contribution to headline earnings

30 June 2018 
R million 
30 June 2017 
R million 
Grindrod (46) (48)
CIV group 48  110 
SEACOM 15  (33)
Other 40 
57  36 



    Grindrod has a December year-end, however its results for the 12 months to 30 June 2018 have been included in Remgro's results for the year under review. The company's contribution to Remgro's headline earnings for the year under review amounted to a loss of R46 million (2017: a loss of R48 million).

    Headline earnings from continuing businesses, i.e. excluding the shipping business, improved during the first half of 2018, increasing from R232 million to R285 million. The Maputo Port continued to benefit from the 75km access channel dredge that was completed in 2017, as well as buoyant chrome and ferrochrome markets. Coal volumes also increased by 36% at the Matola terminal. The logistics business continues to be constrained by challenging market conditions, while the financial services business reported consistent growth.

    Capital expenditure for the six months to 30 June 2018 amounted to R476 million, of which 71% was expansionary and the remainder for maintenance and replacement projects.

    Grindrod successfully implemented the spin-off and separate listing on the NASDAQ of its shipping business (with a secondary listing on the JSE) during the year under review. This will enable the business to act with strategic focus on its freight and financial services businesses.

    Grindrod Shipping's results include the release of a R2.8 billion foreign currency translation gain following the spin-off of the shipping business. The business benefited from its exposure to the dry-bulk spot market, which improved on the comparative period, whilst tanker market rates were under pressure; reporting in the first half a headline loss of R116 million, 14.7% lower than the comparative period loss of R136 million, excluding listing transaction costs. With its reputation and modern eco-friendly fleet, the business is well positioned to grow.


    Remgro has an effective interest of 51.0% in the CIV group, as at 30 June 2018, which is active in the telecommunications and information technology sectors. The key operating company of the group is DFA, which constructs and owns fibre-optic networks.

    The CIV group has a March year-end and therefore its results for the 12 months ended 31 March 2018 have been included in Remgro's results for the year under review. The CIV group's contribution to Remgro's headline earnings for the year under review amounted to R48 million (2017: R110 million).

    DFA's revenue for the financial year ended 31 March 2018 increased by 17.5% year on year to R1 916 million (2017: R1 630 million) mainly as a result of solid growth of 29% in annuity revenue. DFA's EBITDA for the period under review increased by 11.0% to R1 189 million (2017: R1 071 million). The current book value of the fibre-optic network is in excess of R8 billion. DFA has thus far secured an annuity income in excess of R138 million per month (2017: R115 million), with the majority thereof being on long-term contracts with customers. The decreased contribution in headline earnings is mainly due to higher finance costs due to higher gearing.

    DFA owns fibre network rings in Johannesburg, Cape Town, Durban, Midrand, Centurion and Pretoria, as well as rings in smaller metros, such as East London, Polokwane, Tlokwe, Emalahleni and George, to name a few. The company also installs Fibre-to-the-Business (FTTB) and Fibre-to-the-Home (FTTH) networks. At 31 March 2018, a total distance of 10 554 km (31 March 2017: 9 854 km) of fibre network had been completed in the major metropolitan areas and on long-haul routes. The network uptime for the year under review was 99.9868%.

    The DFA revenue model adapts to the customers' needs, and DFA offers flexible payment profiles, with a mix of an upfront amount and a monthly annuity, or solely annuity based with multi-year contracts of mostly up to 15 years. The future value of the current annuity contracts (including orders) is in excess of R12.5 billion.

    During June 2018, the CIV group acquired 34.9 % of Vumatel. Vumatel is a leader in the FTTH market. Vumatel's FTTH network spans over 8 000 kilometres over a residential area footprint which it leases to Internet Services Providers (ISPs), who in turn sell Internet products to the consumer. Vumatel complements the CIV group's existing portfolio and significantly strengthens its ability to continue providing increased broadband and Internet access to schools, homes and businesses in South Africa.

  • SEACOM capital Limited (SEACOM)

    Remgro has an effective economic interest of 30% in SEACOM, which operates an international and local fibre-optic network to connect Southern and Eastern Africa with Europe and Asia.

    SEACOM has a December year-end, but the results for the 12 months to 30 June 2018 have been included in Remgro's results for the year under review. SEACOM's contribution to Remgro's headline earnings for the year under review amounted to R15 million (2017: R33 million loss). The improved profitability is due to growth in the enterprise market segment, once-off revenue on long-term contracts and the containment of operating and overhead costs. The company also generates strong cash flows.

    SEACOM provides high-capacity international and local bandwidth services to customers in the form of International Private Line, IP Transit, Internet access and cloud services. These services are sold under 12 to 36-month lease contracts, as well as 10 to 15-year indefeasible right of use (IRU) contracts, which generally include annual maintenance charges over the term. Revenue from IRUs is accounted for over the full term of each respective contract.

    SEACOM maintains a proactive approach to ensuring profitability by expanding its network and products to meet market demand, and introducing a more diversified product range that allows it to capture increased market share by offering a better value proposition.

    The company continues to expand and grow business in the Enterprise market where metro and last-mile fibre solutions are offered to business customers, providing Internet, Metro Ethernet and cloud services.

    Increasing use of data and cloud services is ensuring that demand continues to grow. SEACOM's ability to adapt to the rapidly evolving data market, and to respond to an ever-increasing demand for faster and more reliable data services, is critical to maintain its ongoing competitive positioning.

    SEACOM continues to grow its market share through a combination of strong organic growth and acquisition.