Remgro eyes 60% surge in earnings as investees recover

Remgro eyes 60% surge in earnings as investees recover


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JSE-LISTED investment holding company Remgro expects its full-year earnings to surge by at least 60 percent, boosted by the recovery from some of its underlying investee companies.

In a trading update for the year to end June, the group said yesterday that it expected its headline earnings per share (Heps) from continuing operations to be at least 60 percent, or 184.5 cents, higher than the 307c a share reported a year ago.

However, its total Heps for the current period was not expected to differ by more than 20 percent from the 560.6c reported a year earlier.

The group said last year’s Heps from continuing operations were significantly impacted during the second six months to June 2020 by the Covid-19 pandemic and the resultant lockdown measures, as well as a onceoff donation of R500 million to the South African SME Relief Trust.

“From this low base, the increase in headline earnings from continuing operations for the current period is mainly due to the expected recovery of the earnings of most of Remgro’s underlying investee companies,” Remgro said.

However, Remgro stated that this increase was partly offset by a lower contribution from Mediclinic International plc. Remgro holds a 44.6 percent stake in Mediclinic and the private hospital group reported a 43 percent decline in adjusted earnings per share for the year to end March, negatively impacted by the Covid-19 outbreak in its operations.

Remgro said Mediclinic’s contribution includes the full impact of the Covid-19-related lockdown measures on their results for the year ended March 2021, as well as lower interest income, due to the 300 basis points reduction in interest rates since January 2020.

Remgro intends to release a further trading statement as soon as it has reasonable certainty on the ranges of Heps from continuing operations. The group expects to release its full-year results on or about September 22.

Remgro also holds stakes in listed companies like FirstRand, Rand Merchant Investment Holdings, Distell and RCL Foods plus unlisted entities.

“Shareholders should also note that due to the accounting reclassification of FirstRand from an equity accounted investment to an investment at fair value through other comprehensive income, no earnings from FirstRand are equity accounted for in the current period, whereas R657m was included in the comparative period,” the group said.

Remgro closed -1.61 percent lower at R114.60 on the JSE yesterday.

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