24th Mar 2020 15:02
(Alliance News) - Premier Inn owner Whitbread PLC will not be paying an annual dividend, it confirmed on Tuesday, as it moves to preserve cash.
Whitbread also warned it is talking with lenders to secure relief from banking obligations.
Whitbread, which also owns Beefeater pubs, said performance in its year ended February 27 met expectations, but since then trading has been severely curtailed by Covid-19.
All of Whitbread's pubs and restaurants in the UK were closed from Friday last week, and it is now to start temporarily closing all hotels in the UK. Hotels in Germany will also be closing, Whitbread added.
"The situation is rapidly changing and at this point, it is not possible to predict the full extent of the market downturn and the impact on the business's revenue. Whitbread entered the year with a strong balance sheet and access to significant liquidity," said the FTSE 100 firm.
"There is material headroom on our funding facilities, and we will be paying all our rent payments this quarter. In addition, the business is backed by a valuable freehold property estate. However, given the unprecedented situation, we have taken a number of decisive actions to reduce cash outflows during this period."
This includes cutting all non-essential spending, and though all staff will remain on full pay, Whitbread will be seeking government financial help to cover this.
On top of this, Whitbread now won't be paying a dividend for its recently-ended financial year.
Relief from business rates announced by the government will save the company around GBP120 million in its new financial year, it added.
"It is possible closure of our hotels and restaurants (other than those which will stay open to support key workers), as a result of the government's instructions, may amount to a technical event of default under our banking arrangements and certain other financial obligations of the group," Whitbread warned.
"We are working with all relevant parties to seek waivers wherever this is required or prudent."
Shares were 9.0% higher on Tuesday afternoon in London at 2,609.00 pence each.
By George Collard; [email protected]
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