1st Sep 2016 08:31
LONDON (Alliance News) - Renold PLC on Thursday said it has secured a sub-lease for the vacant 90% of its manufacturing facility in Bredbury and has entered into formal talks about the possible closure of its distribution centre in Lille.
The industrial chains and power transmission products supplier said the sub-lease for the UK chain manufacturing facility will save the group around GBP700,000 each year when the rental incentive period ends next April.
The sub-lease is for five years, with tenant option to break after three years and to extend for a further five years.
There will be a small cash benefit of just over GBP100,000 in the current financial year in respect of other occupancy costs, Renold said.
The Bredbury facility ceased all manufacturing activities in March 2014 and is held under a long-term lease which expires in 2030. Renold said the terms of the sub-lease were consistent with the assumptions underlying the onerous lease provision established in March 2014, meaning no change to the provision is required.
Renold said it has also commenced formal discussions with its employees on the future of its loss-making European distribution centre in Lille, France. The discussions could result in the cessation of distribution activities in Lille, where eight people are currently employed.
However, Renold said its sales operations in France would be largely unaffected by the outcome of the consultation process.
"We regret the need to consider further reductions in our staffing levels and we are working with employees to limit the impact of these changes. We do, however, remain committed to the continuing delivery of [the strategic plan] STEP 2020 and the group's long term strategic goals. The sub-let of the Bredbury facility, and the consultation process announced today, are in line with achieving those goals," said Chief Executive Robert Purcell.
Shares in Renold were trading down 2.9% at 41.24 pence Thrusday morning.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Renold