Remgro finished selling its FirstRand shares in April. On 9 September, roughly five months later, FirstRand reported its first drop in annual earnings in six years. Two days after that, Remgro told the market to expect the biggest jump in its own earnings in years. Nobody at Remgro has claimed the sequence was deliberate, and nobody has had to.
The trading statement is the news. A JSE rule obliges a company to warn the market as soon as it is reasonably certain its results will come in at least a fifth away from last year's, and Remgro is comfortably past that line. It expects headline earnings per share, the cleaned-up profit figure JSE-listed companies have to report, of between R19.30 and R20.71 for the year to 30 June. That is an increase of between 37% and 47% on last year. Full results are due on or about 21 September.
Two things sit behind it. Remgro says most of the lift is stronger trading at the companies it owns pieces of, helped by one-off items at some of them. Strip those out and the increase is still between 24% and 34%, which is the more useful number.
The stake it is no longer holding
Remgro's FirstRand holding came to it in June 2020, when it unbundled its interest in RMB Holdings, and at one point it was worth 3.92% of the bank's market value. It spent the following years selling that down, having decided the stake was not core to what it does. Business Day puts the final April sale at 39.6 million shares for R3.59 billion, after a larger disposal in March.
FirstRand then had a bad year. Billionaires.Africa reports that its normalised earnings fell 5%, to R39.69 billion for the year to June, the first decline in six years, after it classified its United Kingdom business as held for sale and booked a charge of GBP547.8 million for motor finance redress.
What is left in the portfolio
A holding company is only as good as what it holds. Remgro's list runs to Mediclinic, Heineken, RCL Foods, Rainbow Chicken, Outsurance, TotalEnergies and eMedia, and during the year it took full control of Mediclinic's southern African business, which runs around 50 private hospitals across South Africa and Namibia. Business Day puts the group's market value at R102 billion. The Rupert family holds all the unlisted B shares, which give it more than 40% of the votes.
The detail to look for on 21 September is which of those businesses produced the one-off items. The gap between the two ranges Remgro has published is thirteen percentage points, and that is as close as anyone gets until then.
