17:00 Wed 15 Apr 2020
Equiniti Group PLC - TRADING & COVID-19 UPDATE
Incorporated in
Registration number: 07090427
LEI: 213800TS721HGE2JIV94
ISIN: GB00BYWWHR75
COVID-19
During these difficult times, our priorities have been to support and protect the safety and welfare of the Group's employees and continuing to support EQ's clients and customers.
The Group's response has involved a rapid and coordinated demobilisation of our sites and an almost complete transition to home-working. Aside from essential print and mail operations and the processing of original documents where legally required, all services and telephony are now delivered remotely, with more than 95% of colleagues operating from home. All service lines have been continued without interruption, and service levels sustained where important.
The strength and speed of the Group's response has resulted in some additional work from clients, where extra capacity or resilience in service or payments has been required.
The COVID-19 crisis has led to many clients cancelling or suspending dividends, and changing the timing of other corporate events, often at the last minute. Whilst the Group has responded to these operational issues without difficulty, it is inevitable that some revenues will be deferred until later in the year or beyond when normal conditions return.
Current trading and outlook
Whilst the Group's resilient business model is underpinned by a high degree of recurring revenue and enduring relationships with large listed corporates and Government, the unprecedented nature of the crisis has forced some clients to defer, or in some cases suspend, projects. Whilst the underlying characteristics of our business model continue unchanged, trading has consequently been impacted in the short term.
In the
In all of the Group's key markets our leadership positions are expected to be sustained, with a return to organic growth inextricably linked to the timing of the end of the crisis, market sentiment and the prospects of our clients. Looking forward, the performance of the equity capital markets, for which the Group relies for share-based services, and the speed and timing of the broader economic recovery are unknowable.
Given the unprecedented uncertainty around the impact of COVID-19, it is not possible to assess with certainty the impact this will have on the Group's financial performance for the year. As such, the Group is withdrawing its previous guidance for the year ending
Strong financial position and mitigating actions
In light of the evolving COVID-19 situation, the Group has moved quickly to protect profitability, liquidity and cash flow while seeking to ensure it is well placed to benefit when the recovery takes place.
The Group is proactively managing the cost base, with all non-essential capex and discretionary costs suspended. Salary reviews for senior employees have been deferred, recruitment has been frozen and interim resources removed. The overarching importance of the retention of jobs and skills is recognised, and Government support packages are being utilised where appropriate. Whilst implementing these measures to contain our costs, the flexibility and performance of our operations has been sustained without interruption.
In addition to reducing discretionary and capex costs, the Group is maintaining a strong focus on working capital and will, where permissible, defer tax payments in line with recent Government policies. The Group has also paused all acquisition activity and confirms that no acquisitions are contemplated for the remainder of the year.
The Group continues to generate cash and has a well-managed balance sheet with net debt to underlying EBITDA of 2.5x as at
Full year 2019 dividend
Notwithstanding the relatively resilient trading position and the Group's strong liquidity, the macro economic environment is one of heightened uncertainty. After due consideration the Board has decided it will no longer propose a final dividend for the year ended
AGM
The Group's 2020 AGM is scheduled to be held on
Commenting on today's announcement
"The response of our teams around the world has been strong and decisive, and I am immensely thankful for the dedication and resilience of our colleagues during these challenging times. We are proud that our services have continued without interruption and that we continue to play an important part in the operation of the markets we serve.
"EQ is a strong and resilient diversified business offering many regulated and non-discretionary services to leading listed corporations and Governments. Whilst the long-term prospects of the Group remain unchanged, the combination of reduced interest rates, depressed capital markets and the uncertainty brought by COVID-19 create unavoidable headwinds in the near-term. However, we are taking appropriate actions on cost and cash flow and EQ remains a financially strong business with healthy liquidity and a capital structure that is well-placed to absorb an extended period of uncertainty."
This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.
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