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Audited summary consolidated results for the year ended 30 June 2017 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 2017
AND CASH DIVIDEND DECLARATION
SALIENT FEATURES
- Headline earnings per share +32.7%
- Headline earnings per share, excluding once-off costs and
option remeasurement -3.4%
- Ordinary dividend per share +7.6%
- Intrinsic net asset value per share R251.48
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 1 July
2017 2016 2015
R million Restated Restated
ASSETS
Non-current assets
Property, plant and equipment 6 668 6 500 5 985
Investment properties 129 107 51
Intangible assets 4 927 4 993 5 710
Investments - Equity accounted 80 883 78 565 57 831
- Available-for-sale 3 345 3 408 2 493
Retirement benefits 201 163 220
Loans 562 880 977
Deferred taxation 23 42 18
96 738 94 658 73 285
Current assets 22 317 14 442 21 407
Inventories 3 055 3 274 3 118
Biological agricultural assets 791 968 830
Debtors and short-term loans 4 885 5 503 3 837
Investment in money market funds 5 888 1 050 986
Cash and cash equivalents 7 524 3 569 4 050
Other current assets 85 49 52
22 228 14 413 12 873
Assets held for sale 89 29 8 534
Total assets 119 055 109 100 94 692
EQUITY AND LIABILITIES
Stated capital 13 416 3 605 3 605
Reserves 79 235 75 456 69 781
Treasury shares (219) (217) (272)
Shareholders' equity 92 432 78 844 73 114
Non-controlling interest 2 870 2 813 2 803
Total equity 95 302 81 657 75 917
Non-current liabilities 18 493 20 821 5 404
Retirement benefits 173 202 227
Long-term loans 16 446 17 799 3 547
Deferred taxation 1 511 1 623 1 630
Derivative instruments 363 1 197 -
Current liabilities 5 260 6 622 13 371
Trade and other payables 4 710 4 833 4 469
Short-term loans 480 1 660 366
Other current liabilities 69 129 69
5 259 6 622 4 904
Liabilities held for sale 1 - 8 467
Total equity and liabilities 119 055 109 100 94 692
Net asset value per share (Rand)
- At book value R163.13 R153.13 R142.12
- At intrinsic value R251.48 R306.44 R288.89
The 30 June 2016 annual results were restated due to a change in accounting policy, as well as the rights issue. Refer to
"Restatement of comparative numbers" and notes 1 and 2 under "Comments".
SUMMARY CONSOLIDATED INCOME STATEMENT
Year ended 30 June
2017 2016
R million Restated
Sales 27 600 27 697
Inventory expenses (16 138) (16 959)
Staff costs (4 972) (4 578)
Depreciation (752) (727)
Other net operating expenses (4 978) (4 921)
Trading profit 760 512
Dividend income 61 77
Interest received 633 287
Fair value adjustment on exchangeable bonds' option 687 (730)
Finance costs (1 255) (903)
Net impairment of investments, loans, assets and goodwill 105 (2 556)
Profit on sale and dilution of investments 199 2 451
Consolidated profit/(loss) before tax 1 190 (862)
Taxation (227) 21
Consolidated profit/(loss) after tax 963 (841)
Share of after-tax profit of equity accounted investments 7 545 6 250
Net profit for the year 8 508 5 409
Attributable to:
Equity holders 8 431 5 364
Non-controlling interest 77 45
8 508 5 409
EQUITY ACCOUNTED INVESTMENTS
Share of after-tax profit of equity accounted investments
Profit before taking into account impairments, non-recurring and
capital items 10 066 8 875
Net impairment of investments, assets and goodwill (668) (809)
Profit on the sale of investments 325 216
Other non-recurring and capital items 101 (67)
Profit before tax and non-controlling interest 9 824 8 215
Taxation (1 895) (1 709)
Non-controlling interest (384) (256)
7 545 6 250
HEADLINE EARNINGS RECONCILIATION
Year ended 30 June
2017 2016
R million Restated
Net profit for the year attributable to equity holders (earnings) 8 431 5 364
Plus/(minus):
- Net impairment of equity accounted investments* (302) 1 862
- Impairment of available-for-sale investments 5 -
- Impairment of property, plant and equipment 181 37
- Impairment of intangible assets* - 644
- Impairment of assets held for sale - 7
- Profit on sale and dilution of equity accounted investments** (199) (2 349)
- Profit on sale of available-for-sale investments - (153)
- Recycling of foreign currency translation reserves - 51
- Net (surplus)/loss on disposal of property, plant and equipment (110) 10
- Loss on disposal of biological agricultural assets - 9
- Non-headline earnings items included in equity accounted earnings of equity
accounted investments 223 633
- Net surplus on disposal of property, plant and equipment (19) (27)
- Profit on the sale of investments (325) (216)
- Net impairment of investments, assets and goodwill 668 809
- Other non-recurring and capital items (101) 67
- Taxation effect of adjustments 5 (92)
- Non-controlling interest (13) (149)
Headline earnings 8 221 5 874
Once-off costs - 788
Option remeasurement (687) 730
Headline earnings, excluding once-off costs and option remeasurement 7 534 7 392
* For the year under review "Net impairment of equity accounted investments" primarily consist of a reversal of
impairment of the investment in Grindrod of R478 million (2016: impairment of the investment in Grindrod of
R1 861 million). For the previous year "Impairment of intangible assets" primarily consist of an impairment in RCL
Foods' Milling business amounting to R643 million.
