Melrose Industries PLC Trading Statement
RNS Number : 1070I
Melrose Industries PLC
30 March 2020
30 March 2020
MELROSE INDUSTRIES PLC
Melrose Industries PLC ("Melrose" or the "Group") today issues
an update given the evolving circumstances due to COVID-19.
Following a successful 2019, the Group traded in line with
management expectations from January through to mid-March. From
mid-March onwards a significant deterioration started to be seen
and was experienced in the end markets that Melrose serves as a
result of COVID-19. Given the current uncertainty around future
demand as governments carry out unprecedented actions in many
countries, the Group is unable to provide a meaningful outlook at
the current time, but is closely monitoring and adapting to all
Update on the businesses and on cash management
As a consequence of the changed market environments, significant
and accelerated management actions have been put in place across
all businesses and countries in the Melrose Group, to reduce cost
and preserve cash until the market positions improve.
Melrose has significant levels of cash expenditure, including
capital and restructuring projects and many other costs, which it
normally invests for the long term value of its businesses but
which have now been stopped. In addition, working capital levels
are being tightly managed and reduced.
Melrose has a strong track record of managing cash and this has
now been prioritised over all other considerations until market
conditions improve. All businesses are subject to tight
restrictions and are in regular and close communication with
The Automotive and Powder Metallurgy businesses have factories
that are largely closed outside of Japan and China. The Aerospace
factories are largely open, but running with reduced requirements.
The impact on the Nortek businesses has been varied. Across our
businesses all of our Chinese factories are now open.
Melrose is acting appropriately with regard to its employees and
cost base and taking advantage of various Governmental schemes
wherever it is suitable to do so, primarily in the UK and Europe.
In many of our businesses (including Melrose) senior salaried staff
are taking a temporary 20% pay cut to help support the
Melrose debt facilities are well balanced and there are no short
term maturities. Prudently the Group took action at the end of last
year to extend the maturity of the c.GBP0.9 billion committed term
loan, solely at Melrose's option, from April 2021 to April
The Group's committed c.GBP3.2 billion revolving credit facility
is repayable in January 2023. In addition to these committed
banking lines the Group has two bonds: a GBP450 million bond
maturing in September 2022 and a GBP300 million bond maturing in
May 2032, both of which have no financial covenants.
In total the Group headroom at the end of February 2020 on these
committed facilities was c.GBP1 billion, which largely remains
unchanged from December 2019.
The Group has a very supportive banking syndicate and
consequently, with their agreement, we have secured a net debt to
EBITDA covenant waiver in relation to the June and December 2020
testing periods to provide flexibility should this be needed. The
covenant waiver covers the Group's primary borrowings, which are
the revolving credit facility and the term loan. There was a modest
cash cost to revise this financial covenant. On behalf of all
stakeholders, we thank our banks for their speedy and supportive
The Group, and each business, is focused on maintaining its
financial position through strong cash management given the
significant level of trading uncertainty. In these circumstances
your Board has decided that it must act prudently and
conservatively in respect of payments to shareholders. As such, the
Board has decided not to pay the 2019 final dividend due to be paid
in May 2020, and intends to withdraw the final dividend resolution
at the forthcoming AGM, and will keep under review any decision in
respect to further dividends.
Simon Peckham, CEO of Melrose Industries PLC said:
"While the current circumstances are unparalleled, Melrose has a
track record of managing our businesses successfully in tough times
and we thank all our employees for their extraordinary efforts to
ensure this happens again. We have taken very significant action to
mitigate the effect of this unprecedented crisis. With the help of
our employees, we will do whatever is needed to protect the Group
and to ensure that it is in the best position to move forward when
this crisis recedes."
Melrose Investor Relations:
+44 (0) 207 647 4500 / +44 (0) 7974 974690 /
+44 (0) 20 3514 0897 / +44 (0) 7973 130 669 /
+44 (0) 20 3514 0897 / +44 (0) 7921 881 800 /
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact email@example.com or visit www.rns.com.
(END) Dow Jones Newswires
March 30, 2020 11:25 ET (15:25 GMT)