Brand Architekts Group PLC Trading Update (4676J)
14 Aprile 2020 - 8:00AM
UK Regulatory
TIDMBAR
RNS Number : 4676J
Brand Architekts Group PLC
14 April 2020
14 April 2020
BRAND ARCHITEKTS GROUP PLC
("Brand Architekts Group" or the "Group")
Trading Update
Impact and Response to Covid-19
Brand Architekts Group, the personal care and beauty products
group with its own portfolio of brands, today provides an update on
its strong financial and liquidity position and the actions taken
in response to the Covid-19 outbreak.
Employees
We are taking all necessary steps to ensure the health and
well-being of our employees, clients and suppliers which remains
the top priority for the Group. Following government guidelines all
of our team are now working from home and all our operational
systems and processes are working well on a remote basis as are
internal and external day to day communications.
Retail Customers
More than 90 per cent. of the Group's bricks and mortar sales
are through grocery and pharmacy retailers. These customers
continue to trade and our products continue to be available for
consumers to buy. We are seeing fluctuating patterns of sales in
response to varying store footfall and in-store operational focus,
including changes to in-store promotional activities.
We have noted differences in sales patterns across different
product types. Sale volumes of handcare products have increased
significantly and we have been able to secure extra supply to
support retailer demand whereas, for example, sales of male
haircare and shaving products have, unsurprisingly, declined
significantly in recent weeks.
Within our International business a number of our General
Merchandise and Department Stores' customers have temporarily
closed their doors, which is expected to have a detrimental impact
on our sales through those channels whilst lockdowns are
maintained.
Online sales, both through large e-tailers and our own branded
websites, have increased significantly and we have stepped up
promotional activity to capitalise on this route to market.
Combining all of the above, the impact of the Covid-19 situation
has resulted in a significant reduction to the Group's overall
sales volumes, however, it does remain a very fluid situation and
we are focussed on identifying and securing incremental
opportunities as well as managing situations of demand
reduction.
Supply Chain
6 of our 7 UK based suppliers remain fully operational and we
are focussed on adjusting incoming inventory to respond more
appropriately to the changes within our volume projections across
the portfolio.
All of our suppliers based in China have now returned to normal
operation. We have confirmed volumes for our two largest Christmas
gift customers and are working through the associated supply plans
with our Chinese partners.
Cost Control and Cash conservation
In order to mitigate the possible impact on the business, the
Group has taken the following measures to reduce operating costs
and associated cash requirements.
We have undertaken a number of short-term reductions on our
discretionary expenditure and as part of this, we have also secured
a short-term suspension of rent payments on our offices in
Teddington.
As all our manufacturing, logistics, R&D and IT functions
are outsourced, we currently operate with a lean team of 31
employees and therefore our staff payroll costs are relatively low
as a percentage of sales. Whilst we have taken steps to manage
staff costs, including the postponement of hiring across a number
of current vacant positions. Our team remains fully utilised,
managing the ongoing business and developing and adapting the
growth opportunities that may arise during, and those that will
follow after the government imposed lockdown. We will continue to
monitor this closely and respond appropriately to any material
change to the trading situation.
As a further step, all the Directors of the Board including our
interim Chief Executive have agreed to take a reduction to their
respective salaries or fees of 20 per cent at least until the end
of this financial year (June 2020).
Balance Sheet and Cash
Our balance sheet remains strong and our available cash balance
is GBP20.1m with a net cash position (including outstanding term
loans) of GBP17.8m, with no material capital expenditure programme
to support. Our customer base is made up of major retailers, the
vast majority of whom continue to trade and who for the most part,
are experiencing strong cash inflows even through lockdown. Whilst
we continue to manage our cash resources we are fully confident
that our cash position remains secure and indeed positions us well
to take advantage of any appropriate strategic or tactical
opportunities that may emerge during these fast changing times.
Dividend
Notwithstanding the Group's strong balance sheet, the current
environment is one of heightened uncertainty. After due
consideration, the Board has decided to suspend the interim
dividend for the half year ended 11 January 2020. The Board
recognises the importance of dividends to shareholders and, as
such, it intends to consider the appropriateness, quantum and
timing of this dividend payment when it has a clearer view of the
effects and duration of the current Covid-19 situation on the
Group's business.
Outlook
As a result of the uncertainty surrounding the impact of
Covid-19, the board is withdrawing financial guidance for the full
year ending June 2020. The Board continues to monitor the situation
closely and remains confident in the Group's long term
prospects.
For further information please contact :
Brendan Hynes
Brand Architekts Group PLC Via Alma PR
Executive Chairman
Shaun Dobson/George Tzimas N+1 Singer (Nominated and Broker) 0207496 3000
Josh Royston/Hilary Buchanan/Sam Modlin Alma PR 0203 405 0205
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END
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