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REM
REM
REM - Remgro - Unaudited Report For The Six Months Ended 30 September 2007
And Cash Dividend Declaration
Remgro Limited
Registration number 1968/006415/06
ISIN ZAE000026480 & Share Code REM
Interim report
UNAUDITED REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
AND CASH DIVIDEND DECLARATION
Salient features
- Headline earnings per share: +25.5%
- Intrinsic value per share at 30 September: R228.33
- Interim dividend per share: +17.6%
Abridged consolidated balance sheet
30 September 31 March
2007 2006 2007
R`m R`m R`m
Assets
Non-current assets
Property, plant and equipment 2 504 2 485 2 441
Biological agricultural assets 68 95 91
Investment properties 47 32 32
Goodwill and trade marks 402 403 413
Investments - Associated companies 34 931 31 761 33 033
- Joint ventures 23 1 8
- Other 6 644 4 551 6 245
Retirement benefits 10 - 10
Loans 2 2 2
Deferred taxation 125 88 124
44 756 39 418 42 399
Current assets 7 608 6 540 7 460
Cash and cash equivalents 4 533 4 108 5 004
Other current assets 3 075 2 432 2 456
Total assets 52 364 45 958 49 859
Equity and liabilities
Issued capital 45 8 8
Reserves 49 093 43 344 47 161
Treasury shares (1 521) (1 415) (1 497)
Shareholders` equity 47 617 41 937 45 672
Minority interest 539 633 755
Total equity 48 156 42 570 46 427
Non-current liabilities 1 691 1 316 1 579
Retirement benefits 212 211 213
Long-term loans 220 233 161
Deferred taxation 1 259 872 1 205
Current liabilities 2 517 2 072 1 853
Short-term loans 375 412 234
Other current liabilities 2 142 1 660 1 619
Total equity and liabilities 52 364 45 958 49 859
Net asset value per share (Rand)
(attributable to equity holders)
- At book value R100.78 R88.69 R96.69
- At intrinsic value R228.33 R185.17 R221.00
Abridged consolidated income statement
Six months ended Year ended
30 September 31 March
2007 2006 2007
R`m R`m R`m
Sales 4624 3755 7872
Inventory expenses (3 015) (2 342) (4 781)
Personnel costs (810) (677) (1 302)
Depreciation (129) (110) (223)
Other net operating expenses (190) (187) (550)
Trading profit 480 439 1 016
Dividends received 188 79 156
Interest received 165 206 332
Finance costs (9) (15) (28)
Negative goodwill - - 44
Net impairment of investments, assets
and goodwill 6 - -
Profit on redemption and sale of
investments 96 6 7
Consolidated profit before tax 926 715 1 527
Taxation (194) (211) (403)
Consolidated profit after tax 732 504 1 124
Share of after-tax profit of associated 3 681 2 698 6 003
companies and joint ventures
Net profit 4 413 3 202 7 127
Attributable to:
Equity holders 4 347 3 136 6 942
Minority interests 66 66 185
4 413 3 202 7 127
Share of after-tax profit of associated
companies and joint ventures
Profit before taking into account 3 561 2 789 5 995
impairments, non-recurring and capital
items
Net impairment of investments, assets
and goodwill (18) 7 (12)
Profit on the sale of investments 174 26 249
Restructuring costs (46) (142) (237)
Other non-recurring and capital items
10 18 8
3 681 2 698 6 003
Reconciliation of headline earnings
Six months ended Year
ended
30 September 31 March
2007 2006 2007
R`m R`m R`m
Net profit for the period attributable to
equity holders 4 347 3 136 6 942
Plus/(minus):
- Negative goodwill - - (44)
- Net impairment of investments, assets (2) - -
and goodwill
- Profit on redemption and sale of (96) (6) (7)
investments
- Net (surplus)/loss on disposal of (114) 1 -
property, plant and equipment
- Non-headline earnings items included (150) 154 (25)
in equity accounted earnings of associates
and joint ventures
- Taxation effect of adjustments 28 (53) (14)
- Minority interest 3 - 1
Headline earnings 4 016 3 232 6 853
Earnings and dividends
Six months ended Year
ended
30 September 31 March
2007 2006 2007
Cents Cents Cents
Headline earnings per share
- Basic 851.0 678.1 1 445.4
- Diluted 827.7 659.8 1 401.3
Earnings per share
- Basic 921.2 657.9 1 464.2
- Diluted 896.2 639.6 1 418.5
Dividends per share
Ordinary 180.00 153.00 434.00
- Interim 180.00 153.00 153.00
- Final 281.00
Abridged consolidated statement of changes in equity
Year ended
