Shoe Zone PLC Proposed Cancellation of Dividend/ COVID-19 Update (6503I)
02 Aprile 2020 - 6:05PM
UK Regulatory
TIDMSHOE
RNS Number : 6503I
Shoe Zone PLC
02 April 2020
2 April 2020
Shoe Zone PLC
("Shoe Zone" or the "Company")
Proposed Cancellation of Dividend / COVID-19 Update
At the Annual General Meeting of the Company held on 5 March
2020 (the "2020 AGM") Shareholders passed an ordinary resolution
to declare a final dividend of 8.0 pence per ordinary share
in respect of the financial period ended 5 October 2019, amounting
to a total dividend payment of approximately GBP4.0 million
(the "2019 Final Dividend"). The 2019 Final Dividend is currently
payable to Shareholders on the register on 28 February 2020
and was due to be paid on 18 March 2020.
On 17 March 2020, following a material reduction in footfall
across the Company's estate as a result of consumers' response
to the emerging COVID-19 pandemic, the board of directors
of the Company (the "Board") announced that it had taken the
prudent decision to defer the payment of the 2019 Final Dividend,
with the intention of convening a general meeting of the Company
to seek Shareholder approval for the cancellation of the 2019
Final Dividend. The decision to defer and take steps to propose
the cancellation of the 2019 Final Dividend is one of a number
of measures which the Company has implemented in order to
conserve the Company's cash balances with the aim of seeking
to maintain the viability of the Company's business during
an expected sustained period of challenging trading as a result
of the COVID-19 pandemic.
A general meeting of the Company will be held at the registered
office of the Company at Haramead Business Centre, Humberstone
Road, Leicester, Leicestershire, LE1 2LH at 10.00 a.m. on
29 April 2020 (the "General Meeting") for the purpose of seeking
the approval of Shareholders to cancel the 2019 Final Dividend.
A notice convening the General Meeting, at which a special
resolution to cancel the 2019 Final Dividend (the "Resolution")
will be proposed, will be sent to Shareholders shortly. In
order for the Resolution to be passed, at least three-quarters
of the votes cast by Shareholders who vote at the General
Meeting, either in person or by proxy, must be in favour of
the Resolution.
COVID-19 Update
Events have moved extremely rapidly since the 2020 AGM was
held on 5 March 2020, culminating in the UK and Irish governments'
decision to close down non-essential retail stores and for
the general public to self-isolate and reduce social interaction
in order to reduce the transmission of the COVID-19 virus.
As announced on 17 March 2020, the Company had suffered a
reduction in footfall across its estate at that time, and
it is now clear that the COVID-19 pandemic will have a material
impact on the Company's performance in the current financial
year ("FY19/20"), following the decision to close all of its
stores on 24 March 2020, notwithstanding the improvement in
revenues from the Company's online operations. In light of
the ongoing uncertainty caused by the COVID-19 pandemic, the
Company is unable to accurately quantify the expected impact
of the COVID-19 pandemic on the Company's trading and financial
performance for FY19/20 at this time. However, the Board expects
a material reduction to its prior expectations for FY19/20.
The scale of this reduction will depend upon how the situation
develops, over what timeframe, and the impact of further public
health, economic and business support measures being implemented
by the UK and Irish governments. Previous guidance should
therefore not be relied upon as an indicator of FY19/20 performance.
Funding Update
As at 1 April 2020, the Group had net cash balances of approximately
GBP4.7 million, and undrawn banking facilities of GBP3.0 million
from which the 2019 Final Dividend of approximately GBP4.0
million would need to be paid.
The Board is taking steps to conserve cash, maintain a satisfactory
liquidity position and protect its employees. In particular,
the Group has taken the following actions to date:
* Placed the majority of the workforce, other than the
digital teams and key workers, on Government funded
furlough;
* Ceased all capital expenditure;
* ngaged with HM Revenue & Customs ("HMRC") with a view
to deferring UK tax and VAT liabilities that arise
during this difficult trading period;
* Reclaimed GBP1.0 million of Corporation Tax payments
on account from HMRC;
* Sought the maximum Rate Relief Grant available from
the UK Government of GBP0.5 million (EUR0.6 million),
having already utilised EUR0.2 million previously on
retail rates relief;
* Minimised all other costs and expenditure to the
lowest level possible.
The Group has a strong relationship with its lending bank
and is in advanced discussions with it with respect to the
provision of a new 4 year GBP10.0 million term loan (the "Term
Loan"), to provide it with additional liquidity through the
current disruption caused by COVID-19. However, should the
Term Loan not be provided, or the proposed quantum of the
Term Loan be materially reduced, the Group would need to seek
to take further cost saving measures and/or raise additional
capital by early May 2020, assuming that the 2019 Final Dividend
is cancelled and not paid to Shareholders.
The Board is continuing to closely monitor the Group's performance
and financial position in what is a rapidly changing trading
environment and will provide updates as appropriate.
Cancellation of the 2019 Final Dividend
At the 2020 AGM (prior to the significant downturn in the
Company's trading environment), a resolution was proposed
to approve the 2019 Final Dividend, demonstrating the Board's
confidence at that time in the future growth of the Group's
business and rewarding Shareholders for their ongoing support.
