JOHANNESBURG, Sept 3 (Reuters) - South African franchise restaurant chain Spur Corporation SURJ.J said on Thursday it will further defer payment of its 2020 interim dividend in order to preserve cash during the COVID-19 pandemic.
Spur, with more than 600 restaurants across South Africa, the rest of Africa, Mauritius, Australasia and the Middle East, had notified shareholders at the beginning of the nationwide lockdown in March that it would defer payment until Oct. 5. the reopening of its restaurants and easing of some restrictions, Spur said it is confident that the group's current cash reserves will be sufficient for the foreseeable future as trading recovers.
However, paying the dividend would significantly reduce the group's available cash reserves and would result in a cash deficit should more stringent trading restrictions be re-imposed or current restrictions be extended over the long term.
Spur will make a further announcement regarding payment after it reassess the solvency and liquidity test before it publishes its interim results in March 2021, it said.
The solvency and liquidity test requires the board to consider all reasonably foreseeable financial circumstances of the company at the time of making the assessment.
Following the total prohibition of restaurant trading in April, Spur's franchised restaurant sales declined by 85.7% for May and by 79.0% for June, as restaurants were restricted to deliveries only in May and to deliveries and takeaways in June.
Trading has steadily improved since the beginning of May, although still significantly down on pre-lockdown levels, it said.
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