Remgro Limited · JSE:REM
Remgro — Remgro Ltd Ord — H1 2024 Earnings Presentation
66 slides from Remgro's earnings presentation, Mar 19, 2024
Slide 1: Results Presentation for the Six Months Ended 31 December 2023
RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2023 19 March 2024 1
Slide 2: Contents
CONTENTS 01 Period under review 02 Delivering on our strategic priorities 03 Summarised results for the interim period 04 Update on key portfolio companies 05 Key areas of focus 06 Q&A 2
Slide 3: Period under review
PERIOD UNDER REVIEW 3
Slide 4: Sustaining momentum and resilience through the portfolio
Period under review Doubling efforts to deliver on our stated strategic priorities… Strategic Outcome 1 Embedding transformative corporate actions Sustaining momentum and resilience through the 2 Unlocking value through disposal of non-core assets and new growth opportunities 3 Considered portfolio
Slide 5: Weaker earnings performance largely driven by non-recurring items
Period under review Weaker earnings performance largely driven by non-recurring items HE R2 113m HEPS R3.81 Interim dividend 80c INAVPS R236.95 40.1% 39.1% - 4.6% (2022: R3 529m) (2022: R6.26) (2022: 80c) (June 2023: R248.47) HE excluding the impact of Closing share price INAV discount 31.4% various
Slide 6: Delivering on our strategic priorities
DELIVERING ON OUR STRATEGIC PRIORITIES 6
Slide 7: Embedding transformative corporate actions
Delivering on our strategic priorities Embedding transformative corporate actions As an Investment Holding Company, Remgro is an astute allocator of capital and strategic partner In process Integration Optimisation Unlocking value • Financial and accounting impacts • Capital allocation • Extracting
Slide 8: Heineken Beverages: Bedding down integration, positioning for growth
Delivering on our strategic priorities Heineken Beverages: Bedding down integration, positioning for growth Phase 2: Optimise and deliver on Phase 1: Integration Phase 3: Drive growth synergies 1 Legal Day 1: 26 April 2023 1 Systems and sales force aligned 1 Original investment thesis from 1st Octob
Slide 9: Continued sustainability drive
Delivering on our strategic priorities Continued sustainability drive… ESG highlights Priorities going forward Remgro identified investees to evaluate and consider Agreed ESG targets per focus Early sustainability progress already demonstrated ✓ setting a target for ‘Net Zero by 2050’ to combat Clim
Slide 10: Summarised results for the interim period
SUMMARISED RESULTS FOR THE INTERIM PERIOD 10
Slide 11: Headline earnings overview
Summarised results for the interim period Headline earnings overview Headline earnings adjusted for 6 months 6 months Headline earnings adjusted for corporate actions* corporate actions* 4 000 ended ended 31 Dec 31 Dec R million 2023 2022 % change 3 261 Headline earnings 2 113 3 529 (40.1) 51 3 000
Slide 12: Investment portfolio: Listed vs Unlisted
Summarised results for the interim period Investment portfolio: Listed vs Unlisted Cash, debt and other corporate assets excluded 30 Jun 2022 30 Jun 2023 31 Dec 2023 12% 11% 12% 28% 32% 67% 33% 17% 20% 55% 68% 72% • Listed (2022) to Unlisted (2023): Mediclinic, Distell -> HeinBev & Capevin • Contrib
Slide 13: Valuation approaches – unlisted investments
Summarised results for the interim period Valuation approaches – unlisted investments Primary valuation methodology Discounts applied Investee Company % of Remgro Equity interest Change in value Internal DCF Market multiple Sum-of-the Lack of marketability Forecast risk NAV (1) (from 30 June 2023) p
Slide 14: Valuations – significant unlisted investments
Summarised results for the interim period Valuations – significant unlisted investments 50 000 47 268 45 000 43 089 40 000 ↓8.8% 35 000 30 000 R million 25 000 20 000 14 300 15 000 13 064 12 451 10 000 ↓8.6% 6 751 6 007 6 302 4 911 4 888 5 000 ↓45.8% ↑4.9% ↓0.5% - Mediclinic CIVH Heineken Siqalo Air
Slide 15: INAV: Changes since 30 June 2023
Summarised results for the interim period INAV: Changes since 30 June 2023 R248.47 p.s. 140 000 138 803 (4.6%) R236.95 p.s. R million 711 (5 700) 295 131 484 3 854 ↓45.8% ↓5.3% 130 000 ↑4.9% (4 179) ↓8.8% (1 236) (1 064) ↑24.2% ↓8.6% ↓14.9% 120 000 iNAV Heineken Mediclinic CIVH RCL Foods OUTsurance
Slide 16: Contribution by platform
Summarised results for the interim period Contribution by platform Adjusted headline earnings* Intrinsic NAV* Dec 2023 (outer) 0.1% Dec 2023 (outer) Dec 2022 (inner) 12.4% 14.0% Jun 2023 (inner) Healthcare 23.6% 0.6% Consumer products 2.1% 4.3% 32.7% 14.7% 11.2% 0.1% 22.0% Financial services 0.6% 4.
