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ARB HOLDINGS LIMITED - Impact of COVID-19 - Year end closing statement

Release Date: 01/07/2020 15:30
Code(s): ARH     PDF:  
 
Wrap Text
Impact of COVID-19 - Year end closing statement

ARB HOLDINGS LIMITED
(Registration number: 1986/002975/06)
Share code: ARH
ISIN: ZAE000109435
(“ARB”)




IMPACT OF COVID-19 – YEAR END CLOSING STATEMENT


Impact of Covid-19 pandemic
Shareholders are referred to the announcements made by the President of South Africa
declaring a national state of disaster in response to the COVID-19 pandemic, the extended
lockdown and the risk-adjusted strategy to ease the lockdown restrictions. The country began
a gradual and phased recovery of economic activity on 1 May 2020.
ARB is continuously monitoring COVID-19 related developments and assessing the impact of
the lockdown on its businesses. Over the past few months, ARB has introduced a number of
operational measures due to the pandemic and the consequential impact of the national
lockdown on its financial position.
The group was not classified as an “essential service” and, while we did support essential
services during April, all operations were on lockdown and the support was on a call-out basis
for each specific requirement. Revenue during April was minimal. During May, the regulations
permitted limited opening of the economy, however demand for our products remained
muted. To protect our staff from infection, we opened our operations on a limited basis on a
two or three shift system. In June we saw revenues improve, as more of the economy opened
up even though we remained on a limited time and shift basis.
The group started January 2020 with a strong balance sheet with R85m in cash and with
unutilised banking facilities, which provided a solid base when the lockdown was introduced.
The group’s primary strategy was to defend this strong balance sheet by curtailing capital and
operating expenditure and limiting stock purchases under strict central control of the group
CEO.
Where possible, staff members were allowed to work from home, but this comprised a very
small number of administrative staff. During this crisis, the group honoured its obligations to
suppliers in full and on time.
Staff members who could not work from home were placed on a ‘no work no pay furlough’,
but were allowed to take up to 10 days of negative leave to soften the financial impact and
they were supported by the TERS allowances received from government. In addition, all
managers and directors who continued to work, took a pay reduction of 25% for two months
to show solidarity with the staff on furlough.
In order to reorganise the business in line with the “new normal”, the group has embarked on
a review of all operations to match anticipated economic realities. Under-performing
branches and business units are being restructured and the group has embarked on a S189A
process with employees in both the lighting and electrical divisions, which process is expected
to be complete by August.
It is clear that ARB’s trading will remain constrained in the forthcoming months, while
lockdown regulations are slowly lifted. It is, however, still too early to estimate the full impact
on the group's operations and financial results for the year ended 30 June 2020. Once
reasonable clarity of the impact is obtained, the group will release the required guidance on
SENS.


Durban
1 July 2020


Sponsor
Grindrod Bank Limited

Date: 01-07-2020 03:30:00
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