REMGRO LIMITED - Unaudited results for the six months ended 31 December 2017 and cash dividend declaration

Release Date: 15/03/2018 17:00
Code(s): REM
 
Wrap Text
Unaudited results for the six months ended 31 December 2017 and cash dividend declaration

REMGRO LIMITED
Registration number 1968/006415/06
ISIN ZAE000026480 Share code REM

INTERIM REPORT

UNAUDITED RESULTS FOR
THE SIX MONTHS ENDED
31 DECEMBER 2017
AND
CASH DIVIDEND DECLARATION

SALIENT FEATURES
- Intrinsic net asset value per share                           +5.7%

- Interim dividend per share                                    +5.2%

- Headline earnings per share, excluding option remeasurement   +1.3%

- Headline earnings per share                                  -10.4%

SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                                          31 December   31 December   30 June   
R million                                                                                        2017          2016      2017   
ASSETS                                                                                                                          
Non-current assets                                                                                                              
Property, plant and equipment                                                                   6 741         6 767     6 668   
Investment properties                                                                             130           119       129   
Intangible assets                                                                               4 873         4 936     4 927   
Investments - Equity accounted                                                                 80 184        78 072    80 883   
- Available-for-sale                                                                            2 937         3 152     3 345   
Retirement benefits                                                                               204           152       201   
Loans                                                                                             573           616       562   
Deferred taxation                                                                                  22            40        23   
                                                                                               95 664        93 854    96 738   
Current assets                                                                                 23 179        22 937    22 317   
Inventories                                                                                     3 645         3 621     3 055   
Biological agricultural assets                                                                    619           709       791   
Debtors and short-term loans                                                                    5 730         5 493     4 885   
Investment in money market funds                                                                5 849         3 569     5 888   
Cash and cash equivalents                                                                       7 227         9 458     7 524   
Other current assets                                                                               93            32        85   
                                                                                               23 163        22 882    22 228   
Assets held for sale                                                                               16            55        89   
Total assets                                                                                  118 843       116 791   119 055   
EQUITY AND LIABILITIES                                                                                                          
Stated capital                                                                                 13 416        13 418    13 416   
Reserves                                                                                       78 933        76 171    79 235   
Treasury shares                                                                                 (189)         (231)     (219)   
Shareholders' equity                                                                           92 160        89 358    92 432   
Non-controlling interest                                                                        3 009         2 812     2 870   
Total equity                                                                                   95 169        92 170    95 302   
Non-current liabilities                                                                        18 161        18 935    18 493   
Retirement benefits                                                                               183           182       173   
Long-term loans                                                                                16 278        16 882    16 446   
Deferred taxation                                                                               1 473         1 471     1 511   
Derivative instruments                                                                            227           400       363   
Current liabilities                                                                             5 513         5 686     5 260   
Trade and other payables                                                                        4 625         4 671     4 710   
Short-term loans                                                                                  741           826       480   
Other current liabilities                                                                         147           189        69   
                                                                                                5 513         5 686     5 259   
Liabilities held for sale                                                                           -             -         1   
Total equity and liabilities                                                                  118 843       116 791   119 055   
Net asset value per share (Rand)                                                                                                
- At book value                                                                               R162.59       R157.73   R163.13   
- At intrinsic value                                                                          R265.84       R257.79   R251.48   

SUMMARY CONSOLIDATED INCOME STATEMENT

                                                                                        Six months ended           Year ended
                                                                                     31 December    31 December       30 June
                                                                                            2017           2016          2017
R million                                                                                             Restated*
Sales                                                                                     14 046         14 511        27 600
Inventory expenses                                                                       (6 804)        (7 917)      (16 138)
Staff costs                                                                              (2 522)        (2 456)       (4 972)
Depreciation                                                                               (362)          (379)         (752)
Other net operating expenses*                                                            (3 617)        (3 351)       (4 978)
Trading profit                                                                               741            408           760
Dividend income                                                                               48             19            61
Interest received                                                                            414            238           633
Fair value adjustment on exchangeable bonds' option*                                         134            667           687
Finance costs                                                                              (614)          (648)       (1 255)
Net impairment of investments, loans, assets and goodwill                                    645            593           105
Profit on sale and dilution of investments                                                   120              3           199
Consolidated profit before tax                                                             1 488          1 280         1 190
Taxation                                                                                   (272)          (118)         (227)
Consolidated profit after tax                                                              1 216          1 162           963
Share of after-tax profit of equity accounted investments                                  3 015          4 075         7 545
Net profit for the period                                                                  4 231          5 237         8 508

Attributable to:
Equity holders                                                                            4 131           5 219         8 431
Non-controlling interest                                                                    100              18            77
                                                                                          4 231           5 237         8 508


EQUITY ACCOUNTED INVESTMENTS
Share of after-tax profit of equity accounted investments
Profit before taking into account impairments, non-recurring and
 capital items                                                                             5 380           5 466       10 066
Net impairment of investments, assets and goodwill                                       (1 170)           (308)        (668)
Profit on the sale of investments                                                            108             154          325
Other non-recurring and capital items                                                         13              33          101
Profit before tax and non-controlling interest                                             4 331           5 345        9 824
Taxation                                                                                 (1 096)         (1 079)      (1 895)
Non-controlling interest                                                                   (220)           (191)        (384)
                                                                                           3 015           4 075        7 545

* The fair value adjustment on the exchangeable bonds' option was included in "Other net operating expenses" in the
  December 2016 income statement. As previously reported and in order to improve disclosure, this item is now presented
  separately.

