Remgro Limited · JSE:REM
Remgro — H1 2016 Earnings Presentation
35 slides from Remgro's earnings presentation, Mar 16, 2016
Slide 1: Interim Results Presentation for the six months ended 31 December 2015
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 2015 16 MARCH 2016
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 (1.0%) Interim dividend per share 9.5% Intrinsic net asset value per share (compared to 30 June 2015) (0.7%) 31 December 2015 11 March 2016 2.8% 2
Slide 3: Salient Features
S AL I E N T F E AT U R E S Six months Six months % Dec 2015 Dec 2014 change Earnings (R’million) 3 342 4 310 (22.5) Earnings per share (EPS) (cents) 649.5 838.5 (22.5) Headline earnings (R’million) 3 624 3 658 (0.9) Headline earnings per share (HEPS) (cents) 704.4 711.7 (1.0) Interim gross dividend
Slide 4: Investment Activities
I N V E S T M E N T AC T I V I T I E S Mediclinic International (Mediclinic) Facilitation of Mediclinic’s acquisition of Spire Healthcare Group plc (Spire) • During June 2015 Remgro facilitated Mediclinic’s acquisition of Spire, concluded early in July 2015. The transaction included a Mediclinic rig
Slide 5: Investment Activities
I N V E S T M E N T AC T I V I T I E S Launch: Exchangeable bonds (post balance sheet event) • Remgro issues £350 million senior, secured, guaranteed bonds due in 2021 • Exchangeable into Mediclinic International plc ordinary shares • Initial exchange price premium: 30% (reference price of £8.70 and
Slide 6: Contribution by Investment Platform
C O N T R I B U T I O N B Y I N V E S T M E N T P L AT F O R M (EXCLUDING OTHER INVESTMENTS, TREASURY AND CORPORATE COSTS) Headline earnings for the Intrinsic asset value period ended 31 Dec 2015 as at 31 Dec 2015 0.1% 1.9% 1.5% 4.2% Food, liquor and 11.5% 6.4% home care 20.7% Banking 31.6% 12.0% He
Slide 7: Summary of Headline Earnings by Platform
S U M M ARY O F H E AD L I N E E AR N I N G S B Y P L AT F O R M Six months Six months % R’million Dec 2015 Dec 2014 change Food, liquor and home care 1 250 974 28.3 Banking 1 386 1 347 2.9 Healthcare 787 670 17.5 Insurance 455 549 (17.1) Industrial 5 7 (28.6) Infrastructure 74 91 (18.7) Media and s
Slide 8: Summary of Headline Earnings
S U M M ARY O F H E AD L I N E E AR N I N G S Six months Six months % % Cumulative % R’million Dec 2015 Dec 2014 change of total of total RMBH and FirstRand 1 386 1 347 2.9 38.2 38.2 Mediclinic 787 670 17.5 21.7 59.9 RCL Foods 582 473 23.0 16.0 75.9 RMI Holdings 455 549 (17.1) 12.6 88.5 Distell 361
Slide 9: 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 OTHER INVESTMENTS, TREASURY AND CORPORATE COSTS) December 2015 December 2014 2.5% 0.2% 0.3% 0.1% 1.9% 15.0% 11.5% 26.7% 31.6% 18.4% 19.9% 36.9% 35.0% Food, liquor and home care Banking Healthcare Insurance Industrial Infrastructure
Slide 10: 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 Intrinsic value Six months Six months % As at As at % R’million Dec 2015 Dec 2014 change 31 Dec 2015 30 Jun 2015 change Distell 361 306 18.0 11 003 11 098 (0.9) RCL Foods 582 473 23.0 9 679 11 514 (15.9) Unilever SA 307 195 57.4 9 444 8 688
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 RCL FOODS (77.3% effective interest) • RCL Foods’ results increased mainly due to the release of a R163 million provision relating to uncertain Foodcorp tax disputes • Excluding this, RCL Foods’ contribution to headline earnings would have decreased by 3.6%
Slide 12: Banking
B AN K I N G Headline earnings Intrinsic value Six months Six months % As at As at % R’million Dec 2015 Dec 2014 change 31 Dec 2015 30 Jun 2015 change RMBH 979 950 3.1 22 102 26 409 (16.3) FirstRand 407 397 2.5 9 314 11 720 (20.5) Total 1 386 1 347 2.9 31 416 38 129 (17.6) • RMBH and FirstRand repor
Slide 13: Healthcare and Insurance
H E ALT H C AR E Headline earnings Intrinsic value Six months Six months % As at As at % R’million Dec 2015 Dec 2014 change 31 Dec 2015 30 Jun 2015 change Mediclinic 787 670 17.5 48 815 36 727 32.9 • Mediclinic’s improved results are attributable to: › the solid performances by all three operating p
Slide 14: Industrial
I N D U S T R I AL Headline earnings/(loss) Intrinsic value Six months Six months % As at As at % R’million Dec 2015 Dec 2014 change 31 Dec 2015 30 Jun 2015 change Air Products 142 108 31.5 3 649 4 164 (12.4) KTH (260) (62) (319.4) 2 492 2 696 (7.6) Total SA 51 (112) 145.5 1 493 1 785 (16.4) Wispeco
Slide 15: Industrial
I N D U S T R I AL AIR PRODUCTS (50% effective interest) Six months Six months % R’million Sep 2015 Sep 2014 change Revenue 1 363 1 043 30.7 Operating profit 426 321 32.7 • The results were positively influenced by the commencement of new long-term tonnage contracts • Bulk Liquid and Packaged Gas pr
