| Wed 18 Jun 2008, 17:01 | | REM - Remgro Limited - Audited consolidated results for the year ended 31 March |
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REM
REM
REM - Remgro Limited - Audited consolidated results for the year ended 31 March
2008, cash dividend declaration and change to the board of directors
Remgro Limited
Registration Number 1968/006415/06
ISIN ZAE000026480 Share code REM
Audited consolidated results for the year ended 31 March 2008, cash dividend
declaration and change to the board of directors
Salient features
Headline earnings per share: +16.5%
Headline earnings per share - excluding non-recurring +17.0%
portion of bee costs:
Ordinary dividend per share: +17.5%
Intrinsic value per share at year-end: R253.67
Five-year compound growth rates:
- Headline earnings per share: 12.5% p.a.
- Ordinary dividend per share: 15.5% p.a.
Abridged consolidated balance sheet
2008 2007
R`m R`m
Assets
Property, plant and equipment 2 568 2 441
Biological agricultural assets 67 91
Investment properties 33 32
Goodwill and trade marks 408 413
Investments - associated companies 43 175 33 033
- joint ventures 64 8
- other 8 551 6 245
Retirement benefits 10 10
Loans 2 2
Deferred taxation 4 124
Cash and cash equivalents 3 934 5 004
Other current assets 3 011 2 456
Total assets 61 827 49 859
Equity and liabilities
Shareholders` equity 57 227 45 672
Minority interest 648 755
Total equity 57 875 46 427
Interest-bearing loans 311 301
Other non-current liabilities 1 683 1 419
Non-interest-bearing current liabilities 1 958 1 712
Total equity and liabilities 61 827 49 859
Net asset value per share (rand)
- at book value R121.11 R96.69
- at intrinsic value *
- at year-end R253.67 R221.00
- at 17 June 2008 (15 June 2007) R242.26 R221.44
* Unaudited
Abridged consolidated income statement
2008 2007
R`m R`m
Sales 9 447 7 872
Inventory expenses (5 415) (4 781)
Personnel costs (1 621) (1 302)
Depreciation (251) (223)
Other net operating expenses (1 109) (550)
Trading profit 1 051 1 016
Dividends received 274 156
Interest received 296 332
Finance costs (43) (28)
Negative goodwill - 44
Net impairment of investments, assets and goodwill 19 -
Profit on sale and restructuring of investments 1 665 7
Consolidated profit before tax 3 262 1 527
Taxation (419) (403)
Consolidated profit after tax 2 843 1 124
Share of after-tax profit of associated companies and
joint ventures 7 210 6 003
Net profit for the year 10 053 7 127
Attributable to:
Equity holders 9 893 6 942
Minority interest 160 185
10 053 7 127
Associated companies and joint ventures
Share of after-tax profit of associated companies and
joint ventures
Profit before taking into account impairments, non-
recurring and capital items 10 023 8 515
Net impairment of investments, assets and goodwill (28) (12)
Profit on the sale of investments 372 256
Restructuring costs (259) (297)
Other non-recurring and capital items 32 8
Profit before tax and minority interest 10 140 8 470
Taxation (2 390) (2 033)
Minority interest (540) (434)
7 210 6 003
Reconciliation of headline earnings
Net profit for the year attributable to equity holders
9 893 6 942
Plus/(minus):
- Negative goodwill - (44)
- Net impairment of investments, assets and goodwill (15) -
- Profit on sale and restructuring of investments (1 665) (7)
- Net (surplus)/loss, on disposal of property, plant and
equipment (114) -
- Non-headline earnings items included in equity (122) 14
accounted earnings of associated companies and joint
ventures
- Taxation effect of adjustments 5 (14)
- Minority interest 9 1
Headline earnings 7 991 6 892
Non-recurring portion of BEE costs added back 37 -
Headline earnings - excluding non-recurring portion of 8 028 6 892
BEE costs
Earnings and dividends
2008 2007
Cents Cents
Headline earnings per share
- Basic 1 692.8 1 453.6
- Diluted 1 649.0 1 409.2
