DURBAN – Diversified investment holding company Remgro said yesterday that its full-year profits tumbled nearly 70 percent during the year to end June, hurt by the Covid-19 outbreak.
The group said that its headline earnings and headline earnings per share from continuing operations fell a massive 68.7percent to R1.74billion and 307.5cents respectively.
It attributed the massive decline in headline earnings from continuing operations to Covid-19 and the resultant lockdown measures introduced to contain its spread.
Remgro said the measures hit its investments in Rand Merchant Investment Holdings, FirstRand, Total, Kagiso Tiso Holdings, Distell and RCL Foods, as well as lower interest income, increased losses from Community Investment Ventures Holdings.
It said the decline in earnings was also impacted by a once-off donation of R500million to The SA SME Relief Trust.
RMI’s contribution to Remgro’s headline earnings decreased 48.4percent to R599m.
The headline earnings contribution from FirstRand and RMB Holdings (RMH) also dipped significantly compared to last and they amounted to R657m and R1.43bn in the current year compared to R1.09bn and R2.64bn, respectively in 2019.
Chief executive Jannie Durand said the onslaught of Covid-19 changed the economic, political and social environments faster than anyone would have anticipated prior to its outbreak.
“It has forced individuals and companies alike to re-evaluate the manner in which we interact and the way in which we will continue to do business going forward.
“While Covid-19 has forced change on us all, 2020 has also been another major inflection point for Remgro following the unbundling of our interest in RMH.
“As with previous inflection points in Remgro’s history, the previous major one being the unbundling of Remgro’s interest in British American Tobacco plc in 2008, this provides Remgro with another opportunity to reshape its trajectory while continuing to drive value creation through a portfolio that has now been rebalanced with an increase in the unlisted investments’ weighting,” Durand said.
The group said the unbundling of Remgro’s 28.2percent stake in RMH resulted in a fall of its headline earnings as well as continuing operations and discontinued operations.
It said its intrinsic net asset value per share decreased 33.7 to R154.47 at the end of June as a result of the RMH unbundling.
The group said the decrease reflects the impact of the RMH unbundling and the negative impact of the Covid-19 pandemic on market values and fair values of underlying investee companies.
Remgro declared a total gross dividend of 265c, which is down by 53percent compared to 564c declared last year.
Remgro shares rose 4.94percent on the JSE yesterday to close at R90.99.