TIDMIMI
RNS Number : 9560H
IMI PLC
30 March 2020
30 March 2020
Coronavirus update
Given the current and rapidly changing developments regarding
Coronavirus, IMI plc ('IMI'), the specialist
engineering group , issues the following update. This announcement contains inside information .
Protecting our people
Even before the outbreak of the Coronavirus pandemic, our
primary concern has always been the safety and well-being of our
people, our wider communities, our customers and partners.
Over recent weeks, this commitment has assumed even greater
relevance. All of our facilities have implemented additional
personal protection measures, intensified hygiene, and social
distancing protocols that meet or exceed local and international
guidelines. Employees who are able have been working from home for
some time . Factory operations have been managed safely and
intensively to maximise business continuity and to support our
customers.
A crisis response team comprising both divisional leadership and
members of the Group Executive meets at least three times per week
to closely monitor the situation and co-ordinate our response. We
also communicate regularly with all our employees, keeping them
informed about the evolving situation and offering guidance on how
they can best keep themselves and their colleagues safe.
Financial position
We have entered this period of uncertainty in a strong financial
position. As at the end of February, the Group had immediately
available liquidity of GBP393m, comprising GBP19m of available
cash, GBP293m of undrawn committed bank facilities with our six
core relationship banks, and an additional GBP81m of undrawn
uncommitted facilities.
The Group's existing long-term debt, totalling GBP363m, was
raised through the US Private Placement market . This debt is at
fixed rates and, aside from GBP11m due in 2022, matures in 2025 and
beyond.
The financial covenants attached to our committed facilities are
that EBITDA should be no less than 4 times interest and net debt
should be no more than 3 times EBITDA. Th ose covenant ratios, at
31 December 2019, were 24.0 times and 1.2 times , respectively.
Recent trading
The disruption from Coronavirus to our businesses in the first
two months of the year has been relatively modest - with sales and
orders being slightly ahead of our earlier guidance . Margins and
cash flow remained strong.
The majority of our sites remain at or near normal capacity.
Some facilities, which support IMI Precision Engineering's Life
Science sector, have received special dispensation to accelerate
activity, in order to ramp-up production of key valve components
for the world's ventilator manufacturers.
Our operations in China were disrupted for two weeks in early
February, but have since returned to normal operations. However, in
some locations, including in Italy and India, sites have had to
close temporarily in line with the direction of the authorities. It
is expected that site and supply chain disruptions will likely
increase in the short-term before global industrial activity
returns to normal.
Protecting our future
Whilst we look forward to, and remain confident of, a return to
normal trading, we are actively preparing for the short-term
disruptions and expected macroeconomic declines brought about by
this pandemic. Mitigating actions have already been taken in
anticipation of tougher conditions, including a hiring freeze in
all but exceptional circumstances, reduced discretionary spending,
and reductions to capital expenditure unless vital for health and
safety or operations continuity. The Board and Executive Committee
members have agreed to a 20% salary reduction, effective 1 May, for
at least the next three months.
Further cost reduction initiatives are being developed in order
to enable the organisation to align its cost base with any reduced
market demand. Our leadership is in close communication with key
customers around the world to provide them with our support and
expertise, and to minimise misalignment as we progress the
year.
Dividend
Although we remain confident in the strength of our financial
position, given the unprecedented business uncertainty brought
about by the pandemic, the Board has decided to withdraw its
recommendation to pay a final dividend at the AGM in May, thereby
preserving GBP71m of funds to support the long-term position of the
Group. This is recognised as a significant decision and one that
will be reviewed later in the year, once the trading environment
and outlook become clearer.
Outlook and guidance
When we presented our 2019 preliminary results on 28 February,
we offered guidance for the first half of 2020, subject to the
evolving Coronavirus situation. Although the impact on our trading
to date has been relatively modest, given the significant
volatility within our market environment, we believe it is now
prudent to withdraw that guidance. We will continue to offer
updates as it becomes appropriate and helpful to do so. Our next
formal communication will be the Interim Management Statement
planned for release on 7 May 2020.
Roy Twite, Chief Executive said "I am incredibly proud and
humbled by the commitment, courage and professionalism shown by all
our employees as we face this unprecedented disruption to our
communities and businesses. It is my firm belief that, by
continuing to act decisively, IMI will deliver on its ambitious
strategy once this global, human tragedy has been resolved."
Enquiries to:
John Dean IMI Tel: +44 (0)121 717 3712
Gayden Metcalfe Teneo Tel: +44 (0)20 7420 3189
The Annual Report is available on the IMI plc website and will
be issued along with the Notice of Meeting to shareholders on 2
April 2020.
Notes to editors
IMI plc, the specialist engineering company, designs,
manufactures and services highly engineered products that control
the precise movement of fluids. Its innovative technologies, built
around valves and actuators, enable vital processes to operate
safely, cleanly, efficiently and cost effectively. The Group works
with industrial customers across a range of high growth sectors,
including energy, transportation and infrastructure, all of which
are benefiting from the impact of long-term global trends including
climate change, urbanisation, resource scarcity and an ageing
population. IMI employs around 11,000 people, has manufacturing
facilities in more than 20 countries and operates a global service
network. The Company is listed on the London Stock Exchange.
Further information is available at www.imiplc.com .
IMI plc is registered in England No. 714275. Its legal entity
identifier ('LEI') number is 2138002W9Q21PF751R30.
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END
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