Dividends postponed as companies conserve cash

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Dividends postponed as companies conserve cash

Published Date: 2020-03-25 | Source: Stephen Gunnion | Author: Stephen Gunnion

Dividends postponed as companies conserve cash

Mpact and Trellidor have delayed payment of their dividends until September in order to preserve financial liquidity due to current uncertainty.

Mpact and Trellidor have joined the growing number of companies holding off on declaring dividends or postponing payment of those already declared due to the potential impact of the Covid-19 pandemic on their cash flows.

Mpact said while it was one of the critical links in the economy's supply chain, producing paper and packaging for food, pharmaceuticals and other essential products, its board considered it prudent and in the best interests of the company to preserve financial liquidity due to the current uncertainty. It had planned to pay its final dividend of 42c per share on 6 April but has postponed payment to 6 September. This will add R72.8 million to its undrawn banking facilities of around R400 million, positioning the group to remain well capitalised.

Trellidor had already lowered its interim dividend by 12% to 8c due to a tough market for security gates and shutters. Now it says due to uncertainty over how long the virus will affect commercial activity in the country its board believes it's in the best interests of the company to delay payment until the release of its annual results on 7 September, if the situation improves by then.

On Monday, private education group ADvTECH deferred a decision on its divided until its next board meeting in May, while property groups Hyprop and EPP postponed payment of their dividends. Redefine Properties deferred its decision on a dividend payment for the six months to end-February until the release of its annual results in order to give in financially flexibility and bolster its liquidity.

Mpact's shares fell 14% to R7.52 yesterday. Trellidor didn't trade, closing unchanged at R2.82.





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