25 March 2020
Polypipe Group plc
COVID 19 update
Polypipe Group plc (“Polypipe”, the “Company” or the “Group”), a leading provider of sustainable water and climate management solutions for the built environment, today provides the following COVID 19 update.
Employees, customers and operations
The health, safety and wellbeing of our people has always been, and continues to be, at the forefront of everything we do. The Group and its leadership team has a duty of care to its employees and customers, and the evaluation of risk and taking mitigating actions to protect those employees and customers is taken very seriously and is very much ingrained in our culture. In light of recent events and until further notice, we have decided to wind down our operations to that which is absolutely necessary to support the Government in its battle with COVID 19 and keep the economy going. These include the following:
· Parts of the Group supporting the National Health Service in very specific roles in increasing capabilities to cope with the inevitable increase in COVID 19 patients. Our Nuaire business is manufacturing ventilation for the Royal Marsden Hospital and is receiving urgent enquiries from many other NHS sites for this as well as other essential projects.
· Our Building Products business has been requested to manufacture special pipe for emergency medical use.
· On a wider front, it is necessary to keep supplying some of our plumbing and drainage products that are needed for urgent repair and maintenance across the country to keep essential projects and services running.
The reduction in our operations will happen over the next few days as, for operational reasons, it is not something that can be done immediately.
Current trading and FY20 guidance
Trading for the year to date has been in line with expectations, with no material impact on performance from the COVID 19 pandemic so far. However, the decision to wind down operations, and the inevitable but as yet unquantifiable wider impact of COVID 19 on our end markets in the next weeks and months means it is no longer possible to provide financial guidance for the year ending 31 December 2020 and beyond. Guidance will be resumed when a degree of normality returns to our markets.
Focus on cash preservation and withdrawal of FY19 final dividend
It is clear that both revenues and profits will be adversely impacted in the coming months by the decision to wind down operations and by the effect of COVID 19 on our end markets. In response, we have implemented a range of measures to reduce costs and conserve cash during this period, including utilisation of the Job Retention Scheme and other measures announced by the Government.
Whilst the Board recognises the importance of the dividend to shareholders, as part of its cash conservation plans, the Board has decided to withdraw its recommendation to pay a final dividend of 8.1 pence per share on 28 May 2020, and this will not now be put to shareholders at the AGM on 21 May 2020. This decision will ensure £16m cash will be retained in the business that would otherwise have been distributed which the Board believes is prudent and appropriate in the current circumstances.
The Group enters this period of uncertainty with a strong balance sheet and good liquidity. Excluding IFRS16, net debt at 31 December 2019 stood at £150.0m, representing 1.5 times EBITDA on a pre IFRS16 basis. The Group has a £300m Revolving Credit Facility, committed through to November 2023, and has taken pre-emptive action in drawing down all but £15m of the unutilised facility and holds it on deposit across several banks.
Commenting on this announcement, Martin Payne, Chief Executive Officer, said “In these unprecedented times we have acted swiftly and decisively, taking our decisions with the best interests of our employees and customers foremost in our minds. The Board’s thoughts are with all of our employees and their families in what are worrying times for us all. The Group’s strong balance sheet and cash generation, together with our talented people and clear strategy gives the Board confidence that it will overcome whatever challenges await.”
Martin Payne, Chief Executive Officer
Paul James, Chief Financial Officer
+44 (0) 1709 770 000
+44 (0) 20 7404 5959
Notes to Editors:
Polypipe Group plc (“Polypipe”, the “Company” or the “Group”), a leading provider of sustainable water and climate management solutions for the built environment is the largest manufacturer in the UK, and among the ten largest manufacturers in Europe, of plastic piping systems for the residential, commercial, civils and infrastructure sectors by revenue. It is also a leading designer and manufacturer of energy efficient ventilation systems in the UK.
The Group operates from 19 facilities in total, and with over 20,000 product lines, manufactures the UK’s widest range of plastic piping systems for heating, plumbing, drainage and ventilation. The Group primarily targets the UK and European building and construction markets with a presence in Italy, the Netherlands, Ireland and the Middle East and sales to specific niches in the rest of the world.