Slide 17: Healthcare
Summarised results for the interim period Healthcare Adjusted headline earnings ₭ Intrinsic value Remgro Six months Six months As at As at R million interest 31 Dec 23 31 Dec 22 % change 31 Dec 23 30 Jun 23 % change Mediclinic₭ 50.0%* 731 751 (2.7) 43 089 47 268 (8.8) Contribution* 23.6% 22.0% 32.7%
Slide 18: Consumer Products
Summarised results for the interim period Consumer Products Adjusted headline earnings ₭ Intrinsic value Remgro Six months Six months As at As at R million interest 31 Dec 23 31 Dec 22 % change 31 Dec 23 30 Jun 23 % change Distell - 517 (100.0) Heineken Beverages₭ 18.8% (208) nm 6 751 12 451 (45.8)
Slide 19: Financial services
Summarised results for the interim period Financial services Adjusted headline earnings₭ Intrinsic value Remgro Six months Six months As at As at R million interest 31 Dec 23 31 Dec 22 % change 31 Dec 23 30 Jun 23 % change OUTsurance Group (listed) 30.6% 429 406 5.7 19 811 15 957 24.2 Business Partn
Slide 20: Infrastructure
Summarised results for the interim period Infrastructure Adjusted headline earnings₭ Intrinsic value Remgro Six months Six months As at As at R million interest 31 Dec 23 31 Dec 22 % change 31 Dec 23 30 Jun 23 % change CIVH 57.0% 6 184 (96.7) 13 064 14 300 (8.6) SEACOM 30.0% 32 29 10.3 637 796 (20.0
Slide 21: Industrial
Summarised results for the interim period Industrial Adjusted headline earnings₭ Intrinsic value Remgro Six months Six months As at As at R million interest 31 Dec 23 31 Dec 22 % change 31 Dec 23 30 Jun 23 % change Air Products 50.0% 284 254 11.8 4 888 4 911 (0.5) TotalEnergies₭ 24.9% 115 (144) 179.
Slide 22: Cash flow at the centre
Summarised results for the interim period Cash flow at the centre 3 000 352 463 (1) 2 000 1 535 1 000 - (1 000) R million (3 500) (2 000) (845) (2) (3 000) (886) (302) (88) (4 000) (231) (3 502) (5 000) Dividends Investments Interest income Pref share Investments Dividends Finance costs Corporate co
Slide 23: Cash dividends received evolution
Summarised results for the interim period Cash dividends received evolution 2 000 Unlisted Listed 1 800 1 715 (10.5%) 1 535 1 600 49.0% 1 400 591 1 200 1 151 711 R million 1 000 559 800 600 1 124 400 824 592 200 - 31 Dec 2021 31 Dec 2022 31 Dec 2023 For the six months ended 23
Slide 24: Interim cash dividend
Summarised results for the interim period Interim cash dividend Last date to trade 16 April 2024 Shares trade ex dividend 17 April 2024 300 Record date 19 April 2024 250 240 Payment date 22 April 2024 60% Cents per share 200 150 150 160 60% 100 100 0% 50 60% 80 80 50 - 30 Jun 2022 30 Jun 2023 31 Dec
Slide 25: Update on key portfolio companies
UPDATE ON KEY PORTFOLIO COMPANIES 25
Slide 26: Mediclinic Group
Mediclinic Group Ronnie van der Merwe (CEO) Jurgens Myburgh (CFO) 26
Slide 27: Mediclinic Group: Overview
Mediclinic Group Mediclinic Group: Overview • International healthcare group with long-term oriented, strategic shareholders • Purpose to Enhance the Quality of Life • Leading market positions in all territories • Core business of clinical care is of high quality and improving • Concluded independen
Slide 28: Mediclinic Group – strategic priorities: Switzerland
Mediclinic Group Mediclinic Group – strategic top priorities and focus areas Building resilience in Switzerland • Stable macro-economic environment with good growth • Pressure on supplementary insurance tariffs • Gradual shift to general insurance mix Market dynamics and context • Resource constrain
Slide 29: Mediclinic Group – strategic priorities: Southern Africa
Mediclinic Group Mediclinic Group – strategic top priorities and focus areas Optimise and expand Southern Africa • Impact of network formation on average revenue per bed day and volumes • Increased employee costs Market dynamics and context • Ongoing cost and impact of electricity shortages • Stable
