TIDMRCDO
RNS Number : 0324M
Ricardo PLC
06 May 2020
6 May 2020
Ricardo plc
Trading Update
Ricardo plc (LSE: RCDO.L) (the 'Group') is today providing a
trading update in respect of the year ending 30 June 2020. This
includes an update on the operational impact of COVID-19 on the
business and the actions that it has taken to increase liquidity
and near-term funding, as well as the steps that it has taken to
support frontline staff in local care homes and NHS trusts with
vital personal protective equipment ('PPE').
Funding and liquidity
We have modelled a wide range of scenarios regarding the
potential impact of COVID-19 on the liquidity of the Group. Whilst
we have no immediate concern, we have taken action to strengthen
the Group's funding to provide further headroom against the risk of
the more pessimistic scenarios materialising.
At 30 April 2020, net debt was GBP80.8m, with GBP20m of our
GBP150m RCF undrawn and available. We held Liquid Cash reserves of
GBP66.0m as well as uncommitted overdrafts of GBP16.4m. The level
of liquid cash reserves held has been increased as part of our
treasury management policy in response to COVID-19.
On 5 May 2020, the Group exercised GBP50m of the accordion
option of its banking facilities, thereby increasing the RCF to
GBP200m and increasing the amount undrawn and available to GBP70m.
This provides the Group with increased committed funding available
for the remaining term through to July 2023.
In addition to the increased committed funding available, the
Adjusted Leverage (defined as net debt over underlying EBITDA)
covenant was increased from 3.0x to 3.75x for the next two test
dates of 30 June 2020 and 31 December 2020. The covenant will
return to 3.0x for the following test date on 30 June 2021. The
only other financial covenant is Interest Cover, which remains at
4.0x for each test date. There have been no other changes to the
terms of this multi-currency facility, which has a variable
interest rate ranging from 1.4% to 2.2% above LIBOR and varies
according to the Group's Adjusted Leverage.
We thank each of our relationship banks NatWest, HSBC, Bank of
Ireland and Lloyds for their continued support for Ricardo during
these unprecedented times.
Across the Group, we have also acted quickly to reduce
expenditure and preserve cash. This includes careful management of
employee costs, as well as maintaining tight control of all capital
expenditure and discretionary operating costs.
Trading update
Order intake in the quarter to 31 March 2020 (Q3) was good at
GBP30 million per month and the Group secured a further GBP19m of
orders in April 2020. Against the backdrop of COVID-19, some of our
businesses continue to perform well whilst others have been more
adversely impacted.
Trading in our Energy & Environment and Defense businesses
was good in Q3, both benefiting from a largely public sector
customer base. Our Defense operations have been deemed essential by
the US Government, with c.600 Anti-lock Brake System ('ABS') kits
delivered in Q3. Given the current climate, we expect s ome
re-scheduling of Ambulance ABS deliveries from our Q4 to the next
financial year as the US Government redirects some if its funding.
Discussions on the wider HMMWV fleet ABS retrofit programme remain
positive and continue in line with our expectations.
Further to our February guidance, our Automotive-related and
Rail businesses in Europe and the US have experienced some
slow-down in project delivery due to customers either closing down
their operations or working remotely due to various lockdown
restrictions. Following the easing of restrictions, our China
businesses have now returned to work at their offices. The delivery
of high-performance engines and transmissions by our Performance
Products business is being impacted by the recent closure of some
of our customers' production lines.
Despite the continued good order intake over the past quarter,
there is considerable uncertainty and economic volatility ahead.
With this in mind, it is difficult to forecast with a reasonable
degree of accuracy and we are therefore withdrawing guidance until
we see more stability in the economic backdrop.
Our response to COVID-19 - "healthy people, healthy
business"
At the time of the COVID-19 outbreak in Asia, we quickly
activated our crisis management plan, setting out a "Healthy
people, healthy business" agenda. This focused on supporting our
employees and their families together with the health and wellbeing
of our clients, suppliers and the communities in which we operate.
We operate strong governance with weekly board updates and
Executive Committee meetings supported by a central team of
functional heads reporting to the Chief Executive.
We applied key learnings from our experience in Asia to prepare
our European and US operations to primarily work from home, which
was achieved through swift enhancement to our IT systems, with very
little disruption or impact on IT security as a result of great
support from our employees. We have supported many colleagues with
highly flexible working arrangements so they can add value
alongside caring for their children. Currently, most staff in
Europe and the US are working remotely, with c.200 of our European
and US staff performing essential work from our sites. The majority
of our Asian staff are now working from their offices. We have made
some limited use of the UK Government furlough scheme, where
appropriate to do so.
We have made a commitment to support the communities around our
sites, and in order to support local care homes and NHS Trusts we
have engineered and assembled face shields. These face shields are
certified to the EN166-1 standard and have been donated to health
and care workers on the front line of the national effort to combat
the pandemic. As at 4 May, we have distributed c.7,000 face shields
to communities around our Midlands, Shoreham, Derby and Harwell
locations. We would like to thank both our volunteer employees and
the organisations who have donated extra material for their support
in this initiative.
Dave Shemmans, Ricardo plc CEO, commented:
"I am extremely proud of the way the Group has responded to the
challenges that we have faced as a result of the COVID-19 outbreak
and the willingness of our staff to support their colleagues and
the national effort at this time of crisis, in particular our swift
production of face shields for frontline healthcare workers. I am
confident the measures we are taking will allow us to continue to
deliver our products and services to customers in a safe and
efficient manner. We remain open for business and maintain our
passion to serve our clients.
"Ricardo is a diverse and resilient Group, and we face the
continuing uncertainty with good levels of order intake, together
with a strong position in respect of financing facilities and
liquidity, all of which position us well for when economic
stability returns."
About Ricardo plc
Ricardo is a global engineering, technical, environmental and
strategic consultancy business. We also manufacture and assemble
low-volume, high-quality and high-performance products and develop
advanced virtual engineering tools for conventional and electrified
powertrains as well as for complex physical systems.
Our ambition is to be the world's pre-eminent organisation
focused on the design, development and application of solutions to
meet the challenges within the markets of Transport & Security,
Energy, and Scarce Natural Resources & Waste. Our mission is to
create a world fit for the future , and we will achieve this
through the activities of our portfolio of businesses, each of them
underpinned by our talented team of professionals.
Further enquiries:
Ricardo plc
Dave Shemmans, Chief Executive
Officer Tel: 01273 455611
Ian Gibson, Chief Financial Officer Website: www.ricardo.com
Newgate Communications LLP Tel: 020 7680 6550
Adam Lloyd / Ian Silvera / Isabelle E-mail: ricardo@newgatecomms.com
Smurfit
Cautionary Statement
Note: Certain statements in this press release are
forward-looking. Although these forward-looking statements are made
in good faith based on the information available to the Directors
at the time of their approval of the press release, we can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward-looking statements. We undertake no obligation to
update any forward-looking statements whether as a result of new
information, future events or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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