HEADLINE EARNINGS RECONCILIATION
                                                                                           Six months ended        Year ended
                                                                                      31 December    31 December      30 June
R million                                                                                    2017           2016         2017
Net profit for the period attributable to equity holders (earnings)                         4 131          5 219        8 431   
Plus/(minus):                                                                                                                   
- Net impairment of equity accounted investments                                            (654)          (738)        (302)   
- Impairment of available-for-sale investments                                                  -              -            5   
- Impairment of property, plant and equipment                                                   8            145          181   
- (Profit)/loss on sale and dilution of equity accounted investments                          (4)              5        (199)   
- Profit on sale of available-for-sale investments                                          (116)            (8)            -   
- Net surplus on disposal of property, plant and equipment                                   (45)           (18)        (110)   
- Non-headline earnings items included in earnings of equity accounted                                                          
investments                                                                                 1 048            128          223   
-   Net (surplus)/loss on disposal of property, plant and equipment                           (1)              7         (19)   
-   Profit on the sale of investments                                                       (108)          (154)        (325)   
-   Net impairment of investments, assets and goodwill                                      1 170            308          668   
-   Other non-recurring and capital items                                                    (13)           (33)        (101)   
- Taxation effect of adjustments                                                               32           (22)            5   
- Non-controlling interest                                                                      6           (21)         (13)   
Headline earnings                                                                           4 406          4 690        8 221   
Option remeasurement                                                                        (134)          (667)        (687)   
Headline earnings, excluding option remeasurement                                           4 272          4 023        7 534   

EARNINGS AND DIVIDENDS

                                                                                          Six months ended         Year ended
                                                                                    31 December      31 December         June
Cents                                                                                      2017             2016         2017
Headline earnings per share
- Basic                                                                                   777.5            867.7      1 485.5
- Diluted                                                                                 772.8            863.9      1 479.5

Headline earnings per share, excluding option remeasurement
- Basic                                                                                   753.9            744.3      1 361.3
- Diluted                                                                                 749.1            740.7      1 355.5

Earnings per share
- Basic                                                                                   729.0            965.6      1 523.4
- Diluted                                                                                 725.2            960.8      1 517.2

Dividends per share
Ordinary                                                                                 204.00           194.00       495.00
- Interim                                                                                204.00           194.00       194.00
- Final                                                                                       -                -       301.00

SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                                        Six months ended           Year ended
                                                                                    31 December   31 December         30 June
R million                                                                                  2017          2016            2017

Net profit for the period                                                                 4 231         5 237           8 508   
Other comprehensive income, net of tax                                                  (2 774)       (2 976)         (2 097)   
Items that may be reclassified subsequently to the income statement:                                           
Exchange rate adjustments                                                               (1 182)       (4 570)         (4 477)   
Fair value adjustments for the period                                                       (2)         (117)              69   
Deferred taxation on fair value adjustments                                                  12            53              21   
Reclassification of other comprehensive income to the                                                                           
income statement                                                                           (98)           (9)            (20)   
Other comprehensive income of equity accounted investments                              (1 694)         1 801           2 245   
Items that will not be reclassified to the income statement:                                                                    
Remeasurement of post-employment benefit obligations                                          -             -              68   
Deferred taxation on remeasurement of post-employment benefit                                                                   
obligations                                                                                   -             -            (19)   
Change in reserves of equity accounted investments                                          190         (134)              16   
Total comprehensive income for the period                                                 1 457         2 261           6 411   
Total comprehensive income attributable to:                                                                                     
Equity holders                                                                            1 356         2 244           6 338   
Non-controlling interest                                                                    101            17              73   
                                                                                          1 457         2 261           6 411   


SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                                        Six months ended           Year ended
                                                                                    31 December   31 December         30 June
R million                                                                                  2017          2016            2017

Balance at the beginning of the period                                                   95 302        81 657          81 657   
Total comprehensive income for the period                                                 1 457         2 261           6 411   
Dividends paid                                                                          (1 747)       (1 589)         (2 708)   
Transactions with non-controlling shareholders                                               63             5              18   
Other movements                                                                               7             7              18   
Long-term share incentive scheme reserve                                                     87            48             127   
Shares issued                                                                                 -         9 945           9 945   
Share issue costs                                                                             -         (132)           (134)   
Purchase of treasury shares by wholly owned subsidiary                                        -          (32)            (32)   
Balance at the end of the period                                                         95 169        92 170          95 302   


SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                        Six months ended           Year ended
                                                                                    31 December      31 December      30 June
R million                                                                                  2017             2016         2017     
Cash generated from operations                                                              203              465        2 874   
Taxation paid                                                                             (204)            (120)        (363)   
Dividends received¹                                                                       2 205            2 509        4 163   
Finance costs                                                                             (570)            (611)      (1 179)   
Cash available from operating activities                                                  1 634            2 243        5 495   
Dividends paid                                                                          (1 747)          (1 589)      (2 708)   
Net cash inflow/(outflow) from operating activities                                       (113)              654        2 787   
Investing activities1, 2                                                                  (128)          (3 569)      (6 572)   
Financing activities3                                                                      (58)            8 997        8 553   
Net increase/(decrease) in cash and cash equivalents                                      (299)            6 082        4 768   
Exchange rate loss on foreign cash                                                        (268)            (231)        (424)   
Cash and cash equivalents at the beginning of the period                                  7 472            3 128        3 128   
Cash and cash equivalents at the end of the period                                        6 905            8 979        7 472   
Cash and cash equivalents - per statement of financial position                           7 227            9 458        7 524   
Bank overdraft                                                                            (322)            (479)         (52)   


1.   The dividend received from RMI Holdings in respect of the reinvestment alternative (refer to the section dealing with
     "Investment activities"), amounting to R292 million, is not included in "Dividends received" and "Investing activities"
     for cash flow purposes.
2.   "Investing activities" for the comparative period primarily consisted of an increase in money market funds of
     R2 519 million.
3.   "Financing activities" for the comparative period included the Remgro rights issue of R9 813 million.

