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Audited summary consolidated results for the year ended 30 June 2014 and cash dividend declaration
REMGRO LIMITED
Registration number 1968/006415/06
ISIN: ZAE000026480 Share code: REM
AUDITED SUMMARY CONSOLIDATED RESULTS
FOR THE YEAR ENDED 30 JUNE 2014 AND
CASH DIVIDEND DECLARATION
SALIENT FEATURES
- Headline earnings per share +58.2%
- Headline earnings per share, excluding Mediclinic
refinancing cost +20.5%
- Ordinary dividend per share +12.4%
- Intrinsic net asset value per share +20.1%
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 1 July
2014 2013 2012
Restated Restated
R'm R'm R'm
ASSETS
Non-current assets
Property, plant and equipment 5 616 5 390 3 502
Biological agricultural assets 499 407 318
Investment properties 42 42 37
Intangible assets 5 811 5 831 356
Investments - Equity accounted 52 169 45 408 38 123
- Other 2 642 2 168 1 587
Retirement benefits 210 184 164
Loans 629 497 115
Deferred taxation 14 4 7
67 632 59 931 44 209
Current assets 11 876 12 575 13 678
Inventories 2 408 2 533 2 004
Biological agricultural assets 539 537 476
Debtors and short-term loans 3 330 2 929 2 059
Investment in money market funds 1 171 1 140 2 344
Cash and cash equivalents 3 657 4 188 6 485
Other current assets 17 472 136
11 122 11 799 13 504
Assets held for sale 754 776 174
Total assets 79 508 72 506 57 887
EQUITY AND LIABILITIES
Stated and issued capital 3 605 3 605 8
Share premium - - 3 597
Reserves 62 802 55 456 49 735
Treasury shares (372) (431) (169)
Shareholders' equity 66 035 58 630 53 171
Non-controlling interest 2 599 2 015 849
Total equity 68 634 60 645 54 020
Non-current liabilities 2 199 7 827 1 068
Retirement benefits 258 265 213
Long-term loans 436 5 849 138
Deferred taxation 1 505 1 713 717
Current liabilities 8 675 4 034 2 799
Trade and other payables 3 791 3 429 2 487
Short-term loans 4 661 399 293
Other current liabilities 37 27 19
8 489 3 855 2 799
Liabilities held for sale 186 179 -
Total equity and liabilities 79 508 72 506 57 887
Net asset value per share (Rand)
– At book value R128.56 R114.25
– At intrinsic value (unaudited) R245.96 R204.83
Refer to note 2 for detail regarding the restatements.
SUMMARY CONSOLIDATED INCOME STATEMENT
Year ended
30 June
2014 2013
Restated
R'm R'm
Sales 24 621 16 466
Inventory expenses (15 374) (11 610)
Staff costs (3 747) (2 707)
Depreciation (592) (428)
Other net operating expenses (4 238) (1 306)
Trading profit 670 415
Dividend income 43 34
Interest received 326 252
Finance costs (1 057) (181)
Negative goodwill - 196
Net impairment of investments, loans, assets and goodwill 22 (158)
Profit/(loss) on sale of investments 51 (150)
Consolidated profit before tax 55 408
Taxation (57) (261)
Consolidated profit/(loss) after tax (2) 147
Share of after-tax profit of equity accounted investments 6 853 4 035
Net profit for the year 6 851 4 182
Attributable to:
Equity holders 6 917 4 179
Non-controlling interest (66) 3
6 851 4 182
EQUITY ACCOUNTED INVESTMENTS
Share of after-tax profit of equity accounted investments
Profit before taking into account impairments, non-recurring and capital items 8 584 5 405
Net impairment of investments, assets and goodwill (262) (162)
Profit on the sale of investments 174 117
Other non-recurring and capital items 201 66
Profit before tax and non-controlling interest 8 697 5 426
Taxation (1 558) (1 199)
Non-controlling interest (286) (192)
6 853 4 035
RECONCILIATION OF HEADLINE EARNINGS
Year ended
30 June
2014 2013
Restated
R'm R'm
Net profit for the year attributable to equity holders 6 917 4 179
Plus/(minus):
- Negative goodwill - (196)
- Net impairment of equity accounted investments (92) 29
- Impairment of other investments 80 112
- Net impairment of property, plant and equipment (5) 10
- Recycling of foreign currency translation reserves (32) 154
- Loss on sale of equity accounted investments 83 20
- Profit on sale of other investments (98) (24)
- Net surplus on disposal of property, plant and equipment (12) (12)
- Non-headline earnings items included in equity accounted earnings of
equity accounted investments (244) (13)
- Net (surplus)/loss on disposal of property, plant and equipment (131) 8
- Profit on the sale of investments (174) (117)
- Net impairment of investments, assets and goodwill 262 162
- Other non-recurring and capital items (201) (66)
- Taxation effect of adjustments 33 (63)
- Non-controlling interest 5 -
Headline earnings 6 635 4 196
Mediclinic refinancing cost - 1 312
Headline earnings, excluding Mediclinic refinancing cost 6 635 5 508
EARNINGS AND DIVIDENDS
Year ended
30 June
2014 2013
Restated
Cents Cents
Headline earnings per share
– Basic 1 292.4 817.1
– Diluted 1 270.3 805.0
Headline earnings per share, excluding Mediclinic refinancing cost
– Basic 1 292.4 1 072.6
– Diluted 1 270.3 1 055.5
Earnings per share
– Basic 1 347.3 813.8
– Diluted 1 325.7 800.6
Dividends per share
Ordinary 389.00 346.00
– Interim 156.00 145.00
– Final 233.00 201.00
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
30 June
2014 2013
Restated
R'm R'm
Net profit for the year 6 851 4 182
Other comprehensive income, net of tax 2 444 3 372
Items that may be reclassified subsequently to the income statement:
Exchange rate adjustments 298 889
Fair value adjustments for the year 346 (189)
Deferred taxation on fair value adjustments (43) (6)
Reclassification of other comprehensive income to the income statement (176) 223
Other comprehensive income of equity accounted investments 2 015 2 904
Items that will not be reclassified to the income statement:
