Remgro has increased its stake in Community Investment Ventures Holdings (CIVH), the parent of Vumatel and Dark Fibre Africa (DFA), following a rights issue used by CIVH to raise capital for expansion and reduce debt.
Remgro disclosed in its interim results for the six months ended 31 December 2021 — published on Thursday — that its stake in CIVH has increased marginally from 54.7% to 55.2% through the share subscription offer, in terms of which it subscribed for an additional 54 738 shares in CIVH for a total consideration of just over R1.6-billion.
“The rights issue proceeds were used mainly to reduce the CIVH group’s debt and to unlock capital expenditure facilities for further growth,” Remgro said.
CIVH has a March year-end and its results for the six months ended 30 September 2020 have been included in Remgro’s results for the period under review.
The underlying performance of the business improved due to a 17% increase in revenue coupled with cost reductions, Remgro said.
“The group (CIVH) is operationally cash generative and reinvested in excess of R500-million of operating cash flow during the period into expanding its operations and network footprint.”
Headline losses
CIVH’s contribution to Remgro’s headline earnings in the six-month period amounted to a loss of R209-million (2019: a loss of R197-million). That means that CIVH recorded a headline loss in the latest period of R382-million, from a loss of R360-million previously.
Remgro said DFA’s revenue remained flat in the latest reporting period at R1.2-billion. However, annuity income increased to R187-million/month as at 30 September 2020 (R174-million/month in the comparable period in 2019), which was offset by lower construction services revenue and reduced income from network assets transferred to Vumatel at the end of the prior period.
Underlying operating earnings at DFA increased by 47% to R232-million. The current book value of the fibre-optic network is in excess of R10-billion, while the future value of the current annuity contracts (excluding open orders) is also over R10-billion.
Vumatel’s revenue increased by 43% to R1.1-billion, driven by accumulated subscriber uptake growth and the acquisition of additional networks from a DFA subsidiary. Underlying operating earnings increased by 25% to R297-million.
“Covid-19 accelerated the requirements for data and, in turn, assisted in the performance of the fibre-to-the-home business,” Remgro said.
Remgro issued a guarantee to Rand Merchant Bank for a loan facility, which was granted to CIVH to fund its acquisition of all of Vumatel. Remgro’s exposure at 31 December 2020 amounted to R3.5-billion. – © 2021 NewsCentral Media
