Coronavirus - Government cash but no bonuses or dividends

•A record 6.7m Americans filed for unemployment.

•Serco withdraws dividend and reduces executive bonuses while it takesgovernment support.

•In Spain, 300,000 new applications for unemployment benefits.

•The FCA has proposed a temporary payment freeze on loans and creditcards.

•British Airways is expected to announce it will suspend around 36,000staff because of the crisis.

•Pakistan International Airlines (PIA) is to resume some flights includingthe UK

•Global oil futures rally after Donald Trump said Russia and Saudi Arabiawere ready to “significantly” reduce production.

FCA measures

The FCA has published a statement proposing temporary measures for customers impacted by Covid-19. There will be a brief consultation but measures are likely to come into force on 9 April. The proposals include a temporary payment freeze on loans and credit cards where consumers are facing difficulties, no interest on overdrafts of up to £500, no change to overdraft prices for customers, and no change to the credit rating of anyone using these measures. Measures would last for up to three months and are designed to sit alongside current forbearance measures. Firms will still be allowed to charge a reasonable level of interest when a payment freeze is requested although if full forbearance is requested, that interest will be waived. These are all sensible measures to help both individuals and firms (who the FCA recognises will take time to implement some of these measures) deal with the current situation, and should help avoid the significant impairment of customers in difficulty.

Company news •Burford's own liquidity is more than sufficient for its needs although tomaximise future opportunity Burford will seek to husband liquidity(including by not recommending a final 2019 dividend):

i)$161 million of cash and cash management investments on hand

ii)$180 million of shorter duration investments

iii)$758 million of undrawn fund and sovereign wealth capital

•Burford's draft annual report and accounts for FY2019 are well advancedbut finalisation of the audit has been affected by Covid-19-related delays(and Burford is mindful of the announcements made by the UK regulatorson financial reporting timetables including by the Financial ReportingCouncil ("FRC") and through the FCA's moratorium) and we have not yetagreed on a release date with Ernst & Young. We expect to releasefinancial statements that are consistent with the guidance provided in our 3February 2020 trading update

Burford's business operations – Burford has completed the transition to remote working across its business, with all of our offices closed until further notice. We have also suspended all business travel. Burford’s business is designed to operate remotely and we have not experienced any significant difficulties with our new working arrangements. We have dispersed our executive team geographically to reduce risk, particularly with the outbreak ongoing in New York City. One of our employees is ill with Covid-19 as is the child of another but we have no indications of widespread sickness and our offices have now been closed for more than two weeks.

Progress of existing litigation matters – As a general matter, courts and arbitral tribunals remain in operation and continue to render decisions. Indeed, Burford received winning decisions in two matters in just the last two weeks, a smaller balance sheet case and a larger success in one of our legacy investment funds, Partners I, that when paid will unlock performance fees. We have also closed two new investments in the last week and are on pace to close a significant corporate monetisation shortly.

Courts recognise the importance of the societal role they play and are trying valiantly to remain in operation notwithstanding the coronavirus. For example, the Lord Chief Justice of England and Wales has said that ‘it is of vital importance that the administration of justice does not grind to a halt’.

In general, the status of the courts (including arbitral tribunals) is as follows:

•Courts are open to receive new filings in new and existing cases.

•Courts are continuing to hold hearings and non-jury trials, usually usingvideo conferencing technology.

•Courts are continuing to issue decisions.

•Jury trials have been suspended.

•Pre-trial discovery requiring travel or in-person attendance (such aswitness depositions) is being postponed.

The net result of this is that some cases will proceed in the ordinary course, especially those that are less dependent on witness testimony and do not require a jury trial, whereas other cases will inevitably experience some delay and disruption. Moreover, it is too soon to tell if macroeconomic conditions will reduce near-term settlement willingness by corporate defendants.
Burford does not expect the delays to have a permanent negative impact on its business; unlike many other businesses, delay for us is simply deferral as opposed to loss of income, and indeed in many instances the risk of delay lies on our counterparty and not on Burford, with Burford's terms often increasing as time passes. However, it is reasonable to expect that cash proceeds from litigation resolutions will be lower in the near term as the courts work through these issues.

Future opportunity: We are cognisant that the Covid-19 pandemic is greatly disrupting the global economy as well as people's lives and remain sensitive to that fact. Nonetheless, looking out at the longer-term, just as the global financial crisis of 2008-09 was followed by a large amount of litigation, Burford expects that the current global crisis and what is likely to be a time of economic pressure will result in a significant increase in the volume of large dollar litigation and arbitration matters in which Burford specialises and a corresponding increase in demand for Burford's services. Moreover, as businesses face liquidity challenges, Burford anticipates an increase in corporate monetisations of litigation positions. However, the short-term impact of Covid-19 and the logistical challenges of writing new business will likely result in a decrease in new commitments before we see an upswing in litigation.

Ample liquidity – Burford is in a strong liquidity position to meet the needs of its current commitments and its operating expenses.

At 31 March 2020, Burford had $146 million in cash on its balance sheet and held a further $15 million in cash management investments, for a total liquidity figure of $161 million. The balance sheet also presently has $180 million invested in complex strategies matters, and with the average duration of those matters typically being less than one year, we expect a meaningful amount of that capital to be available to us as a source of liquidity.

