COVID-19 Update
Information within this announcement is deemed to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.
Checkit plc
("Checkit" or the "Group")
COVID-19 Update
Checkit plc (AIM:CKT) announces a trading update in light of COVID-19.
Current trading
During the first two months of FY21 ending 31 March 2020, unaudited revenues were £2.4 million (2019: £2.1 million on a like for like basis, with Checkit UK Limited, which was acquired on 14 May 2019, treated as if owned by the Group throughout both periods).
Cash as at 31 March 2020 was £13.1 million (31 March 2019: £9.1 million).
The directors believe that the company has sufficient cash for working capital purposes for significantly more than the next 12 months under all currently foreseeable economic scenarios.
Effect of the current lockdown on trading
The Board recognises that these are unprecedented times and that the necessary actions (including the lockdown) which the Government is taking to control the outbreak of COVID-19 has inevitably caused disruption to the Group's business. Until the lockdown is lifted, it will be difficult if not impossible to fulfil most existing projects or commence new projects because customers have temporarily ceased operations or our field engineers are prevented from entering sites.
Until the lockdown is lifted, the Board believes that in the interest of prudence, for business planning purposes, it should model its current worst-case scenario on only being able to rely on its committed recurring revenue. This revenue is from high quality customers undertaking essential services, such as the NHS, BP petrol stations and Waitrose.
Under this scenario much of the business projected to be lost or deferred will generally be of low and sometimes negative margins based on quotes issued by Checkit UK Limited prior to the initiation of the Group's margin improvement project. So long as our cost base is reduced proportionately as outlined below, it will be possible to limit the negative effect on the Group.
Pay reduction schemes
The Board considers that Checkit's most valuable asset is its people and wishes to demonstrate its commitment to do its utmost to save as many jobs as possible by implementing the schemes outlined below.
The Group expects to utilise the Government Job Retention Scheme for furloughed employees and in addition, has asked employees who continue to work to agree to a pay reduction.
The Board has received agreement from employees for two temporary pay reduction schemes aimed at an annual saving of over £4 million inclusive of Coronavirus Job Retention Scheme grants, which equates to around 40% of total people costs. As a part of this approach, the Chairman has agreed to waive his entire salary with all remaining Board members agreeing to reduce their salaries by 36%.
The pay reduction schemes will last for an initial two months from 1 April 2020. Whilst there is currently no provision for an extension of the schemes, the Board will determine whether it should request employees to agree to an extension closer to expiry.
The Board is extremely grateful for the sacrifices made by employees in the current crisis and greatly appreciates the positive attitude shown by all staff.
Contribution to the fight against COVID-19
Checkit has offered to provide its solutions free of charge to all temporary hospitals set up by the NHS during the current crisis. Our field engineers have been working at short notice at the newly established Nightingale Hospital in London.
Outlook
Given the evolving and dynamic nature of the COVID-19 situation, the Board is withdrawing guidance on its expectations for FY21 (12 months ending 31 January 2021) until there is greater clarity around the impact the current challenging market conditions will have on our business.
The Board is closely monitoring the business and will make further announcements as and when appropriate.
Results announcement
The Board will delay the announcement of its results for the year ended 31 January 2020 until 28th May 2020 due to the disruption to working practices and access to information required to complete the audit.
Forward looking statements
This document contains forward looking statements with respect to the business, strategy and plans of Checkit plc and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about Checkit or management's beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Checkit's actual future results may differ materially from the results expressed or implied in these forward looking statements as a result of a variety of factors among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. The forward looking statements contained in this document are made as of the date hereof, and Checkit undertakes no obligation to update any of its forward looking statements.
-END-
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Checkit plc |
+44 (0) 1223 371 000 |
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www.checkit.net |
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Keith Daley (Executive Chairman) |
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Andrew Weatherstone (Chief Financial Officer and Company Secretary) |
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Yellowstone Advisory (Investor Relations) |
+44 (0) 7710 164 120 |
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Alex Schlich |
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N+1 Singer (Nominated Adviser & Broker) |
+44 (0) 20 7496 3000 |
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Shaun Dobson / George Tzimas (Corporate Finance) |
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Rachel Hayes (Corporate Broking) |
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