Langton Capital – 2021-04-07 – PREMIUM – Saga, jab passports, outdoor trading, Time Out, Tasty, traffic lights etc.:
Saga, jab passports, outdoor trading, Time Out, Tasty, traffic lights etc.:
PREMIUM EMAIL – PLEASE DO NOT FORWARD:
A DAY IN THE LIFE:
Film cannisters, you remember them?
Not the massive, pancake-sized ones swanning around the Hollywood studios but rather the small ones that housed the 35mm film for our cameras back when Adam was a lad?
Well, I use the few I’ve still got lying around for housing drawing pins, washers, nuts and bolts etc. and useful they are too but I’ve got no idea how old they are and, on a whim, I asked junior Brumby no.3 and junior Brumby no.5 if they knew what they were.
No.3 did but no.5 didn’t, suggesting that they were maybe what Tic-Tac sweets used to come in, implying that the items in question might be 20-25yrs old.
And that kind of fits the facts as I can’t remember buying film since we came back to the UK in 2002. I’ll try a floppy disc next, then maybe a cassette tape.
Anyway, there are still a lot of out-of-office replies coming back suggesting either that holidays are being extended or some of this email’s recipients are as good at taking the auto-responses off as I am. On to the news:
ADVERTISE WITH US:
Langton’s free email now carries adverts. See front page of website for today’s copy & contact us for further details.
The comment was made about Dirk Gently by the narrator in Douglas Adams’ Dirk Gently’s Holistic Detective Agency.
CHANGED EMAIL FORMAT:
The Premium Email is unchanged. The Free Email is written and pre-sent the evening before. It may not include breaking stories nor Langton comment. See Twitter for in-day comment. Let us know if you would like an example of the Premium Email.
PUBS & RESTAURANTS:
Passports, passports, passports:
• The idea, which was reportedly being discussed in Downing Street in December, has been hoisted up the flagpole and there will be a political judgement at some point as to whether enough people have saluted it.
• Pro- and anti- arguments in brief
• The arguments on the pro-side are that consumers ‘seem to be in favour’, that confidence would be enhanced, that social distancing could be scrapped (in vetted venues), that the economy could reopen more rapidly & that some tangible benefit could be derived from the rapid vaccine rollout.
• The anti- arguments focus on civil liberties and intrusion alongside practical arguments such as the expense (both in-venue and to the taxpayer), the suggestion that operators could be ‘blamed’ for all of the above and the feeling that it might disadvantage the young, put some people off visiting the on-trade and, given the power of inertia, enhance the draw of the sofa, the BBQ or the park bench.
• It is clearly too late to do anything for next Monday. And 17 May looks unlikely. But we may have a further update (through leaks in the press and/or) on 12 April.
• Langton comment: The arguments have been and are being aired and, rather than pen a major thesis on the subject, here are some direct and tangential observations in bullet form headed up as a) in favour, b) anti and c) other observations:
• In favour of vaccination passports:
o Consumers seem to be in favour. But they won’t have been asked what price they would be prepared to pay at the till for it nor what level of intrusion or inconvenience is acceptable.
o Passports could (but couldn’t be guaranteed to) deliver an end to social distancing.
o Passports would enhance confidence and they may encourage some (even anti-vaxxers) to have the jab.
o More bits of the sector might be able to reopen (cruise ships, events, concerts etc.) This could save the government furlough cash and give people their lives back.
o They are intrusive, they may damage civil liberties, they are creepy, vaguely ‘anti-British’ and they demand an unfamiliar blind faith in government (this government).
o They’re bound to be called ‘the thin end of the wedge’. The Spectator says ‘what Johnson is planning is a digital identity card – but linked to NHS records and loaded with personal health data, so a bio-identity card.’
o They may create a two-tier society. They may split young (who’ve had a pretty raw deal) from old.
o Venues may get the blame for the above. In addition, passports would cost both the government and venues on the ground money to administer.
o They may incentivise unvaccinated (younger) consumers to find a way of living semi-permanently without pubs or restaurants. They would help settee sales, BBQ sales, boost inertia (tautology there) and help Netflix. They would be ‘one more hurdle…’
o They would damage spontaneity. They would shut the West End to tourists.