Headline earnings per share - excluding non-recurring
portion of BEE costs
- Basic 1 700.7 1 453.6
- Diluted 1 656.8 1 409.2
Earnings per share
- Basic 2 095.7 1 464.2
- Diluted 2 048.9 1 418.5
Dividends per share
Ordinary 510.00 434.00
- Interim 180.00 153.00
- Final 330.00 281.00
Abridged consolidated statement of changes in equity
2008 2007
R`m R`m
Balance at 1 April 46 427 38 090
Total income accounted for 14 377 14 008
Exchange rate adjustments 2 362 5 035
Net fair value adjustments for the year 1 962 1 846
Net income directly accounted for in equity 4 324 6 881
Net profit for the year 10 053 7 127
Dividends paid (2 252) (3 813)
Increase of interest in subsidiary company (660) -
Capital invested by minorities 58 30
Transfer between reserves and other movements 53 11
Change in reserves of associated companies and joint (165) (824)
ventures
Purchase of shares by wholly owned subsidiary (treasury
shares) - (1 031)
Net purchase of shares by The Remgro Share Trust (18) (54)
Long-term share incentive scheme reserve 18 10
Shares issued 37 -
Balance at 31 March 57 875 46 427
Abridged consolidated cash flow statement
2008 2007
R`m R`m
Cash flow from operating activities 1 485 1 970
Taxation paid (497) (676)
Dividends received 3 548 2 736
Cash available from operating activities 4 536 4 030
Dividends paid (2 252) (3 813)
Net cash inflow from operating activities 2 284 217
Investing activities (3 438) (1 725)
Financing activities 84 70
Net decrease in cash and cash equivalents (1 070) (1 438)
Cash and cash equivalents at the beginning of the year 4 901 6 339
Cash and cash equivalents at the end of the year 3 831 4 901
Cash and cash equivalents - per balance sheet 3 934 5 004
Bank overdraft (103) (103)
Additional information
2008 2007
Number of shares in issue
- Ordinary shares of 1 cent each 449 003 606 448 802 207
issued at 1 april 448 802 207 448 802 207
issued during the year 201 399 -
- Unlisted b ordinary shares of 10 cents each
35 506 352 35 506 352
Total number of shares in issue 484 509 958 484 308 559
Number of shares held in treasury (11 972 555) (11 948 372)
- Ordinary shares repurchased and held in
treasury (8 554 019) (8 554 019)
- Ordinary shares held by the Remgro Share Trust (3 418 536) (3 394 353)
and accounted for as treasury shares
472 537 403 472 360 187
Weighted number of shares 472 052 993 474 123 689
In determining earnings per share and headline earnings per share the weighted
number of shares was taken into account.
2008 2007
R`m R`m
Listed investments
Associated
- Book value 16 665 11 478
- Market value 22 147 28 871
Other
- Book value 8 483 6 229
- Market value 8 483 6 229
Unlisted investments
Associated
- Book value 26 510 21 555
- Directors` valuation 82 286 62 969
Joint ventures
- Book value 64 8
- Directors` valuation 64 8
Other
- Book value 68 16
- Directors` valuation 68 16
Additions to and replacement of property, plant and 464 502
equipment
Capital commitments 888 704
(including amounts authorised, but not yet contracted
for)
Dividends received from associated companies set off 3 297 2 748
against investments
Comments
1. Accounting policies
The annual financial statements are prepared on the historical cost basis,
unless otherwise indicated, in accordance with International Financial Reporting
Standards (IFRS), including IAS 34: Interim Financial Reporting, and in
accordance with the requirements of the Companies Act (No. 61 of 1973), as
amended, and the Listings Requirements of the JSE Limited.
These financial statements incorporate accounting policies that have been
consistently applied to both years presented, with the exception of the
implementation of IFRS 7: Financial Instruments - Disclosure, the amendment to
IAS 1: Presentation of Financial Statements and the change in the accounting
treatment of joint ventures.