Six months ended
30 September 31 March
2007 2006 2007
R`m R`m R`m
Balance at 1 April 46 427 38 090 38 090
Total income accounted for 4 148 8 786 14 008
Exchange rate adjustments (545) 5 232 5 035
Net fair value adjustments for the period 280 352 1 846
Net income directly accounted for in equity
(265) 5 584 6 881
Net profit for the period 4 413 3 202 7 127
Dividends paid (1 384) (3 069) (3 813)
Increase of interest in subsidiary company (656) - -
Capital invested by minorities 31 8 30
Transfer between reserves and other
movements 3 (14) 11
Change in reserves of associated companies (436) (232) (824)
Purchase of shares by wholly owned
subsidiary (treasury shares) - (942) (1 031)
Net purchase of shares by The Remgro Share
Trust (24) (60) (54)
Long-term share incentive scheme reserve 10 3 10
Shares issued 37 - -
Total equity 48 156 42 570 46 427
Abridged consolidated cash flow statement
Year
Six months ended ended
30 September 31 March
2007 2006 2007
R`m R`m R`m
Cash generated from operations 481 806 1 970
Taxation paid (195) (524) (676)
Dividends received 1 861 1 361 2 736
Cash available from operating activities
2 147 1 643 4 030
Dividends paid (1 384) (3 069) (3 813)
Net cash flow from operating activities 763 (1 426) 217
Investing activities (1 502) (1 213) (1 725)
Financing activities 345 184 70
Net increase/(decrease) in cash and cash
equivalents (394) (2 455) (1 438)
Cash and cash equivalents at the beginning of
the period 4 901 6 339 6 339
Cash and cash equivalents at the end of the
period 4 507 3 884 4 901
Cash and cash equivalents - per balance sheet
4 533 4 108 5 004
Bank overdraft (26) (224) (103)
Additional information
30 September 31 March
2007 2006 2007
Number of shares in issue
- Ordinary shares of 1 cent each
449 003 606 448 802 207 448 802 207
Issued at 1 April 448 802 207 448 802 207 448 802 207
Issued during the period 201 399 - -
- Unlisted B ordinary shares of
10 cents each 35 506 352 35 506 352 35 506 352
Total number of shares in issue
484 509 958 484 308 559 484 308 559
Number of shares held in
treasury (12 042 320) (11 481 584) (11 948 372)
- Ordinary shares repurchased
and held in treasury (8 554 019) (8 002 196) (8 554 019)
- Ordinary shares held by The (3 488 301) (3 479 388) (3 394 353)
Remgro Share Trust and accounted
for as treasury shares
472 467 638 472 826 975 472 360 187
Weighted number of shares 471 894 427 476 643 317 474 123 689
In determining earnings and headline earnings per share the weighted number
of shares was taken into account.
30 September 31 March
2007 2006 2007
R`m R`m R`m
Listed investments
Associated
- Book value 12 610 11 184 11 478
- Market value 26 251 21 567 28 871
Other
- Book value 6 556 4 427 6 229
- Market value 6 556 4 427 6 229
Unlisted investments
Associated
- Book value 22 321 20 577 21 555
- Directors` valuation 68 455 55 867 62 969
Joint ventures
- Book value 23 1 8
- Directors` valuation 23 1 8
Other
- Book value 88 124 16
- Directors` valuation 88 124 16
Additions to and replacement of 180 246 502
property, plant and equipment
Capital commitments 730 399 704
(Including amounts authorised,
but not yet contracted for)
Dividends received from 1 283 2 748
associated companies set off
against investments 1 506
Comments
1. Accounting policies
The interim report is prepared in accordance with the recognition and
measurement principles of International Financial Reporting Standards (IFRS),
IAS 34: Interim Financial Reporting, the requirements of the South African
Companies Act, Act 61 of 1973, as amended, and the Listings Requirements of
the JSE Limited (JSE).
These financial statements incorporate accounting policies that are consistent
with those of the previous financial periods, with the exception of the change
in the accounting treatment of joint ventures. Refer to the section on prior
year adjustments below.
During the period under review various new accounting standards,
interpretations and amendments to IFRS became effective. The adoption of
these new accounting standards, interpretations and amendments to IFRS had no
impact on the results of either the current or prior periods.
