Mitie unlikely to pay dividend as it cuts costs
Mitie does not expect to pay a dividend this year if overall trading does not improve and has pledged cost-cutting measures due to the coronavirus outbreak.
The outsourcing firm said it had identified £25m in savings and would be cutting board and executive pay to mitigate the impact of the pandemic on its finances.
All non-essential and uncommitted capital expenditure has been deferred, and unless trading improves materially, the board will not recommend a final dividend for this financial year.
The firm expects little change in demand in the services it provides to the public sector, including the NHS, which represents 30 per cent of annual revenues.
Increasing demand for cleaning and security services is to some extent mitigating the impact of Covid-19 on business, notably the material downturn in projects and non-essential maintenance spend.
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Mitie, which manages and maintains high street buildings and homes, said it was looking at additional support through the coronavirus job retention scheme, which will help “furlough” rather than lay off some staff.
The firm has a £275m revolving credit facility and £152 USPP. In its half-year results, Mitie reported a closing net debt of £148m and average net debt of £263m, with peak debt of £355m.
The year-end debt balance will benefit from a deferral of VAT and PAYE payments and is therefore expected to be better than previous guidace, provided clients settle March invoices.
“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,” chief executive Phil Bentley said.
Shares are down six per cent.
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