By Powerscourt on 02/12/2020
Powerscourt Coronavirus Briefing – 02 December 2020
ANALYSIS
Good news on vaccines with the UK starting injections next week. Bad news on infections as COVID-19 rages across Europe and the US, in particular with record deaths New Jersey, record infections in Texas and record hospital cases in California.
As we endure a second wave of Covid-19 and its associated economic lockdown, the cost of the pandemic continues to grow, in bailouts, lost jobs and the closure of fabled high street names.
As he formally unveiled his economic team, US president-elect Joe Biden promised that “help is on the way.” But the fight over a stimulus package to rescue the economy is just beginning. The Democrats initially insisted on a package worth trillions of dollars, though that seems unlikely. A bipartisan group of US senators has proposed a compromise package of $908 billion, but that looks doomed in the Republican-dominated senate.
The stakes could hardly be higher according to Cecilia Rouse, Biden’s pick to chair the Council of Economic Advisers. She told the New York Times: “This is a moment of urgency and opportunity unlike anything we have faced in modern times.”
The Trump administration has bowed to a federal court ruling and released the names of up to 10 million businesses and individuals that received pandemic aid, a scheme that critics say has led to widespread fraud, Reuters reports. The scheme, overseen by the Treasury and the Small Business Administration, has distributed about $700 billion in federal aid but the administration had resisted demands to be more transparent about who got it.
In Europe, the high street is reopening, and also shutting down. Shops in Ireland reported brisk business on Tuesday, their first trading day after a six-week closure. Britain’s high street begins to reopen from today, but Debenhams has gone into liquidation with the loss of at least 12,000 jobs.
The Financial Times reports on the uncertain future of the Gibert Jeune bookstore in Paris. It has been in business in the Latin Quarter for nearly 150 years and is beloved of browsers and students, but the pandemic and its owners’ failure to adapt to the digital age have raised fears that it will have to close permanently.
Early on Wednesday the UK medicines regulator became the first to approve the vaccine developed by Pfizer and BioNTech. The MHRA said the vaccine is safe and can be used from next week, the BBC reports.
Martin Wolf, the Financial Times columnist, strikes an unusually optimistic note. Writing on Wednesday, he says a combination of vaccines, the fact that the economic devastation is less than he expected so far, and the election of the “sane and decent” Joe Biden, suggests things will get better soon. “Just maybe, the world will emerge from the nightmare sooner and in better shape than many feared,” he writes.
Finally, hubris has met nemesis in Brussels. Jozsef Szayer, a senior Hungarian MEP, was forced to quit on Tuesday after admitting to breaking the lockdown rules in Brussels. His offence: attending a “sex party,” as the Belgian media put it, that was broken up by the police for breaching quarantine. Szayer is a leading figure in the hard-right and rampantly homophobic political movement led by Hungary’s Viktor Orban.
US equity markets started December with a 1% rise. Asian markets were flat today.
WHAT ARE COMPANIES SAYING?
Consumer & Retail
BioNTech SE
German biotechnology company BioNTech SE and the American multinational pharmaceutical corporation Pfizer announced today that they had achieved the first authorisation in the world for a vaccine to combat Covid-19. The Medicines & Healthcare Products Regulatory Agency (MHRA) in the U.K. has granted a temporary authorization for emergency use for their COVID-19 mRNA vaccine (BNT162b2), against COVID-19. Pfizer and BioNTech are anticipating further regulatory decisions across the globe in the coming days and weeks and are ready to deliver vaccine doses following potential regulatory authorizations or approvals. Ugur Sahin, M.D., CEO and Co-founder of BioNTech commented: “The Emergency Use Authorization in the U.K. will mark the first time citizens outside of the trials will have the opportunity to be immunized against COVID-19. We believe that the roll-out of the vaccination program in the U.K. will reduce the number of people in the high-risk population being hospitalized.”
Debenhams plc
British multinational retailer Debenhams plc is set to close all its UK shops after 242 years in business, putting 12,000 jobs at risk. The decision to liquidate Debenhams comes after Philip Green’s Arcadia fashion group went into administration on Monday, threatening 13,000 jobs, after the COVID-19 pandemic hit business. Arcadia is the biggest concession operator in Debenhams, accounting for about 5% of Debenhams’ sales, and its collapse looks to have been the final straw, making a sale of Debenhams that would be worth more than a winding down process impossible. Administrators FRP Advisory said on Tuesday that Debenhams would be wound down after it failed to find a buyer.
Tesco PLC
The British multinational groceries and general merchandise retailer announced this morning its decision to repay to the UK Government and the Devolved Administrations the £585m of business rates relief received in respect of the COVID-19 pandemic. In an announcement, the company said “Every penny of the rates relief we have received has been spent on our response to the pandemic. Our latest estimate at our Interim Results in October was that Covid would cost Tesco c.£725m this year – well in excess of the £585m rates relief received.” John Allan, Tesco’s Chairman, commented : “The Board has agreed unanimously that we should repay the rates relief we have received. We are financially strong enough to be able to return this to the public, and we are conscious of our responsibilities to society. We firmly believe now that this is the right thing to do, and we hope this will enable additional support to those businesses and communities who need it.”