o On the basis that something is better than nothing, passports could be welcomed by business that may otherwise not be able to open. Consider crowded events (now shut) with Tesco (always open).
o They could be more acceptable when there is a great deal of intrusion already (think a cruise ship or a plane vs popping into the newsagents for a newspaper or a bag of crisps. For the former, it’s just one more slight inconvenience. For the latter, it feels alien.
o Vaccine passport is a soundbite. Like moon-shot or whatever. But the devil will be in the detail and we don’t have any.
o Passports seem to have been ruled out for 12 April and probably (though not definitely) for 17 May.
o PM Boris Johnson in his former guise as a Telegraph journalist would have certainly got a column out of this. He would probably (but who knows) have been righteously outraged about the (i.e. his) proposal.
o Tory MPs associated with the CRG have called for a vote on the issue. Labour is keeping its powder dry. The CRG’s Mark Harper says ‘by 21 June the government has promised ‘no legal limits on social contact’ or ‘on all life events’. In calling for a Commons’ vote, he says ‘trying to introduce these domestic vaccine passports by the back door by linking them to removing social distancing rules just won’t be acceptable either.’
o Steve Baker, deputy chair of the CRG, says ‘the requirement to have a domestic vaccine passport or instead take two tests a week in order to take part in society, would be discriminatory, lead to a two-tier Britain and be entirely incompatible with freedom’.
o Health Secretary Matt Hancock, per The Spectator, has said ‘we are not a papers-carrying country.’ The Spectator fears ‘without debate or democratic scrutiny, vaccine passports are quickly heading from unthinkable to unstoppable.’ The libertarian right is definitely on the case.
Outdoor opening next Monday:
• It was snowing yesterday in York. Minus two in the morning and three degrees in the middle of the afternoon with minus three overnight into today. Let’s hope it’s a little warmer next Monday.
• Grosvenor Estates says ‘Grosvenor Britain & Ireland is bringing new al-fresco dining to the West End in time for re-opening. From 12 April, over 800 outdoor dining places will be in place in popular dining destinations and public spaces across Mayfair and Belgravia’. For those picking up a takeaway, it says ‘Grosvenor Square will play host to new seating for 150 people and picnic areas providing visitors with a safe and inviting green space to enjoy their meals.’
Staycations: Keeping would-be customers in the UK…
• Further comment on overseas travel is due next Monday. See also Travel & Leisure below. We believe a strong summer in the UK is almost certain. Capacity could be the issue and day trips, for many, could be the order of the day.
• Langton comment: One Brumby studied bio-genetics at Uni and though he isn’t an out-and-out expert, he does know more about the subject of variants and genetic mutations than I do.
• He says variants prosper when there are a) large numbers of case (think South Africa or Brazil) and b) where selective pressure is put on the virus. So, if people are vaccinated in large numbers against a standard variant, they will select a virus for transmission that evades the vaccine (such as the South African variant). This mitigates against travel, even for those who have been vaccinated (against standard variants).
• If the UK – but also the world as a whole – can reduce the number of cases via vaccination, then the number of mutations will be reduced. Consider strangling a snake that is also trying to strangle you. It’s a situation where it is important to get the timing right and it must (surely) mitigate against a wholescale reopening of travel in the short term.
• One way around this, of course, would be to introduce the traffic lights, as flagged, but to leave all the lights at red.
Working from Home:
• Goldman Sachs ‘is preparing for hundreds more staff to go back to its London office this week’ reports the BBC. The Beeb also suggests that some tech giants are moving towards recalling staff. It says that Google is ‘bringing forward its timetable of moving people back into the office.’ It says ‘as of 1 September…employees wishing to work from home for more than 14 days would have to apply to do so.’ Incite, meanwhile, reports that ‘58% of people can’t see the way they do their jobs returning to pre-pandemic norms.’