Slide 30: Mediclinic Group – strategic priorities: Middle East
Mediclinic Group Mediclinic Group – strategic top priorities and focus areas Continue to grow and scale Middle East • Continued robust economic growth • Ongoing regulatory pressure Market dynamics and context • Below inflation tariff increases and mix changes • Increased competition for volumes, doc
Slide 31: Group
Mediclinic Group Group • Group performance impacted by challenging operating environment in USD’m1 1H24 1H23 Variance Switzerland, partially offset by an outperformance in Middle East Revenue 2 199 2 102 5% • Group revenue up 5% in constant currency terms EBITDA 285 297 (4)% • 1.3% growth in inpatie
Slide 32: Switzerland: Turnaround plan in execution
Mediclinic Group Switzerland: Turnaround plan in execution • Revenue and inpatient admissions for the period were broadly stable CHF’m1 1H24 1H23 Variance • Inpatient admissions down 0.1% compared with 1H23 Revenue 901 905 (0)% • General insurance mix increased to 52.7% (1H23: 51.7%) EBITDA 104 118
Slide 33: Southern Africa: Optimising operational performance
Mediclinic Group Southern Africa: Optimising operational performance • Good revenue growth of 7% to ZAR10 394m ZAR’m1 1H24 1H23 Variance • Ongoing recovery in client activity Revenue 10 394 9 724 7% • PPD growth of 1.7% EBITDA 1 817 1 811 0% • Average revenue per bed day impacted by network formatio
Slide 34: Middle East: Growth region with exciting prospects
Mediclinic Group Middle East: Growth region with exciting prospects • Revenue increased by 11% to AED2 321m AED’m1 1H24 1H23 Variance • Inpatient admissions and day cases were up 10% and 19% Revenue 2 321 2 087 11% • Outpatient cases up 10% EBITDA 277 238 16% • Volume increase partly offset by a dec
Slide 35: Mediclinic Group – top priorities
Mediclinic Group Mediclinic Group – top priorities 1 Comprehensive plan to deliver resilience and future growth in Switzerland 2 Drive growth and operating margin improvement in Middle East 3 Optimise Southern African operating margins and initiate core systems replacement 4 Invest for revenue growt
Slide 36: CIVH
CIVH Pieter Uys (Chairman) 36
Slide 37: CIVH structured to deliver on its strategy
CIVH CIVH structured to deliver on its strategy Remgro NewGX CIH Vuma Key Internet 57% 37% 6% Vodacom CIVH Vuma Core Vuma Reach FTTH FTTH 100% 100% 30 – 40% Open Access Wholesale CIVH Africa Maziv Uncapped Fibre FTTB Fibre 100% 100% 100% 50% backhaul Dark Fibre Africa Vumatel LoanCo BritelinkMCT (DF
Slide 38: Pursuing growth in a difficult environment
CIVH Pursuing growth in a difficult environment ➢ High interest rate environment • 400bps increase in repo rate since start of the comparative period (April 2022) ➢ Network freeze with limited sales • Maintenance to improve network quality • Network upgrades to enable future growth • 6 500 links bui
Slide 39: Connecting corporate South Africa
CIVH Connecting corporate South Africa Fibre to the Telco Fibre to the Business Fibre Backhaul (FTTT) (FTTB) Towers, switches and nodes Enterprises, SMEs Data centres, ISPs 30 Sep 23 31 Mar 23 % change 30 Sep 23 31 Mar 23 % change 30 Sep 23 31 Mar 23 % change 12 864 12 686 1.4 39 921 36 788 8.5 10 3
Slide 40: Bridging the digital divide
CIVH Bridging the digital divide CORE market REACH market KEY market • Homes with household monthly 2.2 income > R30k 4.8 • Homes with household monthly income between R5k and R30k 9.7 • Homes with household monthly income < R5k million Homes passed: million Homes passed: million • 0% market share •
Slide 41: Unpacking financial performance
