| Thu 22 Jun 2006, 17:00 | | Remgro Limited - Audited consolidated results for |
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REM
REM
Remgro Limited - Audited consolidated results for the year ended
Remgro Limited
Registration number 1968/006415/06
ISIN ZAE000026480
Share code REM
Audited consolidated results
For the year ended 31 March 2006
Salient features
Headline earnings per share: +4.7%
Headline earnings per share - excluding non- +12.5%
recurring portion of BEE costs:
Ordinary dividend per share: +15.0%
Special dividend per share: 400 cents
Intrinsic value per share at year-end: R157.59
Five-year compound growth rates:
- Headline earnings per share - excluding 13.1% p.a.
non-recurring portion of BEE costs:
- Ordinary dividend per share: 17.4% p.a.
Abridged consolidated balance sheet
2006 2005
R"m R"m
Assets
Property, plant and equipment 2 318 3 995
Biological agricultural assets 95 94
Investment properties 31 31
Goodwill and trade marks 352 386
Investments - Associated companies 26 098 28 201
- Other 4 136 1 948
Loans 6 157
Deferred taxation 90 154
Cash and cash equivalents 6 357 2 372
Other current assets 1 853 2 401
Total assets 41 336 39 739
Equity and liabilities
Shareholders" equity 37 494 34 833
Minority interest 596 2 011
Total equity 38 090 36 844
Interest-bearing loans 216 336
Other non-current liabilities 975 705
Non-interest-bearing current liabilities 2 055 1 854
Total equity and liabilities 41 336 39 739
Net asset value per share (Rand)
- At book value R78.14 R71.51
- At intrinsic value *
- at year-end R157.59 R119.97
- at 21 June 2006 (20 June 2005) R169.01 R132.94
* Unaudited
Abridged consolidated income statement
2006 2005
R"m R"m
Sales 9 802 9 948
Inventory expenses (4 919) (5 205)
Personnel costs (2 603) (2 442)
Depreciation (293) (262)
Other net operating expenses (771) (953)
Dividends received 410 79
Interest received 341 275
Finance costs (29) (56)
Net impairment of investments, assets and
goodwill 3 22
Profit on redemption and sale of investments 3 162 2 194
Consolidated profit before tax 5 103 3 600
Taxation (857) (417)
Consolidated profit after tax 4 246 3 183
Share of after-tax profit of associated
companies 4 354 5 742
Net profit for the year 8 600 8 925
Attributable to:
Equity holders 8 202 8 518
Minority interests 398 407
8 600 8 925
Associated companies
Share of after-tax profit of associated
companies
Profit before taking into account impairments,
capital and non-recurring items 4 428 4 514
Net impairment of investments, assets and
goodwill (157) (202)
Profit on the sale of investments 681 1 663
Restructuring costs (280) (265)
Non-recurring portion of BEE costs (380) -
Other capital and non-recurring items 62 32
4 354 5 742
Reconciliation of headline earnings
2006 2005
R"m R"m
Net profit for the year attributable
to equity holders 8 202 8 518
Plus/(minus) - portion attributable
to equity holders:
- Net impairment of investments, assets
and goodwill 157 197
- Profit on redemption and sale of investments (3 475) (3 828)
- Restructuring costs 279 216
- Other capital and non-recurring items (67) (38)
- Net surplus, after taxation, on disposal of
property, plant and equipment (12) (67)
Headline earnings 5 084 4 998
Non-recurring portion of BEE costs 380 -
Headline earnings - excluding non-recurring
portion of BEE costs 5 464 4 998
Earnings and dividends
2006 2005
Cents Cents
Headline earnings per share
- Basic 1 052.3 1 005.0
- Diluted 1 027.7 977.7
Headline earnings per share - excluding non-
recurring portion of BEE costs
- Basic 1 130.9 1 005.0
- Diluted 1 106.1 977.7
Earnings per share
- Basic 1 697.6 1 712.9
- Diluted 1 671.3 1 677.2
Dividends per share
Ordinary 361.00 314.00
- Interim 133.00 116.00
- Final 228.00 198.00
Special 400.00 600.00
Abridged consolidated statement of changes in equity
2006 2005
R"m R"m
Balance at 1 April 36 844 30 926
IFRS adjustments at 1 April (341) -
Restated balance at 1 April 36 503 30 926
Exchange rate adjustments (1 395) 250
Net fair value adjustments for the year 1 903 46
Net profit for the year 8 600 8 925
Dividends paid (4 676) (2 645)
Capital invested by minorities 17 21
Change in reserves of subsidiary companies,
associated companies and joint ventures (527) 569
Purchase of shares by wholly owned subsidiary
(treasury shares) (977) (1 235)
Medi-Clinic* (1 418) -
Shares purchased by The Remgro Share Trust 92 (24)
Long-term share incentive scheme reserve (21) 11
Cancellation of treasury shares (11) -
Balance at 31 March 38 090 36 844
* Medi-Clinic was consolidated for nine months
only and is accounted for as an associated
company from 1 January 2006. This adjustment
represents the elimination of minorities with
the reclassification from a subsidiary to an
associated company.
