Remgro Limited · JSE:REM
Remgro — H1 2009 Earnings Presentation
27 slides from Remgro's earnings presentation, November 2008
Slide 1: Interim Results Presentation
Interim Results Presentation For the six months ended 30 September 2008 1
Slide 2: Salient features
Salient features 6 Months 6 Months 12 Months Sep ‘08 Sep ‘07 Change March ‘08 Headline earnings (R’m) 4 046 4 151 (2.5)% 7 991 Pro forma headline earnings – excluding BAT (R’m) 2 067 2 389 (13.5)% 4 551 Headline earnings per share (cents) 856.7 879.6 (2.6)% 1 692.8 Pro forma headline earnings per sh
Slide 3: Salient features (cont’d)
Salient features (cont’d) 6 Months 6 Months 12 Months Sep ‘08 Sep ‘07 Change March ‘08 Dividend per share (cents) 80.0 180.0 (55.6)% 510.0 - interim 80.0 180.0 (55.6)% 180.0 - final N/A N/A 330.0 As at 30 September 2008 2007 Intrinsic NAV (Rand) – after CGT 227.16 228.33 253.67 Closing share price (
Slide 4: Prior year adjustments to headline earnings
Prior year adjustments to headline earnings Restatement of comparative figures i.r.o associated companies (+ R15 m) • FirstRand and RMBH restated their 2007 interim headline earnings in terms of SAICA’s Circular 08/07 Restatement of comparative figures i.r.o Tsb Sugar (+ R120 m) • Due to the seasona
Slide 5: Investment activities for the six months ended 30 September 2008
Investment activities for the six months ended 30 September 2008 Share repurchases • During the six months, a wholly-owned subsidiary of Remgro acquired a further 3 500 000 shares at an average price of R189.71 per share for a total amount of R666.4 million to hedge the new share appreciation rights
Slide 6: Investment activities for the six months ended 30 September 2008 (cont’d)
Investment activities for the six months ended 30 September 2008 (cont’d) PG Group of Companies (PGSI) • During the period under review Remgro invested a further $1.0 million in PGSI by acquiring shares from a minority shareholder • On 30 September 2008 Remgro’s interest in PGSI, on a fully diluted
Slide 7: Subsequent to 30 September 2008
Subsequent to 30 September 2008 BAT unbundling • Approved on 7 October 2008 by Remgro shareholders • On 3 November 2008 Remgro distributed 192 870 000 BAT ordinary shares and 302 555 410 Reinet Investments S.C.A. (Reinet) depository receipts to Remgro shareholders as a dividend in specie • Remgro sh
Slide 8: Summary of underlying performance
Summary of underlying performance 6 months to 6 months to R’million Sept ’08 Sept ’07 Change Tobacco interests 2 052 1 839 11.6% Financial services 792 1 080 (26.7)% Industrial interests 847 970 (12.7)% Mining interests 296 176 68.2% Corporate and other 59 86 (31.4)% Headline earnings 4 046 4 151 (2
Slide 9: Contribution to headline earnings performance
Contribution to headline earnings performance September 2008 September 2007 Contribution to pro forma headline earnings performance • For purposes of the pro forma headline earnings, R&R’s other income (comprising mainly of interest income) was allocated to “Corporate and other” 9
Slide 10: Tobacco interests
Tobacco interests Headline earnings Intrinsic value R’million Sept’08 Sept’07 Change Sept’08 Mar’08 Change R&R 2 052 1 839 11.6% 60 276 69 018 (12.7)% Avg ZAR:£ rate 15.02 14.20 (5.8)% Notes • R&R’s contribution to headline earnings, which represents 50.7% (2008: 44.3%) of total headline earnings, i
Slide 11: Financial services
Financial services Headline earnings Intrinsic value R’million Sept’08 Sept’07 Change Sept’08 Mar’08 Change FirstRand 393 557 (29.4)% 8 040 7 698 4.4% RMBH 399 523 (23.7)% 7 859 7 406 6.1% Total 792 1 080 (26.7)% 15 899 15 104 5.3% Note • The decrease of the combined contribution by FirstRand and RM
Slide 12: Industrial interests
Industrial interests Headline earnings Intrinsic value R’million Sep’08 Sep’07 Change Sep’08 Mar’08 Change Total SA 282 118 139.0% 1 445 2 620 (44.8)% Air Products 51 43 18.6% 1 591 1 538 3.4% Distell 114 102 11.8% 2 552 2 992 (14.7)% Unilever SA 127 121 5.0% 4 110 3 663 12.2% Tsb Sugar 173 175 (1.1
Slide 13: Industrial interests (cont’d)
Industrial interests (cont’d) Total SA • Increase in headline earnings due to rampant oil price • Subsequent to 30 September 2008, the oil price reduced substantially • Total did not pay a dividend during the period under review (2007: R168 million) due to substantial increases in working capital re