CIVH Unpacking financial performance CIVH (Consolidated) 6 months to 6 months to R million 30 Sep 23 30 Sep 22 % change Revenue 3 140 3 157 (0.5) EBITDA 2 126 2 068 2.8 Operating earnings 1 083 1 176 (7.9) Headline earnings 11 323 (96.6) DFA 6 months to 6 months to R million 30 Sep 23 30 Sep 22 % ch
Slide 42: Cashflow profile: key drivers
CIVH Cashflow profile: key drivers 2023 (6 months to September) 2022 (6 months to September) 3 000 5 000 2 126 4 000 2 000 (82) (69) 1 079 3 000 1 000 2 068 (896) 2 000 R million (322) 969 0 (113) 1 000 (1 176) (664) R million (340) (437) 0 (1 000) (1 000) (2 000) (1 908) (244) (1 183) (2 000) (3 00
Slide 43: CIVH valuation
CIVH CIVH valuation DECEMBER 2023 Maziv FY23 EV/EBITDA: 12.6x 60 000 50 942 50 000 40 000 307 31 508 R million 30 000 (19 434) 22 907 20 000 (8 908) 13 064 10 000 0 Maziv enterprise value Maziv debt Maziv equity value Net other assets* Discounts CIVH equity value Remgro at 57.0% JUNE 2023 Maziv FY23
Slide 44: Vodacom investment in Maziv
CIVH Vodacom investment in Maziv Transaction Competition Commission Competition Tribunal Competition Tribunal submitted to the recommendation to heard intervention hearing dates for the Competition Competition Tribunal that applications and made matter : Commission and transaction be prohibited ruli
Slide 45: Vodacom investment benefits
CIVH Vodacom investment benefits Beneficial for the country, the economy and lower income households: 1 Maziv commitment to invest at least R10 billion rand over a 5-year period 2 Pass at least one million new homes in lower income areas over 5-year period 3 Facilitate creation of up to 10,000 new j
Slide 46: RCL Foods
RCL Foods Paul Cruickshank (CEO) Marthinus Stander (Rainbow MD) 46
Slide 47: On track with implementation of portfolio strategic review
RCL Foods On track with implementation of portfolio strategic review RCL FOODS OF THE FUTURE + GROW VALUE-ADD PORTFOLIO PEOPLE FIRST • Leverage dynamic platform through partnerships & acquisitions • • Build diverse, inclusive, high-performance culture Strengthen community resilience - VECTOR LOGISTI
Slide 48: Performance: for 6 months ended 31 December 2023
RCL Foods Performance: for 6 months ended 31 December 2023 RCL Foods delivered a pleasing interim result in a challenging environment 48
Slide 49: Performance: for 6 months ended 31 December 2023
•refined focus on capital allocation in the future now that the decision has been made to separately list Rainbow. RCL Foods Performance: for 6 months ended 31 December 2023 Return on Invested Capital (ROIC) will remain a key performance metric for the Group, especially in light of the decision made
Slide 50: Market Context
RCL Foods Market Context Muted demand persists in a challenging economic With exception of pet, market shares remain strong in environment & inflation remains elevated tough economic environment TOTAL VOLUME INFLATION GROCERIES VOLUME MARKET SHARE INDUSTRY 12MM 3MM 12MM 3MM 12MM 12MM 6MM BASKET Dec
Slide 51: Business Unit Performance (excl. Rainbow)
RCL Foods Business Unit Performance (excl. Rainbow) EBITDA GROWTH YOY ➢ Volume challenges in the Culinary category, partially offset by recovery in Pet Food Groceries volumes, drove a muted result R million Grocery + Beverages ➢ Result includes R85 m relating to unrecovered direct load-shedding cost
Slide 52: Rainbow Strategy & Turnaround Plan
RCL Foods Rainbow Strategy & Turnaround Plan Progressing well on ambition to establish a Low Cost Agric & Operations “Engine Room” Volatile Dynamic Input Market Cost Breed April 2024 People/Structure/Culture KPIs with Low Density Feed Double Hammarsdale Brilliant Basics Fixing Assets Integrated valu
Slide 53: Rainbow Performance: KPIs driving improved financial performance
RCL Foods Rainbow Performance: KPI’s driving improved financial performance Upside credited to better agricultural performance aided by the new breed rollout, cost control, improved margins and higher volumes 1% Chicks/HH – Completed Flocks Mortality change = R27m • Performance compromised by ongoin