Company and other news:
• Marston’s has this morning updated on its financial covenant waivers and reopening plans following the recent Government announcements. The group says that it ‘can now confirm that it has secured waivers and amendments to its Bank, Private Placement and Securitised facilities for the financial periods up to and including 1 January 2022.’ The company adds ‘within the securitisation, Marston’s had strong support from bondholders who have approved waivers for the two-quarter tests to 2 October 2021 and the four-quarter test to 1 January 2022. The Group’s banks and private placement have approved the adoption of liquidity and quarterly profit covenants to 1 January 2022.’ Given the above and the fact that the company secured a significant boost to its cash resources via its Carlsberg JV deal last year, this represents further evidence that the company will not be needing to tap the equity
• Marston’s says ‘this collaborative approach was helped by open and constructive dialogue in a period of great uncertainty and underlines the importance of good, long-term relationships with all our stakeholders.’ Regarding its reopening plans, Marston’s says it ‘expects to reopen around 70% (c.700) of its managed and franchised pubs in England with outdoor spaces on or around 12 April and, subject to final regulatory confirmation, the majority of our Scottish and Welsh pubs on 26 April.’ The group says ‘on the basis that the stated reopening roadmap set out by the Government is adhered to, the remaining managed estate in England should open on or around 17 May with restricted indoor trading, and we are assuming a return to normal trading conditions from 21 June.’
• Deliveroo shares flirted with positive territory for the first time yesterday before reversing to finish down a modest 2p on the day (but a somewhat less modest drop of 110p since IPO). Meanwhile, Sky reports that ‘UK Deliveroo riders are expected to strike over pay and conditions as unconditional trading commences in the company’s shares.’ It says there will be protests in London, York, Reading, Sheffield and Wolverhampton. Sky says this ‘comes after the Bureau of Investigative Journalism analysed invoices from more than 300 riders over the past year, concluding that one in three made less than £8.72 an hour – the minimum wage for those aged over 25 – with some earning as little as £2 per hour.’
• Tasty has reported full year numbers to 27 December saying that revenue fell from £44.6m to £24.2m and the loss before tax widened from £0.3m in the prior year to a loss of £12.7m (pre-IFRS16) in the year to December 2020. The company says that it still had net cash at the year end, after allowing for deferred creditors and HMRC payments of £1.5m. The group says that it currently has 38 of 54 restaurants open for delivery and takeaway. Chairman Keith Lassman reports ‘the last 12 months have been extremely tough and required swift action to mitigate the extraordinary challenges and uncertainty following the outbreak of the pandemic.’ He says ‘we navigated our way through the cycle of various lockdown restrictions and consequent re-openings, through agility and quick responses to the everchanging constraints.’
• Tasty says ‘following the sale of More London dim t for £2m in January 2020, we repaid our bank loan and were fortunate to have no banking covenant pressure when we shut down our estate in March 2020.’ It adds ‘with lockdown continuing into this year, in January 2021, the Group drew down its £1.25 million, four year term loan from its existing bankers, Barclays Bank plc, secured in September 2020, in order to strengthen its balance sheet and provide additional working capital.’ It says ‘we believe that the lessons we have learnt over the last 12 months have strengthened our operating model.’ Re the future,, it adds ‘having survived the turmoil of the past 12 months, and as we come out of this pandemic and restrictions are lifted, we are confident that we are in a good position to service the pent-up customer demand and take advantage of the reduced competition.’ There is no
• Time Out Group has announced that its Time Out Market Dubai opens to the public today ‘bringing the best of the city under one roof, based on the editorial curation Time Out has always been known for.’ The company says ‘this marks the Group’s seventh Market to open and subject to any further COVID-19 related delays, the current planned timings for additional markets are Porto (calendar 2022), Abu Dhabi (calendar 2023) and Prague (calendar 2025). It is also anticipated that the Group’s Markets in Boston, New York, Chicago, Montreal and Lisbon will reopen over the course of the second quarter in line with local guidelines, joining Miami which is currently open.’
• Solicitor Philip Ross points out that ‘new pre-pack regulations will come into force on 30 April 2021 after being approved by Parliament on 23 March 2021.’
• A survey by accountancy firm BDO has found that three quarters of medium-sized companies believe 2021 is now the year to invest (per The Telegraph).
