Restaurants, pubs and cafes in England will be allowed to open from 6:00am on Saturday.
Holiday accommodation, hairdressers and a range of other public amenities will also be allowed to open. This will one of the first major tests of how the UK public responds to the ‘new normal’. There will inevitably be pent-up demand and to avoid the crowds seen at beaches last month the government has urged people to be ‘responsible’. Of course, there are risks. There is the risk of seeing the virus spread, but there are also risks in keeping the economy at a standstill. It will be hoped that the message this time is clearer.
Country situation
We show below the number of cases and deaths, and as a proportion of populations. We also show the daily trend in infections vs a three-day moving average and show where lockdowns are being eased. We will be updating this table daily.
Company news
Financial
• CMC – “In Q1 2021, the entire business has continued to perform very well, with client trading activity remaining around double that of the same period in the prior year as stated on 11 June 2020 in our FY20 results. Client income retention for the period is materially higher than the 82% reported in H1 2020 and stockbroking net trading revenue also continues to benefit from the market conditions.
As a result, net operating income for Q1 2021 is in excess of that reported for H1 2020 of £102.3 million.
Our investment in technology continues to attract and retain clients, with market leading functionality and robust operational performance through these extremely high volume periods. Client acquisition and active client numbers remain at elevated levels.
The Board is confident that, even in the event that more normalised client trading activity returns, with the strong underlying performance of the business, 2021 net operating income will exceed the upper end of current market consensus1.
In light of this Q1 2021 update, CMC no longer intends to release the trading update scheduled for 30 July 2020. The Group is scheduled to release a H1 2021 pre-close trading update on Thursday 8 October 2020.”
Industrials
• Essentra# – “Whilst Q1 trading was largely unaffected by the pandemic, as expected the impact was more profound in Q2. Nonetheless, the performance is in-line with our expectations and trading trends are improving.
As highlighted in the Company's last announcement dated 21 May 2020, Group like-for-like (LFL) revenue declined 17% in April.
Group LFL revenue performance has improved as the quarter progressed – in May it was -10%, in June it is expected to be -1%. The Company therefore expects that LFL Q2 performance will be -10%, whilst LFL H1 performance is anticipated to be -9%.
In the Components division (which is more exposed to industrial cyclicality), the start of Q2 saw an accelerated slowdown in customer demand, with LFL revenue -24% on prior year in April. May and June showed an improvement from the April low, as our enhanced online offer enabled us to continue supporting customers through this period.
As previously indicated, the greater risk for the Packaging and Filters divisions related to supply chain performance and individual country temporary legislation. In line with this, April performance in both divisions was somewhat affected by temporary facility closures, which subsequently reopened in May. Underlying demand has remained robust for both divisions in May and June, and both divisions have now returned to modest positive growth – Packaging since May and Filters in June.
The Company anticipates some continued disruption to its trading in the coming months and believes that it is still too early to outline the full impact on full year financial performance – hence any guidance remains absent.
In Components, recent order book trends are positive – with June seeing a c10% improvement compared to May, with progress being noted in all regions.
The order book for Packaging is encouraging, and remains higher than at the same point last year, on a LFL basis. The division has been awarded more than $5m (annualised) of new business as a result of its focus on supporting customers.
Filters continues to make progress on its strategic agenda, in particular the commencement of our two 'gamechanger' outsourcing deals and the establishment of the China JV.
Despite the immediate challenges posed by the pandemic, the Company is well positioned to respond effectively, with the revenue trend seen in Q2 expected to continue into Q3, barring a major second wave to the pandemic.”
Leisure
• Fuller Smith & Turner – “The Company is undertaking a phased, gradual re-opening across the estate. On 4 July 2020, 27 pubs will open, with further pubs opening in groups over the following weeks. By the end of July, over 80% of our Managed Pubs and Hotels will be open.
We expect the majority of our Tenanted Inns to also re-open during July.”
• Rank# – “The Group will commence the re-opening of its Mecca bingo clubs from tomorrow, 4 July 2020.
Our spacious Mecca venues will have extensive social distancing measures and signage; colleague-controlled entry and exit; reconfigured service points to account for social distancing and frequent and extensive cleaning of all surfaces, including tables and machines. Hand sanitiser will be available to customers prior to entry and throughout the venue.
Initially we will be opening 35 venues in England. A further 30 venues are expected to open in a phased approach throughout July and August including, when permitted, our venues in Scotland and Wales. The remaining 12 venues will remain closed until October whilst we assess their ongoing viability. Some restructuring of the cost base and format of these venues is likely to be necessary to allow them to re-open, including renegotiation of rents.
