The services, trading and distribution company said its cash reserves rose 8% against a 19.9% decline in profits as a result of Covid-19. Bidvest said the pandemic cost its operations R1.6 billion($96m).
The group said cash generated by operations increased to R9.2bn($550m) from R6.6bn($400m), while profits eased to R5.34bn($320m) from R6.67bn($400m), the prior year. It said profits rose 3% to R6.9bn, excluding Covid-19, two-thirds of which came from the services unit.
The group said the disposal of its car rental and services division as part of a strategic review of all its businesses necessitated by the Covid-19 outbreak had progressed since year-end.
“Our preference is to sell the businesses in order to preserve as many jobs as possible. Bidvest Car Rental was disclosed as a discontinued operation,” the group said.
Outgoing Chief Executive Lindsay Ralphs said the current financial year had been unprecedented as the group never had to deal with challenges such as Covid-19. Ralphs said the group had embarked on liquidity preservation and implemented measures to respond to considerable demand changes.
Ralphs said revenue from continuing operations rose marginally by 0.6% to R76.5bn($4.60bn).
Normalised headline earnings per share from continuing operations, excluding acquisition costs, amortisation of acquired customer contracts, fair value adjustment to Adcock inventory, Bidvest’s share of Comair’s full impairment of an outstanding SAA settlement and Covid-19 expenses, declined 235 to 1 028.3 cents a share.
The group did not declare a final dividend in light of the extraordinary levels of uncertainty created by Covid-19.
Mergence Investment Managers’ head of equities, Peter Takaendesa, said the earnings decline was in line with the guidance provided by the company, as well as revised market expectations.
Takaendesa said the market was, however, pleased with the stronger cash generation, which resulted in group’s balance sheet gearing remaining within covenant levels despite the completion of a fully debt-funded UK business PHS.
He said the outlook remained clouded by economic weakness in Bidvest’s key South African market and signs of Covid second wave in Europe.
“The results are complicated due to changes in the treatment of some operations as discontinued, consolidation of Adcock, new acquisitions, Covid-19 related one off costs and changes in the accounting treatment of operating leases,” Takaendesa said.
“The group estimates that normalised headline earnings were 23% lower, which implies a 40% lower normalised earnings base in the second half of the year to June and may be a leading indicator of how the next financial year will start given some of their operations exposed to the tourism and automotive sectors are likely to take longer to recover.”
Bidvest shares closed 5.94% higher at R152.24($9.16) on theJohannesburg Stork Exchange (JSE) on Monday.
--BUSINESS REPORT--
