Langton Capital – 2021-03-05 – R Rates, Business Rates & Interest Rates. JDW, MARS, RBG, Deliveroo…
R Rates, Business Rates & Interest Rates. JDW, MARS, RBG, Deliveroo…
A DAY IN THE LIFE:
I’m beginning to think that our dog, who is black and brown and, when he’s lying silently in our darkened hallway, is almost invisible, is a master when it comes to playing the odds.
Because he knows that the most likely outcome of a surprise encounter with a two-legged mammal is that the human comes to a screeching halt and perhaps drops whatever’s in its hands, maybe even food. Outcome, therefore, neutral to good and odds around 90%.
Meaning there’s only a one in ten chance the human walks straight into him but, even then, there’s a 90% chance that they’ll kick something he doesn’t care about much, like his skull or his body, and only a further one in ten chance that he gets a foot in something vital, like his eye or his groin. Outcome, neutral to painful, odds against the latter, long.
Hence, he’s weighing a 90% chance he gets mildly scolded (admittedly confusingly rewarded if a sandwich drops into his mouth) plus a 9% chance of a kick in the head and a 1% chance of a kick somewhere more painful against the 100% inconvenience of having to get up and shift himself and, as actions do clearly speak louder than words, he’d got that one all worked out many years ago.
Anyway, as we passed February last week, we’ve added another Cultural Month. To see what we got up to check HERE. have a good weekend and on to the news:
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PUBS & RESTAURANTS:
Covid in retreat:
• The nightly stats confirm that Covid, at least for present, is in retreat.
• The NIESR estimates that the R rate fell to around 0.8 at the end of February from a range of 0.9 – 1.0 where it had been the week before. The NIESR says ‘should these pandemic variables in the UK continue to fall at the current rate, by 8th March when schools reopen, trend daily cases are forecast to be around 4,300, hospital admissions around 600 and number of deaths close to 200.’
• It says ‘looking further ahead to when non-essential retail is scheduled to reopen on the 12th April, we expect trend daily cases to be around 700, admissions around 200 and deaths below 50.’
• These numbers, as the government has said, could be impacted negatively by new variants or positively if the vaccine rollout continues to be successful. So far, it would appear, so good.
• The NIESR credits both the lockdown and the vaccine rollout. It says the fall in infections ‘may be due to the reduction in cases from reduced mobility during lockdown translating into subsequent reductions in admissions and deaths with a lag.’ It says the evidence ‘on the efficacy of the first dose of the vaccine in protecting against symptomatic Covid-19 for the over 70s’ looks positive.
The restaurant market:
• Lumina Intelligence has commented on the casual dining market making the point that the sector ‘enjoyed just 11.3 weeks of normal trading at the start of 2020 before the coronavirus pandemic made dine-in closures and other restrictions become a reality for operators.’
• Lumina says the ‘40 weeks of impaired trading saw £10 billion wiped from the total UK restaurant market value, a decline of 53%.’ It says an average of 42 restaurants closed every week last year.
• Lumina judges the mood of would-be consumers, saying that ‘when dine-in does reopen, creating experiences that are not easily replicated at home will be key for operators to drive footfall and compete with habitual delivery behaviours built up through the pandemic.’
• It asks how likely consumers would be to visit a restaurant in the next 6mths (assuming no further lockdowns) and finds that 73% were either somewhat, very or extremely likely to visit. Only about 14% refused to countenance a visit.
• Delivery has expanded as has the use of technology. Lumina asks ‘how likely is it you will use technology in restaurants in the future?’ 61% of those aged 18-24 and 58% of those 24-35 said they would use tech. Even 20% of those over 75 said they would use tech to give an average across all age-groups of 45%.
• Lumina says ‘lrading restaurant operators will emerge from the pandemic leaner but stronger with a greater focus on evolving consumer needs, less exposure to the threat of dine-in closures and opportunities to expand into attractive sites for more affordable rents.’
• Revolution Bar Group commented on its reopening plans yesterday (see yesterday’s comments included below).