Working with our casino trade body, the Betting and Gaming Council (BGC), the Group is continuing to engage with Government as we seek to secure a date for the re-opening of Grosvenor's casino estate. We will provide a further update when progress can be announced. Our Enracha clubs in Spain started to re-open from 10 June and all are now open. Revenues have been at approximately 60% of pre Covid-19 levels. The Digital business continued to trade well, delivering aggregate Q4 revenue growth of circa 17% on a proforma1 basis. This was despite the impact on Stride's proprietary brands of additional safer gambling and customer due diligence measures implemented to bring them in line with Rank policy.
Underlying operating profit for the year ended 30 June 2020 is expected to be at the lower end of the previously provided guidance range of £48m to £58m after IFRS16 (£40m to £50m pre-IFRS16) due to the venues re-opening costs being expensed.
Monthly net cash outflow has also been in line with previous guidance, with cash and available facilities at 1 July of approximately £140m. The Board still expects that Rank will meet its banking covenants at 30 June 2020. With the re-opening of Mecca, we expect the monthly cash outflow to be reduced from circa £10m per month to £7m per month and to be cash flow positive upon the re-opening of Grosvenor, assuming that revenues are in line with those achieved in Enracha, and before the repayment of deferred duty and rental payments. We continue to review opportunities for maintaining appropriate levels of liquidity for the Group.”
Real Estate
• Capital & Regional – “Operations – All seven of the Company's community shopping centres have remained open throughout the period of lockdown providing essential services to the communities we serve. The lifting of restrictions enabling non -essential retailers to open again from 15 June 2020 has seen a significant increase in the number of tenants now back trading. As of today 470 stores are back open and trading, increased from 68 stores in early May. This represents 74% of units with a further 10% having confirmed dates for re -opening. We are working closely with the remaining retailers to re -open as soon as possible noting only 5% of our retailers are currently not authorised to open.
Footfall for the week ending 28 June 2020 was approximately 55% of the equivalent week in the prior year, 97% higher than the last week prior to the restrictions easing. Feedback from many of our retailers is that average transaction values have been higher than the comparable period last year with shoppers making focused purpose led visits.
Of the rent for the third quarter of the year that was due on or since the 24 June 2020 we have received or expect to receive 34% imminently. In total we have collected approximately 40% of all rents that have fallen due from the 25 March 2020 to the present day, incorporating rents payable on both a quarterly and monthly basis.
Approaching half of the balance of rents that are outstanding are due from major well -capitalised retailers who have capacity and a clear contractual obligation to pay. It is encouraging that several of the non -payers have engaged with us regarding payments now stores are trading and we are fully committed to working constructively with all our customers.
In line with government guidance our Snozone operation closed its two indoor ski slope sites on Friday 20 March 2020. We are making plans for re -opening in anticipation of the restrictions being lifted in the coming weeks and expect the business to be back up and trading in time for the peak Q4 trading quarter.
Liquidity
• As at close of business on 30 June 2020 the Group had total cash on balance sheet of over £81 million, which is equivalent to more than one year's gross revenue. In addition, the Group has an undrawn revolving credit facility of £15 million available until January 2022. The earliest maturity on any of the Group's other loan facilities is February 2023.
• We have signed waivers for all income covenants with quarterly test dates in July and October 2020 on our three largest asset backed loan facilities. These represent over 93% of our outstanding debt.
• In light of the uncertain market conditions we have paused on any commitments to the proposed Hemel Hempstead Leisure project. We are considering alternative options and are in discussions with the lender to review the loan facility to reflect this.
It remains too early to quantify the medium and longer -term impacts of Covid -19 on the Group's operations. Whilst it is clear that Covid -19 is rapidly accelerating a number of structural trends that were already under way in retail industry, we continue to believe the Group's focus on local community centres providing non -discretionary and essential goods and services will help mitigate the Group on a relative basis and provides the business with a sound base in these unprecedented times.”
Support Services
• Manolete# – “Despite Covid-19, activity levels in April, May and June 2020 have remained strong with new case referrals of 186 compared to last year's total of 98. The team are currently running a record 200 live cases. We are confident that our portfolio of cases will provide attractive returns for shareholders. Overall, the business is very well-positioned in the insolvency litigation financing market for long-term profitable growth.”
