should be positive for sector equity prices.
WHO statement
We understand that countries are trying to assess when and how they will be able to ease these measures. The answer depends on what countries do while these population-wide measures are in place. Asking people to stay at home and shutting down population movement is buying time and reducing the pressure on health systems, but on their own, these measures will not extinguish the epidemics. The point of these actions is to enable the more precise and targeted measures that are needed to stop transmission and save lives. We call on all countries that have introduced so-called “lockdown” measures to use this time to attack the virus. You have created a second window of opportunity. The question is: how will you use it? There are six key actions that we recommend:
1. Expand, train, and deploy your health care and public health workforce.
2. Implement a system to find every suspected case at the community level.
3. Ramp-up production capacity and availability of testing.
4. Identify, adapt, and equip facilities you will use to treat patients.
5. Develop a clear plan and process to quarantine contacts.
6. Refocus the whole of government on suppressing and controlling Covid-19.
These measures are the best way to suppress and stop transmission, so that when restrictions are lifted, the virus doesn't resurge. The last thing any country needs is to reopen schools and businesses only to be forced to close them again because of a resurgence.

Company news
Buildings & Construction
• SIG# – “As outlined in the Group's announcement on 25 February 2020, trading in the early part of the current year saw a continuation of the challenging trends seen in the last quarter of 2019. As a result of these trading patterns, the Group has posted an operating loss of c£9m for the first two slower trading months of the year with like-for-like sales down c11%.
Whilst the Group has not experienced any significant sales impact from COVID-19 to date in the UK, trading has continued to be subdued. In mainland Europe, our first region to experience the effects of government restrictions on movement, the vast majority of our trading sites remain open. Trading has generally held up, though may face further pressure as the situation develops.
We continue to engage with governments and local authorities across our end-markets, who recognise the economic and societal importance of the construction sector, as well as SIG's role within it. The Group will continue to provide services and support to its customers, and the wider construction industry, in both the UK and continental Europe, in line with governments' guidance.
SIG Actions – Given the current challenges, the Group is taking a number of actions across its operations. SIG is committed to do what it can to trade as normally as possible within local government guidelines, allied to the need to preserve the safety of colleagues, suppliers and customers. The Group will keep this position under daily review in every jurisdiction in which it operates.
The Board and Executive leadership team have identified a number of measures to reduce cash outflow. These include a range of operational initiatives across the Group, such as pausing programmes that require significant cash investment and/or do not provide near-term business benefits. The Group is also carefully managing its working capital, subject always to the overriding need to continue to provide good service and support to its customers, suppliers and other stakeholders.
In the interest of preserving the Group's liquidity position, the Board has also taken the decision not to declare a full year dividend and will not consider any return to shareholders of the proceeds of recent disposals.
Financing and Liquidity – The Group received c.£187m in cash (including repayment of intercompany debt) from the sale of its Air Handling division to France Air Management SA on 31 January 2020. The process to complete the sale of the Building Solutions business is ongoing and, assuming that the UK Competition and Markets Authority does not refer the transaction to a Phase 2 investigation, is anticipated to complete in Q3 2020.
The Group has cash resources of c.£135m and is in dialogue with its lending group in order to release additional liquidity as required. The Group will also seek to make use of tax relief and other government measures as they become available.”
• Van Elle# – “The rapid spread of Covid-19 is now having a significant, direct impact on the Group. Many customer sites, particularly in the housing and regional construction sectors, have closed in the last few days, with some suppliers also suspending operations. The situation continues to evolve and it is to be expected that there will be further temporary closures and operational disruption. It is inevitable that this will have an adverse impact on performance for the remainder of the year ending 30 April 2020, which the Board now expects to be below current market expectations. This situation is unprecedented, with the duration and scale of potential impacts being difficult to predict. In view of this uncertainty the Board does not believe it is possible to provide meaningful guidance for FY2021 at this stage.
The Company continues to have a positive cash balance and an undrawn overdraft facility. However, to provide the flexibility required for the highly uncertain planning environment, the Company will enter discussions with its bankers and other debt providers on medium-term financing options, backed by its substantial asset base. The potential short-term cash impacts of the current situation are difficult to predict accurately and depend on a variety of factors, including future customer and governmental actions. In light of this, the Group is taking all appropriate proactive and prudent steps to manage costs and preserve cash within the business. In line with this approach, the Board has resolved to cancel the interim dividend of 0.2p per share, which was due to be paid to shareholders on 27 March 2020, with the dividend policy to be kept under review as conditions become clearer.

• Brickability – ‘Inevitably, since the UK Government's announcement earlier this week to restrict the movement of people this has thrown up considerable challenges to our business and our priority must be the wellbeing of our employees, customers, and suppliers across the regions in which we operate. In light of this advice and actions regarding Covid-19, the Company has taken the decision to close our sites and has asked those staff who are able to work from home to continue to provide support to customers and suppliers throughout this period. We will continue to assess the situation as it unfolds, working with suppliers on a return to delivery schedules as soon as is both possible and responsible to do so.
Brickability is well positioned for this period of uncertainty and for when it passes. The Company has low levels of stock, a strong balance sheet and had cash on the balance sheet of £22m million as at 25 March 2020. Given the unknown extent of this uncertainty the Board will focus on conserving cash and has ceased all discretionary spend.
