Coronavirus - To release or not to release

As the weather improves and demands for release become more vociferous, governments need to be clearer on their exit strategies from lockdown.

There are numerous suggestions. However, politicians have many issues and unknowns to address and it is easy for others to pontificate. Early release/lighter measures were unsuccessful in Hong Kong. Singapore had to impose tighter restrictions on movement, and cases & deaths increased in Sweden. There’s no clear correlation between the number of tests undertaken/number of deaths and, with 16 countries on the verge of exit, it’s premature to think about relaxing restrictions.


• Boris Johnson has been taken to hospital with ‘persistent symptoms’ but remains in charge of the government.
• Japanese Prime Minister Shinzo Abe is expected to announce a state of emergency.
• Kenya has banned travel in and out of the capital Nairobi for three weeks. • Austria – planning to let smaller shops reopen on 14 April and all on 1 May link
• Debenhams files for administration.
• Golf open championships have been cancelled.
Good news
• Spanish and Italian infection rates have fallen in the last three days.
• England’s chief medical officer Professor Chris Whitty has returned to work after recovering from his coronavirus symptoms.
• Sweden is opening a field hospital at a trade-fair complex in Stockholm, with capacity for 600 patients.
• Private school fees – 10-30% discounts being offered.
• BHA – plans to start horse racing behind closed doors in May

Company news
Buildings & Construction
• Gleeson– “Further to the announcement of 25 March 2020 the Company has moved swiftly to put in place a number of further actions to mitigate the impact of the pandemic. With immediate effect:
• A total of 456 employees, representing 76% of the workforce will be furloughed in-line with the Government's Job Retention Scheme and with the Company topping-up salaries of those affected up to a minimum of 80% and a maximum of 95% of salary.
• All members of the Board are taking a reduction in salary/fees of 30%.
• Senior management are taking reductions in salary of between 5% and 20%, weighted according to salary bands.
• The Company will review the position at the end of May.
Together with the actions already taken including cancellation of the interim dividend, pausing all build activity and land acquisition, cutting discretionary costs and implementing a recruitment freeze, the Company has now implemented a comprehensive range of actions to ensure that it is well placed to restart operationally once conditions allow.
A key priority is to reopen sites and sales offices once it is appropriate and safe to do so and our focus now turns to putting in place a programme to ensure as efficient a re-start as possible immediately the resumption of trading is permitted.
We are keen to work with central government and local authorities to agree what provisions might be put in place to enable the safe resumption of building much-needed quality affordable homes as soon as it is practicable to do so.
Gleeson builds and sells high quality, low-cost 2, 3 and 4 bedroom homes to first time buyers on average and lower incomes across the Midlands and North of England, areas where there are already acute supply shortages. The current situation is further exacerbating this position.
Two-thirds of the homes we sell are to people in what are now designated Key Worker roles. In recognition of their extraordinary efforts in keeping us all safe, fed and healthy the Board has decided that, when the Company is able to recommence site build activities, it will prioritise house sales to Key Workers.”
• SigmaRoc – “Q1 2020 trading momentum a continuation of strong H2 2019 performance and ahead of analyst estimates
For the first quarter of 2020, SigmaRoc has performed ahead of budget and analyst estimates, despite significant weather disruption and flooding across the UK and the Channel Islands, and the start of the Covid-19 pandemic. For the quarter, the Group recorded unaudited revenues of £26.5m, an 87% year-on-year increase, and unaudited underlying EBITDA of £5.25m, representing a 144% year-on-year increase.
This performance is a continuation of the trend set in the second half of 2019, where the Group made further progress with the rollout of its strategy. As a result, the Group was able to generate sufficient cash from operations to cover both its non-underlying acquisition and restructuring expenses of £3.9m relating to the purchase and integration of four businesses in 2019, whilst also reducing gross debt by €2m in its Benelux operations.