** For the previous year "Profit on sale and dilution of equity accounted investments" primarily consists of a profit of
R2 262 million realised on the dilution of Remgro's interest in Mediclinic as part of the Al Noor transaction.
EARNINGS AND DIVIDENDS
Year ended 30 June
2017 2016
Cents Restated
Headline earnings per share
- Basic 1 485.5 1 119.6
- Diluted 1 479.5 1 115.0
Headline earnings per share, excluding once-off costs and option
remeasurement
- Basic 1 361.3 1 409.0
- Diluted 1 355.5 1 404.4
Earnings per share
- Basic 1 523.4 1 022.4
- Diluted 1 517.2 1 018.5
Dividends per share
Ordinary 495.00 460.00
- Interim 194.00 185.00
- Final 301.00 275.00
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 June
2017 2016
R million Restated
Net profit for the year 8 508 5 409
Other comprehensive income, net of tax (2 097) 2 579
Items that may be reclassified subsequently to the income statement:
Exchange rate adjustments (4 477) 1 745
Fair value adjustments for the year 69 534
Deferred taxation on fair value adjustments 21 (112)
Reclassification of other comprehensive income to the
income statement (20) (951)
Other comprehensive income of equity accounted investments 2 245 1 652
Items that will not be reclassified to the income statement:
Remeasurement of post-employment benefit obligations 68 19
Deferred taxation on remeasurement of post-employment benefit obligations (19) (6)
Change in reserves of equity accounted investments 16 (302)
Total comprehensive income for the year 6 411 7 988
Total comprehensive income attributable to:
Equity holders 6 338 7 943
Non-controlling interest 73 45
6 411 7 988
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 30 June
2017 2016
R million Restated
Balance at the beginning of the year 81 657 75 917
Total comprehensive income for the year 6 411 7 988
Dividends paid (2 708) (2 358)
Transactions with non-controlling shareholders 18 31
Other movements 18 15
Long-term share incentive scheme reserve 127 64
Shares issued 9 945 -
Share issue costs (134) -
Purchase of treasury shares by wholly owned subsidiary (32) -
Balance at the end of the year 95 302 81 657
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 30 June
2017 2016
R million Restated
Cash generated from operations 2 874 1 413
Taxation paid (363) (328)
Dividends received 4 163 3 547
Finance costs (1 179) (795)
Cash available from operating activities 5 495 3 837
Dividends paid (2 708) (2 358)
Net cash inflow from operating activities 2 787 1 479
Investing activities* (6 572) (18 767)
Financing activities** 8 553 16 365
Net increase/(decrease) in cash and cash equivalents 4 768 (923)
Exchange rate profit/(loss) on foreign cash (424) 222
Cash and cash equivalents at the beginning of the year 3 128 3 829
Cash and cash equivalents at the end of the year 7 472 3 128
Cash and cash equivalents - per statement of financial position 7 524 3 569
Bank overdraft (52) (441)
* "Investing activities" primarily consists of an increase in money market funds of R4 838 million, while the comparative
year included an investment in Mediclinic of R17 512 million in respect of the Mediclinic rights issue and Al Noor
transaction.
** "Financing activities" primarily consists of the Remgro rights issue of R9 811 million, while the comparative year
included debt raised of R16 456 million in order to participate in the above-mentioned Mediclinic rights issue and Al
Noor transaction.
ADDITIONAL INFORMATION
30 June
2017 2016
Restated
Number of shares in issue
- Ordinary shares of no par value 529 217 007 481 106 370
- Unlisted B ordinary shares of no par value 39 056 987 35 506 352
Total number of shares in issue 568 273 994 516 612 722
Number of shares held in treasury
- Ordinary shares repurchased and held in treasury (1 666 638) (1 725 393)
566 607 356 514 887 329
Weighted number of shares 553 423 346 524 628 257
In determining earnings per share and headline earnings per share the weighted number of shares was taken into account.