The Company refinanced earlier this year to HSBC, increasing the historic revolving credit facility of £20m with a new £35m facility (£30m revolving credit facility and a £5m accordion) of which £10m million remains undrawn and can be used to fund the business through this difficult time.”
• British Land – “Following the new measures announced by the Government on 23 March, one of our retail centres is closed (Valentine, Lincoln). All others remain open to provide important access to essential stores such as supermarkets and pharmacies. Overall, as of 25 March, around 200 individual units (c.12% of the total) are open.
Our immediate priority is to support those customers who are being hardest hit. At sites we control, we are therefore releasing our smaller retail, food & beverage and leisure customers from their rental obligations for three months (April to June). The financial impact in terms of lost rent and service charge is c.£3m.
For other retail, food & beverage and leisure customers experiencing financial challenges because of Covid-19, we are prepared to defer the March quarter day rents and spread repayment over the six quarters from September 2020. On the sites we hold in joint venture or via fund structures, we are working with our partners to agree an appropriate approach. We estimate the aggregate amount of March deferrals across the Group will be c£40m (British Land share) assuming this is extended to joint venture and fund properties.
Enhanced financial strength & flexibility – We have worked consistently over several years to ensure that British Land has a strong and robust financial footing and we are now benefiting from that.
We have enhanced this financial strength and flexibility by successfully extending and amending one of our unsecured Revolving Credit Facilities (RCF) at £450m.
We have £1.2bn of available cash and undrawn facilities and no requirement to refinance until 2024. Our leverage remains low, with LTV of 31% at 30 September 2019 and we retain significant headroom to our debt covenants.
Dividend & outlook – To best ensure we can effectively support our retail and leisure customers who are hardest hit, protect the long-term value of the business, and further strengthen our financial position, the Board considers it prudent to temporarily suspend future dividend payments. This will be with immediate effect, including the FY20 Q3 dividend due for payment in May. We will revisit our dividend policy when we have sufficient clarity of outlook.
Underlying earnings for the year ending 31 March 2020 are currently expected to be broadly in line with previous expectations, however the independent valuation of our assets as at 31 March 2020 is likely to include a statement from the valuers highlighting the material uncertainty. Until there is clarity on the duration, severity and consequences of this fast-moving situation, the Board is unable to comment further on the outlook.
Extension and amendment of £450m Revolving Credit Facility – We have completed our first ESG RCF at £450m with a group of eight banks, by extending and amending one of our existing unsecured RCFs.
The extended RCF has a headline margin of 90 basis points over LIBOR (unchanged) and an initial five-year term which may be extended to a maximum of seven years at British Land's request, subject to banks' consent. It may continue to be used for our general corporate purposes.
Aligning with our sustainability strategy, the facility will include two ESG-related KPI's focused on the BREEAM ratings of our developments and assets under management.
Significant covenant headroom – We continue to have significant headroom to our debt covenants. There are two financial covenants which apply across British Land's unsecured debt:
• Net Borrowings not to exceed 175% of Adjusted Capital/Reserves (as of H1: 34%).
• Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets (as of H1: 25%).
There are no income or interest cover covenants on British Land's unsecured debt. The secured debt in joint ventures and funds is all non-recourse and the Broadgate and Meadowhall securitisations have no loan to value default covenants.
Given our covenant structure across the Group, we could withstand a fall in asset values across the portfolio of greater than 50% without any further mitigating actions.
London developments – As of 25 March, to ensure the safety and wellbeing of those working on site, work has been suspended at our major development schemes at 100 Liverpool Street and 1 Triton Square. We therefore expect delays to practical completion at these sites. There is approximately 1 month of work remaining at 100 Liverpool Street and approximately 9 months’ work at 1 Triton Square.
Our committed and recently completed development pipeline is 89% pre-let or under offer, representing c.£55m in rents. The office space at 1 Triton Square is fully pre let to Dentsu Aegis Network. The office space at 100 Liverpool Street is significantly pre-let to a range of occupiers, with only two floors still to be let.
We recently reached practical completion on 135 Bishopsgate, having completed 1FA in the previous financial year. Completion of post PC works at 135 Bishopsgate have however also been suspended with immediate effect.
Where appropriate, we are in discussions with certain occupiers about delaying taking possession of newly developed office space. Delays are primarily related to occupiers' practical ability to execute fit outs of space.
This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014. The person responsible for arranging the release of this announcement on behalf of British Land is Bruce James, Head of Secretariat.”

• Topps Tiles# – “The Group has ceased normal store operations in order to protect colleagues and customers. The Group’s online business remains in operation and we are working to fulfil existing customer orders to the extent possible within the constraints of the UK Government restrictions.
The Board is taking prudent steps to ensure the business is protected through this period in order that it remains well positioned to recover, once the situation has normalised.
Current Trading – Like for like sales in the Group's Retail business for the 12 weeks ended 21 March 2020 were down 3.1%.
Financial Liquidity – Topps remains in a good financial position, with a robust balance sheet. The Group's committed £39 million revolving credit facility has been fully drawn down, and the Group has approximately £20 million of cash liquidity immediately available. In addition to the above committed facilities, the Group has an £11 million accordion facility which is subject to lender approval. The Group expects total net debt at the half year end on 28 March 2020 to be approximately £19 million.