Operational update for Q2 2020 – Further to the Company's announcement of 25 March 2020, the Group has decided to remain active across its operations where it can ensure compliance with all applicable government welfare guidelines and where there is a clear strategic and financial case in the local market.
As required by local government instructions, the Group has had to close all but essential infrastructure maintenance operations, in both Guernsey and Jersey, for a period of 14 days. It is expected that permitting system will be implemented in Jersey shortly, which will allow the reopening of accredited construction sites and in turn the Group's operations.
In the UK, the Group remains active across all sites supplying product where doing so is an economically viable proposition for its customers. In this context, the Group has decided to suspend some of its production capacity and supply from stock. In Wales, G.D Harries remains active across a number of civil engineering and road maintenance contracts, having reduced production and haulage capacity in-line with current local demand.
The Group's Belgian businesses also remain operational with the support of staff and unions, supplying bluestone to a reduced number of active customers. The Group's partner in the sale of aggregates from its Soignies quarry has decided to close its production entirely until further notice. However, the Group continues to supply customers from its other aggregate quarries near the town of Huy.
FY 2020 guidance – In light of the operational picture provided above, the Group anticipates that reduced activity and demand levels in the month of April and possibly the month of May, will result in substantially reduced revenue and EBITDA performance in the second quarter, relative to the Group's expectations prior to the onset of the Covid-19 pandemic. The Group is confident that it has robust business continuity and cost mitigation plans, however, given the very high level of uncertainty presented by current events, it does not believe it is possible to provide accurate guidance to the market for the current financial year at this time.
The Group benefits from both a diverse regional market base and operational footprint, with experienced local management teams. Continuity plans have been implemented swiftly, to ensure the business can remain operational where end market demand continues to require our support. SigmaRoc has a tightly controlled cost base in any event and actions have, and will continue to be taken, to conserve cash further as appropriate. As at 3 April 2020, the Group had £11m in cash reserves and undrawn headroom of £5m under its RCF facilities, providing a solid liquidity position from which to navigate through even a protracted period of disruption. As such, the Board is confident that the Group remains in a strong position to confront the currently foreseen consequences of the Covid-19 pandemic and respond quickly as markets recover.”
• APQ Global – “PQ Global is an emerging markets growth company, incorporated in Guernsey (company registration number 62008) which is listed on The International Stock Exchange and admitted to trading on AIM.
The Company experienced very difficult trading conditions during the month of February, due to extreme market movements in emerging markets currencies, bonds and equities, while putting pressure on the outlook for its private direct investments.
During March, the Company continued to experience difficult trading conditions and volatility in emerging markets, resulting from the Covid-19 pandemic. This resulted in a further deterioration of the value of the Company's unaudited book value per share.
During this time, the Company took decisive action to mitigate further risk to the its balance sheet, de-risking its portfolio of liquid market securities, with the current portfolio comprising:
• $40.6 million of unencumbered cash;
• $4.3 million of cash equities;
• $1.3 million of cash bonds; and
• $1.3 million of tangible book value in its private direct investments.
As such, as at the close of business on 31 March 2020, the Company's estimate of its unaudited book value per Ordinary Share was 10.4 US Dollar cents*, equivalent to 8.4 Pounds Sterling pence.
The Company has met all its payment obligations to various counterparties and is not in breach of any debt covenants.
Furthermore, with the ongoing uncertainty faced by emerging markets due to Covid-19, the Board has decided to implement the following further cash preservation measures, which are intended to facilitate a smooth recovery:
• Suspension of dividends paid to ordinary shareholders until further notice;
• The management bonus scheme to be cut from 20% of profits to 10%;
• Significant cost reduction across all of the Company; and
• Move to quarterly reporting of key metrics in the Company's income statement and balance sheet, an increase from semi-annually, starting for the reporting period Q2 2020.”
• Arrow Global – “We now have nearly 100% of Arrow Global employees across our five countries working from home with full operational capability. This has allowed the Company to continue to operate at high efficiency levels.
