Breedon Group plc, a leading construction materials group in Great Britain and Ireland, has issued the following business update and notice of the company’s forthcoming Annual General Meeting (AGM).
Following its update on trading and the company’s initial response to COVID-19 dated 26 March 2020, Breedon Group has taken the necessary steps to safeguard its colleagues and customers during the lockdown, maintain the group’s financial liquidity and ensure that it is well-placed to benefit from the anticipated recovery in its markets over the coming months.
Since 26 March 2020 a small proportion of the group’s sites have remained open to service critical supply needs, with stringent social-distancing protocols in place. The majority have, however, remained closed, with more than 80% of the company’s colleagues being furloughed in the UK or on temporary lay-off in the Republic of Ireland on full pay.
The company has been encouraged by recent announcements from several companies in the wider construction sector confirming their intention to gradually to reopen their operations in a number of regions of GB and Ireland. Breedon Group, in turn, plans to progressively reopen some of its sites during the coming weeks, where customer demand supports it and where the company can do so safely. This includes an anticipated return to clinker production at its two cement plants during the course of this month.
The company has taken disciplined action to reduce its cost base and conserve cash, including the restriction of capital expenditure to critical and committed projects only, elimination of discretionary expenditure and tight management of working capital. It has also deferred the 2020 pay increases across the group, withheld the issue of 2020 bonus schemes and deferred long-term Performance Share Plan awards to Executive Directors and the wider leadership team. The group is benefiting from the deferral of VAT payments and the reimbursement of a substantial proportion of the wages and salaries of furloughed and temporarily laid-off colleagues under the relevant government employee retention schemes.
As a result of these measures, cash outflows have been substantially reduced.
Financing and liquidity
The group’s balance sheet remains strong. As at 30 April 2020, the company had £79 million of cash and an undrawn committed facility of £222 million, compared with £60 million and £220 million respectively at 25 March 2020, which has enhanced its liquidity headroom. Breedon Group has also agreed with its banks a relaxation of its 30 June 2020 covenants, and a deferral of £35 million of term loan amortisation to April 2022. The company continues to explore available sources of government support to further increase its liquidity headroom.
Breedon Group’s AGM, which was deferred from 21 April 2020, will now take place on Friday 22 May 2020 at 9.00am at Pinnacle House, Breedon Quarry, Breedon on the Hill, DE73 8AP. In light of the continuing restrictions on public gatherings, this will be a closed meeting. Shareholders are strongly encouraged to ensure that their votes are counted and to appoint the Chairman of the AGM as their proxy. Details will be set out in the Notice of Meeting, which will be posted to shareholders and made available via the company’s website on 6 May 2020.
Appointment of non-executive director
Further to the company’s announcement on 11 March 2020, Breedon Group is pleased to announce that Carol Hui has been appointed to the Board as an independent non-executive Director with immediate effect.
The fact that a number of contractors, house builders and merchants have announced that they intend to resume their operations, albeit in a measured way and within strict safety parameters, is clearly good news for the industry. Where demand from the company’s customers justifies it, the group seeks to support them, provided it can do so without compromising the safety of colleagues, customers, and the communities in which it operates, which remains the overriding priority. It is still too early to predict with any certainty how quickly markets will recover, and Breedon Group therefore remains unable to provide market guidance at this time. However, the company reiterates the points made in its announcement on 26 March 2020, prior to which it was trading broadly in line with its expectations. The company has a fundamentally robust and diversified business with traditionally strong cashflow, and remains confident in its ability to prosper in the long term. The pending acquisition of assets from CEMEX in the UK, which has been delayed due to the difficulties caused by COVID-19, will further strengthen the group’s position.
Read the article online at: https://www.worldcement.com/europe-cis/01052020/breedon-group-shares-business-update-ahead-of-its-annual-general-meeting/