The Group welcomes the emergency support measures already announced by the UK Government, which will help retain cash liquidity in the business. Specifically, the cessation of business rates for a period of 12 months will save us £9.5 million, and the deferral of the VAT quarter payment will improve cash flow by £3.1 million. We will utilise the Job Retention Scheme to furlough colleagues who are unable to work due to store closures and we estimate that this will benefit cash flow by at least £2.0 million per month while this situation continues. A number of additional steps are being taken to reduce costs, preserve cash and provide the business with maximum flexibility.
The Group has modelled a number of trading scenarios for the balance of the current financial year but is planning its finances around the most pessimistic expectation, which assumes that stores remain closed for a prolonged period. In the event of a 12 week closure of retail premises, followed by a further quarter of materially reduced sales, when combined with the support detailed above, the Group believes that its cash reserves will provide it with good levels of liquidity for the remainder of the current financial year. The Group has shared details of its modelling with its lending bankers, who remain supportive.
Full Year Outlook – While assessing the outlook with accuracy is impossible, it is clear that the Covid-19 pandemic will result in a material reduction to our expectations for revenue and profit for the second half of the financial year. In these circumstances, the Group is withdrawing its financial guidance for FY20 and does not expect to pay an interim dividend this financial year.”
• Breedon – “The Group’s trading performance in 2020 was until this week broadly in line with our expectations. However, following the more stringent measures introduced by the UK Government on 23 March, there has been an immediate and significant reduction in demand for our products which we expect to continue until restrictions on movement are relaxed.
The Group is well invested, which has enabled us to immediately restrict capital expenditure solely to committed and critical projects without compromising the longer-term performance of our operations. In addition, we have halted all discretionary expenditure and continue to apply robust discipline to our management of working capital. We will make full use of any government support, including tax reliefs and other forms of financial aid, as they become available.
Financing – The Group has a strong balance sheet and significant liquidity headroom. As at 25 March the Group has £335 million of drawn debt on our facility, cash of £60 million and an undrawn committed facility of £220 million. The covenants attached to our facility, agreed before the adoption of IFRS 16, require that leverage (net debt as a multiple of EBITDA) should not generally exceed 3.0 times and that interest cover (EBITDA as a multiple of interest) should be not less than 3.5 times. As at 31 December, our leverage for covenant purposes was 1.4 times and our interest cover was 20 times. The facility does not mature until April 2022.
Completion of our acquisition of certain of CEMEX's UK assets remains subject to satisfactory conditions being met, including a TUPE consultation and IT migration. In light of COVID-19, completion may take longer than originally anticipated. We continue to believe that these well-located, resource-backed assets will enable us over time to create significant additional value for shareholders.
• We have conducted stress testing of the Group's liquidity requirements under different scenarios, assuming the completion of the CEMEX acquisition, and believe that headroom will remain adequate for our needs under those scenarios, particularly in light of the robust actions we are taking to manage our cost base and preserve cash.”
• Quiz – “Since the beginning of March 2020, there has been a substantial reduction to traffic in stores and online. On Saturday 22 March 2020 the Group took the decision to close its physical stores and concessions in order to ensure the health and wellbeing of its staff and customers.
Given these factors, revenues and margins in March 2020 are expected to be materially below the Board's expectations. The financial results for the year ending 31 March 2020 (‘FY2020’) will also be impacted by factors such as determining the recoverability of debtor balances, the adequacy of inventory provisions and the requirement for further non-cash store fixture and lease provisions.
Given the ongoing uncertainty regarding the duration of the Covid-19 outbreak, the Board is unable to provide guidance for the year ending 31 March 2021 at this time.
As at 24 March 2020, the Group had net cash of £8.3m. In addition, the Group has a £2.0m overdraft facility and a £2.0m working capital facility available (the ‘Facilities’). The Facilities are scheduled to expire on 23 April 2020 and the Group is currently seeking their renewal. There are no financial covenants applicable to the Facilities.”
• Dixons Carphone – “In line with Government guidance we closed our stores across the UK and Ireland from 24 March. This follows store closures in Greece from 18 March. At present almost all stores in the Nordics continue to trade.
Our large Online operations remain open. Online trading has been very strong in all countries over the last two weeks as people have been preparing to work from home and use essential technology to continue their lives during the Coronavirus outbreak. Early signs are that this strong trading has continued since stores closed and will help to compensate for lost store sales.
Over the long-term, we do not expect disruption from Covid-19 to affect the transformation of the business and our ability to drive future value for our customers, our colleagues, our suppliers and our shareholders.
However, in the nearer term, because of disruption to sales, we are aware of the need to preserve cash and have been taking sensible and prudent measures to do so:
• Government cost support: Government actions across Europe including store business rates suspension, payroll support and lowering of taxes will lower net operating costs. In the UK we expect to lower costs at a rate of over £200m p.a. from the suspension of business rates and the support of our colleague salaries.
• Discretionary spend control: We have already acted to reduce non-essential spending, including variable operating costs, marketing and other overheads. The run rate of these items could total over £200m p.a.
• Capital expenditure commitment: In the current year our Group capital expenditure will be under our previous guidance of £200m. This spend can be reduced very significantly in 1H 2020/21 which would cause some delays to the transformation plans but will have no lasting impact on the long-term success of the business.
• Working capital: We have reduced our stock ordering significantly and are in discussion with suppliers to push out delivery dates. We are also moving mostly to monthly rent payments, in line with many others in the retail industry.
• Tax deferral: The UK Government is allowing deferral of VAT which reduces our near-term cash outflow by around c.£140m, and various tax deferrals in International will reduce near term outflow by a further c.£50m.