During the year various other 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 years.
2. Prior year adjustments
Changes in accounting policy
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 applying the equity
method. Previously the Group 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 the Group changed its accounting policy for the
accounting treatment of jointly controlled ventures from proportionate
consolidation to the equity method, as it only has an interest in the outcome
generated by the activities of these ventures and not any rights to the
individual assets or contractual obligations for expenses or financing of these
entities. The change in accounting policy will thus 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 year. Certain line items in the comparative balance sheet and income
statement have been restated accordingly. The effect thereof was immaterial.
Other adjustments
Restatement of comparative figures in respect of associated companies
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.
On 26 November 2007 Remgro published its interim results for the six months
ended 30 September 2007. Attention was drawn to the fact that at that stage
certain associated companies were not in a position to provide Remgro with the
necessary information in order to restate its headline earnings for the
comparative periods. This related to associated companies that implemented
Circular 08/07 in later financial periods, for example FirstRand Limited and RMB
Holdings Limited in respect of their interim reporting to 31 December 2007.
The JSE granted Remgro exemption from complying with Circular 08/07 in respect
of listed associated companies that had not yet published their restated
headline earnings prior to Remgro releasing its interim results for the six
months ended 30 September 2007. The results of those companies included in
Remgro`s interim report for the six months ended 30 September 2007 were based on
their results prepared in terms of Circular 07/02.
The companies mentioned above have subsequently announced their restated results
in terms of Circular 08/07 and Remgro has consequently restated its reported
results for the six months ended 30 September 2006 and 30 September 2007
respectively, as well as for the year ended 31 March 2007.
Restatement of headline earnings as a result of the abovementioned adjustment:
Year ended Six months ended
31 March 30 September 30 September
2007 2007 2006
R`m R`m R`m
Income statement
Headline earnings as previously 6 853 4 016 3 232
reported
Restatement of comparative figures 39 15 (13)
in respect
of associated companies
Restated headline earnings 6 892 4 031 3 219
Headline earnings per share as 1 445.4 851.0 678.1
previously reported (cents)
Restated headline earnings per share 1 453.6 854.2 675.3
(cents)
Attention is drawn to the fact that the results for the six months ended 30
September 2007 and 2006 are unaudited.
Comparison with prior year
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 year 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 the prior year.
3. Results
Headline earnings
Total headline earnings for the year to 31 March 2008 increased by 15.9% from R6
892 million to R7 991 million. Headline earnings per share, however, increased
by 16.5% from 1 453.6 cents to 1 692.8 cents due to the favourable impact of the
share repurchase programme in the previous year. During the year under review
Rainbow Chicken Limited concluded a black economic empowerment (BEE)
transaction. The accounting treatment of this transaction resulted in a non-
recurring charge of R37 million (Remgro`s share), or 7.9 cents per share,
against headline earnings for the year under review. Due to this reason
headline earnings per share, and its year-on-year comparison, are also presented
excluding the non-recurring portion of BEE costs.
Excluding Remgro`s share of the non-recurring portion of BEE costs, headline
earnings and headline earnings per share increased by 16.5% and 17.0%
respectively.
Contribution to headline earnings
Year ended 31 March
Non-recurring Non-recurring
portion of BEE portion of BEE
costs included costs excluded
2008 % 2008 % 2007
R`m change R`m change R`m
Tobacco interests 3 579 20.7 3 579 20.7 2 964
Financial services 2 120 35.2 2 120 35.2 1 568
Industrial interests 1 895 (1.5) 1 932 0.4 1 924
Mining interests 264 70.3 264 70.3 155
Corporate finance and other 133 (52.7) 133 (52.7) 281
interests
7 991 15.9 8 028 16.5 6 892
In 2007 headline earnings was impacted favourably by foreign currency gains
amounting to R65 million relating to intergroup balances, as well as the
accounting recognition of a pension fund surplus amounting to R70 million
following the finalisation of a surplus allocation process. Excluding these
items, as well as Remgro`s share of the non-recurring BEE costs accounted for
during the year under review, Remgro`s headline earnings and headline earnings
per share increased by 18.8% and 19.3% respectively.