Slide 14: Industrial interests (cont’d)
Industrial interests (cont’d) Unilever South Africa • Headline earnings up 5.0% • Revenue for Unilever SA increased by 20.7% to R5.6 billion (2007: R4.6 billion) • The growth in the retail business turnover was 21.3% for the period, 17% of which was derived from price increases • Gross profit margin
Slide 15: Industrial interests (cont’d)
Industrial interests (cont’d) KTI • The reduction in contribution to Remgro’s headline earnings was mainly due to an unfavourable fair value adjustment of the conversion rights attached to its holding in Metropolitan preference shares of R369 million (2007: R10 million - favourable) as well as a neg
Slide 16: Industrial interests (cont’d)
Industrial interests (cont’d) PGSI • Turnover declined by 2% over the comparative period to R1.3 billion and headline earnings declined by 56.5% from R62 million to R27 million • The main reasons for the profit decline are: ¾ lower domestic new car sales and resultant lower demand from the Original
Slide 17: Mining interests
Mining interests Headline Intrinsic value earnings R’million Sept’08 Sept’07 Change Sept’08 Mar’08 Change Implats dividend 314 187 67.9% 4 430 8 353 (47.0)% Trans Hex (18) (11) (63.6)% 205 317 (35.3)% Total 296 176 68.2% 4 635 8 670 (46.5)% Note • TransHex reported a headline loss of R63 million for
Slide 18: Corporate finance & other
Corporate finance & other Headline earnings R’million Sep ‘08 Sep ‘07 Treasury – foreign interest 48 62 Treasury – foreign exchange profits/(losses) 48 (1) Treasury – local interest 31 40 Business Partners 14 13 Xiocom (44) 0 Net corporate costs & donations (34) (22) Share scheme costs (4) (6) Total
Slide 19: Other interests
Other interests Business Partners • Headline earnings for the six months ended 30 September 2008 amounted to R65 million (2007: R63 million) • Investments to the value of R475 million (2007: R300 million) were made during the six month period, representing an increase of 58.3% Xiocom • Remgro has eq
Slide 20: Other interests (cont’d)
Other interests (cont’d) Xiocom (cont’d) • Xiocom is positioning itself to be a business-to-business integrated “last mile” broadband solutions provider for the developing world • The original roll out program is aimed for a cash flow breakeven by December 2010 • The current economic slowdown is cau
Slide 21: Total cash
Total cash At 30 September 2008 R’million Local Offshore Total Per consolidated balance sheet 822 3 335 4 157 Less: Cash of other operating subsidiaries (414) - (414) Cash at the centre 408 3 335 3 743 Attributable share of R&R’s cash - 2 238 2 238 Available cash 408 5 573 5 981 • Offshore cash comp
Slide 22: Investments differences repurchases
R million 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Cash @ 31 March 08 3 273 Dividends paid (1 561) Investments realised 2 136 Dividends received - 664 other Dividends received - 167 R&R 21 Other Share repurchases (617) Foreign Cash at the centre movement exchange (203) differences
Slide 23: Remgro’s intrinsic value
Remgro’s intrinsic value R’million Sept ‘08 March ‘08 Change Tobacco interests in GBP (£’m) 4 084 4 306 (5.2)% Tobacco interests (including R&R cash) 60 276 69 018 (12.7)% Financial services 15 899 15 104 5.3% Industrial interests 22 853 25 271 (9.6)% Mining interests 4 635 8 670 (46.5)% Other inter
Slide 24: Intrinsic value vs share price
Intrinsic value vs share price • Remgro traded at a 16.4% and 25.4% discount as at 30 September 2008 and 18 November 2008 (ex BAT), respectively, to its intrinsic value (after CGT) (31 March 2008: 22.8%) 24
Slide 25: Share price performance to 30 September 2008
Share price performance to 30 September 2008 • Remgro’s share price as at 30 September 2008, based to September 2000, outperformed the ALSI by 52.3% and the FINDI by 127.0% over the period 25
Slide 26: Share price performance post BAT
Share price performance post BAT • The Remgro share price has outperformed the ALSI and FINDI by 14.2% and 15.4%, respectively, since the unbundling of BAT 26
Slide 27: Questions
Questions 27