Dividend: The Group has already declared and paid an interim dividend for a total of £26m. The final dividend is not payable until September, the Board will consider whether it is prudent to pay a final dividend at its full years' results when it has a clearer view on the scale and duration of the impact of Covid-19 on the business.
These measures represent a substantial amount of discretionary cash flow that the Group can preserve in order to meet our liquidity requirements.
Liquidity – The Group has two Revolving Credit Facilities totalling £1,050m provided by major banks which expire in October 2022 and a term loan of €50m which expires in October 2020. As at 20 March 2020, the Group had access to a total of over £700m of unutilised facilities.
The Group also has significant headroom compared to its fixed charge cover (1.75x) and net debt to EBITDA (2.5x) covenants on the RCF and expects to comply with these at the next measurement date in April 2020.
The Group has modelled a wide range of scenarios regarding the potential impact on liquidity and covenants of the COVID-19 disruption and has detailed action plans in place to respond to each. We believe that we have sufficient funding capacity available to meet our obligations over the foreseeable future.”

• Clean Invest Africa – On 23 March 2020, a Directive was issued by the South African Government requiring a 21-day national lockdown, effective midnight Thursday 26 March 2020 to midnight Thursday 16 April 2020, in order to contain the spread of the coronavirus in the country (the “Lockdown Directive”).The Company’s subsidiary, Coal Agglomeration South Africa (Pty) Ltd (“CASA”) will stop all activities currently ongoing at its Bulpan Plant, based the following plan of action:
• All testing activities were suspended effective Wednesday night, 25 March 2020.
• During today, Thursday, all critical equipment will be disconnected and all value material will be removed from site.
• By this Thursday evening today, the company will have the plant in safe mode and people involved with the plant operation will be sent home.
• Security surveillance will continue to protect all the assets.
• Serabi Gold# – “At this time the Board is anticipating that the Company will not be able to achieve the production levels over the coming few months that management had originally anticipated. The health and wellbeing of our employees, contractors and local communities are of paramount importance during these uncertain and worrying times. Whilst a number of Serabi’s operational staff reside in nearby communities, the location of Serabi’s current operations require a significant number of its personnel (including those resident in the State of Para) to live at site during their work roster, returning to their homes at the end of each roster period. The nature of a work camp arrangement presents challenges of ensuring, with shared facilities, that personnel can practice social distancing during periods when they are on site but not on a work shift. As a result, the Board anticipates that operations, while continuing, may have to be undertaken by a lower than normal number of personnel.
The Board and management are also continuing to monitor and react to the actions and decisions being taken by the government of Brazil and individual state Governors that may impact on the movement (both nationally and internationally) of personnel and goods or may provide financial assistance to protect the jobs and the economy, which remains heavily reliant on the mining sector and the export earnings that it generates.
Management is evaluating a number of operational scenarios. In the meantime, there has been no interruption to gold production and this is expected to continue. However, rates of production may be below those originally anticipated in the event that it is not possible to maintain a full workforce complement over the coming months as the Company balances its obligation to provide a safe working and living environment for its staff, with an operational plan that ensures the long term sustainability of the business. Capital investment and exploration programmes and all other non-essential expenditures have been temporarily suspended to conserve cash resources.”
• Caledonia Mining Corporation – “The lockdown [South Africa] is expected to have knock-on effects for Caledonia as the supply chain for the procurement of a significant portion of mining consumables and capital equipment for the Blanket Mine in Zimbabwe (‘Blanket’) comes from South Africa. Caledonia is confident that Blanket can manage the effects of the lockdown without interruption to its gold production.
Critical Spares and Consumables Inventory – In anticipation of supply chain disruptions arising from Covid-19, Caledonia has increased the levels of consumable stocks at Blanket in recent weeks. Caledonia estimates that Blanket has adequate critical spares and mining consumables in its inventory to sustain uninterrupted gold production well past the expected duration of the supply interruption including allowing for a period of supply chain and inventory restocking after the end of the South African lockdown on 16 April. Accordingly, management does not expect that Blanket will be forced to suspend gold production as a result of the disruption in the South African supply chain.
Financial Resilience Planning – In the event of either a similar lockdown procedure being enacted in Zimbabwe, or an outbreak of Covid-19 infections at Blanket affecting a significant number of employees and necessitating a mine shut down, Caledonia would enter this unprecedented situation with a strong balance sheet with cash on hand at March 25, 2020 of approximately $12.5 million. Cash has been boosted by a strong Q1 production performance at the recently elevated gold prices. The current cash on hand and existing term and overdraft facilities already in place at Blanket leave the business in a strong position to withstand an extended period of production interruption if it were to materialise.
• Metal NRG – “As a result of applying these principles we have stopped all travel, until the ban on travel is removed by the Government. The Company, with input from Ed Lukins at Orrick, our legal advisors, has set up its Annual General Meeting to be held electronically, so as not to put our shareholders, advisers, Board members and management at risk. Last but not least we are currently all working from home while progressing the Company's business.
The impact of Covid-19 on our Gold Ridge project in Arizona, is that on site work has stopped, we are advancing our planning work and making preparations to be in a position to go back on site as soon as we have confirmation that it is safe to do so and have the human resources and tools to implement the next stage of work.
