Renew Holdings PLC H1 Period End Trading Update (3111I)

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RNS Number : 3111I

Renew Holdings PLC

01 April 2020

Renew Holdings plc

("Renew" or the "Group")

H1 Period End Trading Update

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces an update on trading in advance of the interim results for the half year ended 31 March 2020.

The Board expects the Group's trading in the first half of the year to be in-line with market expectations. We are also pleased to confirm that the integration of Carnell, acquired in January 2020, is going well and its trading performance has been in line with our expectations.

The potential impact of Covid-19 on the Group's trading performance in the second half of the year is unclear at this stage. We remain, where safe to do so, operational across the majority of our sectors, but we are experiencing disruption in certain areas. In Rail and Highways, which account for the majority of our engineering activity, we are working closely with our public sector customers in areas designated critical to the Covid-19 response. In both cases there is a clear commitment and ongoing demand for our directly delivered maintenance and renewal services. Water and Telecommunications have also been designated 'critical sectors' and we remain operational here too, with key workers deployed across all network areas where we have framework contracts. Our services in civil nuclear have been disrupted with a temporary cessation of programmes at Sellafield and Springfields where both customers are developing plans for resumption of critical activities that will require our involvement. In total, approximately 80% of our activities are in areas deemed critical to the Covid-19 response.

Cash generation in the first half of the year has continued to be strong and the Group's net debt as at 31 March 2020 is anticipated to be between GBP15m-GBP17m. Included in this amount is the balance outstanding on the term loan used to fund the acquisition of QTS which was GBP17.5m. The Group recently re-financed its working capital facilities as part of the acquisition of Carnell in January 2020 and now has a revolving credit facility ("RCF") provided by HSBC & NatWest of GBP44.2m, expiring in January 2024. In addition, the Group has a GBP10m unsecured overdraft facility. As at 31 March 2020, we anticipate having headroom in our available facilities of approximately GBP55m plus a GBP15m uncommitted accordion facility on the RCF.

Since the escalation of the Covid-19 pandemic, the Board has been focussed on taking actions to preserve cash and protect liquidity in a way that does not compromise the long-term prospects of the business. These include deferral of all non-essential capital expenditure, a hiring freeze, cost reductions, deferral of VAT payments (GBP2.6m deferred in March), utilisation of the Government's Job Retention Scheme and a temporary 20% reduction in the salaries of the Board and senior management from 1 April 2020. In addition, the Board has decided to suspend payment of the interim dividend which would ordinarily have been paid to shareholders in July. We understand the importance of the dividend to our shareholders and will keep our dividend policy under review in the coming months.

The Board believe these actions to be prudent in light of the uncertain economic outlook, notwithstanding the non-discretionary nature of much of our work and the covenant strength of our customers. Nevertheless, at this stage we are not able to quantify the impact on our full year results and consequently the Board does not believe it would be appropriate to provide forward looking financial guidance until greater clarity returns.

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."

Enquiries:

 
 Renew Holdings plc                                                        Tel: 0113 281 4200 
 Paul Scott, CEO 
 Sean Wyndham-Quin, CFO 
 
 Numis Securities Limited (Nominated Adviser                               Tel: 020 7260 1000 
  & Broker) 
 Stuart Skinner/ Kevin Cruickshank 
 
 Walbrook PR                                       Tel: 020 7933 8780 or renew@walbrookpr.com 
 Paul McManus                                                              Mob: 07980 541 893 
 Lianne Cawthorne                                                          Mob: 07584 391 303 
 Nick Rome                                                                 Mob: 07748 325 236

About Renew Holdings plc

Engineering Services , which accounts for over 90% of Group revenue and over 95% of operating profit, focuses on the key markets of Infrastructure, Energy (including Nuclear) and Environmental, which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

Specialist Building focuses on the High Quality Residential and science markets in London and the Home Counties.

For more information please visit the Renew Holdings plc website: www.renewholdings.com

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