Renew trading in line with expectation, uncertain about COVID-19 impact

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Renew Holdings expects first half trading to be “in-line with market expectations” in interim results released this morning, adding that the impact of COVID-19 on second half trading is “unclear at this stage”.

The AIM listed Leeds-based engineering services group reported that cash generation in the first half of the year ha “continued to be strong”. As of 31 March 2020, net debt is expected to be between £15 million to £17 million here.

Included in this amount, is the outstanding balance on the term loan used to fund the acquisition of QTS which was £17.5 million.

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 £44.2 million, expiring in January 2024.

The Group said that the integration of Carnell is “going well” and trading performance has been in line with expectations.

Where COVID-19 is concerned, the Group said that the coronavirus’ impact on second half trading is “unclear at this stage”. Therefore, it remains operational across the majority of its sectors, but admitted to experiencing disruption in certain areas.

Since the escalation of the 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, 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 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,” said CEO Paul Scott.

“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.”