City briefs: Provident Financial; Marshalls; and more

Bradford-headquartered credit provider Provident Financial has suspended face-to-face visits in its home credit business.

Communications with customers are now being done via phone, SMS and online.

Provident says that in the first eleven weeks of 2020, it saw no discernible impact of COVID-19 on credit issued, credit quality or collections.

However, it adds: “We expect both our credit issued and collections performance to be adversely impacted during this period of uncertainty. 

“It is too early to quantify the potential financial impact of COVID-19 on the group’s financial performance and, therefore, we consider it prudent to withdraw any forward guidance for 2020.

“The Board has decided that, given the uncertainties at this time, the 2019 final dividend of 16p per share will no longer be proposed at the Annual General Meeting. The cash and capital impact of the decision to withdraw the dividend is approximately £40m.”

Malcolm Le May, Group chief executive, said: “In these trying times, the welfare of our customers and colleagues has been paramount and I have been very pleased with how we have adapted our business practices to ensure we continue to safely support our customers.

“The impact of COVID-19 on the wider UK economy and our own financial performance clearly remains uncertain.

“However, the decisive actions we are taking, together with our strong capital and liquidity positions, mean that I remain confident in the group’s medium-term opportunity.”

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Elland-based building and landscaping supplies company Marshalls is temporarily halting some its operations in those parts of the business where demand has slumped.

The listed company says this measure will protect cash flow generation and contain costs, adding that non-essential capital expenditure has been deferred.

Its latest update today notes: “The Group has a strong balance sheet supported by a flexible capital structure and we maintain significant headroom against bank facilities.

“The Group’s total bank facilities are currently £165m of which £140m are committed. As at 25 March the Group had £93m of net debt (on a pre-IFRS 16 basis) of which £82m was committed.

“The Board believes it is important to preserve the Group’s strong financial position and, consequently, that it is now appropriate to cancel the 2019 final dividend of 9.65 pence and the previously announced supplementary dividend of four pence.

“The cash saving from this measure will be £27.1m.”

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Leeds and Manchester-based global law firm DWF predicts its Group revenue for the financial year ending 30 April 2020, as compared to the prior financial year, will fall below expectations.

The company forecasts “high single-digit organic growth” and total growth of between 15% and 20%, following the impact of the coronavirus.

Although DWF continues to expect double-digit percentage growth in underlying adjusted PBT this year, it expects a material impact on expected FY20 profits.

The Group has already implemented cost savings during the course of the year and has accelerated its cost saving programme, which is expected to deliver c.£10m in cash savings during FY21 and annualised savings of £13.5m in FY22.

Its update adds: “The company’s revenues are generated from a diversified set of service lines and geographies, with a substantial proportion generated from litigation and related practice areas, which are less affected by the economy.

“Certain divisions and geographies have however experienced an impact from the market disruption caused by the COVID-19 pandemic.

“International and Insurance will deliver most of the revenue growth in this financial year.

“As anticipated, International will deliver the strongest growth, albeit the Group has begun to experience issues in a number of locations as a result of COVID-19.

“Insurance, with its strong counter-cyclical offering, is trading ahead of management expectations.

“Connected Services is also expected to see revenue growth in FY20 whilst Commercial Services is now expected to be flat – corporate, finance and real estate have all been adversely impacted by COVID-19, with this partially offset by a strong performance from litigation.

“The Group has a Revolving Credit Facility with HSBC, NatWest and Lloyds of £80m and currently expects to continue to operate within the limits of that facility.”

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Online betting giant, Flutter Entertainment owners of PaddyPower and The Stars Group (TSG) owners of Sky Betting and Gaming have said they will continue plans for the merger dispite the disruption caused to the business by Conronvirus.

In an update today, the boards of Flutter and TSG said they have considered the likely impact of the current pandemic on the combined group and continue to believe strongly in the strategic rationale for the merger. Citing it will create a more diversified product portfolio and increased geographic diversification.

The merger is still under investigation by the CMA, with the deadline for a first phase decision next week – 31 March.

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