SHOE Shoe Zone Plc

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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April 02, 2020 12:05 ET (16:05 GMT)

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