Infrastructure

 


  • COMMUNITY INVESTMENT VENTURES HOLDINGS PROPRIETARY Limited (CIVH)

    CIVH has a March year-end and therefore its results for the 12 months ended 31 March 2019 have been included in Remgro’s results for the year under review. CIVH’s contribution to Remgro’s headline earnings for the year under review amounted to R204 million loss (2018: R48 million headline earnings). CIVH’s main operations are DFA and Vumatel.

    DFA owns fibre networks in Johannesburg, Cape Town, Durban, Midrand, Centurion and Pretoria, as well as 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 2019, a total distance of 13 600 km (2018: 10 554 km) of fibre network had been completed in the major metropolitan areas and on long-haul routes. The current book value of the fibre-optic network is in excess of R9 billion. The network uptime for the year under review was 99.985%.

    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 (excluding orders) is in excess of R12 billion.

    DFA revenue for the financial year ended 31 March 2019 increased by 22.6% year on year to R2 349 million (2018: R1 916 million) mainly as a result of strong growth of 28.7% in annuity revenue. DFA’s annuity income is in excess of R163 million per month (2018: R136 million), with the majority thereof being on long-term contracts with customers.

    DFA’s earnings before interest and tax (EBIT) for the period under review decreased by 54.6% to R276 million (2018: R605 million). The decrease in EBIT result mainly from impairment losses relating to other financial assets, intangible assets and goodwill, totalling R371 million. A loss of R90 million relating to SqwidNet, DFA’s Internet of Things start-up, was also incurred as it completed its network rollout in advance of signing on customers. Excluding the aforementioned once-off items, the EBIT of DFA increased by 21.2%.

    During June 2018, CIVH acquired 34.9% of Vumatel. Vumatel is a leader in the FTTH market. Vumatel’s FTTH network spans 16 000 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 CIVH’s existing portfolio and significantly strengthens its ability to continue providing increased broadband and internet access to schools, homes and businesses in South Africa. The results of CIVH include equity accounted losses of R98 million from its investment in Vumatel. During May 2019, CIVH acquired the remaining 65.1% of Vumatel.

  • GRINDROD LIMITED (GRINDROD)

    Grindrod has a December year-end, however its results for the 12 months to 30 June 2019 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 R72 million (2018: a loss of R46 million).

    Continuing operations generated headline earnings amounting to R137 million for the first half of 2019, compared to a R63 million in 2018. The Maputo Port and Terminals increased by 66% over that period, while the Logistics segment contributed headline earnings amounting to R47 million (2018: R61 million headline loss).The bank reported headline earnings of R55 million (2018: R74 million) for the first six months of 2019.

    The Freight Services business focused on “trade corridors supported by key infrastructure” and have used the first half of the year to focus on the customers’ need for efficient and effective freight logistics services. Good progress was made to add scale and diversification to the core business.

    The core Bank has been further capitalised following good growth in deposits and advances and is re-establishing its retail business. The private equity businesses have been split out and are now being driven as a separate focused business.

  • GRINDROD SHIPPING HOLDINGS LIMITED (Grindrod Shipping)

    Grindrod Shipping has a December year-end, however its results for the 12 months to 30 June 2019 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 R65 million.

    During the previous financial year in June 2018, Grindrod successfully implemented the spin-off and separate listing on the NASDAQ (with a secondary listing on the JSE) of its shipping business, Grindrod Shipping.

    Revenue for the six months ended 30 June 2019 increased by $16.4 million, or approximately 10.9%, to $167.2 million (six months ended 30 June 2018: $150.8 million). The largest component of revenue is vessel revenue. Vessel revenue remained relatively flat with a slight increase of $0.3 million, or approximately 0.2%, from $147.4 million for the six months ended 30 June 2018 to $147.7 million for the six months ended 30 June 2019. The increase in total revenue was primarily due to the sale of a small tanker vessel and a drybulk vessel, and improved spot rates in the tanker market, offset by a decrease in the spot rates in the drybulk market in the first half of 2019. Additionally, one of Grindrod Shipping’s joint ventures sold a medium range tanker.

    Gross profit increased by $3.5 million, or 145.8%, from $2.4 million for the six months ended 30 June 2018 to $5.9 million for the six months ended 30 June 2019 primarily due to improved rates in the tanker spot market in the six months to 30 June 2019. This was offset by the decrease in the drybulk spot market in that period.

    Grindrod Shipping’s headline loss for the six months ended 30 June 2019 amounted to $14.4 million (2018: $13.9 million).

  • 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 2019 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 R2 million loss (2018: R15 million profit). The drop in profitability arose as there was a decline in once-off revenue in the period under review and increased imputed interest costs due to the impact of IFRS 15.

    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 and Service Provider market with national long haul, metro and last-mile fibre solutions are offered to customers, providing high capacity 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.

  • other infrastructure interests