Remgro Limited · JSE:REM
Remgro — FY2020 Earnings Presentation
45 slides from Remgro's earnings presentation, Sep 29, 2020
Slide 1: Results Presentation for the Year Ended 30 June 2020
RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 29 SEPTEMBER 2020 2020
Slide 2: Agenda
AGENDA 01 SALIENT FEATURES Jannie Durand 02 SETTING THE SCENE Jannie Durand PRESENTERS 03 EXECUTING ON STRATEGY Jannie Durand 04 INVESTMENT ACTIVITIES Jannie Durand Jannie Durand Neville Williams 05 RESULTS FOR THE YEAR Neville Williams (CEO) (CFO) 06 CLOSING COMMENTS AND Q&A Jannie Durand 2 2
Slide 3: Salient Features
SALIENT FEATURES 3
Slide 4: Salient Features
SALIENT FEATURES SALIENT FEATURES Year ended Year ended 30 Jun 20 30 Jun 19 % change Headline earnings measures (Rand) Total headline earnings per share 5.61 14.49 ▼61.3% Headline earnings per share from continuing operations 3.08 9.81 ▼68.7% Ordinary dividend per share (Rand) 2.65 5.64 ▼53.0% As at
Slide 5: Setting the Scene
SETTING THE SCENE 5
Slide 6: Covid-19
SETTING THE SCENE COVID-19 IMPACT OUR RESPONSE RESILIENCE Lockdown impact Sukuma Fund Balance sheet strength • 1 month near standstill of economy • R500 million donation to aid small • Conservative approach to debt businesses • Strong focus on liquidity Financial Services • Voluntary donations by Ma
Slide 7: Frail Operating Environment
SETTING THE SCENE FRAIL OPERATING ENVIRONMENT GDP DECLINE CONSUMER CONFIDENCE UNEMPLOYMENT Real GDP, R'bn FNB/BER Consumer Confidence Index (net balance) Official unemployment rate (%) 3 200 30 32 3 100 20 30 10 3 000 28 0 2 900 26 -10 2 800 24 -20 2 700 -30 22 2 600 -40 20 Q1-10 Q3-10 Q1-11 Q3-11 Q
Slide 8: Executing on Strategy
EXECUTING ON STRATEGY 8
Slide 9: Investment Strategy (Capital Allocators)
EXECUTING ON STRATEGY INVESTMENT STRATEGY (CAPITAL ALLOCATORS) ACQUIRE HOLD DISPOSE/UNBUNDLE • Significant contribution to Remgro’s Consumer • No value to be added earnings products • Maturity profile of business • Value over the long term • Risk profile has changed • Significant influence and Board
Slide 10: Group Profile
REMGRO IS A DIVERSIFIED INVESTMENT HOLDING GROUP PROFILE COMPANY WITH THE VISION TO BE THE TRUSTED INVESTMENT COMPANY GROUP STRUCTURE OF CHOICE THAT CONSISTENTLY CREATES REMGRO LIMITED PRINCIPAL INVESTMENTS – EQUITY INTEREST HELD SUSTAINABLE STAKEHOLDER VALUE. Our interests consist FINANCIAL CONSUME
Slide 11: Summary of Intrinsic Net Asset Value – Material Investments
EXECUTING ON STRATEGY SUMMARY OF INTRINSIC NET ASSET VALUE – MATERIAL INVESTMENTS As at As at R million 30 Jun 20 30 Jun 19 % change % of total Mediclinic 18 769 17 891 4.9 20.8 RMI 13 708 15 947 (14.0) 15.2 CIVH 10 584 8 403 26.0 11.7 FirstRand 7 068 15 069 (53.1) 7.8 Siqalo Foods 6 145 6 164 (0.3)
Slide 12: Intrinsic Net Asset Evolution
