27th Mar 2020 11:37
(Alliance News) - Facilities management and professional services firm Mitie Group PLC on Friday said it will not pay a final dividend and added that it cannot provide any guidance for the next financial year due to the Covid-19 outbreak.
Mitie said it has reviewed its cost base and spotted about GBP25 million of savings over the next 12 months. It said it has called off non-essential capital expenditure. The company's board and executive team have committed to cutting their fees and salaries by 30% and 20%, respectively, "for at least the next three months".
Mitie said: "The board has determined that unless overall trading improves materially, no final dividend will be recommended."
In the nine months to December 31, the company traded in line with expectations though it has experienced a "material downturn" over the past two weeks.
Mitie added: "We anticipate that this trend will continue to accelerate in financial 2021, while the Covid-19 situation continues. This is being mitigated to some extent by increasing demand for cleaning and security services. Due to the inherent uncertainties arising out of the Covid-19 situation, the board has concluded that it cannot provide guidance with regard to the anticipated financial performance for financial 2021 until the outlook becomes clearer.
"As a strategic supplier to the government, we are in conversations to seek additional support to bridge the downside impact on the business, as well as taking advantage of the 'coronavirus job retention scheme', which will allow us to 'furlough' colleagues, if necessary, rather than laying them off."
The company said demand for its public sector work, which includes services supplied to the UK's National Health Service, the police and Bank of England, will see "little change in demand". These services represent about 30% of Mitie's revenue.
In the Finance, Professional & Banking sector, which represents about 12% of revenue, trading is expected to remain "close to normal levels", while branches are open. And in Cleaning & Security Services, demand is increasing.
"However, we are starting to see discretionary project work in both Fire & Security and Technical Services being significantly deferred, alongside reduced demand from Transport & Logistics, Manufacturing, Property Managers and general office-based clients," Mitie added.
On its finance, the company said it has GBP427 million in facilities available.
The company is penned to report its full year results on June 4.
Shares in Mitie were 5.2% lower at 61.60 pence each in London on Friday morning.
By Eric Cunha; [email protected]
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