Remgro Limited · JSE:REM
Remgro — H1 2017 Earnings Presentation
35 slides from Remgro's earnings presentation, Mar 17, 2017
Slide 1: Interim Results Presentation for the six months ended 31 December 2016
I N T E R I M R E S U LT S P R E S E N TAT I O N FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 17 MARCH 2017
Slide 2: Salient Features
S A L I E N T F E AT U R E S Restated Six months Six months Dec 2016 Dec 2015 Headline earnings measures (cents) Headline earnings per share (HEPS) 25.9% 867.7 689.4 HEPS excl. once-off costs & option remeasurement 4.3% 744.3 713.8 Interim dividend (cents) 4.9% 194.0 185.0 Dec 2016 Jun 2016 Intrinsi
Slide 3: Headline Earnings Analysis
H E A D L I N E E A R N I N G S A N A LYS I S Restated Six months Six months % R’million Dec 2016 Dec 2015 change Reported headline earnings 4 690 3 616 29.7 Adjusted for: Option remeasurement (667) - Once-off costs - 128 Headline earnings (excl. once-off costs and option remeasurement) 4 023 3 744
Slide 4: Restatement and Rights Issue
R E S TAT E M E N T A N D R I G H T S I S S U E RESTATEMENT OF DECEMBER 2015 RESULTS • The adoption of the amendments to IAS 16: Property, Plant and Equipment and IAS 41: Agriculture resulted in RCL Foods having to: • reclassify bearer plants from biological assets to property, plant and equipment;
Slide 5: Investment Activities
I N V E S T M E N T AC T I V I T I E S COMMUNITY INVESTMENT VENTURES HOLDINGS (PTY) LTD (CIVH) • During September 2016 Remgro subscribed for an additional 12 353 shares amounting to R329.3 million in terms of CIVH’s rights issue • Remgro’s effective interest increased marginally to 51.0% (June 2016:
Slide 6: Contribution by Investment Platform
C O N T R I BU T I O N B Y I N V E S T M E N T P L AT F O R M (EXCL. OTHER INVESTMENTS, TREASURY AND CORPORATE COSTS) Headline earnings for the Intrinsic asset value period ended 31 Dec 2016 as at 31 Dec 2016 (excl. once-off costs and option remeasurement) Media Infrastructure and sport 5.3% Infrast
Slide 7: Summary of Headline Earnings by Platform
S U M M A RY O F H E A D L I N E E A R N I N G S B Y P L AT F O R M Restated Six months Six months % R’million Dec 2016 Dec 2015 change Food, liquor and home care 945 1 242 (23.9) Banking 1 580 1 386 14.0 Healthcare 983 787 24.9 Insurance 492 455 8.1 Industrial 426 5 Nm Infrastructure 15 74 (79.7) M
Slide 8: Summary of Headline Earnings
S U M M A RY O F H E A D L I N E E A R N I N G S Restated Cumulative Six months Six months % % % R’million Dec 2016 Dec 2015 change of total of total RMBH and FirstRand 1 580 1 386 14.0 39.3 39.3 Mediclinic 983 787 24.9 24.4 63.7 RMI Holdings 492 455 8.1 12.2 75.9 Distell 364 361 0.8 9.1 85.0 RCL Fo
Slide 9: Contribution to Headline Earnings
C O N T R I BU T I O N TO H E A D L I N E E A R N I N G S (EXCL. OTHER INVESTMENTS, TREASURY AND CORPORATE COSTS) December 2016 December 2015 Infrastructure 0.3% Infrastructure Industrial 1.9% 0.1% Industrial 9.6% Food, liquor Insurance and home 11.5% Insurance care 21.3% 11.1% Food, liquor and home
Slide 10: Food, Liquor and Home Care
FOOD, LIQUOR AND HOME CARE Headline earnings Intrinsic value Restated Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change Unilever SA 263 307 (14.3) 10 232 10 650 (3.9) Distell 364 361 0.8 9 782 10 723 (8.8) RCL Foods 318 574 (44.6) 8 477 9 278 (8.6)
Slide 11: Food, Liquor and Home Care
FOOD, LIQUOR AND HOME CARE UNILEVER SA (25.8% effective interest) Six months Six months % R’million Dec 2016 Dec 2015 change Headline earnings 1 020 1 191 (14.4) • The main reasons for the decrease in headline earnings were due to: › a higher effective tax rate resulting from lower tax allowances fo