Balance sheet conservatism and 2019 final dividend update – Whilst we are still yet to see a meaningful operational and financial impact on the Group so far, in light of the current uncertainty caused by Covid-19 and its impact on economic activity, the Board believes that conserving capital and maximising financial flexibility is in the long-term best interests of the business and all its stakeholders. Accordingly, the Board is no longer recommending the final dividend of 8.7p per ordinary share for the year ended 31 December 2019 that was announced with the full year 2019 results on 12 March 2020. As a result, a resolution to approve the 2019 final dividend payment of 8.7p per ordinary share will not now be proposed at the Annual General Meeting (‘AGM’).
Whilst we believe that the Group’s strong financial position and resilient business model leaves us well placed to navigate this period of uncertainty, the Board views the cash saving of approximately £15 million from the decision to withdraw the dividend to be prudent and in line with the Group's approach to minimising financial risk. The Board will continue to assess the most appropriate methods of capital allocation as the year progresses, including the level of Investment Business portfolio purchases. Arrow Global enjoys a strong liquidity position at present with £153.0 million of headroom as of 31 March 2020 and no debt facilities maturing until 2024.
This decision in no way diminishes the Board's confidence in the long-term outlook for the Group and the strength of the through-the-cycle model, which is set up to withstand reasonable downside scenarios and to take advantage of investment opportunities as they arise.
At this stage, given the level of continued uncertainty around economic activity, it is not possible to provide financial guidance for the 2020 financial year.
The Group will announce Q1 results for the three months ending 31 March 2020 on 14 May 2020.”
• City of London Group – “The Company has in place measures and infrastructure to allow its staff to work effectively from home over an extended period. Measures have been taken to reflect the reduction in business volumes in certain of the group businesses.
COLG's subsidiary, Recognise, is progressing with its application to the PRA for a banking licence. It hopes to receive its Authorisation as a Bank with Restrictions later in the year. Recognise believes it has in place the governance, infrastructure and key personnel to be able to commence lending in its own name in order to play a role in helping UK entrepreneurs recover and re-build their businesses after the battle has been won against Covid-19.
The COLG Board remain confident that as UK businesses emerge the other side of this pandemic, there will again be a strong market demand for SME specialist lending and new opportunities for growth. Recognise will have no legacy book and will be keen to build its lending portfolio by supporting well established businesses with sensible business plans.
The Company has a very small loan book, originated through Credit Asset Management Limited and Professions Funding Limited and therefore expects little credit impact from Covid-19. CAML will go into run off & all new business will be originated in Recognise from authorisation.
Given the current crisis, we are reviewing all of our outstanding loans and engaging with our borrowers, early indications from this exercise has been positive.
COLG's subsidiary, Milton Homes, believes sales may slow and reversions may increase. There is potentially greater valuation volatility with Milton Homes as a consequence of Covid-19.”
• TBC Bank – “TBC PLC is continuing to focus on optimising our cost structure, re-arranging many processes and prioritising expenses. As part of this, and in recognition of the current extraordinary circumstances, the Executive Directors of TBC Bank Group PLC and Top Management of JSC TBC Bank have volunteered to waive all their rights to potential bonuses and long-term incentive plan grants for 2020, which usually represents the majority of total compensation.”
Food, Drinks & Household
• InnovaDerma – “Trading in the second half of the year began positively and was in line with expectations however Covid-19, and the UK Government's lockdown measures saw a sudden shift in consumer behaviour which has significantly slowed the sales of our brands through our bricks and mortar channels. We continue to distribute to our retail partners including Boots, Superdrug and Tesco which are defined as essential businesses/services by the UK Government and remain open. The Company's DTC channel, which accounted for c.60% of revenue in FY2019, continues to perform very well. The Company has healthy levels of inventory and its supply chain remains strong with timely deliveries being made to our customers.
As at the end of March, the Company had sufficient levels of cash and no debt. The Company is aware of the UK Government's lending initiatives for small businesses during this crisis and as a prudent measure, it is assessing a debt facility with its bank, Barclays plc, should the business require funds.
