Remgro Limited · JSE:REM
Remgro — FY2014 Earnings Presentation
37 slides from Remgro's earnings presentation, September 2014
Slide 1: Final Results Presentation for the Year Ended 30 June 2014
F I N AL R E S U LT S P R E S E N TAT I O N FOR THE YEAR ENDED 30 JUNE 2014 September 2014
Slide 2: Financial Highlights
F I N AN C I AL H I G H L I G H T S Headline earnings per share 58.2% Headline earnings per share (excluding Mediclinic refinancing costs) 20.5% Intrinsic net asset value per share 20.1% Total dividend per share 12.4% 2
Slide 3: Salient Features
S AL I E N T F E AT U R E S 12 months 12 months % June 2014 June 2013* Change Headline earnings (R’million) 6 635 4 196 58.1 Headline earnings per share (HEPS) (cents) 1 292.4 817.1 58.2 HEPS – excl Mediclinic refinancing costs (cents) 1 292.4 1 072.6 20.5 Total gross dividend per share (cents) 389.
Slide 4: Summary of Investment Activities
S U M M ARY O F I N V E S T M E N T AC T I V I T I E S Investments made and loans granted 12 months 12 months R’million June 2014 June 2013 Commentary Grindrod 551 136 ‣ 2013 noted for high levels of corporate activity Unilever SA (loan) 283 - ‣ 2014 financial year was used to consolidate the positi
Slide 5: Investment Activities for the Year to June 2014
I N V E S T M E N T AC T I V I T I E S F O R T H E Y E A R T O J U N E 2 0 1 4 RCL Foods On 1 May 2013, RCL Foods acquired an effective 64.2% interest in Foodcorp (included for only 2 months in the prior financial year to 30 June 2013) During the current financial year, RCL Foods concluded and imple
Slide 6: Investment Activities for the Year to June 2014
I N V E S T M E N T AC T I V I T I E S F O R T H E Y E A R T O J U N E 2 0 1 4 PG Group of Companies (PGSI) During the year Remgro participated in two rights offers and invested a further R47.1 million in PGSI The PGSI cumulative, redeemable preference shares, invested in by Remgro in June 2009, to
Slide 7: Investment Activities for the Year to June 2014
I N V E S T M E N T AC T I V I T I E S F O R T H E Y E A R T O J U N E 2 0 1 4 The CIV group As part of the CIV group restructure on 1 April 2014, to simplify the holding structure from multiple entry points to a single entry point, Remgro invested R67.3 million in CIV Holdings (CIVH) The restructur
Slide 8: Summary of Comparable Headline Earnings
S U M M ARY O F C O M PAR AB L E H E AD L I N E E AR N I N G S 12 months 12 months % % of Cumulative R’million June 2014 June 2013 Change Total % of total RMBH and FirstRand 2 542 2 077 22.4 38.3 38.3 Mediclinic (excl once-off costs) 1 489 821 81.4 22.4 60.7 RMI Holdings 871 666 30.8 13.1 73.8 Diste
Slide 9: Summary of Comparable Headline Earnings
S U M M ARY O F C O M PAR AB L E H E AD L I N E E AR N I N G S 12 months 12 months R’million June 2014 June 2013 % Change Food, liquor and home care 795 1 123 (29.2) Banking 2 542 2 077 22.4 Healthcare (excl Mediclinic refinancing costs) 1 489 821 81.4 Insurance 871 666 30.8 Industrial 700 548 27.7
Slide 10: Contribution to Headline Earnings
C O N T R I B U T I O N TO H E AD L I N E E AR N I N G S (excluding Mediclinic once-off costs, other investments, treasury and corporate costs) 30 June 2014 30 June 2013 3.5% 2.1% 1.0% 2.5% 10.0% 20.2% 12.0% 10.5% 12.0% 13.1% 14.8% 37.4% 38.4% 22.5% Food, liquor and home care Banking Healthcare Insu
Slide 11: Food, Liquor and Home Care
F O O D , L I Q U O R AN D H O M E C AR E Headline earnings/(loss) Intrinsic value 12 mnths 12 mnths % At 30 Jun At 30 Jun % R’million Jun 2014 Jun 2013 Change 2014 2013 Change RCL Foods (239) 21 Nm 10 547 6 759 56.0 Distell 495 360 37.5 9 336 8 073 15.6 Unilever SA 347 426 (18.5) 9 037 8 676 4.2 TS
