Appreciate Group PLC Trading, COVID-19 and Dividend Update (1320I)
March 31 2020 - 2:00AM
UK Regulatory
TIDMAPP
RNS Number : 1320I
Appreciate Group PLC
31 March 2020
31 March 2020
Appreciate Group plc
Trading, COVID-19 and Dividend update
Appreciate Group plc (the 'Group') today provides an update on
trading for its financial year ending 31 March 2020, the potential
impact of COVID-19 on its business, and the measures it is taking
to actively mitigate the risks to its customers, colleagues and
business.
Summary
-- Trading for the 11 month period to the end of February 2020 was in line with our expectations
-- Greater uncertainty due to COVID-19 means providing forward
looking financial guidance at this stage is inappropriate
-- We have taken a number of steps to preserve cash including
reducing discretionary expenditure, cancelling the interim dividend
payment and reviewing bonuses
-- The Group has a strong balance sheet, approximately GBP30
million of free cash (excluding funds required to be held in
trust), and projected adequate liquidity covering a range of
financial scenarios over the next twelve months
-- We remain confident in our strategy and in the medium to long
term opportunity, particularly as the current situation
precipitates a move to digital
-- A further update will be given in the second half of April
which will provide an update on FY2019/20 financial performance
COVID-19 response, trading and outlook
The safety of our colleagues, their families and our
communities, is our first priority and we are following the
government's health and safety recommendations in order to
responsibly do what we can to control the spread of COVID-19. As a
result, we have acted quickly to temporarily close all our offices
and fulfilment locations.
The investments in technology we have made over the last year
mean that over 80% of the Group's employees are able to work from
home effectively. We are now looking at how we can support those
employees unable to fulfil their role from home, including through
parental leave or furloughing employees under the government's Job
Retention Scheme. Group trading websites also continue to accept
and fulfil orders, but our emphasis has shifted to digital delivery
only.
The situation has been changing rapidly, and it is currently
difficult to predict the impact on our clients and any further
threats and opportunities to come. However, over the week since we
ceased the delivery of physical product following the temporary
closure of our fulfilment facility, we have seen a substantial drop
in new billings. We have also seen a small increase in the
cancellation rate for Park Christmas Savings at a time when we
would expect to add to our final Christmas 2020 order book. We will
mitigate these trends by focusing on our digital delivery
opportunities. Following the implementation of our 'digital first'
strategy, we are in a strong position to do this quickly. Given the
current uncertainty, the Board does not believe it would be
appropriate to provide forward looking financial guidance at this
time.
Balance sheet and liquidity
The Group has a strong balance sheet with no debt. The business
currently has adequate liquidity for a range of financial scenarios
with GBP30 million free cash, and the nature of our business is
such that a short term reduction in billings will mean an increase
in available cash.
Cash preservation and dividend update
The Board has taken steps to preserve cash by a close focus on
costs, eliminating discretionary expenditure and delaying certain
capital projects, including a re-phasing of our ERP
implementation.
In addition, the Board has decided that it is prudent not to pay
the interim dividend of 1.05 pence per ordinary share (representing
GBP2.0 million of cash outflow) as previously announced and due to
be paid on 6 April 2020. The Board recognises the importance of the
dividend to our shareholders and will consider the quantum of any
final dividend for FY2019/2020 at the time of the final results
(currently due to be announced in June 2020) once it has been able
to further assess the impacts of COVID-19.
If any bonus payments are earned as a consequence of the
FY2019/2020 results, the Remuneration Committee will exercise its
discretion on their quantum, and in any event delay payment of any
such bonuses, so rewards to shareholders and management are
aligned.
Ian O'Doherty, Chief Executive Officer of Appreciate,
commented:
"Over the last year we have made great progress against the
strategic plan we outlined in December 2018, to build a robust and
scalable platform for future growth. The steps already taken have
better enabled us to respond well and quickly to this crisis.
"Despite the immediate challenges of this unprecedented
situation, we are taking all necessary actions to mitigate any
adverse impacts and the Board remains confident that the Group is
well positioned for growth in the medium and long term.
"We will provide a further update by the end of April."
For further information please visit
https://www.appreciategroup.co.uk or contact:
Appreciate Group plc Liberum MHP Communications
(NOMAD and broker)
Ian O'Doherty, CEO Richard Crawley Reg Hoare / Katie
Tim Clancy, CFO Jamie Richards Hunt / Patrick Hanrahan
/ Charles Hirst
Tel: 0151 653 1700 Tel: 020 3100 2222 Tel: 020 3128 8193
Email: appreciategroup@mhpc.com
The information contained within this announcement is deemed by
Appreciate Group to constitute inside information as stipulated
under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
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END
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