HOTELS & LEISURE TRAVEL:
• Saga has reported full year numbers to 31 January saying that it made an underlying PBT of £17.1m, down from £109.9m. The company says its reported loss of £61.2m reflects the £59.8m impairment of Travel goodwill in the first half. The company says it has a strong liquidity position, with total available cash of £75.4m and undrawn revolving credit facility (RCF) of £100m at 31 January 2021. It says that its Travel division has been ‘reset and [is] ready to operate once restrictions lifted.’ It says it is ‘ready to resume its Tour Operations and Cruise businesses in 2021 with specific timing being subject to government restrictions.’ It adds ‘customer demand remains strong, with evidence of significant pent-up demand from customers ready to travel.’ The group has taken ‘total cruise bookings of £154m for 2021/22 and 2022/23 combined, in comparison to £128m at the same point last year,
• Saga CEO Euan Sutherland says ‘Saga has made significant progress in a year of unprecedented challenge.’ He says ‘we have continued the work to strengthen our financial position and started to deliver against our new strategy, outlined in September, which will return Saga to sustainable growth.’ Mr Sutherland says ‘looking ahead, while we are mindful of economic headwinds and the potential ongoing impacts of COVID-19, it is clear that there is significant pent-up demand among our customer base, the vast majority of whom have now been vaccinated and are ready to enjoy post-lockdown freedom.’ He concludes ‘we look forward to relaunching our brand later in 2021 which will only enhance our ability to unlock the potential in Saga, returning the business to sustainable growth and creating significant long-term value for all our investors and stakeholders.
• Carnival’s Seabourn brand has announced that it is ‘developing plans to restart Seabourn operations in the Mediterranean with a series of sailings operating round-trip out of Athens beginning July 3, 2021.’ The company says ‘the cruises are open to any guests that are fully vaccinated against COVID-19. “Fully vaccinated” means a minimum of 14 days following the final dose of the currently approved COVID-19 vaccines being administered. Proof of vaccination and the dates given will be required. Approved forms of documentation will be confirmed closer to time of departure and must be shown at the terminal prior to boarding.’
• The Travel Trade Gazette reports PM Boris Johnson as saying that he has not given up on allowing overseas travel from 17 May.
• Johan Lundgren, CEO of easyJet, has told Sky that foreign holidays may become the preserve of the rich. He says that a traffic light system could pile on costs for travellers.
• The CAA has said that only 554 of the 742 ATOL licenses due to expire on 31 March have been renewed.
• STR reports Las Vegas hoteliers have begun, once again, to add capacity.
• NCL aims to resume cruise sailings in Europe and the Caribbean this summer for vaccinated guests. Viking has added two UK cruises in June to its programme and has announced plans to run limited operations in Bermuda and Iceland. The company says ‘we applaud the governments of the United Kingdom, Bermuda and Iceland for their collaboration and support in restarting the cruise industry safely.’
• Pragma Consulting suggests that airports could look to diversify their income streams in light of the 60% drop in flight volumes. Nothing could be done in the short term, but it suggests that some office or mixed use space may be offered. It’s not clear if these occupants would be able to pay the same rental charges as existing tenants.
• See Pubs & Restaurants for coverage of staycations & vaccine passports. See premium email for news on Saga. News from Carnival later in the day.
• GameStop, which has seen its shares rally by 900% on support from Reddit readers, has said that it will issue up to 3.5m shares to raise up to $1bn.
• The Guardian reports that, after a sharp rise in internet betting due to the pandemic, there has been a ‘rise in the number of gamblers trying to block themselves from using online casinos and bookmakers.’
FINANCE & MARKETS:
• The IMF has raised its estimate for UK and world growth this year and next. The UK economy is predicted to return to its pre-pandemic level of activity in late 2022.
• Sterling weaker at $1.382 and €1.1648. Oil up at $62.85. UK 10yr gilt yield down 1bp at 0.79%. World markets mixed yesterday after a strong opening in Europe. London set to open around 26pts better.
RETAIL WITH NICK BUBB:
• Nick is taking a well-earned break and is back on 12 April.