Franchise Brands suggests shareholders accept scrip dividend
By Iain Gilbert
Date: Monday 30 Mar 2020
(Sharecast News) - Franchise Brands urged investors on Monday to accept dividend payments in shares rather than cash in order to help maintain the group's financial strength amid the Covid-19 outbreak.
While Franchise Brands said it still intends to pay a final dividend of 0.65p per share, the group requested that shareholders follow the board's lead and accept shares given the "current extraordinary environment".
"The board strongly recommends that the scrip dividend option is taken by shareholders, as they intend to take this option in respect of their personal shareholdings, which collectively account for 61.5% of total voting rights in the company," said Franchise Brands.
On the operational front, Franchise Brands said its business-to-business operations had been deemed essential operations by the government and continued to operate normally. The group warned that volumes would be lower but said a round of cost cuts should allow the unit to continue to trade profitably.
However, the firm's three consumer-facing businesses had witnessed demand slump in the wake of the outbreak and cut franchise fees as part of an effort to help them survive.
Franchise Brands added that it still intends to try running the business-to-consumer side of its business at cash break-even while the crisis persists.
Executive chairman Stephen Hemsley said: "We do expect to remain profitable overall, albeit at lower levels than originally anticipated.
"We have a robust balance sheet, which, in combination with the utilisation of the various government schemes, will enable us to support our people and franchisees during this challenging period."
As of 0950 BST, Franchise shares had slumped 13.80% to 90.08p.
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