EXECUTING ON STRATEGY INTRINSIC NET ASSET EVOLUTION PER SHARE LISTED/UNLISTED* 250 100% 233.03 9% 9% 14% 3% 3% 90% (33.7%) 23% 24% 19.4% 6% 7% 5% 200 5% 5% 38% 80% 2% 2% 12% (2.3%) 6% 5% 154.47 70% 150.98 7% 7% 7% 150 (46.8%) 3% 60% R per share 12% 11% 7% 35.3% 50% 42.6% 6% 100 13% 18% 187.90 40% 77
Slide 13: Strategic Priorities
SETTING THE SCENE STRATEGIC PRIORITIES CAPITAL ALLOCATION BUSINESS CONTINUITY REMUNERATION • Remgro is an allocator of capital, both • Protect financial health of investees • A key consideration is that managers' financial and human amidst the magnitude of the economic incentivisation must be aligne
Slide 14: Investment Activities
INVESTMENT ACTIVITIES 14
Slide 15: Investment Activities for the Year Ended 30 June 2020
INVESTMENT ACTIVITIES INVESTMENT ACTIVITIES FOR THE YEAR ENDED 30 JUNE 2020 FIRSTRAND AND RMH CIVH MILESTONE CHINA FUNDS OTHER 19 November 2019 • Remgro announces its intention to distribute its exposure to FirstRand/RMH to shareholders 31 March 2020 • Remgro announces full distribution of its 28.2%
Slide 16: Investment Activities for the Year Ended 30 June 2020
INVESTMENT ACTIVITIES INVESTMENT ACTIVITIES FOR THE YEAR ENDED 30 JUNE 2020 FIRSTRAND AND RMH CIVH MILESTONE CHINA FUNDS OTHER CIVH • In the 2019 financial year: o Remgro advanced a R100 million loan to CIVH; and o earned R58 million underwriting fees on a CIVH rights issue • On 31 March 2020 Remgro
Slide 17: Results for the Year
RESULTS FOR THE YEAR 17
Slide 18: Reconciliation of Headline Earnings for the Year Ended June 2020
RESULTS FOR THE YEAR RECONCILIATION OF HEADLINE EARNINGS FOR THE YEAR ENDED 30 JUNE 2020 9,000 8 195 8,000 7,000 (1214) 6,000 (562) (445) 5,000 (436) (348) R million (325) (294) 4,000 (162) (514) 3 167 3,000 (500) (228) 2,000 1,000 0 Headline RMH RMI CIVH FirstRand Total KTH Distell RCL Foods Centra
Slide 19: A Year of Two Halves
RESULTS FOR THE YEAR A YEAR OF TWO HALVES Six monthly headline earnings from continuing operations 3 500 3 007 2 952 3 000 (1.8%) 2 544 2 500 2 000 1 500 R million 1 000 (147.8%) 500 - ( 500) (1 000) (1 500) (1 215) H1 Jun 2019 H1 Jun 2020 H2 Jun 2019 H2 Jun 2020 Dec 2018 Dec 2019 Jun 2019 Jun 2020
Slide 20: Headline Earnings Contribution by Platform
RESULTS FOR THE YEAR HEADLINE EARNINGS CONTRIBUTION BY PLATFORM Year ended Year ended R million 30 Jun 20 30 Jun 19 % change Financial services 1 256 2 254 (44.3) Healthcare 1 655 1 693 (2.2) Consumer products 545 918 (40.6) Industrial 103 944 (89.1) Infrastructure (716) (174) (311.5) Media and spor
Slide 21: Contribution by Platform - Continuing Operations
RESULTS FOR THE YEAR CONTRIBUTION BY PLATFORM - CONTINUING OPERATIONS Headline earnings* Intrinsic NAV* Jun 2020 (outer)** Jun 2020 (outer) Jun 2019 (inner)** Jun 2019 (inner) 2.8% 2.7% 1.6% Financial Services 15.7% 14.9% 16.2% 0.3% Healthcare 1.1% 25.8% 11.6% 15.7% Consumer products 11.9% 32.9% 38.