ADDITIONAL INFORMATION
                                                                              31 December        31 December          30 June
                                                                                     2017               2016             2017
Number of shares in issue
- Ordinary shares of no par value                                             529 217 007        529 217 007      529 217 007
- Unlisted B ordinary shares of no par value                                   39 056 987         39 056 987       39 056 987
Total number of shares in issue                                               568 273 994        568 273 994      568 273 994
Number of shares held in treasury
- Ordinary shares repurchased and held in treasury                            (1 432 501)        (1 756 218)      (1 666 638)
                                                                              566 841 493        566 517 776      566 607 356

Weighted number of shares                                                     566 682 343        540 505 301      553 423 346

In determining earnings per share and headline earnings per share the weighted number of shares was taken into account.

                                                                                          31 December   31 December   30 June   
R million                                                                                        2017          2016      2017   
Equity accounted investments                                                                                                    
Associates                                                                                     74 451        72 536    75 392   
Joint ventures                                                                                  5 733         5 536     5 491   
                                                                                               80 184        78 072    80 883   
Equity accounted investment reconciliation                                                                                      
Carrying value at the beginning of the period                                                  80 883        78 565    78 565   
Share of net attributable profit                                                                3 015         4 075     7 545   
Dividends received                                                                            (2 304)       (2 109)   (3 861)   
Dilutionary effects                                                                                 2           (6)       196   
Exchange rate differences                                                                       (940)       (5 372)   (4 947)   
Grindrod impairment reversal                                                                      654           724       478   
Movements on reserves                                                                         (1 504)         1 667     2 256   
Other movements                                                                                   378           528       651   
Carrying value at the end of the period                                                        80 184        78 072    80 883   
Long-term loans                                                                                                                 
20 000 Class A 7.7% cumulative redeemable preference shares                                     3 513         3 513     3 512   
10 000 Class B 8.3% cumulative redeemable preference shares                                     4 383         4 383     4 382   
Exchangeable bonds with an effective interest rate of 4.5%                                      5 533         5 530     5 650   
Various other loans                                                                             3 084         3 597     3 127   
                                                                                               16 513        17 023    16 671   
Short-term portion of long-term loans                                                           (235)         (141)     (225)   
                                                                                               16 278        16 882    16 446   
Additions to and replacement of property, plant and equipment                                     336           802     1 228   
Capital and investment commitments                                                              1 330         1 433     1 247   
(Including amounts authorised, but not yet contracted for)                                                                      
Guarantees and contingent liabilities                                                              25           239        26   
Dividends received from equity accounted investments set off                                                                    
against investments                                                                             2 304         2 109     3 861   


Refer to the section dealing with "Investment activities" for
more detail on significant 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   
31 December 2017                                                                                                                 
Assets                                                                                                                           
Available-for-sale                                                                           1 093         -     1 844   2 937   
Derivative instruments                                                                           -         8         -       8   
Investment in money market funds                                                             5 849         -         -   5 849   
                                                                                             6 942         8     1 844   8 794   
Liabilities                                                                                                                      
Non-current derivative instruments                                                               -       227         -     227   
Current derivative instruments                                                                   -        14        49      63   
                                                                                                 -       241        49     290   
31 December 2016                                                                                                                 
Assets                                                                                                                           
Available-for-sale                                                                           1 040         -     2 112   3 152   
Derivative instruments                                                                           -         2         -       2   
Investment in money market funds                                                             3 569         -         -   3 569   
                                                                                             4 609         2     2 112   6 723   
Liabilities                                                                                                                      
Non-current derivative instruments                                                               -       400         -     400   
Current derivative instruments                                                                   -        39        54      93   
                                                                                                 -       439        54     493   
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

The following table illustrates the reconciliation of the carrying value of level 3 assets from the beginning to the end of the
period:

                                                                                           31 December   31 December   30 June   
R million                                                                                         2017          2016      2017   
Assets: Available-for-sale                                                                                                       
Balances at the beginning of the period                                                          2 167         2 148     2 148   
Additions                                                                                           56            26       119   
Disposals                                                                                        (350)          (57)      (67)   
Exchange rate adjustments                                                                        (103)         (109)     (178)   
Fair value adjustments through comprehensive income                                                 74           104       145   
Balances at the end of the period                                                                1 844         2 112     2 167   
Liabilities: Derivative instruments                                                                                              
Balances at the beginning of the period                                                             49            54        54   
Remeasurements                                                                                       -             -       (5)   
Balances at the end of the period                                                                   49            54        49   


There were no transfers between the different levels.

Level 3 financial assets consist mainly of investments in the Milestone China entities (Milestone) and the Pembani Remgro
Infrastructure Fund (PRIF) amounting to R1 492 million and R228 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 (45%), cash and cash equivalents (6%) and unlisted investments (49%).
Unlisted investments included at recent transaction prices in Milestone's fair value amounted to R400 million, while its
remaining nine unlisted investments were valued at R328 million and is considered to be immaterial. PRIF's main assets are
the investments in ETG Group and Lumos Global. The fund values its investments using appropriate revenue and earnings
multiples based on peer group companies to determine a price-to-book valuation.