Stock Spirits Group PLC
The leading owner and producer of branded spirits and liqueurs that are principally sold in Central and Eastern Europe and Italy, today announced its results for the year ended 30 September 2020. Underlying revenue increased +6.9% and adjusted EBTIDA was up 4.6%, demonstrating a resilient performance against the backdrop of COVID-19 in H2, and excise tax increases in Poland and the Czech Republic in H1. The company announced a total ordinary dividend of 9.55 €cents per share and a special dividend of 11.00 €cents per share, taking the total dividend for the year up 130%. Commenting on the results, Mirek Stachowicz, Chief Executive Officer, said: “We are pleased to have delivered a resilient performance against the backdrop of a hugely challenging year… While there remains some uncertainty in the short-term outlook, in the longer term we are confident that we will emerge from the pandemic with an even more loyal and engaged consumer base, closer customer and supplier relationships, and a stronger business than ever before.”
Avon Rubber P.L.C.
The British company specialised in the engineering and manufacturing of respiratory protection equipment for military, law enforcement and fire personnel has today announced its unaudited preliminary results for the year ended 30 September. It reported that the business has continued to operate with only minor disruption throughout the year, despite the unprecedented challenge of COVID-19, and announced revenue growth of 30.8% to £168 million in the year to September 30.. Paul McDonald, Chief Executive Officer commented: “2020 has been a year of both significant strategic evolution and strong organic execution for Avon Rubber. We have again delivered strong results ahead of expectations and continued to make significant steps transforming the business into a leading provider of life critical personal protection products.”
Financials & Real Estate
Belvoir Group PLC
The UK’s largest property franchise today released a Trading Update announcing that trading in the ten months to the end of October 2020 was ahead of its pre-Covid expectations with both the property and the financial services divisions achieving year on year growth in gross profit of 10% and 11% respectively. The Group reported that it has continued to benefit from the prompt action taken to reduce its cost base at the start of the pandemic, such that overheads are now significantly below the original budget. Consequently, it reported that the Board expects that the performance for the year, in terms of profit before tax, will be comfortably ahead of management’s expectations. Dorian Gonsalves, CEO, commented: “This year has demonstrated beyond doubt the incredible resilience of our franchise business model. In what has been a rollercoaster of a year for Belvoir, the Group has performed well across both divisions. I am delighted that we are in a position to be able to reimburse staff for their earlier sacrifice, to repay the Government Covid subsidies and to make good the missed 2019 dividend for shareholders.”
Augmentum Fintech plc
The UK’s only publicly listed fintech investment fund today announced its unaudited interim results for the six months ended 30 September 2020. It reported that overall NAV increased to £139.4 million (31 March 2020: £135.8 million) and NAV per share increased by 2.8% to 119.3 pence (31 March 2020: 116.1 pence). Neil England, Chairman of Augmentum Fintech plc commented: “I am pleased to report that in the period, despite many sectors in the UK and wider European economies being hit hard by the effects of the pandemic. The Company’s share price has doubled since the March lows, reflecting investor confidence in our proposition. The fintech market offers a substantial opportunity for further growth and your Board remains confident that the long term investor will be well rewarded.”
BMO Real Estate Investments Lt
The UK investment fund announced this morning a quarterly interim dividend in respect of the year ending 30 June 2021 at an increased rate 0.85 pence per share. This is a 36 per cent increase on the previous quarterly interim dividend of 0.625 pence per share. This dividend will be a property income distribution. According to the announcement that the Board has kept the rate of distribution under review, having regard to rent collection levels and the significant economic risks and continuing uncertainty regarding the path of Covid-19. Furthermore, it states that the Board is also mindful that the level of dividend paid in the previous financial year was 84.3 per cent covered by profits.
TMT
Salesforce.com inc
The American cloud-based software company has agreed to buy Slack Technologies Inc, an American international software company known for its workplace messaging app. The $27.7 billion acquisition comes as many companies place bets on an extended run for remote working. The deal will allow Salesforce to provide a unified platform for businesses to connect their employees, customers and partners with each other and the apps they use, bolstering its enterprise portfolio and sharpening its rivalry with Microsoft. For Slack, the deal comes as it struggles to fully capitalize on the switch to remote working during the COVID-19 pandemic. Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, or $45.5 per share based on Salesforce’s closing price on Tuesday.
Airbnb Inc
The American vacation rental online marketplace announced on Tuesday that it is aiming for a valuation of up to $34.8 billion in its initial public offering (IPO), despite the damage caused by the COVID-19 pandemic earlier this year. In a regulatory filing, Airbnb set a target price range of between $44 and $50 apiece to sell 51.9 million shares, which would pull in $2.6 billion. Airbnb could end up selling $2.85 billion at the upper end of the range. Airbnb struggled in the immediate aftermath of the pandemic as travel ground to a halt. It had to make a a quarter of its workforce redundant and sought $2 billion in emergency funding from investors, including private equity firms Silver Lake and Sixth Street Partners. However as lockdowns eased, more travelers opted to book homes instead of hotels, enabling Airbnb post a surprise profit for the third quarter.
NCC Group plc
The global experts in cyber and software resilience, today publishes a trading update, based on unaudited financial information, for the six months to 30 November 2020. NCC reported that trading has remained resilient since the Group’s AGM trading statement and, compared to the same period last year, revenue is expected to be slightly ahead. Adam Palser, CEO, commented: “Achieving revenue growth in the first six months of the year is a tribute to the inspirational work and dedication shown by my NCC Group colleagues across the world. We are proud to have continued delivering exceptional work for our clients despite the logistical challenges of Covid-19 restrictions. We continue to be excited about the future growth potential of the cyber services market and the opportunity for NCC Group to play a full part in keeping our customers safe and secure.”
IN THE NEWS
Johnson suffers big Tory revolt as MPs approve England’s Covid curbs – Financial Times
Care homes to reopen to visitors – The Times
Exclusive: NHS ready to provide Covid vaccine within days – The Telegraph