During July 2007 the South African Institute of Chartered Accountants issued a
new accounting guideline on headline earnings, i.e. Circular 08/07. The
effective date of this circular is for all financial periods ending on or
after 31 August 2007. The circular requires comparative headline earnings to
be restated in accordance with the new prescribed formula if needed.
Previously headline earnings was calculated in terms of Circular 07/02.
Attention is drawn to the fact that certain associated companies are not in a
position to provide Remgro with the necessary information in order to restate
its headline earnings for the comparative periods. This relates to associated
companies that will only implement Circular 08/07 in later financial periods,
e.g. FirstRand Limited and RMB Holdings Limited in respect of their interim
reporting to 31 December 2007.
The JSE has granted Remgro dispensation from complying with Circular 08/07 in
respect of listed associated companies that have not yet published their
restated headline earnings prior to Remgro releasing its interim results. The
results of those companies included in this interim report are based on their
results prepared in terms of Circular 07/02.
Any restatement of Remgro`s headline earnings that may result from the later
restatement of associated companies` results, will be reported with the
release of the audited consolidated results for the year ended 31 March 2008.
2. Prior year adjustments
Restatement of comparative figures in respect of joint ventures
In terms of IAS 31: Interests in Joint Ventures, such entities can be
accounted for by using proportionate consolidation or alternatively by using
the equity method. Previously Remgro proportionately consolidated its
interests in jointly controlled ventures and thereby accounted for its share
of each of the assets, liabilities, income and expenses of the jointly
controlled ventures on a line-by-line basis in its financial statements.
With effect from 1 April 2007 Remgro changed its accounting policy for the
accounting treatment of jointly controlled ventures from proportionate
consolidation to the equity method as it will result in more appropriate
presentation of investments in joint ventures. This change in accounting
policy had no effect on Remgro`s net asset value, earnings or headline
earnings for the comparative periods. Certain line items in the comparative
balance sheets and income statements have been restated accordingly. The
effect was immaterial.
Comparison with prior periods
With effect from 31 March 2007 Business Partners Limited (Business Partners)
was reclassified as an investment in an associated company, while previously
it was accounted for under "Investments - Other".
For the period under review Business Partners was thus accounted for according
to the equity method, while only dividend income was previously accounted for.
Certain income statement items are therefore not directly comparable with
those of prior periods.
3. Results
Headline earnings
Headline earnings increased by 24.3% from R3 232 million to R4 016 million.
Headline earnings per share, however, increased by 25.5% from 678.1 cents to
851.0 cents due to the favourable impact of the share repurchase programme in
the comparative period.
Contribution to headline earnings
Six months ended Year ended
30 September 31 March
2007 2006 2007
R`m R`m R`m
Tobacco interests 1 839 1 483 2 964
Financial services 1 065 772 1 529
Industrial interests 850 729 1 924
Mining interests 176 76 155
Corporate finance and other interests
86 172 281
4 016 3 232 6 853
The contribution of the tobacco interests, which represented 45.8% (2006:
45.9%) of headline earnings, increased by 24.0%.
Currency movements had a greater impact on the Group`s earnings than in the
comparative period. Due to the weaker rand, the currency impact on R&R
Holdings SA, Luxembourg`s (R&R) contribution to headline earnings increased
from R104 million in 2006 to R207 million as set out in the table below.
Six months ended Year ended
30 September 31 March
2007 2006 2007
Average exchange rate (R/GBP/) 14.1987 12.5995 13.2898
Closing exchange rate (R/GBP) 14.0020 14.5143 14.3449
R&R contribution (GBP`m) 130 118 223
R&R contribution (R`m) 1 839 1 483 2 964
Favourable currency impact (R`m) 207 104 420
In sterling terms, R&R`s contribution increased by 10.2%.
The combined contribution of FirstRand and RMBH to Remgro`s headline earnings
amounted to R1 065 million (2006: R772 million). The increase of 38.0% can be
attributed mainly to good performances in the retail, corporate and investment
banking segments.
The contribution of the industrial interests increased by 16.6% to R850
million (2006: R729 million). Medi-Clinic and Distell produced good results
with contributions amounting to R153 million and R102 million respectively
(2006: R131 million and R74 million). Rainbow`s contribution to Remgro`s
headline earnings increased from R107 million in 2006 to R142 million. This
increase can be attributed mainly to Remgro`s increased shareholding in
Rainbow resulting from the offer to Rainbow minorities concluded during June
2007. Both UBR and Nampak reported strong earnings growth with contributions
to headline earnings amounting to R121 million and R77 million respectively
(2006: R92 million and R55 million).