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.

COMMENTS


1. ACCOUNTING POLICIES

   The interim report is prepared in accordance with the recognition and measurement principles of International
   Financial Reporting Standards (IFRS), including IAS 34: Interim Financial Reporting, 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 in accordance with the requirements of the Companies Act (No. 71 of
   2008), as amended, and the Listings Requirements of the JSE Limited. The financial statements have been prepared
   under the supervision of the Chief Financial Officer, Neville Williams CA(SA). The interim report has not been
   audited or reviewed.

   These financial statements incorporate accounting policies that are consistent with those of the previous financial
   periods, with the exception of the adoption of the amendments to IAS 7: Cash flow statements, IAS 12: Income taxes
   and IFRS 12: Disclosure of interest in other entities. The implementation of these interpretations and amendments
   had no impact on the results of either the current or prior periods.

2. RESULTS
   Headline earnings
   For the period under review, headline earnings decreased by 6.1% from R4 690 million to R4 406 million, while
   headline earnings per share (HEPS) decreased by 10.4% from 867.7 cents to 777.5 cents. The difference in the
   decrease between headline earnings and HEPS is attributed to the impact of the rights issue during the comparative
   period.

   Included in headline earnings for the period under review is a positive fair value adjustment amounting to
   R134 million (2016: R667 million), relating to the decrease in value of the bondholders' exchange option of the
   exchangeable bonds ("option remeasurement"). Excluding the option remeasurement, headline earnings increased by
   6.2% from R4 023 million to R4 272 million, while HEPS increased by 1.3% from 744.3 cents to 753.9 cents. The
   increase in headline earnings, excluding option remeasurement, is mainly due to higher earnings from RCL Foods,
   Total, RMI Holdings and higher finance income, offset by a lower contribution from Mediclinic.

   Contribution to headline earnings by reporting platform

                                                                                                             Year ended   
                                                                                  31 Dec        %   31 Dec      30 June   
   R million                                                                        2017   Change     2016         2017   
   Banking                                                                         1 678      6.2    1 580        3 163   
   Healthcare                                                                        487   (50.5)      983        1 875   
   Consumer products                                                               1 140     20.6      945        1 354   
   Insurance                                                                         626     27.2      492        1 041   
   Industrial                                                                        551     29.3      426          750   
   Infrastructure                                                                     32    113.3       15           36   
   Media and sport                                                                  (18)     28.0     (25)         (58)   
   Other investments                                                                  29   (25.6)       39           70   
   Central treasury                                                                                                       
   - finance income                                                                  259    146.7      105          349   
   - finance costs                                                                 (452)      2.2    (462)        (903)   
   - option remeasurement                                                            134   (79.9)      667          687   
   Other net corporate costs                                                        (60)     20.0     (75)        (143)   
   Headline earnings                                                               4 406    (6.1)    4 690        8 221   
   Option remeasurement                                                            (134)             (667)        (687)   
   Headline earnings, excluding option remeasurement                               4 272      6.2    4 023        7 534 

   Refer to Annexures A and B for segmental information.                                           
   
   Commentary on reporting platforms' performance
   
   Banking
   The headline earnings contribution from the banking division amounted to R1 678 million (2016: R1 580 million),
   representing an increase of 6.2%. FirstRand and RMH reported headline earnings growth of 6.0% and 6.2%
   respectively. On a normalised basis, which excludes certain non-operational and accounting anomalies, FirstRand
   and RMH reported earnings growth of 7.0% and 7.2% respectively. These increases are mainly due to growth in both
   net interest income, underpinned by good growth in advances and deposits, and non-interest revenue due to strong
   growth in fee and commission income.
   
   Healthcare
   Mediclinic's contribution to Remgro's headline earnings amounted to R487 million (2016: R983 million),
   representing a decrease of 50.5%. It should be noted that all the Al Noor facilities were rebranded to Mediclinic and
   therefore Mediclinic's contribution for the period under review included an accelerated amortisation charge of
   R171 million relating to the Al Noor trade name. Excluding the impact of the accelerated amortisation, Mediclinic's
   contribution to Remgro's headline earnings would have decreased by 33.1% from R983 million to R658 million. The
   strengthening of the rand against the Swiss franc, British pound and United Arab Emirates dirham also had a
   negative impact on Mediclinic's contribution. In British pound terms Mediclinic's contribution, excluding the
   accelerated amortisation, decreased by 20.4% mainly due to a weaker performance by the Hirslanden and Middle
   East operating divisions and a decrease in the equity accounted earnings from Spire. Hirslanden's comparative period
   also included a positive past service cost adjustment of GBP10 million, while Spire's contribution to Mediclinic's results
   included a provision of GBP7 million for the potential cost of a settlement relating to civil litigation against a consultant
   who previously had practicing privileges at Spire.
   