Moreover, Burford's assets regularly produce cash that is available for reinvestment. Last year, Burford generated more than $500 million in balance sheet cash receipts, more than four times the amount necessary to cover operating expenses and interest, leaving more than $350 million available for investment in new or ongoing matters. (Group-wide, Burford generated more than $1 billion in cash in 2019, showing the cash generative nature of Burford's business.) Moreover, while Covid-19 may cause some short-term delay, the generation of that cash is typically uncorrelated to economic conditions or market activity: courts don't stop deciding matters because the economy weakens.

Burford also has access to a further $758 million in undrawn capital that has been committed by institutional investors in its investment funds and from its sovereign wealth fund arrangement.

Without raising any incremental capital from any external source, Burford is thus capable of meeting its existing commitments and also continuing to grow its business. It may assist to provide some more granular information about Burford's liquidity needs and obligations under its current portfolio. At 31 December 2019, Burford had $829 million of undrawn commitments relating to core litigation finance, complex strategies and asset recovery matters on its balance sheet. However, of those commitments, only one-third are definitive (meaning that Burford's failure to fund as needed over time could cause adverse consequences), and the remainder are at Burford's discretion. Moreover, we have good visibility into the timing of draws on those commitments; while we ultimately have deployed an average of 89% of the commitments we have made to concluded assets, it can take years to get there. During each of the last three years, we deployed an average of only 15% of undrawn commitments outstanding at the end of the previous year. Based on that experience, Burford would normally expect to deploy approximately 15% of its undrawn commitments each year and could choose to deploy less than that by minimising its deployments on the two-thirds of its undrawn commitments that are discretionary.

To be sure, there are likely to be so many opportunities for Burford in the next few years that to take advantage of all of the desirable ones may need more capital than Burford has access to at present, but just as investors recognised the desirability of Burford's relatively short duration and uncorrelated cash flows in the aftermath of the financial crisis, we expect them to do so once again, presenting us with future opportunities to raise external capital through both corporate debt issuance and private fund raises. But that is a question of expansion, not the maintenance of Burford's existing business. Burford is also taking steps to husband liquidity, detailed below, to enhance its ability to take advantage of those opportunities without access to new external capital.

Annual report and accounts timing – Burford's draft annual report and accounts for the year ended 31 December 2019 are well advanced and consistent with the guidance provided in our 3 February 2020 trading update. However, as Burford's auditors Ernst & Young adjust to all of their staff working and interacting remotely due to Covid-19 restrictions in the US and the UK it has not yet been practical to confirm a target date for the release of Burford's results as is also the case with many other companies. Burford is also mindful of the announcements made by the UK regulators on financial reporting timetables including by the FRC and through the FCA's moratorium. Burford has been working actively with Ernst & Young to address the logistical challenges being faced in this unusual situation and will advise its target release date as soon as this has been agreed with Ernst & Young.

Actions to enhance liquidity further – As noted, Burford sees a period of significant opportunity ahead to continue to make desirable investments and grow its business. While Burford is comfortable with its liquidity position, at the same time it believes that husbanding its cash for use in new investments is both desirable and the best path to attractive long-term returns for shareholders, particularly as access to external capital may be constrained in the near-term due to market conditions.

Thus, Burford is taking a number of actions to husband liquidity and position the business for what we expect to be a busy next few years, including:

•Burford's CEO and CIO have committed to use their entire 2019 bonuses,after tax, to purchase Burford securities in the market once the results forthe year ended 31 December 2019 are disclosed. However, while weunderstand shareholder frustration around the volatility of our depressedshare price, Burford has always been clear about the long-term nature of itsbusiness vision and does not intend to take short-term actions merely basedon the share price. Thus, Burford does not believe it is in shareholders’long-term interests to engage in a corporate share buyback, and it does notintend to divert capital from its core business to buy back shares.

•Burford believes in this period of opportunity with liquidity-constrainedmarkets that applying all available cash to its business is in shareholders' best interests, and thus Burford intends, like many other companies, not to propose a final 2019 dividend and instead reallocate that capital to its financing business.”

• Duke Royalty Limited – “For the financial year ending 31 March 2020 (‘FY20’), the Company is pleased to report that cash revenue received from its royalty partners was in line with market expectations at over £10.0 million, with March 2020 contributing the greatest monthly cash revenue received by the Company to date at over £1.0 million.

During March 2020, as the impact of the spread of Covid became prevalent across Duke's target geographical and market sectors, management has been focused on assessing the potential impact of Covid on its royalty partners' operations. The ongoing global response to Covid is evolving rapidly and management is in direct and continual contact with each of its royalty partners to assess their business outlook.

As we enter our financial year ending 31 March 2021 (‘FY21’), the rapidly evolving Covid outbreak and the government's response to it has created an uncertain economic outlook. We know that some of our royalty partners have had, or will have, business interruption. While Duke has been able to build a diversified portfolio of royalty partners across geographies and industries, this will no doubt lead to a reduction in its royalty payments in the coming months. This in turn will have a negative impact on the fair value of the portfolio assets, leading to potential write downs in the FY20 year-end financials.

