File picture: African News Agency (ANA)
File picture: African News Agency (ANA)

Life has scrapped its half-year dividend payment

By Sandile Mchunu Time of article published May 12, 2020

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DURBAN - Life Healthcare has scrapped its half-year dividend payment in an effort to preserve cash in the midst of the Covid-19 outbreak, and has warned that its full-year earnings are likely to fall by more than 20 percent.

Acting chief executive Pieter van der Westhuizen said yesterday that the group expected tough trading conditions for the rest of the year due to the continued impact of the pandemic on its business operations.

“However, we are taking steps to protect revenue streams, reduce costs and preserve cash in all the countries we operate in and will focus on bringing operations to full capacity as quickly as possible once lockdown conditions in the various countries are lifted,” Van der Westhuizen said.

The group has also put on hold recruiting a permanent chief executive due to the pandemic to replace Dr Shrey Viranna, who resigned in January.

The Covid-19 outbreak has already provided a dent in the group’s results for the six months to end March, with revenue taking a hit of R264 million and normalised earnings before interest, tax, depreciation and amortisation (Ebitda) by R166m, while its earnings took a hit of R132m.

Despite the impact of the pandemic the diversified healthcare group still managed to report a 6.8percent increase in revenue to R13.2billion, while its normalised Ebitda inched up by 2.7 percent to R2.8bn, and normalised earnings per share increased by 12percent to 55cents a share. Without the Covid-19 impact, revenue would have been up by 8.9percent and normalised Ebitda by 8.7percent.

Van der Westhuizen said in addition to withholding a dividend, the group had also reduced its capital expenditure for the year. “The board has decided, considering the current trading conditions and in order to preserve cash, not to pay an interim dividend. However, this position will be reviewed for the full year,” he said.

Last year the group declared an interim dividend of 40c.

The group also expected its capital expenditure to be approximately R1.6bn for the year, down from R2.1bn compared to last year. Looking ahead, the group said it expects its earnings for the full-year to end September to decline by more than 20percent.

Life Healthcare expected its earnings per share to decline by more than 20percent or 35.3c to 141.1c, down from last year’s 176.4c.

“This expected decrease is mainly due to the impact of the disposal of Life Healthcare’s equity investment in Max Healthcare during the fourth quarter of 2019, a non-recurring net profit on disposal in financial year 2019 of 68.5c per share. The pandemic will further impact the results for the full year, but the extent thereof is uncertain,” the group said.

It expects to dispose of its Scanmed business in Poland at the back end of 2020. Its shares closed 3.36percent lower at R17.24 on the JSE yesterday.

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