Business Day

Focus is on ESG, Remgro says

- Karl Gernetzky Markets Writer gernetzkyk@businessli­ve.co.za

Remgro, which is chaired and controlled by Johann Rupert, says it is pleased with the resilience of a portfolio that is mostly showing steady recovery from Covid-19. However, after rethinking its priorities, the investment heavyweigh­t says its focus is squarely on more sustainabl­e business practices.

Remgro, which is chaired and controlled by Johann Rupert, says it is pleased with the resilience of a portfolio that is mostly showing steady recovery from Covid-19. However, after rethinking its priorities, the investment heavyweigh­t says its focus is squarely on more sustainabl­e business practices.

Remgro’s most valuable stake is in Mediclinic, which has made more than one announceme­nt recently on how it intends to meet its target of carbon neutrality by 2030. Remgro investees Rand Merchant Investment Holdings (RMI) and RCL Foods have also recently announced plans that could see them unbundling parts of their portfolio to narrow their focus on core businesses.

Releasing its results for its year to end-June on Wednesday, Remgro said its focus was on environmen­tal, social and governance (ESG) factors, which are of increasing relevance to directors amid a push from lobbyists and investors for companies to focus more on issues such as climate change.

“We understand the importance of relevance and the need to be adaptable, and as such saw 2020, the year of the pandemic, as the ideal and most opportune time to introspect, reflect and recalibrat­e,” said CEO Jannie Durand in the group’s 2021 results on Wednesday.

“Coming out of that process, which remains ongoing, we believe now is the time to reset — to do more than pause and adjust but to recognise the harbingers of change,” he said.

Headline earnings from continuing operations increased by almost two-thirds to R2.88bn in Remgro ’ s year ending June, driven by a rebound for investees such as RCL Foods and Distell, although Mediclinic continues to feel pandemic pressure.

Remgro holds 44.6% of Mediclinic with an intrinsic value of R19.3bn, and that company’s contributi­on to headline profit fell 59.3% to R674m to end-June.

SA hospital groups have been hit hard by Covid-19, which has prompted a drop-off in elective surgeries and has cut into revenue streams such as hospital parking and coffee shops.

Mediclinic, SA’s largest hospital group by market value, announced on Tuesday it had signed R8.45bn syndicated sustainabi­lity-linked loan, which incentivis­es it to meet targets such as lower emissions or water efficiency through the prospect of lower margins.

This follows an announceme­nt earlier in September that the hospital group inked a deal for up to R2.2bn in local renewable energy, part of its commitment for carbon neutrality by 2030.

Remgro’s intrinsic net asset value per share increased by 14.8% to R177.33 to end-June, when its shares were trading at a 35.4% discount, up only marginally year on year. The intrinsic value of the portfolio stood at R104.3bn.

RMI, in which Remgro holds a 30.6% stake, also announced earlier in September that it intends to unbundle its stakes in Discovery and Momentum Metropolit­an, with news of the plan to unlock value sending its shares up 14.57%.

RCL Foods said earlier in September it was considerin­g all options as it weighed up separating its chicken, sugar and logistics businesses. The news propelled its share up as much as 18.55%, although it later pared gains to close 6.22% higher. In the following session, RCL Foods’ shares gained 8.16%.

NOW IS THE TIME … TO DO MORE THAN PAUSE AND ADJUST BUT TO RECOGNISE THE HARBINGERS OF CHANGE

Jannie Durand Remgro CEO

Newspapers in English

Newspapers from South Africa