Slide 12: Banking
BA N K I N G Headline earnings Intrinsic value Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change RMBH 1 115 979 13.9 26 391 22 356 18.0 FirstRand 465 407 14.3 11 688 9 857 18.6 Total 1 580 1 386 14.0 38 079 32 213 18.2 • FirstRand and RMBH reported
Slide 13: Healthcare
H E A LT H C A R E Headline earnings Intrinsic value Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change Mediclinic 983 787 24.9 42 690 69 691 (38.7) • The increase in Mediclinic’s contribution to headline earnings is mainly due to: › Remgro’s increa
Slide 14: Insurance
INSURANCE Headline earnings Intrinsic value Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change RMI Holdings 492 455 8.1 17 897 18 526 (3.4) • On a normalised basis, earnings increased by 11.2% • OUTsurance and Discovery achieved earnings growth of 2
Slide 15: Industrial
INDUSTRIAL Headline earnings/(loss) Intrinsic value Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change Air Products 151 142 6.3 4 445 4 241 4.8 KTH 58 (260) 122.3 2 576 2 723 (5.4) Total SA 102 51 100.0 1 956 1 879 4.1 Wispeco 90 54 66.7 1 138 1 055
Slide 16: Industrial
INDUSTRIAL AIR PRODUCTS (50% effective interest) Six months Six months % R’million Sep 2016 Sep 2015 change Revenue 1 447 1 363 6.2 Operating profit 436 426 2.3 • Difficult trading conditions with depressed demand for the company’s products in most sectors, especially in the packaged gases division
Slide 17: Industrial
INDUSTRIAL TOTAL SA (24.9% effective interest) Six months Six months % R’million Dec 2016 Dec 2015 change Revenue 26 747 26 195 2.1 Operating profit 474 189 150.8 Headline earnings 409 205 99.5 • The increase in revenue was mainly due to sales to other oil companies affected by the transport strike
Slide 18: Industrial
INDUSTRIAL WISPECO (100% effective interest) Six months Six months % R’million Dec 2016 Dec 2015 change Revenue 1 162 1 064 9.2 Operating profit 128 97 32.0 • Revenue growth resulted from slightly higher selling prices as well as higher sales volumes • Sales margins were higher than expected due to
Slide 19: Infrastructure
I N F R A S T RU C T U R E Headline earnings/(loss) Intrinsic value Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change CIV Holdings 44 35 25.7 3 895 3 166 23.0 Grindrod (18) 43 (141.9) 2 329 1 986 17.3 SEACOM (18) (28) 35.7 1 050 1 043 0.7 Other (in
Slide 20: Infrastructure
I N F R A S T RU C T U R E CIV HOLDINGS (51.0% effective interest) DFA Six months Six months % R’million Sep 2016 Sep 2015 change Revenue 734 529 38.8 EBITDA 495 347 42.7 • The improved results were mainly as a result of the solid growth in annuity income of 29.0% • Annuity income in excess of R101
Slide 21: Media and Sport
MEDIA AND SPORT Headline earnings/(loss) Intrinsic value Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change eMedia 33 11 200.0 1 573 1 342 17.2 Other (58) (39) (48.7) 341 328 4.0 Total (25) (28) 10.7 1 914 1 670 14.6 eMEDIA (32.3% effective interest
Slide 22: Other Investments, Treasury and Corporate Costs
OT H E R I N V E S T M E N T S , T R E A S U RY A N D C O R P O R AT E C O S T S Headline earnings/(loss) Intrinsic value Restated Six months Six months % As at As at % R’million Dec 2016 Dec 2015 change 31/12/2016 30/06/2016 change Other investments 39 31 25.8 3 869 3 717 4.1 Central treasury 105 7
Slide 23: Summary of Intrinsic Net Asset Value
S U M M A RY O F I N T R I N S I C N E T A S S E T VA LU E As at As at % % R’million 31 Dec 2016 30 Jun 2016 change of total Mediclinic 42 690 69 691 (38.7) 27.6 RMBH and FirstRand 38 079 32 213 18.2 24.7 RMI Holdings 17 897 18 526 (3.4) 11.6 Unilever 10 232 10 650 (3.9) 6.6 Distell 9 782 10 723 (8.