The total contribution of the mining interests increased by 131.6% to R176
million (2006: R76 million). Dividends received from Implats amounted to R187
million (2006: R73 million). Trans Hex reported a headline loss of R32
million for the period (2006: R8 million profit). Remgro`s share of this loss
amounted to R11 million (2006: R3 million profit).
The central treasury division`s contribution to Remgro`s headline earnings
decreased from R196 million to R100 million. This decrease can be attributed
mainly to the non-recurrence of foreign currency profits amounting to R74
million relating to outstanding intergroup balances accounted for in the
comparative period, as well as lower average cash balances compared to 2006.
Earnings
Total earnings increased by 38.6% to R4 347 million (2006: R3 136 million),
mainly as a result of favourable non-recurring and capital items of associated
companies during the period under review.
4. Intrinsic value
Remgro`s intrinsic value per share increased by 3.3% from R221.00 at 31 March
2007 to R228.33 at 30 September 2007. Refer to Annexure A for full details.
5. British American Tobacco Plc (BAT)
Remgro`s interest in BAT is represented by its one-third holding of the
ordinary shares and all of the "2005" participation securities, issued by R&R.
This gives Remgro an effective interest of 10.6% in BAT at 30 September 2007
(2006: 10.4%). The balance of the ordinary share capital of R&R is held by
Compagnie Financi?re Richemont SA.
There was no change in the number of BAT shares held by R&R. However, due to
the positive effect of BAT`s continuing share buy-back programme, R&R`s
interest in BAT increased to 29.8% at 30 September 2007 (2006: 29.2%).
Remgro`s share of R&R`s headline earnings consists of 35.46% of R&R`s share of
the attributable profit of BAT and its share of R&R`s non-BAT income
(including income attributable to its investment in the "2006" participation
securities issued by R&R during March 2006).
Six months
to September
2007 2006
GBP`m GBP`m
Attributable profit of BAT before non-recurring and 1 177 1 100
capital items
R&R`s share of the attributable profit of BAT:
- 29.62% to 29.84% (2006: 29.06% to 29.21%) 350 320
R&R`s non-BAT income 8 6
R&R`s headline earnings for the six months to 30 358 326
September
Remgro`s share thereof:
- 35.46% of R&R`s share of the attributable profit 124 114
of BAT
- portion of R&R`s non-BAT income 6 4
130 118
R`m R`m
Translated at an average GBP/R rate of 14.1987 (2006: 1 839 1 483
12.5995)
BAT has a 31 December year-end and reports to its shareholders on a quarterly
basis. The following commentary is condensed from BAT`s financial report for
the nine months ended 30 September 2007. More complete information in respect
of BAT, including copies of the annual and quarterly reports, is available
from the BAT website at www.bat.com.
The reported profit from BAT was 19% higher at GBP2 304 million or 8% higher
if non-recurring items are excluded. However, profits from operations at
comparable rates of exchange and excluding non-recurring items would have been
14% higher, with all regions contributing to this result.
In Europe, profit at GBP650 million was up GBP56 million mainly as a result of
higher margins in Russia, Romania, Hungary and Spain, partly offset by the
impact of reduced volumes in a number of markets and weaker exchange rates.
At comparable rates of exchange, profits would have increased by GBP67 million
or 11%.
In BAT`s Asia-Pacific region, profit rose by GBP32 million to GBP498 million,
mainly attributable to strong performances from Australasia, South Korea,
Vietnam, Pakistan and Bangladesh, despite the adverse impact of exchange. At
comparable rates of exchange, profit would have increased by GBP47 million or
10%.
Profit in Latin America increased by GBP103 million to GBP550 million due to
exceptionally strong performances in Brazil and Venezuela, partly offset by
lower profit in Mexico and the adverse impact of weaker local currencies. At
comparable rates of exchange, profit would have grown by GBP127 million or
28%.
Profit in the Africa and Middle East region fell by GBP8 million to GBP354
million due to exchange rate movements. However, at comparable rates of
exchange, profit would have increased by GBP45 million or 12% with strong
performances from South Africa and Nigeria.
The profit from BAT`s America-Pacific region decreased by GBP12 million to
GBP320 million as a result of lower profit in Canada and the impact of weaker
exchange rates. At comparable rates of exchange, profit would have increased
by GBP15 million or 5%.
