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Fri 3rd Apr 2020 - Update: Fuller’s, pub companies, ‘squeezed middle’
Fuller’s updates on coronavirus position: Pub operator Fuller’s has reported it has placed the vast majority of its employees in furlough, retaining a small number in key positions to maintain critical functions and deliver the year-end financial reporting process. The company stated: “Fuller’s is grateful for the government’s financial assistance to employees in furlough and, where 80% of their regular wage exceeds the government cap of £2,500 per month, the company has committed to top up the payment to the 80% level. During the current closure of the entire estate, steps have been taken to minimise all outgoings and to preserve cash. The company has suspended all non-essential capital spend and is negotiating across its supplier base to reduce costs further. As stated in the previous announcement on 23 March 2020, Fuller’s has an excellent relationship and open dialogue with its lending banks, and the company is well financed with a healthy balance sheet and significant liquidity headroom. However, in light of the unprecedented current situation – especially the uncertainty as to how long the emergency regulations will last – and to ensure the company is in the best possible financial position with maximum flexibility, the board has taken the decision not to propose a final dividend on the company’s ordinary shares for the year ended 28 March 2020, thereby preserving further cash (FY2019 final dividend: £6.8 million).” Chief executive Simon Emeny added: “We have implemented a wide range of measures that will impact all our stakeholders, but will protect the business and ensure that we emerge in a strong position to build for the future. We are supporting our tenants by cancelling commercial rent payments, we will not be proposing a final dividend, we have placed over 95% of our team members in furlough and my board colleagues and I have taken a 25% reduction in pay. I would like to thank all my colleagues for their support and the way they have positively engaged in these decisions. I have been so proud of the way they have reacted with understanding and compassion. These are unprecedented times – but we look forward to the day we reopen our doors, get our teams back together and are ready to welcome our customers back into our pubs and hotels and deliver the outstanding hospitality that Fuller’s is famous for.”

The Times reports on split in pub company approach to tenants: The Times has reported a split has opened up between Britain’s biggest tenanted pub owners over the concessions being offered to thousands of self-employed publicans. The newspaper added: “While some, including Admiral Taverns, Fuller’s and Young’s, are cancelling rents for the time being, most of the big pub companies are only deferring rent and other payments until the covid-19 crisis blows over. A senior executive at one of the big six pubcos, as they are known, admitted last night that the generosity of Admiral, another member of the six, had caught it by surprise.” “Admiral’s action has put us on the back foot,” one told The Times. “Pub campaigners has turned to name and shame the groups that are only deferring payments.”

FT reports help on way for ‘squeezed middle’: The Financial Times has reported that the UK government is poised to set up a new emergency loans package for the ‘squeezed middle’ of midsized companies excluded from the Treasury’s covid-19 rescue schemes. The newspaper reported: “Chancellor Rishi Sunak last week set up government loan guarantees aimed at two groups of companies: large ‘investment-grade’ corporations and small companies. The first scheme, called the Covid Corporate Financing Facility, allows loans to large companies for up to 12 months by the Bank of England buying their commercial paper. The second programme, the Coronavirus Business Interruption Loan Scheme (CBILS), is currently limited to companies with turnover under £45m — and allows them to access government-backed loans of up to £5m. A third scheme will allow companies with much higher sales to access state support. One model discussed in recent days would allow companies with turnover of several hundred million pounds to borrow loans of about £25m, largely guaranteed by the state. The loans would not be interest-free but should still provide a lifeline for the ‘squeezed middle’ companies that are unable to access either of the existing bailout schemes. Meanwhile, Mr Sunak is expected to iron out flaws in CBILS, first by dropping the need for viable companies to have first tried to get a normal commercial loan elsewhere. Borrowers have complained that they were being told to take high interest debt when they approached their banks to take part in the bailout programme. The move would also mean that almost all lending to the smaller business sector would be carried out through the scheme, which could lead to high volumes of applications for the interest-free loans. Personal guarantees for loans under £250,000 have already largely been dropped by most of the banks in the scheme following complaints from borrowers that they risked the loss of their property and savings. Further changes are expected to stipulate that personal guarantees can only be asked for the 20% of the loans over £250,000 not supported by the government scheme. The Federation of Small Businesses on Thursday said that it wanted personal guarantees removed by all 40 lenders and any new ones joining the scheme. It also pointed to concerns about the prospects of high interest charges at the end of the 12-month period of the government loans, and has called for any interest rate to be limited to 6%. Meanwhile, Mr Sunak’s team is also examining ways to improve the CCFF scheme for larger companies, although those changes are unlikely to be announced until next week. The chancellor said last week that there were still a number of companies left out of the two existing schemes. “There’s a small gap that we are actively working on to find some creative solutions for,” he said.”

Catering firm owned by chef Nigel Smith goes into administration: Administrators have been appointed at Cookeze, the Lancashire-based events catering firm partly owned by chef Nigel Smith. Dean Watson, of the Manchester office of Begbies Traynor, and Neil Dingley, of Moore in Stoke, have been appointed joint administrators after Cookeze ceased trading, leading to 72 staff being made redundant. The company, which traded as Patisserie By Nigel Smith, specialised in ‘artisan patisserie’ and was founded by Smith in 2010. Clients included football clubs Manchester United and Liverpool as well as Brasserie Blanc and Malmaison Hotels. Turnover last year was £1.5m. Watson said: “Covid-19 has seen the sports-related events where the company excelled cancelled. The immediate cash flow challenge this presented, as well as recent significant investment in a high-specification modern office complex and commercial kitchen equipment, has taken its toll. In the meantime, we are looking for interested parties who may be strongly attracted by the fact it was, until very recently, a successful business with blue-chip clients, talented staff and outstanding facilities.”

LWC Drinks switches business model by adding home-delivery service: Independent drinks wholesaler LWC Drinks has temporarily switched its business model to accept consumer orders as it launches a home-delivery service amid the continuing pandemic. The company, which operates 14 depots in the country, usually focuses on serving the on-trade but will also accept consumer orders over the phone. LWC Drinks managing director Ebrahim Mukadam said: “It is deeply saddening to see the impact covid-19 is having on families, societies and, of course, the hospitality sector. As the uncertainty continues and social guidelines and policies around the virus become more stringent, we have inevitably felt the business effects ourselves and have seen trade quieten. We are now expanding our business model to reach those in self-isolation, choosing to stay at home or simply struggling to leave the house. But, ultimately, the business priority will remain the same – servicing and supporting our trade customers during these turbulent times.” The business turned over £345m in the year ending September 2019 – a year-on-year growth of 15%. 

Starbucks to donate more than $3m to support response to coronavirus: Starbucks has announced it is donating more than $3m to support community response efforts to the impact of the coronavirus (covid-19) outbreak. On a global scale, The Starbucks Foundation will contribute $1m to the covid-19 Solidarity Response Fund in support of the World Health Organisation (WHO), powered by the United Nations. The fund strengthens the WHO’s efforts to track and understand the spread of the virus, help patients get the care they need and workers get essential supplies and information, and accelerates the development of vaccines, tests and treatments. In China, where early signs of recovery from covid-19 are showing, The Starbucks Foundation will contribute $1m to Give2Asia to fund a project focused on supporting front line medical workers, and strengthening grassroots capabilities to safeguard the future of local communities. The remain circa $1m will be spent on supporting initiatives and charities across the US and Canada.

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