Abridged consolidated cash flow statement
2006 2005
R"m R"m
Cash flow from operating activities 1 786 1 785
Taxation paid (369) (546)
Dividends received 3 888 2 451
Cash available from operating activities 5 305 3 690
Dividends paid (4 676) (2 642)
Net cash inflow from operating activities 629 1 048
Investing activities 3 364 (2 203)
Financing activities 99 9
Net increase/(decrease) in cash and cash
equivalents 4 092 (1 146)
Cash and cash equivalents at the beginning
of the year 2 247 3 393
Cash and cash equivalents at the end
of the year 6 339 2 247
Cash and cash equivalents - per balance sheet 6 357 2 372
Bank overdraft (18) (125)
Additional information
2006 2005
Number of shares in issue
- Ordinary shares of 1 cent each 448 802 207 486 493 650
Issued at 1 April 486 493 650 486 493 650
Cancelled during the year (37 691 443) -
- Unlisted B ordinary shares of
10 cents each 35 506 352 35 506 352
Total number of shares in issue 484 308 559 522 000 002
Number of shares held in treasury (4 473 004) (34 903 000)
- Ordinary shares repurchased and
held in treasury (1 379 635) (30 521 841)
- Ordinary shares held by The Remgro
Share Trust and accounted for as
treasury shares (3 093 369) (4 381 159)
479 835 555 487 097 002
Weighted number of shares 483 154 691 497 292 403
In determining earnings per share and headline earnings per share the weighted
number of shares was taken into account.
2006 2005
R"m R"m
Listed investments
Associated
- Book value 9 989 11 946
- Market value 23 248 19 893
Other
- Book value 4 013 1 866
- Market value 4 013 1 866
Unlisted investments
Associated
- Book value 16 109 16 255
- Directors" valuation 41 564 31 301
Other
- Book value 123 82
- Directors" valuation 123 82
Additions to and replacement of property,
plant and equipment 689 487
Capital commitments 275 857
(Including amounts authorised, but not
yet contracted for)
Dividends received
Dividends included in consolidated profit 410 79
Dividends from associated companies
set off against investments 3 349 2 501
Interest received
From unlisted investments and deposits 341 275
(Included in consolidated profit)
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), the requirements of the South African Companies Act, Act 61 of
1973, as amended, and the Listings Requirements of the JSE Limited.
These financial statements incorporate accounting policies that are consistent
with those of the previous year, with the exception of the implementation of the
following accounting standards:
- IFRS 5: Non-current assets held for sale and discontinued operations;
- IFRS 4: Insurance contracts, IAS 32: Financial instruments - Disclosure and
presentation and IAS 39: Financial instruments - Recognition and measurement,
which, in accordance with the transitional arrangements to IFRS, are not applied
retrospectively; and
- IFRIC 8: The scope of IFRS 2.
2. Prior year adjustments
International Financial Reporting Standards (IFRS)
With effect from 1 April 2005, Remgro is required to prepare its consolidated
financial statements in accordance with IFRS. Consequently, the 31 March 2006
financial statements are Remgro"s first complete set of financial statements
under IFRS. As comparative information is also reported, the date for the
transition to IFRS is effectively 1 April 2004. IFRS 1: First-time adoption of
IFRS has been applied and the results for the comparative period have been
restated accordingly. Refer to the Updated IFRS Transition Report, as
distributed to shareholders during April 2006, for information regarding the
adjustments.