30 June
2017 2016
R million Restated
Equity accounted investments
Associates 75 392 73 418
Joint ventures 5 491 5 147
80 883 78 565
Equity accounted investment reconciliation
Carrying value at the beginning of the year 78 565 57 831
Share of net attributable profit 7 545 6 250
Dividends received (3 861) (3 900)
Investment in Mediclinic - 18 246
Dilutionary effects 196 1 886
Exchange rate differences (4 947) (1 274)
Grindrod impairment reversal/(impairment) 478 (1 861)
Movements on reserves 2 256 1 350
Other movements 651 37
Carrying value at the end of the year 80 883 78 565
Long-term loans
20 000 Class A 7.7% cumulative redeemable preference shares 3 512 3 512
10 000 Class B 8.3% cumulative redeemable preference shares 4 382 4 382
Exchangeable bonds with an effective interest rate of 4.5% 5 650 6 380
Various other loans 3 127 3 672
16 671 17 946
Short-term portion of long-term loans (225) (147)
16 446 17 799
Additions to and replacement of property, plant and equipment 1 228 1 295
Capital and investment commitments 1 247 1 999
(Including amounts authorised, but not yet contracted for)
Guarantees and contingent liabilities 26 241
Dividends received from equity accounted investments set off
against investments 3 861 3 900
Dividends received from associate classified as asset held for sale - 149
Refer to the section dealing with "Investment activities" for
more detail on related party transactions.
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 appropriate valuation methodologies
and 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 table illustrates the fair values of financial assets and liabilities that are measured at fair value, by hierarchy
level:
R million Level 1 Level 2 Level 3 Total
30 June 2017
Assets
Available-for-sale 1 178 - 2 167 3 345
Derivative instruments - 1 - 1
Investment in money market funds 5 888 - - 5 888
7 066 1 2 167 9 234
Liabilities
Non-current derivative instruments - 363 - 363
Current derivative instruments - 13 49 62
- 376 49 425
30 June 2016
Assets
Available-for-sale 1 260 - 2 148 3 408
Derivative instruments - 8 - 8
Investment in money market funds 1 050 - - 1 050
2 310 8 2 148 4 466
Liabilities
Non-current derivative instruments - 1 197 - 1 197
Current derivative instruments - 63 54 117
- 1 260 54 1 314
The following table illustrates the reconciliation of the carrying value of level 3 assets from the beginning to the end of the
period:
30 June
R million 2017 2016
Assets: Available-for-sale
Balances at the beginning of the year 2 148 1 591
Additions 119 174
Disposals (67) (53)
Exchange rate adjustments (178) 236
Fair value adjustments through comprehensive income 145 200
Balances at the end of the year 2 167 2 148
Liabilities: Derivative instruments
Balances at the beginning of the year 54 -
Remeasurements (5) -
Additions - 54
Balances at the end of the year 49 54
There were no transfers between the different levels.
Level 3 financial assets consist mainly of investments in the Milestone China entities (Milestone), the Kagiso Infrastructure
Empowerment Fund (KIEF) and the Pembani Remgro Infrastructure Fund (PRIF) amounting to R1 554 million, R272 million
and R246 million respectively. These investments are all valued based on the fair value of each investment's underlying
assets, which are valued using a variety of valuation methodologies. Listed entities are valued at the last quoted share price on
the reporting date, whereas unlisted entities' valuation methods include discounted cash flow valuations, appropriate earnings
and revenue multiples.
Milestone's fair value consists of listed investments (40%), cash and cash equivalents (4%) and unlisted investments (56%).
Unlisted investments included at recent transaction prices in Milestone's fair value amounted to R606 million, while its
remaining eight unlisted investments were valued at R264 million and is considered to be immaterial. KIEF's investments
were valued using the discounted cash flow method or the agreed exit price. PRIF's main assets are the investments in ETG
Group and Nova Lumos. ETG Group was valued using appropriate revenue and earnings multiples based on peer group
companies to determine a price-to-book valuation, while Nova Lumos was recently acquired and therefor valued at its cost
price.
Changes in the valuation assumptions of the above unlisted investments will not have a significant impact on Remgro's
financial statements as the underlying assets of the funds in which Remgro made its investments are widely spread.
RESTATEMENT OF COMPARATIVE NUMBERS
Refer to notes 1 and 2 under "Comments" for further detail
Restatement of comparative numbers on 1 July 2015
As at
1 July 2015 As at
as previously 1 July 2015
R million reported Adjustments Restated
Impact on statement of financial position*
ASSETS
Property, plant and equipment 5 716 269 5 985
Non-current assets - Biological agricultural assets 550 (550) -
Current assets - Biological agricultural assets 549 281 830
Total assets 94 692 - 94 692
* There was no impact on shareholders' equity on 1 July 2015 as all affected entities elected to use the carrying value of
bearer plants on that date as the deemed cost thereof as permitted by IFRS.