Actuarial gains and losses 23 8
Deferred taxation on actuarial gains and losses (6) (2)
Change in reserves of equity accounted investments (13) (455)
Total comprehensive income for the year 9 295 7 554
Total comprehensive income attributable to:
Equity holders 9 357 7 553
Non-controlling interest (62) 1
9 295 7 554
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended
30 June
2014 2013
Restated
R'm R'm
Balance at 1 July (as previously reported) 60 645 54 253
Effect of changes in accounting policies - (233)
Balance at 1 July (restated) 60 645 54 020
Total comprehensive income for the year 9 295 7 554
Dividends paid (1 834) (1 745)
Investment in subsidiaries (529) -
Business acquired - 331
Capital invested by minorities 876 822
Other movements 114 1
Purchase of treasury shares by wholly owned subsidiary - (405)
Long-term share incentive scheme reserve 67 67
Balance at the end of the year 68 634 60 645
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended
30 June
2014 2013
Restated
R'm R'm
Cash generated from operations 898 1 040
Taxation paid (135) (236)
Dividends received 3 372 2 917
Cash available from operating activities 4 135 3 721
Dividends paid (1 834) (1 745)
Net cash inflow from operating activities 2 301 1 976
Investing activities (2 121) (4 635)
Financing activities (818) (170)
Net increase/(decrease) in cash and cash equivalents (638) (2 829)
Exchange rate profit on foreign cash 110 598
Cash and cash equivalents at the beginning of the year 4 164 6 395
Cash and cash equivalents at the end of the year 3 636 4 164
Cash and cash equivalents – per statement of financial position 3 657 4 188
Bank overdraft (21) (24)
ADDITIONAL INFORMATION
30 June
2014 2013
Number of shares in issue
- Ordinary shares of no par value 481 106 370 481 106 370
- Unlisted B ordinary shares of no par value 35 506 352 35 506 352
Total number of shares in issue 516 612 722 516 612 722
Number of shares held in treasury
- Ordinary shares repurchased and held in treasury (2 960 766) (3 433 101)
513 651 956 513 179 621
Weighted number of shares 513 404 676 513 526 699
In determining earnings per share and headline earnings per share the weighted number of shares was taken into account.
30 June
2014 2013
R'm Restated
R'm
Listed investments
Associated
– Book value 36 601 30 758
– Market value 79 734 62 232
Other
– Book value 880 823
– Market value 880 823
Unlisted investments
Associated
– Book value 11 090 10 693
– Directors' valuation (unaudited) 22 497 20 727
Joint ventures
– Book value 4 478 3 957
– Directors' valuation (unaudited) 11 063 9 673
Other
– Book value 1 762 1 345
– Directors' valuation 1 762 1 345
Additions to and replacement of property, plant and equipment 852 730
Capital and investment commitments 1 105 1 439
(Including amounts authorised, but not yet contracted for)
Guarantees and contingent liabilities 306 348
Dividends received from equity accounted investments set off
against investments 3 568 2 891
Fair value remeasurements
The following methods and assumptions are used to determine the fair value of each class of financial instruments:
- Financial instruments available-for-sale and investment in money market funds: Fair value is based on quoted market
prices or, in the case of unlisted instruments, appropriate valuation methodologies, being discounted cash flow, liquidation
valuation and actual net asset value of the investment.
- Derivative instruments: The fair value of derivative instruments is determined by using mark-to-market valuations.
Financial instruments measured at fair value, are disclosed by level of the following fair value hierarchy:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – Inputs (other than quoted prices included within level 1) that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices); and
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following tables illustrate the fair values of financial assets and liabilities that are measured at fair value, by hierarchy
level:
Level 1 Level 2 Level 3 Total
30 June 2014 R'm R'm R'm R'm
Assets
Available-for-sale 880 - 1 762 2 642
Derivative instruments - 3 - 3
Investment in money market funds 1 171 - - 1 171
2 051 3 1 762 3 816
Liabilities
Derivative instruments - 10 - 10
30 June 2013 (restated)
Assets
Available-for-sale 823 - 1 285 2 108
Assets at fair value through profit and loss - - 60 60
Derivative instruments - 364 73 437
Investment in money market funds 1 140 - - 1 140
1 963 364 1 418 3 745
Liabilities
Derivative instruments - 26 - 26
The following tables illustrate the reconciliation of the carrying value of level 3 assets from the beginning to the end of the
year:
Assets at
fair value
through
Available- profit and Derivative
for-sale loss instruments Total
30 June 2014 R'm R'm R'm R'm
Balances at the beginning of the year 1 285 60 73 1 418
Additions 277 23 - 300
Disposals (3) - (111) (114)
Exchange rate adjustments 64 - - 64
Transfer to equity accounted investments - (83) - (83)
Fair value adjustments through profit and loss - - 38 38
Fair value adjustments through comprehensive income 139 - - 139
Balances at the end of the year 1 762 - - 1 762
30 June 2013 (restated)
Balances at the beginning of the year 779 40 80 899
Additions 711 20 - 731
Disposals (20) - - (20)
Exchange rate adjustments 101 - - 101
Fair value adjustments through profit and loss - - (7) (7)
Fair value adjustments through comprehensive income (286) - - (286)
Balances at the end of the year 1 285 60 73 1 418
There were no transfers between the different levels.
