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Vumatel revenue increases by 43 percent due to increased subscriber uptake

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Investment holding company Remgro reported a significant drop in earnings for the six months ended December 2020 on Thursday (25 March), citing relentless toil around the Covid-19 pandemic.

Total headline earnings per share fell 67.1 percent to 247.4 cents per share, while continuing operations headline earnings per share fell 52.7 percent to 247.4 cents per share.

According to the company, the decrease in headline earnings from continuing operations is primarily due to lower contributions from Mediclinic and FirstRand, as well as lower interest income as a result of the 300 basis point reduction in interest rates since January 2020.

Mediclinic, RMI, CIVH (which owns Vumatel and DFA), FirstRand, RCL Foods, and Distell are among Remgro's assets. CIVH's contribution to the group's headline earnings was a loss of R209 million, according to the company (2019: a loss of R197 million).

Dark Fibre Africa Proprietary Limited (DFA) revenue remained flat at R1 188 million (2019: R1 190 million), but Vumatel revenue increased by 43 percent to R1 092 million, driven by accumulated subscriber uptake growth and the acquisition of additional networks from a DFA subsidiary, the company said.

Vumatel is South Africa's largest fiber-to-the-home network operator, with over 19,000 kilometers of fiber assets.

Covid-19 accelerated data requirements, which aided the performance of the FTTH business, according to Remgro.

Grindrod and Seacom contributed R15 million and R35 million to Remgro's headline earnings, respectively (2019: R41 million and R9 million), while other infrastructure investments included Grindrod Shipping Holdings Limited's (Grindrod Shipping) contribution, which amounted to a loss of R58 million (2019: a loss of R22million).

According to the group, the increased loss from Grindrod Shipping is primarily due to a decrease in dry bulk spot rates, which were influenced by lower dry bulk demand as a result of the Covid-19 pandemic.

“The second wave of Covid-19 hit South Africa harder than expected in the second half of 2020, bringing with it a new variant with higher infection rates and greater severity of symptoms. This prompted the imposition of additional lockdown measures in order to slow the spread of the disease and relieve pressure on the healthcare system, according to Remgro.

It stated that the results for the six months ending December 2020 are not directly comparable with the results for the six months ending December 2019, which were from a pre-Covid-19 period.

Headline earnings for the period under review were significantly impacted by Mediclinic's reduced contribution (down by 80.2 percent), which includes the full impact of the Covid-19-related lockdown measures on its results for the six months ending September 2020.

Furthermore, because FirstRand was reclassified from an equity-accounted investment to an investment at fair value through other comprehensive income, no earnings from FirstRand were accounted for in the period under review, whereas R548 million was included in the comparative period.

As a result of the Covid-19 pandemic, FirstRand did not pay any dividends during the review period, according to the company.

With the exception of Mediclinic and FirstRand, Remgro said its investment portfolio performed well during the Covid-19 pandemic, with their contribution to Remgro's headline earnings decreasing by only 7.7 percent.

Total headline earnings fell by 67 percent during the period under review, from R4 242 million to R1 398 million.

Remgro unbundled its 28.2 percent stake in RMB Holdings in June 2020, and as a result, the investment in RMH was classified as a discontinued operation for the fiscal year ended June 2020.

Remgro's intrinsic net asset value per share increased by 4.9 percent from R154.47 on June 30, 2020 to R161.98 on December 31, 2020, according to the company.

The company declared an interim gross dividend of 30 cents per share (2019: 215 cents), which was reduced to account for the RMH Unbundling and the impact of the Covid-19 pandemic.

A 20% withholding tax, or 6 cents per share, will be applied, resulting in a net dividend of 24 cents per share, according to the company.


26 Mar 2021



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