• JD Wetherspoon yesterday confirmed that it ‘is to open beer gardens, roof top gardens and patios at 394 of its pubs in England from Monday April 12.’ It says ‘the pubs will be open from 9am to 9pm (Sunday to Thursday inclusive) and 9am to 10pm (Friday and Saturday), although some have restrictions on closing times and in those cases will close earlier.’
• JDW adds that the units ‘will offer a slightly reduced menu, to include breakfast, burgers, pizza, deli deals, fish and chips and British classics. Food will be available from 9am to 8pm seven days a week.’ It says ‘customers will be able to order and pay through the Wetherspoon app, however, Wetherspoon staff will be able to take orders and payment at the table from those who don’t have the app.’
• JDW will not be taking bookings. It says ‘customers will be able to enter the pub to gain access to the outside area and also to use the toilet.’ CEO John Hutson said: “We are looking forward to welcoming our customers and staff back to our pubs.”
• Marston’s yesterday update on financing saying that, in light of the current, third, national lockdown, it has ‘formally asked the holders of its Secured Class A Notes for a limited number of further technical waivers of its financial covenant for the second half of 2021 and until January 2022, to cater for the lockdown since 20 December and the significant restrictions that are likely to be in place on pubs, as per the government’s announcement of 22 February, until 21 June 2021 at the earliest.’
• MARS says ‘it is also seeking an extension of certain other technical waivers and amendments which were agreed to by the holders of its Secured Class A Notes in May last year.’ These are ‘required solely as a consequence of the enforced temporary re-closure of its pubs in England, Scotland and Wales by the UK government and the devolved administrations, as a result of the COVID–19 pandemic measures.’
• A meeting is scheduled for 26 March 2021. MARS says ‘the financial and liquidity position of Marston’s and its subsidiaries remains sound. As previously announced, the Group had £176m of headroom under its bank facilities as at 2 January 2021. Bondholders also benefit from the £120m Liquidity Facility which is expected to be only around £30m drawn at its peak.’
• Regarding reopening, Marston’s says it ‘is confident that demand in its pubs will be strong once allowed to fully re-open (albeit with restrictions). As previously reported, the pubs performed well last Summer after the first lockdown, outperforming the market in the 13 weeks to 3 October 2020 with like for like sales at the Group’s managed and franchised pubs 90% of the previous financial year during the corresponding period.’
• As widely rumoured, Deliveroo is to list its shares in London in what could be a £5bn IPO. The company says the UK is its “long-term home”. There could be split voting rights that, in this case, may give founder Will Shu enhanced votes for his shares. Chancellor Rishi Sunak says that the company’s decision to list in the UK was a vote of confidence in the London market.
• The US is to suspend tariffs on UK goods, including Scotch whisky, for four months. The US and the UK said jointly this would ‘ease the burden on the industry and take a bold, joint step towards resolving the longest-running dispute at the World Trade Organization.’
• The Scotch Whisky Association says it is ‘delighted’ and adds that ‘the tariff on single malt Scotch whisky exports to the US has been doing real damage to Scotch Whisky in the sixteen months it has been in place, with exports to the US falling by 35%, costing companies over half a billion pounds.’
• Diageo CEO Ivan Menezes says ‘today is a very good day for Scotch and Scotland. We recognise the Government’s tireless efforts, using the UK’s newly independent trade policy, to deliver the suspension and hopefully in time, a permanent end to these punitive tariffs.’ He says ‘final resolution of the aerospace dispute, combined with the announcement of a continued freeze on spirits duty in yesterday’s Budget, will safeguard thousands of jobs across Scotland and the UK.’
REVOLUTION BARS (IN YESTERDAY’S PREMIUM EMAIL):
• Revolution Bars Group has updated on trading saying that the announcements regarding reopening ‘enables us to fully prepare and manage the expectations of our colleagues. Initially, on 12 April 2021, the Company intends to open 20 bars, and with the opening of indoor hospitality on 17 May 2021, all 66 bars will reopen.’
• RBG says ‘the subsequent additional support announced for the hospitality sector by the Chancellor in the Spring Budget on 3 March 2021, particularly the restart grants, continued reduction in business rates, low VAT on food and non-alcoholic drinks and other measures are also welcome. This support will give further certainty to all our stakeholders and allow the Company, together with the wider hospitality industry, to regain a financial position from which it can again develop and thrive.’
