Breedon Group prepares to progressively reopen facilities

Breedon Group Plc plans to progressively reopen some operations in a number of regions in Great Britain and in the Republic of Ireland, where customer demand supports it and where the company can open safely.

Breedon Group Plc closed the majority of its sites on 26 March 2020 with more than 80 per cent of its staff furloughed in the UK or on temporary lay-off in the Republic of Ireland on full-pay.

The reopening includes an anticipated return to clinker production at the company’s two cement plants at Hope Cement, England, and Kinnegad in the Republic of Ireland in May.

The company has reduced its cost base and conserved cash, while restricting capital expenditure to critical and committed projects only, eliminating discretionary expenditure and tight management on working capital.

The group has also deferred the 220 pay increases, withheld the issue of 2020 bonus schemes and deferred long-term Performance Share Plan awards to executive directors and the wider leadership team. Breedon is benefitting from the deferral of VAT payments and the reimbursement of a substantial portion of the wages and salaries of furloughed and temporarily laid-off colleagues under the relevant government employment retention schemes.

The group's balance sheet as at 30 April 2020 listed GBP79m of cash and an undrawn committed facility of GBP220m, compared with GBP60m and GBP220m, respectively on 25 March 2020, which has enhanced the liquidity headroom. An agreement has been made with banks for a relaxation of the 30 June 2020 covenants and a deferral of GBP35m of term loan amortisation to April 2022 and the cpm any is continuing to explore available sources of government support to further increase the company’s liquidity headroom.

The annual general meeting has been deferred from 21 April 2020 to 22 May 2020.

Outlook
It is too early to predict with any certainty how quickly the markets will recover and therefore, Breedon Group remains unable to provide market guidance at this time. However, the company is trading broadly in line with expectations as announced on 26 March 2020. Breedon Group says it has a robust and diversified business with traditionally strong cash flow, and remains confident in its ability to prosper in the long term. The pending acquisition of assists from Cemex in the UK, which has been delayed due to the outbreak of COVID-19, will further strengthen the company’s position.