Vumatel and Dark Fibre Africa parent company Community Investment Ventures Holdings (CIVH) has turned profitable, Remgro reported in its 2022 annual financial results released Tuesday.
Vumatel and DFA are wholly-owned subsidiaries of CIVH, while Remgro owns 57% of the holding company.
Between 1 July 2021 and 30 June 2022, CIVH’s contribution to Remgro’s headline earnings was R47 million, a substantial increase from its R435 million loss last year.
“The increase in earnings is mainly due to the settlement of head office debt, resulting from two rights issues, and improved performances by the underlying businesses,” Remgro reported.
“The performance of the underlying businesses improved due to a 14.8% increase in revenue despite greater market competition.”
CIVH also experienced some macroeconomic pressure in terms of customer relocations, customer defaults and an increased collection risk, Remgro noted.
Vumatel’s revenue increased by 26.3% to R2.981 billion, driven by its subscriber uptake growth.
Dark Fibre Africa’s increased marginally by 4.1% to R2.485 billion, mainly due to annuity income increasing to R198 million per month by 31 March 2022.
“During July 2021, Remgro subscribed for 67,364 shares in CIVH for a total amount of R2.124 billion in terms of a rights issue,” Remgro stated.
“The proceeds of the rights issue was used to reduce the CIVH group’s debt and to facilitate further growth.”
The deal exited one of CIVH’s minority shareholders and increased Remgro’s interest in CIVH from 55.2% to 57%.
Seacom also showed revenue growth, with its contribution to Remgro’s headline earnings increasing from R26 million last year to R37 million.
Remgro also adjusted its net asset values for CIVH and Seacom.
Accounting for Remgro’s increased stake in CIVH, the company’s valuation increased from R21.84 billion last year to R24.13 billion.
For Seacom, Remgro set its intrinsic net asset value at R776 million, down from R799 million. Considering Remgro’s 30% shareholding, Seacom’s valuation is R2.59 billion, down from R2.66 billion.
“For purposes of determining the intrinsic net asset value, the unlisted investments are shown at IFRS 13: Fair value measurement valuations,” Remgro stated.