However, in light of the unprecedented deterioration in market
conditions and the material impact which this will have on
the Company's financial and trading performance in FY19/20,
the Board is of the view that it is imperative that the 2019
Final Dividend is cancelled and not paid to Shareholders,
in order to conserve the Company's cash balances with the
aim of seeking to maintain the viability of the Company's
business during an expected sustained period of challenging
trading conditions.
As noted above, payment of the 2019 Final Dividend represents
an aggregate cash payment of approximately GBP4.0 million,
and hence represents the majority of the funds that were available
to the business as at 1 April 2020. The Directors therefore
believe that if the Resolution is not passed at the General
Meeting and the Company is required to pay the 2019 Final
Dividend, this will result in a material uncertainty around
the continued viability of the Company and its ability to
trade during this rapidly changing and uncertain trading environment.
The Board is proud of the part that the dividend has played
in the Company's relationship with its Shareholders and considers
the decision to cancel the 2019 Final Dividend to be in the
best interests of the Company, its Shareholders taken as a
whole, and the Company's other stakeholders.
The General Meeting
A notice convening the General Meeting to be held at 10.00
a.m. on 29 April 2020 at the registered office of the Company
at Haramead Business Centre, Humberstone Road, Leicester,
Leicestershire LE1 2LH will be sent to Shareholders shortly.
The purpose of the General Meeting is to seek Shareholders'
approval for the cancellation of the 2019 Final Dividend by
passing the Resolution.
The Resolution proposes that the resolution to declare the
2019 Final Dividend which was passed at the 2020 AGM shall
not have any effect and shall not be acted upon by the Company
and that the 2019 Final Dividend be cancelled and is not legally
payable by the Company.
The Resolution will be proposed at the General Meeting as
a special resolution and will be put to a vote on a poll.
In order for the Resolution to be passed, at least three-quarters
of the votes cast by Shareholders who vote at the General
Meeting, either in person or by proxy, must be in favour of
the Resolution.
In accordance with the Company's articles of association,
all Shareholders who are entitled to attend and vote at the
General Meeting shall upon a poll have one vote in respect
of every ordinary share held.
The health of our Shareholders, employees and other stakeholders
remains extremely important to the Company and accordingly
the Board has taken into consideration the compulsory "Stay
at Home" measures that have been published by the UK Government.
These measures provide that public gatherings of more than
two people are currently not permitted in the UK. As a result,
the Board has resolved that Shareholders are not allowed to
attend the General Meeting in person and anyone seeking to
attend the General Meeting will be refused entry. Arrangements
will be made by the Company to ensure that the minimum number
of Shareholders required to form a quorum will attend the
General Meeting in order that the meeting and the vote by
a poll may proceed. Therefore, Shareholders are requested
to submit their votes in respect of the Resolution in advance
of the General Meeting by either voting online or by completing
and submitting a form of proxy or a CREST Proxy Instruction,
as discussed in the notice convening the General Meeting.
Votes should be submitted via proxy as early as possible and
Shareholders should appoint the chair of the General Meeting
as their proxy in order that their votes may be taken into
account when the Resolution is voted on by a poll. If a Shareholder
appoints someone else as their proxy, that proxy will not
be able to attend the General Meeting in person or cast the
Shareholder's vote on the poll vote.
If any Shareholder has a question about the General Meeting
they would like to pose to the Board, this should be submitted
to the Chairman of the Board by email at investorrelations@shoezone.com.
In the event that further disruption to the General Meeting
becomes unavoidable, the Company will announce any changes
to the meeting (such as timing or venue) as soon as practicably
possible through the Company's website and by an announcement
to the London Stock Exchange.
Recommendation
The Directors consider the passing of the Resolution to be in
the best interests of the Company and its Shareholders taken as a
whole. Accordingly, the Directors unanimously recommend that
Shareholders vote in favour of the Resolution, as the Directors
intend to do in respect of their own beneficial holdings of
ordinary shares (amounting in aggregate to 25,265,348 ordinary
shares, which represent approximately 50.5 per cent. of the total
issued share capital and voting rights of the Company as at the
date of this announcement).
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, please contact:
Shoe Zone plc Tel: +44 (0) 116 222
Anthony Smith (Chief Executive Officer) 3000
Jonathan Fearn (Chief Financial Officer)
FinnCap Limited (Nominated Adviser & Tel: +44 (0) 20 7220
Broker) 0500
Matt Goode / Carl Holmes / Hannah Boros
(Corporate Finance)
Alice Lane (ECM)
FTI Consulting (Financial PR) Tel: +44 (0) 20 3727
Alex Beagley 1000
Eleanor Purdon
Alice Newlyn
About Shoe Zone
Shoe Zone is a Town Centre, Retail Park and Digital footwear
retailer, offering low price and high-quality footwear for the
whole family.
Shoe Zone operates from a portfolio of around 500 stores and has
approximately 3,500 employees across the UK and the Republic of
Ireland.
The store portfolio consists of over 450 high street stores
containing the core Shoe Zone product range and 45 larger out of
town retail units which also feature brands such as Clarks,
Skechers and Hush Puppies.
The website shoezone.com, combined with the store network
ensures a full multi-channel offering for great customer
service.
Shoe Zone sells 18 million pairs of shoes per annum with an
average retail price per pair of shoes of around GBP10.
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END
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