Investment holding group Remgro on Tuesday (17 March), reported a marginal decline in headline earnings for the six months ended December 2019, but maintained its dividend declaration.

Headline earnings decreased by 0.4% from R4 259 million to R4 242 million, while headline earnings per share (HEPS) decreased by 0.2% from 752.1 cents to 750.9 cents.

The group pointed to an intrinsic net asset value per share of R240.93 while it maintained its interim dividend per share at 215 cents.

Remgro chief executive officer, Jannie Durand, said: “The last five or six years in South Africa have probably been some of the toughest years from both a business and a political perspective.

“We anticipate that this trend will continue for at least the next couple of years and we remain positive and confident in Remgro’s strategy and ability to continue creating shareholder value over the long term.

“While there is still a lot of uncertainty around global markets and the potential impact of Covid-19 in particular, we remain confident that Remgro and its underlying investments remain well placed to navigate these storms and capitalise on the various opportunities that inevitably present themselves during challenging times.”

In respect of Remgro’s announcement regarding the unbundling of its interests in FirstRand/RMH in part/in full, “we anticipate that the detail of the proposed transaction will be released before the end of March,” Durand said.

  • Banking: The headline earnings contribution from the banking platform amounted to R1 838 million (2018: R1 775 million), representing an increase of 3.5%. FirstRand Limited (FirstRand) and RMB Holdings Limited (RMH) reported headline earnings growth of 4.8% and 3.0% respectively. RMH reported lower growth due to higher funding costs resulting from further investments into properties, Remgro said.
  • Insurance: Remgro said that RMI’s contribution to its headline earnings decreased by 13.4% to R504 million (2018: R582 million).
  • Infrastructure: CIVH’s contribution to Remgro’s headline earnings amounted to a loss of R197 million (2018: loss of R104 million).

Despite the increase in losses, Dark Fibre Africa’s (DFA) revenue increased to R1 211 million (2018: R1 065 million) due to strong growth of 17% in annuity revenue, while EBITDA grew by 19%. DFA’s contribution was negatively impacted by higher depreciation and finance costs as a result of the expanding network, Remgro said.

Included in CIVH’s results were higher finance and transaction costs due to the acquisition of a further 65.1% stake in Vumatel during May 2019, as well as an increase in losses accounted for Vumatel due to the additional interest acquired.

Vumatel’s revenue and EBITDA increased by 74% and 109%, respectively, but its results were also negatively impacted by higher depreciation and finance costs driven by the expanding network, Remgro said.

Remgro owns a 54.4% interest in CIVH, which owns 100% in Vumatel.

As reported previously, Seacom has a zero carrying value and therefore, Remgro said it will only account for Seacom’s profits once these profits exceed the accumulated losses not accounted for in the prior periods.

However, a dividend amounting to R22 million was received from Seacom during the period under review, which caused Remgro to equity account headline earnings of R9 million for Seacom, it said.

Remgro’s actual portion of Seacom’s headline earnings amounted to R21 million (2018: a loss of R1 million). This increase is mainly due to positive growth in the traditional business, as well as a stronger performance in the Service Provider segment, due to the inclusion of FibreCo, it said.

Remgro has a 30% stake in Seacom.

Read: Remgro earnings decline as Vumatel acquisition weighs