With no precedent, it is difficult for us to quantify the effects of Covid-19 and the Board is reviewing its expectations for the full year and continues to monitor the situation carefully. Notwithstanding this, the Company remains well-positioned, underpinned by its robust business model, particularly through its online platforms.”
• ErgoMed – “Announces it is providing support for a clinical development programme for namilumab, a monoclonal antibody therapy targeting granulocyte-macrophage colony stimulating factor (GM-CSF), for the treatment of patients with rapidly worsening Covid-19.
The programme is being conducted at the Humanitas Research Hospitals in Bergamo and Milan, Italy and is supported by Izana Bioscience, an Oxford, UK-based biopharmaceutical company focused on the development of namilumab.”
• IGEA Pharma – “Today announced to starting supply of a Covid-19 antibody test following an agreement signed with a PRC independent SARS-CoV-2 IgM/IgG test developer and manufacturer.
According to terms, IGEA has ensured the exclusivity of the test under certain volume-based conditions for the US States New York, California, and Louisiana, severely affected by the pandemic outbreak.
IGEA expects to start FDA approved distribution within a very short time. The actual supply capacity is 100'000 tests per day, with the ability to expand if demand increases.
Antibody-based tests can tell whether someone has already had Covid-19, but they are not as good at testing if a person currently has it. Still, the FDA has issued its first authorization for a Covid-19 antibody test for emergency use a few days ago, which most probably indicates that the agency thinks the benefits of having such tests available to help in the response to the pandemic outweigh their known limits. IGEA expects this will lead many other players to develop antibody tests.”
• Impact Healthcare – “The Group confirms that, as at 3 April 2020, it had received 100% of the rent due in respect of the forthcoming period from its tenants who operate care homes, which represents 98.3% of the Group's total rent roll. The rent due from NHS Cumbria, which represents the remaining 1.7% of the Group's total rent roll, is expected to be paid later in the month as usual.
Of the total rent due this month, 90.5% is rent paid quarterly in advance and 9.5% is rent paid monthly in advance. The Group's total annualised rent roll as at 1 April 2020 is £24.9 million.
New bank facility –The £50m Facility is for an initial term of three years with an option to extend, subject to lender approval, for up to a further two years. The Facility has a margin of 195 basis points per annum over three-month LIBOR. £34.5 million can be immediately drawn down under the Facility, and £15.5 million is conditional on security registration of Scottish assets and the completion of transactions which have exchanged.
The Facility takes the Group’s total committed facilities to £125 million, of which £26 million is currently drawn.
This Facility will help to ensure that the Group continues to be well capitalised and increases balance sheet resilience:
• As at 6 April 2020 the Group has cash of £27 million and headroom on its undrawn debt facilities of £98.9 million, of which £84.4 million is available immediately.
• The Group has £54.6 million of outstanding commitments to acquisitions and asset management initiatives, and a further £7.2 million contingent commitment to deferred payments based on future financial performance, all of which are expected to deliver incremental rental returns.
• The Group has no debt refinancing requirements before 2023.
• Debt drawn at 6 April 2020 is £26 million, giving an LTV of 7.0%, based on net asset values at 31 December 2019.
• Once facilities have been drawn to finance the outstanding commitments outlined above, drawn debt will be circa £75 million and the Group's LTV will be circa 18%, well below the Group's maximum permitted LTV of 35%.
• Once £75 million has been drawn, the Company's asset values would need to fall by more than 50% from its most recent valuations before there would be any potential breaches of its banking LTV covenants.
The Facility will help the Group to continue to manage its capital structure in line with its investment policy in a flexible manner and will support the Group with its future growth plans. However, the Group has no plans to drawdown more debt than is required to finance the existing outstanding commitments outlined above until the impact of the Covid-19 pandemic is clearer”
• Novacyt – “Announces that the CNR (Centre National de Référence des Virus des Infections Respiratoires (dont la grippe)) of the Institut Pasteur, an internationally renowned centre for biomedical research with a goal of improving public health in France, has approved its Covid-19 test. The Company's CE-Mark test is available for immediate distribution into the French market.
