DEAL WOULD ‘MILDLY’ DILUTE EARNINGS
LORD Wolfson spoke on March 19 as the chain’s 2019 trading figures – showing healthy sales of almost £4.4 billion and profits of more than £728 million – were totally overshadowed by the current crisis. At the time he said: “What we believe to be the worst case scenario, we’ve called minus-25 per cent of our whole year sales – which is more like minus-55 per cent during the affected period. “That would be the equivalent of the company being completely shut for three months. “We think that is the most extreme that things could get, but clearly we don’t know. “The important thing is the cash flow modelling. We have £1.6 billion worth of cash resources, made up of bank and bond facilities. “We think even in the worst case scenario, as long as we take mitigating action within the business, we would still have, at our peak cash requirement, £110 million of cash resources available to the business. “So we do not think that the business will need to draw on Government facilities, although obviously that option is open to us.” Hinting at selling the Leicestershire HQ, the annual accounts said: “We have some freehold warehousing and other property which could be leased back. “We estimate we could realise £100 million from these sales.” The accounts added that leasing back “high quality assets”, would have “little impact on the operations of the business” but would “mildly” dilute earnings in future years. It said: “For example, the cost of rent on a leased-back building is likely to be higher than prevailing interest rates on the proceeds of sale.”