BAT`s share of the post-tax results of its associates decreased by GBP13
million to GBP335 million. Excluding the exceptional item in 2006, its share
of the post-tax results of associates was slightly up at GBP335 million but
would have been 8% higher at comparable rates of exchange. The contribution
from Reynolds American, excluding the benefit from the favourable resolution
of tax matters in 2006, was GBP10 million lower due to the impact of the
weaker US dollar. BAT`s associate in India, ITC, continued its strong growth
and its contribution rose by GBP12 million to GBP77 million.
BAT`s adjusted, diluted earnings per share for the nine-month period rose 9%
to 82.00 pence, principally as a result of the strong operating profit
performance, partly offset by the adverse impact from foreign exchange
movements. Some 38 million shares were repurchased in the nine months at a
cost of GBP612 million and at an average of 1 630 pence per share.
6. Other investments
The most important changes to Remgro`s other investments during the period
under review were as follows:
Rainbow Chicken Limited (Rainbow)
During March 2007 Remgro made an offer by way of a scheme of arrangement to
acquire the entire issued share capital of Rainbow not already owned by
Remgro. The initial offer was for a cash consideration of R16.00 per Rainbow
share or 9 Remgro ordinary shares for every 100 shares held in Rainbow, or a
combination of the aforementioned. On 5 June 2007 Rainbow shareholders voted
against the scheme of arrangement.
An alternative offer, consisting of a cash consideration of R16.00 per Rainbow
share or 8.1 Remgro ordinary shares for every 100 shares held in Rainbow, or a
combination thereof, became effective on 6 June 2007.
In terms of the abovementioned offer Remgro acquired 30 236 876 Rainbow
shares. Of this number of shares 27 749 336 were acquired for a cash
consideration of R16.00 per Rainbow share for a total amount of R446.4
million, while the remaining 2 487 540 Rainbow shares were acquired through
the issue of 201 399 Remgro shares, issued at an average price of R186.10 per
Remgro share.
During the period under review Remgro acquired 10 699 024 Rainbow shares in
the open market at R16.00 per share for a total amount of R171.9 million. On
30 September 2007, Remgro`s effective interest in Rainbow was 74.0% (31 March
2007: 61.4%).
PG Group of Companies (PG)
With effect from 31 July 2007 Remgro has acquired a 24.5% interest, on a fully
diluted basis, in PG for R719.5 million, including transaction costs. For the
period under review, no income from PG was accounted for. For Remgro`s year
ending 31 March 2008 PG, which has a December year-end, will be equity
accounted for the five months to December 2007. In future PG will be equity
accounted by Remgro for the twelve-month period ending December each year.
It should be noted that the purchase price allocation process in terms of IFRS
3: Business Combinations, is currently still in progress.
Kagiso Trust Investments (Pty) Limited (KTI) and the Kagiso Infrastructure
Empowerment Fund (KIEF)
During the 2007 financial year Remgro entered into agreements with KTI and
KIEF, in terms of which it committed funds amounting to R350 million to KIEF.
The fund has a target size of R650 million and aims to invest in
infrastructure projects, including roads, airports, power and
telecommunication installations, railway systems, ports, water and social
infrastructure. By 31 March 2007 R4.7 million of the R350.0 million committed
was invested. During the period under review Remgro invested a further R36.7
million in KIEF.
Tsb Sugar Holdings (Pty) Limited (Tsb Sugar)
Land claims
Effective 1 April 2007 Tsb Sugar concluded the Tenbosch land claim whereby it
disposed of 4 800 hectares (ha) of irrigated sugar-cane agricultural land in
the Nkomazi region to land claimants in terms of a land reform transaction for
an amount of R285 million. The transaction constituted the first phase of Tsb
Sugar`s land reform process.
The second phase of Tsb Sugar`s land reform transactions is currently in
progress and consists of the remaining claimed land, situated mainly in the
Malelane area. This phase will comprise the sale of 3 162 ha under sugar cane
and 71 ha under litchis, all of which is irrigated, as well as 2 599 ha that
is not under irrigation. This transaction is expected to be completed early
in the next financial year.
Resource Energy BV (RE)
During the period under review Tsb Sugar and co-founding shareholders, i.e.
Compagnie Industriali Riunite of Italy and VenFin Limited, established RE.
Tsb Sugar acquired a 25% interest in RE for a total amount of R7.9 million,
with additional investments to be made on a project-by-project basis.
