Mitie Group has published results stating that the Covid-19 outbreak was having “a mixed impact” on its divisions.
Across the essential services it provides to the public sector – including the NHS, Home Office, the police, Sellafield, AWE, Bank of England, Network Rail and others in its portfolio – it expects little change in demand as a consequence of Covid-19.
It says these services represent about 30 per cent of its annual revenues.
Services to the finance, professional, and banking sector, which represent 12 per cent of group revenues, are also expected to continue at close to normal levels while 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 6 per cent of revenues.
And demand for cleaning and security services from food and online retailers is increasing. These services represent 11 per cent of group revenues.
However, Mitie says it is starting to see discretionary project work in both fire and security and technical services (about 15 per cent of group revenue) being significantly deferred, alongside less demand from transport and logistics, manufacturing, property managers and general office-based clients.
In the latter cases (representing in aggregate roughly a further 26 per cent of group revenues) it is 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 of Mitie’s frontline staff continue to work at client sites as requested to provide essential services. Where clients have reduced demand for services, so far, Mitie has mostly been able to redeploy colleagues in other areas.
All of its HR, finance and IT support activities – including those outsourced to India – are being maintained effectively by staff working remotely. All other staff that are able to work remotely are also doing so – as a consequence its major office hubs are now shut.
Mitie says it remains “fully capable of delivering our full suite of essential services, despite the challenges of the current environment”.
The group 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 past two weeks it has seen a material downturn in projects and non-essential maintenance spend.
Its statement says: “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.”
Phil Bentley, chief executive of Mitie, said: “I am humbled by the unstinting commitment of our frontline 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.”