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Despite reporting improved financial results for the 2019 financial year, ADvTECH [JSE: ADH], the owner of a number of private learning institutions, says it will hold off on paying out dividends as it waits for the full impact of Covid-19 pandemic to play out on financial markets and the economy.
The group, which owns Crawford Schools and Abbotts College, among other private institutions, on Monday released its financial results for the year ended December 31, 2019.
It reported a 16% growth in revenue of R5.1 billion and an operating profit increase of 8% to R869 million. Profit for the year was up 18% to R468 million. Headline earnings per share grew 20% to 86 cents per share.
But the group's board has decided to defer the decision to declare a further 2019 dividend until its next board meeting in May, given the uncertainty the coronavirus outbreak has created in markets. The dividend per share declared for the year remains at 15 cents, compared to 30 cents for 2018.
"While management has contingency plans in place and remains confident of navigating the business through the unpredictability, the board felt that it would be prudent to delay the decision and continue to assess the environment and potential impact of the pandemic.
"The board will consider a dividend payment at the next board meeting to be held in May 2020, when the impact of the pandemic on the group may have become clearer," it said in a notice to shareholders.
In light of the fall in its share price, ADvTECH said it would consider a share buy-back in lieu of a dividend.
ADvTECH shares, which opened at R7 on Monday, are trading at roughly half their value when compared to late March 2019. The group's shares reached a low of R6.06 during Monday's session, amid widespread falls on the JSE.
"The safety and well-being of all our staff and pupils, and the continuation of quality teaching and learning is paramount and will remain our first priority," said CEO Roy Douglas.
Douglas said an incident support team has been established and the group has closed all its schools and tertiary institutions until April 14, 2020. "We are leveraging and making full use of online learning tools and systems previously implemented in both the schools and tertiary divisions," he added.
"Whilst we are well positioned, the rapidly developing COVID-19 broader impact creates uncertainty. We will continue to be vigilant in monitoring the impact on our people and business," Douglas said.
Commenting on the group's financial results, Douglas said the group had delivered "good results" and was continuing on a "consistent trend" of strong growth. He said that restructuring and rationalisation in the schools division is also starting to yield benefits.
Over the past five years, learner numbers at schools increased 128% and student numbers at tertiary institutions doubled.
The group added its investments in Kenya saw its revenue from the rest of Africa increase 55% in FY2019.
