Mpac Group Plc - COVID-19, trading update and AGM
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Mpac Group plc
(''Mpac'', "Company" or "Group")
COVID-19, trading update and AGM
COVID-19 and trading update
Mpac Group plc, a global leader in 'Make, Pack, Monitor and Service' high speed packaging and automation solutions issues an update to the market on current year trading.
In the light of the rapidly evolving situation resulting from the spread of COVID-19 and its development into a global pandemic, Mpac today provides an update on the Group's current trading and operations. Our priority remains the health, safety and well-being of our employees and essential support for our customers.
The latest government travel restrictions in the regions of our main sites, UK, Netherlands and Canada, and measures implemented are being evaluated and are having an immediate impact, restricting customer interaction and site-based work. However, Mpac remains dedicated to the provision of equipment, spares and services for customers in the critical sectors of Healthcare and Food and Beverage and we are utilising increased remote working wherever practical and possible.
The Board is continually monitoring the rapidly changing global situation regarding the COVID-19 pandemic. Whilst it remains difficult to predict the length and depth of the impact for the full year at this stage, the Board anticipates that order intake will be lower than expected due to reduced demand as a result of customers deferring investment decisions and current projects being delayed due to travel restrictions.
Given the fast moving and unprecedented nature of the current crisis, we are unable to predict how long this lower level of order activity will last and therefore the impact on the Group's business. Accordingly, in the immediate term we are scrutinising discretionary spend and investment plans, identifying and implementing cost saving initiatives, whilst seeking to protect our talented workforce and being careful not to compromise the long-term prospects of the business. We are also evaluating government support measures available in the jurisdictions in which we operate.
Mpac has a strong balance sheet, is well financed and remains debt free and is therefore very well positioned to navigate the COVID-19 pandemic. The Group has c.£19m of cash and cash generation in the first two months of the year was in line with management's expectations. Additionally, the Group has access to a £10m secured committed revolving facility which is currently fully undrawn. Even in cautious downside scenarios which we have modelled, and stress tested, we expect to have sufficient liquidity from existing resources to meet our needs throughout 2020.
However, in light of the exceptional and open-ended uncertainty caused by the Covid-19 pandemic and the still rapidly changing environment, the Board has taken the prudent decision to no longer recommend the final dividend for the year ending 31 December 2019, as a further measure to protect the business and conserve cash during this period. This decision comes after finalising the Notice of Meeting in respect of the Annual General Meeting for 2020 which is scheduled to be posted to Shareholders on 1 April 2020. Therefore, the Board intends to withdraw Resolution number 2 in the Notice of Annual General Meeting relating to the approval of a proposed final dividend of 1.5p per Ordinary.
Annual General Meeting ("the Meeting")
The Company is planning to proceed with the Meeting, which will be held at 12 noon on Wednesday 6 May 2020. However, the evolving COVID-19 situation and the related Government guidelines will clearly impact the ability of shareholders to attend the Meeting. On this basis, the Board has concluded that it is appropriate for shareholders not to attend in person this year and, instead, to submit proxy votes. Details on submitting proxy votes are contained in the Notice of Meeting. We always welcome questions from our shareholders at the Annual General Meeting but this year, we would rather shareholders submit their questions to the Board before the Meeting, and we will ensure that answers to the questions are placed on the Company's website. You can submit questions up until 5pm on 5 May 2020 by emailing them to email@example.com .
The situation in relation to COVID-19 continues to develop and we will update shareholders on the Company's website www.mpac-group.com and through the Regulatory News Service.
The Board remains confident in the ability of the management teams across the Group to manage the business through difficult times and to ensure that Mpac is well placed when the market returns to normality.