Implementation of IFRS 5
With effect from 1 April 2005 Remgro adopted IFRS 5: Non-current assets held for
sale and discontinued operations.
As previously reported, Remgro sold its total shareholding in Absa Group Limited
and Sage Group Limited during the year under review. Consequently, these
investments were reclassified as "Assets held for sale" with effect from 1 April
2005, while previously they were reported under "Investments - Associated
companies". During the year under review only dividend income from these
companies was accounted for.
Due to the fact that the comparative figures are not restated under the
transitional provisions of IFRS 5, certain items are not directly comparable on
a line-for-line basis with those of the previous financial year.
Implementation of IFRIC 8
During January 2006 IFRIC (International Financial Reporting Interpretations
Committee) issued an interpretation, i.e. IFRIC 8: The scope of IFRS 2. IFRIC 8
is applicable to financial reporting periods commencing on or after 1 May 2006
and should also be implemented on a fully retrospective basis.
During the year under review, various investee companies in the Group
implemented black economic empowerment (BEE) transactions. To ensure consistent
accounting treatment of these transactions, Remgro decided to implement IFRIC 8
in its 31 March 2006 financial year. The effect of that on Remgro"s 2006 results
has been a non-recurring charge of R379.7 million against headline earnings.
Due to the material effect that IFRIC 8 has on Remgro"s results, headline
earnings per share is also presented excluding the non-recurring portion of BEE
costs.
Other adjustments
Restatement of comparative figures in respect of associated companies
FirstRand Limited (FirstRand) and RMB Holdings Limited (RMBH) restated their
results for the year ended 30 June 2004 to comply with AC 501: Accounting for
secondary taxation on companies (STC). The effect of this restatement on
Remgro"s results for the year ended 31 March 2005 was an increase in headline
earnings of R6 million. The comparative balance sheet has been restated
accordingly.
During May 2006, FirstRand and RMBH also announced that their results are being
restated to comply with the accounting standard on headline earnings. The
Accounting Practice Committee of the South African Institute of Chartered
Accountants revised this standard in such a manner that profits and losses on
the realisation of equity accounted private equity or venture capital
investments are excluded from headline earnings.
The effect of this restatement on Remgro"s results for the year ended 31 March
2005, was a decrease in headline earnings of R41 million. This restatement had
no effect on Remgro"s earnings for the year ended 31 March 2005 or its
comparative balance sheet.
Restatement of prior year headline earnings as a result of the above-mentioned
adjustment:
Year ended
31 March 2005
R"m
Income statement
Headline earnings as reported during April 2006 5 039
Restatement of comparative figures in respect of (41)
associated companies
Restated headline earnings 4 998
Headline earnings per share as reported during 1 013.3
April 2006 (cents)
Restated headline earnings per share (cents) 1 005.0
Comparison with prior year
Due to the fact that since 1 January 2006 Medi-Clinic has been accounted for as
an associated company while previously it was consolidated, certain balance
sheet and income statement items are not directly comparable with those of the
previous financial year.
3. Results
Headline earnings
During the year under review various investee companies in the Group concluded
BEE transactions. The specific accounting treatment of these transactions
impacted negatively on Remgro"s headline earnings by R380 million (or 78.6 cents
per share) for the 2006 year. However, headline earnings per share, excluding
the non-recurring portion of BEE costs, increased by 12.5%.
Contribution to headline earnings per share
2006 % 2005
Cents Change Cents
Tobacco interests 490.3 18.2 414.8
Financial services 297.2 (11.7) 336.6
Industrial interests 263.9 16.1 227.4
Mining interests 59.6 190.7 20.5
Corporate finance and
other interests 19.9 249.1 5.7
1 130.9 12.5 1 005.0
Non-recurring portion of
BEE costs (78.6) -
1 052.3 4.7 1 005.0
Total headline earnings for the year to 31 March 2006 increased by 1.7% from R4
998 million to R5 084 million. Headline earnings per share increased by 4.7%
from 1 005.0 cents to 1 052.3 cents due to the favourable impact of the share
repurchase programme.