Restatement of comparative numbers for the 2016 financial year
For the
year ended For the
30 June 2016 year ended
as previously 30 June 2016
R million reported Adjustments Restated
Impact on income statement
Depreciation (670) (57) (727)
Fair value adjustment on exchangeable bonds' option* - (730) (730)
Other net operating expenses* (5 647) 726 (4 921)
Taxation 4 17 21
Net profit for the year 5 453 (44) 5 409
Attributable to:
Equity holders (earnings) 5 386 (22) 5 364
Non-controlling interest 67 (22) 45
(44)
Impact on headline earnings
Headline earnings 5 887 (13) 5 874
Headline earnings, excluding once-off costs
and option remeasurement 7 405 (13) 7 392
Impact on earnings per share (cents)
Headline earnings 1 143.9 (24.3) 1 119.6
Headline earnings, excluding once-off costs
and option remeasurement 1 438.9 (29.9) 1 409.0
Earnings 1 046.6 (24.2) 1 022.4
Impact on statement of comprehensive income
Net profit for the period 5 453 (44) 5 409
Total comprehensive income for the year 8 032 (44) 7 988
Total comprehensive attributable to:
Equity holders 7 965 (22) 7 943
Non-controlling interest 67 (22) 45
(44)
Impact on statement of cash flows
Cash flows from operating activities 1 457 22 1 479
Cash flows from investing activities (18 745) (22) (18 767)
* The fair value adjustment on the exchangeable bonds' option was included in "Other net operating expenses" in the 2016
income statement. In order to improve disclosure this item is now shown separately.
Restatement of comparative numbers for the 2016 financial year
As at
30 June 2016 As at
as previously 30 June 2016
R million reported Adjustments Restated
Impact on statement of financial position
ASSETS
Property, plant and equipment 6 292 208 6 500
Non-current assets - Biological agricultural assets 625 (625) -
Current assets - Biological agricultural assets 612 356 968
Total assets 109 161 (61) 109 100
LIABILITIES
Deferred taxation 1 640 (17) 1 623
Total liabilities 27 460 (17) 27 443
EQUITY
Distributable reserves 44 324 (22) 44 302
Non-controlling interest 2 835 (22) 2 813
Total equity 81 701 (44) 81 657
COMMENTS (unaudited)
1. ACCOUNTING POLICIES
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited
(JSE) for summary financial statements, and the requirements of the Companies Act applicable to summary financial
statements. The JSE requires summary financial statements 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
adoption of the amendments to IAS 16: Property, Plant and Equipment and IAS 41: Agriculture. These amendments
have to be applied retrospectively and accordingly the reported results of the comparative year were restated. The
restatements pertain to the reclassification of bearer plants from biological assets to property, plant and equipment,
the transfer of the remaining non-current biological assets (being the produce) to current biological assets and the
measurement of the reclassified assets under the appropriate accounting treatment. Refer to the section "Restatement
of comparative numbers" for further detail.
The financial statements have been prepared under the supervision of the Chief Financial Officer, Neville Williams
CA(SA).
2. RIGHTS ISSUE
During October 2016 Remgro completed a rights issue whereby 48 110 637 new ordinary shares and 3 550 635 new
B ordinary shares were issued at a subscription price of R192.50 per share for a total consideration of
R9 944.8 million. The offer to the ordinary shareholders was made in the ratio of 10 rights issue shares for every
100 ordinary shares held on the record date of the rights issue, representing an aggregate amount of
R9 261.3 million. In order to maintain the current level of voting rights of Rupert Beleggings Proprietary Limited
(Rupert Beleggings) in Remgro, and to contribute to the new equity capital being raised, Remgro offered Rupert
Beleggings the right to subscribe for 3 550 635 B ordinary shares, representing an aggregate amount of
R683.5 million. In terms of IAS 33 paragraph 26, an adjustment to the weighted average number of shares in issue
for the comparative period is required as the shares were issued at a discount to the Remgro share price on the day
before the announcement (being R243.29 per share). Consequently, the comparable weighted number of shares in
issue was adjusted by 9 994 195 shares to account for the deemed dilutive effect of the rights issue. Refer to the
section "Restatement of comparative numbers" for further detail.
3. RESULTS
Headline earnings
For the year to 30 June 2017, headline earnings increased by 40.0% from R5 874 million to R8 221 million, while
headline earnings per share (HEPS) increased by 32.7% from 1 119.6 cents to 1 485.5 cents. The difference in the
increase between headline earnings and HEPS is attributed to the impact of the rights issue during the year under
review.
Included in headline earnings for the comparative year are once-off transaction costs incurred with the Mediclinic
International Limited (Mediclinic) rights issue and Al Noor Hospitals Group plc (Al Noor) transaction amounting to
R788 million ("once-off costs"), as well as a negative fair value adjustment of R730 million, relating to the increase
in value of the bondholders' exchange option of the bonds ("option remeasurement"). The year under review
includes a positive fair value adjustment of R687 million. Excluding these items, headline earnings increased by
1.9% from R7 392 million to R7 534 million, while HEPS decreased by 3.4% from 1 409.0 cents to 1 361.3 cents.
