Coronavirus Update

Marshalls Plc - Updated Trading Statement

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Marshalls Plc

Trading Update

Ahead of its Annual General Meeting at 11.00am today, Marshalls plc, the specialist landscape products group, issues a Trading Update and further information on the measures it is taking in response to the COVID-19 outbreak.

COVID-19 update

Marshalls continues to monitor the impact that COVID-19 is having on the business and the wider industry. Our priority is to ensure the safety and well-being of our employees, suppliers and customers at this time. In line with our sector, we have seen a sharp drop in demand. As previously advised, actions have been, and continue to be, taken to control costs and maintain our cash liquidity. As part of these actions, the Board and Executive management have agreed to a 20 per cent reduction in remuneration.  Senior managers in the business have now also agreed a 15 per cent reduction in their remuneration. Additionally, we are utilising the Government's scheme which allows the deferral of tax payments that would normally have been payable in the period to 30 June 2020. We also continue to utilise the furlough arrangements that are in place.

We have now taken further steps to restructure the Group's operations. We have entered into consultations with employees across the Group as part of a series of restructuring proposals that cover all parts the business. These proposals include selective site closures, changes in shift patterns and proposed changes to the size of and structure of support functions. There are potentially up to 400 positions representing 15 per cent of Marshalls total workforce, that may be impacted as a result of these proposed changes. We are reopening our plants as demand returns. The nature of the concrete manufacturing process means our facilities have low re-start time and cost requirements. This flexibility and our improved efficiency means that capacity will not be materially reduced by the proposed changes and we will continue to satisfy our customers' requirements.

We are taking all appropriate steps to support the long-term interests of the business, its employees and other stakeholders.

Bank Facilities

Further to the announcement on 14 April 2020, the Group has now signed final agreements with each of NatWest, Lloyds and HSBC for an additional £30 million , 12 month committed revolving credit facility with each, with a 12-month extension option. These additional facilities comprise £90 million and significantly strengthen the Group's headroom. Including these additional facilities, Marshalls now has total bank facilities of £255 million of which £230 million are committed. As at 30 April the Group had net debt of £69 million, on a pre-IFRS 16 basis.

In addition, Marshalls plc has been confirmed as being eligible for the Covid Corporate Financing Facility ("CCFF") with an issuer limit of £200 million. We have now completed the processes and documentation to establish a commercial paper programme under this scheme and are able to access the liquidity available to us under this facility.

The Board considers that the facilities now available to the Group, both from its enhanced bank facilities and its CCFF commercial paper programme, are sufficient to meet significant downside liquidity scenarios over a prolonged period.

Trading performance

As a result of the impact of the COVID-19 crisis, sales in the first four months through to 30 April were down 27 per cent at £131 million (2019: £180 million). Sales activity took a steep drop in the last week of March and throughout April.  However, In the early part of May we have seen daily levels of activity progressively improve and we are currently at circa 50 per cent of our daily revenues compared to the same period in 2019.

Outlook

Our operational planning continues to be dynamic and capable of reacting to the changing environment. We are closely monitoring cash flows to ensure that the business is in a strong position for eventual recovery. Our priority is to ensure the health and safety of our employees, and consequently detailed additional safety standards and procedures have been put in place, which are in line with current Government COVID-19 guidance, to allow our sites to operate safely. We will meet the demands of our stakeholders and protect the long term sustainability of the business.

The combined effect of the cost reductions, the restructuring programme and the new bank facilities will leave the Group stronger and well placed to meet the current challenges and also well positioned for eventual future opportunities.

At this time, it does not remain possible for the Group to provide an accurate assessment of trading for the current year and accordingly all previous market guidance continues to be withdrawn.