Remgro will report a sharp decline in first-half earnings, mostly as a result of its investments in FirstRand and Mediclinic. It says its performance has also been skewed by Covid-19, which had a significant impact over the six months to end-December.
Remgro has a broad portfolio of investments that span the economy, which also include Rand Merchant Investment Holdings, Total South Africa, Distell and RCL Foods, amongst others. Last June, it unbundled its 28.2% interest in RMB Holdings.
In a trading statement, it said headline earnings were significantly affected by a decreased contribution from Mediclinic, which included the full impact of the Covid-19 lockdown on the hospital group’s results for the six months to end-September. Due to the accounting reclassification of FirstRand from an equity accounted investment to an investment at fair value, it didn’t account for any earnings from the bank in the period under review. The previous year’s interim numbers included R548 million of FirstRand earnings. Also, due to Covid-19, the bank didn’t pay a final dividend last year.
For the period, it expects headline earnings per share (HEPS) from continuing operations to be between 45% and 55% below the 522.5c reported a year earlier, while total HEPS will be 60% to 70% below the 750.9c previously reported.Excluding Mediclinic and FirstRand, the rest of Remgro’s investment portfolio had a resilient performance during the Covid-19 pandemic,” the company said. “The decrease in headline earnings from continuing operations is mainly due to lower contributions by Mediclinic and FirstRand, as well as lower interest income, due to the 300 basis points reduction in interest rates since January 2020.”
Remgro’s shares closed 2c higher at R106.02 yesterday.
InceConnect
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