The increase in headline earnings, excluding once-off costs and option remeasurement, is mainly due to higher
contributions from the banking and insurance platforms, KTH and higher interest income, partly offset by lower
earnings from RCL Foods and higher finance costs.
Contribution to headline earnings by reporting platform
Year ended Year ended
30 June % 30 June
2017 Change 2016
R million Restated
Healthcare 1 875 19.7 1 566
Banking 3 163 5.8 2 989
Consumer products 1 354 (15.6) 1 605
Insurance 1 041 17.2 888
Industrial 750 45.1 517
Infrastructure 36 500.0 6
Media and sport (58) (61.1) (36)
Other investments 70 4.5 67
Central treasury
- finance income 349 179.2 125
- finance costs (903) (3.6) (872)
- option remeasurement 687 194.1 (730)
Other net corporate costs (143) 43.0 (251)
Headline earnings 8 221 40.0 5 874
Once-off costs - 788
Option remeasurement (687) 730
Headline earnings, excluding once-off costs and
option remeasurement 7 534 1.9 7 392
Refer to Annexures A and B for segmental information.
Commentary on reporting platforms' performance
Healthcare
Mediclinic's contribution to Remgro's headline earnings amounted to R1 875 million (2016: R1 566 million),
representing an increase of 19.7%. It should be noted that Mediclinic's results for the comparative period include
once-off transaction costs incurred with the Al Noor transaction amounting to R891 million (Remgro's portion being
R386 million). Excluding these once-off items Mediclinic's contribution to Remgro's headline earnings would have
decreased by 3.9% from R1 952 million to R1 875 million. This decrease is mainly due to the strengthening of the
rand against the British pound. In British pound terms Mediclinic's contribution, excluding once-off transaction
costs, increased by 8.2% mainly due to Remgro's increased interest in Mediclinic (42.1% to 44.6%), the inclusion of
the results of Al Noor and Spire Healthcare Group plc (Spire) for the full twelve months and a strong performance in
Switzerland, as well as good organic growth in Southern Africa. The increase is partly offset by the underperforming
Middle East business, which was impacted by a number of operational and regulatory factors, doctor vacancies and
delayed facility openings.
Banking
The headline earnings contribution from the banking division amounted to R3 163 million (2016: R2 989 million),
representing an increase of 5.8%. FirstRand and RMBH reported headline earnings growth of 6.1% and 5.7%
respectively. On a normalised basis, which excludes certain non-operational and accounting anomalies, FirstRand
and RMBH reported earnings growth of 7.1% and 6.6% respectively. These increases are mainly due to growth in
both net interest income, underpinned by good growth in deposits and a positive endowment on the back of higher
average interest rates, and non-interest revenue due to strong growth in fee and commission income at FNB and
from realisations in RMB's private equity portfolio at marginally higher levels. This growth in earnings was partly
offset by an increase in credit impairment charges.
Consumer products
The contribution from consumer products to Remgro's headline earnings amounted to R1 354 million (2016:
R1 605 million), representing a decrease of 15.6%. RCL Foods' contribution to Remgro's headline earnings
decreased by 34.3% to R424 million (2016: R645 million). During the comparative period RCL Foods' results were
positively impacted by the release of a R163 million provision raised for uncertain tax disputes as part of the
Foodcorp acquisition, as well as a R119 million gain on the exercise of the Zam Chick and Zamhatch put options.
On a normalised basis, RCL Foods reported headline earnings growth of 7.7%. The Sugar business benefited from
price increases which helped offset reduced volumes, while the Chicken business was impacted by a massive
oversupply in the local market caused by local production and dumping of imported chicken. Unilever's contribution
to Remgro's headline earnings decreased by 2.6% to R449 million (2016: R461 million). This decrease is mainly the
result of lower tax allowances following the completion of manufacturing investments, as well as a weakening trade
environment. Distell's contribution to headline earnings, which includes the investment in Capevin Holdings,
amounted to R481 million (2016: R499 million). Distell's results were negatively impacted by a stronger rand,
particularly against the British pound, as well as intense competition and pressure on consumers. Distell reported
headline earnings growth, adjusted for foreign exchange movements, of 7.4%.