   Consumer products
   The contribution from consumer products to Remgro's headline earnings amounted to R1 140 million 
   (2016: R945 million), representing an increase of 20.6%. RCL Foods' contribution to Remgro's headline earnings increased
   by 56.6% to R498 million (2016: R318 million). The increase is mainly due to an improved result in the Chicken
   business unit as a result of a revised business model, lower feed prices and improved realisations. On a normalised
   basis, which excludes certain once-off items in the comparative period, relating to the settlement of the Zam Chick
   and Zamhatch put options and costs incurred on the implementation of the revised Chicken business model, RCL
   Foods reported headline earnings growth of 35.3%. Unilever's contribution to Remgro's headline earnings increased
   by 9.5% to R288 million (2016: R263 million). This increase is mainly due to an improvement in gross margins as a
   result of cost control. Distell's contribution to headline earnings, which includes the investment in Capevin
   Holdings, amounted to R354 million (2016: R364 million). Distell's results for the period under review were
   negatively impacted by once-off losses and write-offs amounting to R78 million in its associate, Tanzania
   Distilleries Limited, following a sachet ban and excise duty dispute. The comparative period included a reversal of a
   provision for interest payable in respect of an extended excise duty dispute of R42 million. Distell reported headline
   earnings growth, adjusted for foreign exchange movements and the aforementioned once-off items, of 3.2%, mainly
   driven by a 9.3% increase in revenue achieved across all regions and categories.
   
   Insurance
   RMI Holdings' contribution to headline earnings increased by 27.2% to R626 million (2016: R492 million). On a
   normalised basis, RMI Holdings reported an increase of 25.8% in earnings mainly due to Discovery and
   OUTsurance (excluding Hastings), which achieved earnings growth of 29.5% and 11.3% respectively. The strong
   result by Discovery was driven by both established and emerging businesses, while OUTsurance's results were
   driven by Youi's growth in operating profit as a result of lower natural peril claims in Australia. The contribution
   from Hastings were partially offset by higher funding costs relating to its acquisition in the prior year.
   
   Industrial
   Total's contribution to Remgro's headline earnings amounted to R258 million (2016: R102 million). Included in the
   contribution to headline earnings for the period under review are favourable stock revaluations amounting to
   R135 million (2016: unfavourable stock revaluations of R28 million). These revaluations are the result of the
   volatility in the Brent Crude price and the rand exchange rate. Excluding these revaluations, the contribution
   decreased by 5.4% from R130 million to R123 million mainly due to a lower refining margin, the impact of planned
   and unplanned refinery shutdowns and a less favourable economic environment. Remgro's share of the results of
   KTH amounted to R73 million (2016: R58 million), mainly due to lower finance costs as a result of the repayment
   of debt following the disposal of the investment in Exxaro Resources Limited. Air Products' and Wispeco's
   contribution to headline earnings amounted to R142 million and R62 million respectively (2016: R151 million and
   R90 million), while PGSI contributed R16 million to Remgro's headline earnings (2016: R25 million).

   Infrastructure
   Grindrod's contribution to Remgro's headline earnings amounted to a loss of R52 million (2016: a loss of
   R18 million), impacted by stock impairments in the rail assembly business due to the closure of this business unit.
   This decrease was partly offset by improved results across core businesses mainly due to increased commodity
   demand and stronger drybulk shipping rates. For the period under review the CIV group contributed R32 million to
   headline earnings (2016: R44 million). This decrease is mainly due to higher finance costs and depreciation as a
   result of the expanding network, as well as lower equity accounted income due to the disposal of the CIV group's
   investment in Dartcom SA Proprietary Limited. Remgro's share of SEACOM's profit amounted to R32 million
   (2016: loss of R18 million). This increase is mainly due to improved results in South Africa and Kenya, as well as a
   once-off realisation of deferred revenue relating to the early termination of long term contracts.

   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 decreased to R3 million (2016: R33 million). This decrease is mainly due to a
   significant decline in license revenue resulting from a renegotiated DStv agreement.

   Other investments
   The contribution from other investments to headline earnings amounted to R29 million (2016: R39 million), of
   which Business Partners' contribution was R29 million (2016: R23 million).

   Central treasury and other net corporate costs
   Finance income amounted to R259 million (2016: R105 million). This increase is mainly due to higher average cash
   balances as a result of the Remgro rights issue in the comparative period. Finance costs amounted to R452 million
   (2016: R462 million). The positive fair value adjustment of R134 million (2016: R667 million) relates to the
   decrease in the value of the exchange option of the exchangeable bonds. Other net corporate costs amounted to
   R60 million (2016: R75 million).

   Earnings
   Earnings decreased by 20.8% to R4 131 million (2016: R5 219 million). This decrease is mainly the result of the
   lower positive fair value adjustment, relating to the decrease in value of the exchange option of the exchangeable
   bonds of R134 million (2016: R667 million), as well as Remgro's portion of the impairment of Mediclinic's
   investment in Spire amounting to R830 million.

3. INTRINSIC NET ASSET VALUE

   Remgro's intrinsic net asset value per share increased by 5.7% from R251.48 at 30 June 2017 to R265.84 at
   31 December 2017. The closing share price at 31 December 2017 was R236.00 (30 June 2017: R213.46)
   representing a discount of 11.2% (30 June 2017: 15.1%) to the intrinsic net asset value. Refer to Annexure B for full
   details.

4. INVESTMENT ACTIVITIES
   The most important investment activities during the period under review were as follows:

   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 elected to reinvest its cash dividend amounting to R292.3 million,
   and received 7 691 641 new RMI Holdings ordinary shares at R38.00 per share. Remgro's interest in RMI Holdings
   increased marginally from 29.9% on 30 June 2017 to 30.1% on 31 December 2017.