Duke would like to re-emphasise to its investors that it continues to be a high margin and profitable business with a low fixed cost base and is therefore well-placed to trade through this challenging period. The Company has strengthened its position further in light of the outbreak by implementing a number of cost-saving measures, including the deferral of all deployments into new royalty partners and reducing all non-core operational costs. These measures are not expected to materially compromise the Company's business prospects in the medium to long term and are expected to reduce the FY21 operating budget by over 25%, reflecting a material saving on FY20.

Outlook and liquidity – At this stage, it is too early to accurately assess the medium and longer-term impact of Covid across the Duke portfolio as a whole. Therefore, the Company wishes to withdraw its market guidance at this time, pending further clarity on the outlook. Every royalty partner has enacted cost-reduction plans and they are assessing what government relief funding may be available to assist them in trading during the Covid outbreak.

Duke retains its confidence in the quality and long-term prospects of the portfolio as a whole. If necessary to preserve long-term value, Duke will be willing to assist cash flow by deferring payments and/or providing additional financial support to its royalty partners on a case-by-case basis. Duke will continue to monitor the impact of Covid on its royalty partners and the associated level of cash royalty payments it will receive, and will keep the market updated accordingly. Duke is conservatively geared; after paying its dividend announced 11 March 2020, it will have net debt of approximately £13 million and a cash balance of £2.7 million. Based on Duke's internal 30% maximum loan to value limit, Duke currently has access to additional liquidity of approximately £18 million. It should also be noted that the recent drop in UK interest rates has lowered the cost of Duke's funding and that all the Company's debt is long term in nature with no amortisation payments due until September 2022. The Company remains compliant with its debt covenants.

Dividend – Duke recently confirmed its final quarterly dividend for Q4 FY20 at 0.75p, taking the full year pay-out to 2.95p per share. To date Duke has paid out over £12.7 million in dividends to shareholders and intends to continue to pay out a share of its operating cash flow to shareholders in future periods. In line with its regular reporting cycle, the Company's next quarterly dividend is scheduled to be announced in mid-June, by which time the Board hopes there will be better visibility on the long-term effects of Covid.

The situation in relation to Covid continues to evolve. However, Duke and its royalty partners are in a strong position to manage through this period of turbulence and the Board will keep shareholders updated as appropriate.”

• Manolete Partners# – “We have successfully adjusted to the ongoing Covid-19 crisis. We remain fully operational, all employees in our regional offices work from home and employees in our London headquarters have been working from home for the last three weeks. Activity levels in March 2020 were high, featuring: 50 new case enquiries, 15 new signed cases and 8 case completions.

While there have been some delays in the Courts, very few of our cases go to Court and we have been conducting mediations and other Alternative Dispute Resolution meetings using video conferencing services during this current period of social distancing.

In respect of the twelve-month period ending 31 March 2020, we have achieved:

• A 131% increase in new cases (141; FY19: 61);

• A 54% increase in completed cases (54; FY19: 35); and

• Gross proceeds of £10.1m (FY19: £9.3m) for the full year; with gross proceeds in the second half of FY20 of £7.7m, compared to £2.4m in the first half.”

• WH Ireland – “WH Ireland has continued to make good progress in returning the business to profitability with a strong and effective control framework. Progress on revenue and cost actions were sufficient to see a small profit in the month of January consistent with our expectation of returning to monthly profitability by the start of the new financial year. However, both February and March experienced a loss, as market levels and corporate activity were impacted by the Covid-19 pandemic.

During the year, positive momentum was building across the Company with the completion of re-pricing actions across Wealth Management, 12 new corporate client wins in Corporate and Institutional Broking and selective new hires, all of which are some of the key drivers behind improving the quality and resilience of the business. The benefit from the planned further cost initiatives reinforced this positive shift and has created a strong platform from which to build the business in the years ahead.

In the last few weeks, the impact of Covid-19 on Corporate and Institutional activity has been notable, and the reduction in market levels has reduced our Wealth Management income. As a result, the Company is not now expected to achieve monthly profitability by the start of the new financial year. The Company expects to report an operating loss before exceptional items for the 12 months ending 31 March 2020, of approximately £2.2m on revenue of approximately £21.3m.

In response to these circumstances, the Board has already undertaken a number of additional decisive actions across the business to reduce costs and more closely align the cost base to the levels of revenue generation we are currently seeing. In particular, it has accelerated the move to a greater element of remuneration being related to profitability.”

Food, Drinks & Household

• Bakkavor# – “Following an encouraging start to the new financial year, the Covid-19 outbreak has created significant operational challenges, initially in China and more recently in the UK and US. The impact of this has led to increased volatility in daily order levels, and some disruption to labour availability. While our colleagues and infrastructure have responded well in ensuring excellent service levels for customers, trading has been impacted and overall sales are below expectations:

• In the UK, which represents around 90% of Group Adjusted EBITDA, the impact of Covid-19 has resulted in a reduction in orders across all of our categories, most notably in our salads and food-to-go products.

• In the US, orders have reduced and, together with our customers, we are taking appropriate actions to limit complexity in our ranges, adapt our shift systems and review resourcing requirements.