Insurance
RMI Holdings' contribution to headline earnings increased by 17.2% to R1 041 million (2016: R888 million). On a
normalised basis, RMI Holdings reported an increase of 16.4% in earnings mainly due to OUTsurance and
Discovery, which achieved earnings growth of 25.7% and 8.2% respectively. The strong result by OUTsurance was
driven by favourable claims experienced across the group, as well as a significant improvement in the cost-to-income
ratio, particularly at Youi due to scale benefits and cost efficiencies. With effect from 1 March 2017 RMI Holdings
acquired a 29.9% stake in Hastings Group Holdings plc (Hastings), a fast-growing agile digital general insurance
provider operating principally in the UK motor market. The contribution from Hastings were partially offset by
higher funding costs relating to the acquisition.
Industrial
Total's contribution to Remgro's headline earnings amounted to R224 million (2016: R291 million). The decrease is
mainly due to a lower refining margin. Remgro's share of the results of KTH amounted to a profit of R34 million
(2016: loss of R229 million). In the comparative period, KTH's results were negatively impacted by unfavourable
fair value adjustments relating to its investments in Exxaro Resources Limited and MMI Holdings Limited
preference shares. Air Products' and Wispeco's contribution to headline earnings amounted to R298 million and
R169 million respectively (2016: R275 million and R144 million), while PGSI contributed R25 million to Remgro's
headline earnings (2016: R36 million).
Infrastructure
Grindrod's contribution to Remgro's headline earnings amounted to a loss of R48 million (2016: a loss of
R45 million). The increased loss is mainly due to the underperformance of the rail assembly businesses resulting
from a lack in demand for locomotives, continued uncertainty in the mining sector and low levels of activity in
Southern Africa. The increased loss is partly offset by an improvement in dry-bulk shipping rates and commodity
markets, as well as the Agricultural businesses. For the year under review the CIV group contributed R110 million to
headline earnings (2016: R64 million). This increase is mainly due to solid growth in annuity revenue. Remgro's
share of SEACOM's loss amounted to R33 million (2016: loss of R33 million).
Media and sport
Media and sport primarily consist of the interests in eMedia Investments and various sport interests, including
interests in rugby franchises, as well as the Stellenbosch Academy of Sport. eMedia Investments' contribution to
Remgro's headline earnings increased to R49 million (2016: R28 million), mainly due to higher advertising revenue
as a result of an improvement in market share. The increase is partly offset by higher business development costs, as
well as continued investment into the multi-channel business.
Other investments
The contribution from other investments to headline earnings amounted to R70 million (2016: R67 million), of
which Business Partners' contribution was R54 million (2016: R48 million).
Central treasury and other net corporate costs
Finance income amounted to R349 million (2016: R125 million). This increase is mainly due to higher average cash
balances as a result of the Remgro rights issue. Finance costs mainly consist of funding costs amounting to
R893 million (2016: R466 million) and once-off transaction costs in the comparative period amounting to
R402 million, which relate to the Mediclinic rights issue and Al Noor transaction. The positive fair value adjustment
of R687 million relates to the decrease in the value of the exchange option of the exchangeable bonds (2016:
negative fair value adjustment of R730 million). Other net corporate costs amounted to R143 million (2016:
R251 million). The comparative period includes transaction and funding costs amounting to R115 million relating to
Remgro's acquisition of Spire. These costs were recouped from Mediclinic as part of the Spire disposal
consideration, outside headline earnings.
Earnings
Earnings increased by 57.2% to R8 431 million (2016: R5 364 million). This increase is mainly the result of the
positive fair value adjustment relating to the decrease in value of the exchange option of the exchangeable bonds
amounting to R687 million (2016: negative fair value adjustment of R730 million) and the once-off transaction costs
in the comparative period amounting to R788 million, which relate to the Mediclinic rights issue and Al Noor
transaction. The comparative period also includes an impairment of the investment in Grindrod (R1 861 million),
Remgro's portion of the impairments in Grindrod's Rail and Shipping divisions (R577 million) and Remgro's
portion of an impairment in RCL Foods' Milling business (R439 million), offset by a profit of R2 262 million
realised on the dilution of Remgro's interest in Mediclinic as part of the Al Noor transaction.
4. INTRINSIC NET ASSET VALUE
Remgro's intrinsic net asset value per share decreased by 17.9% from R306.44 at 30 June 2016 to R251.48 at
30 June 2017 mainly due to a 40.4% drop in the market value of the Mediclinic investment, as well as the dilutive
effect of the rights issue. The closing share price at 30 June 2017 was R213.46 (2016: R254.66) representing a
discount of 15.1% (2016: 16.9%) to the intrinsic net asset value. Refer to Annexure B for full details.
5. INVESTMENT ACTIVITIES
The most important investment activities during the year under review were as follows:
Community Investment Ventures Holdings Proprietary Limited (CIVH)
During September 2016 Remgro subscribed for an additional 12 353 shares in CIVH for a total amount of
R329.3 million in terms of a CIVH rights issue. As a result of the share subscription, Remgro's interest in CIVH
increased marginally to 51.0% on 30 June 2017 (2016: 50.9%).