   Kagiso Infrastructure Empowerment Fund (KIEF)
   During the period under review, Remgro disposed of its investment in KIEF, realising a profit on disposal of
   R102.8 million on the transaction. Remgro initially committed funds amounting to R350 million to KIEF, which had
   a target size of R650 million and aimed to invest in infrastructure projects, including roads, airports, power and
   telecommunication installations, railway systems, ports, water and social infrastructure. In total, Remgro invested
   R285.3 million in KIEF and received income and capital distributions amounting to R380.5 million, which includes
   the proceeds on disposal of KIEF.

   Other
   Other smaller investments amounted to R122 million.

   Events after 31 December 2017

   Distell Group Limited (Distell)
   During June 2017 it was announced that Distell will restructure its multi-tiered ownership structure. In terms of the
   restructuring, Remgro will subscribe for listed ordinary shares and unlisted B shares in a new listed entity (New
   Distell). The listed ordinary shares will give Remgro the same 31.8% economic interest, while the unlisted B shares,
   though not having any economic rights, will increase Remgro's voting rights in New Distell to 56.0%. The
   restructuring is still subject to the approval by the relevant competition authorities.

   Unilever South Africa Holdings Proprietary Limited (Unilever)
   On 22 September 2017 it was announced that Unilever will acquire Remgro's 25.75% shareholding in Unilever in
   exchange for the Unilever Spreads business in Southern Africa, as well as a cash consideration of R4.9 billion,
   representing a total transaction value of R11.9 billion. This transaction values the Unilever Spreads business at
   R7.0 billion. The transaction is still subject to the approval by the relevant competition authorities.

   RMI Holdings Limited (RMI Holdings)
   On 12 March 2018 RMI Holdings declared its interim dividend for the six months ended 31 December 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 R178.4 million, by electing the reinvestment alternative, in order to receive 4 196 921 new RMI
   Holdings ordinary shares at R42.50 per share.

   Other than the above-mentioned transactions, there were no other significant transactions subsequent to
   31 December 2017.

5. INFORMATION REGARDING UNLISTED INVESTMENTS
   Unilever South Africa Holdings Proprietary Limited (Unilever)
   Unilever has a 31 December year-end and its results for the six months to 31 December 2017 have been included in
   Remgro's results for the period under review. Unilever's contribution to Remgro's headline earnings for the six
   months under review increased by 9.5% to R288 million (2016: R263 million). The higher headline earnings
   contribution was mainly due to improvements in trading results, gross margins and cost control, which resulted in
   strong operating income in 2017.

   Air Products South Africa Proprietary Limited (Air Products)
   Air Products has a September year-end and its results for the six months ended 30 September 2017 have been
   included in Remgro's results for the period under review. Air Products' contribution to Remgro's headline earnings
   for the period under review decreased by 6.0% to R142 million (2016: R151 million).

   Turnover for Air Products' six months ended 30 September 2017 increased by 3.1% to R1 492 million 
   (2016: R1 447 million), while the company's operating profit for the same period remained unchanged at
   R436 million (2016: R436 million).

   The period under review saw difficult trading conditions with depressed demand for the company's products in most
   sectors of the business.

   Kagiso Tiso Holdings Proprietary Limited (KTH)
   KTH is a leading black-owned investment company with a strong and diversified asset portfolio covering the
   resources, industrial, media, financial services, healthcare, property and information technology sectors.

   KTH's contribution to Remgro's headline earnings for the period under review amounted to R73 million 
   (2016: R58 million). The increase in headline earnings was mainly due to the decrease in net finance cost to R117 million
   (2016: R219 million) resulting from the repayment of debt at the centre following the disposal of the investment in
   Exxaro Resources Limited (Exxaro). Exxaro's contribution to KTH's headline earnings for the period under review
   amounted to R69 million (2016: R134 million), which included the profit on disposal thereof (included in headline
   earnings).

   KTH's loss attributable to ordinary shareholders amounted to R138 million (2016: R383 million profit). The loss is
   mainly due to the impairment of the investment in Actom Proprietary Limited of R412 million, partly offset by the
   reversal of impairment of XR Platinum Partnership (R146 million), while the comparative period included the profit
   on disposal of Idwala Holdings Limited (R308 million).
   
   Income from equity accounted investments decreased to R50 million (2016: R57 million) partly due to lower
   contributions from other associates, joint ventures and partnerships as a result of the current difficult macro-
   economic conditions. The major contributors to equity accounted earnings during the reporting period were the
   investments in MMI Holdings Limited and Fidelity Bank (Ghana) Limited.
   
   Total South Africa Proprietary Limited (Total)
   Total has a December year-end and its results for the six months to 31 December 2017 have been included in
   Remgro's results for the period under review. Total's contribution to Remgro's headline earnings for the six months
   to 31 December 2017 amounted to R258 million (2016: R102 million).
   
   Total's turnover for the six months ended 31 December 2017 increased by 12.9% to R30 196 million 
   (2016: R26 747 million), mainly due to a price increase and increased sales volumes in the mining and reseller sector during
   the period under review.
   
   The results were positively impacted by stock revaluation gains of R753 million (2016: loss of R156 million) due to
   the increase in the average basic fuel price and in crude prices during the period under review.
   
   Total experienced lower refining margins during the period under review in comparison to 2016, due to the impact of
   a major planned shutdown during October and November 2017, other unplanned shutdowns and a less favourable
   economic environment.
   
   PGSI Limited (PGSI)
   PGSI's contribution to Remgro's headline earnings for the six months to 31 December 2017 amounted to
   R16 million (2016: R25 million). PGSI's turnover for the period under review increased from R2 105 million to
   R2 171 million. The group's normalised operating profit, which excludes the impact of asset impairments, decreased
   from R159 million to R114 million.
   
