• AIR PRODUCTS SOUTH AFRICA PROPRIETARY LIMITED (AIR PRODUCTS)

    Air Products has a September year-end, but its results for the 12 months ended 31 March 2018 have been included in Remgro’s results for the year under review. Air Products’ contribution to Remgro’s headline earnings for the period under review decreased by 3.0% to R289 million (2017: R298 million).

    Turnover for Air Products’ twelve months ended 31 March 2018 increased by 3.7% to R2 894 million (2017: R2 791 million), while the company’s operating profit for the same period decreased by 0.2% to R855 million (2017: R857 million).

    Air Products is the largest manufacturer of industrial gases in Southern Africa and also imports and distributes a variety of specialty gases and chemical products that are supplied to a wide range of industries including steel, chemicals, oil refining, resource minerals, glass, pulp and paper, food packaging as well as general manufacturing, fabrication and welding.

    The period under review saw difficult trading conditions with depressed demand for the company’s products in most sectors of the business.


  • KAGISO TISO HOLDINGS PROPRIETARY LIMITED (KTH)

    KTH is a leading black-owned investment company with a strong and diversified asset portfolio covering the resources, industrial, services, media, financial services and healthcare sectors.

    KTH’s contribution to Remgro’s headline earnings for the year amounted to R55 million (2017: R34 million). The increase in KTH’s headline earnings was mainly driven by the net decrease in finance costs to R208 million (2017: R373 million) as a results of debt repayments made during the period, as well as its net attributable share of positive fair value adjustments on its equity investment in Exxaro Resources Limited (R139 million). This was offset by a loss recognised on the MMI Holdings Limited preference share investment (R48 million).

    KTH’s earnings for the year amounted to R738 million (2017: R157 million). Income from equity accounted investments increased to R1 207 million (2017: R119 million), mainly due to increased profits from Servest Group Proprietary Limited (R962 million) from the disposal of a significant foreign operation, as well as increased contributions from Fidelity Bank (Ghana) due to improved performance over the period. Other than Servest and Fidelity, the major contributors to the equity accounted earnings during the reporting period was Aurora Wind Power Proprietary Limited, MMI Holdings Limited and XK Platinum Partnership. The current difficult macro-economic conditions had an impact on other equity accounted investments, resulting in lower contributions compared to the comparative period.

  • TOTAL SOUTH AFRICA PROPRIETARY LIMITED (TOTAL)

    Total has a December year-end, but its results for the 12 months to 30 June 2018 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 R501 million (2017: R224 million).

    The results were impacted by favourable stock revaluations of R1 205 million (2017: R454 million, unfavourable), as the international oil price increased from US$46.5 per barrel, at 30 June 2017, to US$75.8 per barrel at 30 June 2018.

    Total’s turnover for the 12 months ended 30 June 2018 increased by 10.7% to R59 637 million (2017: R53 866 million). The increase in turnover is mainly due to increased volumes sold in the mining and commercial sectors.

    The company has continued with its investments regarding health, safety, environment and quality (HSEQ) constraints 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 our staff, transporters and construction contractors.

    Natref experienced lower refining margins compared to previous period due to the impact of a major planned shutdown during October and November 2017, other unplanned shutdowns and a less favourable economic environment.

  • PGSI LIMITED (PGSI)

    PGSI has a December year-end, but its results for the 12 months ended 30 June 2018 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 R4 million (2017: R25 million).

    PGSI’s turnover for the period under review of R4 175 million was flat on the prior period (2017: R4 173 million). The group’s normalised operating profit, which excludes the impact of asset impairments, decreased from R206 million to R89 million. It has been a particularly challenging year mainly due to the effects of a stronger rand and significant competition from low priced imported product. The lackluster demand in the construction and automotive markets has been exacerbated by the continuing impact of this competition on both price and volumes in domestic markets. Equally, the profitability of export sales have also been impacted by the strong rand.

    The group’s main operating subsidiary in South Africa, PG Group, manufactures and supplies glass for the building and automotive industries. A 10% shareholding in PG Group was sold to a BEE Trust during the reporting period. The building sector remains depressed, and the building glass businesses reported a decline in profits during the period driven by weak domestic demand and growing pressure on selling prices in a competitive and oversupplied market. Overcapacity in global markets contributed to increased glass volumes being imported into South Africa. The Africa businesses, which have shown robust growth over the past few years, reported a decline in profitability with many regions being impacted by weaker economic activity and political instability, and the impact of rand imported supplies having to compete with cheaper imports from elsewhere in the world.

    The market conditions in the automotive businesses also remain difficult. This sector has been negatively impacted by economic pressures on consumers, lower claims from the Insurance sector and mixed demand in export markets. The relatively stronger rand negatively impacted automotive export profitability. Supplies to local automotive assembly operations have been challenged by very competitive pricing, especially out of China. The margins are compressed with the Original Equipment Manufacturers benchmarking prices with global competitors who have the advantage of better economies of scale. New local vehicle sales have shown marginal growth over the past 12 months after a three-year trend of negative growth.

    While the economic climate remains challenging, the group has made good progress in the areas of cost reduction, manufacturing quality and performance efficiencies. This has established a better strategic base for future growth. The initiatives to focus on market requirements and improve the service offering to its customers are progressing well.

  • WISPECO HOLDINGS PROPRIETARY LIMITED (WISPECO)

    Wispeco’s turnover for the year ended 30 June 2018 increased by 1.5 % to R2 266 million (2017: R2 232 million). Demand for aluminium extrusions in Southern Africa was subdued and price competition was intense. Although import tariffs on aluminium extrusions were increased by 10% during the year, the effect on local extruders was moderated by the subsequent strengthening of the rand. Margins reduced as raw material costs increased whilst selling prices remained largely flat. This caused headline earnings for the year under review to decrease by 28% to R122 million (2017: R169 million).

    Efficiency improvement remains a critical focus area throughout the business. Various projects are under way to improve throughput and reduce costs in all operating divisions. Investment in state-of-the-art plant and processes forms part of Wispeco’s drive to remain a world-class manufacturer of aluminium extrusions. The company utilised its capacity and flexibility to offer short make-to-order lead times and maximise customer service.

    The company’s Crealco range of architectural products is the benchmark in Southern Africa for aluminium used in buildings and is the preferred choice in specification by architects and building designers. The Crealco range is continuously being improved whilst supported by certified software solutions allowing creative yet cost-effective designs as well as compliance under the building regulations.

    Internally and externally focused training and skills development initiatives lie at the heart of Wispeco’s sustainability and social responsibility. Externally focused initiatives include the upskilling of disabled and previously disadvantaged youths with the aim of finding employment in the aluminium industry. Internal training targets productivity improvement and includes various learnerships to support company growth.