RESTATEMENT OF COMPARATIVE NUMBERS
Refer to note regarding "Changes in accounting policy" for further detail.
For the
year ended For the
30/06/2013 IFRS 10 year ended
as previously and IFRS 11 IAS 19 30/06/2013
reported adjustments adjustments Restated
R'm R'm R'm R'm
Impact on income statement
Sales 16 446 20 - 16 466
Inventory expenses* (11 519) (91) - (11 610)
Staff costs (2 681) (29) 3 (2 707)
Depreciation (424) (4) - (428)
Other net operating expenses* (1 460) 154 - (1 306)
Interest received 250 2 - 252
Finance costs (173) (8) - (181)
Net impairment of investments, loans, assets and
goodwill (152) (6) - (158)
Loss on sale of investments (154) - 4 (150)
Taxation (249) (10) (2) (261)
Share of after-tax profit of equity accounted
investments 4 313 (197) (81) 4 035
Net profit for the year 4 427 (169) (76) 4 182
Attributable to:
Equity holders 4 438 (183) (76) 4 179
Non-controlling interest (11) 14 - 3
(169) (76)
Impact on headline earnings
Headline earnings 4 387 (108) (83) 4 196
Headline earnings, excluding Mediclinic
refinancing cost 5 699 (108) (83) 5 508
Impact on earnings per share (cents)
Headline earnings per share 854.3 (21.0) (16.2) 817.1
Headline earnings per share, excluding
Mediclinic refinancing cost 1 109.8 (21.0) (16.2) 1 072.6
Earnings per share 864.2 (35.6) (14.8) 813.8
* The amounts previously reported in the 2013 Income Statement for "inventory expenses" and "other net operating expenses" were
restated. Previously "inventory expenses" were understated and "other net operating expenses" overstated by R723 million. The
restatement had no impact on trading profit, earnings or headline earnings.
For the
year ended For the
30/06/2013 IFRS 10 year ended
as previously and IFRS 11 IAS 19 30/06/2013
reported adjustments adjustments Restated
Impact on statement of comprehensive
income
Net profit for the year 4 427 (169) (76) 4 182
Items that may be reclassified subsequently to
the income statement:
Other comprehensive income of equity
accounted investments 2 938 (25) (9) 2 904
Items that will not be reclassified to the income
statement:
Actuarial gains and losses - - 8 8
Deferred taxation on actuarial gains and losses - - (2) (2)
Change in reserves of equity accounted
investments (543) 27 61 (455)
Total comprehensive income for the year 7 739 (167) (18) 7 554
Total comprehensive income attributable to:
Equity holders 7 750 (181) (16) 7 553
Non-controlling interest (11) 14 (2) 1
(167) (18)
As at
30/06/2013 IFRS 10 As at
as previously and IFRS 11 IAS 19 30/06/2013
reported adjustments adjustments Restated
R'm R'm R'm R'm
Impact on statement of financial position
ASSETS
Property, plant and equipment 5 354 36 - 5 390
Biological agricultural assets 107 300 - 407
Investments - Equity accounted 45 954 (234) (312) 45 408
Deferred taxation 9 - (5) 4
Inventories 2 528 5 - 2 533
Debtors and short-term loans 2 939 (10) - 2 929
Cash and cash equivalents 4 221 (33) - 4 188
Total assets 72 759 64 (317) 72 506
LIABILITIES
Retirement benefits 266 1 (2) 265
Long-term loans 5 774 75 - 5 849
Deferred taxation 1 661 56 (4) 1 713
Trade and other payables 3 424 5 - 3 429
Short-term loans 361 38 - 399
Taxation 3 (2) - 1
Total liabilities 11 694 173 (6) 11 861
EQUITY
Equity reserves
Opening balance 9 367 10 (287) 9 090
Adjustments for the year 3 689 (194) (26) 3 469
Other reserves
Opening balance 669 - 1 670
Adjustments for the year 220 - (1) 219
Distributable reserves
Opening balance 39 725 - (7) 39 718
Adjustments for the year 2 162 13 11 2 186
Non-controlling interest
Opening balance 799 50 - 849
Adjustment for the year 1 156 12 (2) 1 166
Total equity 61 065 (109) (311) 60 645
Impact on statement of cash flows
Cash flows from operating activities 1 999 (23) - 1 976
Cash flows from investing activities (4 558) (77) - (4 635)
Cash flows from financing activities (236) 66 - (170)
Cash and cash equivalents at the beginning
of the year 6 394 1 - 6 395
Cash and cash equivalents at the end of the year 4 197 (33) - 4 164
As at
01/07/2012 IFRS 10 As at
as previously and IFRS 11 IAS 19 01/07/2012
reported adjustments adjustments Restated
R'm R'm R'm R'm
Impact on statement of financial position
ASSETS
Property, plant and equipment 3 485 17 - 3 502
Biological agricultural assets 99 219 - 318
Investments - Equity accounted 38 451 (42) (286) 38 123
Deferred taxation 6 - 1 7
Inventories 2 002 2 - 2 004
Debtors and short-term loans 2 071 (12) - 2 059
Cash and cash equivalents 6 484 1 - 6 485
Assets held for sale 214 (40) - 174
Total assets 58 027 145 (285) 57 887
LIABILITIES
Retirement benefits 203 1 9 213
Long-term loans 105 33 - 138
Deferred taxation 673 45 (1) 717
Trade and other payables 2 493 (6) - 2 487
Short-term loans 279 14 - 293
Taxation 9 (2) - 7
Total liabilities 3 774 85 8 3 867
EQUITY
Equity reserves 9 367 10 (287) 9 090
Other reserves 669 - 1 670
Distributable reserves 39 725 - (7) 39 718
Non-controlling interest 799 50 - 849
Total equity 54 253 60 (293) 54 020
COMMENTS
1. ACCOUNTING POLICIES
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE
Limited Listings Requirements for provisional reports, and the requirements of the Companies Act applicable to
summary financial statements. The Listings Requirements require provisional reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a
minimum, contain the information required by IAS 34: Interim Financial Reporting.
