Breedon announce gradual reopening of sites
Group planning to progressively reopen some operations during the coming weeks, where safe to do so
ENCOURAGED by recent announcements from several companies in the wider construction sector confirming their intention gradually to reopen their operations in a number of regions of Great Britain and Ireland, Breedon Group plc have announced that they too plan progressively to reopen some of their sites during the coming weeks, where customer demand supports it and where they can do so safely.
This includes an anticipated return to clinker production at the Group’s two cement plants during the course of this month.
A spokesperson for the company said: ‘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 our industry.
‘Where demand from our customers justifies it, we will seek to support them, provided we can do so without compromising the safety of our colleagues, our customers, and the communities in which we operate, which remains our overriding priority.’
Following the Group’s update on trading and its initial response to COVID-19 dated 26 March 2020, Breedon have been taking the necessary steps to safeguard their colleagues and customers during the lockdown, maintain the Group’s financial liquidity, and ensure that they are well placed to benefit from the anticipated recovery in their 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 employees furloughed in the UK or on temporary lay-off in the Republic of Ireland on full pay.
Disciplined action has been taken to reduce the Group’s 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.
Breedon have also deferred 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 also 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, Breedon say cash outflows have been substantially reduced.
Moreover, the Group’s balance sheet also remains strong. As at 30 April 2020 Breedon 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 their liquidity headroom.
Breedon have also agreed with their banks a relaxation of their 30 June 2020 covenants and a deferral of £35 million of term loan amortization to April 2022, and continue to explore available sources of government support to further increase their liquidity headroom.
Although still too early to predict with any certainty how quickly markets will recover, Breedon say they remain confident in their ability to prosper in the long term, whilst 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 their position.
In light of the continuing restrictions on public gatherings, the Group’s AGM, which was deferred from 21 April 2020, will now take place behind closed doors on Friday 22 May 2020, with shareholders encouraged to vote by proxy.