RE is involved in renewable energy through the acquisition, development and
integration of bio-fuel production facilities, with its initial focus on the
production of ethanol from sugar-cane.
Business Partners Limited (Business Partners)
During the period under review Remgro acquired a further 437 330 Business
Partners shares for a total amount of R2.5 million. On 30 September 2007,
Remgro`s interest in Business Partners was 21.5% (31 March 2007: 21.3%).
Repurchase of Remgro shares
At 30 September 2007 8 554 019 Remgro ordinary shares (1.9%) were held as
treasury shares (31 March 2007: 8 554 019 shares).
The Remgro Share Trust purchased 150 566 Remgro ordinary shares during the
period under review at an average price of R189.19 for a total amount of R28.5
million, while 56 618 shares were delivered to participants against payment of
the subscription price.
Subsequent to 30 September 2007:
Medi-Clinic Corporation Limited (Medi-Clinic)
On 26 October 2007 Medi-Clinic announced that all conditions precedent for the
acquisition of Hirslanden Finanz AG (Hirslanden) for an amount of CHF 2 556
million, had been fulfilled. Hirslanden is the holding company of the largest
private hospital group in Switzerland. Medi-Clinic will finance CHF 1 114
million of the purchase consideration with own funds and obtained a fixed
interest loan from Barclays Capital for the remainder.
Concurrently Medi-Clinic proposed a rights offer of 198 675 497 of its shares
at an issue price of R22.65 per share. Remgro gave an irrevocable commitment
to participate in the rights offer and will take up 86 217 868 Medi-Clinic
shares amounting to R1 952.8 million.
FirstRand Limited (FirstRand) and RMB Holdings Limited (RMBH)
On 7 November 2007 FirstRand shareholders approved its proposed unbundling of
its shareholding in Discovery Holdings Limited (Discovery). The transaction
involves the disposal of 21 569 301 Discovery shares to Discovery`s senior
management, the Discovery share trust as well as RMBH. On 26 November 2007
FirstRand will distribute the remainder of its Discovery shareholding in the
ratio of 5.61343 Discovery shares for every 100 FirstRand shares to its
shareholders.
In terms of a separate agreement with Remgro, RMBH has agreed to acquire the
27 008 590 Discovery shares received by Remgro pursuant to the unbundling
described above, by issuing 21 302 886 RMBH shares at R33.94 per share for a
total amount of R723 million.
During the period under review Remgro also acquired 30 000 RMBH shares in the
open market at R33.49 per share for a total amount of R1.0 million. Following
these transactions, Remgro`s interest in RMBH will be 25.0% (31 March 2007:
23.7%).
Unilever Bestfoods Robertsons (Holdings) Limited L.L.C. (UBR)
Until October 2007 Remgro held a 41% interest in UBR, which in turn owned 100%
of the Unilever South Africa Foods (SA Foods) and Unilever Israel Foods
businesses. The UBR venture had no interest in the Unilever South Africa Home
and Personal Care (SA HPC) businesses.
Globally, Unilever has reorganised by simplifying its organisational structure
that, amongst others, entail the merging of the SA Foods and SA HPC businesses
into a single leadership and operating framework under the "One Unilever"
programme.
During October 2007 Remgro and Unilever agreed that Remgro will divest from
its 41% interest in UBR in exchange for a 25.75% interest in the total South
African Unilever business, consisting of the combined SA Foods and SA HPC
businesses. This restructuring had no effect on the results for the period
under review.
7. Information regarding unlisted investments
Tsb Sugar
Tsb Sugar`s contribution to Remgro`s headline earnings amounted to R55 million
(2006: R54 million).
It is expected that Tsb Sugar`s sugar production for the season will increase
to 493 500 tons (2006: 436 804 tons). This increase can be attributed to the
return to near normal conditions in cane production due to improved prevailing
climatic conditions. Cane yields improved by 10% as a result of the increase
in overall water availability. The export sugar price for the full year is
expected to be lower than the previous year. This, combined with a stronger
rand, is expected to result in lower export income. Tsb Sugar did benefit from
the increase in the local market sugar price. The Royal Swaziland Sugar
Corporation`s contribution to Tsb Sugar`s profit increased during the period
under review.
Business Partners
Business Partners` contribution to Remgro`s headline earnings amounted to R13
million (2006: R5 million).
Business Partners is a leading investor of capital, skills and knowledge in
Small and Medium Enterprises. Its headline earnings for the six months ended
30 September 2007 increased by 26.1% to R63 million. The primary drivers for
the growth in profits were the increase in operational income (partly due to
the recent interest rate increases), effective control over expenses and the
surpluses realised on the disposal of investments.