The accounting policies applied in the preparation of the consolidated financial statements from which the summary
consolidated financial statements were derived are in terms of IFRS and are consistent with those accounting
policies applied in the preparation of the previous consolidated annual financial statements, with the exception of
the implementation of IFRS 10: Consolidated Financial Statements, IFRS 11: Joint Arrangements and the
amendments to IAS 19: Employee Benefits. The adoption of IFRS 10, IFRS 11 and the revised IAS 19 required a
restatement of the comparative results as set out in the "Changes in accounting policy" note below, as well as the
section "Restatement of comparative numbers". The financial statements have been prepared under the supervision
of the Chief Financial Officer, Leon Crouse CA(SA).
During the year under review various other new and revised accounting standards became effective, but their
implementation had no impact on the results of either the current or prior year.
2. CHANGES IN ACCOUNTING POLICY
With effect from 1 July 2013 Remgro adopted IFRS 10: Consolidated Financial Statements, IFRS 11: Joint
Arrangements and the revised IAS 19: Employee Benefits. These accounting standards have to be applied
retrospectively in terms of their transitional provisions and accordingly the reported results of the comparative year
presented were restated, with the cumulative effect as at 1 July 2012 being accounted for as an adjustment to
opening equity.
IFRS 10 and IFRS 11
These new accounting standards broaden the definition of "control" and consequently "joint control" and
accordingly all rights in relation to investee companies must be considered in order to determine whether the
investment should be classified as a subsidiary, associate or joint venture.
Remgro reclassified its investments in Distell Group Limited and the CIV group as joint ventures, while previously
they were accounted for as associates. The change in classification had no impact on the Group's measurement of
the investments as the equity method is used to account for both associates and joint ventures. In the case of TSB
Sugar Holdings Proprietary Limited (TSB) certain of its investee companies that were previously classified as joint
ventures (and accordingly equity accounted) were reclassified as subsidiaries. Kagiso Tiso Holdings Proprietary
Limited also reclassified certain of its investments previously accounted for at fair value, as associates. These
include the investment in MMI Holdings Limited that was previously accounted for at fair value through profit and
loss.
IAS 19
The revised IAS 19 introduced significant changes in the accounting treatment for defined-benefit post-retirement
plans. The most significant change of the amended IAS 19 relates to the elimination of the option to defer the
recognition of past service costs and actuarial gains and losses. These remeasurements are now required to be
accounted for in full in the income statement and in other comprehensive income, respectively, in the period in
which they arise. The accounting standard also replaced interest cost and expected return on plan assets with a net
interest amount that is equal to the discount rate used for determining retirement benefit obligations.
The application of the revised IAS 19 affected Remgro and its subsidiaries, RCL Foods Limited and TSB, as well as
certain significant associates like FirstRand Limited, RMB Holdings Limited and Mediclinic International Limited
(Mediclinic).
Refer to the section "Restatement of comparative numbers" for further detail.
3. COMPARISON WITH PRIOR YEAR
During the previous financial year Mediclinic incurred material once-off charges relating to the comprehensive
refinancing of its Swiss and South African debt. Remgro's share of these once-off items included in its results for
the year ended 30 June 2013 amounted to a loss of R1 312 million.
Due to the materiality of the amounts involved, headline earnings and headline earnings per share are also presented
by excluding Remgro's share of Mediclinic's refinancing costs referred to above.
4. RESULTS
Headline earnings
Headline earnings for the year to 30 June 2014 amounted to R6 635 million compared to R4 196 million for the
year to 30 June 2013, representing an increase of 58.1%, whereas headline earnings per share increased by 58.2%
from 817.1 cents to 1 292.4 cents.
However, excluding the effect of the once-off items relating to Mediclinic's refinancing transaction referred to
earlier, headline earnings increased by 20.5% from R5 508 million to R6 635 million, whereas headline earnings per
share also increased by 20.5% from 1 072.6 cents to 1 292.4 cents, as presented in the table below.