Slide 12: Food, Liquor and Home Care
F O O D , L I Q U O R AN D H O M E C AR E RCL FOODS (77.7% effective interest) During the year, RCL Foods’ results were negatively impacted by: ‣ Material foreign exchange losses as a result of the early redemption of Foodcorp’s Euro-denominated debt ‣ Once-off BEE costs relating to the restructurin
Slide 13: Food, Liquor and Home Care
F O O D , L I Q U O R AN D H O M E C AR E TSB (sold) ‣ TSB’s contribution to headline earnings only includes the six months to 31 December 2013 ‣ Remgro sold 100% of TSB to RCL Foods during January 2014 UNILEVER SA (25.8% effective interest) 12 months 12 months % R’million Jun 2014 Jun 2013 Change P
Slide 14: Banking
B AN K I N G Headline earnings Intrinsic value 12 mnths 12 mnths % At 30 Jun At 30 Jun % R’million Jun 2014 Jun 2013 Change 2014 2013 Change RMBH 1 793 1 460 22.8 20 743 15 541 33.5 FirstRand 749 617 21.4 8 957 6 359 40.9 Total 2 542 2 077 22.4 29 700 21 900 35.6 ‣ RMBH and FirstRand reported good h
Slide 15: Healthcare and Insurance
H E ALT H C AR E Headline earnings Intrinsic value 12 mnths 12 mnths % At 30 Jun At 30 Jun % R’million Jun 2014 Jun 2013 Change 2014 2013 Change Mediclinic 1 489 821 81.4 29 316 24 640 19.0 ‣ The positive effect of Mediclinic’s refinancing transaction, a solid performance from its operations as well
Slide 16: Industrial
I N D U S T R I AL Headline earnings Intrinsic value 12 mnths 12 mnths % At 30 Jun At 30 Jun % R’million Jun 2014 Jun 2013 Change 2014 2013 Change Air Products 217 180 20.6 3 610 3 126 15.5 KTH 71 36 97.2 2 481 2 425 2.3 Total SA 233 258 (9.7) 1 596 1 275 25.2 PGSI 72 10 620.0 760 571 33.1 Wispeco 1
Slide 17: Industrial
I N D U S T R I AL AIR PRODUCTS (50% effective interest) 12 months 12 months % R’million Mar 2014 Mar 2013 Change Revenue 1 902 1 682 13.1 Operating profit 617 525 17.5 ‣ The increase is mainly as a result of increased volumes of bulk liquid and packaged gas products, albeit at a modest pace ‣ Altho
Slide 18: Industrial
I N D U S T R I AL TOTAL SA (24.9% effective interest) 12 mnths 12 mnths % R’million Jun 2014 Jun 2013 Change Revenue 44 818 37 767 18.7 Operating profit 1 232 1 049 17.4 Headline earnings 936 1 037 (9.7) ‣ The increase in operating profit is mainly due to: ‣ the increase in the retail margin of 3.7
Slide 19: Industrial
I N D U S T R I AL PGSI (37.7% effective interest) 12 mnths 12 mnths % R’million Jun 2014 Jun 2013 Change Revenue 3 645 3 398 7.3 Operating profit 250 100 150.0 ‣ The increase in operating profit was driven by: ‣ slightly improved global and domestic economic conditions; and ‣ business initiatives t
Slide 20: Infrastructure
I N F R AS T R U C T U R E Headline earnings/(loss) Intrinsic value 12 mnths 12 mnths % At 30 Jun At 30 Jun % R’million Jun 2014 Jun 2013 Change 2014 2013 Change Grindrod 108 144 (25.0) 4 513 3 103 45.4 CIV group 58 59 (1.7) 2 282 2 305 (1.0) SEACOM (6) - Nm 991 1 069 (7.3) Other 6 (7) 185.7 829 776
Slide 21: Infrastructure
I N F R AS T R U C T U R E CIV HOLDINGS (50.7% effective interest) DFA 12 months 12 months R’million Mar 2014 Mar 2013 % Change Revenue 879 683 28.7 Operating profit 311 222 40.1 Headline earnings contribution 30 25 20.0 ‣ Effective 1 April 2014 the restructuring of the CIV group was implemented (no
Slide 22: Media and Sport
M E D I A AN D S P O R T Headline earnings/(loss) Intrinsic value 12 mnths 12 mnths % At 30 Jun At 30 Jun % R’million Jun 2014 Jun 2013 Change 2014 2013 Change Sabido 131 148 (11.5) 2 528 2 279 10.9 Other (67) (29) (131.0) 533 605 (11.9) Total 64 119 (46.2) 3 061 2 884 6.1 Other ‣ The “Other” intere
