Forterra Regulatory News (FORT)

FORTERRA plc

24 March 2020

Update on Covid-19

Forterra plc, a leading UK producer of manufactured masonry products, provides an update on Covid-19 and the measures it is taking to mitigate the impact on its business.

Colleagues and customers

The health, safety and wellbeing of our employees remains our primary concern and we have already taken prompt action to allow our colleagues to work from home wherever possible and eliminated all unnecessary travel.

In light of the new Government guidance, and in order to protect our workforce, the Board has decided to suspend all business operations as soon as possible until further notice. In some cases shutting down our facilities in a controlled and safe manner will take several days, and we will take all necessary measures to ensure our factories can efficiently resume production at the appropriate time.

The Board welcomes the Government's announcement that funding will be available to ensure employees can still be paid a proportion of their salary during a period of furlough and anticipates making use of this facility.

Balance sheet and liquidity

The Group enters this uncertain time with a strong balance sheet. We ended 2019 with net debt (pre IFRS 16) of £43.2m. This represents a multiple of 0.6 times EBITDA on a pre IFRS 16 basis.

The Group has access to a £150m revolving credit facility extending to July 2022. In recent days the Group has taken the precautionary action of drawing this facility. At the present time the Group has cash reserves of c£70m and access to an undrawn overdraft facility of £10m. In addition, the Group's credit agreement includes a £50m uncommitted accordion facility on the same terms as the main facility.

We are in regular discussion with the Company's lenders, all of whom remain supportive, to understand what future funding options may be available to the Company in light of recent Government announcements.

Actions

Given the unprecedented level of uncertainty we now face with significant economic disruption ahead, the Board has taken several immediate actions to protect the Group's liquidity position including:

Cost reduction and cash preservation: Prior to the decision to temporarily cease operations we had already taken actions to halt all non-essential discretionary expenditure. Existing commitments for capital expenditure will be honoured although we expect our suppliers and contractors to also face significant disruption in the coming months. No new commitments will be entered into. The Board remains committed to the completion of the new Desford brick factory although the phasing of expenditure will be flexed according to circumstance.

2019 final dividend suspended: Our recent full year results announcement stated that the Board would propose the payment of a final dividend of 7.5 pence per share. If approved by shareholders at the AGM this would lead to a cash outflow of c£15m in July. Whilst the Board recognises the importance of the dividend to shareholders, in the current circumstances the Board feels that it is no longer appropriate to make this payment and this resolution will be removed from the AGM notice sent to shareholders in the coming weeks.

At this stage the Board is unable to quantify what impact Covid-19 and the actions we are taking will have on the 2020 results and as such is currently unable to provide meaningful guidance on future earnings.

Upcoming AGM

The Company's AGM is currently scheduled for 14 May 2020. This is being kept under review and a further announcement will be made in due course.

Enquiries:

Further information relating to the Company and its group can be found at www.forterraplc.co.uk.