Checkit withdraws guidance, launches cost cutting programme

Digital compliance manager Checkit withdrew its full-year guidance on Tuesday as a result of the Covid-19 pandemic.

Checkit said the evolving and dynamic nature of the situation had led it to pull its financial guidance for the 2021 financial year until there was "greater clarity" around the impact that the "challenging market conditions" would have on the business.

Indeed, it would be "difficult if not impossible" to fulfil most existing projects or commence new ones as customers had temporarily ceased operations, preventing field engineers from entering sites.

The company went on to say that until the lockdown can be lifted, it will model its current "worst-case scenario" on only being able to rely on its committed recurring revenue 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," said Checkit.

"So long as our cost base is reduced proportionately as outlined below, it will be possible to limit the negative effect on the group."

Checkit also noted that employees had agreed to two temporary pay reduction schemes, saving it £4m, while the group's chairman agreed to waive his entire salary and the rest of the board has agreed to a 36% salary cut.

As of 1130 BST, Checkit shares were up 6.06% at 35p.