Slide 23: Media and Sport
M E D I A AN D S P O R T SABIDO (31.9% effective interest) 12 months 12 months % R’million Mar 2014 Mar 2013 Change Revenue 2 364 2 118 11.6 Operating profit 670 739 (9.3) Headline earnings (before amortisation) 448 502 (10.8) Headline earnings (after amortisation) 414 468 (11.5) ‣ The decrease in S
Slide 24: 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 COSTS Headline earnings/(loss) Intrinsic value 12 mnths 12 mnths % At 30 Jun At 30 Jun % R’million Jun 2014 Jun 2013 Change 2014 2013 Change Other investments 59 57 3.5 2 767 2 204 25.5 Central treasury 83 3 >500 3 264 2 733 19.4
Slide 25: Summary of Intrinsic Value
S U M M ARY O F I N T R I N S I C VAL U E % R’million 30 Jun 2014 30 Jun 2013 Change % of Total RMBH and FirstRand 29 700 21 900 35.6 22.6 Mediclinic 29 316 24 640 19.0 22.3 RMI Holdings 14 739 11 331 30.1 11.2 RCL Foods 10 547 6 759 56.0 8.0 Distell 9 336 8 073 15.6 7.1 Other investments 37 829 35
Slide 26: Contribution to Intrinsic Value
C O N T R I B U T I O N TO I N T R I N S I C VAL U E (excluding other investments, treasury, corporate costs and potential CGT) 30 June 2014 30 June 2013 2.8% 2.5% 7.0% 7.0% 7.6% 26.6% 7.5% 23.4% 11.0% 11.9% 21.2% 23.8% 24.0% 23.7% Food, liquor and home care Banking Healthcare Insurance Industrial I
Slide 27: Intrinsic Value
I N T R I N S I C VAL U E June 2014 June 2013 % Change Discount to Intrinsic value 6.5% 7.3% Intrinsic value – after CGT (Rand) 245.96 204.83 20.1 Closing share price - (Rand) 230.00 189.95 21.1 27
Slide 28: Total Cash at the Centre
TO TAL C AS H AT T H E C E N T R E As at 30 June 2014 R’million Local Offshore Total Per Statement of Financial Position 2 958 699 3 637 Investment in money market funds 746 425 1 171 Less: Cash at operating subsidiaries (1 491) (73) (1 544) Cash at the centre 2 213 1 051 3 264 Cash held in the foll
Slide 29: Cash at the Centre Movement
C AS H AT T H E C E N T R E M O V E M E N T 4,500 4,000 78 100 276 3,500 3 382 3,000 2,500 2,000 (1 833) 1,500 1,000 531 ,500 (1 347) (112) (13) - Dividends Investments sold Exchange rate Interest and Dividends paid Investments Remuneration Taxation paid Net cash received and loans repaid revaluatio
Slide 30: Cash Dividend
C AS H D I V I D E N D 450 389 400 346 350 314 300 12.4% 233 Cents 250 201 188 Final Dividend 200 Interim Dividend 150 100 126 145 156 50 0 30 Jun 2012 30 Jun 2013 30 Jun 2014 ‣ The final dividend of 233 cents represents an increase of 15.9% from the final dividend in June 2013 ‣ The total dividend
Slide 31: 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 32: Thank You
THANK YOU FOR MORE INFORMATION VISIT OUR WEBSITE www.remgro.com
Slide 33: 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 Discount Unilever SA Discounted cash fl
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 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 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 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 36: 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 Sabido Sabido 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 launched its free-to-
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 Other investments Business Business Partners is a specialist investment company providing risk Partners finance, mentorship, property accommodation, as well as management services to small and medium enterprises mainly i