Remgro Limited · JSE:REM
Remgro — FY2021 Earnings Presentation
47 slides from Remgro's earnings presentation, Sep 22, 2021
Slide 1: Results Presentation for the Year Ended 30 June 2021
RESULTS PRESENTATION FOR THE YEAR ENDED 30 JUNE 2021 22 September 2021
Slide 2: Contents
1 Setting the scene 2 Performance in context 3 Executing on strategy 4 Unlocking value Contents 5 Capital allocation 6 Jannie Durand Neville Williams Pieter Uys (CEO) (CFO) (Strategic Investments) Results for the year 7 Closing comments and Q&A
Slide 3: Setting the scene
Setting the scene
Slide 4: South African economic indicators
South African economic indicators CPI (yoy) Food inflation (yoy) Repo rate 7 12 7 6 10 6 5 8 4.6 7 5 4 6 4 3 4 3.5 2 2 3 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 PMI Consumer confidence Real GDP household consumption 35 60 22.7 57.9 20 56 25 52 15 10
Slide 5: Performance in context
Performance in context
Slide 6: Encouraging signs of recovery
Encouraging signs of recovery Year ended Year ended 30 June 21 30 June 20 % change Headline earnings measures (Rand) Headline earnings per share from continuing operations* 5.11 3.08 ▲66.0 Total headline earnings per share 5.11 5.61 ▼8.9 Ordinary dividend per share (Rand) 0.90 2.65 ▼66.0 - Interim d
Slide 7: Results in context: three-year view
Results in context: three-year view Actual Actual Actual 30 Jun % 30 Jun % 30 Jun R million 2021 change 2020 change 2019 Total Headline earnings 2 885 (8.9) 3 167 (61.4) 8 195 RMH (discontinued operation) - (1 430) (45.9) (2 644) Headline earnings from continuing operations 2 885 66.1 1 737 (68.7) 5
Slide 8: Hard-hit healthcare sector still clouds gains
Hard-hit healthcare sector still clouds gains 3 500 Rest of portfolio: Recovering from the significant impact of 3 000 151 2 885 pandemic during H2 2020 184 214 2 500 299 230.0% 500 (1) 33.0% 386 2 000 49.9% R million 1 737 373 1 500 1 930.0% 667 226.1% (981) (2) 1 000 59.3% 611 (466) (3) 500 70.9%
Slide 9: Covid-19 impact starting to wane, recovery continues
Covid-19 impact starting to wane, recovery post financial year end continues Company Impact Covid-19 impact Current Covid-19 as at interim results impact Mediclinic Performance is showing improvement, but it will take time to catch-up on lost revenue due to Covid-19 cost impact on the business RMI H
Slide 10: Executing on strategy
Executing on strategy
Slide 11: Recap on strategic priorities
Recap on strategic priorities Optimal capital structure Efficient capital allocation Sustainability drive Unlock value Establish most optimal Remgro continues to be an Aim to be ESG leader Focus on turnaround and capital structure allocator of capital, both growth assets financial and human ESG focu
Slide 12: Unlocking value
Unlocking value
Slide 13: Portfolio optimisation
Portfolio optimisation RCL Foods RMI • Strategic intent – deal with structural inefficiencies • Reshaping portfolio to align with current strategy • Optimise portfolio through separation of businesses • Move to more unlisted investments • Unlock value within separate divisions • Unlock market valuat
Slide 14: Capital allocation
Capital allocation
Slide 15: Capital deployed in line with strategic focus (CIVH, FirstRand, RCL Foods)
Capital deployed in line with strategic focus… Material investment activities during the year ended 30 June 2021 CIVH FirstRand RCL Foods CIVH • Remgro participated in two rights issues by CIVH (one during January 2021 and one subsequent to 30 June 2021) for an aggregate amount of R3 760 million, th
Slide 16: Capital deployed in line with strategic focus (Asia Partners, Milestone)
Capital deployed in line with strategic focus… Material investment activities during the period (continued) Asia Partners Milestone China Funds PRIF Asia Partners I LP • Remgro committed to invest $25 million in Asia Partners. • Asia Partners makes private equity and private equity-related investmen
Slide 17: Capital deployed in line with strategic focus (KTH, Invenfin)
Capital deployed in line with strategic focus… Material investment activities during the period (continued) KTH Invenfin KTH • During November 2020 Tiso Blackstar Group Proprietary Limited exited its 20.0% investment in KTH through multiple inter-connected steps, which increased Remgro’s interest in
Slide 18: Results for the year
Results for the year
Slide 19: Contribution to headline earnings
