Company Announcements

COVID-19 and business update

Source: RNS
RNS Number : 8179I
Spectris PLC
06 April 2020

COVID-19 and business update

6 April 2020 - Spectris plc (SXS: LSE), the expert in providing insight through precision measurement, provides an update on the impact of COVID-19 on its current activities and the actions it is taking.

Andrew Heath, Chief Executive, said:

"Spectris has entered this crisis with a strong balance sheet and liquidity position, committed sources of funding and the benefit of cost actions taken in 2019.

"I would like to thank all our colleagues for their dedication in keeping our operations open and reaffirm our commitment to supporting them and our customers through this challenging period. Our focus is on ensuring the health and well-being of our employees, as well as preserving as many jobs as possible and minimising the impact on our people.

"Despite these uncertain times, the combination of the quality of our employee base, our strong market positions, our diverse end markets and customer exposure as well as our robust balance sheet and liquidity position mean the Group is well positioned to withstand this period of uncertainty. We are having to take a number of difficult decisions but are working to emerge from this crisis in a position of strength."


•      Priority on protecting our people, supporting our customers and ensuring we emerge in a strong position from the crisis

•      Manufacturing facilities remain operational, with measures in place to protect our people

•      First quarter trading impacted by COVID-19, like-for-like sales expected to be down 10%

•      Many mitigating actions already implemented. Working to preserve as many jobs as we can. Further cost action being developed

•      Strong balance sheet and liquidity position

•      Special dividend withdrawn; final dividend postponed

•      Financial guidance withdrawn given current circumstances; will be revisited when appropriate

Protecting our people and supporting our customers

First and foremost, our priority is to safeguard the health, safety and well-being of our employees, their families and the communities we operate in. We are following the advice of the World Health Organization, regional and national governments, and health authorities and have instituted a number of measures to meet this goal. These measures include social distancing and split shifts within our facilities, along with enhanced cleaning and disinfection processes, the introduction of temperature screening in certain regions, a work from home policy and a ban on all non-essential travel.

We are also focused on continuing to support our customers by providing them with the products, services and any assistance they need, particularly at this challenging time. We are committed to meeting production demand, while ensuring our people are protected, to the extent possible.

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.


Spectris plc

Siobhán Andrews

Head of Corporate Affairs
+44 1784 485325

FTI Consulting

Richard Mountain/Susanne Yule

+44 203 727 1340

About Spectris

Spectris' global group of businesses are focused on delivering value beyond measure for all our stakeholders. We target global, attractive and sustainable markets, where growth and high returns are supported by long-term drivers. Precision is at the heart of what we do. We provide customers with expert insight through our advanced instruments and test equipment, augmented by the power of our software and services. This equips customers with the ability to reduce time to market, improve processes, quality and yield. In this way, Spectris know-how creates value for our wider society, as our customers design, develop, test and manufacture their products to make the world a cleaner, healthier and more productive place. Headquartered in Egham, Surrey, United Kingdom, the Company employs approximately 9,000 people located in more than 30 countries. For more information, visit

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