Remgro investments start to recover from pandemic, tightening focus on ESG
REMGRO lifted headline earnings a share 66 percent to 510.6 cents in the year to June 30 after its investments recovered off the low base of the Covid19-hit 2020 financial year.
The year’s dividend slipped to 90c from 265c. Intrinsic net asset value per share was up 14.8 percent to R177.33. The share price rose 1.25 percent to R128.57 yesterday morning, indicating that, as is common with listed investment groups, it trades at a discount to intrinsic net asset value.
The discount at year-end came to 35.4 percent versus 35.3 percent in 2020.
Remgro directors said in a statement that the pandemic had caused immeasurable harm globally, but these hardships also provided individuals, companies and organisations with the opportunity to reflect and to reset where appropriate.
“Remgro continues to adapt to the changing markets. As part of this, Remgro is placing increased emphasis on its ESG (environmental, social and governance) practices across the group,” the group directors said.
Chief executive Jannie Durand said: “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 time to introspect, reflect and recalibrate.
“Coming out of that process, we believe now is the time to reset – to do more than pause and adjust, but to recognise the harbingers of change.”
While workplace, economic, social and environmental sustainability practices had been part of Remgro’s values, the aim now was to be an ESG leader, and measures were being implemented
to ensure the group remained engaged with its corporate citizen mandate and values-driven ethos.
A final dividend of 60c (2020: 50c) per share was declared for the year, which brought the total dividend for 2021 to 90c. The final dividend of 2020, as well as the interim and final dividends of 2021, were adjusted downwards due to the RMH unbundling the prior year and the ongoing impact of the pandemic.
Durand said that while the ramifications of the pandemic would be felt for a long time, they were encouraged by its improved performance over the previous financial year.
Remgro unbundled its 28.2 percent stake in RMB Holdings (RMH) in June 2020 and, consequently, the investment in RMH was treated as a discontinued operation.
Headline earnings from continuing operations for 2020 were much impacted, during the second six months to June 30, 2020, by lockdown measures
in South Africa, as well as a once-off R500 million donation to The South African SME Relief Trust.
From this low base, the increase in headline earnings from continuing operations was mainly from a recovery of earnings of most of Remgro’s investee companies, most notably RCL Foods, Distell Group Holdings, TotalEnergies Marketing South Africa and Rand Merchant Investment Holdings.
This was partly offset by a lower contribution from Mediclinic International – Mediclinic’s contribution included the full impact of lockdown measures on its results for the year ended March 31, 2021, and lower interest income from low interest rates.
In addition, FirstRand only accounted for R191m of dividend income, versus R657m last year, following an accounting reclassification of FirstRand from an equity account investment to an investment at fair value through other comprehensive income.