Capevin Holdings Limited (Capevin)
During May 2017 Remgro acquired a further 30 667 156 Capevin shares for a total amount of R264.5 million. This
transaction increased Remgro's effective interest in Capevin to 19.0% (2016: 15.6%).
Invenfin Proprietary Limited (Invenfin)
During July 2016 Remgro (through its wholly owned subsidiary, Invenfin) acquired a 30% stake in Dynamic
Commodities Proprietary Limited (Dynamic Commodities) for R80.0 million. Dynamic Commodities is an export-
focused company that produces high quality frozen desserts, snacks and value-added "fresh frozen" fruit.
During August 2016, Invenfin also acquired a 30% stake in Joya Brands Proprietary Limited, a sweets manufacturer,
for R50.2 million.
Pembani Remgro Infrastructure Fund (PRIF)
On 15 August 2016 PRIF had its final close, which resulted in Remgro receiving a capital distribution of
R14.6 million, as well as an income distribution of R3.8 million. During the year under review Remgro also invested
a further R58.0 million in PRIF, thereby increasing its cumulative investment to R255.2 million. As at 30 June 2017
the remaining commitment to PRIF amounted to R394.8 million.
Other
Other smaller investments amounted to R215 million.
Events after year-end
Distell Group Limited (Distell)
During June 2017 it was announced that Distell will restructure its multi-tiered ownership structure (the Proposed
Transaction) and in order to give effect to the Proposed Transaction, Remgro will, through a number of inter-
conditional steps, exchange its existing 50% shareholding in Remgro-Capevin Investments Proprietary Limited
(RCI) for additional ordinary shares in Capevin Holdings Limited (Capevin) (RCI Exchange). Remgro currently
holds 19.0% of the ordinary shares in Capevin and after the RCI Exchange, Remgro will hold 59.5% in Capevin.
Following the RCI Exchange, Remgro will exchange its entire Capevin shareholding for ordinary shares in a new
listed entity (New Distell), which entity will be substantially similar to the current Distell. Remgro will, in addition,
also receive unlisted B shares in New Distell, which shares will be linked to those New Distell ordinary shares
acquired by Remgro in virtue of the RCI Exchange, resulting in Remgro replicating RCI's current 52.8% voting
rights in Distell. The unlisted B shares will only carry voting rights in New Distell and will have no economic
participation. The Proposed Transaction will have no impact on Remgro's intrinsic asset value and Remgro will
retain its economic interest in Distell. Post implementation of the Proposed Transaction, Remgro will, in aggregate,
have voting rights of 56.0% in New Distell. The Proposed Transaction is still subject to a number of conditions
precedent, inter alia Distell and Capevin shareholders' approvals, which is expected to be on 27 October 2017, as
well as the approval of the relevant competition authorities.
RMI Holdings Limited (RMI Holdings)
On 19 September 2017 RMI Holdings declared its final dividend for the year ended 30 June 2017, which included an
alternative to the cash dividend of either receiving a scrip distribution or reinvesting the cash dividend by subscribing
for new RMI Holdings ordinary shares. Remgro has committed to reinvesting its cash dividend amounting to
R292.3 million, by electing the reinvestment alternative, in order to receive 7 691 641 new RMI Holdings ordinary
shares at R38.00 per share.
Other than the above-mentioned transactions, there were no other significant transactions subsequent to
30 June 2017.
6. TREASURY SHARES
At 30 June 2016, 1 725 393 Remgro ordinary shares (0.4%) were held as treasury shares by a wholly owned
subsidiary of Remgro. As previously reported, these shares were acquired for the purpose of hedging Remgro's share
incentive scheme.
During the year under review 224 542 Remgro ordinary shares were utilised to settle Remgro's obligation towards
scheme participants who exercised the rights granted to them. Remgro also followed its rights with respect to
treasury shares it held when it completed the rights issue during October 2016 and subscribed for 165 787 Remgro
ordinary shares for a total amount of R32 million.
At 30 June 2017, 1 666 638 (0.3%) Remgro ordinary shares were held as treasury shares.
7. CASH RESOURCES AT THE CENTRE
The Company's cash resources at 30 June 2017 were as follows:
30 June 2017 30 June 2016
R million Local Offshore Total
Per consolidated statement of financial position 5 260 2 264 7 524 3 569
Investment in money market funds 3 815 2 073 5 888 1 050
Less: Cash of operating subsidiaries (1 170) (19) (1 189) (841)
Cash at the centre 7 905 4 318 12 223 3 778
On 30 June 2017, approximately 48% ( R5 888 million) of the available 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.
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 2017 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 registered office
of the Company.
DECLARATION OF CASH DIVIDEND
Declaration of Dividend No. 34
Notice is hereby given that a final gross dividend of 301 cents (2016: 275 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 2017.
