Green Cross suspends dividend to protect balance sheet through Covid-19

Green Cross won't pay a final dividend to help preserve the company's cash. Photo / Andrew Warner

Green Cross Health won't pay a final dividend in an effort to protect its balance sheet through the Covid-19 pandemic.

The pharmacy chain franchisor and primary healthcare provider reported a net profit attributable to shareholders of $13.5 million in the 12 months ended March 31, down from $16.1m a year earlier. The bottom line was dragged down by new accounting rules changing the way leases are recognised, but also by a $4.7m impairment charge as it wrote off the value of software it had developed.

Revenue edged up 0.2 per cent to $568.5m, while earnings before interest and tax were up 5.5 per cent at $31m.

Green Cross had paid a 3.5 cent per share interim dividend, but the board today said it won't pay a final dividend to help preserve the company's cash.

The firm had $56.5m of gross debt at the March 31 balance date, with another $10m of undrawn facilities available. That was up from $49.1m a year earlier. However, its cash and equivalents swelled to $33.9m from $16.6m, meaning net debt shrank to $22.6m from $32.5m.

Green Cross said it's committed to maintaining a strong balance sheet to absorb the impact of the pandemic.

"In addition to weathering the storm of lockdown, this approach helps protect the company from the need for a dilutive capital raise and positions the company to be able to capitalise on future opportunities," it said in a statement.

The board intends to resume dividend payments from November.

The shares slipped 0.9 per cent to $1.05 in early trading on the NZX.

The company's Unichem and Life Pharmacy chain of 361 stores posted a 1 per cent decline in revenue to $336.4m for a 17.6 per cent decline in operating profit of $22.5m. That was due largely to the impairment charge.

Its Doctors medical division lifted revenue 8.5 per cent to $76.5m while operating profit jumped 81.1 per cent to $8m. Its community health division reported a 0.5 per cent dip in revenue to $155.6m while earnings of $2.5m compared to just $100,000 a year earlier as it benefited from quitting unprofitable contracts.