A recent trading statement issued by
Marshall Group states that the sale of the ex-RAF C-130Js is expected during H2, the delay is affecting its cash position, not only has it lost the maintenance contract it has done subsequent upgrade work on the airframes in of payment as a share of the sale value.
Cash position
The year end cash position was significantly below forecast primarily due to increased working capital requirements on various projects, including the Centre Wing project in Aerospace and inventory build-up in Land Systems following a temporary line stoppage to address an engineering issue. Underperformance in the engineering businesses also contributed to the reduction in cash.
The continued delay in resale of the UK RAF C130 Hercules aircraft contributed further to the reduction in the cash position. However, there has been serious interest from several overseas governments over the year, with a sale of the majority of the aircraft anticipated in the second half of 2024. The additional value created in these aircraft through MRO4 work, undertaken in collaboration with the UK MOD, will be released by the sale and should result in material value to the Group.
Outlook
This has been a transitional year for Marshall, and it was always anticipated that progress against the five-year strategic plan would not be linear. The Group is proactively addressing these challenges through prudent cost control, accelerated operational efficiencies and a renewed focus on leveraging the profit opportunities in our order pipeline, particularly internationally.
In the short term, it is expected that the cash and working capital trends will continue in the first half of the 2024 financial year before easing in the second half of the year, pending the anticipated sale UK RAF C130 Hercules aircraft. The order book and order pipeline remain robust, and international expansion remains on track with construction of facilities in the US and Canada to service the US and Canadian Militaries.
A document issued by Marshall of Cambridge Holdings a few days later states
Shaping the group for the future
Management has taken action to offset the end of the RAF C-130J support programme (Hercules Integrated Operational Support – ‘HIOS’) by implementing cost efficiencies, strengthening the senior leadership team, and focusing on converting the £4bn pipeline of opportunities into future revenues.
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Although the last service of an RAF C-130J was completed in February, Marshall has continued to modernise aircraft within the fleet (as part of the gain share agreement with the UK MoD.)
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Marshall Aerospace, the UK MoDs resale partner, is under a gain share contract and is storing the C-130J aircraft ahead of their sale. However, the timing of revenues associated with the disposal of the RAFs fleet have been pushed back, with negotiations at the ministerial level between the UK and the governments of interested parties. Any further modification work will be undertaken and paid for on completion of any deal. We understand that expressions of interest from other countries have been submitted, but timing is subject to MoD approval.