BILB.L Regulatory News (BILB)

24 April 2020

Bilby plc

("Bilby" or the "Company") 

Year-end and COVID-19 trading update

Bilby Plc (AIM: BILB), a leading gas heating, electrical and building services provider, provides the following update.

Year-end update

The Group anticipates announcing its results for the year-end 31 March 2020 in July 2020. It is pleased to report that results are expected to be in line with previous guidance of at least maintaining revenues of £59 million with an underlying EBITDA of not less than £4.5 million, and with a net debt position at the year-end of £7.4 million (2019: £10.9 million).

Supporting our employees and customers

Bilby's core services provide its local authority and housing association customers with vital services including emergency repair and maintenance cover, whilst also ensuring that customers remain compliant with gas, electricity and building maintenance regulations. As a result, the Government recognises many of our employees as key workers and it is deemed crucial that they continue to perform their essential services. In addition to the critical and necessary work that our employees continue to undertake, they are also providing vital voluntary services to our customers, assisting and supporting the wider community during these unprecedented times.

The outbreak of COVID-19, as with many businesses, has presented challenges for Bilby and how it operates, but our absolute priority will always be the safety of our employees and customers. We have implemented a range of measures to ensure the well-being of colleagues while minimising the risk of spreading the virus and we remain focused on serving our customers in a wholly safe manner.

Given the nature of Government restrictions imposed as a result of COVID-19, the Group is experiencing delays in accessing certain residential and communal properties to undertake work. Furthermore, while the UK remains subject to travel and social distancing restrictions, some local authority customers are choosing to defer certain elements of work that are deemed of a lower priority. However, over 95% of Group revenue is generated through contracts with local authorities and housing associations, providing an assurance of continuity moving forward as well as minimal debtor risk. Whilst the short-term outlook remains uncertain, the Group is confident of completing these deferred works when conditions return to normal and our longer-term prospects remain very positive. 

Mitigating Actions

The positive momentum during the second half of the year has demonstrated the underlying cash generation abilities of the Group and has served to significantly increase headroom against our facilities at the year end. In light of the current challenging environment, the Company is maintaining a rigorous focus on cash conservation and cost management. This process has been helped as a result of the Company's recent investment in enhanced reporting controls and aligning accounting and performance management procedures. To further reduce the Group's exposure to COVID-19, we have put in place a range of initiatives including work from home, alternate shift patterns and implementing the Government's measures relating to workforce protection through the furlough scheme as well as taking advantage of VAT and NI/PAYE deferment. The Board and senior management have also taken a 40% reduction in salary and remuneration to provide further support to the Group's cost management objectives.

Balance sheet update

In the year to 31 March 2020, and as part of the strategic review, the business took significant steps to strengthen its balance sheet including raising £2 million of new equity. In addition, the Group focused on reducing the stretch in its trade creditors. Collectively this led to net debt dropping by 32% from the year ending March 2019 position of £10.9 million to £7.4 million at the period end March 2020, compared to overall facilities of £10.4 million. In November 2019, the Company received approval from its banking partner HSBC to make amendments to its financial covenants up to June 2020, which provided additional time and flexibility for the Group to enter into new debt facilities with rebased financial covenants. These discussions have progressed well. At the year-end, the Company maintained comfortable covenant headroom on its banking facilities. However, in light of the current COVID-19 lockdown, the Board felt it prudent to review future trading scenarios and their impact on covenants with HSBC, to ensure that the new agreement reflects the interim disruption that COVID-19 will have on the business and its outlook. HSBC remains supportive and the Group will update the market once a new agreement has been confirmed. A new agreement is expected to provide Bilby with sufficient liquidity and financial stability both during and after the COVID-19 outbreak.

Guidance

The Board has concluded that, while positive progress is being made on the actions above, the level of uncertainty created by the Covid-19 pandemic is such that it is difficult to provide guidance on the financial performance for the current year until a clearer outlook emerges. The situation is evolving rapidly. We will provide further updates to the market as the situation evolves.

Commenting on the results, David Bullen, Chief Executive of Bilby plc said:

"I am immensely proud of and grateful to the Bilby workforce. They have undertaken their vital work in a very responsible manner and have continued to ensure our customers receive the highest standard of service in extremely challenging circumstances.

The Group has finished the year strongly and we have been implementing all the necessary actions to mitigate our risks which has positioned us well to overcome the short-term issues created by COVID-19. In addition, we are having constructive and helpful discussions with our lenders, who remain committed to agreeing new facilities with rebased covenants, reflecting our solid relationship with them and would like to thank them for their continued support.

As a result of the swift actions taken, I am confident that the Group is well placed to deal with the unprecedented challenges of the current times and that the Group will emerge even stronger as a result."

Enquiries

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.