Contribution to headline earnings
Non-recurring Non-recurring
portion of BEE portion of BEE
costs included costs excluded
2006 % 2006 % 2005
R"m chang R"m chang R"m
e e
Tobacco interests 2 369 14.8 2 369 14.8 2 063
Financial services 1 147 (31.5 1 436 (14.2 1 674
) )
Industrial interests 1 184 4.7 1 275 12.7 1 131
Mining interests 288 182.4 288 182.4 102
Corporate finance and other 96 242.9 96 242.9 28
interests
5 084 1.7 5 464 9.3 4 998
Currency movements continued to impact the Group"s earnings. Due to a slightly
stronger, but more stable rand, the unfavourable currency impact on translation
of R&R Holdings SA, Luxembourg"s (R&R) contribution to headline earnings
declined from R103 million in 2005 to R26 million for the year under review, as
set out in the table below.
Financial year: 2006 2005
Average exchange rate (GBP/R) 11.4050 11.5281
Closing exchange rate at year-end (GBP/R) 10.6437 11.7520
R&R contribution (GBP"m) 208 179
R&R contribution (R"m) 2 369 2 063
Unfavourable currency impact (R"m) (26) (103)
The contribution of the financial services interests to Remgro"s headline
earnings decreased by 31.5% from R1 674 million in 2005 to R1 147 million. With
effect from 1 April 2005, Absa was reclassified as an "Asset held for sale" and
was consequently no longer equity accounted. Dividends amounting to R123 million
have been included in headline earnings for the year under review, while Absa"s
contribution to headline earnings in 2005 was R509 million. The combined
contribution of FirstRand and RMBH to Remgro"s headline earnings amounted to R1
024 million (2005: R1 160 million). This decrease can be attributed mainly to
the non-recurring BEE cost resulting from FirstRand"s BEE transaction concluded
during May 2005. Remgro"s attributable share of this cost, including the
indirect interest held through its 23.1% interest in RMBH, amounts to R289
million.
The contribution of the industrial interests increased by 4.7%. The good
performances by Rainbow, Total South Africa and Distell were offset by lower
results from Dorbyl, Medi-Clinic and Nampak. The results from both Dorbyl and
Medi-Clinic for the year under review were negatively influenced by secondary
taxation on companies (STC) payable on special dividends paid during the year.
Remgro"s share of the non-recurring BEE cost resulting from the BEE transactions
of Medi-Clinic and Nampak amounted to R71 million, while R20 million was also
accounted for with regard to the BEE transaction concluded by Distell during the
year under review.
The contribution of the mining interests to headline earnings increased by
182.4%, mainly as a result of the special dividend paid by Implats during March
2006. Total dividends received from Implats during the year under review
amounted to R277 million (2005: R70 million) and was accounted for in headline
earnings. Trans Hex reported lower results and its contribution to headline
earnings decreased to R10 million (2005: R31 million). The average rough diamond
prices deteriorated in the second half of the year, the cost of diamonds sold
were higher and the Angolan and marine operations did not meet their production
targets.
Earnings
Earnings per share, including capital profits realised with the sale of various
investments, decreased by 0.9% to 1 697.6 cents. This decrease can be attributed
mainly to the surplus accounted for during the 2005 year on the redemption by
R&R of debentures, as well as unfavourable capital and non-recurring items of
associated companies during the year under review.
4. Intrinsic value
Remgro"s intrinsic value per share increased by 31.4% from R119.97 at 31 March
2005 to R157.59 at 31 March 2006. 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 10.2% in BAT at 31 March 2006. The other two-
thirds of the ordinary share capital of R&R is held by Compagnie Financiere
Richemont SA (Richemont).
During March 2006, Richemont redeemed a portion of its R&R debentures for cash
amounting to GBP285 million. The funds available were part of the proceeds that
R&R received in May 2004 upon the exercise by the holders of the warrants issued
over the BAT preference shares that were previously held by R&R. Remgro elected
not to redeem its pro rata portion of the debentures amounting to GBP142.5
million. Consequently, R&R issued new "2006" participation securities of nominal
value to Remgro and Richemont in proportion to their shareholding. Dividends on
these "2006" participation securities will cater for the effect that the
disproportionate holding of debentures may have on the distribution by R&R of
non-BAT income, which constitutes only a minor source of its income. This places
Remgro in the position it would have been had Richemont not taken redemption of
R&R debentures as described above. It therefore does not affect BAT dividends
flowing to Remgro.
