Rolls-Royce exited 2019 in a robust liquidity and financial position as its transformation efforts gained momentum. In response to the change in outlook resulting from the global spread of COVID-19 and to ensure cash headroom in the event of a prolonged reduction in trading activity, the company took the precautionary decision in March to draw fully on our £2.5 billion revolving credit facility. Including this cash, which has been placed on short-term deposit, our current gross cash balance is £5.2 billion. We have also secured an additional £1.5 billion revolving credit facility commitment with a consortium of banks, which will increase overall liquidity to £6.7 billion.
Rolls-Royce will be executing a number of specific mitigations to reduce its cash expenditure which will have a cash flow benefit of at least £750 million in 2020 in addition to its ongoing transformation plans. These mitigations include minimizing discretionary costs such as non-critical capital expenditure projects, consulting, professional fees and sub-contractor costs, ceasing all non-essential travel, postponing external recruitment, and reducing salary costs across its global workforce by at least 10% in 2020, subject to local legal requirements. Salaries for the company’s senior managers and Executive Team will be reduced by 20% for the rest of 2020, comprising a reduction of 10% and a deferral of 10%, with an additional bonus deferral for the CFO and CEO. There will also be a corresponding reduction in fees for Non-Executive Directors of the Board for the remainder of the year.
Notwithstanding the Group’s financial and liquidity position, the Board has decided that in light of the uncertain macro outlook they are no longer recommending a final shareholder payment of 7.1 pence per share in respect of 2019, equivalent to a further £137 million. Rolls-Royce is withdrawing its previously announced financial guidance for 2020.