Nichols Plc - COVID-19 Trading Update
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(the "Company" or "Group')
COVID-19 Trading Update
Nichols plc, the diversified soft drinks Group, provides the following trading update considering the ongoing impact of COVID-19.
Trading in the first two months of the financial year was in line with management's expectations.
However, as a result of the COVID-19 pandemic and the restriction of movement of people worldwide, the Board now expects a significant impact on the Group's financial performance in 2020.
Given the level of global uncertainty, the Board is not currently able to provide financial guidance for the year ended 31 December 2020.
The Group entered this financial year with a strong balance sheet, with more than £40m of cash and no debt. However, in light of the uncertain outlook, the Board considers it prudent to protect the Group's cash position in the near term and has taken the decision to cancel the final dividend announced on 26 February 2020 of 28.0 pence per share, which was due for shareholder approval at the upcoming AGM and expected to be paid on 1 May 2020. This decision will conserve £10.4m of cash over the seasonally critical spring and summer period. The Board will consider the Group's cash position once through this critical trading period and if it is appropriate will reinstate the payment of a dividend. As a result of this decision, Ordinary Resolution 2 (proposed final dividend) will be withdrawn from the AGM due to take place on 29 April 2020.
The Board and management team continue to plan for multiple scenarios and explore various ways to mitigate the impact of reduced demand on the business for a potentially sustained period. Whilst the Group operates a co-packing and licensing model and is therefore asset light, the Board is taking steps to remove cost, including the re-evaluation of its marketing spend given the changed circumstances, postponing non-essential recruitment and suspending non-critical capital expenditure from the business.
Date of AGM
Given uncertainty regarding the duration of travel restrictions across the UK, the Board is currently reviewing arrangements for its AGM, and will update shareholders in due course via an RNS.
John Nichols, Non-Executive Chairman, said:
"Our first and most important objective remains to protect the health and wellbeing of our employees and customers. At this most challenging time, the Vimto family has once again demonstrated its values and commitment and I would like to wholeheartedly thank all our teams for their current and future efforts.
With a heritage of 112 years, Nichols has successfully weathered significant challenges and changes across global markets before. Driven by the strength of the Group's brands, robust balance sheet and diversified business model, the Board remains absolutely confident in Nichols' ability to both manage the near term pressures impacting the global economy and emerge from this unprecedented period well-placed to continue to deliver the Group's long-term growth plans."