• In China, as we reported at our full year results on 27 February 2020, the outbreak had a significant effect on our business in the early months of this year. After a challenging period, this situation has now stabilised, our customers have reopened most of their stores, and our sites are resuming service as orders gradually rebuild.

Guidance and mitigating actions – Given that market conditions are likely to remain highly uncertain for the foreseeable future, Bakkavor is withdrawing its guidance for 2020, issued on 27 February 2020, and committing to a number of important actions to preserve liquidity:

• A tight control on costs will be maintained, and all non-essential capital investment and discretionary expenditure has been placed on hold.

• We are reviewing capacity across our facilities to better match the current levels of demand and, wherever possible, we will be supporting any impacted colleagues by making use of the Job Retention Scheme (Furlough) introduced by the Government in the UK.

• In addition to the pro-active steps we are taking around cash and investment, the Board has decided to suspend the proposed final dividend. We will review our dividend policy in due course.

• Members of the Board and Management Board have also agreed voluntary reductions in remuneration for the coming three months: the Chairman and Non-executive Directors' have agreed to a 50% reduction in base salaries and fees, while the Group's founders (CEO, Agust Gudmundsson and Non-executive Director, Lydur Gudmundsson) have volunteered not to take a salary in the period. The wider Management Board have also agreed to a voluntary 20% reduction in base salaries.

In addition, in light of recent guidance from the FCA/FRC regarding approval timetables for annual reports, and the suspension of the proposed final dividend as mentioned above, Bakkavor has taken the decision to delay the publication of its Annual Report & Accounts and its Annual General Meeting, due to have been held on 21 May 2020. Further details on revised timings for both will be provided at the earliest opportunity.

Financial position – Bakkavor is a resilient and cash generative business with a robust balance sheet, which has market leading positions in each of the categories it operates; we are responding to the impact of Covid-19 from a position of strength. We have a strong and supportive relationship with all our lending banks and the Group has significant liquidity headroom, particularly as we recently completed a planned refinancing of our core bank arrangements, extending them until 2024. Together with a number of bilateral facilities, the Group currently has facilities in place of £562m. As at December 2019, the Group had operational net debt of £355m and leverage of 2.3 times against a covenant of 3.0 times.”

• Benchmark – “Trading in our Genetics business has not been materially affected by Covid-19. The two and a half to three year salmon production cycle means that demand for salmon eggs is less affected by the short term impact from Covid-19 on the salmon sector, which is experiencing weaker demand from the catering industry, partially offset by retail demand, as well as challenging logistics to Asia and US.

In Advanced Nutrition, global shrimp consumption has dropped, with a consequent reduction in production in most markets. There are cautious signs of a potential recovery in China, although the effect will be slowed by a backlog of shrimp stocks from prior months. Demand for sea bass and bream in Europe and in the US has been significantly impacted, leading to a reduction in production across all markets which could worsen if European borders close to fry or end product. There is ongoing uncertainty and we expect a significant impact from Covid-19 on the division.

In Animal Health, the Company has built stocks to support customers and trading is on track. Our work towards the commercial launch of BMK08 and CleanTreat® is continuing, with timings highly reliant on any impact from Covid-19 on the regulatory approval process.

Liquidity and headroom – Having raised £42m net proceeds through a placing and open offer completed in February, the Group has a strong liquidity position with c.£63.6 million cash and undrawn facilities as at 30th March 2020, well within covenant levels.

Management priorities and actions – The Group is taking a number of actions to protect the health and wellbeing of its staff, to continue to supply and service its customers, and to protect cash and maintain headroom during this period of uncertainty.

The Group has implemented a business continuity plan to manage all parts of the business safely, whilst continuing to support customers. This includes remote working across our global operations for our office based employees. We have adapted shift patterns at manufacturing sites worldwide to reduce employee exposure and enhanced safety procedures such as deep cleaning.

We continue to serve our customers with limited interruption to date. We have built an inventory of product and key ingredients in response to the increased risk posed by the closure of borders and freight and logistical challenges. We are also conducting regular customer support webinars. 
From a financial perspective, we are taking actions to conserve cash to maintain a resilient financial position through the crisis. These include cost reductions, cuts or delays to R&D and capex, and working capital management. We are continuing to focus on the disposal of non-core activities and restructuring, which is progressing albeit with some delays. The business will take advantage of governmental support packages where appropriate and offered in the countries in which we operate.”

• Advanced Medical Solutions – “Given the strong cash position of £65 million and no debt as at 31 December 2019, the Group confirms it is in a robust financial condition to weather the current global disruption caused by the pandemic. Additionally, in the unlikely event that it was needed, the Group also has an undrawn unsecured £80 million credit facility provided jointly by The Royal Bank of Scotland and HSBC which is in place until December 2023.

Reflecting the strength of the Group's financial condition and the Board's belief in the long term prospects of AMS, subject to shareholder approval, the Board still proposes its final dividend for 2019 of 1.05p per share, to be paid on 19 June 2020 to shareholders on the register at the close of business on 29 May 2020.

