Remgro Limited · JSE:REM
Remgro — FY2009 Earnings Presentation
36 slides from Remgro's earnings presentation, June 2009
Slide 1: Final Results Presentation for the Year Ended 31 March 2009
Kemgro Limited FINAL RESULTS PRESENTATION FOR THE YEAR ENDED 3I MARCH 2009
Slide 2: Salient features
Salient features 12 Months 12 Months 31 March 2009 2008 Change Headline earnings (R’m) 4 660 7 991 (41.7)% - Continuing operations 3 168 4 551 (30.4)% - Discontinued operations 1 492 3 440 (56.6)% Headline earnings per share (cents) 987.7 1 692.8 (41.7)% - Continuing operations 671.5 964.1 (30.3)% -
Slide 3: Salient features (cont'd)
Salient features (cont’d) 12 Months 12 Months 31 March 2009 2008 Dividend per share (cents) 190.0 510.0 - interim 80.0 180.0 - final 110.0 330.0 Intrinsic NAV (Rand) – after CGT 99.15 253.67 Closing share price (Rand) 67.50 195.93 Discount to NAV 31.9% 22.8% • On 19 June 2009, the intrinsic NAV was
Slide 4: Comparison with the prior year
Comparison with the prior year BAT unbundling • On 3 November 2008 Remgro distributed its investment in BAT as a dividend in specie, amounting to R55.2 billion • STC and Securities Transfer Tax amounted to R830.1 million • For the year under review the investment in BAT was equity accounted for the
Slide 5: Investment activities for the year ended 31 March 2009
Investment activities for the year ended 31 March 2009 Share repurchases • During the year Remgro acquired 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 scheme • During the year under review, no Remgro ordina
Slide 6: Investment activities for the year ended 31 March 2009 (cont'd)
Investment activities for the year ended 31 March 2009 (cont’d) PG Group of Companies (PGSI) • During the year under review Remgro invested a further $1.0 million in PGSI by acquiring shares from a minority shareholder • On 31 March 2009 Remgro’s interest in PGSI, on a fully diluted basis, was 25.0%
Slide 7: Investment activities for the year ended 31 March 2009 (cont'd)
Investment activities for the year ended 31 March 2009 (cont’d) Business Partners Limited (Business Partners) • During the year Remgro acquired a further 930 900 Business Partners shares for a total amount of R5.8 million • On 31 March 2009, Remgro’s interest in Business Partners was 20.8% (31 March
Slide 8: Subsequent to 31 March 2009
Subsequent to 31 March 2009 KWV Investments Limited (KWV Investments) • On 14 April 2009, Remgro acquired 4 028 136 KWV Investments shares (9.6% shareholding) for a total consideration of R258.5 million • As Remgro’s interest in Distell is held through Remgro KWV Investments Limited, in which both R
Slide 9: Subsequent to 31 March 2009 (cont'd)
Subsequent to 31 March 2009 (cont’d) Remgro / Venfin merger • On 8 June 2009, Remgro and Venfin announced that they are engaged in discussions regarding a possible merger • The companies’ boards proposed that the merger be implemented on a net asset value (NAV) basis, excluding Venfin’s shareholding
Slide 10: Summary of underlying performance
Summary of underlying performance 12 Months 12 Months R’million 2009 2008 Change Tobacco interests 2 295 3 579 (35.9)% Financial services 1 576 2 120 (25.7)% Industrial interests 1 318 1 895 (30.4)% Mining interests 164 264 (37.9)% Corporate and other (693) 133 nm Headline earnings 4 660 7 991 (41.7
Slide 11: Reconciliation of headline earnings
Reconciliation of headline earnings 12 Months 12 Months R’million 2009 2008 Net profit for the year – continuing operations 2 827 6 508 Net impairment of investments, assets and goodwill 442 (15) Profit on sale and restructuring of investments (24) (1 665) Non-headline earnings items included in equ
Slide 12: Contribution to headline earnings – continuing operations
