Remgro Limited · JSE:REM
Remgro — FY2018 Earnings Presentation
38 slides from Remgro's earnings presentation, Sep 20, 2018
Slide 1: Final Results Presentation for the Year Ended 30 June 2018
FINAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2018 20 SEPTEMBER 2018 Remgro Limited 1 Final results presentation 2018
Slide 2: Salient Features
S AL I E N T F E AT U R E S Year ended Year ended 30 June 2018 30 June 2017 Headline earnings measures (cents) Headline earnings per share (HEPS) 1.8% 1 512.6 1 485.5 HEPS excl. option remeasurement 7.7% 1 466.5 1 361.3 Total dividend (cents) 7.5% 532.0 495.0 As at As at 30 June 2018 30 June 2017 In
Slide 3: Headline Earnings Excl. Option Remeasurement
H E AD L I N E E AR N I N G S E X C L . O P T I O N R E M E A S U R E M E N T 30 June 30 June % R’million 2018 2017 change Reported headline earnings 8 573 8 221 4.3 Adjusted for: Option remeasurement (261) (687) Headline earnings excl. option remeasurement 8 312 7 534 10.3 Weighted number of issued
Slide 4: Investment Activities: Distell
I N V E S T M E N T AC T I V I T I E S FOR THE YEAR ENDED 30 JUNE 2018 DISTELL • Effective 11 May 2018, Distell (DST) completed its ownership restructuring in terms of which it delisted and became a wholly-owned subsidiary of a new listed entity, Distell Group Holdings (DGH) • Prior to the restructu
Slide 5: Investment Activities: RMI Holdings and KIEF
I N V E S T M E N T AC T I V I T I E S RMI HOLDINGS LTD (RMI HOLDINGS) • On 19 September 2017 and 12 March 2018 Remgro elected the “reinvestment option” in terms of RMI Holding’s 2017 final and 2018 interim dividend, respectively • The dividends amounted to: › R292 million which was utilised to subs
Slide 6: Investment Activities: Grindrod, Invenfin, PRIF
I N V E S T M E N T AC T I V I T I E S GRINDROD LTD (GRINDROD) • On 19 June 2018 Grindrod distributed its shipping division to its shareholders as a dividend in specie • Grindrod shareholders received 1 Grindrod Shipping Holdings Ltd (Grindrod Shipping) share for every 40 Grindrod shares held – acco
Slide 7: Investment Activities: Events After Year-End
I N V E S T M E N T AC T I V I T I E S EVENTS AFTER YEAR-END UNILEVER SOUTH AFRICA HOLDINGS (PTY) LTD (UNILEVER) • The competition authorities have approved Unilever’s acquisition of Remgro’s 25.75% interest in Unilever in exchange for the Unilever Spreads business in Southern Africa, as well as a c
Slide 8: Contribution by Investment Platform
C O N T R I B U T I O N B Y I N V E S T M E N T P L AT F O R M ( E X C L . O T H E R I N V E S T M E N T S , T R E A S U R Y A N D C O R P O R AT E C O S T S ) Headline earnings for the Intrinsic value year ended 30 June 2018 as at 30 June 2018 Media and Infrastructure 0.6% Infrastructure 5.7% sport
Slide 9: Earnings and Dividend Yields by Platform
E AR N I N G S AN D D I V I D E N D Y I E L D S B Y P L AT F O R M Earnings yield % Dividend yield % 30 June 2018 30 June 2017 30 June 2018 30 June 2017 Banking 9.1 9.6 5.0 5.3 RMH 9.3 9.8 5.1 5.3 FirstRand 8.5 9.2 4.8 5.2 Healthcare - Mediclinic 4.3 3.4 1.3 1.0 Consumer products 5.1 4.4 3.6 2.4 Uni
Slide 10: Contribution to Headline Earnings by Platform
C O N T R I B U T I O N T O H E AD L I N E E AR N I N G S B Y P L AT F O R M ( E X C L . O T H E R I N V E S T M E N T S , T R E A S U R Y A N D C O R P O R AT E C O S T S ) June 2018 June 2017 Infrastructure 0.6% Infrastructure 0.4% Industrial Industrial 10.9% 9.1% Insurance Insurance 12.7% 13.7% B
Slide 11: Contribution to Headline Earnings
C O N T R I B U T I O N T O H E AD L I N E E AR N I N G S ( E X C L . O P T I O N R E M E A S U R E M E N T ) 30 June 30 June % % R’million 2018 2017 change contribution RMH and FirstRand 3 525 3 163 11.4 42.4 Mediclinic 1 556 1 875 (17.0) 18.7 RMI Holdings 1 228 1 041 18.0 14.8 75.9% RCL Foods 647
Slide 12: Banking
B AN K I N G Headline earnings Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change RMH 2 486 2 232 11.4 30 123 23 350 29.0 FirstRand 1 039 931 11.6 14 045 10 365 35.5 Total 3 525 3 163 11.4 44 168 33 715 31.0 • Both FirstRand and RMH reported n
Slide 13: Healthcare
