Zoetic International PLC COVID-19 Update (8936G)
20 March 2020 - 6:00PM
UK Regulatory
TIDMZOE
RNS Number : 8936G
Zoetic International PLC
20 March 2020
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
20 March 2020
Zoetic International plc
("Zoetic" or the "Company")
COVID-19 Update
Zoetic, the London listed vertically integrated CBD company,
provides the following update regarding the impact of Covid-19.
In the short time since Zoetic published its operational update
on 5 March 2020, the impact of Covid-19 on global economies,
financial markets and consumer confidence has developed rapidly as
governments in several countries have announced extraordinary
measures to slow the spread of the virus. This has inevitably
caused some disruption to the Company's business.
Reports indicate that convenience stores in the USA are
currently experiencing a significant drop in sales and footfall and
therefore, if this trend continues, the Board anticipates reduced
demand for its products in the coming months. Online sales in both
countries in which Zoetic operates are also showing signs of being
impacted as customers have shown increasing caution with their
disposable income. Within its oil & gas division, the steep
fall in oil prices will lead to a reduction in revenue in the
coming months.
Zoetic is taking prudent actions to manage these challenges. As
previously reported, the management team has significantly reduced
the Company's cost base in the past six months but, in the light of
these new events, further action is now underway. Zoetic is
adopting a set of exceptional operational measures to significantly
reduce its costs and navigate through these unprecedented times.
Regrettably, Zoetic has terminated the employment of six members of
staff in the USA and the Company is exploring the possibility of
putting further staff on unpaid leave or asking them to work part
time should global economies deteriorate further. All non-essential
expenditure is on hold. Further sales of peripheral assets have
been made and the Company has been successful in recovering unpaid
obligations to it in the oil & gas division.
Despite the ongoing problems in retail markets, the Company's
distribution partners remain very supportive and, whilst this is no
longer the right time to launch an extended distribution of Chill
products in the USA, discussions with Zoetic's partners continue to
be based on when, and not if, the launch should take place.
Likewise, in the UK, Zoetic continues to generate interest from
prospective retail partners for Zoetic and Chill branded products.
The Board naturally remains cautious about predicting when this
interest may materialise into demand, but the ongoing enthusiasm
for the Company's products provides the Board with optimism that,
when this current downturn passes, Zoetic's business model remains
attractive.
Furthermore, seed harvests have exceeded expectations and Zoetic
now holds an inventory of 2,925,573 feminised hemp seeds. The focus
of the team in the USA has moved to seeking buyers for these. It is
too early to assess how Covid-19 will impact the agricultural
communities, or how hemp seed prices will react to global economic
pressures, but Zoetic now has sufficient volumes of high-quality
seeds to compete effectively in this market. Discussions with
prospective buyers in both the US and internationally are
ongoing.
Pending seed sales, the Company is taking action to maintain
online retail sales. Discounts are being offered on both the Zoetic
and Chill websites along with other periodic special offers.
Activity on social media has been increased to expand customer
reach and ensure the Company's products remain visible to
prospective customers. In anticipation of fulfilling its
distribution contracts, inventories of finished products are
healthy and so the Board does not anticipate incurring any
significant manufacturing costs or disruption to its supply chain
for the time being.
The Board continues to plan for multiple scenarios and explore
various ways to mitigate the impact of reduced demand for a
potentially extended period of time. The Board also welcomes the
initiatives that both the UK and US Governments have announced to
support businesses and their employees. Further updates will be
made in due course.
Nick Tulloch, Chief Executive of Zoetic, said:
" The breath-taking speed at which economies around the world
have been impacted by the spread of Covid-19 is unprecedented and
the impact is likely to be felt by every business.
"We are fortunate in that much work had already been undertaken
to streamline the group and reduce our overheads but, in the
extraordinary situation we find ourselves in, we have taken further
action to remove all non-essential costs . We are taking this
situation very seriously and I would caution our shareholders to be
prepared for further challenges as the impact of Covid-19 and the
economic downturn is felt. However, in our two CBD brands and
feminised hemp seeds, we have created a business capable of
generating substantial returns in the future and our task is to
ensure we can deliver on that opportunity."
**ENDS**
Enquiries
Zoetic International plc +44 (0) 1738 472 029
Nick Tulloch
Allenby Capital Limited (Financial Adviser and Broker) +44 (0)
20 3328 5656
Nick Harriss
Nicholas Malins Smith
Nick Naylor
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe
Graham Herring
Florence Chandler
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END
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