Contribution to headline earnings – continuing operations 31 March 2009 31 March 2008 5.2% 3.5% 6.0% 5.8% 46.6% 49.7% 41.6% 41.6% Financial Industrial Mining Corporate Financial Industrial Mining Corporate 12
Slide 13: Tobacco interests
Tobacco interests Headline earnings Intrinsic value March March March March R’million 2009 2008 Change 2009 2008 Change R&R 2 295 3 579 (35.9)% - 69 018 nm Avg ZAR:£ rate 15.22 14.29 Note • Due to the weaker rand, the positive currency impact on headline earnings was R141 million (2008: R250 million
Slide 14: Financial interests
Financial interests Headline earnings Intrinsic value March March March March R’million 2009 2008 Change 2009 2008 Change FirstRand 815 1 090 (25.2)% 5 803 7 698 (24.6)% RMBH 761 1 030 (26.1)% 6 227 7 406 (15.9)% Total 1 576 2 120 (25.7)% 12 030 15 104 (20.4)% Note • The decrease of the combined con
Slide 15: Industrial interests
Industrial interests Headline earnings Intrinsic value March March March March R’million 2009 2008 Change 2009 2008 Change Listed investments: Distell 304 261 16.5% 3 052 2 992 2.0% Medi-Clinic 288 285 1.1% 5 533 5 070 9.1% Rainbow 235 377 (37.7)% 3 315 3 133 5.8% Nampak 105 163 (35.6)% 984 1 281 (2
Slide 16: Industrial interests (cont'd)
Industrial interests (cont’d) Headline earnings Intrinsic value March March March March R’million 2009 2008 Change 2009 2008 Change Balance b/f 892 1 070 (16.6)% 13 027 12 701 2.6% Unlisted investments: Unilever SA 231 229 0.9% 4 110 3 663 12.2% Tsb Sugar 187 121 54.5% 2 631 2 097 25.5% Air Products
Slide 17: Industrial interests (cont'd)
Industrial interests (cont’d) Unilever South Africa (25.75% interest) • The combined turnover for the businesses grew by 24.5% for the year ended 31 March 2009 to R11.7 billion (2008: R9.4 billion), predominantly: • through pricing strategy, and • improved product supply due to the non-recurrence of
Slide 18: Industrial interests (cont'd)
Industrial interests (cont’d) Tsb Sugar (100% interest) • Turnover, driven by an increase in volume and prices, increased by 49% to R3 732 million (2008: R 2 509 million) • Headline earnings increased by 55% to R187 million (2008: R121 million) notwithstanding increased cost pressure throughout the
Slide 19: Industrial interests (cont'd)
Industrial interests (cont’d) Air Products (50% interest) • For the twelve months ended 31 March 2009, Air Products’ turnover grew by 13.1% (2008: 15.3%) from R1 007 million to R1 139 million and Remgro’s share in its headline earnings by 8.3% (2008: 30.5%) from R94 million to R102 million • Air Pro
Slide 20: Industrial interests (cont'd)
Industrial interests (cont’d) PGSI (cont’d) • The results of PG Group were negatively impacted by: • the difficult macro-economic environment; • the electricity crisis earlier in the year; • high interest rates; and • a decline in demand for PG’s products in both the building and automotive industry
Slide 21: Industrial interests (cont'd)
Industrial interests (cont’d) Wispeco (100% interest) • For the twelve months under review, Wispeco’s headline earnings included in Remgro’s results amounted to R30 million (2008: R64 million) • Wispeco’s financial performance was influenced by reducing sales volumes due to economic downturn and inv
Slide 22: Industrial interests (cont'd)
Industrial interests (cont’d) Total SA (24.9% interest) • Total’s contribution to Remgro’s headline earnings for the period under review decreased from earnings of R207 million in the previous year to a loss of R25 million, mainly driven by the significant drop in oil prices • Oil prices were very v
Slide 23: Industrial interests (cont'd)
Industrial interests (cont’d) KTI (42.5% interest) • KTI posted a headline loss of R332 million for the twelve months ended 31 December 2008, compared to headline earnings of R211 million in the prior twelve month period • The headline loss is mainly due to an unfavourable fair value adjustment on t
