Remgro earnings increased by a slim 1.8 percent: Henk Kruger/African News Angency (ANA)
Remgro earnings increased by a slim 1.8 percent: Henk Kruger/African News Angency (ANA)

Diversity saves Remgro as reinvestments eat into gains

By Banele Ginindza Time of article published Sep 20, 2018

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JOHANNESBURG – Investment Holding company Remgro was saved blushes by its diverse portfolio as reinvestments and option remeasurements ate into gains made from robust banking and insurance platforms, RCL Foods, Total and higher finance income. 

A lower contribution from Mediclinic as well as transaction costs incurred on the Distell ownership restructuring and the Unilever Spreads business acquisition saw headline earnings for the year to June increase by a marginal 4.3 percent from R8 221 million to R8 573m.

Headline earnings per share (Heps) increased by a slim 1.8 percent from 1 485.5 cents to 1 512.6c.

Analyst at Nitrogen Financial Management Waldo du Plessis said Remgro's results were in line with expectations.

"Remgro looks like an attractive opportunity for value investors," said Du Plessis.

Included in headline earnings for the year under review is a positive fair value adjustment amounting to R261m compared to R687m in 2017, relating to the decrease in value of the bondholders’ exchange option of the exchangeable bonds (option remeasurement). 

Excluding the option remeasurement, headline earnings increased by 10.3 percent  from R7 534m to R8 312m, while Heps increased by 7.7 percent from 1 361.3c to 1 466.5c.

Remgro's headline earnings contribution from the banking division amounted to R3 525m, which was an 11.4 percent increase from the R3 163m in the prior year.

FirstRand and RMH reported headline earnings growth of 11.6 and 11.4 percent respectively. 

The healthcare division, headlined by Mediclinic's contribution to Remgro’s headline earnings, amounted to R1 556m, a 17 percent decrease from the R1 875m of the prior year.

Consumer products contributed R1 605m to Remgro’s headline earnings, an 18.5 percent increase from the R1 354m from the year before. 

Unilever’s contribution to Remgro’s headline earnings increased by 11.1 percent  to R499m.


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