Shoe Zone Regulatory News (SHOE)

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 £4.0 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 £4.7 million, and undrawn banking facilities of £3.0 million from which the 2019 Final Dividend of approximately £4.0 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 £1.0 million of Corporation Tax payments on account from HMRC;

§ Sought the maximum Rate Relief Grant available from the UK Government of £0.5 million (€0.6 million), having already utilised €0.2 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 £10.0 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 £4.0 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

Shoe Zone plc

Anthony Smith (Chief Executive Officer)

Jonathan Fearn (Chief Financial Officer)

Tel: +44 (0) 116 222 3000

FinnCap Limited (Nominated Adviser & Broker)

Matt Goode / Carl Holmes / Hannah Boros (Corporate Finance)

Alice Lane (ECM)

Tel: +44 (0) 20 7220 0500

FTI Consulting (Financial PR)

Alex Beagley

Eleanor Purdon

Alice Newlyn

Tel: +44 (0) 20 3727 1000