The Oil & Gas transaction due diligence process on the potential acquisition in Romania has been completed. However, due to the recent oil price collapse and the unfavourable short to medium term forecasts, which are detrimental to the economy of the project under consideration, we have proposed alternative commercial terms to the Vendor. The new terms are being considered by the Vendor and we expect them to revert by the end of the current month, although some slippage can be expected due to Covid-19.
Nevertheless, with the current market turmoil, especially in the oil and gas sector, we have been presented with additional and potentially attractive transactions. Following the initial desktop assessment, we are now actively pursuing projects that meet our strategic intent, projects that offer short term cash flow and additional exploration upside that can be funded by the short term cash flow generated form the operation.
• Bank Pekao – “The Bank and the Group maintain full business continuity. The Bank and subsidiaries of the Group have implemented a number of actions in order to ensure business continuity and reduce the risk of epidemic, with regards to both its employees and clients using the branch network. A significant proportion of the Bank's and the Group's workforce perform their duties remotely while customer activity gradually shifts to electronic channels.
The Bank on an individual and consolidated basis maintains good capital and liquidity position at a level significantly exceeding the minimum regulatory requirements and currently does not see the impact of the coronavirus epidemic on its liquidity and capital adequacy.
As of the date of the publication of this current report, the Bank identifies factors that will have a negative impact on the financial results of the Bank and the Group in the next quarters of 2020. Recent decisions of central banks to reduce interest rates, including the decision of the Monetary Policy Council in Poland to reduce interest rates, will lower the net financial result of the Group in 2020 by about PLN 200-250 million as a result of lowering the interest margin by about 15 basis points. This impact will materialize gradually in the next quarters.
The Bank assumes that as a consequence of the epidemic of the coronavirus Covid-19 economic activity in Poland and globally can decrease, which in turn can affect customer activity, both retail and corporate, including those active in international markets, and lower sales dynamic of financial products by the Bank and the Group. The Bank expects financial and liquidity situation of part of its clients to worsen in the next months and, as a consequence, an increase in costs of risk for the Group, and scale of the increase is currently difficult to estimate. The above elements will reduce the net financial results and associated financial indicators. At the same time, the Bank plans to implement measures to reduce the impact of the above factors on the net financial results of the Bank and the Group related, among others, to the level of risk appetite and reduction of operating costs. The Bank continues to implement a number of operational activities under the strategy ‘The Strength of the Polish Bison’, including the digital and operational transformation.”
The National Bank of Poland established a package of measures aimed at maintaining liquidity of financial markets and liquidity of banks, which in the Bank's assessment will positively impact liquidity position of the Bank and banking sector. With regards to the Polish banking sector, the Minister of Finance waived the systemic risk buffer. As a consequence, the minimum capital requirements for the Bank at the individual and consolidated levels decreased by 2.9 pp, further increasing the capital buffers of the Bank and the Group above regulatory capital requirements.
• Princess Private Equity – “The spread of the virus, government policy responses and changing demand patterns are expected to have a negative impact on the operations and earnings of portfolio companies. At this early stage it is not possible to quantify the impact, but further updates will be provided as more information becomes available.
The extent of the impact will depend on the length and severity of the crisis and is expected to vary widely between sectors and companies. Partners Group’s investment approach targets investments in sub-sectors which benefit from long-term growth drivers such as demographics and technology, with limited exposure to companies in cyclical industries.
The Company's NAV as of 29 February 2020 does not reflect the impact of the declines in equity markets witnessed during March. These declines are expected to put downward pressure on the valuation multiples used to value the Company's portfolio companies and will be reflected in the NAV as of 31 March 2020.
Liquidity position – Partners Group continues to closely monitor the Company's liquidity position and remains confident that the Company has access to sufficient liquid resources to meet all liabilities as they fall due.
As of 29 February 2019, the Company held cash of EUR 12.3 million having drawn EUR 48.5 million of its EUR 50 million committed credit facility which it maintains to manage short-term liquidity requirements. As part of its ongoing review of liquidity management, the Company had initiated a renewal of the credit facility in January 2020 and on 18 March 2020 announced an increase in the size of the facility from EUR 50 million to EUR 80 million, and a term extension to December 2024. Liquidity will be significantly enhanced by the EUR 88.6 million of proceeds from the realisation of Princess' stake in Action which is expected to be received by the end of May.
• Non-Standard Finance – We have reduced significantly our lending volumes across all three of our divisions. We are however continuing to offer credit, subject to our detailed assessment of affordability, where there is an urgent need and/or where our detailed knowledge of an existing customer provides us with the requisite comfort that we are happy to lend. We are also putting in place arrangements so that we are able to offer credit to eligible ‘key workers’ during this challenging period.
This reduction in overall lending volume will mean we can shift resources to managing collections and ensure that due forbearance is offered to any of our customers that may find themselves in financial difficulty during this difficult time.
All collections in branch-based lending and guarantor loans are already remote and our staff are continuing to service our customers over the phone and online. In home credit, while our agents are no longer calling at customers' homes, they have been encouraging customers to make use of a variety of remote collections options that are now available both online and over the phone so that we can continue to make collections as planned.
Whilst it is hoped that these measures will be in place for a temporary period only and that the Group can soon return to normal business practices, the timing of any such return remains unclear and will depend, among other things, on prevailing Government advice and the circumstances at the time.
Full year results – The Group's 2019 full year results will be announced on 28 April 2020. The Group continues to expect normalised results for the year ended 31 December 2019 to be in line with expectations.
