Remgro recorded a double-digit upsurge in key performance metrics in fiscal year 2022, with the infrastructure division, which houses its fibre assets, gaining steam in the period.
Chaired by Johann Rupert, the Stellenbosch-domiciled investment group reported its performance for the year ended June today, saying in the period it recorded a strong showing to pre-COVID-19 level.
In the year, Remgro’s headline earnings per share rose by 125.3% to 1 150.6 cents, the ordinary dividend per share surged by 66.7% to 150 cents, while the company’s intrinsic net asset value per share as at 30 June was up by 20.2% to R213.10.
Remgro fibre entity Community Investment Ventures Holdings (CIVH) rebounded from a loss of R435 million in 2021, to contribute R47 million to the group’s headline earnings.
The company says CIVH turning profitable positively impacted Remgro, as it lowered finance costs, due to the redemption of the exchangeable bonds during March 2021.
In the current reporting period, CIVH’s increase in earnings was mainly due to the settlement of head office debt, resulting from two rights issues, and improved performances by the underlying businesses, says Remgro.
In July 2021, Remgro subscribed for 67 364 shares in CIVH for a total amount of R2.1 billion in terms of a rights issue. The proceeds of the rights issue was used to reduce the CIVH group’s debt and facilitate further growth.
On the company’s performance in the fiscal year 2022, Remgro says: “The performance of the underlying businesses improved due to a 14.8% increase in revenue despite greater market competition. CIVH also experienced some macro-economic pressure in terms of customer relocations, customer defaults and an increased collection risk.”
Up in the air
Turning to CIVH’s pending potential tie-up deal with Vodacom, which spooked SA’s telecoms sector, Remgro says the transaction is still subject to various regulatory approvals.
The Vodacom and Remgro link-up was first announced in November, in a deal that will see the parties create a mega infrastructure company.
Vodacom will, through a combination of assets of approximately R4.2 billion and cash of at least R6 billion, acquire up to 40% of the ordinary shares of a newly-created, wholly-owned subsidiary of CIVH (namely Infraco), which will hold CIVH’s current interests in Vumatel and DFA.
Remgro notes: “The proposed transaction is still subject to various conditions precedent, inter alia regulatory approvals.”
The potential of this accord, analysts say, rekindled fierce competition in the fibre market, prompting the ongoing scramble to control Telkom’s assets.
Turning to its other fibre investments, Remgro says Dark Fibre Africa’s revenue increased marginally by 4.1% to R2.4 billion (2021: R2.3 billion), mainly due to annuity income increasing to R198 million per month at 31 March 2022 (31 March 2021: R192 million per month).
In the period, Vumatel’s revenue increased by 26.3% to R2.9 billion, driven by its subscriber uptake growth.
Meanwhile, Remgro’s returns from the Seacom global high-speed data network were healthy, as the entity contributed R37 million to headline earnings, from R26 million the previous year.
Commenting on Remgro’s strong showing for the year, CEO Jannie Durand says:“We are encouraged by the progress we have made, amid all the headwinds, in our continued journey of recovery and in delivering on our strategy to optimise our portfolio in order to unlock stakeholder value.
“While considerable uncertainty still remains with much of the global economic outlook being negative amid continued geopolitical volatility, Remgro remains optimistic about its future prospects, as it stays committed to shape the future and partner for South Africa’s prosperity.
“Key to Remgro’s ongoing commitment to the country is to ensure it puts its ethical approach to business that it has long pursued into a practical, modern form, and address the most pressing social and environmental issues it faces. Remgro remains committed to do that, understanding not only that they present challenges, but also opportunities to change for the better, for all.”
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