Remgro to give the lowdown on RMB unbundling in weeks
RMH is like a child that must leave home, says CEO Jannie Durand
Remgro, the listed investment holding company chaired by Johann Rupert, will release details of its unbundling of financial services group RMB Holdings (RMH) and FirstRand within weeks, CEO Jannie Durand said on Tuesday.
The company, founded in the 1940s by Anton Rupert, plans to unbundle its 28.7% interest in RMH and a 3.9% direct interest in FirstRand, the parent company of First National Bank. RMH owns 34% of FirstRand.
Speaking after the release of the company’s results for the six months ended December 31, Durand said the company expected to release details of the proposed transaction before the end of March. The transaction will bring to a close more than 40 years of Remgro’s close association with RMH.
“RMH has multiplied over the years. It has outgrown Remgro. It can stand on its own without us a shareholder. It is like a child that must leave home,” Durand said. At R75.3bn, RMH’s market capitalisation is bigger than Remgro’s R73bn.
Remgro's reported a marginal decline in headline earnings, but it's warned that the current economic conditions will last for a few more years. Business Day TV spoke to CEO Jannie Durand about the group's interim performance.
In the six months, the headline earnings contribution from the banking platform rose 3.5% to R1.8bn. FirstRand and RMH reported headline earnings growth of 4.8% and 3%, respectively.
The contribution from another investment, Mediclinic, to Remgro’s headline earnings increased 37.7% to R858m. Remgro said Hirslanden, Switzerland’s largest private-clinic group, had adapted to the regulatory changes affecting the Swiss health-care system.
“It has continued to implement its day-case clinic strategy, which focuses on a more efficient, lower-cost service-delivery model, attracted additional clinical professionals, and also delivered ongoing cost management and efficiency savings”.
The consumer-products segment increased its contribution to Remgro’s headline earnings by 4.8% to R977m. RCL Food’s contribution to headline earnings was, however, down 1.9% at R359m.
RCL’s sugar business experienced lower market demand due to the implementation of sugar tax. “Within chicken, the tough trading conditions were worsened by market oversupply due to sustained high levels of dumped imports,” Remgro said.
Liquor company Distell’s contribution to headline earnings was R384m, down 3.8% on the previous period. “This decrease is mainly due to lower margins and lower sales volumes resulting from weak economic conditions,” Remgro said.
Lower contributions from Hastings Group, Discovery and Outsurance resulted in a 13.8% decrease in Rand Merchant Investment’s contribution to headline earnings.
Durand said Remgro was bracing itself for hardship in coming years. “The last five or six years in SA have probably been some of the toughest years from both a business and a political perspective. We anticipate that this trend will continue for at least the next couple of years, and we remain positive and confident in Remgro’s strategy and ability to continue creating shareholder value over the long term.
“While there is still a lot of uncertainty around global markets and the potential impact of Covid-19 in particular we remain confident that Remgro and its underlying investments remain well placed to navigate these storms and capitalise on the various opportunities that inevitably present themselves during challenging times,” he said.