The following commentary, comparing the results to those of the previous year,
is based on headline earnings excluding the non-recurring portion of BEE costs.
The contribution of the tobacco interests, which represents 44.6% (2007: 43.0%)
of headline earnings, increased by 20.7%. In sterling, R&R Holdings SA,
Luxembourg`s (R&R) contribution increased by 12.6%.
Currency movements continued to impact the tobacco interests` contribution to
the Group`s earnings materially. Due to the weaker rand, the positive currency
impact on translation of R&R`s contribution to headline earnings (consisting
mainly of equity accounted income from BAT) was R250 million during the year
under review, compared to R420 million in 2007, as set out in the table below.
Year ended
31 March
2008 2007
Average exchange rate (R/GBP) 14.2882 13.2898
Closing exchange rate (R/GBP) 16.0290 14.3449
R&R`s contribution (GBP`m) 251 223
R&R`s contribution (R`m) 3 579 2 964
Favourable currency impact (R`m) 250 420
The combined contribution of FirstRand and RMBH to Remgro`s headline earnings
from financial services amounted to R2 120 million (2007: R1 568 million). The
increase of 35.2% can be attributed mainly to good performances in the retail,
corporate and investment banking segments during the twelve months ended 31
December 2007.
The contribution of the industrial interests to headline earnings increased by
0.4% to R1 932 million (2007: R1 924 million). Kagiso Trust Investments (KTI)
reported lower results, with a contribution to headline earnings amounting to
R88 million (2007: R307 million). During the previous financial year KTI`s
results were favourably impacted by a fair value adjustment relating to its
holding of Metropolitan Holdings Limited preference shares, amounting to R390
million, as well as certain non-recurring profits. During the year under review
KTI`s fair value adjustment referred to above amounted to only R38 million.
Rainbow`s contribution to Remgro`s headline earnings increased from R293 million
in 2007 to R414 million. This increase can be attributed to earnings growth by
Rainbow, as well as Remgro`s increased shareholding in Rainbow resulting from
the offer to Rainbow minorities concluded during June 2007. Distell reported
good results with a contribution to headline earnings amounting to R261 million
(2007: R210 million), while Nampak reported improved results with a contribution
to headline earnings amounting to R163 million (2007: R125 million). Medi-
Clinic`s contribution to Remgro`s headline earnings amounted to R285 million
(2007: R278 million), while the Plate Glass group contributed R22 million to
headline earnings for the five months since acquisition.
Mining interests` contribution to headline earnings increased by 70.3% to R264
million (2007: R155 million). Dividends received from Implats amounted to R267
million (2007: R147 million). Trans Hex reported a headline loss of R8 million
for the year under review (2007: R23 million profit). Remgro`s share of this
loss amounted to R3 million (2007: R8 million profit).
Earnings
Total earnings increased by 42.5% to R9 893 million (2007: R6 942 million),
mainly as a result of a capital gain amounting to R1 167 million realised on the
restructuring of Remgro`s interest in Unilever, as well as the earnings growth
of the underlying investments.
4. Intrinsic value
Remgro`s intrinsic value per share increased by 14.8% from R221.00 at 31 March
2007 to R253.67 at 31 March 2008. 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 31 March 2008 (2007: 10.4%). The
balance of the ordinary share capital of R&R is held by Compagnie Financiere
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 30.0% at 31 March 2008 (2007: 29.4%).
R&R`s share of BAT`s earnings for the twelve months to 31 March 2008 is based on
BAT`s results for the year ended 31 December 2007 plus the results for the
quarter to 31 March 2008 less the results for the quarter to 31 March 2007.