   The group's main operating subsidiary in South Africa, PG Group, manufactures and supplies glass for the building
   and automotive industries. The building glass businesses reported a decline in profits due to weak domestic demand
   and growing pressure on selling prices in a competitive and oversupplied market.
   
   The automotive businesses were negatively impacted by economic pressures on consumers, lower claims from the
   insurance sector and weaker demand in export markets. The strong rand negatively impacted automotive export
   profitability. Supplies to local automotive assembly operations have been challenged by very competitive pricing,
   especially out of China. Original Equipment Manufacturers benchmarking prices with global competitors, who have
   the advantage of better economies of scale, also compressed margins.
   
   The Rest of Africa businesses, which have shown robust growth over the past few years, reported a decline in
   profitability with many regions impacted by weaker economic activity, as well as political instability in some
   regions.
   
   The group made good progress in reducing costs and improving manufacturing quality and efficiencies. This has
   established a sound strategic base for future growth.
   
   Wispeco Holdings Proprietary Limited (Wispeco)
   Wispeco's turnover for the six months ended 31 December 2017 decreased by 7.4% to R1 076 million 
   (2016: R1 162 million). This decrease resulted from sales volumes being lower in a market where price competition is
   intense and margins are under pressure. Headline earnings for the period under review decreased to R62 million
   (2016: R90 million). Import duties on aluminium extrusions were increased from 5% to 15% at the end of 2017,
   going some way in levelling the playing field going forward for local manufacturers against subsidised imports. The
   recent strengthening of the rand poses its own challenges for local manufacturing, emphasising the importance of
   Wispeco's drive to world-class productivity and lowest cost of production.
   
   Wispeco continues to lead the way with product innovation and aluminium solutions. New fit-for-purpose
   aluminium products are being developed to meet the needs of specific market segments. Its new design and
   estimating software package for fabricators of aluminium windows and doors (Starlite) will soon be launched to
   support sales and legal compliance in the fastest growing segment of the market. Technical manufacturing
   capabilities are elevated continuously to produce more challenging products for industrial (non-architectural)
   markets. Opportunities to expand the company's distribution footprint are exploited on an ongoing basis.
   
   Community Investment Ventures Holdings Proprietary Limited (CIV group)
   Remgro has an effective interest of 51.0% in the CIV group, which is active in the telecommunications and
   information technology (ICT) sector. The key operating company of the group is Dark Fibre Africa Proprietary
   Limited (DFA), which constructs and owns fibre-optic networks.
   
   The CIV group has a March year-end and therefore its results for the six months ended 30 September 2017 have
   been included in Remgro's results for the period under review. The CIV group's contribution to Remgro's headline
   earnings for the period under review amounted to R32 million (2016: R44 million). This decrease is mainly due to
   higher finance costs and depreciation as a result of the expanding network, as well as lower equity accounted income
   due to the disposal of the CIV group's investment in Dartcom SA Proprietary Limited.
   
   DFA's revenue for the six months ended 30 September 2017 increased by 23.0% to R903 million 
   (2016: R734 million) mainly as a result of solid growth of 28.3% in annuity revenue. DFA's EBITDA for the period under
   review increased by 10.1% to R545 million. The current book value of the fibre-optic network is in excess of
   R6.8 billion (30 June 2017: R6.6 billion). DFA has thus far secured a healthy annuity income of R113 million per
   month, with the majority thereof being on long-term contracts with customers.
   
   DFA owns fibre network rings in Johannesburg, Cape Town, Durban, Midrand, Centurion and Pretoria, as well as a
   number of smaller metropolitan areas, including East London, Polokwane, Tlokwe, Emalahleni, George and
   Pietermaritzburg. At 30 September 2017, a total distance of 10 138 km (September 2016: 9 503 km) of fibre network
   had been completed in the major metropolitan areas, small towns and on long-haul routes. The network uptime for
   the period under review was 99.99%.
   
   The DFA revenue model is flexible to adapt to customers' needs and DFA either sells an indefeasible right of use
   agreement, which is a lump sum in advance, or on an annuity basis with multi-year contracts of mostly up to
   15 years. The future value of the current annuity contract base is in excess of R12.2 billion.
   
   SEACOM Capital Limited (SEACOM)
   Remgro has an effective interest of 30% in SEACOM, which operates Africa's largest international data network
   connecting Southern and Eastern Africa with Europe and Asia.
   
   SEACOM has a December year-end and its results for the six months to 31 December 2017 have been included in
   Remgro's results for the period under review. SEACOM's contribution to Remgro's headline earnings for the period
   under review amounted to R32 million (2016: headline loss of R18 million). The increase in headline earnings is due
   to an improved SEACOM Business result in South Africa and Kenya and the once-off realisation of deferred
   revenue associated with the early termination of long term indefeasible right of use (IRU) contracts.
   
   SEACOM's core sales and revenue streams are generated from its established base of Service Provider (wholesale)
   customers that also provide the basis for network scale, cost reductions and service innovation. The Service Provider
   segment is seeing strong demand for international capacity from large Over The Top providers and from the growth
   of Internet Protocol Transit traffic from local internet service providers. The SEACOM international and terrestrial
   networks are continuously being upgraded to keep pace with this demand.
   