Slide 24: Mining interests
Mining interests Headline earnings Intrinsic value March March March March R’million 2009 2008 Change 2009 2008 Change Implats dividend 346 267 29.6% 4 223 8 353 (49.4)% Trans Hex (182) (3) nm 44 317 (86.1)% 164 264 (37.9)% 4 267 8 670 (50.8)% Note • TransHex reported a headline loss of R637 million
Slide 25: Corporate finance & other
Corporate finance & other Headline earnings March March R’million 2009 2008 Change Treasury – foreign interest 71 119 (40.3)% Treasury – foreign exchange profits/(losses) 50 - nm Treasury – local interest 73 61 19.7% STC on BAT unbundling (686) - nm Net corporate costs & donations (68) (44) (54.5)%
Slide 26: Other interests
Other interests Business Partners (20.8% interest) • Headline earnings for the twelve months ended 31 March 2009 amounted to R129.8 million (2008: R213.1 million), representing a decrease of 39.1% • Headline earnings attributable to Remgro for the period was R28 million (2007: R47 million), primaril
Slide 27: Other interests (cont'd)
Other interests (cont’d) Xiocom (cont’d) • The major events were: • Setting up of Main Street Broadband, a company that obtained a $34 million low interest rate, non-recourse loan from a government agency to roll out 66 networks in the rural areas of South Georgia and North Florida in the USA • Esta
Slide 28: Total cash
Total cash At 31 March 2009 R’million Local Offshore Total Per consolidated balance sheet 1 507 3 543 5 050 Investment in government bonds/T-bills (> 3 months) - 1 578 1 578 Less: Cash of operating subsidiaries (633) (28) (661) Cash at the centre 874 5 093 5 967 Cash at the centre is held in the fol
Slide 29: Cash at the centre movement
Cash at the centre movement 6,000 105 55 (21) (292) 1,530 169 (520) 5,500 5,000 (2,068) 4,500 4,000 3,736 R million 3,500 3,000 (2,694) 2,500 2,000 1,500 1,000 500 0 Share transactions Other dividends R&R dividends Investments & loans realised R&R cash Foreign exchange differences Other income Divid
Slide 30: Valuation of unlisted industrial interests
Valuation of unlisted industrial interests Factors taken into consideration in determining the directors’ valuation: • Growth potential and risk; • Underlying NAV; • Profit history; and • Cash flow projections Premium / discount Unlisted investment Valuation method applied Unilever SA Put option val
Slide 31: Remgro's intrinsic value
Remgro’s intrinsic value March March R’million 2009 2008 Change Tobacco interests (including R&R cash) - 69 018 - Financial services 12 030 15 104 (20.4)% Industrial interests 24 135 25 271 (4.5)% Mining interests 4 267 8 670 (50.8)% Other interests 1 659 785 74.1% Deferred tax liability (422) (1 02
Slide 32: Intrinsic value v share price
Intrinsic value v share price • Remgro traded at a 31.9% and 26.8% discount as at 31 March 2009 and 19 June 2009, respectively, to its intrinsic value (after CGT) (31 March 2008: 22.8%) 32
Slide 33: Share price performance since the BAT unbundling
Share price performance since the BAT unbundling • Remgro’s share price as at 31 March 2009, based to 3 November 2008 (unbundling of BAT), underperformed the ALSI by 13.3% and the FINDI by 1.1% over the period • Remgro’s share price as at 19 June 2009, on the same basis, underperformed the ALSI by 1
Slide 34: Dividend cover
Dividend cover * HEPS of continuing operations 34
Slide 35: Future of Remgro's STC credits
Future of Remgro’s STC credits • The STC credits will continue to exist for five years after the effective date of the new Dividends Tax (DT) legislation • The effective date for the changes to STC legislation is to be determined by the Minister of Finance • DT is expected to be legislated during th
Slide 36: Thank you, questions?
Kemgro Limited T H AN K Y O U QUESTIONS?