Outlook and final dividend – Each of the Group's three divisions are trading in an unprecedented business environment. The full impact of Covid-19 on the Group’s future financial performance will be heavily influenced by a number of factors including the severity and duration of the pandemic as well as the way in which both Government and consumers respond. As a result, we are withdrawing all previous guidance and medium-term targets until further notice.
The Board is focused on conserving cash within the Group given the pandemic and the uncertain macroeconomic outlook and has determined that it will not recommend or pay a final dividend in respect of the year ended 31 December 2019. The Board believes that by prioritising cash conservation, when circumstances allow, we will be better placed to return to our normal lending and collections practices as quickly as possible.”

Food, Drinks & Household
• JBS (world’s leading protein producer) – “We are working more hours, increasing weekend shifts to ensure world food supplies. Chinese demand is recovering after a drop earlier this year, when the nation was struck by the new virus. About 80% of China’s inland traffic has been normalized, the CEO said, paving the way for imports to return to normal. The production increase to fill shelves is happening in all markets the company operates, from the U.S. to Australia. The exception is Brazil’s beef unit, where five from a total of 37 facilities will be shut this month. The plants are expected to resume operations in April.”
• Daily Mail and General Trust – “At this stage, the severity and duration of the impact of Covid-19 and the escalating measures to control it are unclear, with a range of possible outcomes. Although there has been limited impact on the Group's performance to date, we have started to see the effects, notably on our Events and Exhibitions and Consumer Media businesses, and the financial performance in FY 2020 is now likely to be lower than the existing guidance5. We consider it prudent to suspend the guidance at this stage and will provide an update at the Half Year results on 28 May 2020.”
• Reach – “Whilst the first 12 weeks of the new financial year have traded overall in line with our expectations, the situation remains significantly uncertain and it is too early to assess the expected impact that the Covid-19 pandemic will have on FY 2020 and beyond. Currently, the principal trading areas expected to be impacted are advertising, print circulation and events. Advertising revenue deferrals may be expected given its discretionary nature, print circulation will be impacted by footfall reductions and closures of outlets and events delays or cancellation may be necessary. Mitigation plans are being developed to try to partially offset some of these. We expect to provide further financial guidance at the time of our AGM Trading Update, which is scheduled for 7 May 2020.
Balance Sheet and Liquidity – As noted in our recent preliminary results, the business came into the year with a robust balance sheet position and has adequate liquidity. Through strong cash generation in 2019, the prior year net debt balance had become net cash of £20.4m and new 4-year revolving banking facilities of £65m had been agreed (with a 1.75x EBITDA covenant). The business has a proven track record for disciplined cost control and strong cash management, which will continue to be vital in the current trading environment.
Dividend – There is currently no change to the announced 2019 full year dividend, which will be voted on by shareholders at the forthcoming AGM.”
• STV# – “STV has good ongoing access to liquidity through its £60m overdraft and revolving credit facility. Net debt was £37.5m at the end of 2019 and is expected to be c.£38m at the end of March 2020, comprising cash balances of £10m and £48m of drawn down facility. The unutilised portion of the facility is £12m and this is accessible under the terms of the agreement.
We are very focused on cash and have already taken steps to reduce costs and cash commitments. National programming costs will reduce in line with any reduction in revenues (thanks to our unique variable cost model) and we have identified a further £2m of other cost savings across the business for 2020, along with c.£2.5m of cash savings from delayed capital expenditure.
As an additional measure to ensure maximum flexibility, it is also confirmed that our Board is no longer recommending a final dividend of 14.7p per share (financial year ended 31 December 2019) and this will no longer be paid, conserving a further £5.5m. We recognise how important the dividend is to our shareholders and the Board will revisit the position for future dividends once there is greater clarity on the impact of Covid-19 on the business.
Taken together these actions will ensure that at least an additional £10m of cash (over and above current cash balances) is retained within the business in the short to medium term.”
Support Services
• Inspired Energy# – The company announced that it will be delaying its reporting of its financial results at request of the FCA. Further company updated on Covid-19. “The Group is in the fortunate position of having a robust balance sheet and a business underpinned by the strength of its Corporate Order Book, and the diversity of its 2,800 corporate customers that operate across all segments of the UK and Irish economies. The year-end Corporate Order Book which stood at £57.5m had increased further as at 28 February 2020 to £58.5m. There has been no material impact on the assurance and advisory services provided by the core Corporate Division to date, which represents c.90% of 2019 Group revenues.
The Group's smaller SME division representing c.10% of 2019 Group revenues, is currently seeing a reduction in demand for energy supplier switching services. As such a number of staff in this division have been placed on furlough, with a core team remaining to service this sector, as such the immediate financial impact to the Group is being mitigated accordingly.
Financial position and liquidity - The Group has a strong balance sheet position, having recently refinanced its banking facilities to October 2023, with an option to extend to October 2024. In addition to cash and cash equivalents of £10.7m on hand as at 25 March 2020, approximately £14.0m of the Group's £60.0m Revolving Credit Facility is undrawn with an additional £25.0m accordion option available, subject to continued covenant compliance. The Board is actively focused on cash conservation and management, taking prudent and proactive measures to preserve cash.
