Remgro's net asset value rises 34%

Wednesday 18th September, 2013 on Business Day

Remgro CEO Jannie Durand. Picture: FINANCIAL MAIL CAPE TOWN — Investment behemoth Remgro underlined the quality of its investment portfolio and dealmaking skills by increasing its intrinsic net asset value (NAV) by 34% to R204.83 per share in the year to end June. CE Jannie Durand said on Wednesday the results of the majority of Remgro’s underlying investments attested to the resilience by these companies in challenging global and local economic conditions. His reassuring comments were underlined by a 10% hike in dividends to 356c per share.

The gain in intrinsic NAV — regarded as the best performance gauge of investment companies — was spurred by strong gains in private hospital subsidiary Mediclinic, which now ranks as Remgro’s single biggest investment by value. Mr Durand said the group's investment in Mediclinic had roughly doubled in value since 2012.

He said that Remgro also participated in Mediclinic’s rights offer at R28.63 per share in late 2012 — a far cry from Wednesday’s closing price of R75.80. Ironically, Mediclinic’s contribution to Remgro’s headline earnings was a loss of R385m due to a one-off cost relating to Mediclinic’s recent refinancing transaction.

This meant Remgro’s headline earnings came in 14% lower at R14.4bn. But if the refinancing costs were stripped out Remgro showed a 11% gain in headline earnings to R5.7bn.

A more critical indicator of the robustness of Remgro’s investment portfolio was the R1bn generated in operational cash flow coupled to another R2.9bn in dividends received. Cash at the end of June stood at R4.2bn, but Mr Durand said this figure was somewhat misleading in that it included cash held at subsidiary companies.

He estimated Remgro’s cash at centre to be about R2.7bn, which is the lowest balance shown by the company for a number of years.

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