Remgro increases asset value per share by 10.3%, more shareholder value to be unlocked

Remgro lifted intrinsic net asset value per share by 10.3% for the six months to December 31, and its management says further work will be done to unlock shareholder value.

The investment group, chaired by well-known South African businessman Johann Rupert, includes among its major interests, stakes in Mediclinic International, RCL Foods, FirstRand, Discovery, and Momentum Metropolitan. The interim dividend was raised by 20% to 96 cents.

In the six months, intrinsic net asset value per share increased by 10.3% to R276.89 since June 30, 2024. Remgro’s share price gained 3.53% Tuesday morning on the JSE to R159.78, which brought the annual gain in the price to 34%. Despite this, the price still represents about a 42% discount to intrinsic net asset value.

“Much work still needs to be done to further unlock and optimise the performance of the portfolio,” Rupert said in the results announcement.

Headline earnings increased by 38.7% in the six months to R3.73 billion, while headline earnings per share (HEPS) increased by 38.6% to 672 cents, with the increase due mainly to much improved operational performances from the majority of the investee companies.

There were increased contributions from Rainbow Chicken (+R237 million), RCL Foods (+R224m), OUTsurance Group (+R195m), and Mediclinic Group (+R152m). Heineken Beverages Holdings returned to profitability, driven by volume growth and margin recovery (+R274m).

There were lower contributions from TotalEnergies Marketing South Africa (-R331m), mainly due to higher negative stock revaluations, and Community Investment Ventures Holdings (CIVH) (-R147m), mainly due to increased borrowing costs from higher average debt balances and a negative fair value adjustment on an interest rate hedge.

There were lower finance costs due to the redemption of the preference shares (+R226m).

The impact of significant corporate actions implemented during the previous financial years decreased to R77m from R343m in 2023.

Remgro’s management said their focus on capital management and active partnership helped drive performance in the portfolio, as reflected by the marked improvements in earnings contributions.

“Remgro is pleased these efforts are bearing fruit,” said Rupert.

The group said that the period under review was still characterised by a degree of global macroeconomic and geopolitical instability.

In contrast, the local operating environment showed signs of moderation, fueled by improved investor and consumer confidence, ongoing traction on political reform, and a positive trend in key economic indicators.

“This has and continues to give the group the impetus to focus on the things within its control, with our immediate priority remaining the focus on disciplined capital allocation and driving sustainable performance in the underlying portfolio companies,” Rupert said.

Mediclinic’s performance was driven by good volume growth across all the divisions. Mediclinic’s contribution to Remgro’s headline earnings increased by 56% to R883 million. As a result of the Mediclinic acquisition, Remgro’s interest in Mediclinic increased from 44.6% to 50% in June 2023.

Heineken Beverages’ contribution to Remgro’s headline earnings amounted to a loss of R11m, which is much improved from a R386m loss at December 31, 2023. Heineken Beverages saw high-single-digit volume and revenue growth. Namibia Breweries achieved mid-teens volume and revenue growth.

CIVH’s revenue for the six months to September 30, 2024, increased by 7.9% to R3.39bn, supported by subscriber uptake growth at Vumatel and increased demand for Dark Fibre Africa (DFA) fibre-to-the-business (FTTB) products. CIVH’s EBITDA increased by 6.5% as the business increased security and maintenance costs to ensure the safety of its workforce.

Business Report