Remgro pushes up dividend payout

Investment giant Remgro, controlled by the Rupert family, nudged up the interim dividend payout despite a marked fall in intrinsic net asset value (NAV) in the six months to December.

Results released on Thursday evening showed Remgro’s intrinsic NAV — the key performance gauge for an investment counter — down almost 16% to R257 a share after the sharp drop in the share price of key private hospitals subsidiary Mediclinic International.

London Stock Exchange-listed Mediclinic is Remgro’s single biggest investment. But Remgro, which held a R9.8bn rights offer last year, pushed up the interim payout 5% to 194c a share.

The dividend payout was underpinned by strong net cash flow (after dividends paid, tax and finance charges) of R654m (last year: R611m). Remgro saw slightly lower cash from operations of R65m (R473m), but dividends received were 25% higher at R2.5bn.

Remgro’s cash-at-the-centre was R12.3bn at the end of the interim period. Asked if the cautious hike in dividends (considering the company’s cash-flush position) meant there was potential deal flow pending, Remgro CEO Jannie Durand said the company was always on the lookout for deals. He stressed the dividend was aligned to headline earnings — which were up by about 4%.

Aside from Mediclinic, Remgro holds influential stakes in insurance company RMI, liquor business Distell, RCL Foods and Unilever as well as the RMB/FirstRand banking hub.

Lentus Asset Management chief information officer Nic Norman-Smith said there were no material surprises in the Remgro interims.

“It was always going to be about Mediclinic … which the market already knew.”

Norman-Smith said though the Remgro share price discount to intrinsic NAV had narrowed, the share was more attractive due to the fact that the market attributed a much more realistic valuation to Mediclinic.