Elementis Regulatory News (ELM)

ELEMENTIS PLC - COVID-19 update

PR Newswire

London, March 18

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No.596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Elementis plc

COVID-19 update

Suspension of the 2019 final dividend and relaxation of banking covenants

Elementis plc (“Elementis” or the “Group”), a global specialty chemicals company, today provides an update on the impact of the COVID-19 pandemic on its business and a change to its banking covenants.

Business performance

Up to 18 March 2020, the Group has experienced a solid start to the year with limited impact on production and demand from COVID-19. Our sites around the world remain open and are operating at normal levels. Trading and performance has been in line with our expectations, benefitting from efficiency actions implemented in 2019, with overall progress in Personal Care, Coatings and Talc. Market conditions are unchanged in Chromium.

The impact of COVID-19 however presents significant demand and operating uncertainty. Our immediate priorities remain safeguarding the health and wellbeing of our employees, and supporting our customers.

The Group is also taking steps to mitigate any potential material adverse financial impact, with focus on optimisation of cash flow via cost savings, working capital reduction and tight management of capex.

Liquidity, banking covenants and dividend

The Group has very ample liquidity, with in total over $300m immediately available. Total net debt for the Group, excluding lease liabilities under IFRS 16, was $454m at 31 December 2019, representing a ratio of 2.7x EBITDA*.

Elementis is a highly cash generative business, with average operating cash conversion of over 90% over the last 3 years. However, given market and economic uncertainties, the Group has taken two steps to provide additional financial headroom and preserve cash.

First, Elementis has secured a relaxation of its banking covenants from 3.25x to 3.75x net debt/EBITDA*. This will apply for two testing periods (i.e. 30 June 2020 and 31 December 2020).

Second, the Board has decided that given the uncertainties at this time it is prudent to preserve cash. Therefore, the 2019 final dividend of 4.4487 pence per share will no longer be proposed at the AGM scheduled for 29 April 2020. The cash impact of this decision to suspend the dividend is $33m in H1 2020. Future dividend decisions will be made as and when conditions normalise.

Paul Waterman, CEO of Elementis said:

“While our business performance to-date is in line with our expectations, we are acutely aware of the increased level of market and macroeconomic uncertainty. Our focus remains on what we can control, namely active cost and cash management. The relaxation of our banking covenants and the decision to suspend the final dividend will create material additional financial headroom to counter the potential impacts of the global COVID-19 crisis.”

Enquiries

Elementis plcJames Curran, Investor Relations Tel: 020 7067 2994

Tulchan Martin Robinson Tel: 020 7353 4200David Allchurch

Note: *Pre IFRS 16