All AMS sites are currently in operation and meeting the Group's commitments to maintain supply of its medical devices to healthcare partners and customers worldwide. However, the Group is now experiencing a slowdown in demand caused by the cancellation or postponement of elective surgeries and a reduction in accident & emergency treatment as a result of the global lockdowns. Clinical activities and new customer evaluations in both Business Units have also been temporarily impeded by the pandemic, and we envisage some potential supply disruption across the Group in the coming months. We are unable to predict the eventual financial impact for AMS, as it will depend on how long pandemic control procedures are in operation and how quickly thereafter the global markets in which the Group operates can recover. The Group currently estimates that its annual revenues will be impacted by approximately 3% to 5% for each month the widespread restrictions remain in place. The Group continues to monitor the situation carefully and will update the market as appropriate.

In this period of uncertainty, the Group will carefully manage its operating costs, working capital and capital expenditure to ensure that it remains in the strongest possible financial and operational position to return to strong growth when the Group's end markets recover to a more normal basis.”

• Flowtech Fluid Power – “During Q1 the business has performed in line with our expectations at the time of the February trading update. Naturally the final few weeks of Q1 suggest an altogether different position going into Q2. While several of our suppliers and customers have suspended operations, these currently only account for 10-15% of revenue, and there has been little slippage in customer receipts helped enormously by the timely Government action. Overall, revenues are currently trending down by around 30%, with expectations that volumes may dip further before recovering. Therefore, we do not believe it prudent to provide formal guidance for the current financial year.
However, factoring in the cash savings from all elements of the Government support mechanisms, we would need a prolonged 35% drop in revenue run rates before the business becomes broadly break-even. This is based on furloughing 181 of our 590 UK and ROI employees, combined with similar support from the Dutch/Belgium Governments. Should the need arise, we have scope to make further cost savings.

Net debt at 31 March 2020 was £15.6m, a £1m reduction from the position at 31 December 2019. We have recently extended our aggregate banking facilities of £25m out to the end of June 2021. Discussions with our Bank are constructive, and they are looking to support us in ensuring all covenants are complied with, and to secure extended facilities beyond the 15-months remaining with our existing arrangements.

We continue to pursue our rationalisation and cost reduction programmes. These centre around the implementation of operational efficiencies in relation to our procurement and warehousing activities, as well as the centralisation of back office functions. Over time we hope to achieve further significant reductions in both working capital and operating costs. Despite the short-term trading disruption, the business should generate positive cash flow through 2020 and 2021, helping to further reduce net debt

Dividend – Although in our February update we indicated that we would look to propose a final dividend, given current levels of uncertainty it is prudent that we suspend all dividend payments and retain as much cash in the business as possible until the situation becomes clearer.”

• Mitsubishi Motors – Suspending production at three plants in Japan for up to 17 days due to reduction in demand.

• 2nd production line (for registered vehicle) at Mizushima Plant (Okayama, Japan): From 6 April to 23 April.

• Okazaki Plant (Aichi, Japan): From 9 April to 17 April.

• Pajero Manufacturing Co., Ltd. (Gifu, Japan): From 13 April to 20 April.

• Volution – “Since our last update on Wednesday 25th March the restrictions and lockdowns in the UK, Belgium and latterly Australia and New Zealand have resulted in a marked reduction in order intake and revenue across our businesses in these countries. The impact in the Nordics and Germany to date has been less pronounced although we have started to see some reduction in activity in these markets. We therefore anticipate demand across our businesses to remain considerably below normal levels of trading, however we expect to maintain a baseline of orders and revenue throughout the crisis due to our geographic and product diversity.

Our ventilation product ranges are supplied to a wide range of applications in both residential and commercial buildings, and in the UK, for example, ventilation has been classified as an essential product. Maintaining excellent indoor air quality is very important and we are proud to be supporting some of the important projects that are taking place as the UK responds to the pandemic. Earlier this week we delivered a large batch of air movement ventilation axial fans for use in the newly constructed Nightingale Hospital in London. A number of other projects are underway to reopen mothballed hospital wards and our sales, production and logistic teams are supporting these initiatives to ensure that we can service these requirements in full.
We have scaled back discretionary expenditure to the absolute minimum, whilst almost all capital expenditure other than that related to health and safety requirements has been put on hold. Furthermore the Board including the Executive Directors will take a 20% salary reduction for the next two months and this remains subject to ongoing review depending on the length and severity of the crisis.

Our gross cash balance as at 31 March stood at £41 million, with a further £14 million of undrawn facilities available under the Group's Revolving Credit Facility. With the cost containment actions already implemented and an expected continuation of variable levels of trading across our markets, we are therefore, well placed to withstand the challenges of the coming months.”

• Wood Group – “We have considerable levels of financial headroom and liquidity. We entered 2020 with a strong balance sheet foundation with c$1.4bn of headroom against our debt facilities. At 31 December net debt to pre-IFRS 16 EBITDA was 2.0x. The completed disposals of our nuclear and industrial services businesses in Q1 2020 for proceeds of c$430m reduced net debt to pre-IFRS16 EBITDA to 1.5x on a pro forma basis.