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 profit (this
includes income attributable to its investment in the "2006" participation
securities issued by R&R during March 2006).
2008 2007
GBP`m GBP`m
Attributable profit of BAT before non-recurring and 2 275 2 077
capital items
R&R`s share of the attributable profit of BAT:
- 29.62% to 29.97% (2007: 29.06% to 29.40%) 679 607
R&R`s non-BAT income 12 9
R&R`s headline earnings for the year ended 31 March 691 616
Remgro`s share thereof:
- 35.46% of R&R`s share of the attributable profit of BAT 241 215
- portion of R&R`s non-BAT income 10 8
251 223
R`m R`m
Translated at an average R/GBP rate of 14.2882 (2007: 3 579 2 964
13.2898)
BAT has a 31 December year-end and reports to its shareholders on a quarterly
basis. The following commentary is condensed from BAT`s annual report for the
year ended 31 December 2007. More complete information in respect of BAT,
including the annual and quarterly reports, is available from the BAT website at
www.bat.com.
BAT`s adjusted, diluted earnings per share, a good indicator of its underlying
performance, grew by 11% to 108.53 pence per share, principally as a result of
the strong growth in profit from operations, partly offset by the adverse impact
from foreign exchange movements. Basic earnings per share were higher at 105.19
pence compared to the prior year of 92.08 pence.
BAT`s cigarette sales volumes from subsidiaries for the year ended 31 December
2007 decreased by 1% to 684 billion, mainly as a result of the high level of
trade buying in some markets at the end of 2006, supply chain disruptions in the
Middle East and the loss of StiX in Germany. BAT`s revenue increased by 3% to
GBP10 018 million but, at comparable rates of exchange, would have increased by
5% as a result of more favourable pricing and an improving product mix.
Profit from operations was 11% higher at GBP2 905 million or 7% higher if
exceptional items were excluded. However, profit from operations at comparable
rates of exchange and excluding exceptional items, would have been 11% higher,
with all regions contributing to this strong result.
In Europe, profit at GBP842 million was up GBP61 million or 8%, at both current
and comparable rates of exchange, mainly as a result of higher margins in
Russia, Romania, Hungary and Spain, which more than offset the impact of reduced
volumes in a number of markets.
In Asia-Pacific, profit rose by GBP56 million to GBP672 million, mainly
attributable to strong performances from Australasia, Vietnam, Pakistan and
Bangladesh, despite the adverse impact of exchange rates. At comparable rates of
exchange, profit would have increased by GBP66 million or 11%.
Profit in Latin America increased by GBP69 million to GBP680 million due to good
performances in key markets such as Brazil and Venezuela, partly offset by lower
profit in Mexico and the adverse impact of some weaker local currencies. At
comparable rates of exchange, profit would have increased by GBP86 million or
14%.
Profit in the Africa and Middle East region was only GBP2 million higher at
GBP470 million due to exchange rate movements. However, at comparable rates of
exchange, profit would have increased by GBP53 million or 11% with strong
performances from South Africa and Nigeria.
The profit from the America-Pacific region increased by GBP22 million to GBP446
million as a result of higher profit in local currency in Japan and Canada,
partly offset by the impact of weaker exchange rates. At comparable rates of
exchange, profit would have increased by GBP45 million or 11%.
BAT`s associated companies comprise Reynolds American, ITC and Skandinavisk
Tobakskompagni. BAT`s share of the post-tax results of its associates increased
by GBP11 million, or 3% to GBP442 million, after taxation of GBP246 million.
Excluding exceptional items, BAT`s share of the post-tax results of associates
was GBP449 million. However, BAT`s share of these results was particularly
affected by the weakening of the average US dollar rate against sterling from
1.844 to 2.001 and, at comparable rates of exchange, the increase would have
been 11%.