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 28.9% at 31 March 2006 (2005: 28.3%).
R&R"s share of BAT"s earnings for the twelve months to 31 March 2006 is based on
BAT"s results for the year ended 31 December 2005 plus the results for the
quarter to 31 March 2006 less the results for the quarter to 31 March 2005.
Remgro"s share of R&R"s headline earnings is also shown in the table below.
2006 2005
GBP"m GBP"m
Attributable profit of BAT before capital
and non-recurring items 1 942 1 731
Movement in present value of BAT preference
shares and dividends - (8)
Adjusted attributable profit of BAT for the
twelve months ended 31 March 1 942 1 723
R&R"s share of the adjusted attributable
profit of BAT:
- 28.56% to 28.89% (2005: 28.05% to 29.57%) 558 489
Movement in present value of BAT preference
shares and dividends - 8
R&R"s non-BAT income 29 37
R&R"s adjusted headline earnings for the
year ended 31 March 587 534
Remgro"s share thereof:
- 35.46% of R&R"s share of the adjusted
attributable profit of BAT (2005: 33.3% to
35.46%) 198 164
- 33.3% of R&R"s non-BAT income 10 15
208 179
R"m R"m
Translated at an average GBP/R rate of
11.4050 (2005: 11.5281) 2 369 2 063
In BAT"s financial year to 31 December 2005, its adjusted, diluted earnings per
share, a good indicator of its underlying performance, grew by 17% to 89.34
pence per share, mainly due to the improved underlying operating performance and
reduced net finance costs, the impact of the formation of Reynolds American, and
the share buy-back programme.
In BAT"s quarter to 31 March 2006, its adjusted diluted earnings per share grew
by 14% as a result of the increase in the profit from operations, the improved
contribution from associated companies and the benefit of the share buy-back
programme, partially offset by higher taxation and minority interests.
The following commentary is based on BAT"s annual report for the year ended 31
December 2005.
BAT cigarette sales volumes from subsidiaries decreased by 1% to 678 billion
from the prior year due to the merger of BAT"s US business with R.J. Reynolds to
form Reynolds American as well as the sale of Etinera, an Italian distribution
business. However, excluding the impact of these transactions, there was good
organic volume growth from subsidiaries of 2%. The four global drive brands -
Dunhill, Kent, Lucky Strike and Pall Mall - performed well with an overall
growth of 9% on a `like for like" basis. Associates" volumes increased from 167
billion to 232 billion and, with the inclusion of these, total BAT volumes would
have been 910 billion (2004: 853 billion).
BAT"s profit from operations was 36% lower at GBP2 420 million, mainly due to
the impact in 2004 of a significant GBP1 389 million gain on the Reynolds
American merger. Excluding the merger of its US business with R.J. Reynolds and
the sale of Etinera, on a `like for like" basis, BAT"s profit from operations
would have been 9% higher, or 5% at constant rates of exchange. This `like for
like" information provides a better understanding of the subsidiaries" trading
results. The strong profit performance reflected higher profit in all regions,
except America-Pacific.
In Europe, profit increased by GBP34 million to GBP784 million, with
particularly strong growth from Russia and Germany. The integration of the
Smoking Tobacco and Cigars business in 2005, other cost savings and the positive
impact of the change in trade terms in Italy also contributed to the result.
Excluding a net GBP30 million gain as a result of the sale of Etinera at the end
of 2004, partly offset by the consequent change in terms of trade, profit on a
`like for like" basis would have increased by GBP64 million or 9%. Volumes were
2% higher at 244 billion, with growth in Russia, Romania and Poland, partly
offset by declines in Italy, Germany, Switzerland and Ukraine.
In Asia-Pacific, profit rose by GBP36 million to GBP531 million as good
performances in Australasia and Pakistan, a benefit in the first quarter from
the timing of an excise payment in South Korea and good results from many of its
other markets more than covered the reductions in Malaysia and Vietnam. Volumes
at 137 billion were 4% higher, as strong increases in Pakistan and Bangladesh
were partially offset by declines in South Korea, Vietnam and Malaysia.
