Netcare postpones R800million of capex
DURBAN - Private hospital group Netcare yesterday said that it postponed approximately R800million of capital expenditure earmarked for new and current projects to preserve cash following the Covid-19 fallout on its operations.
The group informed shareholders in a trading guidance for the 11 months to end August that only key strategic projects would be allowed to continue as planned.
“However, capital expenditure on key strategic projects continued during the period and total spend for financial year 2020 is expected to amount to approximately R1billion, as previously guided, including additional Covid-19-related capex of approximately R155m,” the group said.
Netcare said that its revenue declined 12.9percent during the period as a result of the pandemic compared to last year.
It said the second half of 2020 experienced disruptions on Covid-19 restrictions, hitting its earnings before interest, tax, depreciation and amortisation (Ebitda) before IFRS 16 by 50.8percent while operating profit before tumbled 61.5percent compared to a year earlier.
The group's Ebitda margin also declined to 11.5percent compared with 20.3 percent reported during the corresponding period in 2019.
Netcare attributed the loss to declined activity, resultant negative operating leverage and additional costs of R219m related to the pandemic.
The group said its working capital was well-managed during the period despite the need to prioritise additional inventory reserves, including adequate levels of personal protective equipment, drugs, and consumables.
It said it also secured a further R1bn in bank loans and listed notes, and they've been applied to the settlement of debt maturities that fell due in July.
“As at August 31, the group had cash resources and available committed, undrawn facilities of R5.1bn. In addition, the GHG PropCo 2 property disposal proceeds of R778m were recently repatriated.
"The group therefore has sufficient access to capital and funding to meet its foreseeable operational needs,” it said.
Looking ahead, the group said that it anticipated that the relaxation of lockdown measures would result in a second wave of Covid-19 infections in the country, in line with global trends.
The group is expected to release its full-year results in November.
Netcare shares declined 0.71percent on the JSE yesterday to close at R12.60.