1 April 2020 – trading update

In light of the rapidly changing developments regarding COVID-19 the supplier of bathroom and kitchen products has issued a further update on the potential impact on its performance for the year to 31 March 2020 and the measures it is taking to manage the associated risks.  Until recently the company remained in line to meet market expectations but this is now no longer the case.  The South African Government issued a directive on 23 March 2020 requiring a 21-day national lockdown, effective midnight 26 March 2020 to midnight 16 April 2020 in order to contain the spread of the COVID -19 pandemic. Trading in the country has therefore ceased for now.  In the UK, trading has been minimal.  The company has suspended manufacturing and assembly operations in the UK in a controlled way to safeguard workers and to ensure an efficient resumption at the appropriate time.  Underlying operating profitfor the year to 31 March 2020 is now set to be approximately £31m compared to the previous consensus forecast of £35m.  All of this reduction is attributable to the COVID-19 situation.  The balance sheet is in good shape and debt is well under control.  However, the final dividend has a serious question mark over it.  We feel that the shares have fallen far enough and put forward a BUY recommendation.