Coronavirus Update – UNITE plc
The Unite Group plc today provides an update on the potential impact of Coronavirus on the business and the measures it is taking to mitigate the resulting risks.
Key points
· The Company is well positioned to withstand the impact of the Coronavirus until trading conditions normalise.
· Our balance sheet and liquidity position is robust with significant headroom against debt covenants. The Company has £291 million of cash and undrawn debt facilities available.
· In order to protect the long-term reputation of the business and despite a strong contractual position, the Company will offer to forgo rent for students who choose to return home for the remainder of the 2019/20 academic year. This implies a reduction in Group cashflow of £90-125 million in 2020.
· We are working closely with our University partners and will continue to provide accommodation through our nomination agreements.
· We are implementing a number of actions to mitigate this cash shortfall, including deferring development and non-essential operational capex and cost savings, which would retain an additional £95-105 million of cash in the business in 2020. We will continue to review the cost base of the business and have the ability to make further savings if required.
· In addition, the Board has decided to cancel the final dividend for 2019 and suspend further distributions by the Company until market conditions stabilise. This would retain an additional £124 million in cash during 2020 if no dividend payments are made.
· The combination of these measures will ensure the Company retains cash headroom through the remainder of 2020.
· At this stage, we expect the 2020/21 academic year to commence according to its usual timetable in September. This reflects the Government’s decision to cancel A-Level exams and award grades to students using alternative assessment methods. Latest reservations for 2020/21 are 78%, in line with the prior year (2019/20: 78%) …