• The group had expected to burn £0.4m to £0.45m per week and now says it ‘has more than sufficient liquidity resources available to take the Company well through 17 May 2021, the date that its estate will be able to commence trading indoors in line with the Government’s phased release of current lockdown measures. This assumes no tightening of Government restrictions over that period.’
• CEO Rob Pitcher says ‘notwithstanding that good news, our industry remains on the critical list and the continued support announced by the Government is required to ensure that we can be in a position to return to growth and be a driver of national job creation once again particularly for young people who are the lifeblood of our industry and who have been severely impacted over the last year.’ He concludes ‘we are excited at the prospect of welcoming back our colleagues and guests and providing fun and memorable experiences for them as lockdown restrictions ease.’
HOTELS & LEISURE TRAVEL:
• The airline & holiday industries have reacted negatively to the decision not to suspend APD increases. Airlines UK says ‘the continued absence of the promised Treasury consultation into APD – a full 12 months since its announcement by the chancellor – is a source of much frustration and bewilderment.’
• Travel Weekly reports RCL as “clinging” on to hopes that domestic cruise holidays could be allowed in May or June.
• Holiday companies Inghams and Club Med have suspended all holidays and stays until mid-May reports the TTG.
MORE LEISURE SNIPPETS:
• Pukka Pies is investing a further £4.5m at its Leicestershire bakery
• Aldi is investing £22m in new and existing stores in the Greater London area
• Apple’s App Store is to be investigated by the UK competition watchdog the CMA over claims of possible unfair practices
FINANCE & MARKETS:
• Markit reported on the UK Construction Industry yesterday saying that the February numbers means ‘UK construction companies experienced a solid return to growth in February after a setback at the start of 2021.’
• It says housing is driving the growth. The PMI was 53.3 in February, up from 49.2 in January. Markit says ‘the rebound was supported by the largest rise in commercial development activity since last September as the successful vaccine rollout spurred contract awards on projects that had been delayed at an earlier stage of the pandemic.’
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TRADING STATEMENTS & EVENTS:
Upcoming results are set out below:
• 4 Mar 21 William Hill FY numbers
• 4 Mar 21 Entain FY numbers
• 5 Mar 21 Marston’s SA Brains transaction webinar
• 10 Mar 21 Restaurant Group full year numbers
• 11 Mar 21 Playtech FY numbers
• 11 Mar 21 Morrison’s FY numbers
• 15 Mar 21 Carlsberg AGM
• 16 Mar 21 Gregg’s FY numbers
• 16 Mar 21 C&C pre-close trading update
• 17 Mar 21 Hostelworld H1 numbers
• 18 Mar 21 Fever Tree FY numbers
• 18 Mar 21 Gym Group FY numbers
• 23 Mar 21 DP Eurasia FY numbers
• 24 Mar 21 M&B AGM
• 25 Mar 21 Compass Group H1 update
• 25 Mar 21 TUI AGM
• 30 Mar 21 AG Barr FY numbers
• 8 Apr 21 Sportech FY numbers
• 15 Apr 21 Pepsi Q1 numbers
• 23 Apr 21 Gear4Music results
• 28 Apr 21 Carlsberg Q1 numbers
• 4 May 21 Campari Q1 numbers
• 7 May 21 Intercontinental Hotels Q1 numbers
• 12 May 21 Compass Group H1 numbers
• 12 May 21 Stock Spirits H1 numbers
• 12 May 21 TUI H1 numbers
• 18 May 21 Britvic H1 numbers
• Est 19 May 21 Marston’s H1 numbers
• 27 Jul 21 Campari H1 numbers
• 10 Aug 21 Intercontinental Hotels H1 numbers
• 12 Aug 21 TUI Q3 numbers
• 18 Aug 21 Carlsberg H1 numbers
• 22 Oct 21 Intercontinental Hotels Q3 numbers
• 26 Oct 21 Campari Q3 numbers
• 8 Dec 21 TUI FY numbers
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