Remgro chairman Johann Rupert said investor sentiment towards SA has improved since the establishment of the GNU. Picture: Itumeleng English/Independent Newspapers
Remgro upped its ordinary dividend payment for the year to June by 10% to 264 cents per share, despite suffering an 18.8% plunge in headline earnings per share, although its intrinsic net asset value per share held the fort through a marginal increase of 1% to R251.01 per share.
Despite highlighting challenges it faced during the year under review – including infrastructure and logistics challenges, as well as political uncertainty ahead of the May 29 elections – the company yesterday noted macroeconomic improvements in South Africa.
It highlighted the substantial reduction in load shedding and, more recently, a reduction in fuel prices as positive for South Africa.
Since the May 29 election, and “post establishment of the Government of National Unity (GNU), investor sentiment towards South Africa has improved and we too believe there is reason to be hopeful about improved economic prospects”, said Remgro chairman Johann Rupert.
While its headline earnings per share (HEPS) fell by 18.8%, headline earnings in Remgro decreased by 20% (R5.6 billion).
The company said the 120 basis points difference in its HEPS measure compared to headline earnings represents the accretive impact of shares repurchased during the 2023 financial year and at the beginning of the year under review.
Furthermore, significant drivers of the decline in headline earnings were identified as relating to the effects of corporate actions the company has recently implemented, the majority of which are non-recurring items.
These include Remgro’s portion of a debt forgiveness gain amounting to R227 million that was accounted for by Kagiso Tiso Holdings; a portion of transaction costs amounting to R165m incurred in respect of acquisition in Manta Bidco Limited; and redemption liabilities amounting to R344m relating to Mediclinic’s acquisition of Hirslanden La Colline Grangettes SA.
“The difficult operating environment, particularly in relation to the trading results of Heineken Beverages Holdings Limited also contributed to the material decline in headline earnings,” explained Rupert.
The net intrinsic asset value per share in Remgro increased by 1% to R251.01 in the full year to June, after total earnings in the company amounted to R1.2bn compared to R9.6bn a year earlier.
The decrease in the company’s earnings has been attributed to “the decrease in headline earnings” as well as “the impairment of Remgro’s investment in Heineken Beverages” that amounted to R4.2bn.
In the prior year to June 2023, Remgro accounted for a profit on disposal of R3.3bn in respect of the Distell/Heineken transaction.
“While the group’s results for the year under review did not meet expectations, Remgro’s focus remains on disciplined capital allocation and actively partnering with management teams to drive sustainable performance at its underlying investee companies in order to deliver long-term value for its shareholders,” said Rupert.
BUSINESS REPORT