DURBAN - KAP Industrial Holdings yesterday said that it was unlikely to declare a dividend in 2020 as it steps up its effort to cushion the impact of the coronavirus (Covid-19) outbreak in its operations.
The diversified industrial group said it was unlikely to follow its dividend policy of declaring a dividend of around 37percent of headline earnings per share as the pandemic was likely to affect its business in the year to end June and the economy as a whole.
The group declared a 23cents dividend last year.
“The current situation is unprecedented, uncertain and constantly evolving, and as such may affect certain assumptions that have been made in the preparation of the financial and liquidity forecasts,” the group said.
KAP reported a 22percent increase in cash generated by operations to R4billion, with R2bn worth of free cash. The group also undertook to implement a 20percent reduction in salaries of all non-bargaining unit employees for three months to ensure safeguard liquidity.
“In order to soften the impact of the 20percent reduction in salaries, application has been made to relevant provident funds to exempt employer and employee contributions for the relevant period,” the group said.
KAP said that the measures were meant to avoid mass retrenchments as a result of an expected slow and staggered start-up of economic activity after the lockdown.
It said other measures would include no annual inflationary salary increases from July to June next year
It said that there would be no performance-related incentives for the current financial year, including the annual incentive bonus scheme, share rights scheme and long-term incentive scheme.
The group said it had already initiated negotiations on the measures through the relevant bargaining council.
KAP said all non-essential expenditure and uncommitted capital expenditure would also be suspended during the period to deal with the pandemic.
KAP shares declined 1.05percent on the JSE yesterday to close at R1.89.