Transport
• Ryanair – “100% of Ryanair’s Irish pilots have accepted a 4 year agreement which includes a 20% pay reduction, restored over 4 years along with productivity improvements on rosters, flexible working and annual leave. The UK pilots agreed similarly and this will effectively reverse the pay increases linked to unionisation in the last 2 years UK & Irish cabin crew have accepted 1% pay reductions, fully restored over 4 years as well.”
Lifting restrictions
• In Scotland, the five-mile travel limit has been lifted and self-contained holiday accommodation can now re-open.
• In Northern Ireland, hotels, bars, restaurants and cafes can re-open. Pubs and bars must serve food and operate on a table service basis; those pubs that do not serve food will be allowed to sell alcohol outdoors.
Other
• CMA has secured refunds from Sykes Cottages, a major holiday letting firm until recently, Sykes had been refusing to provide full cash refunds to all customers whose holidays could not go ahead because of Covid-19. This is changing following intervention by the CMA; if the company had not changed its policy, the CMA could have launched court proceedings against it.
• The US will be among the countries on England’s coronavirus ‘red list’, and travellers from there will continue to face 14 days’ quarantine on arrival.
• The governor of Texas has ordered face-coverings to be worn in public as virus cases in the state continue to rise. The directive applies to counties with 20 or more Covid-19 cases – which covers most of the 254 counties in Texas.
• A major greenhouse farm in central Canada has been shut down after nearly 200 coronavirus cases were reported there over the weekend. The Nature Fresh Company in Leamington – which has 670 workers, including approximately 360 migrant workers – was shuttered by the Windsor-Essex County Health Unit, according to the Windsor Star newspaper.
• The ONS said that an estimated 73,600 weddings and same-sex civil partnership ceremonies may have been postponed in England during the three-month period of lockdown restrictions between 23 March and 3 July 2020. From 4 July weddings in England will be able to take place with a maximum of 30 people who must maintain social-distancing measures, avoid singing unless behind a screen, avoid consuming food or drink and avoid playing instruments that must be blown into.
• This week’s ONS survey asked people their ability to pay household bills and to meet any unexpected expenses compared with before the coronavirus outbreak. It also asked how safe people feel about having tradespeople in their homes for essential and non -essential work. The weekly survey, relating to the period 25 to 28 June. Findings included:
• Paying the usual household bills is ‘difficult or very difficult’ for 11% of adults compared with 5% before the outbreak. Asked if their household could afford to pay an unexpected but necessary bill of £850, 28% said they could not.
• More than 1 in 10 (11%) adults reported that they have had to borrow more money or use more credit than usual since the coronavirus outbreak.
• Among working adults, 78% said they had either worked at home or travelled to work this week – the proportion of working adults who had travelled to work in the past seven days increased to 49% (compared with 44% last week).
• In an emergency situation, such as needing repairs to a boiler or electrics, 51% of adults said they felt either very comfortable or comfortable having someone come into their home to carry out repairs. This fell to 37% for non-emergency work in their home, and 42% felt uncomfortable or very uncomfortable with this situation.
• The most common issue affecting adults’ well -being continues to be feeling worried about the future (62%). However, this week the proportion of people feeling stressed or anxious has fallen to 55% from 66% last week. ‘Feeling bored’ has decreased to 45% of people, compared with 60% last week.
• North Tyneside Council figures show around 30% of licensees in Newcastle city centre have stated they will definitely welcome patrons once again on Saturday. A further 10% said they plan to open later in the month, once the initial rush has passed. Another 35% said they have not yet decided whether to open this month, with the remainder not stating their plans to licensing officials.
• The mayor of Belgrade in Serbia is expected to declare a state of emergency because of a rise in cases. It will place limits on the number of people indoors, require social distancing of 1.5m and tighten rules on wearing masks.
• Portugal has stepped in to nationalise the airline TAP to save it from collapse, increasing the state’s share from 50% to 72.5%.
• The US has recorded its largest single -day jump in infections since the start of the pandemic, with more than 53,000 new cases reported yesterday. Cases are currently rising in 37 out of 50 states.
• In the Netherlands, authorities have announced that another mink farm has been infected with coronavirus, making 18 in total, with 4,300 animals to be culled.
• The United Nations has predicted that more than 2.7m businesses could go under and 8.5m jobs could be lost in Latin America due to the coronavirus crisis. The UN’s economic commission for the region said shops, hotels and restaurants, many of which are small - and medium -size businesses, will be hardest hit.
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