BREEDON GROUP PLC
Business Update & Notice of AGM
Breedon Group plc, a leading construction materials group in Great Britain (“GB”) and Ireland, issues the following business update and notice of the Company's forthcoming Annual General Meeting (“AGM”).
Following our update on trading and our initial response to COVID-19 dated 26 March 2020, we have taken the necessary steps to safeguard our colleagues and customers during the lockdown, maintain the Group's financial liquidity and ensure that we are well-placed to benefit from the anticipated recovery in our markets over the coming months.
Operational update
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 per cent of our colleagues furloughed in the UK or on temporary lay-off in the Republic of Ireland on full pay.
We have been 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 GB and Ireland. We in turn plan progressively to reopen some of our sites during the coming weeks, where customer demand supports it and where we can do so safely. This includes an anticipated return to clinker production at our two cement plants during the course of this month.
We have taken disciplined action to reduce our 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. We have 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. We are 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 we 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 our liquidity headroom. We have also agreed with our banks a relaxation of our 30 June 2020 covenants and a deferral of £35 million of term loan amortisation to April 2022. We continue to explore available sources of government support to further increase our liquidity headroom.
AGM
Our 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 our website at www.breedongroup.com/investors/agm on 6 May 2020. Members may appoint a proxy online by visiting www.signalshares.com and we will provide a facility for shareholders to submit questions to the Board on our website .
Appointment of non-executive director
Further to our announcement on 11 March 2020, we are pleased to announce that Carol Hui has been appointed to the Board as an independent non-executive Director with immediate effect. Further details are given in a separate announcement made today.
Outlook
The fact that a number of contractors, housebuilders 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.
It is still too early to predict with any certainty how quickly our markets will recover, and we therefore remain unable to provide market guidance at this time. However, we reiterate the points made in our announcement on 26 March 2020, prior to which we were trading broadly in line with our expectations. We have a fundamentally robust and diversified business with traditionally strong cashflow, and remain confident in our 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 our position.
We will provide further updates as and when appropriate.