Slide 22: Financial Services
RESULTS FOR THE YEAR FINANCIAL SERVICES Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 20 30 Jun 19 % change 30 Jun 20 30 Jun 19 % change RMI 599 1 161 (48.4) 13 708 15 947 (14.0) FirstRand** 657 1 093 (39.9) 7 068 15 069 (53.1) Total 1 256 2 254 (44.3) 20 776 3
Slide 23: Healthcare
RESULTS FOR THE YEAR HEALTHCARE Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 20 30 Jun 19 % change 30 Jun 20 30 Jun 19 % change Mediclinic 1 655 1 693 (2.2) 18 769 17 891 4.9 Contribution to Headline earnings* Contribution to Intrinsic NAV* 23.3% 45.3% *Exclud
Slide 24: Consumer Products
RESULTS FOR THE YEAR CONSUMER PRODUCTS Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 20 30 Jun 19 % change 30 Jun 20 30 Jun 19 % change RCL Foods 92 254 (63.8) 6 029 7 960 (24.3) Distell 118 412 (71.4) 5 330 9 060 (41.2) Entity contribution 165 459 (64.1) IFRS
Slide 25: Consumer Products | RCL Foods
RESULTS FOR THE YEAR CONSUMER PRODUCTS | RCL FOODS Headline Earnings Intrinsic Value 280 8 000 7 960 240 254 24.3% 6 000 200 6 029 R Million R Million 160 4 000 120 63.8% 80 92 2 000 40 - - Jun 19 Jun 20 Jun 19 Jun 20 25
Slide 26: Consumer Products | Distell
RESULTS FOR THE YEAR CONSUMER PRODUCTS | DISTELL Headline Earnings* Intrinsic Value 500 10 000 459 9 060 400 8 000 300 6 000 R Million 41.2% R Million 5 330 200 64.1% 4 000 165 100 2 000 - - Jun 19 Jun 20 Jun 19 Jun 20 *Headline earnings excludes IFRS 3 charges 26
Slide 27: Consumer Products | Siqalo Foods
RESULTS FOR THE YEAR CONSUMER PRODUCTS | SIQALO FOODS Year ended Year ended R million 30 Jun 20 30 Jun 19 % change Revenue 2 712 2 626 3.3 Operating profit 515 447 15.2 Headline Earnings* Intrinsic Value 430 24.7% 6 500 0.3% 414 6 000 6 164 6 145 360 5 500 R Million R Million 332 290 5 000 220 4 500
Slide 28: Industrial
RESULTS FOR THE YEAR INDUSTRIAL Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 20 30 Jun 19 % change 30 Jun 20 30 Jun 19 % change Air Products 333 343 (2.9) 3 979 4 264 (6.7) Total (20) 328 (106.1) 2 515 2 722 (7.6) KTH (164) 161 (201.9) 1 961 2 127 (7.8) Wispec
Slide 29: Industrial | Air Products
RESULTS FOR THE YEAR INDUSTRIAL | AIR PRODUCTS Year ended Year ended R million 31 Mar 20 31 Mar 19 % change Revenue 3 232 3 148 2.7 Operating profit 930 964 (3.6) Headline Earnings Intrinsic Value 400 4 400 350 2.9% 4 264 6.7% 4 000 343 333 3 979 300 3 600 R Million R Million 250 3 200 200 2 800 150
Slide 30: Industrial | Total
RESULTS FOR THE YEAR INDUSTRIAL | TOTAL Year ended Year ended R million 30 Jun 20 30 Jun 19 % change Revenue 64 605 75 432 (14.4) Operating profit / (loss) (190) 1 735 (111.0) Headline Earnings Intrinsic Value 370 3 000 320 328 2 750 270 2 722 7.6% 220 2 500 2 515 R Million R Million 170 2 250 120 7
Slide 31: Industrial | KTH
RESULTS FOR THE YEAR INDUSTRIAL | KTH Headline Earnings Intrinsic Value 200 2 250 161 2 000 2 127 7.8% 100 1 961 1 750 R Million R Million 0 1 500 -100 1 250 (164) -200 201.9% 1 000 Jun 19 Jun 20 Jun 19 Jun 20 31
Slide 32: Industrial | Wispeco
RESULTS FOR THE YEAR INDUSTRIAL | WISPECO Year ended Year ended R million 30 Jun 20 30 Jun 19 % change Revenue 1 991 2 376 (16.2) Operating profit 106 145 (26.9) Headline Earnings Intrinsic Value 130 1 000 110 121 850 6.5% 866 810 90 33.9% 700 R Million R Million 70 80 550 50 400 30 250 10 100 Jun 1
Slide 33: Industrial | PGSI
RESULTS FOR THE YEAR INDUSTRIAL | PGSI Year ended Year ended R million 30 Jun 20 30 Jun 19 % change Revenue 3 375 4 331 (22.1) Operating profit 103 265 (61.1) Headline Earnings Intrinsic Value 0 350 2.3% -20 (9) 300 302 309 -40 250 R Million R Million -60 -80 200 -100 150 -120 (126) -140 1300.0% 100
