Marshalls withdraws all previous market guidance in response to coronavirus pandemic

MARSHALLS has cancelled its final dividend and withdrawn all previous market guidance in response to the coronavirus pandemic.

Marshalls plc, the specialist landscape products group, has issued an update on the impact and the measures it is taking in response to the COVID-19 outbreak.

The statement said: "In view of the Government's increasing measures to contain the spread of the virus in the current challenging environment, the group is taking actions to ensure the health and wellbeing of employees, customers and suppliers and to support the long-term interest of the business.

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"The group is implementing an agile, operational plan to manage all parts of the business safely, whilst continuing to support customers where there is demand. We are continuing to distribute product where demand exists, but in those parts of the business where demand has fallen we are managing the manufacturing facilities carefully and commencing a process of temporary suspension of operations.

The coronavirus has affected every aspect of life in Britain. Picture: PAThe coronavirus has affected every aspect of life in Britain. Picture: PA
The coronavirus has affected every aspect of life in Britain. Picture: PA

"These actions will protect cash flow generation and contain costs. Non-essential capital expenditure has been deferred, but not at the expense of health and safety. Our operational planning is dynamic and able to react to the changing environment. The majority of our office-based employees are now safely working from home. We are adhering closely to official UK Government guidance"

Marshalls said that the group had a strong balance sheet supported by a flexible capital structure and it maintains significant headroom against bank facilities.

It added: "We conduct deep stress testing on a regular basis to support this position. We have a range of committed facilities in place with a spread of maturity dates that extend out to 2024. The group's total bank facilities are currently £165 million of which £140 million are committed. As at 25 March the Group had £93 million of net debt (on a pre-IFRS 16 basis) of which £82 million was committed. Consequently, £72 million of facilities remain unutilised of which £58 million is committed.

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"Our bank covenants are for the ratio of EBITA to interest charge to be greater than 2.5 times and for the ratio of net debt to EBITDA to be less than 3.0 times. All bank covenants are on a pre-IFRS 16 basis. Interest cover and net debt to EBITDA covenants were comfortably met for the year ended 31 December 2019 at 42.6 times and 0.2 times respectively."

"We maintain positive and constructive relationships with all our banking partners. Our short term cash flows will also benefit from many of the initiatives announced by the Government."

The statement added: "In the current circumstances, however, the board believes it is important to preserve the group's strong financial position and, consequently, that it is now appropriate to cancel the 2019 final dividend of 9.65 pence and the previously announced supplementary dividend of 4.00 pence.

"These were previously proposed with the announcement of the full year results for 2019 on 12 March 2020. As a result, the approval of these previously proposed dividends will not be put before shareholders at the AGM. The cash saving from this measure will be £27.1 million."

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Commenting on outlook ,Marshalls said: "As a consequence of the current levels of uncertainty, which are unprecedented, it is not possible at this time for the group to provide an accurate assessment of trading for the current year and accordingly all previous market guidance is now being withdrawn. We will provide a further update when there is greater clarity about the impact of COVID-19."