Industrial

PROFILE: Distell produces and markets fine wines, spirits and flavoured alcoholic beverages in South Africa and internationally.

TOTAL South Africa PROPRIETARY LIMITED (TOTAL)

Total has a December year-end, but its results for the 12 months to 30 June 2020 have been included in Remgro’s results for the year under review. Total’s contribution to Remgro’s headline earnings for the year under review amounted to a loss of R20 million (2019: R328 million profit).

The results were impacted by unfavourable stock revaluations of R1 277 million (2019: R2 million, unfavourable), as the international oil price decreased from $64.1 per barrel, at 30 June 2019, to $40.1 per barrel at 30 June 2020.

Total’s turnover for the 12 months ended 30 June 2020 decreased by 14.4% to R64 605 million (2019: R75 432 million). The decrease in turnover is mainly due to Covid-19 government lockdown impact on sales volumes sold in the mining and commercial sectors at a lower average basic fuel price compared to prior period.

The company has continued with its investments regarding health, safety and environment (HSE) to comply with increased stringent legislation and developing group requirements. The key focus areas are environmental compliance as well as health and safety compliance by staff, transporters and construction contractors.

Natref’s results deteriorated for the period under review, as the fourth quarter of the current period was severely impacted by the refinery shutdown from mid-April to mid-June due to absence of demand resulting from Covid-19.

PROFILE: KTH is an established black economic controlled company with a focus on investment banking services, media and strategic investments. Its major investments include Kagiso Media Limited, Momentum Metropolitan Holdings Limited and Servest Group Proprietary Limited.

KAGISO TISO HOLDINGS PROPRIETARY LIMITED (KTH)

KTH is a leading black-owned investment holding company with a strong and diversified asset portfolio comprising a mix of listed and private investments in the media, financial services, industrial, services and healthcare sectors.

KTH’s contribution to Remgro’s headline earnings for the year amounted to a loss of R164 million (2019: profit of R161 million). The decrease in KTH’s headline earnings was mainly as a result of negative fair value adjustments on its shareholder loans to Actom Investment Holdings Proprietary Limited (Actom) (R260 million), shareholder loan in MeCure Healthcare Limited (R60 million) and Momentum Metropolitan Holdings Limited (MMH) (R69 million).

Net finance costs for the period amounted to R105 million (2019: R105 million).

KTH’s earnings for the year amounted to a loss of R610 million (2019: loss of R90 million) due to the following:

• Income from equity accounted investments decreased to a loss of R55 million (2019: profit R244 million), mainly due to a loss accounted from Servest Group Proprietary Limited (Servest) (R109 million) due to stock impairments and the recognition of a guarantee obligation. In addition, equity accounted results from MMH decreased significantly from R129 million to R10 million.
• The investment in Fidelity Bank (Ghana) Limited (Fidelity) was reclassified in terms of IFRS 5 and recognised a profit from discontinued operations (R84 million). KTH will dispose its entire investment structure in Fidelity as part of an agreed shareholder transaction. In the previous period Fidelity contributed equity accounted earnings of R96 million.
• Significant impairments were recognised on Servest, Kaya FM Proprietary Limited, as well as goodwill relating to Urban Brew Studios Proprietary Limited and MediaMark Proprietary Limited during the period totalling R215 million.

PROFILE: Wispeco’s main business is the manufacturing and distribution of extruded aluminium profiles used mainly in the building, engineering and durable goods sectors.

Wispeco Holdings PROPRIETARY LIMITED (WISPECO)

Wispeco’s turnover for the year ended 30 June 2020 decreased by 16.2 % to R1 991 million (2019: R2 376 million). The decrease can mainly be attributed to the Covid-19 pandemic that disrupted business operations during the extended national lockdown in South Africa. Operations were shut down for the month of April, resumed at 50% in May and returned to full manning during June under the national risk adjusted strategy framework. The reduction in turnover also negatively impacted on headline earnings, being the main contributor for the decrease of 33.9% to R80 million (2019: R121 million). In general, the Southern African demand for aluminium extrusions remained stagnant in the past year while price competition prevails.

Wispeco continues along its journey to be world class in the manufacturing of aluminium extrusions as is evidenced by the installation and commissioning a new state-of-the-art billet casting plant and two modern extrusion lines in Alrode. The focus for the year ahead will be on maximising the benefits from these investments. Wispeco remains committed to maintain the shortest possible make-to-order lead times thereby maximising the customer service experience.

The company’s Crealco range of architectural products remains firmly established as the benchmark for aluminium windows and doors in South Africa. The brand carries the reputation of being the preferred choice for specification by architects and signifies novelty and quality. The range is widely supplied and supported by a network of owned and independent distributors across Southern Africa. Wispeco’s class-leading design software (offered to its customers) continuously evolves to support modern customisation and cost-effective design whilst ensuring compliance to building regulations.

PROFILE: PGSI holds an interest of 80% in PG Group Holdings (2019: 90%). The PG Group is South Africa’s leading integrated flat glass business that manufactures, distributes and installs high-performance automotive and building glass products.

PGSI LIMITED (PGSI)

PGSI has a December year-end, but its results for the 12 months ended 30 June 2020 have been included in Remgro’s results for the year under review. PGSI’s contribution to Remgro’s headline earnings for the year under review amounted to a loss of R126 million (2019: loss of R9 million).

PGSI’s turnover for the period under review decreased by 22% to R3 388 million (2019: R4 331 million). The group’s operating profit decreased from R265 million to R103 million. The results were significantly negatively impacted by the Covid-19 State of Disaster and lockdown in the last quarter of the period.

The group’s main operating subsidiary in South Africa, PG Group, manufactures and supplies glass for the building and automotive industries. Both sectors had reported significantly weak demand with the domestic economy in recession even prior to the Covid-19 outbreak.

The results reflect the impact of the weak domestic market, and the overcapacity in global glass markets which has resulted in significant competition from low-priced imported product. Economic pressures on consumers also negatively affected the automotive sector where new vehicle sales are slow, and there have been significantly lower claims from the Insurance sector.

The group is embarking on a number of initiatives to improve efficiencies and reduce the costs to market, which are critical to compete in the current difficult economic climate.