Slide 54: Key areas of focus
KEY AREAS OF FOCUS 54
Slide 55: Continued focus to deliver on our stated strategic priorities
Key areas of focus Continued focus to deliver on our stated strategic priorities… Strategic Outcomes 1 Overtime translating NAV accretion to share price returns Embedding transformative corporate actions Sustaining momentum and resilience through the and unlocking value in a sustainable manner 2 Unl
Slide 56: Q&A
Q&A 56
Slide 57: Annexure
ANNEXURE 57
Slide 58: Contribution to Headline earnings adjusted for corporate actions
Annexure Contribution to Headline earnings adjusted for corporate actions* R million 31 Dec 2023 31 Dec 2022 % change Mediclinic Softer revenue performance; Increased staff costs in Switzerland and increased staff and energy costs in S.Africa 731 751 (2.7) RCL Foods Main drivers for increase are Rai
Slide 59: Intrinsic Net Asset Value: Material Investee Companies
Annexure Intrinsic Net Asset Value: Material Investee Companies R million 31 Dec 2023 30 June 2023 % Change % Contribution Mediclinic 43 089 47 268 (8.8) 31.9 OUTsurance Group 19 811 15 957 24.2 14.7 CIVH 13 064 14 300 (8.6) 9.7 FirstRand 7 274 6 889 5.6 5.4 Heineken Beverages 6 751 12 451 (45.8) 5.
Slide 60: Consumer products | Siqalo Foods performance
Annexure Consumer products | Siqalo Foods performance Six months Six months R million 31 Dec 23 31 Dec 22 % change Revenue 1 883 2 009 (6.3) Operational EBITDA 332 268 23.9 Operating profit 300 207 44.9 Headline earnings Intrinsic value 250 46.3% 7 000 4.9% 237 6 000 6 302 200 6 007 Drivers 5 000 •
Slide 61: Industrial | unlisted portfolio performance
Annexure Industrial | unlisted portfolio performance Air Products Six months Six months Air Products • Overall trading conditions for the year remained mixed and erratic R million 30 Sep 23 30 Sep 22 % change • Volumes in the large Tonnage Gases business were largely static overall, Revenue 2 727 2
Slide 62: Diversified investment vehicles | KTH performance
Annexure Diversified investment vehicles | KTH performance Adjusted headline Intrinsic value earnings₭ Drivers 200 52.9% 3 000 • Valuation based on sum of the parts of 11.8% 180 investment portfolio, of which three 185 contribute 94%, these include Kagiso 160 2 500 2 649 Media, MMH and Servest. Driv
Slide 63: Diversified investment vehicles
Annexure Diversified investment vehicles Adjusted headline earnings₭ Intrinsic value Remgro Six months Six months As at As at R million interest 31 Dec 23 31 Dec 22 % change 31 Dec 23 30 Jun 23 % change KTH₭ 43.5% 185 121 52.9 2 649 2 370 11.8 Prescient China Equity Fund 38.0% - - - 1 047 1 137 (7.9
Slide 64: Other investments, treasury and corporate costs
Annexure Other investments, treasury and corporate costs Adjusted headline earnings₭ Intrinsic value Six months Six months As at As at R million 31 Dec 23 31 Dec 22 % change 31 Dec 23 30 Jun 23 % change Media 66 64 3.1 764 841 (9.2) Portfolio investments 435 503 (13.5) 16 307 15 641 4.3 FirstRand 24
Slide 65: Cash and debt at the centre
Annexure Cash and debt at the centre Actual Actual 31 December 30 June R million % of total 2023 2023 Local cash 41.8 2 301 5 872 Offshore cash 58.2 3 198 3 129 US$ 164.4m (@ R18.28/US$) (30 Jun 2023: US$156.2m @ R18.83/US$) 54.7 3 006 2 940 GB£ 3.4m (@ R23.62/GB£) (30 Jun 2023: GB£3.4m @ R23.80/GB£
Slide 66: Dividends received at the centre
Annexure Dividends received at the centre 6 months 6 months 6 months ended ended ended R million 31 Dec 2023 31 Dec 2022 31 Dec 2021 Listed 824 1 124 592 FirstRand 240 381 196 OUTsurance Group 406 197 106 RCL Foods - 214 214 Mediclinic - 195 - Momentum Metropolitan 86 80 - Discovery 56 - - Other lis