Investments amounting to R496 million (2006: R486 million) were approved
during the six month period, which is slightly below budget. An increased
investment activity, ahead of the levels achieved in the first six months, is
expected in the second half of the financial year.
Wispeco Holdings Limited (Wispeco)
Wispeco`s results for the six months ended 30 September 2007 were lower mainly
due to price suppression caused by competition from China. Sales volumes for
the half year were 3% higher than the comparative period, while gross profit
margins were lower. Headline earnings amounted to R26.5 million for the half
year, which is 24% lower than in the same period last year.
A possible positive outcome of the ongoing anti-dumping investigation on
imported extrusions from China as well as the reduction of export rebates by
China could contribute to leveling the playing field in the local market.
Prospects of a margin recovery reinforce Wispeco`s growth strategy and
expansion plans embarked on in 2006. An eighth extrusion press is now being
commissioned, while three new powder coating lines will be put into production
by the end of the year. A new stockist branch has also been opened in the
Eastern Cape.
Total South Africa (Pty) Limited (Total South Africa)
Total South Africa`s contribution to Remgro`s headline earnings for the period
under review was R118 million (2006: R116 million). Sales of petroleum
products in South Africa continued to increase. Total South Africa`s market
share for main fuels was constant at 14.7%, with the added income from higher
volumes being set off by lower finished product revaluation gains when
compared to the prior year, leaving marketing profits practically unchanged.
Natref, in which Total South Africa has an interest of 36%, was shut down for
six weeks from May 2007. The positive impact of both increasing prices within
the South African regulatory environment and the weaker rand exchange rate,
resulted in refining profits remaining unchanged. Refining volumes have
returned to previous levels in the latter part of 2007.
Air Products South Africa (Pty) Limited (Air Products)
Air Products` contribution to Remgro`s headline earnings for the period under
review amounted to R43 million (2006: R33 million). The increase was driven by
continued strong demand for gas products from most sectors of the economy.
Profit after tax increased to R83 million (2006: R62 million) for the six
months ended 30 September 2007 as a result of operational efficiencies,
improved margins and a reduction in the effective tax rate.
Air separation plants were commissioned in South Africa to supply Impala
Platinum and the PG Group, and in Zambia to supply Mopani Copper Mines and
First Quantum Minerals. The resulting additional sales volumes contributed to
double digit volume and revenue growth in the tonnage gases business, despite
the impact of reduced volumes at the company`s Vanderbijlpark site during the
Mittal Steel blast furnace shutdown between April and August.
Infrastructure development continued to drive growth for cylinder gases and
other packaged gas products, particularly argon, and this is expected to
continue in the coming year.
UBR
UBR`s contribution to Remgro`s headline earning for the period, which includes
interest on the shareholders` loan of R5 million (2006: R8 million), amounted
tot R121 million (2006: R92 million).
The increased contribution is mainly due to turnover growth and the resultant
higher gross profit. The impact of the increased turnover has been partially
offset by investment in pricing, advertising and promotion as well as raw
material cost inflation.
The South African retail operation delivered an underlying sales growth of
10.9%, driven by a combination of volume and price growth. The Israeli
business reported an increase in turnover of 7.1%.
KTI
KTI`s contribution to Remgro`s headline earnings for the period under review
amounted to R18 million (2006: R37 million) mainly due to lower favourable
fair value adjustments of the conversion right attached to its holding of
Metropolitan Holdings Limited preference shares accounted for than in the
comparative period. The growth in the intrinsic value of the underlying
investments was satisfactory.
Cautionary announcement
Shareholders are referred to the cautionary announcement dated 19 November
2007 and are accordingly advised to continue to exercise caution when dealing
in their shares.
Declaration of cash dividend
Declaration of Dividend No 15
Notice is hereby given that an interim dividend of 180 cents (2006: 153 cents)
per share has been declared in respect of both the ordinary shares of one cent
each and the unlisted B ordinary shares of ten cents each, for the half year
to 30 September 2007.
Dates of importance:
Last day to trade in order to participate in the
interim dividend Friday, 4 January 2008
Trading on or after this date will be ex the
interim dividend Monday, 7 January 2008
Record date Friday, 11 January 2008
Payment date Monday, 14 January 2008
Shareholders may not dematerialise or rematerialise their holdings of ordinary
shares between Monday, 7 January 2008, and Friday, 11 January 2008, both days
inclusive.