Slide 34: Infrastructure
RESULTS FOR THE YEAR INFRASTRUCTURE Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 20 30 Jun 19 % change 30 Jun 20 30 Jun 19 % change CIVH (649) (204) (218.1) 10 584 8 403 26.0 Grindrod (12) 72 (116.7) 532 1 049 (49.3) Grindrod Shipping (46) (65) 29.2 208 292 (2
Slide 35: Infrastructure | CIVH
RESULTS FOR THE YEAR INFRASTRUCTURE | CIVH Year ended Year ended R million 31 Mar 20 31 Mar 19 % change Revenue 3 704 2 350 57.7 Operating profit 608 243 150.2 Headline Earnings Intrinsic Value 0 12 200 26.0% -100 10 700 (204) 10 584 -200 9 200 -300 7 700 8 403 R Million R Million -400 6 200 -500 4
Slide 36: Media and Sport
RESULTS FOR THE YEAR MEDIA AND SPORT Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 20 30 Jun 19 % change 30 Jun 20 30 Jun 19 % change eMedia 78 39 100.0 947 773 22.5 Other 19 (19) 200.0 321 267 20.2 Total 97 20 385.0 1 268 1 040 21.9 Contribution to Headline ea
Slide 37: Other Investments, Treasury and Corporate Costs
RESULTS FOR THE YEAR OTHER INVESTMENTS, TREASURY AND CORPORATE COSTS Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 20 30 Jun 19 % change 30 Jun 20 30 Jun 19 % change Other investments (66) 39 (269.2) 4 439 4 795 (7.4) Central treasury - Finance income/cash 479
Slide 38: Summary of Intrinsic Net Asset Value
RESULTS FOR THE YEAR SUMMARY OF INTRINSIC NET ASSET VALUE As at As at As at 25 Sep 20 30 Jun 20 30 Jun 19 % change Discount to intrinsic value 42.6% 35.3% 19.4% (1 590 bps) Intrinsic value – after CGT (Rand) 150.98 154.47 233.03 ▼33.7% Closing share price (Rand) 86.71 99.90 187.90 ▼46.8% Intrinsic v
Slide 39: Cash and Debt at the Centre
RESULTS FOR THE YEAR CASH AND DEBT AT THE CENTRE R million 30 Jun 2019 % of total 30 Jun 2020 Currency exposure Local cash 9 038 39.3 6 716 Balance: R17 073m Offshore cash 6 689 60.7 10 357 GB£ 352.9m (@ R21.45/GB£) 2 063 44.4 7 572 16.2% 39.4% US$ 159.7m (@ R17.35/US$) 4 550 16.2 2 770 Other 76 0.1
Slide 40: Cash Flow at the Centre
RESULTS FOR THE YEAR CASH FLOW AT THE CENTRE 8 000 7 000 771 (3 186) 879 6 000 1,638 5 000 R million 4 000 3,514 (807) 3 000 (500) (485) 2 000 (478) 1,346 1 000 0 Dividends Exchange rate Investments Interest Dividends Finance costs Sukuma Corporate Investments Net cash received revaluation of sold a
Slide 41: Dividends Received at the Centre
RESULTS FOR THE YEAR DIVIDENDS RECEIVED AT THE CENTRE 5000 RMH 4,432 4500 (20.7%) FirstRand 4000 1,435 3,514 Other 3500 (9.0%) 787 RCL Foods 3000 2,997 624 2,727 R million 2500 Total 655 212 2000 268 179 Siqalo Foods 164 169 73 200 100 1500 282 296 Distell 280 260 1000 Air Products 456 479 500 511 5
Slide 42: Cash Dividend
RESULTS FOR THE YEAR CASH DIVIDEND 700 3.0% 2.6% 6.0% 600 564 532 349 (53.0%) 500 328 6.4% 400 2.7% Cents (85.7%) 300 265 50 200 204 215 215 5.4% 0.0% 100 0 30 June 2018 30 June 2019 30 June 2020 Interim dividend Final dividend Total dividend Dividend yield 42
Slide 43: Closing Comments and Q&A
CLOSING COMMENTS AND Q&A 43
Slide 44: Thank You
THANK YOU For more information visit our website www.remgro.com Investor Relations contact: Mari Rabie [email protected]
Slide 45: Valuation of Unlisted Investments | IFRS 13 Framework
APPENDIX VALUATION OF UNLISTED INVESTMENTS | IFRS 13 FRAMEWORK Forecast and/or Investment Valuation method 12 month change tradability discount Siqalo Foods Discounted cash flow (0.3%) Yes Factors taken into Total Discounted cash flow (7.6%) Yes consideration in determining the Air Products Discount