Contribution to headline earnings Actual Actual % R million 30 Jun 2021 30 Jun 2020 change Mediclinic Revenue and profit impacted by Covid-19 674 1 655 (59.3) RMI Normalised earnings ↑14.9% driven by growth from ST insurers and lower funding costs 898 599 49.9 RCL Foods Excellent performances by Sug
Slide 20: Summary of intrinsic net asset value – material investments
Summary of intrinsic net asset value – material investments % % R million 30 Jun 2021 30 Jun 2020 change of total Mediclinic 19 358 18 769 3.1 18.6 RMI 14 713 13 708 7.3 14.1 CIVH 12 054 10 117 19.1 11.6 Distell 11 665 5 330 118.9 11.2 FirstRand 7 659 7 068 8.4 7.3 Siqalo Foods 7 277 6 145 18.4 7.0
Slide 21: Contribution by platform - continuing operations
Contribution by platform - continuing operations Headline earnings* Intrinsic NAV* Jun 2021 (outer)** Jun 2021 (outer) Healthcare Jun 2020 (inner) Jun 2020 (inner)*** 1.2% 5.5% Consumer products 0.1% 8.4% 15.0% 0.8% Financial services 19.4% 6.1% 0.5% 17.9% 9.1% 0.4% 42.6% Infrastructure 1.2% 21.9% 6
Slide 22: Healthcare
Healthcare Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 21 30 Jun 20 % change 30 Jun 21 30 Jun 20 % change Mediclinic 674 1 655 (59.3) 19 358 18 769 3.1 Contribution to Headline earnings* Contribution to Intrinsic NAV* 15.0% 19.4% * Excluding discontinued oper
Slide 23: Consumer products
Consumer products Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 21 30 Jun 20 % change 30 Jun 21 30 Jun 20 % change RCL Foods 759 92 725.0 6 926 6 029 14.9 Distell 491 118 316.1 11 665 5 330 118.9 Entity contribution 538 165 226.1 IFRS 3 charge (47) (47) - Siqal
Slide 24: Consumer products | Siqalo Foods
Consumer products | Siqalo Foods Year ended Year ended R million 30 Jun 21 30 Jun 20 % change Revenue 3 088 2 712 13.9 Operating profit 498 515 (3.3) Headline earnings* Intrinsic value 400 7 500 18.4% 350 2.7% 7 000 7 277 300 335 326 6 500 250 R million R million 6 000 6 145 200 5 500 150 5 000 100
Slide 25: Financial services
Financial services Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 21 30 Jun 20 % change 30 Jun 21 30 Jun 20 % change RMI 898 599 49.9 14 713 13 708 7.3 Business Partners 23 25 (8.0) 1 273 1 232 3.3 Total 921 624 47.6 15 986 14 940 7.0 Contribution to Headline ea
Slide 26: Infrastructure
Infrastructure Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 21 30 Jun 20 % change 30 Jun 21 30 Jun 20 % change CIVH (435) (649) 33.0 12 054 10 584* 13.9 Grindrod 16 (12) 233.3 842 532 58.3 SEACOM 26 (10) 360.0 799 909 (12.1) Other infrastructure investments 17
Slide 27: Infrastructure | CIVH
Infrastructure | CIVH CIVH (Consolidated) Year ended Year ended R million 31 Mar 21 31 Mar 20 % change Revenue 4 759 3 704 28.5 Operating profit 648 491 32.0 Headline loss (797) (1 268) 37.1 Headline losses Intrinsic value 0 13 000 19.1% 12 000 (100) 12 054 11 000 10 584 (200) 10 000 467* R million
Slide 28: Infrastructure | CIVH (Vumatel)
Infrastructure | CIVH (Vumatel) Vumatel (Standalone) Year ended Year ended R million 31 Mar 21 31 Mar 20 % change Revenue 2 277 1 524 49.4 Operating profit 681 424 60.6 Headline loss (20) (308) 93.5 Revenue increase driven by: • accumulated subscriber uptake; and • further network expansion. Operati
Slide 29: Infrastructure | CIVH (DFA)
Infrastructure | CIVH (DFA) DFA (Standalone) Year ended Year ended R million 31 Mar 21 31 Mar 20 % change Revenue 2 368 2 283 3.7 Operating profit 307 95 223.2 Headline earnings (122) (398) 69.3 Marginal revenue increase as a result of: • lower once-off revenue due to Covid-19; and • monthly recurri
Slide 30: Infrastructure | CIVH capital structure evolution
Infrastructure | CIVH capital structure evolution Completed Vumatel acquisition – funded via equity and holding May 2019 company debt Refinanced group debt facilities into consolidated package with Dec 2019 significant funding cost savings Evaluated strategic equity investor introduction to repay de
Slide 31: Infrastructure | CIVH debt facilities
Infrastructure | CIVH debt facilities Total rights issue Refinanced group debt proceeds of c. R6.58 facilities into total facilities billion of R16 billion, of which - Holdco debt repayment Debt/EBITDA within 3.5x R2.5 billion required of c. R5 billion to 4.5x range further equity injections - R761
Slide 32: Infrastructure | CIVH – Vumatel Reach
Infrastructure | CIVH – Vumatel Reach Reach product rolled out into Mitchell's Plain, Soweto and ✓ Vosloorus ✓ 20 Mbps and 40 Mbps uncapped products ✓ Prepaid fibre access on a monthly basis ✓ Also on open access basis for customer to choose their own ISP ✓ Uptake exceeding expectations 32
