REMGRO, after a year of substantial change, lifted headline earnings per share a robust 139.4 percent to 592.3 cents in the six months to December 31 after many of its investments recovered from the effects of the pandemic.
The interim dividend was raised by 66.7 percent to 50 cents.
Intrinsic net asset value per share was up 14.2 percent to R202.47 from R177.33 on June 30, 2021. Based on the share price at December 31, of R131.15, the price represented a 35.2 percent discount to intrinsic net asset value, much the same level as last year.
That discount, however, has in the meantime narrowed to 28.2 percent based on yesterday’s share price of R145.28, a price that fell 4.4 percent yesterday morning following the release of the results. The share price is nevertheless 45 percent higher over a 12-month period.
“As we move forward in our journey of recovery and portfolio optimisation, in the face of heightened global political instability, we still believe now is the time to reset – to do more than pause and adjust – but to recognise the harbingers of change,” Remgro chief executive Jannie Durand said in a statement.
“We are more than encouraged our prudent management, strong balance sheet and capital allocation track record, as evidenced by our resilient portfolio, has enabled us to deliver a quick recovery amid all the headwinds,” he said.
The first half of their financial year had continued to be a “roller-coaster,” he added, with the fallout of the July violent unrest and the threat of the fourth wave of the Covid-19 pandemic amid a slow vaccination progress.
Most of Remgro’s investee companies’ financial metrics were ahead of pre-pandemic levels.
Much progress had been made with corporate actions at Distell Group Holdings, Community Investment Ventures Holdings (CIVH) and Rand Merchant Investment Holdings.
Management warned the results did not reflect current market conditions, which had been impacted by the Russia-Ukraine war and related economic sanctions.
For example, its portfolio had been subject to the effects of rising commodity prices across the various investee companies, as well as the impact of moving bond yields.
For the six-month period, headline earnings increased by 139.3 percent to R3.35bn from R1.4bn.
The increase was mainly due to higher contributions from Grindrod Shipping, CIVH (lower losses), RCL Foods, TotalEnergies, Distell Group Holdings and Grindrod, as well as lower finance costs due to the redemption of exchangeable bonds.
Dividend contributions from Mediclinic and FirstRand were lower, as was interest income due to the lower South African repo rate.
Remgro’s portion of the profit realised by Rand Merchant Investment Holdings (RMI) on the disposal of its investment in Hastings Group of R1.48bn also boosted total earnings.
Compared to pro forma headline earnings for the 2019 period, headline earnings increased 22.2 percent, indicating that earnings of most of Remgro’s investee companies had substantially recovered from the pandemic.
“Our prudent management, strong balance sheet and capital allocation track record ... has enabled us to deliver a quick recovery amid all the headwinds,” said Durand.
CIVH reduced its loss-making contribution to Remgro’s headline earnings to R23m from R209m due mainly to the settlement of head office debt, resulting from two rights issues, and improved performances by the underlying businesses.
Dark Fibre Africa’s revenue increased by 18.2 percent to R1.4bn. Vumatel revenue increased by 31.7 percent to R1.44bn, driven by its fibre infrastructure expansion programme and subscriber uptake growth.
Seacom’s contribution to Remgro headline earnings fell 77 percent to R8m as it continued to adapt to the rapidly evolving data market and investment in its submarine and terrestrial network, Remgro said.
BUSINESS REPORT