Deneb is expecting to feel the Covid bite
DURBAN - Deneb's investments was expecting to feel the impact of the Covid-19 outbreak despite collecting 84 percent of its rent during the two months in which the country has been under lockdown.
The group said on Friday that rental collections for April and May were satisfactory, with 84 percent of rentals having been collected and 10 percent deferred with agreement.
“We have begun processes to collect the outstanding portion, and we are expecting that these will be recovered. However, we will not be immune to the fallout from the crisis, and the indication in June is that collections are a little more challenging. We believe that the South African economy is only at the beginning of the economic fallout as a result of
Covid-19 and the lockdown,” the group said.
Deneb has investments in property, manufacturing and branded product distribution.
Its property portfolio largely consists of low-cost B-grade industrial properties, and the group hopes that these properties will prove to be more resilient in the long term.
Deneb is also pinning its hopes on its strong cash generation in the year ahead to come through the challenges presented by the pandemic after it generated R399 million from operating activities in the year to the end of March.
It said its short-term focus had been on cash preservation.
However, its revenue from continuing operations decreased by 3 percent to R2.87 billion, and operating profit from continuing operations increased by 16 percent to R173m.
The loss for the period widened by 176 percent to R129m. The headline loss per share surged by 100 percent to 8.92 cents a share, while the loss per share increased by 178 percent to 29.24c.
The group said its results for continuing operations had been negatively affected by the Covid-19 pandemic.
“Our best estimate is that the slowdown and ultimate shutdown in late March 2020 reduced revenue by R60m and reduced operating profit by some R20m,” the group said.
Deneb did not declare a dividend and opted to preserve cash.
The group said the major impact of Covid-19 occurred after the financial year-end.
“The severe lockdown restrictions in April meant that the group operated at around 10 percent of capacity, which was largely centred around supplying essential service providers.
“The move to level 4 restrictions in May allowed our manufacturing operations and stationery businesses to open on a restricted basis, and the group operated at around 40 percent capacity. The easing to level 3 in June means that all the group’s businesses may operate,” the group said.
Deneb was in the process of assessing whether its insurance policies provide cover for the interruptions caused by Covid-19.
The group said it would continue to invest in areas that it believes can deliver good returns on capital.
Deneb shares closed unchanged at R1.55 on Friday.