Since its listing on AIM in 2011, Inspired has established a track record of delivery on financial forecasts which has facilitated a consistent and progressive dividend policy. Following a successful 2019, and a strong start to 2020, ordinarily the Board would expect to propose a final dividend for the year in line with that approach. However, in light of the exceptional circumstances caused by the Covid-19 outbreak, the Board deems it prudent to defer declaration of the final dividend at this time, and will reassess the position on release of the 2020 interim results statement.”
• The Ince Group – “The Board has now concluded that the pandemic of the Covid-19 virus is now having a significant effect on the Group's UK business, having progressively impacted all of the international offices, beginning with Greater China.
Clients’ businesses may be also be impacted, with consequent uncertainty about the timing of collection of our fees. The Group is therefore limiting discretionary expenditure except on items to support the immediate ability to meet our clients’ expectations and is examining other means of reducing expenditure. We are also exploring the many initiatives announced by the UK Government and will use them wherever commercially sensible.
As a result of these uncertainties, the Board has now concluded that it is not possible to forecast the Group's trading performance during the pandemic. Therefore, the Board can no longer be confident of delivering results which are in line with market expectations either for the current period ending 31 March 2020 or for the year to 31 March 2021.
Given the level of uncertainty about the global economies generally and the impact this will undoubtedly have on cash flows, the Board has in the interests of prudence resolved to cancel the interim dividend due for payment on 16 April 2020. The Board continues to believe that rewards for shareholders who have invested in the business are very important and will review the position with the finalisation of the results for the year ending 31 March 2020.”
• Hargreaves Services – “Since the announcement of the Group's interim results on 29 January 2020, trading has been in line with our expectations, with no meaningful impact to date on the Group's trading activities as a result of Covid-19. Nevertheless, the Board has considered Government guidance in respect of Covid-19 and has determined that it is not possible to assess the potential impact on the Group's trading performance over any clear timeline. Against this background, the Board considers it prudent to protect the Group's cash position and management is focused on taking whatever steps it can to minimise all discretionary expenditure, including capital expenditure, and to reduce all other cash outflows wherever possible. In doing so, the Board is seeking to maintain the Group's trading activity and its level of service to its customers to the maximum extent possible.
Accordingly, the Board has decided to defer payment of the proposed interim dividend of 2.7 pence per share, otherwise payable on 6 April 2020, until further notice and will review the Group’s future dividend policy once there is greater clarity on the likely future impact of the pandemic on the Group’s business.
Regarding market consensus estimates for the Group's future financial performance, the Board considers that the uncertainties surrounding many industries as a result of Covid-19 render it impossible to provide any meaningful guidance.
As previously stated, the Group's current bank borrowing facilities of £50m are due to expire on 31 August 2020. Discussions are continuing with both existing and prospective new lenders to put in place appropriate facilities for the future. The Group has met all banking covenants and has no more measurement points prior to 31 August 2020. As reported at 30 November 2019, the Group had a strong balance sheet with net assets of £130m and net bank debt of £25.4m.”
• Knights Group – “While the Group has seen limited impact on revenues and cash flows to date, management has pre-emptively put a number of precautionary measures in place given the increased economic uncertainty created by the spread of the coronavirus pandemic.
A number of cost saving initiatives focused in areas that do not compromise the prospects of the business in the long term have been identified and implemented. These include:
• Stopping or deferring all non-essential capital expenditure across the firm.
• Eliminating all discretionary spend, including marketing.
• Reducing Board members' salaries by 30% and reducing the salaries of all staff whose salaries are £30,000 or more by 10%, with effect from 1 April 2020.
• Making staff cost savings to reflect a more prudent approach to resourcing.
The Board believe these actions to be prudent in light of the uncertain economic outlook. Given the rapidly changing situation, it is currently difficult to predict the potential impact on the activity levels of our clients. As a result, the Board does not believe it would be appropriate to provide forward looking financial guidance to investors and analysts at this time. However, we remain confident in the Group's market positioning and long-term ambition to become the leading legal and professional services business outside London.
Balance sheet and liquidity – The Group has a strong balance sheet with a conservative gearing level and good liquidity.
The Group had recently extended its revolving credit facility with HSBC UK and Allied Irish Bank (GB) to £40m until June 2023, giving the Group a total of c.£23m in undrawn committed facilities for working capital purposes, based on current market expectations for c.£17m of net debt as at the year ending 30 April 2020. This level of expected net debt will be less than 1 times pro-forma EBITDA.”
• Northbridge Industrial Services – “As noted in our pre-close trading update on 31 January 2020, results for the year ended 31 December 2019 are expected to be in line with management's expectations. Extracts from our unaudited draft accounts for the year ended 31 December 2019 show a strong balance sheet with pre-IFRS 16 net bank debt, excluding convertible debt, of only £2.5 million and pre-IFRS 16 EBITDA of £7.0 million. Our bank facilities with NatWest extend to June 2021. The Group has a worldwide rental fleet with a net book value of £18.5 million, UK and New Zealand freehold properties externally valued at £4.5 million, and a UK debtor book of £1.9 million.
The operations of Tasman in the Middle and Far East continue to trade, but the combination of COVID-19 and the downturn in the oil price is beginning to impact the industry base, in particular restrictions on travel and closed borders which are impeding equipment and rig crew movements. It is too early to tell what the long-term impact on the industry will be, but Q2 and Q3 are anticipated to be quiet as the various governments concentrate their efforts to combat the virus.