Slide 16: Industrial
I N D U S T R I AL TOTAL SA (24.9% effective interest) Six months Six months % R’million Dec 2015 Dec 2014 change Revenue 26 195 25 292 3.6 Operating profit/(loss) 189 (669) 128.3 Headline earnings/(loss) 205 (450) 145.6 • The positive revenue growth was mainly due to: › an increase in the regulated
Slide 17: Industrial
I N D U S T R I AL WISPECO (100% effective interest) Six months Six months % R’million Dec 2015 Dec 2014 change Revenue 1 064 838 27.0 Operating profit 97 70 38.6 Net profit 55 48 14.6 • Revenue growth resulted from slightly higher selling prices due to higher raw material costs, a 5% increase in sa
Slide 18: Infrastructure
I N F R AS T R U C T U R E Headline earnings/(loss) Intrinsic value Six months Six months % As at As at % R’million Dec 2015 Dec 2014 change 31 Dec 2015 30 Jun 2015 change CIV group 35 5 Nm 2 452 2 797 (12.3) Grindrod 43 76 (43.4) 1 955 2 329 (16.1) SEACOM (28) 8 Nm 1 258 1 001 25.7 Other (incl PRIF
Slide 19: Infrastructure
I N F R AS T R U C T U R E CIV HOLDINGS (50.9% effective interest) DFA Six months Six months % R’million Sep 2015 Sep 2014 change Revenue 529 466 13.5 EBITDA 347 313 10.9 • The improved results were mainly as a result of the solid growth in annuity income of 20.7%, currently R77 million per month (t
Slide 20: Media and Sport
M E D I A AN D S P O R T Headline earnings/(loss) Intrinsic value Six months Six months % As at As at % R’million Dec 2015 Dec 2014 change 31 Dec 2015 30 Jun 2015 change eMedia 11 44 (75.0) 1 766 2 094 (15.7) Other (39) (33) 18.2 388 382 1.6 Total (28) 11 (354.5) 2 154 2 476 (13.0) 20
Slide 21: Media and Sport
M E D I A AN D S P O R T eMEDIA (32.3% effective interest) Six months Six months % R’million Sep 2015 Sep 2014 change Revenue 1 146 1 201 (4.6) Operating profit 96 246 (61.0) Headline earnings (before amortisation) 52 155 (66.5) Headline earnings (after amortisation) 35 138 (74.6) • eMedia was previ
Slide 22: 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 C O S T S Headline earnings/(loss) Intrinsic value Six months Six months % As at As at % R’million Dec 2015 Dec 2014 change Dec 2015 Jun 2015 change Other investments 31 39 (20.5) 3 955 3 266 21.1 Central treasury – Cash 77 57 35.
Slide 23: Summary of Intrinsic Value
S U M M ARY O F I N T R I N S I C VAL U E At At % % R’million 31 December 2015 30 June 2015 change of total Mediclinic 48 815 36 727 32.9 32.0 RMBH and FirstRand 31 416 38 129 (17.6) 20.6 RMI Holdings 17 407 19 096 (8.8) 11.4 Distell 11 003 11 098 (0.9) 7.2 RCL Foods 9 679 11 514 (15.9) 6.3 Other in
Slide 24: Contribution to Intrinsic Value by Platform
C O N T R I B U T I O N T O I N T R I N S I C VAL U E B Y P L AT F O R M (EXCLUDING OTHER INVESTMENTS, TREASURY, CORPORATE COSTS AND POTE NTIAL CGT) December 2015 June 2015 1.7% 1.5% 4.6% 7.1% 4.2% 21.6% 6.4% 20.7% 13.2% 12.0% 26.4% 21.6% 25.4% 33.6% Food, liquor and home care Banking Healthcare Ins
Slide 25: Intrinsic Value
I N T R I N S I C VAL U E At At At 6 mnth % 11 Mar 2016 31 Dec 2015 30 Jun 2015 change Discount to Intrinsic value 16.7% 14.5% 11.4% Intrinsic value – after CGT (Rand) 297.11 286.96 288.89 (0.7) Closing share price (Rand) 247.40 245.21 255.94 (4.2) 25
Slide 26: Total Cash at the Centre
TO TAL C AS H AT T H E C E N T R E As at 31 December 2015 R’million Local Offshore Total Per Statement of Financial Position 2 832 1 043 3 875 Investment in money market funds 500 619 1 119 Less: Cash at operating subsidiaries (899) (9) (908) Cash at the centre 2 433 1 653 4 086 Cash held in the fol
Slide 27: 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 7 000 121 13 369 6 000 2 297 5 000 4 000 3 465 3 000 2 000 (1 333) (4 842) 1 000 (23) 67 - Borrowings (net Dividends Foreign Investments and Taxation Investments and Dividends paid Other Net cash of costs) received exchange gain loans realised * received l
Slide 28: Cash Dividend
C AS H D I V I D E N D 500 450 428 389 400 350 300 259 Cents 233 250 Final Dividend 9.5% 200 8.3% Interim Dividend 150 100 169 185 156 50 0 30 Jun 2014 30 Jun 2015 30 Jun 2016 • The interim dividend of 185 cents represents an increase of 9.5% from the December 2014 interim dividend 28
Slide 29: Thank You
THANK YOU F O R M O R E IN F O R MAT ION VISIT O U R W EB SIT E w ww.remg ro .c om
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
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 Tradeability discount Unilever SA Disco
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 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