Contribution to headline earnings by reporting platform
Year ended Year ended
30 June 30 June
2014 2013
% Restated
R'm Change R'm
Food, liquor and home care 795 (29.2) 1 123
Banking 2 542 22.4 2 077
Healthcare 1 489 403.3 (491)
Insurance 871 30.8 666
Industrial 700 27.7 548
Infrastructure 166 (15.3) 196
Media and sport 64 (46.2) 119
Other investments 59 3.5 57
Central treasury 83 2 666.7 3
Other net corporate costs (134) (31.4) (102)
Headline earnings 6 635 58.1 4 196
Mediclinic refinancing cost - - 1 312
Headline earnings, excluding Mediclinic refinancing cost 6 635 20.5 5 508
Refer to Annexures A and B for segmental information.
Commentary on reporting platforms' performance
Food, liquor and home care
The contribution from food, liquor and homecare to Remgro's headline earnings amounted to R795 million (2013:
R1 123 million), representing a decrease of 29.2%. This decrease is mainly the result of lower contributions from
RCL Foods and TSB. RCL Foods reported a headline loss of R303 million for the year under review (2013:
R29 million profit), with Remgro's share of this loss amounting to R239 million (2013: R21 million profit). During
the year under review RCL Foods' results were negatively affected by the following items:
- Material foreign exchange losses resulting from the early redemption of Foodcorp's euro-denominated debt;
- Once-off BEE costs relating to the restructuring of its BEE shareholding;
- Material transaction costs relating to the various corporate actions undertaken during the year;
- Continued high levels of cheap competitive chicken imports and high input costs;
TSB's contribution to headline earnings amounted to R192 million (2013: R316 million). It should be noted that
TSB's contribution only includes its results for the six months ended 31 December 2013 due to the fact that Remgro
disposed of its 100% interest in TSB to RCL Foods during January 2014. TSB's headline earnings for the full year
amounted to R218 million (2013: R316 million). This decrease is mainly due to lower domestic sales volumes and
margins realised due to the negative impact of increased sugar imports. Unilever's contribution to headline earnings
decreased by 18.5% to R347 million (2013: R426 million). This decrease is mainly the result of turnover growth
being offset by increased supply chain costs, as well as brand and marketing investments and restructuring costs.
Distell's contribution to headline earnings, which includes the investment in Capevin Holdings, amounted to
R495 million (2013: R360 million). During April 2013, Distell acquired Burn Stewart Distillers Limited and its
results for the current year include a favourable remeasurement of R159 million to the contingent consideration
payable on the acquisition. In the comparative year Distell's results were negatively affected by new business
acquisition costs and an interest provision on excise duty totalling R265 million. Excluding these once-off items,
Distell's contribution to Remgro's headline earnings would have decreased by 1.6% to R442 million. Remgro's
effective interest in Distell decreased from 33.4% to 31.0%.
Banking
The headline earnings contribution from the banking division amounted to R2 542 million (2013: R2 077 million),
representing an increase of 22.4%. Both FirstRand and RMBH reported excellent headline earnings growth of
21.8% and 22.8% respectively, mainly due to growth in both interest income and non-interest income from FNB,
RMB and WesBank, as well as a significant reduction in year-on-year credit impairment charges.
Healthcare
Mediclinic's contribution to Remgro's headline earnings amounted to a profit of R1 489 million (2013:
R491 million loss). This increase in profit was mainly due to the effect of the once-off items relating to Mediclinic's
refinancing transaction in the comparative year referred to earlier. Excluding these once-off items, Mediclinic's
contribution to Remgro's headline earnings would have increased by 81.4% from R821 million, mainly due to solid
performances from all three operating platforms, as well as a once-off past service cost credit of R192 million
relating to its retirement benefit obligations.
Insurance
RMI is the only investment being reported under insurance interests. RMI reported an increase of 28.4% in headline
earnings, with all three operating platforms, Discovery, MMI Holdings and OUTsurance achieving excellent
headline earnings growth of 45.6%, 28.5% and 19.2% respectively.
Industrial
Total South Africa's contribution to Remgro's headline earnings amounted to R233 million (2013: R258 million).
This decrease is despite more favourable stock revaluations than in the comparative period, which was set off by an
increase in its site rehabilitation cost provision. Remgro's share of the results of KTH amounted to R71 million
(2013: R36 million). Wispeco's contribution to Remgro's headline earnings amounted to R107 million (2013:
R64 million). This increase in headline earnings is mainly due to improved sales volumes and selling prices, as well
as improved production efficiencies. Air Products' and PGSI's contribution to headline earnings amounted to
R217 million and R72 million respectively (2013: R180 million and R10 million respectively).
Infrastructure
Grindrod's contribution to Remgro's headline earnings amounted to R108 million (2013: R144 million). This
decrease is mainly due to a weaker operating performance from its commodity trading division. These operations
are in the process of being wound down and sold according to plan. For the year under review the CIV group
contributed R58 million to headline earnings (2013: R59 million). SEACOM reported a headline loss of
R26 million for the year under review (2013: R3 million loss), with Remgro's share of this amounting to R6 million
(2013: a loss of less than R1 million).
Media and sport
Media and sport interests primarily consist of the interests in Sabido and Premier Team Holdings (PTH). Sabido's
contribution to Remgro's headline earnings amounted to R131 million (2013: R148 million). This decrease is
mainly due to significant new business development costs incurred during the period under review. PTH's
contribution to headline earnings amounted to a loss of R68 million (2013: R37 million loss).
Other investments
The contribution from other investments to headline earnings amounted to R59 million (2013: R57 million), of
which Business Partners' contribution was R33 million (2013: R32 million).
