TIDMMTO
RNS Number : 7941H
MITIE Group PLC
27 March 2020
27 March 2020
Mitie Group plc
LEI number: 213800MTCLTKEHWZMJ03
Mitie Group plc
COVID-19 UPDATE
Mitie Group plc ("Mitie" or "the Group") (LSE: MTO), the UK's
leading facilities management company, issues the following update
in relation to the impact of the COVID-19 outbreak.
OVERRIDING PRIORITIES
The Group has three overriding priorities in the current
environment:
-- Protecting the health and safety of our colleagues,
our clients, our other business partners and the communities
that we serve;
-- Ensuring that our businesses are able to continue to
operate with minimal disruption, and deliver the essential
services we provide to our clients;
-- Preserving the financial strength of the Group.
OPERATIONAL IMPACT OF COVID-19 IN FY21
Although we cannot predict with any accuracy the long-term
impact of Covid-19 on our business at the present time, currently
we are seeing a mixed impact on our divisions:-
-- Across the essential services we provide to the public
sector - including the NHS, Home Office, The Police,
Sellafield, AWE, Bank of England, Network Rail etc -
we expect little change in demand as a consequence of
Covid-19. These services represent c.30% of our annual
revenues.
-- Services to the Finance, Professional, and Banking sector,
which represent c.12% of revenues, are expected to continue
at close to normal levels, whilst branches remain open,
as will essential statutory and mandatory maintenance
services to critical infrastructure such as Data Centres,
Telecoms and Drug Manufacturing, which represent a further
c.6% of revenues.
-- Demand for Cleaning and Security Services from food
and On-line Retailers are increasing. These services
represent c.11% of group revenues.
-- However, we are starting to see discretionary project
work in both Fire & Security and Technical Services
(c.15% of Group Revenue) being significantly deferred,
alongside reduced demand from Transport & Logistics,
Manufacturing, Property Managers and general office-based
clients. In the latter cases (representing in aggregate
a further c.26% of Group Revenues) we are seeking retainers
to ring-fence 'furloughed' staff to ensure rapid and
cost effective remobilisation, when the impact of Covid-19
has abated.
Currently almost all our front-line staff continue to work at
client's sites as requested to provide essential services. Where
clients have reduced demand for our services, so far, we have been
able, in the main, to re-deploy colleagues in other areas of
opportunity.
All of our HR, Finance and IT support activities - including
those outsourced to India - are being maintained effectively by
staff working remotely. All other staff able to work remotely are
also doing so, as a consequence of which our major office hubs are
now shut. In short, we remain fully capable of delivering our full
suite of essential services, despite the challenges of the current
environment.
FINANCIAL CONSIDERATIONS
We have some GBP427m of facilities available, comprising a
GBP275m Revolving Credit Facility which matures 23(rd) July 2021
and GBP152m USPP, of which GBP122m matures December 2022.
We reported in our HY 2019/2020 results a closing net debt of
GBP148m and average net debt of GBP263m, with peak debt of GBP355m.
Peak debt in H2 was GBP273m.
The year end debt balance will benefit from a deferral of VAT
and PAYE payments, agreed with HMRC, and is therefore expected to
be better than previous guidance, providing that clients settle
March month end invoices as due.
CURRENT TRADING FY20 AND OUTLOOK
Mitie has continued to trade in line with guidance provided in
the trading update for the first nine months of FY19/20, issued on
30 January 2020 for both EBIT and Revenue, although in the last two
weeks we have seen a material downturn in projects and
non-essential maintenance spend.
We anticipate that this trend will continue to accelerate in
FY20/21, 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 FY20/21
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.
We are also implementing a number of actions to further mitigate
the impact of the COVID-19: we have carried out a review of our
overhead cost base which should deliver savings over the next 12
months of c.GBP25m; we have deferred any non-essential and
uncommitted capital expenditure; the Board and CEO, and the
Executive team have volunteered reductions in their directors' fees
and salaries of 30% and 20% respectively (for at least the next
three months); and the Board has determined that unless overall
trading improves materially, no final dividend will be recommended
for FY19/20.
In addition, we are pro-actively managing our cash flows, by
working with clients to bring settlements forward, as well as
securing HMRC support to defer PAYE and VAT payments (as referred
to above). We have also initiated discussions with our lenders to
ensure we have their support and flexibility to assist us in
responding to the challenges arising out of COVID-19.
We expect to publish our full year results on 4 June 2020, when
we will update the market further.
Phil Bentley, Chief Executive of Mitie, said
"I am humbled by the unstinting commitment of our front-line
colleagues, who continue to provide essential services to our
clients at this most challenging of times. They embody the Mitie
Value of 'going the extra mile' and they deserve everyone's thanks.
We welcome the support measures available to Mitie, as a strategic
supplier to Government. The Board is therefore confident that the
combination of its existing lending facilities, Government support
measures and the current actions being undertaken, Mitie will be
able to meet the challenges arising from Covid-19 in the near term
and be well placed - as financing markets normalise - to complete
its transformation programme and build an enduring business."
- Ends -
For further information, contact:
Claire Lovegrove
Head of Media Relations M: +44 (0)790 027 E: claire.lovegrove@mitie.com
6400
Fiona Lawrence
Group IR Director M: +44 (0)7808 439 E: fiona.lawrenceIR@mitie.com
112
Peter Dickinson
Chief of Staff and M: +44 (0)776 821 E: peter.dickinson@mitie.com
General Counsel 5013
Notes for editors
About Mitie Group
Founded in 1987, Mitie is the UK's leading facilities management
and professional services company. It offers a range of services
including Technical Services (Engineering Services, Energy, Water
and Real Estate Services), Business Services (Security, Cleaning
and Office Services) and Specialist Services (Care & Custody,
Landscapes and Waste Management).
Mitie employs 48,900 people across the country, looking after a
large, diverse, blue-chip customer base, from banks and retailers,
to hospitals, schools and critical government strategic assets. It
takes care of its customers' people and buildings, by delivering
the basics brilliantly and by deploying advanced technology. It is
pioneering the Connected Workspace, using smart analytics to
provide valuable insight and deliver efficiencies to create
outstanding work environments for customers.
Find out more at www.mitie.com
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END
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