Macfarlane cuts pay, defers bonuses, scraps dividend

Glasgow-based packaging firm Macfarlane Group said on Monday its board members have waived 25% of their salaries and fees for the period from April 2020 until September 2020 and its executive directors have “deferred payment of their 2019 bonuses.”

Macfarlane Group also said it has taken the decision not to propose its 2019 final dividend of 1.76p per share.

In a stock exhcnage statement, Macfarlane Group said: “The board is committed to following all of the UK Government’s guidance in response to COVID-19, as well as ensuring the long-term sustainability and success of the company.  

“The measures being taken by the company are detailed below together with a summary of its financial position and liquidity …

“On 27 February 2020 our preliminary announcement noted that 2020 had started well and profitability in the year to date was well ahead of the same period in 2019.

“This performance has continued through March.  

“However, the recent changes in UK Government guidance in response to COVID-19 have negatively impacted a number of the market sectors in which Macfarlane operates.  

“As a result, the company now expects a marked slowdown in activity.

“Our customers in the hygiene, household essentials, medical and food sectors are currently demonstrating strong ongoing demand as they play a vital role in helping the country meet the challenge of COVID-19 and we are continuing to support them. 

“However, customers in other sectors such as automotive, aerospace and segments within retail have been materially impacted and their business has declined rapidly.

“We have no visibility on the timescale over which the reduced demand will be sustained.

“It is therefore not currently possible for the company to provide meaningful guidance on trading for the financial year ending 31 December 2020.  

“A further announcement will be made on the anticipated 2020 performance when the board has more clarity …

“It is the board’s intention during this difficult period to ensure that we protect the wellbeing of our people and preserve employment in line with the UK Government’s aim. 

“The board wishes to express its gratitude to all Macfarlane staff for their commitment, support and flexibility in such challenging times.

“The company is currently assessing the UK Government’s range of COVID-19 related financial support measures to assess which of those would assist the business during this period …

“The company is currently focused on taking measures to reduce operating costs to a level that reflects the reduced level of activity. 

“The board will waive 25% of their salaries and fees for the period from April 2020 until September 2020 and the executive directors have deferred payment of their 2019 bonuses. 

“All non-critical operational and capital spend has stopped.

“Cash flows are being carefully managed …

“As a key measure to conserve cash, the board has taken the decision not to propose the 2019 final dividend of 1.76 pence per share, detailed in the preliminary announcement. 

“A resolution was due to be proposed at the forthcoming Annual General Meeting (AGM) in May 2020, but this resolution will be withdrawn.

“This will reduce cash outflows by £2.8 million in the second quarter of 2020.

“The company has been a regular dividend payer for a number of years and the board remains committed to providing dividend income to shareholders. 

“Once trading has recovered in line with normal levels and uncertainty has decreased, the board’s intention is to recommence dividend payments either by augmenting regular dividends or by declaring a special dividend.”