• On 2 April 2020, Novacyt also received approval for its Covid-19 test from the Ministry of Health in Thailand.”
• Bodycote – “Recent Trading – Trading in the first quarter has not been significantly impacted by disruption from the pandemic. Nonetheless, we have already been taking mitigating actions in anticipation of tougher conditions to come. These actions are designed to align our cost base with any reduced demand and we will continue to take further action in response to developments and as we deem necessary.
Financial Position – Following the announcement today of the completion of the acquisition of Ellison Surface Technologies, Bodycote is approximately £83 million drawn on its £230 million revolving credit facility (RCF), which has two more years to run. Accordingly, there remains £147 million of immediately available liquidity. The Group's current net debt: EBITDA gearing ratio is 0.7 times, well below the 3 times covenant ceiling permitted under the RCF. Bodycote has a very strong balance sheet and can withstand a significant decline in trading conditions. Nonetheless, given the uncertainty in the current environment the Board is keeping the proposal for the final dividend under review.”
• Rolls Royce – “Financial and liquidity position – Rolls-Royce exited 2019 in a robust liquidity and financial position as our transformation efforts gained momentum. In response to the change in outlook resulting from the global spread of Covid-19 and to ensure cash headroom in the event of a prolonged reduction in trading activity, we took the precautionary decision in March to draw fully on our £2.5 billion revolving credit facility. Including this cash, which has been placed on short-term deposit, our current gross cash balance is £5.2 billion. We have also secured an additional £1.5 billion revolving credit facility commitment with a consortium of banks, which will increase overall liquidity to £6.7 billion.
The underlying reduction in liquidity in the first quarter primarily reflects our normal adverse seasonal working capital movements, with this being the typical low point for our liquidity. The seasonal movement this year is consistent with our original guidance and in line with amounts seen over each of the past few years. The headwind related to Covid-19 was approximately £300 million, before the impact of mitigations, and largely related to the last six weeks of the period.
The Group has only one outstanding debt maturity in 2020, a $500 million bond due for repayment in the second half of the year. None of our Group borrowing facilities contain any financial covenants nor are they dependent on our public credit rating.
We are executing a number of specific mitigations to reduce our cash expenditure which will have a cash flow benefit of at least £750 million in 2020 in addition to our ongoing transformation plans. These mitigations include minimising discretionary costs such as non-critical capital expenditure projects, consulting, professional fees and sub-contractor costs, ceasing all non-essential travel, postponing external recruitment, and reducing salary costs across our global workforce by at least 10% in 2020, subject to local legal requirements. Salaries for our senior managers and Executive Team will be reduced by 20% for the rest of 2020, comprising a reduction of 10% and a deferral of 10%, with an additional bonus deferral for the CFO and CEO. There will also be a corresponding reduction in fees for Non-Executive Directors of the Board for the remainder of the year.
Notwithstanding the Group's financial and liquidity position, the Board has decided that in light of the uncertain macro outlook they are no longer recommending a final shareholder payment of 7.1 pence per share in respect of 2019, equivalent to a further £137 million.
Year to date trading impact of Covid-19 – Due to the limited visibility of the duration and impact of the pandemic, we are withdrawing our previously announced financial guidance for 2020.
To-date, the primary impact from Covid-19 has been on engine flying hours in our Civil Aerospace business. Widebody flying hours fell by approximately 25% in the first quarter, compared to the prior year, and fell approximately 50% in March, with an expected further deterioration in April and beyond as airlines have grounded an increasing proportion of their fleets over the last few weeks. Output of new widebody engines remained broadly stable in the first quarter as airframe customers maintained production levels. However, our airframe and airline customers are facing unprecedented business challenges and we are in close communication with our customers and suppliers as we prepare for an anticipated reduction in engine delivery and MRO (maintenance, repair and overhaul) volumes.