H E ALT H C AR E Headline earnings Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change Mediclinic 1 556 1 875 (17.0) 31 329 41 568 (24.6) • Mediclinic’s results were negatively impacted by: › the rebranding of all Al Noor facilities to Mediclin
Slide 14: Consumer Products
CONSUMER PRODUCTS Headline earnings Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change Unilever 499 449 11.1 11 900 10 702 11.2 RCL Foods 647 424 52.6 11 534 10 173 13.4 Distell 459 481 (4.6) 9 674 9 556 1.2 Total 1 605 1 354 18.5 33 108 30 43
Slide 15: Consumer Products: RCL Foods
CONSUMER PRODUCTS RCL FOODS (77.0% EFFECTIVE INTEREST) • The increase in RCL Foods’ results was mainly due to: › the recovery in the Chicken business resulting from the revised business model, lower feed prices and improved realisations; › strong volume performances in the Dressings, Pet Food and Pi
Slide 16: Consumer Products: Distell
CONSUMER PRODUCTS DISTELL (31.8% EFFECTIVE INTEREST) • The results were negatively impacted by once-off losses and write-offs in Tanzania Distilleries Limited (an associate), amounting to R78 million (June 2017: R22 million) following a sachet ban and excise duty dispute • The comparative year inclu
Slide 17: Insurance
I N S U R AN C E Headline earnings Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change RMI Holdings 1 228 1 041 18.0 17 285 17 532 (1.4) • On a normalised basis, RMI Holdings’ earnings increased by 14.8% • Discovery and OUTsurance (excluding Ha
Slide 18: Industrial
I N D U S T R I AL Headline earnings Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change Air Products 289 298 (3.0) 4 158 4 298 (3.3) Total SA 501 224 123.7 2 382 2 167 9.9 KTH 55 34 61.8 2 218 2 466 (10.1) Wispeco 122 169 (27.8) 984 1 368 (28.
Slide 19: Industrial: Air Products and KTH
I N D U S T R I AL AIR PRODUCTS (50.0% EFFECTIVE INTEREST) 31 March 31 March % R’million 2018 2017 change Revenue 2 894 2 791 3.7 Operating profit 855 857 (0.2) • Difficult trading conditions with depressed demand for the company’s products in most sectors of the business were experienced KTH (36.3%
Slide 20: Industrial: Total SA
I N D U S T R I AL TOTAL SA (24.9% EFFECTIVE INTEREST) 30 June 30 June % R’million 2018 2017 change Revenue 59 637 53 866 10.7 Gross profit 4 692 4 672 0.4 Operating profit 2 736 1 129 142.3 • The increase in revenue was mainly due to increased volumes sold in the mining and commercial sectors • The
Slide 21: Industrial: Wispeco and PGSI
I N D U S T R I AL WISPECO (100% EFFECTIVE INTEREST) 30 June 30 June % R’million 2018 2017 change Revenue 2 266 2 232 1.5 Operating profit 167 233 (28.3) • Revenue increased marginally with demand for aluminium extrusions in Southern Africa remaining subdued and price competition intense • Import du
Slide 22: Infrastructure
I N F R AS T R U C T U R E Headline earnings/(loss) Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change CIV Holdings 48 110 (56.4) 4 940 4 829 2.3 Grindrod (46) (48) 4.2 1 624 1 915 17.3 Grindrod Shipping - - - 623 - SEACOM 15 (33) 145.5 870 89
Slide 23: Infrastructure: CIV Holdings
I N F R AS T R U C T U R E CIV HOLDINGS (51.0% EFFECTIVE INTEREST) DFA 31 March 31 March % R’million 2018 2017 change Revenue 1 916 1 630 17.5 EBITDA 1 189 1 071 11.0 • The increase in revenue was mainly as a result of solid growth of 29% in annuity revenue • Annuity income in excess of R138 million
Slide 24: Media and Sport
M E D I A AN D S P O R T Headline earnings/(loss) Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change eMedia 1 49 98.0 866 1 424 (39.2) Other (48) (107) 55.1 268 319 (16.0) Total (47) (58) 19.0 1 134 1 743 (34.9) eMEDIA (32.3% EFFECTIVE INTERES
Slide 25: Other Investments, Treasury and Corporate Costs
O T H E R I N V E S T M E N T S , T R E AS U RY AN D C O R P O R AT E C O S T S Headline earnings/(loss) Intrinsic value As at As at 30 June 30 June % 30 June 30 June % R’million 2018 2017 change 2018 2017 change Other investments 66 70 (5.7) 4 196 3 932 6.7 Central treasury - Finance income/cash 52
Slide 26: Summary of Intrinsic Net Asset Value