Signed on behalf of the Board of Directors.
Johann Rupert Thys Visser
Chairman Chief Executive Officer
Stellenbosch
26 November 2007
Directorate
Non-executive directors
Johann Rupert (Chairman),
E de la H Hertzog (Deputy Chairman), P E Beyers, G D de Jager*, J W Dreyer,
P K Harris*, J Malherbe, M M Morobe*, D Prins*, M Ramos (Miss)*,
F Robertson*
(*Independent)
Executive directors
M H Visser (Chief Executive Officer),
W E Buhrmann, D M Falck, J A Preller (Mrs), T van Wyk
Corporate information
Secretary
M Lubbe (Mrs)
Listing
JSE Limited
Sector: Financials - Diversified Industrials
American depositary receipt (ADR) program
Cusip number 75956M107 ADR to ordinary share 1 : 1
Depositary
The Bank of New York, 101 Barclay Street, New York NY 10286
Business address and registered office
Carpe Diem Office Park, Quantum Street, Techno Park, Stellenbosch 7600
(PO Box 456, Stellenbosch 7599)
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc.,
Cape Town
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Website
www.remgro.com
INTRINSIC NET ASSET VALUE
Shares Stock
exchange
held closing
Notes million price GBP`m
Tobacco interests
R&R Holdings 3 941.7
- BAT ordinary shares 1 214.3 1 752 3 754.5
- Cash and dividends 187.4
accrued
- Other net assets/ (0.2)
(liabilities)
Financial services
FirstRand 481.1 2 210
RMB Holdings 281.0 3 337
Industrial interests
Medi-Clinic Corporation 171.1 2 220
Distell Group 58.7 6 398
Unilever Bestfoods
Robertsons
Rainbow Chicken 214.6 1 610
Total South Africa
Tsb Sugar
Nampak 78.1 2 160
Kagiso Trust
Investments
Air Products South
Africa
PG Group
Wispeco
Dorbyl 14.1 1 025
Caxton 7.8 1 750
Mining interests
Implats 26.7 24 000
Trans Hex Group 30.2 1 205
Other
Sundry investments and
loans
Deferred taxation
asset/(liability)
Other net
assets/(liabilities)
Cash at the centre
- Local 2
- Offshore 2 211.6
Intrinsic net asset
value
Potential CGT liability 3
Intrinsic net asset
value after tax
Intrinsic value per
share
Table continues:.
30 September 31 March
Exchange 2007 2007
rate R`m R`m
Tobacco interests
R&R Holdings 14.0020 55 191 52 229
- BAT ordinary shares
- Cash and dividends
accrued
- Other net assets/
(liabilities)
Financial services
FirstRand 10 633 11 836
RMB Holdings 9 376 10 111
Industrial interests
Medi-Clinic Corporation 3 799 4 295
Distell Group 3 754 3 054
Unilever Bestfoods 3 663 3 020
Robertsons
Rainbow Chicken 3 455 2 778
Total South Africa 2 585 2 226
Tsb Sugar 1 773 1 980
Nampak 1 687 1 735
Kagiso Trust Investments 1 278 1 312
Air Products South 1 039 910
Africa
PG Group 719 -
Wispeco 403 421
Dorbyl 144 211
Caxton 136 130
Mining interests
Implats 6 405 6 085
Trans Hex Group 364 438
Other
Sundry investments and 296 220
loans
Deferred taxation (785) (738)
asset/(liability)
Other net 416 506
assets/(liabilities)
Cash at the centre
- Local 977 1 220
- Offshore 14.0020 2 963 3 137
Intrinsic net asset 110 271 107 116
value
Potential CGT liability (2 386) (2 714)
Intrinsic net asset 107 885 104 402
value after tax
Intrinsic value per R228.33 R221.00
share
Issued shares after 472.5 472.4
deduction of shares
repurchased and the
shares in The Remgro
Share Trust (million)
Notes
1. This represents Remgro`s effective interest of 10.6% in BAT Plc.
2. Cash at the centre excludes cash held by subsidiaries and associated
companies that are separately valued above.
3. The potential capital gains tax (CGT) liability, which is unaudited, 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 (Implats and Caxton) is included in "Other" above.
4. Unlisted investments are shown at directors` valuation. Listed investments
are shown at stock exchange prices.
Date: 26/11/2007 17:01:01 Produced by the JSE SENS Department.
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