Recently BAT announced an agreement to acquire 100% of the Skandinavisk
Tobakskompagni`s (ST) cigarette and snus business in exchange for its 32.25%
holding in ST and payment of DKK11 384 million in cash. This transaction is
subject to approval by the European Commission. ST accounts for more than 60% of
cigarette sales in Scandinavia. In addition, BAT won the public tender for the
cigarette assets of Tekel, the Turkish state owned tobacco company, with a bid
of US$1 720 million (GBP860 million). On completion, which is expected later in
2008 and is subject to regulatory approvals, the acquisition will raise BAT`s
market share in Turkey, the eighth largest cigarette market in the world, to
some 36% from just over 7% prior to acquisition.
6. Other investments
The most important changes to Remgro`s other investments during the year under
review were as follows:
Rainbow Chicken Limited (Rainbow)
Offer to minority shareholders of Rainbow
During March 2007 Remgro made an offer to buy out the minority shareholding of
Rainbow 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 the majority of Rainbow`s 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 R448.6 million, while 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 year 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 31
March 2008, Remgro`s effective interest in Rainbow was 74.0% (31 March 2007:
61.4%).
Broad-based black economic empowerment (BEE) initiative
On 18 March 2008 Rainbow shareholders approved a proposal to introduce a
strategic BEE shareholding into the company. Rainbow will issue 51 177 217
Rainbow shares (the BEE shares) at R17.89 per share to a BEE consortium (BEECo).
BEECo will be owned by the BEE partners and the shares issued to BEECo will
represent 15% of the entire issued share capital of Rainbow.
The BEE shares will be issued during June 2008, after the payment of the final
dividend to existing Rainbow shareholders. For accounting purposes the effective
date of the transaction is 18 March 2008, i.e. the date on which Rainbow
shareholders approved the transaction. The purchase price of the BEE shares will
be settled by BEECo by issuing redeemable preference shares in BEECo to Rainbow.
For accounting purposes the terms of the issue of the BEE shares and funding
thereof are deemed to constitute an option in Rainbow shares granted to BEECo,
and accordingly the issue of the BEE shares and the subscription by Rainbow of
the BEECo preference shares, are not recognised for accounting purposes. The BEE
transaction will accordingly not affect Remgro`s effective shareholding in
Rainbow until the redemption of the BEE preference shares referred to above,
takes place.
PG Group of Companies (PGSI)
With effect from 31 July 2007 Remgro acquired a 24.5% interest, on a fully
diluted basis, in PGSI for R719.5 million, including transaction costs. PGSI is
the foreign holding company of the Plate Glass group. For the year ended 31
March 2008 PGSI, which has a December year-end, has been equity accounted for
the five months to December 2007. In future PGSI will be equity accounted for
the twelve-month period ending December each year.
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 sugarcane 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 sugarcane 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 year under review Tsb Sugar, Compagnie Industriali Riunite of Italy
and VenFin Limited, established RE. Tsb Sugar acquired a 25% interest in RE for
a total amount of R8.6 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 sugarcane.
Unilever South Africa Holdings (Pty) Limited (Unilever South Africa)
Until October 2007 Remgro held a 41% interest in Unilever Bestfoods Robertsons
(Holdings) Limited L.L.C. (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 simplified its organisational structure which, inter alia,
entailed 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 would 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. An
after-tax capital gain of R1 167 million was realised on this transaction.
Medi-Clinic Corporation Limited (Medi-Clinic)
Effective 26 October 2007 Medi-Clinic finalised the acquisition of Hirslanden
Finanz AG (Hirslanden) for an amount of CHF 2 556 million. Hirslanden is the
holding company of the largest private hospital group in Switzerland. Medi-
Clinic financed the purchase consideration through interest-bearing debt as well
as a rights offer amounting to R4 500 million.
In terms of the rights offer Medi-Clinic issued 198 675 497 shares at an issue
price of R22.65 per share. Remgro followed its rights in terms of the rights
offer and took up 86 217 868 Medi-Clinic shares amounting to R1 952.8 million.
On 31 March 2008 Remgro`s effective interest in Medi-Clinic was 45.9% (31 March
2007: 47.6%).