Central treasury and other net corporate costs
The contribution from the central treasury division amounted to R83 million (2013: R3 million). This increase is
mainly the result of foreign exchange losses of R98 million accounted for in the comparative period on the hedging
of the repatriation of a portion of Remgro's offshore cash. Other net corporate costs amounted to R134 million
(2013: R102 million). This increase is mainly the result of the net after-tax underwriting fee of R46 million received
on the Mediclinic rights offer in the comparative year.
Total earnings
Total earnings increased by 65.5% to R6 917 million (2013: R4 179 million), mainly as a result of the costs
associated with the Mediclinic refinancing in the comparative year.
5. INTRINSIC NET ASSET VALUE
Remgro's intrinsic net asset value per share increased by 20.1% from R204.83 at 30 June 2013 to R245.96 at
30 June 2014. Refer to Annexure B for full details.
6. INVESTMENT ACTIVITIES
The most important investment activities during the year under review were as follows:
RCL Foods Limited (RCL Foods)
During the previous financial year RCL Foods acquired an effective 64.2% interest in New Foodcorp Holdings
Proprietary Limited (Foodcorp). During the year under review RCL Foods acquired the remaining 35.8% interest in
Foodcorp in two separate transactions from Foodcorp management and Capitau Investment Advisors Proprietary
Limited for a total cash consideration of R520.7 million.
During January 2014 RCL Foods also acquired 100% of the shares in TSB Sugar RSA Proprietary Limited and TSB
International Proprietary Limited (collectively referred to as TSB) from Remgro for a total purchase consideration
of R4.0 billion. The purchase consideration was settled on 17 January 2014 through the issue of 230.9 million new
RCL Foods shares to Remgro at a price of R17.32 per share.
As part of the announcement referred to above RCL Foods also announced its intention to restructure its existing
BEE notional vendor financed shareholding, as well as implement TSB's BEE scheme at the RCL Foods
shareholding level. RCL Foods further also proposed a capital raising in the amount of R2.5 billion through a
combination of a pro rata offer to existing minority shareholders (excluding Remgro and RCL Foods' existing BEE
parties) and a specific issue of new shares via a placement to qualifying investors.
RCL Foods shareholders approved the BEE transactions and capital raising referred to above on 16 January 2014.
The results of the pro rata offer was announced on 5 February 2014, indicating that R790 million was raised. On
19 February 2014 RCL Foods announced that the placement of new shares to raise the balance of the R2.5 billion
referred to above has been delayed, subject to market conditions, its cash/gearing situation as well as the anticipated
timing of investment cash flows.
The TSB BEE transaction and the restructuring of RCL Foods' existing BEE shareholding were implemented on
3 April 2014 and 26 May 2014 respectively. As part of these transactions RCL Foods issued an additional
19.6 million new RCL Foods shares.
On 30 June 2014, Remgro's effective interest in RCL Foods was 77.7% (2013: 75.9%).
PG Group of Companies (PGSI)
PGSI is the foreign holding company of the Plate Glass group. During the year under review, in participation of two
rights offers, Remgro invested a further R47.1 million in PGSI.
During June 2009 Remgro invested R129.6 million in PGSI cumulative, redeemable preference shares. The
preference shares had a term of five years. Together with its investment in the PGSI preference shares, Remgro also
acquired the right to use the proceeds on redemption to subscribe for new ordinary shares in PGSI. During
June 2014 the preference shares were redeemed and Remgro used the proceeds to subscribe for 8.3 million new
ordinary shares in PGSI.
The above transactions increased Remgro's interest in PGSI to 37.7% (2013: 25.3%).
Grindrod Limited (Grindrod)
During May 2014 Grindrod issued 96 million new Grindrod shares through an accelerated bookbuild offering to
qualifying investors, thereby raising an additional R2.4 billion of capital. As part of this process, Remgro acquired a
further 26.1 million shares in Grindrod for a total amount of R652 million, or R25.00 per share.
After the completion of the Grindrod bookbuild, Remgro and Grindrod Investments Proprietary Limited, who was
also allocated Grindrod shares in terms of the bookbuild, offered qualifying Grindrod shareholders the opportunity
to participate in a clawback offer, also at a price of R25.00 per Grindrod share. In terms of the clawback offer
Remgro disposed of 4.0 million of the shares acquired in terms of the bookbuild for a total consideration of
R101.1 million.
During June 2014 Grindrod issued a further 64 million shares to a consortium of strategic black investors. This issue
of shares, as well as the bookbuild offering referred to above, reduced Remgro's effective interest in Grindrod to
22.6% (2013: 25.0%).
The CIV group
Previously Remgro's interests in the CIV group consisted of its investments in Dark Fibre Africa Proprietary
Limited (Dark Fibre Africa), CIV Fibre Network Solutions Proprietary Limited (CIV FNS), CIE
Telecommunications Proprietary Limited (CIE Telecommunications), CIV Power Proprietary Limited (CIV Power),
as well as Central Lake Trading No. 77 Proprietary Limited (Central Lake).
On 1 April 2014 the CIV group was restructured in order to simplify its holding structure from multiple entry points
to a single entry point in order to align the interests of all shareholders. Consequently Remgro exchanged its
interests in Dark Fibre Africa, CIV FNS, CIE Telecommunications, CIV Power and Central Lake for a direct
investment in Community Investment Ventures Holdings Proprietary Limited (CIVH). The restructuring did not
change Remgro's interest in Dark Fibre Africa materially and accordingly the earnings contribution of CIVH in the
future will be comparable with that of the combined contribution of the investee companies prior to the
restructuring.
