Acsa is looking up after secured funding bolsters its liquidity

AIRPORTS Company South Africa (Acsa), which has been hard hit by the Covid-19 related slump in airline traffic, has strengthened its financial position and secured funding to bolster its liquidity and sustain its business through to the 2023/24 financial year.

Chief executive Mpumi Mpofu said yesterday that the company’s estimate of the three-year funding support that may be required had fallen from mid2020 estimates of up to R4 billion, to about R600 million only in the 2023/24 financial year.

“We are in a better place than in mid-2020. While there is still a great uncertainty about a recovery in air travel, we have implemented most commitments in response to the impact of Covid-19 and are on track with further measures,” said Mpofu.

Revenue in the first half of the 2020/21 financial year was R685m, well down from R3.5bn for the same period in the 2019/20 financial year, due to the pandemic. The first half loss for 2020/21 came to R1.47bn, versus a first half profit in 2019/20 of R125m.

Core of its funding initiatives was to reduce annual operating expenditure of R1.2bn and the deferment of infrastructure projects of R14.5bn. Capital expenditure to 2024 was now capped at R1bn a year for essential maintenance and refurbishment, he said.

Chief financial officer Siphamandla Mthethwa said the funding position was bolstered by the sale of the 10 percent interest in Mumbai International Airport for R1.27bn after tax, while an offer was being considered for Acsa’s interest in Guarulhos International

Airport in São Paulo, Brazil.

A process to monetise some of its R7.7bn investment property portfolio had started.

Acsa also issued R2.3bn in preference shares. The shares had been taken up by the national government, which holds a 74.6 percent stake in Acsa.

The other major shareholder is the Public Investment Corporation with a 20 percent shareholding, which is considering taking up the preference shares. Minority shareholders also had the option to take up preference shares.

Mthethwa said a key benefit of the preference shares instrument was that it was long-dated, which provided the company with the ability to roll-up dividends. This allowed the business sufficient space to recover while also guaranteeing shareholders a return on their investment.

Further funding initiatives included securing R3bn in short-term banking facilities and a loan of R810m from the Development Bank of Southern Africa.

A waiver of financial covenants until June 2022 from major lender Agence Française de Développement had also been received.

Acsa expected that its debt, including preference shares and funding initiatives, would peak at R9bn before dropping to R8bn by 2023/24.

Excluding preference shares, Acsa’s debt was expected to decline to R5bn over the same period.

The number of departing passengers in 2020 fell by 65.8 percent compared to 2019, from 21.6m to 7.4m passengers.

Domestic departing passengers fell 61.9 percent with international departing passengers falling by 74.6 percent.

In 2020, seats made available by airlines for destinations within South

Africa and between the country and international destinations were 41 percent of the previous year’s levels. So far in 2021, seats published were at 74 percent of 2019 levels.

The optimistic recovery scenario prepared by Airports Council International had global traffic returning to pre-pandemic levels in 2023, and 2025 on a more pessimistic estimate.

Mthethwa said they were closely monitoring drivers of airport traffic specific to Covid-19.

These included travel restrictions, consumer health concerns, the sustainability of virtual business practices, passenger experiences, ticket prices, consumer spending and the global rollout of vaccination programmes.

He said the strategic focus up to 2025 was to extend and defend core businesses and to explore emerging businesses.

VIVO ENERGY yesterday reported a 16 percent decline in annual earnings, but said it was encouraged by its strong recovery in the second half of the financial year.

The leading pan-African retailer and distributor of Shell- and Engenbranded fuels and lubricants reported that its adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) declined to $360 million (R5.4 billion) for the year to the end of December, down from $431m last year.

The firm declared a final dividend of 3.8 US cents per share.

However, its second-half performance was slightly ahead of the performance in 2019, and it achieved an adjusted Ebitda of $220m.

Chief executive Christian Chammas said although 2020 was a year like no other, they managed to see a strong recovery in the second half and continued to deliver against their strategy.

“The recovery would not have been possible without the actions we took to support our stakeholders, which meant that, as demand recovered, we were ready and able to supply our customers and keep the continent moving.

“The strong recovery has reinforced our confidence in the future, and the board has recommended a final dividend of 3.8 US cents a share, in line with our progressive dividend policy,” Chammas said.

The group’s sales volume declined 7 percent to 9 637 million litres, due to the impact of Covid-19 on mobility in its markets.

Revenue fell 17 percent to $6.92bn, reflecting the significant decline in crude oil prices and the contraction in demand due to Covid-19-related mobility restrictions.

Its diluted earnings per share declined 45 percent to 6 US cents a share, down from 11 US cents a year earlier.

The group operates and markets its products in countries across North, West, East and Southern Africa.

It has a network of more than 2 300 service stations in 23 countries and exports lubricants to a number of other African countries.

Its retail fuel segment saw volumes declining 8 percent as strong trading at the beginning of the year was offset by Covid-19-related mobility restrictions imposed across its portfolio late in the first quarter.

The non-fuel retail segment reported a 21 percent decline in profits to $26m, with financial performance impacted by Covid-19-related restrictions.

“The mobility restrictions led to lower traffic at our sites, affected store opening hours and, in some cases, led to store closures for periods during the year.

“We noted strong improvement in most markets in the second half. However, in certain markets, such as Morocco, ongoing restrictions on travel between regions have impacted sales at large motorway sites, which are traditionally large contributors,” the group said.

Vivo Energy said it expected the positive second-half trends to continue into the 2021 financial year.

“We have started 2021 well and are confident we can continue to successfully navigate future challenges and deliver long-term growth and returns for all of our stakeholders,” Chammas said.

Vivo shares closed 0.54 percent higher at R18.69 on the JSE yesterday.