Slide 24: Contribution to Intrinsic Value by Platform
C O N T R I BU T I O N TO I N T R I N S I C VA LU E B Y P L AT F O R M (EXCL. OTHER INVESTMENTS, TREASURY, CORPORATE COSTS AND POTENTIA L CGT) December 2016 June 2016 Media Media and and sport sport Infrastructure 1.0% Infrastructure 1.3% 5.3% 4.0% Industrial 6.2% Industrial Food, liquor Food, liquo
Slide 25: Intrinsic Value
I N T R I N S I C VA LU E As at As at As at % R’million 13 Mar 2017 31 Dec 2016 30 Jun 2016 change Discount to Intrinsic value 13.5% 13.5% 16.9% -340 bps Intrinsic value – after CGT (Rand) 258.20 257.79 306.44 (15.9) Closing share price (Rand) 223.39 223.05 254.66 (12.4) 25
Slide 26: Total Cash at the Centre
TOTA L C A S H AT T H E C E N T R E As at 31 December 2016 R’million Local Offshore Total Per statement of financial position 7 151 2 307 9 458 Investment in money market funds 1 335 2 234 3 569 Less: Cash of operating subsidiaries (732) (2) (734) Cash at the centre 7 754 4 539 12 293 % of total R’m
Slide 27: Cash at the Centre Movement
C A S H AT T H E C E N T R E M OV E M E N T 14,000 2,572 48 12,000 9,813 (1 558) 10,000 (828) (649) 8,515 (235) (236) (412) 8,000 R’million 6,000 4,000 2,000 - Rights issue Dividends Investments Dividends paid Borrowings - Investments Foreign Corporate Finance Net cash received and loans bridge fina
Slide 28: Cash Dividend
CASH DIVIDEND 500 7.5% 460 428 400 6.2% 275 Cents 300 259 Final Dividend 200 Interim Dividend 9.5% 4.9% 100 185 194 169 0 30 June 2015 30 June 2016 30 June 2017 • The interim dividend of 194 cents represents an increase of 4.9% from the December 2015 interim dividend 28
Slide 29: Thank You
THANK YOU F O R M O R E I N FO R MAT ION V I S I T O U R W E B S IT E w w w.r emg r o.com
Slide 30: 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 impact Investment stake • Sufficient to exercise influence (>20%) Listed vs. unlisted • Unlisted is preferable Disposals • Ex cash flow growth busi
Slide 31: Valuation of Unlisted Investments
VA LUAT 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 SA Discou
Slide 32: 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 Food, liquor and home care Unilever SA Unilever manufactures and markets an extensive range of food and home and personal care products, while enjoying market leadership in most of its major categories. Well-known brands
Slide 33: 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 Industrial KTH KTH is a leading black-owned investment company and has a strong and diversified asset portfolio covering the resources, industrial, media, power, financial services, healthcare, property and information t
Slide 34: 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
Slide 35: 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 Other investments Business Partners Business Partners is a specialist investment company providing risk finance, mentorship, property accommodation, as well as management services to small and medium enterprises mainly i