Johann Rupert’s Remgro ups dividend 60% as investments bear fruit

Remgro saw impressive growth in its various investments over the past financial year, leading the holding company to up its dividend by 60%.

Remgro released its results for the year ended June 2023 today, which revealed a solid performance.

Headline earnings increased by 8.7% from R6.49 billion to R7.06 billion, while headline earnings per share (HEPS) increased by 8.9% from 1,151 cents to 1,254 cents. 

The company explained that the uplift in HEPS compared to headline earnings represents the accretive impact of shares repurchased during the year under review.

The 8.7% increase in headline earnings is mainly due to higher contributions from OUTsurance Group’s continuing operations, Mediclinic, the Pembani Remgro Infrastructure Fund, KTH and FirstRand.

The company’s earnings also got a boost from higher interest income and a foreign exchange gain realised on foreign exchange contracts entered in respect of acquiring an additional 5.4% indirect interest in Mediclinic. 

However, the earnings increase is partly offset by lower contributions from TotalEnergies, RCL Foods and Grindrod (due to its unbundling) and transaction costs relating to the Mediclinic acquisition and the Distell/Heineken transaction, the company said.

In addition, the comparative year also included the contributions of Grindrod Shipping, which was disposed of, and the discontinued operations of OUTsurance Group, which unbundled its investments in Discovery and Momentum Metropolitan, as well as disposed of its investment in Hastings.

Remgro said the following corporate actions impacted the comparability of Remgro’s headline earnings over the past two years –

  • The discontinued operations of OUTsurance Group
  • The disposal of Grindrod Shipping
  • The unbundling of Grindrod
  • The foreign exchange gain and transaction costs relating to the Mediclinic acquisition 
  • The transaction costs relating to the Distell/Heineken transaction

However, excluding the impact of these factors, headline earnings increased by approximately 27%.

Remgro’s intrinsic net asset value per share increased by 16.6% from R213.10 as of 30 June 2022 to R248.47 as of 30 June 2023.

Remgro said these results were achieved despite the company operating in “what is probably one of the most difficult business environments to operate in since Remgro’s inception”.

The company’s operating environment was made more challenging by low levels of expected economic growth, the breakdown of state infrastructure relating to energy, transport and logistics, and the slow pace of economic reforms to date.

“The urgency to address these issues cannot be overstated,” the company said.

Remgro declared a final gross dividend of 160 cents per share, a 60% increase from the year before.