Coronavirus Update

Marshalls Plc - New Trading Statement

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Marshalls Plc

Half Year Trading Update: 16 July 2020

Marshalls plc, the specialist landscape products group, issues a Trading Update and further information on its response to the COVID-19 outbreak, ahead of its half year results due to be announced on 15 September 2020.

Trading and operational performance

Our priority continues to be the safety and well-being of our employees, suppliers and customers and we aim to ensure that our health and safety practices are in line with recommended guidelines.

Revenue for the 6 months ended 30 June 2020 was £210.5 million (2019: £280.1 million) which represents a decrease of 25 per cent year on year. Trading in June was better than expected with revenue 2 per cent ahead of June 2019, with the benefit of 2 extra trading days. On a like for like basis the June average daily revenue was down 7 per cent compared to the prior year period. This is a significant improvement as April was 66 per cent down on a like for like basis. This improved level of trading has continued in the early part of July. All continuing manufacturing sites are now fully operational and have been reorganised to accommodate appropriate social distancing requirements without any loss of productivity.

Sales to the Domestic end market have been strong, with the survey of domestic installers at the end of June 2020 showing a healthy order book of 12.4 weeks (June 2019: 11.5 weeks; February 2020 9.7 weeks). In the Public Sector and Commercial end market, infrastructure sales remain strong although there remains some uncertainty within the housebuilding sector.

Balance sheet and liquidity

As at 30 June 2020, the Group had net debt of £53.9 million, on a pre-IFRS 16 basis (2019: £55.6 million). This is ahead of management's base case scenario and reflects the encouraging recent trading performance. We continue to monitor cash flows closely.

As a result of the recent improving trading levels, we have not been required to access our additional bank facilities or the Group's approved Covid Corporate Financing Facility ("CCFF") commercial paper programme. Marshalls' liquidity is strong and will support our investment priorities going forward. The Group has total bank facilities of £255 million, of which £230 million are committed, together with an issuer limit of £200 million under its CCFF facility.

Restructuring

We continue to take all appropriate steps to support the long-term interests of the business, its colleagues and other stakeholders. As previously announced, the Group entered into consultation with colleagues as part of a series of restructuring proposals, covering all parts of the business and including selective site closures. The restructuring programme is now substantially complete. The flexibility and improved efficiency of our plants means that capacity has not been materially reduced. The cost of the restructuring programme will be booked in the accounts for the 6 months to 30 June 2020.

Outlook

Whilst business confidence and market demand remain uncertain, recent trading has been better than expected and continues to improve. The restructuring programme and the new bank facilities have served to further strengthen the Group and ensure it is well placed both to manage the ongoing impact of COVID-19 and future growth opportunities. Our aim is to protect the long term sustainability of the business and to ensure that the Group remains focused on its strategic objectives.

Against this background the Board expects to be able to give a clearer outlook once the trading performance for both July and August have been assessed. In the interim, financial guidance remains suspended.