Wood has access to financing facilities that consist of bilateral term loans of $300m, a revolving credit facility of $1.75bn and US private placement debt of c$880m. The bilateral and revolving credit facilities have a maturity date of May 2022. The US private placement debt has a variety of maturity dates between 2021 and 2031 with first maturity of $77m in late 2021 and the majority weighted to later dates. Covenants are set at 3.5x pre-IFRS 16 EBITDA.

Leveraging our flexible, asset light business model: salary, headcount and capex reductions

We have a proven track record of leveraging our flexible, asset light business model in response to changing market conditions. Although it is too early to quantify the impacts of Covid-19 and the substantial reduction in oil price we are taking early action to significantly adjust the cost base in anticipation of a reduction in activity levels. These include:

• Salary Reductions. The Board, executive directors and senior leaders have elected to take a voluntary, temporary 10% reduction in base salary. An additional group of employees is also being asked to do the same. In total, we anticipate that this will generate overhead savings in 2020 of c$40m.

• Headcount reductions, temporary furloughing, unpaid leave and operational salary reductions. The active management of utilisation is a key measure of efficiency within our business. In response to changing activity levels we are focusing on redeploying people wherever possible alongside considering reduced working hours, unpaid leave and furloughs. Regrettably, employee reductions are also being made in certain areas reflecting the reduction in operational activity.

• Capital expenditure reductions. We have taken the decision to pause the implementation of our ERP system and other discretionary capex which is expected to generate a c$20-25m reduction in capex in 2020.

• Other overhead cost reductions including the stoppage of discretionary spend, travel costs and further utilisation of shared service centers and high value engineering centers.
Withdrawal of final dividend recommendation – In the statement of our results for 2019, which we published on 10 March 2020, we noted that the Board had recommended a final dividend of 23.9 cents per share (total cost $160m). Whilst the Board recognises the importance of dividends to shareholders, given the unprecedented levels of uncertainty and measures being taken to protect cash flows and preserve long term value, the Board considers it prudent and appropriate to withdraw its recommendation. The Board will no longer propose a resolution to approve the dividend at the AGM and will review the future policy once there is greater clarity on the impact of CovidD-19 and the substantial fall in oil prices.

Order book – Our order book at the end of February before the recent fall in oil prices was $8.0bn with around 70% of 2020 activity delivered or secured. Looking forward, we anticipate that some of the existing order book will be subject to postponement and that new order intake will slow due to the impact of Covid 19 and lower oil prices.”

• Saga – “Given the significant potential impact of Covid-19 on the travel industry, the Group has considered scenarios for extended suspension of Cruise and Tour Operations, including full cancellation of all travel departures over six months, followed by a slow recovery.

Based on this analysis, the Group has taken action to protect its balance sheet and increase near-term liquidity by:

• A precautionary £50m draw down of the revolving credit facility, with available cash resources at the end of March of £92m;

• Reducing operating expenses, with run rate cost savings of £15m from actions that were implemented in February. This will be partially offset by an expected £10m of redundancy costs in the current year. Further mitigating actions are underway in response to the Covid-19 crisis in relation to the Travel business;

• Suspending the dividend; and

• Agreeing amendments to banking covenants, with the net debt to EBITDA (excluding Cruise debt and EBITDA) covenant within the Term Loan and RCF increasing to 4.75x from 3.5x for reporting periods from 30 July 2020 to 30 April 2021, and to 4.25x at 30 July 2021.

Saga has strong liquidity and diversified sources of income, and has the flexibility to respond to the challenging market environment due to the cash generative Insurance business, an expected £23m in cash proceeds to be received from the sale of Bennetts and the £50m remaining undrawn revolving credit facility.

The Group has been notified by Meyer Werft that disruption arising from Covid-19 may delay delivery of Saga's second new ship, the Spirit of Adventure, currently due to commence operations in August 2020. This has been considered within planning scenarios and is not anticipated to significantly change the Group’s financial position.”

Leisure

• Hollywood Bowl – “The Group actioned the temporary closure of its centres on 20 March, in line with Government guidance. Management had prepared for this scenario well in advance and was therefore able to implement its close-down plans with minimal disruption for both customers and team members.

Government support initiatives & management actions – The Group has welcomed the one-year exemption granted from business rates and the VAT payments deferral announced by the Government, which combined is expected to result in cash savings of £6m for the current financial year (FY2020).

A key priority for management is the welfare of its team members and with the support from the Coronavirus Job Retention Scheme, the Group intends to keep its team members at full salary levels for as long as is practicable.

Alongside this Government support, management have taken several actions regarding capex and opex. These include the pausing of refurbishments and new centre fit outs as well as the renegotiation of supplier contracts and payment terms, which will reduce costs and conserve cash while the Covid-19 situation continues. However, management remain confident in the long-term prospects of Hollywood Bowl and will ensure that the Group is well positioned for when it is appropriate to re-open centres.

Financing and liquidity – Management has always adopted a prudent approach to its cost base and capital expenditure and, with the benefit of its cash generative business model, has maintained a strong financial position.