S U M M ARY O F I N T R I N S I C N E T AS S E T VAL U E As at As at 30 June 30 June % % R’million 2018 2017 change contribution RMH and FirstRand 44 168 33 715 31.0 29.0 Mediclinic 31 329 41 568 (24.6) 20.5 RMI Holdings 17 285 17 532 (1.4) 11.3 Unilever 11 900 10 702 11.2 7.8 RCL Foods 11 534 10 17
Slide 27: Net Increase in Intrinsic NAV
N E T I N C R E AS E I N I N T R I N S I C N AV 16 000 572 (10 239) 1 198 14 000 1 361 1 481 12 000 10 453 10 000 R’million 8 000 6 000 (247) (190) (1 210) 4 000 3 179 2 000 0 RMH and Cash at the RCL Foods Unilever Potential Mediclinic RMI Debt at the Other Net INAV FirstRand centre CGT liability Ho
Slide 28: Contribution to Intrinsic Value by Platform
C O N T R I B U T I O N T O I N T R I N S I C VAL U E B Y P L AT F O R M ( E X C L . O T H E R I N V E S T M E N T S , T R E A S U R Y A N D C O R P O R AT E C O S T S ) 30 June 2018 30 June 2017 Media and Media and sport sport Infrastructure 0.8% Infrastructure 1.2% 5.7% 5.7% Industrial Industrial
Slide 29: Intrinsic Value
I N T R I N S I C VAL U E As at As at As at 17 September 30 June 30 June 2018 2018 2017 % change Discount to intrinsic value 19.7% 20.5% 15.1% 540 bps Intrinsic value – after CGT (Rand) 256.42 256.97 251.48 2.2 Closing share price (Rand) 205.91 204.29 213.46 (4.3) Remgro Limited 29 Final results pre
Slide 30: Total Cash at the Centre
T O TAL C AS H AT T H E C E N T R E As at 30 June 2018 R’million Local Offshore Total Per consolidated statement of financial position 6 921 5 248 12 169 Investment in Money Market Funds 3 915 81 3 996 Less: Cash of operating subsidiaries (1 701) (760) (2 461) Cash at the centre 9 135 4 569 13 704 C
Slide 31: Cash Flow at the Centre
C AS H F L O W AT T H E C E N T R E 7 000 205 (2 862) 645 6 000 883 5 000 4 516 4 000 R’million (796) 3 000 (708) 2 000 (402) 1 481 1 000 0 Dividends Investments Interest Foreign Dividends Finance costs Investments Corporate Net cash received sold and loans income and exchange paid made and costs an
Slide 32: Dividends Received at the Centre
D I V I D E N D S R E C E I V E D AT T H E C E N T R E 30 June 30 June R’million 2018 2017 % change Listed investments 3 402 3 282 3.7 RMH and FirstRand 1 944 1 737 RMI Holdings (cash dividend reinvested) 471 531 Mediclinic 458 554 Distell (including Capevin) 264 256 RCL Foods 233 167 Other 32 37 Un
Slide 33: Cash Dividend
C AS H D I V I D E N D 600 7.5% 532 7.6% 495 460 500 9.0% 328 9.5% 301 275 400 Cents 300 200 5.2% 4.9% 204 185 194 100 0 30 June 2016 30 June 2017 30 June 2018 Interim dividend Final dividend • The total dividend of 532 cents represents an increase of 7.5% from the June 2017 total dividend Remgro Li
Slide 34: Thank You
THANK YOU For more information visit our website www.remgro.com
Slide 35: Strategy
S T R AT E G Y Criteria Descriptions Geography • South Africa and other African countries through investee companies Investment size • Make a meaningful contribution Investment stake • Sufficient to exercise significant influence (>20%) Listed vs. unlisted • Unlisted is preferable Disposals • Ex cas
Slide 36: Valuation of Unlisted Investments
VAL U AT I O N O F U N L I S T E D I N V E S T M E N T S Factors taken into consideration in determining the directors’ valuation: • Growth potential and risk; • Profit history; and • Underlying NAV; • Cash flow projections Unlisted investment Valuation method Tradeability discount Unilever Agreed p
Slide 37: Information on Unlisted Investments
I N F O R M AT I O N O N U N L I S T E D I N V E S T M E N T S Business Profile Consumer products Spreads The Spreads business manufactures and markets well-known brands which include Rama, Flora and Stork. Industrial Air Products Air Products produces oxygen, nitrogen, argon, hydrogen and carbon di
Slide 38: Information on Unlisted Investments
I N F O R M AT I O N O N U N L I S T E D I N V E S T M E N T S Business Profile Media and sport eMedia eMedia has a range of media interests, which includes e.tv, eNews Channel Africa (eNCA), Gauteng-based radio station, Yfm and various studio and facilities businesses. It also owns the free-to-air