I would like to update you of the situation today as we enter the 3rd week of “Lockdown”.
In the past 2 weeks most of our Centura Companies and especially CRL have experienced significant downturns in their activities. I estimate that the overall reduction in income is about 80%. Nearly all of this downturn is as a result of our clients instructing us to postpone site activities until reopening sites is deemed safe, not only for our teams but also for anyone else associated with the projects. I am afraid that the reduction in activities in Scotland is 100% in line with instructions directly from the Scottish Parliament.
In England and Wales the restrictions imposed by the Government still allow some construction projects to continue. If they continue then they must proceed in line with new Site Operating Procedures (SOP) published by the Construction Leadership Council which are in line with guidance from Public Health England. Currently we are advising our clients of this position and offering to work with them so that they may allow us to resume our work. Some sites may reopen as a result of this revised guidance.
We cannot however ignore the fact that so much of our income has been temporarily suspended. This is a very difficult time for the company. As of approximately 60% of Centura and CRL employees at all levels have been transferred to furlough leave. Centura Directors remuneration has been cut by 30%. Salary reductions and reduced working hours for key staff are now being planned. All bonus payments are cancelled. I know that this is a very difficult time for you. I hope that you can accept my assurance that we are doing everything possible to restart some projects and see an improvement in our income.
We cannot forget that we must see our situation alongside what is happening nationally and internationally in our fight against Covid 19. Many reports suggest that the pandemic is developing as predicted. That means that we will reach a peak followed by a reduction in cases. As that happens it is likely that we may see a lifting of some restrictions. This may take place over several weeks during which we must all follow Government guidelines regarding social separation and other measures to prevent infection.
Currently our primary objective is to manage our cash so that we will be able to quickly restart the business when allowed. Restarting the business will preserve your jobs. This may require more significant reductions in cost. Please remember that this situation will not last forever and we will see an upturn. The key staff remaining in Group A are working flat out to manage our finances, which is now by far our most important task. We remain entirely dependent on the grants and loans promised by the government. This flow of cash is promised and must arrive soon.
Nearly all the projects that have currently stopped will of course restart when conditions allow. This means that when we are allowed to restart work, the backlog of projects will be huge. In addition we are still receiving orders for future projects. Currently we estimate that because of the backlog we will start our new financial year in July with our largest forward order book ever. You must all be ready to start this work as soon as the restrictions are lifted.
I am so sorry that so many of you have had to be transferred to furlough leave. I thank you for your understanding. I must also offer a huge debt of gratitude to the remaining staff who are working long hours, nights and weekends to maintain the business and preserve our jobs.
I think it is too early to talk about an upturn. At present I believe that our activities will not diminish further. I think we can expect our current situation to remain stable over the 2 weeks of Easter. Any improvement remains entirely dependent on the Governments’ assessment of the spread of Coronavirus and the ability of the NHS to treat patients.
Many of you will have seen or read the Queen’s broadcast to the people last night. I would like to borrow just a few words from that speech.
“We will succeed-and that success will belong to every one of us. We should take comfort that while we may have still to endure, better days will return”.