Our actions to reduce the number of aircraft on the ground (AOG) related to the technical issues on the Trent 1000 engines have continued to deliver positive results, with mid-20s AOG at the end of March, down from mid-30s reported at the end of February, and sufficient overhauled engines now delivered to achieve below 20 when all fitted to aircraft. We expect to reduce this to single-digits by the end of the second quarter and to date our MRO facilities are still operating, despite Covid-19 disruptions. Design work remains on schedule to resolve the last remaining technical issue, a new high pressure turbine blade for the Trent 1000 TEN engine, with ground testing of the new blade progressing through the second quarter. We continue to expect the new design to be ready for incorporation into the fleet by the end of H1 2021.
Power Systems delivered a relatively resilient performance in a weaker trading environment in the first quarter, helped by our diverse mix of end markets and geographies. Reduced demand from the Chinese market and from our oil and gas customers was partly offset by demand for critical backup power generation. Looking ahead, we expect the reduction in economic activity to affect full-year performance, particularly in industrial markets.
Defence activity remains in line with our expectations, with no material operational or financial disruption as a result of Covid-19 in the first quarter. In the UK and US, the government has designated Rolls-Royce as a critical supplier and our Defence facilities remain operational, while observing all health and safety guidance. We will continue to supply and support the engines that power military aircraft, naval vessels and other vehicles, many of which are being called upon to assist the relief effort.”
• Smiths Group – “Impact on trading year-to-date – Group trading to the end of March was affected to some extent by early Covid-19 disruption, which is now accelerating. In HY2020 only the Chinese operations of John Crane and Interconnect were disrupted. All our sites in China have now reopened and are operating at close to normal levels.
For the 8 weeks ended 28 March 2020, percentage underlying revenue growth for continuing operations and for Smiths Medical was mid-single digit.
All measures are in place to flex cost and conserve cash including hiring freezes, cancellation of discretionary expenditure and, postponement of non-critical capex. We have reinforced controls around receivables and payables, including cash tax (corporate, indirect and payroll).
Demand – We are now seeing generally weaker demand with the exception of Medical, but with some mitigating factors;
• Some customers have temporarily closed their facilities and have not been able to accept delivery of equipment and services.
• Together with lower oil prices, energy customers have announced reductions in capital expenditure. John Crane is not exposed to upstream oil & gas and has a very strong order book, two thirds of which is aftermarket.
• Many airports are closing or operating at significantly reduced capacity, with delays impacting both OE and aftermarket revenue. As a counter balance some customers are starting to pull forward installation, service and software activity in order to use the downtime effectively and enable instant restart when required. Smiths Detection has a record order book to meet global regulatory changes.
• Smiths is responding to a significant increase in demand globally for critical care devices including ventilators. Smiths Medical is contracting with the UK government and is in discussion with other governments around the world for a significant ramp-up in production of its paraPAC plusTM ventilator.
Supply – We are experiencing increasing disruption to supply chain and production;
• As of 3 April 2020, sites accounting for more than 90% of manufacturing capacity were open but a large number of sites and service centres continue to be affected and this is changing daily.
• We are pre-emptively obtaining government authorisation for sites supplying critical products to remain operational.
• A group team is working daily with operating units and suppliers, to identify and resolve potential operations and supply chain issues.
Forward guidance – We are moving decisively on all fronts to address the near-term challenges. Although we believe that we are in a strong position as we enter this period of high uncertainty, it is too early to assess the full impact of Covid-19. Therefore we are withdrawing forward guidance for FY2020.”
• Spectris – “As of today, all our manufacturing sites around the world continue to operate. Many have been deemed essential by governments, as they serve a wide range of critical end markets, including pharmaceutical, energy, infrastructure management and food manufacturing, as well as critical process controls in manufacturing. Several of our operating companies are providing equipment for the production of vital and urgently required ventilator equipment during this crisis.
