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Mediclinic News : Remgro sees glow in fibre

Title

Remgro sees glow in fibre

Date

2016-09-22

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News Description

BUSINESS DAY LIVE Investment giant Remgro has signalled that big things are expected from its investment in fibre-optic cabling specialist Dark Fibre Africa. At an investment briefing on Wednesday, Remgro CEO Jannie Durand said the company was confident about the future of Dark Fibre Africa, which he reckoned was capable of sustaining double-digit growth. "We believe this business will make a significant contribution to Remgro’s net asset value and earnings going forward." Remgro’s interest in Dark Fibre Africa is held via a 50.9% stake in CIV Group, one of the company’s smaller investments, with an intrinsic value estimated at R3.2bn. Remgro’s investment portfolio is worth more than R150bn, and includes major listed counters such as Mediclinic Corporation, FirstRand, RMI, RCL Foods and Distell. In the year to end-June, Dark Fibre Africa reported revenue up 13.5% to R1.19bn with earnings before interest, tax, depreciation and amortisation growing 15% to R861m. Durand said Dark Fibre Africa’s improved results stemmed mainly from a solid 21% growth in annuity income, which was now in excess of R87.5m a month. Durand also disclosed that Dark Fibre Africa’s book value of its fibre-optic network was more than R6bn, and that the future value of the annuity contract base topped R10bn. Remgro’s portion of Dark Fibre Africa’s headline earnings was 25% higher at R64m — making the investment the standout performer of the Infrastructure division, which also includes stakes in shipping and logistics group Grindrod and undersea cable specialist Seacom. Most of the questions at the investor presentation were centred on Remgro’s recent resolution that allows it to issue new shares to raise fresh capital. Durand stressed that the resolution was aimed at ensuring flexibility at Remgro. "It depends what materialises in the [deal] pipeline … and it allows us to execute quickly." Remgro now holds about R16bn of debt at the centre after backing 54.6%-held private hospitals subsidiary Mediclinic International in two major international deals. There is talk that Remgro could exercise a pre-emptive right over SABMiller’s shares in liquor group Distell. Remgro is the largest shareholder in Distell with an effective 30.9% stake. Durand stressed there was no burning issue to reduce debt, noting: "If we do raise funds by a rights issue, it will be opportunistic, and not to settle debt or sit on cash." In the year to June, Remgro’s net operational cash flows came in at a reassuring R3.8bn, with cash flow from operations reaching R1.4bn and net dividends received topping R3.5bn. Although dividends received were lower than last year’s R4.7bn, Remgro financial director Neville Williams said the final dividend of R382m from Mediclinic was received only in July, after the close of the investment group’s financial year). If this dividend were included in the total then net dividends received would have touched R4.2bn, he said.
Created at 2016/09/27 11:46 AM by Mediclinic
Last modified at 2016/09/27 11:46 AM by Mediclinic