As at 31st March 2020, Hollywood Bowl had approximately £15.6m of cash and £30.25m of debt, drawn from its £35m facility. This takes into account full rents paid to all landlords for the March quarter and team member salaries paid up to the end of March 2020. Management has been in constructive discussions with its lenders regarding ongoing support. Considering the current Covid-19 uncertainty, the lenders have agreed an extension to the RCF of an additional £10m, amended the leverage covenants and waived the cash flow covenants for the rest of FY2020.

Dividend – In addition to the management actions taken to preserve liquidity, the Board does not intend to declare an Interim ordinary dividend at the time of its Interim Results.”

• M&C Saatchi – “Trading in the first two months of 2020 was in line with the Board's expectations. We began to feel the impact of Covid-19 in March, with a reduction in activity in several of our markets following government restrictions on movement and the consequent reduction in economic activity.

As a result, our performance was substantially weaker in March than in January and February. It is clear that Covid-19 will continue to have an impact on the business. At this stage, however, it is not possible to accurately predict the scale or duration of the impact. As a result, we are not providing financial guidance for 2020. We will provide an update when appropriate.

We are taking wide-ranging action to mitigate the financial impact of the crisis and maintain a strong liquidity position in anticipation of a further deterioration in the business environment.
The Group had approximately £45m of cash worldwide as at 23rd March 2020. This includes a fully drawn revolving credit facility (RCF) with NatWest of £36m, leaving a net cash position of £9m. Although the Group is in a net cash position, the RCF and cash is typically required for working capital purposes. The £36m RCF and £5m overdraft facility (which is undrawn), was recently extended through to 31 July 2021, and has a 2.5x Gross Borrowings / Adjusted EBITDA covenant and a 5x Adjusted PBIT / borrowing costs (interest cover) covenant. Despite the increased pressure on cash, the company forecasts it has sufficient liquidity and expects to be able to continue to operate within these covenant levels for the foreseeable future.

We are reducing costs in a number of areas, including the elimination of significant rent, IT and travel expenditure and reduced capital expenditure in the London head office. In addition, we have improved the Group's cash flow and working capital through deferrals of tax and rent through instituting a daily review of cash outflows and receipts and working with our clients to ensure payments are received on a timely basis.

Where appropriate, the Group is seeking to apply for additional government business support initiatives worldwide. We are focused on protecting our employees as much as possible and will be securing government support to furlough staff in the UK, the US and Australia. For a very large proportion of higher paid, non-furloughed staff we are reducing salaries. The Group's Board and senior management team have already committed to a 20% reduction in their salaries. We regretfully commenced consultation with a number of employees across the Group about possible redundancy before the recent escalation in the Covid-19 crisis and this process will continue.

Given the current circumstances, the Board has decided to suspend shareholder distributions until further notice. This includes the final dividend for the year ended 30 December 2019.”

• Moneysupermarket – “As a marketplace business, we are impacted by changes in consumer demand or provider supply. In Q1 we initially saw strong demand for travel insurance due to consumer concerns over Covid-19 but both TravelSupermarket and travel insurance have materially weakened since the travel ban. Over recent weeks we have seen a slowdown in consumer demand and lower product availability in our Money business. Notably the outlook for loans and mortgages and some of our promotional Money channels has reduced. To date, Insurance and Home Services trading remain relatively resilient. Over the longer-term, the attractive fundamentals of our business and markets are unchanged.

Balance sheet and dividend – We benefit from being a financially resilient business with diversified revenue streams and strong cash conversion. We have access to a £100m committed revolving credit facility, which matures in September 2021, with the ability to apply for a one or two year extension to this facility. As at 31 March 2020, we had net cash of c£30m.

Given this strong balance sheet and robust liquidity position, the Board has determined that, despite the challenging macro conditions, the proposed 2019 final dividend amount of 8.61p per share will not jeopardise our ability to continue to invest into the business and support ongoing operations, including our customers and colleagues.

The Board therefore proposes to pay the final dividend of 8.61p per share declared with the Group's preliminary results and will keep dividend policy for the rest of the year under review.”

Oil & Gas

• Egdon Resources – “As announced on 26 February 2020, production during the six months ended 31 January 2020 was 178 barrels of oil equivalent per day (‘Boepd’) (H1 2019: 164 Boepd). Revenue during the six months to 31 January 2020 was £0.675 million (H12019: £1.21) which reflects the lower gas prices seen through the winter of 2019/20. Production remains within guidance of 130-140 Boepd for the full financial year (ending 31 July 2020).

The coronavirus pandemic and the resultant international actions have adversely impacted worldwide oil demand which has largely contributed to the current low oil price environment. In common with our peers, our current late field life production is unprofitable at these current prices and we are reducing costs wherever possible.

Given the current reduction in predicted oil and gas forward prices, non-cash impairments will be made in our Interim Results on a small number of assets. These impairments are expected to be of the order of c.£2.5-3.0 million out of total non-current assets of £31.94 million.

The Company is focussed on reducing costs and expenditure and concentrating on progressing key near term cash generative projects such as Wressle. We will continue to keep future activity under review in light of the current circumstances and are positioning the Company for growth once normality returns to the economy and oil markets.”

• United Oil & Gas – “Proactive measures taken by United and its partners to reduce near-term Capex commitments during current oil-price uncertainty and the impact of Covid-19.