As part of the restructuring Remgro invested R67.3 million in CIVH and on 30 June 2014 Remgro's effective
interest in CIVH was 50.7% (2013: effective interest in the CIV group of 43.8%). For accounting purposes the
investment in CIVH is classified as a joint venture.
Distell Group Limited (Distell)
As part of the restructuring of its BEE transaction and in order to maintain its current BEE rating, Distell issued
15.0 million new ordinary shares to BEE shareholders during January 2014. This issue of shares resulted in
Remgro's total interest in Distell, which includes the indirect interest held through Capevin Holdings, to dilute from
33.4% to 31.0%.
ElementOne Limited (ElementOne)
On 29 November 2013, a consortium led by Rand Merchant Bank and Remgro, through a new special purpose
vehicle (Main Street 1132 Proprietary Limited, or Bidco) made a firm offer to acquire 100% of ElementOne. As
consideration for their shares in the company, ElementOne shareholders were offered R22.507 per ElementOne
share, to be settled through the payment of a combination of cash and shares in Caxton and CTP Publishers and
Printers Limited (Caxton).
On 7 February 2014 it was announced that all conditions precedent applicable to the transaction were fulfilled and
on 25 February 2014 the transaction was implemented. Remgro did not provide any funding for the transaction, but
following the transaction and the broader restructuring of the Caxton control structure, it has effectively exchanged
its 1.8% direct interest for a 6.1% indirect interest in Caxton.
Milestone China Opportunities Fund III (Milestone III)
During the year under review Remgro invested a further $25.2 million in Milestone III, thereby increasing its
cumulative investment to $53.4 million. As at 30 June 2014 the remaining commitment to Milestone III amounted to
$46.6 million.
Other smaller investments, amounting to R77 million, were made during the year under review in, inter alia,
Milestone China Opportunities Fund II and Premier Team Holdings Limited.
There were no significant transactions subsequent to 30 June 2014.
7. TREASURY SHARES
At 30 June 2013, 3 433 101 Remgro ordinary shares (0.7%) were held as treasury shares by a wholly owned
subsidiary company of Remgro. As previously reported, these shares were acquired for the purpose of hedging
Remgro's share incentive scheme.
During the year under review no Remgro ordinary shares were repurchased, while 472 335 Remgro ordinary shares
were utilised to settle Remgro's obligation towards scheme participants who exercised the rights granted to them.
At 30 June 2014, 2 960 766 Remgro ordinary shares (0.6%) were held as treasury shares.
8. CASH RESOURCES AT THE CENTRE
The Company's cash resources at 30 June 2014 were as follows:
30 June 2014 30 June 2013
Local Offshore Total Restated
R'm R'm R'm R'm
Per consolidated statement of financial position 2 958 699 3 657 4 188
Investment in money market funds 746 425 1 171 1 140
Less: Cash of operating subsidiaries (1 491) (73) (1 564) (2 595)
Cash at the centre 2 213 1 051 3 264 2 733
On 30 June 2014, approximately 40% (R425 million) of the available offshore cash at the centre was invested in
money market funds which are not classified as cash and cash equivalents on the statement of financial position.
DIRECTORATE
Mr JW Dreyer has retired as an executive director from the Board of Remgro with effect from 31 December 2013.
The Board wishes to thank him for his valuable contribution over many years.
REPORTS OF THE INDEPENDENT AUDITOR
The Company's directors are responsible for the preparation of a summary of the audited consolidated financial statements.
These summary consolidated financial statements for the year ended 30 June 2014 have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified
opinion on the annual financial statements from which these summary consolidated financial statements were derived.
A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the annual
consolidated financial statements are available for inspection at the Company's registered office, together with the financial
statements identified in the respective auditor's reports.
The auditor's report does not necessarily report on all of the information contained in this announcement/financial results.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they
should obtain a copy of the auditor's report together with the accompanying financial information from the issuer's registered
office.
DECLARATION OF CASH DIVIDEND
Secondary tax on companies (STC) and dividend tax
With effect from 1 April 2012, STC was replaced with a dividend tax. In terms of the new legislation, companies will be
allowed to apply their available STC credits against future dividends declared for a period of three years from the effective
date of dividend tax.
Declaration of Dividend No. 28
Notice is hereby given that a final gross dividend of 233 cents (2013: 201 cents) per share has been declared out of income
reserves in respect of both the ordinary shares of no par value and the unlisted B ordinary shares of no par value, for the year
ended 30 June 2014.
The Company will be utilising STC credits amounting to 233 cents per ordinary share and 233 cents per unlisted B ordinary
share. As a result there will be no dividend tax deducted from the final gross dividend for any Remgro shareholder.
The issued share capital at the declaration date is 481 106 370 ordinary shares and 35 506 352 B ordinary shares. The
income tax number of the Company is 9500-124-71-5.
