ValueMax addresses significant loans, borrowings exceeding S$600 million

VALUEMAX Group’s significant loans and borrowings of S$610.5 million in the 2022 financial year caught the attention of the Singapore Exchange Securities Trading (SGX-ST), which asked why this increased by S$167.9 million from the previous FY.

The rise in loans and borrowings were reported earlier this month, against a 16.8 per cent drop in its earnings for the second half of 2022 to S$19.2 million, from S$23.1 million in the corresponding period in 2021.

Addressing its queries on Wednesday (Mar 15), the mainboard-listed company said the loans and borrowings were taken to mainly finance its pawning and moneylending businesses.

The loan books relating to these businesses “increased significantly” in FY2022 from the previous year as reflected in the increases in segment assets of S$45.6 million and S$146.5 million respectively, it added.

ValueMax reported a net cash outflow from operating activities amounting to S$163.4 million. It was asked to justify why it was unable to generate net cash inflow from its operating activities despite its net profit position for the financial year.

The company, which also sells and trades jewellery and gold, again cited its moneylending and pawnbroking business segments. 

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Noting that they generate interest income from loans granted to customers, it said the trade receivables will increase as these two business segments grow. The result is an outflow of working capital, it stated.

Notwithstanding this, ValueMax pointed out that the group generated a cashflow from operations before working capital of S$74.2 million in FY2022, versus S$62.4 million in FY2021.

ValueMax then addressed the group’s cash and cash equivalents of just S$6.3 million.

Asked how the company intends to fulfil its significant payment obligations in the next 12 months, it said it has banking facilities to do so.

At its disposal is a S$100 million multi-tranche unsecured commercial paper facility programme and a S$300 million multicurrency medium term note programme if these avenues have to be tapped on, ValueMax added.

The company also said it only maintains “sufficient” cash and cash equivalents to meet its daily cash management needs, so as to minimise financing costs.

ValueMax’s counter was unchanged at S$0.345 on Wednesday.