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Summary
- Capital & Counties Properties stated that the majority of its customers in hospitality and retail business have reopened.
- Capital & Counties Properties acquired 26.3 percent holding in Shaftesbury PLC.
- Capital & Counties Properties deferred the dividend decision to the end of FY2020.
- Hostelworld stated that slight uptick in bookings witnessed in Europe for short-haul travel after an ease in the lockdown.
- Hostelworld raised €15.2 million in June 2020 through the issue of new shares.
- Hostelworld suspended the dividend payment for FY2020.
Capital & Counties Properties PLC (LON:CAPC) & Hostelworld Group PLC (LON:HSW) have released their H1 FY2020 financial results. We would review the result updates of CAPC, a real estate stock and HSW, a travel & leisure stock. Based on 1-year performance, CAPC and HSW were down by 27.13 percent and 62.96 percent, respectively. CAPC and HSW were down by about 5.25 percent and 1.11 percent, respectively from their last closing price (as on 12 August 2020, before the market close at 12:15 PM GMT+1).
Capital & Counties Properties PLC (LON:CAPC) – 22 leasing transactions signed in H1 FY2020
Capital & Counties Properties PLC (Capco) is a UK based property company that develops and manages the property. Capco has investments in Covent Garden Estate, LillieSquare and it has 26.3 percent holding in Shaftesbury. Capco is included in the FTSE 250 index.
H1 FY2020 (ended 30 June 2020) as reported on 12 August 2020
(Source: Company Website)
The Covid-19 negatively impacted the operations, valuation and income of the Company. In H1 FY20, the net rental income was £25.3 million, which declined by 5.6 percent year on year from £30.9 million in H1 FY19. The profit before tax was down to £2.9 million in H1 FY20 from £7.0 million a year ago. The underlying earnings from continued operations were £2.5 million with earnings per share of 0.3 pence. Capco had an EPRA NAV per share of 241 pence. As on 30 June 2020, the portfolio value of the Company was £2.3 billion with net debt to gross assets of 26 percent. During H1 FY20, Capco signed 22 leasing transactions, and it had deferred the dividend decision to the end of FY20.
Covent Garden Estate
Covent Garden property is situated in the West End has 81 buildings with 548 units and lettable space of 1.2 million square foot. Covent Garden’s property value was down to £2.1 billion as in June 2020 from £2.5 billion in December 2019. The property value declined by £291 million due to ERV (estimated recovery value) movement, and yield movement and assumed loss on the near-term income eroded property value by £108 million and £31 million, respectively. The ERV was mainly impacted due to the food & beverage and retail business.
Investment in Shaftesbury PLC
On 30 May 2020, Capco acquired 26.3 percent stake in Shaftesbury PLC. The investment was made in two parts for a total purchase value of £436 million. The Company made payment of £347.7 million in cash for 64.4 million of Shaftbury’s shares and then paid cash of £88.2 million for 16.3 million shares. The Company stated that it invested at an implied price of £1,200 per square foot.
Share Price Performance
1-Year Chart as on August-12-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Capital & Counties Properties PLC’s shares were down by close to 5.25 percent and trading at GBX 133.60 per share (as on 12 August 2020, before the market close at 12:15 PM GMT+1). CAPC’s 52-week High and Low were GBX 275.00 and GBX 131.30, respectively. Capco had a market capitalization of £1.20 billion.
Business Outlook
The Company reopened the sites keeping in mind all the safety measures to have a thriving environment for business activity. Capco highlighted that it is focused on a disciplined capital allocation approach via investment in owned assets and acquisition of assets near Covent Garden Estate. It also plans to dispose of non-strategic assets. The Company expects the trading conditions to be challenging in H2 FY20, although the circumstances are expected to improve with time.
Hostelworld Group PLC (LON:HSW) – A higher number of booking cancellations seen in H1 FY20
Hostelworld Group is a UK based group that provides an online booking platform that is focused on hostel booking. There are close to 17,000 hostels listed on the platform across 179 countries. The application of the Company works in 13 languages, and the website functions in 19 languages. Hostelworld is included in the FTSE All-Share index.
H1 FY2020 results (ended 30 June 2020) as reported on 12 August 2020
(Source: Group website)
In H1 FY20, the net revenue was €12.0 million, which declined by 69 percent year on year from €38.8 million a year ago. The business was affected due to the pandemic as travel was restricted from March 2020 onwards. The Group’s net booking volume declined to 1.1 million in H1 FY20 from 3.5 million a year ago that reflected a decline of 67 percent year on year. Bookings of value close to €5.4 million were cancelled during the period. The average booking value was €9.45 in H1 FY20 that was lower than booking value of €12.40 a year ago. Hostelworld spent €7.5 million on marketing that was much lower than €16.2 million spent in H1 FY19. The marketing cost was close to 76 percent of the net revenue. The adjusted EBITDA loss for the reported period was €8.3 million, whereas it reported the adjusted EBITDA profit of €8.9 million in H1 FY19. The basic loss per share was 18.9 euro cents against a profit per share of 6.8 euro cents in H1 FY19. In June 2020, the Group raised €15.2 million through the placement of new shares, and it also secured a revolving credit facility of €7.0 million for three years. As on 30 June 2020, Hostelworld had cash of €32.9 million. The Group had customer deposit of €3.3 million that is under the free cancellation policy, of which bookings of value €2.7 million has already been cancelled. Hostelworld has cancelled the dividend for FY20, and it has proposed a bonus share.
Share Price Performance
1-Year Chart as on August-12-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Hostelworld Group PLC’s shares were down by close to 1.11 percent and trading at GBX 62.20 per share (as on 12 August 2020, before the market close at 12:15 PM GMT+1). HSW’s 52-week High and Low were GBX 170.00 and GBX 35.75, respectively. HSW had a market capitalization of £72.14 million.
Business Outlook
The Group highlighted that they had seen an uptick in travel demand after an ease in travel restrictions. The performance in the business activity is above the Group’s base case scenario. The bookings have picked up on short-haul travel in Europe. Meanwhile, the travel scenario in the Americas, Asia and Oceania continue to be bleak. Hostelworld expects the bookings to improve in H2 FY20, although they would remain below the 2019 level. The travel activity is expected to move in tandem with travel guidelines, and the Group is confident about the resilience of the business model. The Group is working closely with the partner hostels with Covid-19 related policies.