With a recession likely in the world's three largest economies of China, the USA and the EU, energy demand is likely to be lower for the rest of 2020 and this may impact on Group revenues. The scale of the slowdown is currently uncertain, but we are already reviewing planned operating expenditure to reduce costs, and reducing capital expenditure to conserve our strong liquidity.”
• Renewi# – ‘Relevant national governments have introduced significant measures to reduce the spread of coronavirus and to support companies affected. They have defined waste management as an essential service, which helps us to maintain a full service. Significant additional government measures such as wage and VAT tax payment deferrals as well as additional support to maintain employment levels are being put in place which will have a material positive impact in offsetting the impact of reduced volumes.
We are tracking incoming volumes and other leading indicators daily. Volumes have only just begun to reduce and so there is expected to be little impact on our March results.
We do expect a negative impact next year: the extent will depend on the duration and severity of the measures.
We have prepared cost reduction and cash preservation plans for progressive implementation. These include reductions in discretionary expenditure and capital expenditure, placing employees on temporary leave using schemes available in the Netherlands and Belgium, and not paying a final dividend for the current year. These initial actions are expected to save over €40m during the next financial year.’
Oil & Gas
• Falcon Oil & Gas – “Given the unprecedented circumstances brought about by Covid-19 in recent weeks, the JV has made changes to its operations to protect the health and well-being of Origin Energy Limited employees, contractors and communities across the Northern Territory. Adhering to the latest guidelines and advice from the Northern Territory and Federal Government on health and safety and social distancing are of the utmost importance to the JV and all present on site are observing health authority requirements.
Following the implementation of the necessary control procedures, the JV has now elected to temporarily pause activities at the Kyalla Well site, reducing those on site to essential personnel only, whilst ensuring the required regulatory and environmental management conditions to monitor and maintain the site can be met. The JV plans to resume activities in the latter half of 2020 and during this interim period the JV will use Northern Territory based employees and contractors to undertake civil and other works in preparation for the resumption of activities.”
• RockRose Energy – “The Company has not experienced an adverse impact on its operations as a result of COVID-19. The precautionary and contingency measures that have been put in place, on both operated and non-operated assets, are working well. In the Brae field, which we operate, we currently have no staff with symptoms and no staff in isolation. The safety and wellbeing of the Company's staff remains of paramount importance and RockRose is working closely with the authorities and other operators on this matter.
Based on the strength of the Company’s cash position, the hedging it has in place, and the flexibility of its capital expenditure commitments, the Board of Directors still expects to recommend the payment of a final dividend of 25p per share, bringing the total for 2019 to 85p.”
• Inspired Energy# – The company announced that it will be delaying its reporting of its financial results at request of the FCA. Further company updated on Covid-19. “The Group is in the fortunate position of having a robust balance sheet and a business underpinned by the strength of its Corporate Order Book, and the diversity of its 2,800 corporate customers that operate across all segments of the UK and Irish economies. The year-end Corporate Order Book which stood at £57.5m had increased further as at 28 February 2020 to £58.5m. There has been no material impact on the assurance and advisory services provided by the core Corporate Division to date, which represents c.90% of 2019 Group revenues.
The Group's smaller SME division representing c.10% of 2019 Group revenues, is currently seeing a reduction in demand for energy supplier switching services. As such a number of staff in this division have been placed on furlough, with a core team remaining to service this sector, as such the immediate financial impact to the Group is being mitigated accordingly.
Financial position and liquidity – The Group has a strong balance sheet position, having recently refinanced its banking facilities to October 2023, with an option to extend to October 2024. In addition to cash and cash equivalents of £10.7m on hand as at 25 March 2020, approximately £14.0m of the Group's £60.0m Revolving Credit Facility is undrawn with an additional £25.0m accordion option available, subject to continued covenant compliance. The Board is actively focused on cash conservation and management, taking prudent and proactive measures to preserve cash.
Since its listing on AIM in 2011, Inspired has established a track record of delivery on financial forecasts which has facilitated a consistent and progressive dividend policy. Following a successful 2019, and a strong start to 2020, ordinarily the Board would expect to propose a final dividend for the year in line with that approach. However, in light of the exceptional circumstances caused by the COVID-19 outbreak, the Board deems it prudent to defer declaration of the final dividend at this time, and will reassess the position on release of the 2020 interim results statement.”
• JLEN – “The Company is in a strong financial position and is conservatively geared both in relation to its Revolving Credit Facility (‘RCF’), which is currently £17 million drawn and is not due to be refinanced until June 2022, and at a portfolio company level where all project debt is on a long-term, fully amortising basis with no need for refinancing.
Operations at its wind, solar, anaerobic digestion and hydro assets have not experienced any material interruption and all assets are performing as expected. The Company's food waste project, which represents less than 5% of its portfolio and is ungeared, has seen a reduction to its commercial food waste collections while residential food waste supply remains stable. Foresight is monitoring the impact of this closely. The Company's counterparties have implemented measures that enable the continued maintenance and operation of JLEN's assets while taking appropriate steps to ensure the health, safety and wellbeing of the those involved.
The Company currently sees no material long-term impact from COVID-19 on its ability to continue to meet its investment objectives.
The Company reaffirms its guidance for a full-year dividend of 6.66p for the current financial year to 31 March 2020, including a quarterly dividend of 1.665p to be paid for the period January to March 2020 and, in line with the Company's usual reporting cycle, will announce its target dividend for the 12 months to 31 March 2021 in its Final Results, which will be published in June 2020.”