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UK Sparks: British Land suspends dividend due to coronavirus crisis

Edison

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Property company British Land has suspended dividend payments with immediate effect, but it will revisit its dividend policy when there is more clarity on outlook. The company says that around 12% of its retail units remain open after the Government has announced new measures to fight coronavirus on 23 March 2020. It has taken steps to mitigate their impact on its clients, which includes releasing its smaller tenants from lease obligations for three months. The company states this will have a negative £3m impact on its financials. It is also prepared to defer March rents in the amount of up to £40m.

British Land has £1.2bn of cash and undrawn facilities and no requirement to refinance until 2024. Its leverage is ‘low’, with LTV at 31% at 30 September 2019, and it has ‘significant’ headroom to its debt covenants.

Consumer electrical and mobile retailer Dixons Carphone has warned that it will not meet its full year guidance for adjusted profit before tax of £210m and reduction of net debt year-on-year. This follows closure of its stores in the UK, Ireland and Greece due to the coronavirus spread, which were expected to contribute around £400m to the group sales for the rest of the year. Having said that, the company achieved ‘very strong’ online sales over the last weeks, which will help compensate for the lost store sales.

Dixons Carphone remains committed to its ongoing strategic transformation but in the nearer term its focus is on preserving cash, which includes cutting capex and reducing stock ordering. The group assures it has ‘significant’ headroom to covenants on its revolving credit facilities, which expire mostly in 2022. It has also access to over £700m of unutilised facilities. The company will revisit the potential dividend payment in September 2020 once the outlook becomes clearer.

Engineering company Weir has withdrawn its guidance for 2020 due to the current business uncertainty related to coronavirus outbreak. The company highlights its Chinese facilities are now back to full operating capacity, but it has experienced increasing disruptions in other regions. It is launching measures to mitigate their impact on the group, including an additional $30m annualised cost reduction plan in its Oil & Gas segment. The company will also curtail non-essential capital expenditures, and the board has withdrawn its recommendation to pay a 2019 final dividend. Currently it has around £500m of available liquidity and its net debt to EBITDA of 2.4x at 31 December 2019 was below the covenant level of 3.5x.

Finally, packaging company DS Smith has announced that Adrian Marsh will continue as the group’s CFO and his prior resignation will be treated as withdrawn. Adrian Marsh was supposed to join the bookmaker William Hill, which has recommenced the search for a new CFO. William Hill’s CFO is Ruth Prior, who is currently serving out her notice period.

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