A dividend withholding tax of 20% or 60.2 cents per share will be applicable, resulting in a net dividend of 240.8 cents per
share, unless the shareholder concerned is exempt from paying dividend withholding tax or is entitled to a reduced rate in
terms of an applicable double-tax agreement.
The total gross dividend per share for the year ended 30 June 2017 therefore amounts to 495 cents, compared to 460 cents for
the year ended 30 June 2016.
The issued share capital at the declaration date is 529 217 007 ordinary shares and 39 056 987 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 Tuesday, 14 November 2017
Shares trade ex dividend Wednesday, 15 November 2017
Record date Friday, 17 November 2017
Payment date Monday, 20 November 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 15 Novemer 2017, and Friday,
17 November 2017, 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 are no longer issued. 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.
Signed on behalf of the Board of Directors.
Johann Rupert Jannie Durand
Chairman Chief Executive Officer
Stellenbosch
20 September 2017
DIRECTORATE
Non-executive directors
Johann Rupert (Chairman), E de la H Hertzog (Deputy Chairman),
J Malherbe (Deputy Chairman), S E N De Bruyn Sebotsa*, G T Ferreira*,
P K Harris*, N P Mageza*, P J Moleketi*, M Morobe*,
F Robertson*
(*Independent)
Executive directors
J J Durand (Chief Executive Officer),
W E Bührmann, M Lubbe, N J Williams
CORPORATE INFORMATION
Secretary
D I Heynes
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,
Rosebank Towers, 15 Biermann Avenue, Rosebank 2196
(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
2017 2016
R million Restated
Healthcare
Mediclinic 1 875 1 566
Banking
RMBH 2 232 2 112
FirstRand 931 877
Consumer products
Unilever 449 461
Distell(1) 481 499
RCL Foods 424 645
Insurance
RMI Holdings 1 041 888
Industrial
Air Products 298 275
KTH 34 (229)
Total 224 291
PGSI 25 36
Wispeco 169 144
Infrastructure
Grindrod (48) (45)
CIV group 110 64
SEACOM (33) (33)
Other infrastructure interests 7 20
Media and sport
eMedia Investments 49 28
Other media and sport interests (107) (64)
Other investments 70 67
Central treasury
Finance income 349 125
Finance costs(2) (216) (1 602)
Other net corporate costs (143) (251)
Headline earnings 8 221 5 874
Weighted number of shares (million) 553.4 524.6
Headline earnings per share (cents) 1 485.5 1 119.6
Notes
1. Includes the investment in Capevin Holdings Limited.
2. Finance costs for the year under review include a positive option remeasurement of R687 million. The prior year includes a
negative option remeasurement of R730 million and once-off costs of R402 million.
ANNEXURE B
COMPOSITION OF INTRINSIC NET ASSET VALUE
30 June 2017 30 June 2016
Book value Intrinsic value Book value Intrinsic value
R million Restated
Healthcare
Mediclinic 33 763 41 568 33 629 69 691
Banking
RMBH 14 016 23 350 13 132 22 356
FirstRand 5 010 10 365 4 652 9 857
Consumer products
Unilever 3 737 10 702 3 589 10 650
Distell(1) 3 727 9 556 3 500 10 723
RCL Foods 7 553 10 173 7 272 9 278
Insurance
RMI Holdings 7 277 17 532 7 157 18 526
Industrial
Air Products 1 047 4 298 933 4 241
KTH 1 684 2 466 1 631 2 723
Total 1 640 2 167 1 575 1 879
PGSI 643 643 734 734
Wispeco 821 1 368 702 1 055
Infrastructure
Grindrod 1 915 1 915 1 986 1 986
CIV group 2 242 4 829 1 871 3 166
SEACOM 321 896 655 1 043
Other infrastructure interests 520 520 540 540
Media and sport
eMedia Investments 1 147 1 424 1 116 1 342
Other media and sport interests 365 319 328 328
Other investments 3 947 3 932 3 737 3 717
Central treasury
Cash at the centre(2) 12 223 12 223 3 778 3 778
Debt at the centre (13 907) (13 907) (16 452) (16 452)
Other net corporate assets 2 741 3 164 2 779 3 149
Intrinsic net asset value (INAV) 92 432 149 503 78 844 164 310
Potential CGT liability(3) (7 010) (6 526)
INAV after tax 92 432 142 493 78 844 157 784
Issued shares after deduction of shares
repurchased (million) 566.6 566.6 514.9 514.9
INAV after tax per share (Rand) 163.13 251.48 153.13 306.44
Remgro share price (Rand) 213.46 254.66
Percentage discount to INAV 15.1 16.9
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 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 net asset value, the unlisted investments are shown at directors' valuation and the listed
investments are shown at stock exchange prices.
Date: 20/09/2017 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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