Outsurance Group Limited · JSE:OUT
Outsurance — RMI Holdings — FY2016 Earnings Presentation
22 slides from Outsurance's earnings presentation, September 2016
Slide 1: Reflections on FY2016 Results
REFLECTIONS ON FY2016 RESULTS SEPTEMBER 2016
Slide 2: RMI is an investment holding company
RMI is an investment holding company with an investment team of experienced, alternative thinking, financial services specialists who actively partner smart and industry-changing management teams by being a shareholder of influence 1
Slide 3: Focus areas: in a nutshell
Focus areas: in a nutshell OPTIMISE Dynamically enhance our existing portfolio by actively engaging in strategic dialogue with our management partners DIVERSIFY Invest in and build traditional financial services assets Expand geographic footprint independently and/or through the existing portfolio M
Slide 4: Table of contents
Table of contents RMI portfolio snapshot 4 Reflections on FY2016 10 Portfolio company FY2016 results summaries 15 3
Slide 5: RMI portfolio snapshot
RMI portfolio snapshot
Slide 6: RMI: Strategic, active manager of a R64bn financial services portfolio
RMI Strategic, active manager of a R64bn financial services portfolio % holding | Market cap R64bn, $4.5bn 84% Implied value R40bn 25% Market cap R82bn 25% Market cap R37bn Sale process 76% underway(a) c. 95% 100% 25.1% (a) RMB-SI disposal to Santam announced on 23 August 2016. Sale price not disclo
Slide 7: RMI: FY2016 results summary
RMI: FY2016 results summary R’m Jun-15 Jun-16 % chg EARNINGS HISTORY (R’m) Normalised earnings 12% 17% 2% 8% OUTsurance 1 388 1 985 43% Discovery 4 027 4 312 7% MMI 3 836 3 206 (16%) RMB-SI (excl. Truffle) 81 8 (90%) Other(a) 1 (11) >(100%) Group normalised earnings 1 257 1 209 1 448 1 388 1 985 2 3
Slide 8: Relative contribution analysis
Relative contribution analysis OUTsurance | 52% OUTsurance | 47% MARKET VALUE Discovery | 32% Discovery | 30% NORMALISED EARNINGS (R64bn) MMI | 15% (R3 348m) MMI | 23% RMB-SI | 1% RMB-SI | NM OUTsurance | 54% GEOGRAPHIC SPLIT Local | 88% DIVIDENDS Discovery | 14% (NORMALISED EARNINGS) (R1 972m) MMI
Slide 9: Market performance (1 July 2015 – June 2016)
Market performance (1 July 2015 – 30 June 2016) 1 RMI 2 OUTSURANCE 125 25 Total shareholder return (rebased to 100) 41 120 Share price R41.2 115 39 23 Market cap R61.2bn 38 Rands per RMI share 11% Implied value (R'bn) 110 21 12M 37 105 21 high/ 45.3/ 100 0% low 34.7 35 95 (2%) 19 PE (x) 90 33 (trail
Slide 10: Market performance since unbundling (March 2011 – June 2016)
Market performance since unbundling (March 2011 – June 2016) Total return CAGR of 30% per annum since listing Shareholder return comparison vs. FINI 15 since listing 500 Total shareholder return CAGR (March 2011-June 2016) 400 410 59% 300 286 32% 30% 200 27% 26% 231 24% 23% 23% 21% 21% 17% 15% 15% 1
Slide 11: Reflections on FY2016
Reflections on FY2016
Slide 12: FY2016…setting a foundation
FY2016…setting a foundation OPTIMISE • Inception of MMI incentive scheme Enhanced involvement with portfolio companies • Extension of OUTsurance incentive scheme Growth in insurance revenues • Sale of RMB-SI to Santam (pending regulatory approval) • Purchase of shares in MMI and OUTsurance Leadershi
Slide 13: Reflections on FY2016
Reflections on FY2016 EXPANSION Outcome Reflections OF TEAM • Appointment of three mid-level investment • Specialist and impactful resources executives and one finance executive • Relationships established with investee companies • Team complement: • Market presence › 7 investment executives › 6 fin
Slide 14: Reflections on FY2016 (continued)
Reflections on FY2016 (continued) ALPHACODE Outcome Reflections • AlphaCode continues to grow and has been recognised as one of the • Understanding of what AlphaCode should be and the top 11 co-working hubs globally (Uproxx) needs it is trying to meet became clearer as • Established a BBBEE Centre o
Slide 15: RMI recent investment activity
RMI recent investment activity SUMMARY OF FY2016 INVESTMENT ACTIVITY SPLIT OF OPPORTUNITIES ASSESSED • During FY2016, the RMI and RMI IM investment teams assessed 170 investment opportunities › Nine deals completed (including Merchant Capital and 8 asset management Traditional affiliates) › Divestme
Slide 16: Portfolio company FY2016 results summaries
Portfolio company FY2016 results summaries
Slide 17: Existing portfolio: OUTsurance
Existing portfolio: R’m Jun-15 Jun-16 % chg COMMENTS OUTsurance 1 443 1 570 8.8% • 18% top-line growth and 43% increase in headline earnings. Youi grew earnings by >100%, driven by a substantial decrease in the cost-to-income ratio. Results compared favourably with the Youi Group (110) 347 >100% pri
Slide 18: Existing portfolio: Discovery
Existing portfolio: R’m Jun-15 Jun-16 % chg COMMENTS Discovery Health 2 031 2 265 11.5% • New business increased 22% to R16.2 billion (excluding R4.2 for Bankmed in FY 2015); normalised profit from operations increased 11% to R6.4 billion; profit from existing Discovery Life 2 968 3 373 13.7% busine
Slide 19: Existing portfolio: MMI
Existing portfolio: R’m Jun-15 Jun-16 % chg COMMENTS Momentum Retail 1 756 1 600 (8.9%) • A strong embedded value of R43.0 billion (2 680 cents per share) was recorded, reflecting a 13% return on embedded value or R5.2 billion embedded value earnings for shareholders Metropolitan Retail 604 667 10.4
Slide 20: Existing portfolio: RMI IM
Existing portfolio: RMI IM COMPANY OVERVIEW AND UPDATE RMI IM identify, partner and grow world-class asset managers We invest minority equity stakes in our affiliates alongside their investment teams and support their growth as an engaged but non-interfering shareholder 1. Affiliates RMI IM expanded
Slide 21: Existing portfolio: RMI IM - how the affiliates fit together
Existing portfolio: RMI IM HOW THE AFFILIATES FIT TOGETHER* HIGH RETURN EFFICIENT Cash FRONTIER Bonds Credit Property Passive equity Equity (core active and specialist) Private equity Global LOW RISK Hedge funds LOW HIGH Multi asset ASSET CLASS RMI IM ROYAL SA equity SA cash SA bonds SA credit SA mu
Slide 22: Existing portfolio: Merchant Capital
Existing portfolio: COMPANY DESCRIPTION • Merchant Capital was founded in 2012 in response to the lack of funding options available to SMEs • Merchant Capital provides qualifying merchants with an upfront cash-advance in exchange for an agreed percentage of their future credit/debit card turnover wh