• Deferral of Italian Capex improves cash flow and moves expected first gas slightly to H1 2021.

• Deferral of Egyptian Capex reduces 2020 infill campaign from 4 to 2 wells, significantly reducing gross 2020 Capex estimates. Further optimisation of the Capex and Opex budgets is being considered.

• Completion of post-Egyptian-acquisition licence review sees divestment plans for selected non-core assets in the Wessex Basin and a decision not to exercise the farm-in option in Benin.

• Substantial cut in administrative expenditure resulting in further cost savings.

Measures taken to minimise the impact of oil-price uncertainty and Covid-19 will help safeguard the company during the current industry challenges, with the aim of putting it in a position to take advantage of future opportunities.”

• Assura – “Looking at the quarter as a whole, Assura continued to make good operational progress, in particular around our acquisition and development opportunities, as we seek to deliver primary care assets that cater to the needs of the NHS now and for the future. Dividend of 0.697 pence to be paid on 15 April 2020 as previously announced.”

• Land Securities – “The rapid spread of CV-19 has brought with it a huge shift in the use of our buildings. From 24 March, stores at our shopping centres, outlets and leisure assets were substantially closed, save for essential services as defined by the Government. Four retail outlets and seven leisure and retail parks have been closed entirely.

We have been informed by Accor that they have closed 15 of their 21 hotels in our portfolio.

Our office properties remain open on a reduced service.

65% of the rent due on 25 March was paid by 31 March compared with 96% for the equivalent period last year.

Our response:

•We continue to focus on supporting our customers through this period ofdisruption and are agreeing rent deferrals with many of our retail andleisure occupiers.

•We have established a rent relief support fund of £80m to help ourcustomers most in need, with a particular focus on supporting F&Bcustomers and small and medium sized businesses.

•We will give £500,000 to support our existing charity partners with theirimmediate challenges.

•We are taking measures to reduce expenditure as far as possible at ouroperating assets and reviewing the timing of further commitment toexpenditure in our development programme.

•The Board has taken the decision to cancel our third interim dividend dueto be paid on 9 April 2020 and will regularly review the position on futuredividend payments, reinstating them as soon as it is appropriate to do so.

Financial capacity and liquidity.

We are financially robust with an LTV of 28.1% at September 2019.

Using September 2019 valuation numbers, we can withstand a valuation fall of 62% or EBITDA reduction of £385m before our LTV or ICR covenants prevent further bank drawings.

At 31 March 2020, we had £1.2bn of cash and available facilities, net of repayments due under our commercial paper programme.

Our external valuer has informed us that the valuation will contain a ‘material uncertainty’ clause.”

•LondonMetric Property# – “Our strategic decisions and actions over the pastfew years have aligned the portfolio to structurally supported sectors thatcontinue to offer superior growth prospects, as well as assets that areunderpinned by high intrinsic values. These actions mean we have built ahighly desirable and resilient portfolio that is c99% occupied and let on longleases to a diverse range of occupiers across multiple industries. With c70% ofour portfolio in logistics, this warehousing space provides our occupiers withoperationally critical infrastructure.

Our operational and financial performance to date has been strong. EPRAEarnings for FY 2020 are anticipated to be in line with expectations and ourthird quarter dividend of 2.0 pence per share will be paid as planned on 16April.

In respect of advanced quarterly rental payments that were due by 1 April,85% has been collected, 7% is expected to be received shortly and on a further 4% we are in advanced discussions on short term rental concessions in return for compensatory asset management initiatives.

Unsurprisingly, some of our customers are experiencing unprecedented short term disruption to their business models, which is putting enormous pressure on the robustness and sustainability of their cash flows. Therefore, through our occupier-led strategy we are actively assisting those that are being materially impacted by providing proportionate assistance. Some companies are also seeking help with short term cash flows to improve liquidity. Consequently, following conclusion of current occupier discussions, we expect that 17% of our rent will be paid monthly compared to 13% previously.

Clearly this will have some impact on our short-term cash flows. However, where any liability is deferred, it still remains due and so we will expect compensation by way of lease extensions, removal of break clauses or additional payments in the future.

Our financial position was strengthened in the second half of the financial year by £174 million of disposals (LondonMetric share: £167 million). £106 million of these sales have already completed, including the Dixons Carphone warehouse in Newark and in the last few days a DFS unit in Nottingham and an office park in Worcester. The remaining sales are unconditional and are scheduled to complete by the end of June.

Over the same period, we acquired £50 million of long let assets with a WAULT of 19 years which have further diversified our income base and where all rental payments due in March have been received.

We have no debt maturing during this financial year and, as at 31 March 2020, we had £134 million of undrawn facilities and £81 million of cash on the balance sheet. Our committed development expenditure is £22 million, of which 89% relates to developments that are pre-let.

We recently strengthened our debt profile through a new £75 million unsecured revolving credit facility for a three-year term with HSBC at an attractive opening margin over LIBOR of 150bps. The facility has the same covenants as our other unsecured facilities, which have significant headroom both on an LTV and ICR basis: compared to 30 September 2019, valuations would need to fall c.32% or rent would need to fall c58% before testing these covenants.”

To read the full research note, please click here