FirstRand Limited (FirstRand) and RMB Holdings Limited (RMBH)
On 7 November 2007 FirstRand shareholders approved the proposed unbundling of
its shareholding in Discovery Holdings Limited (Discovery). In terms of this
transaction FirstRand distributed its Discovery shareholding to its shareholders
on 26 November 2007 in the ratio of 5.61343 Discovery shares for every 100
FirstRand shares.
In terms of a separate agreement with Remgro, RMBH 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. Remgro realised an after-tax capital gain of R403 million on
this transaction.
During the year 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 is 25.0% (31 March 2007: 23.7%).
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,
Remgro invested R4.7 million of the R350.0 million committed. During the year
under review Remgro invested a further R45.7 million in KIEF.
Business Partners Limited (Business Partners)
During the year under review Remgro acquired a further 437 330 Business Partners
shares for a total amount of R2.5 million. On 31 March 2008, Remgro`s interest
in Business Partners was 20.2% (31 March 2007: 20.0%) on a fully diluted basis.
Xiocom Wireless, Inc. (Xiocom)
During the year under review Remgro acquired a 37.5% interest, on a fully
diluted basis, in Xiocom, a newly established USA company that specialises in
the deployment and operation of wireless broadband networks. Remgro has
conditionally committed funds amounting to $50.0 million to Xiocom. By 31 March
2008, $11 million of the $50.0 million was invested.
For the year under review, Xiocom was equity accounted for the eight months to
31 March 2008.
Repurchase of Remgro shares
At 31 March 2008, 8 554 019 Remgro ordinary shares (1.9%) were held as treasury
shares (31 March 2007: 8 554 019 shares). No shares were repurchased by the
Company or any wholly owned subsidiary company during the year under review.
The Remgro Share Trust purchased 150 566 Remgro ordinary shares during the year
under review at an average price of R189.19 for a total amount of R28.5 million,
while 126 383 shares were delivered to participants against payment of the
purchase price.
7. Cash resources and application
The Company`s cash resources at 31 March 2008 were as follows:
Local Offshore Total
R`m R`m R`m
Per consolidated balance sheet 1 280 2 654 3 934
Less: Cash of other operating (661) - (661)
subsidiaries
Cash at the centre 619 2 654 3 273
Attributable share of R&R`s cash - 2 433 2 433
Available cash 619 5 087 5 706
On 31 March 2008, GBP309 million (R4 953 million) of the available offshore cash
was invested in United Kingdom Treasury Bills.
The final ordinary dividend per share has been increased by 17.4% to 330 cents.
Total ordinary dividends per share in respect of the financial year to 31 March
2008 have therefore increased by 17.5% from 434 cents to 510 cents.
The total distribution to shareholders in respect of the financial year is as
follows:
2008 2007
(Based on total issued shares at time of payment) R`m R`m
Ordinary
- Interim 872 741
- Final 1 599 1 361
Total 2 471 2 102
Directorate
Mr Denis Falck, our financial director, retired on 18 June 2008 after nearly 37
years of service, half of which was as director of the Group. Through his
dedication and integrity he made a huge contribution to the development and
success of the Group. We wish him the very best for a well-deserved retirement.
We are pleased to welcome Mr Leon Crouse who joined the Board as financial
director on 18 June 2008.
Audit report
The annual financial statements have been audited by PricewaterhouseCoopers Inc.
and their unqualified audit reports on the comprehensive annual financial
statements and the summarised financial statements are available for inspection
at the registered office of the Company.
Group restructuring
During November 2007, Remgro announced that it was considering a restructuring
of the Group to split its tobacco assets from its other assets.
A separate announcement in this regard has been released together with this
results announcement. All cautionary and other announcements relating to the
intended restructuring are available on Remgro`s website at www.remgro.com.
Declaration of cash dividend
Declaration of Dividend No 16
Notice is hereby given that a final dividend of 330 cents (2007: 281 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 financial year
ended 31 March 2008.
