The business environment is one of the most difficult that investment holding group Remgro has had to operate in since its inception, chairman Johann Rupert and CEO Jannie Durand said yesterday.
Challenges included, among other things, load shedding, high inflation, high interest rates, sharp increases in electricity prices, foreign exchange volatility, geopolitical tensions, the erosion of foreign investment confidence in the country, as well as concerning levels of crime and corruption.
Remgro was originally established in the 1940’s by Dr Anton Rupert.
“With low levels of expected economic growth – combined with the breakdown of state infrastructure relating to energy, transport and logistics, and the slow pace of economic reforms to date – the urgency to address these issues cannot be overstated,” the two directors said.
Despite this, Remgro maintained positive momentum - intrinsic net asset value per share increased a solid 16.6% to R248.47 for the year to June 30 and a dividend was paid out that was 60% higher at 240 cents.
The share price traded at R155.09 yesterday morning, up 18.1% over a year, but nevertheless at a 37.5% discount to intrinsic net asset value.
Remgro also successfully completed the Mediclinic and Distell/Heineken corporate actions during the year.
“Amid all the headwinds that South Africa is facing, Remgro remains confident about the resilience of its portfolio,” Rupert and Durand said.
Headline earnings a share (Heps) rose 8.9% to 1 254 cents. An uplift of 29 percentage points per share in the Heps represented the impact of share repurchases.
The increase of 8.7% in headline earnings was mainly due to higher contributions from OUTsurance Group’s continuing operations, Mediclinic, the Pembani Remgro Infrastructure Fund, KTH and FirstRand, as well as higher interest income and foreign exchange gains on foreign exchange contracts entered in for an additional 5.4% interest in Mediclinic.
This was partly offset by lower contributions from TotalEnergies, RCL Foods and Grindrod, as well as transaction costs relating to the Mediclinic acquisition and the Distell/Heineken transaction.
The comparative year also included the contributions of Grindrod Shipping (which was disposed of) and the discontinued operations of OUTsurance (OUTsurance unbundled its investments in Discovery and Momentum Metropolitan, and sold its stake in Hastings).
Excluding the impact on headline earnings of these corporate actions, the headline earnings increased by about 27% reflecting a resilient underlying performance of Remgro’s portfolio, the two directors said.
BUSINESS REPORT