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LIBSTAR HOLDINGS LIMITED - Business Update and Postponement of Cash Dividend

Release Date: 02/04/2020 15:37
Code(s): LBR     PDF:  
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Business Update and Postponement of Cash Dividend

Libstar Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2014/032444/06)
(JSE share code: LBR)
(ISIN: ZAE000250239)
("Libstar" or the “Group”)


On 23 March 2020 President Ramaphosa announced further interventions to curb the spread of the
coronavirus (Covid-19), including a 21-day national lockdown with effect from midnight, Thursday 26 March

It is not yet possible to predict or quantify the business impact of the Covid-19 virus and the state and
societal responses to it. Given the rapidly evolving situation and current market conditions, Libstar continues
to assess the impact on its business, respond to the latest guidelines issued by relevant authorities and
adapt its activities accordingly.


Shareholders are referred to the announcement entitled “Results For The Year Ended 31 December 2019
And Cash Dividend Declaration”, released on SENS on 18 March 2020 (“Results Announcement”),
wherein shareholders were advised that the board of directors of Libstar (“Board”) had declared a cash
dividend of 25 cents per share for the year ended 31 December 2019 (“Dividend”), totaling R170.5 million.

In light of the uncertainty as to the duration and extent of the impact that Covid-19 may have on the
operations within the markets in which Libstar operates, the Board considers it prudent and in the best
interests of the Group, its people and stakeholders to preserve the Company’s financial liquidity to the fullest
extent possible. The Board has therefore resolved to postpone the payment of the Dividend until the release
of its results for the six-month period ended 30 June 2020 (“Interim Results”). These results are expected
to be released on or about 2 September 2020. This decision remains subject to further review based on a
continued assessment of all relevant considerations. Should the Group be in a position to effect payment
earlier, it will do so.

In the event that the Board resolves to proceed with the payment of Dividend at the time of the publication
of the Interim Results, the following salient dates will apply:

    •   Indicative declaration date                                  Wednesday, 2 September 2020
    •   Last day to trade cum the interim dividend                   Monday, 21 September 2020
    •   Shares commence trading ex the final dividend                Tuesday, 22 September 2020
    •   Record date                                                  Friday, 25 September 2020
    •   Payment in respect of the final dividend                     Monday, 28 September 2020

Share certificates may not be dematerialised or re-materialised between Tuesday, 22 September 2020 and
Friday, 25 September 2020, both days inclusive.

In accordance with the measures announced by the President, Libstar has been designated as a company
essential to the production of food. As such, Libstar remains open during the 21-day lockdown period.

However, and in accordance with a notice to the restaurant industry dated 24 March 2020, the Ministry of
Tourism has confirmed that all restaurants, quick-service restaurants, cafes, bars and coffee shops will be
required to remain closed during the lockdown period, including all prepared food delivery services. As
such, the food service and quick-service restaurant industries have been impacted by these measures.
Food service channel revenue constituted approximately 18% of Group revenue for the year ended 31
December 2019. Since the week preceding the President’s announcement, Libstar has experienced a
decline in demand for food-service products which has worsened further since implementation of the

Revenue from Libstar’s retail sales channel constituted approximately 60% of revenue for the year ended
31 December 2019. Within this channel, the Group has experienced increased demand from its customers,
especially in the week preceding the lockdown. However, it expects demand to reduce as Government’s
preventative measures take effect in the coming weeks.

The safety, health and wellbeing of Libstar’s workforce remain single most important priorities during this
time. In this regard, Group and divisional steering committees have been established to continuously
monitor the unfolding situation. Hygiene practices have been intensified across all sites and remote working
practices have been implemented where possible. In line with these efforts, cleaning and hygiene expenses
have increased and are expected to remain at above-average levels. Whilst the Group’s workforce remains
motivated to support its ongoing operations, it is envisaged that additional expenses will be incurred to
provide housing, transportation and related benefits in the coming weeks and months.

During this time, Libstar maintains close communication with its trading partners, suppliers and landlords
in order to find mutually beneficial solutions and address the extraordinary circumstances in which we

Protection of Libstar’s cash position remains a key priority. The Group remains solvent, liquid and operates
well within the facility covenants established by its lenders. Covenants are measured and reported every
six months. As at 31 December 2019:

    •   The Group’s leverage ratio (net debt to EBITDA) is 1.25 against a covenant of no more than 2.5;
    •   The Group’s EBITDA to senior interest cover ratio is 6.73 against a covenant of at least 3.5; and
    •   Save for capital repayments in relation to vehicle and asset finance facilities of approximately R112
        million due in the next 12 months, no capital repayments are due on the Group’s other long-term

The Board will continue to monitor the impact of COVID-19 on the Group’s operations and its financial
position to take timeous action where required.

The financial information in this business update has not been reviewed and reported on by Libstar’s
external auditors.

By order of the Board
2 April 2020

The Standard Bank of South Africa Limited

Date: 02-04-2020 03:37:00
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