   SEACOM Business provides the platform for future growth and improved profitability as the number and size of
   corporate customers increases. SEACOM Business added over 1 000 corporate customers in 2017, and over
   US$22 million in new order total contract value. The unit has a healthy pipeline to continue to grow sales and
   revenue in 2018. In addition to organic growth, SEACOM Business has made acquisitions of internet service
   providers focused largely on the enterprise market. SEACOM Business continues to focus its investments on 
   in-building fibre reticulation and terrestrial fibre to unlock previously unserviced areas.

6. TREASURY SHARES
   At 30 June 2017, 1 666 638 Remgro ordinary shares (0.3%) 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 period under review 234 137 Remgro ordinary shares were utilised to settle Remgro's obligation towards
   scheme participants who exercised the rights granted to them.

   At 31 December 2017, 1 432 501 (0.3%) Remgro ordinary shares were held as treasury shares.


DECLARATION OF CASH DIVIDEND
Declaration of Dividend No. 35
Notice is hereby given that an interim gross dividend of 204 cents (2016: 194 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 half-year ended 31 December 2017.

A dividend withholding tax of 20% or 40.8 cents per share will be applicable, resulting in a net dividend of 163.2 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 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, 17 April 2018
Shares trade ex dividend                                                                          Wednesday, 18 April 2018
Record date                                                                                          Friday, 20 April 2018
Payment date                                                                                         Monday, 23 April 2018


Share certificates may not be dematerialised or rematerialised between Wednesday, 18 April 2018, and Friday, 20 April 2018,
both days inclusive.

In terms of the Company's Memorandum of Incorporation, dividends will only be transferred electronically to the bank
accounts of shareholders, as 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
15 March 2018

DIRECTORATE
Non-executive directors
Johann Rupert (Chairman), E de la H Hertzog (Deputy Chairman),
J Malherbe (Deputy Chairman), S E N De Bruyn*, 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

                                                                           Six months ended
R million                                                         31 December 2017   31 December 2016   
Banking                                                                                                 
RMH                                                                          1 185              1 115   
FirstRand                                                                      493                465   
Healthcare                                                                                              
Mediclinic                                                                     487                983   
Consumer products                                                                                       
Unilever                                                                       288                263   
Distell¹                                                                       354                364   
RCL Foods                                                                      498                318   
Insurance                                                                                               
RMI Holdings                                                                   626                492   
Industrial                                                                                              
Air Products                                                                   142                151   
KTH                                                                             73                 58   
Total                                                                          258                102   
PGSI                                                                            16                 25   
Wispeco                                                                         62                 90   
Infrastructure                                                                                          
Grindrod                                                                      (52)               (18)   
CIV group                                                                       32                 44   
SEACOM                                                                          32               (18)   
Other infrastructure interests                                                  20                  7   
Media and sport                                                                                         
eMedia Investments                                                               3                 33   
Other media and sport interests                                               (21)               (58)   
Other investments                                                               29                 39   
Central treasury                                                                                        
Finance income                                                                 259                105   
Finance costs                                                                (452)              (462)   
Option remeasurement                                                           134                667   
Other net corporate costs                                                     (60)               (75)   
Headline earnings                                                            4 406              4 690   
Weighted number of shares (million)                                          566.7              540.5   
Headline earnings per share (cents)                                          777.5              867.7   


Note
1. Includes the investment in Capevin Holdings Limited.

            ANNEXURE B

COMPOSITION OF INTRINSIC NET ASSET VALUE

                                                  31 December 2017                30 June 2017
R million                                 Book value   Intrinsic value   Book value   Intrinsic value   
Banking                                                                                                 
RMH                                           14 380            31 466       14 016            23 350   
FirstRand                                      5 170            14 783        5 010            10 365   
Healthcare                                                                                              
Mediclinic                                    31 111            35 038       33 763            41 568   
Consumer products                                                                                       
Unilever                                       3 575            10 512        3 737            10 702   
Distell¹                                       3 927             9 839        3 727             9 556   
RCL Foods                                      7 991            10 146        7 553            10 173   
Insurance                                                                                               
RMI Holdings                                   7 860            20 993        7 277            17 532   
Industrial                                                                                              
Air Products                                   1 019             3 830        1 047             4 298   
KTH                                            1 632             2 157        1 684             2 466   
Total                                          1 831             2 282        1 640             2 167   
PGSI                                             657               658          643               643   
Wispeco                                          883             1 037          821             1 368   
Infrastructure                                                                                          
Grindrod                                       2 364             2 364        1 915             1 915   
CIV group                                      2 280             4 881        2 242             4 829   
SEACOM                                           332               836          321               896   
Other infrastructure interests                   247               247          520               520   
Media and sport                                                                                         
eMedia Investments                             1 150             1 114        1 147             1 424   
Other media and sport interests                  341               338          365               319   
Other investments                              3 931             3 937        3 947             3 932   
Central treasury                                                                                        
Cash at the centre2                           12 543            12 543       12 223            12 223   
Debt at the centre                          (13 656)          (13 656)     (13 907)          (13 907)   
Other net corporate assets                     2 592             3 014        2 741             3 164   
Intrinsic net asset value (INAV)              92 160           158 359       92 432           149 503   
Potential CGT liability3                                       (7 668)                        (7 010)   
INAV after tax                                92 160           150 691       92 432           142 493   
Issued shares after deduction of shares                                                                 
repurchased (million)                          566.8             566.8        566.6             566.6   
INAV after tax per share (Rand)               162.59            265.84       163.13            251.48   
Remgro share price (Rand)                                       236.00                         213.46   
Percentage discount to INAV                                       11.2                           15.1   


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.







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