Our Chinese factories have now returned to full operation. However, elsewhere, our manufacturing facilities are working below full capacity as a number of employees self-isolate at home. While all our sites are currently open, we will not hesitate to close them for employee safety reasons or in compliance with government guidance.
Our crisis management teams continue to ensure we support both our people and our customers, through the ongoing operation of our facilities and supply chains. We are communicating regularly with our people to keep them informed as the situation evolves.
Update on trading – The year started broadly in line with expectations, except in China, where LFL sales were notably lower in February, although we have seen activity in China pick up in March as customers' factories reopened.
Elsewhere, during March, we saw a deterioration in orders, most notably in Europe and North America as lockdowns started. Sales also deteriorated as access to our customers' facilities, to install equipment and provide services, has been restricted, compounded by emerging logistics issues. As a result, Group sales in the first quarter are expected to be 10% lower than the prior year on a like-for-like basis.
Mitigating actions – Given the high level of uncertainty and the low level of visibility regarding current and future trading, we have already taken a number of actions to mitigate the economic impact on the Group. 
A headcount freeze has been implemented, along with halting the planned inflation-related salary increases across the Group. Where appropriate, compulsory paid holidays are being enacted and we are reducing discretionary spending and capex. The Chief Executive and Chief Financial Officer are taking a voluntary 25% salary reduction, effective 1 April 2020, until further notice. The Chairman’s and Non-executive Directors' fees have also voluntarily been reduced by this amount.
Additional cost-savings measures are also being considered and developed. The profit improvement programme initiatives that were already underway continue. We are seeing reduced costs from the 2019 programme activities, with the additional benefits from the 2020 initiatives being supplemented with these further actions.
We are mindful of our corporate and social responsibility at this unprecedented time and one of our key priorities is to preserve as many jobs as possible and minimise the impact on our employees. We have a high-quality workforce and we will work to best retain their experience and capabilities to ensure that we emerge in a position of strength from this crisis. We will draw on government wage replacement schemes, where these exist, and it is appropriate to do so, along with asking our people to be flexible around working arrangements.
Balance sheet – The Group entered 2020 with a strong balance sheet and is highly cash generative. At the end of March, we had net cash of approximately £53 million, with a cash balance of c.£240 million and gross borrowings of £187 million. The Group has £831.7 million of committed banking facilities, as follows:
• an $800.0 million (£644.3 million) revolving credit facility (RCF), currently undrawn, maturing in July 2024 with a one-year extension option, subject to approval by the lenders;
• a seven-year €94.8 million (£84.2 million) term European Investment Bank (EIB) loan maturing in October 2020; and
• a seven-year €116.2 million (£103.2 million) term EIB loan maturing in September 2022.
These facilities have a leverage (net debt/EBITDA) covenant of up to 3x for the EIB loans and up to 3.5x for the RCF. In addition to the above, the Group also has access to a number of uncommitted and bank overdraft facilities.
Despite this robust position, maintaining a strong balance sheet and conserving cash is a key priority for the Group during this period of uncertainty. Consequently, the Board has determined that it is in the Company's best interests, having regard to all our stakeholders' interests, to withdraw the proposed £175 million special dividend (150 pence per share). The Board has also determined that it is appropriate to postpone the proposed 2019 final dividend of 43.2 pence per share. Both payments were due to be approved at the forthcoming Annual General Meeting. This results in a cash saving of approximately £225 million. We recognise the importance of the dividend to our shareholders but believe these actions to be responsible in the current circumstances. We will reassess the position with regard to the final dividend later in the year.
Financial guidance - The Group remains in a strong position. Clearly, the full impact of Covid-19 on orders and sales is difficult to predict and given this level of uncertainty, the Group is unable to accurately forecast the outlook for the remainder of the year at this time. We are therefore withdrawing forward financial guidance for 2020, until the situation is clearer.”

To read the full research note, please click here