Equiniti cancels dividend as looks at deferred revenues

(Sharecast News) - Equiniti Group confirmed cancellation of its final dividend for 2019 and pulled full year guidance as it sought to save cash during the coronavirus pandemic.
The FTSE 250 financial outsourcing and administration provider said the crisis had led to a large number of clients cancelling or suspending dividends, and changing the timing of other corporate events, often at short notice, which would lead to a deferral of revenues until later in the year or beyond.

Interest income would be impacted by reductions in central bank rates, and by the unwinding of some hedging arrangements in 2020 and 2021, the company added.

"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," the board said in its statement.

The company said it was proactively managing its cost base, with all non-essential capital expenditure and discretionary costs suspended. Salary reviews for senior employees had been deferred and recruitment frozen.

The group had also paused all acquisition activity, and confirmed that no acquisitions were expected for the remainder of the year.

Equiniti said it was continuing to generate cash, and had a "well-managed" balance sheet with net debt-to-underlying EBITDA of 2.5x as at 31 December, and "significant" headroom in its committed facilities of around ?150m.

It said it had strong relationships with a broad group of banks, and in July, refinanced its senior debt facilities to extend the ?520m term loan and revolving credit facility to July 2024.

It said the covenant ratio as at 31 December was 2.2x, which excluded IFRS 16 liabilities.

Wakeley said that, while the long-term prospects of the group remained unchanged, the combination of reduced interest rates, depressed capital markets and the uncertainty brought by Covid-19 created "unavoidable headwinds" in the near-term.

At 0809 BST, shares in Equiniti Group were down 6.77% at 151.4p.