Dates of importance:
Last day to trade in order to participate in the dividend Friday, 7 November 2014
Shares trade ex dividend Monday, 10 November 2014
Record date Friday, 14 November 2014
Payment date Monday, 17 November 2014
Share certificates may not be dematerialised or rematerialised between Monday, 10 November 2014 and Friday,
14 November 2014, both days inclusive.
In terms of the Company's Memorandum of Incorporation, dividends will only be transferred electronically to the bank
accounts of shareholders, while dividend cheques will no longer be mailed. If you have in the past received dividend
cheques, please contact the Transfer Secretaries to provide them with confirmation of your banking details. In the instance
where shareholders do not provide the Transfer Secretaries with their banking details, the dividend will not be forfeited but
will be marked as "unclaimed" in the share register until the shareholder provides the Transfer Secretaries with the relevant
banking details for payout.
The Integrated Annual Report will be posted to members and will be available on Remgro's website at www.remgro.com
during October 2014.
Signed on behalf of the Board of Directors
Johann Rupert Jannie Durand
Chairman Chief Executive Officer
Stellenbosch
17 September 2014
DIRECTORATE
Non-executive directors
Johann Rupert (Chairman), E de la H Hertzog (Deputy Chairman),
G T Ferreira*, P K Harris*, N P Mageza*,
J Malherbe, P J Moleketi*, M Morobe*,
F Robertson*, H Wessels*
(*Independent)
Executive directors
J J Durand (Chief Executive Officer),
W E Bührmann, L Crouse
CORPORATE INFORMATION
Secretary
M Lubbe
Listing
JSE Limited
Sector: Industrials – Diversified Industrials
Business address and registered office
Millennia Park, 16 Stellentia Avenue, Stellenbosch 7600
(PO Box 456, Stellenbosch 7599)
Transfer Secretaries
Computershare Investor Services Proprietary Limited, 70 Marshall Street,
Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc.
Stellenbosch
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Website
www.remgro.com
ANNEXURE A
COMPOSITION OF HEADLINE EARNINGS
Year ended
30 June
2014 2013
Restated
R'm R'm
Food, liquor and home care
Unilever South Africa 347 426
Distell 1 495 360
RCL Foods 2 (239) 21
TSB2 192 316
Banking
RMBH 1 793 1 460
FirstRand 749 617
Healthcare
Mediclinic 1 489 (491)
Insurance
RMI Holdings 871 666
Industrial
Air Products South Africa 217 180
KTH 71 36
Total South Africa 233 258
PGSI 72 10
Wispeco 107 64
Infrastructure
Grindrod 108 144
CIV group 58 59
SEACOM (6) -
Other infrastructure interests 6 (7)
Media and sport
Sabido 131 148
Other media and sport interests (67) (29)
Other investments 59 57
Central treasury 83 3
Other net corporate costs (134) (102)
Headline earnings 6 635 4 196
Weighted number of shares (million) 513.4 513.5
Headline earnings per share (cents) 1 292.4 817.1
Notes
1. Includes the investment in Capevin Holdings Limited.
2. TSB's contribution only includes its results for the six months ended 31 December 2013 due to the fact that Remgro disposed of
its 100% interest in TSB to RCL Foods during January 2014. TSB's results for the six months ended 30 June 2014 were
accounted for by RCL Foods.
ANNEXURE B
COMPOSITION OF INTRINSIC NET ASSET VALUE
30 June 2014 30 June 2013
Book value Intrinsic value Book value Intrinsic value
Restated
R'm R'm R'm R'm
Food, liquor and home care
Unilever South Africa 3 086 9 037 3 099 8 676
Distell 1 2 864 9 336 2 623 8 073
RCL Foods 6 862 10 547 5 121 6 759
TSB - - 1 877 3 964
Banking
RMBH 11 225 20 743 10 346 15 541
FirstRand 3 969 8 957 3 622 6 359
Healthcare
Mediclinic 10 597 29 316 7 429 24 640
Insurance
RMI Holdings 6 224 14 739 5 645 11 331
Industrial
Air Products South Africa 839 3 610 691 3 126
KTH 2 061 2 481 2 304 2 425
Total South Africa 1 329 1 596 1 192 1 275
PGSI 760 760 568 571
Wispeco 540 778 458 414
Infrastructure
Grindrod 3 667 4 513 2 868 3 103
CIV group 1 657 2 282 1 650 2 305
SEACOM 569 991 617 1 069
Other infrastructure interests 829 829 776 776
Media and sport
Sabido 974 2 528 929 2 279
Other media and sport interests 534 533 608 605
Other investments 2 699 2 767 2 185 2 204
Central treasury – cash at the centre 2 3 264 3 264 2 733 2 733
Other net corporate assets 1 486 1 860 1 289 1 516
Net asset value (NAV) 66 035 131 467 58 630 109 744
Potential CGT liability 3 (5 130) (4 628)
NAV after tax 66 035 126 337 58 630 105 116
Issued shares after deduction of shares
repurchased (million) 513.7 513.7 513.2 513.2
NAV after tax per share (Rand) 128.56 245.96 114.25 204.83
Notes
1. Includes the investment in Capevin Holdings Limited.
2. Cash at the centre excludes cash held by subsidiaries that are separately valued above (mainly RCL Foods, TSB and Wispeco).
3. The potential capital gains tax (CGT) liability is calculated on the specific identification method using the most favourable calculation for
investments acquired before 1 October 2001 and also taking into account the corporate relief provisions. Deferred CGT on investments "available-
for-sale" is included in "other net corporate assets" above.
4. For purposes of determining the intrinsic value, the unlisted investments are shown at directors' valuation and the listed investments are shown at
stock exchange prices.
5. Intrinsic values have not been audited.
Date: 17/09/2014 05:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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