Engineering firm warns of ‘unclear’ impact of Covid-19
Engineering services group, Renew Holdings has given trading update in advance of its Interim results for the half year ended 31 March 2020.
The Leeds-based firm expects the trading in the first half of the year to be in-line with market expectations, this includes the performance Carnell, which it acquired for £38m in January.
It reports that cash generation in the first half of the year has continued to be strong and that as a result of recently re-financing its working capital facilities as part of the acquisition of Carnell, it now has a revolving credit facility provided by HSBC & NatWest of £44.2m, expiring in January 2024.
However the second half of the year is expected to be impacted by Covid-19 although to what level the board say is “unclear at this stage”.
The business is still operational across the majority of our sectors, and there is an ongoing demand for the directly delivered maintenance and renewal services which it offers particularly in the designated ‘critical sectors’, which make up 80% of its work.
However the impact of the Covid-19 pandemic, on the business to date has been a 20% reduction in the salaries of the board and senior management from 1 April, a hiring freeze and a wider cost reduction scheme. The business has said it is also utilising the Government’s Job Retention Scheme.
As a result of the current pandemic, the board has decided to suspend payment of the interim dividend which would ordinarily have been paid to shareholders in July.
Paul Scott, CEO commented: “The health, safety and wellbeing of our people and all stakeholders impacted by our activities remains our highest priority. We have responded quickly and effectively to the incredible challenges of the Covid-19 pandemic and I am immensely proud of the reaction to this event by my colleagues and our entire workforce who remain fully committed to our mitigation measures.
“While we are experiencing interruption, the situation is continuously evolving and we have many defensive qualities which provide resilience in these unprecedented circumstances.
“Our strong trading performance in the period is reflective of the reliable long-term nature of the UK infrastructure markets in which we operate. We continue to work very closely with all of our customers and where we can satisfy the requirements of Public Health England guidance we are delivering essential network services that the UK Government has classified as critical to the Covid-19 response.
“Despite the unique challenges the country is currently facing, we are well placed to play a significant role in the long- term opportunities that will emerge for UK infrastructure services, a sector that will play an important role in rebuilding our economy.”
