CAPE TOWN - REMGRO’S investment portfolio saw a “resilient performance” in the six months to December 31; excluding FirstRand, which did not declare dividends, and Mediclinic International, which was also severely affected by the pandemic.
The group, chaired and controlled by well-known South African businessperson Johann Rupert, said in a guidance update for the six-month period yesterday that headline earnings per share from continuing operations were expected to fall 45 to 55 percent to between 235.1 cents and 287.4c a share.
However, the results were not directly comparable with the same period a year ago. The full interim results are expected to be released on March 25.
Headline earnings were affected by an 80.2 percent lower contribution of Mediclinic International, which included the full impact of the Covid-19 pandemic on Mediclinic’s results for the six months to September 30, 2020, and the suspension of its dividend to preserve liquidity, despite a robust operational performance.
Due to an accounting reclassification of FirstRand from an equity accounted investment to an investment at fair value through other comprehensive income, no earnings from FirstRand were accounted for in the period, whereas R548 million was included in the comparative period.
FirstRand did not pay dividends during the period under review.
The decrease in headline earnings was also due to lower interest income from the 300 basis points reduction in interest rates since January 2020.
During June 2020, Remgro unbundled its 28.2 percent interest in RMB Holdings (RMH) and the investment in RMH was treated as a discontinued operation for the year ended June 30, 2020. For the period under review, discontinued operations for the comparative six months to December 31, 2019, also included the equity accounted income of RMH.
Remgro’s other investments, apart from Mediclinic and FirstRand, are in the consumer product, financial services, infrastructure, industrial, other diversified investment vehicles and in the media sectors, as well as in what it terms social impact investments.
Its main investments include Distell, Total South Africa, Rand Merchant Bank Investment Holdings, RCL Foods – Remgro increased its stake in branded food and chicken group RCL towards the end of last year – and Siqalo Food.
Remgro’s intrinsic net asset value at June 30, 2020, was R154.47 per share. The share was up 1.53 percent to R107.62 on the JSE yesterday morning, indicating an approximate 30 percent discount to net asset value. Last year this time, the share price was around R129 a share. Remgro shares closed 0.02 percent higher at R106.02 on the JSE yesterday.
BUSINESS REPORT