Dates of importance:
Last day to trade in order to participate in the Friday, 8 August 2008
final dividend
Trading on or after this date will be ex the final Monday, 11 August 2008
dividend
Record date Friday, 15 August 2008
Payment date Monday, 18 August 2008
Shareholders may not dematerialise or rematerialise their holdings of ordinary
shares between Monday, 11 August 2008, and Friday, 15 August 2008, both days
inclusive.
The Annual Report will be posted to members during July 2008.
Signed on behalf of the Board of Directors.
Johann Rupert Thys Visser
Chairman Chief Executive Officer
Stellenbosch
18 June 2008
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, L Crouse, J A Preller (Mrs),
T van Wyk
Corporate information
Secretary
M Lubbe (Mrs)
Listing
JSE Limited
Sector: Industrials - 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 (Proprietary) 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
Annexure A
Intrinsic net asset value
Shares Stock
held exchange
closing
Notes million price GBP`m
Tobacco interests
R&R Holdings 4 305 8
- BAT-ordinary shares 1 214.3 1 891 4 052.4
- Cash and cash equivalents 151.8
- Dividends accrued 102.0
- Other net assets/(liabilities) (0.4)
Financial services
FirstRand 481.1 1 600
RMB Holdings 302.3 2 450
Industrial interests
Medi-Clinic Corporation 257.3 1 970
Distell Group 58.7 5 100
Unilever SA Holdings
Rainbow Chicken 214.6 1 460
Total South Africa
Tsb Sugar
Nampak 78.1 1 640
Kagiso Trust Investments
Air Products South Africa
PG Group
Wispeco
Dorbyl 14.1 800
Caxton 7.8 1 450
Mining interests
Implats 26.7 31 300
Trans Hex Group 30.2 1 050
Other
Sundry investments and loans
Deferred taxation
asset/(liability)
Other net assets/(liabilities)
Cash at the centre 2
Local
Offshore
- Sterling 164.8
- Rand
Intrinsic net asset value
Potential CGT liability 3
Intrinsic net asset value after
tax
Issued shares after deduction of
shares repurchased and the shares
in The Remgro Share Trust
(million)
Intrinsic value per share
Annexure A
Intrinsic net asset value (continued)
Exchange 31 March 31 March
2008 2007
Notes rate R`m R`m
Tobacco interests
R&R Holdings 16.0290 69 018 52 229
- BAT-ordinary shares 1
- Cash and cash equivalents
- Dividends accrued
- Other net assets/(liabilities)
Financial services
FirstRand 7 698 11 836
RMB Holdings 7 406 10 111
Industrial interests
Medi-Clinic Corporation 5 070 4 295
Distell Group 2 992 3 054
Unilever SA Holdings 3 663 3 020
Rainbow Chicken 3 133 2 778
Total South Africa 2 620 2 226
Tsb Sugar 2 097 1 980
Nampak 1 281 1 735
Kagiso Trust Investments 1 432 1 312
Air Products South Africa 1 538 910
PG Group 773 -
Wispeco 447 421
Dorbyl 112 211
Caxton 113 130
Mining interests
Implats 8 353 6 085
Trans Hex Group 317 438
Other
Sundry investments and loans 344 220
Deferred taxation (1 027) (738)
asset/(liability)
Other net assets/(liabilities) 441 506
Cash at the centre 2
Local 619 1 220
Offshore 2 654 3 137
- Sterling 16.0290 2 641 3 137
- Rand 13 -
Intrinsic net asset value 121 094 107 116
Potential CGT liability 3 (1 233) (2 714)
Intrinsic net asset value after 119 861 104 402
tax
Issued shares after deduction of 472.5 472.4
shares repurchased and the shares
in The Remgro Share Trust
(million)
Intrinsic value per share R253.67 R221.00
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: 18/06/2008 17:01:03 Produced by the JSE SENS Department.
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