Slide 33: Industrial
Industrial Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 21 30 Jun 20 % change 30 Jun 21 30 Jun 20 % change Air Products 322 333 (3.3) 4 523 3 979 13.7 TotalEnergies 366 (20) 1 930.0 2 539 2 515 1.0 Wispeco 264 80 230.0 1 188 810 46.7 Other industrial investmen
Slide 34: Industrial | unlisted portfolio performance
Industrial | unlisted portfolio performance Air Products Year ended Year ended R million 31 Mar 21 31 Mar 20 % change Revenue 3 220 3 232 (0.4) Operating profit 898 930 (3.4) TotalEnergies Year ended Year ended R million 30 Jun 21 30 Jun 20 % change Revenue 60 988 64 605 (5.6) Gross profit 5 070 2 9
Slide 35: Diversified investment vehicles
Diversified investment vehicles Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 21 30 Jun 20 % change 30 Jun 21 30 Jun 20 % change KTH (182) (164) (11.0) 2 044 1 961 4.2 Other (78) (91) 14.3 4 012 3 514 14.2 Total (260) (255) (2.0) 6 056 5 475 10.6 Contribution t
Slide 36: Diversified investment vehicles | KTH
Diversified investment vehicles | KTH Headline losses Intrinsic value 0 2 200 4.2% (20) 2 000 (40) 2 044 1 961 (60) 1 800 R million (80) R million (100) 1 600 (120) 1 400 (140) (164) (160) (182) 1 200 (180) (200) 11.0% 1 000 30 Jun 20 30 Jun 21 30 Jun 20 30 Jun 21 36
Slide 37: Other investments, treasury and corporate costs
Other investments, treasury and corporate costs Headline earnings Intrinsic value Year ended Year ended As at As at R million 30 Jun 21 30 Jun 20 % change 30 Jun 21 30 Jun 20 % change Media 53 78 (32.1) 753 988 (23.8) Portfolio investments 247 695 (64.5) 8 320 7 850 6.0 Social impact investments (66
Slide 38: Relative market performance
Relative market performance… As at As at As at 17 Sep 21 30 Jun 21 30 Jun 20 % change Discount to intrinsic value 35.6% 35.4% 35.3% (10 bps) Intrinsic value per share – after tax (Rand) 185.77 177.33 154.47 ▲14.8% Closing share price (Rand) 119.57 114.60 99.90 ▲14.7% 35000 30000 Discount @17/09/21 =
Slide 39: Cash and debt at the centre
Cash and debt at the centre Actual Actual % of 30 Jun 30 Jun R million total 2021 2020 Local cash 77.2 7 496 6 705 Offshore cash 22.8 2 210 10 368 US$ 151.0m (@ R14.28/US$) (2020: US$159.7m @ R17.35/US$) 22.2 2 157 2 770 GB£ 1.5m (@ R19.74/GB£) (2020: GB£352.9m @ R21.45/GB£) 0.3 29 7 572 Other 0.3 2
Slide 40: Cash movement at the centre
Cash movement at the centre 6 000 450 1 533 4 000 2 948 # 2 000 0 R million (2 000) (7 143) (4 000) (2 396) * (6 000) (867) (817) (623) (8 000) (452) (7 367) (10 000) Investments sold Dividends Interest income Exchangeable Investments Exchange rate Finance Corporate costs Dividends Net Net cash cash
Slide 41: Reconciliation of dividends received at the centre
Reconciliation of dividends received at the centre 4 000 3 514 ↓ R1.6 billion in dividends received 3 500 64 from major listed investments 75 140 3 000 160 2 727 (787) (479) (1 194) 2 500 (43.8%) R million (464) 2 000 (410) 15 1 533 1 500 (295) 1 000 500 0 Dividends RMH # Continuing Siqalo Air Produ
Slide 42: Dividends received at the centre
Dividends received at the centre Year ended Year ended 30 Jun 30 Jun R million 2021 2020 % change Listed 529 2 197 (75.9) FirstRand *^ 191 655 RMI *^ 106 516 Mediclinic *# - 479 RCL Foods 176 169 Distell *# - 295 Other listed investments 56 83 Unlisted 1 004 530 89.4 Air Products 400 260 Siqalo Food
Slide 43: Cash dividend
Cash dividend 300 265 250 200 Cents per share 150 215 90 ↓66.0% 100 30 50 ↑20.0% 50 60 0 30 June 2020 30 June 2021 Final dividend Interim dividend 43
Slide 44: Closing comments and Q&A
Closing comments and Q&A
Slide 45: Key takeaways and looking ahead
Key takeaways and looking ahead… Continue to effectively execute on strategy – RMI & RCL Foods Covid impact starting to wane, recovery post financial year end continues Strong financial position Financial and human capital focus ESG focus embedded in performance conditions Deliver on growth and valu
Slide 46: Thank you
THANK YOU For more information visit our website www.remgro.com Investor Relations contact: Lwanda Zingitwa [email protected]
Slide 47: Valuation of unlisted investments | IFRS 13 framework
Valuation of unlisted investments | IFRS 13 framework Forecast and/or tradability Investment Valuation method 12 month change discount Siqalo Foods Discounted cash flow 18.4% Yes Factors taken into TotalEnergies Discounted cash flow 1.0% Yes consideration in determining the Air Products Discounted c