In Latin-America, profit increased by GBP82 million to GBP530 million as good
performances across the region reflected higher volumes and margins, further
helped by stronger currencies in many of the markets. Volumes at 149 billion
increased slightly as growth in many markets was partly offset by declines in
Mexico and Argentina.
Profit in the Africa and Middle East region grew by GBP74 million to GBP434
million, mainly driven by South Africa and reduced losses from Turkey. Volumes
grew by 5% to 103 billion, with strong growth from the Middle East markets and
Turkey.
On a `like for like" basis, the America-Pacific regional profit declined by
GBP54 million to GBP436 million, with lower contributions from both Canada and
Japan. Increased volumes in Japan were more than offset by a decrease in Canada
leading to an overall decline of 2%. As the comparative period included in the
US tobacco businesses (now merged with R.J. Reynolds and included in
associates), the reported regional volumes were 34% lower at 45 billion, while
the reported profit was GBP203 million down.
BAT"s share of the post tax results of its own associates increased by GBP266
million to GBP392 million, reflecting the inclusion of GBP244 million for
Reynolds American following its formation in July 2004. On a pro forma US GAAP
basis, as if the combination of the R.J. Reynolds domestic US tobacco business
with Brown & Williamson had been completed on 1 January 2004, Reynolds American
reported that operating profit for the year increased by 35% and net income rose
by 29%. These results demonstrate the success of the business combination. The
higher income principally reflected improved pricing and merger synergies.
6. Other investments
The most important changes to Remgro"s other investments during the year under
review were as follows:
Absa Group Limited (Absa)
During July 2005, Remgro sold its entire interest in Absa to Barclays Plc for R5
064 million at a price of R82.50 per share. An after-tax capital gain of R2 570
million was realised on this transaction.
Medi-Clinic Corporation Limited (Medi-Clinic)
During December 2005, Medi-Clinic implemented its black ownership initiative and
capital restructuring.
In terms of this transaction, Medi-Clinic"s strategic black partners (a BEE
consortium) acquired approximately 14.9 million ordinary shares on a pro rata
basis from all shareholders in the ratio of 4.25 ordinary shares for each 100
ordinary shares held. The price per ordinary share was R18.40. Consequently,
Remgro received R139.5 million. At the same time Medi-Clinic issued 44.3 million
ordinary shares to the BEE consortium and to a trust set up for the benefit of
participating employees. This resulted in the dilution of Remgro"s interest in
Medi-Clinic from 51.8% (as at 30 September 2005) to 48.0% as at 31 March 2006.
As a result, Medi-Clinic was no longer consolidated and accounted for as an
associated company from 1 January 2006. An after-tax capital gain of R70 million
was realised on this transaction.
FirstRand Limited (FirstRand)
In May 2005, FirstRand announced that all conditions precedent in respect of its
BEE transaction had been complied with.
In terms of this transaction, FirstRand bought back approximately 416.2 million
ordinary shares on a pro rata basis from all shareholders in the ratio of 7.6
ordinary shares for each 100 ordinary shares held. The price per ordinary share
amounted to R12.28 and Remgro received R486.0 million on 16 May 2005. An after-
tax capital gain of R123 million was realised. As part of this transaction,
FirstRand also issued 119 million ordinary shares to the BEE consortium.
On 31 March 2006, Remgro"s total interest in FirstRand, including the indirect
interest held through its 23.1% interest in RMBH, was 17.0% (2005: 18.0%).
RMB Holdings Limited (RMBH)
RMBH distributed R1.00 per ordinary share to its shareholders in terms of a
capital reduction scheme, and Remgro received R274 million during November 2005.
Sage Group Limited (Sage)
During September 2005, Remgro sold its 17.9% interest in Sage to Momentum Group
Limited for R114 million, or R1.75 per Sage share, comprising an initial payment
of R1.42 per share and a potential subsequent payment of up to R0.33 per share.
The initial payment received amounted to R92 million. An after-tax capital gain
of R10 million was realised on this transaction. The potential subsequent
payment is still subject to certain tax queries being resolved.
Kagiso Trust Investments (Proprietary) Limited (KTI)
During December 2005, the Competition Authorities gave their approval for
Remgro"s acquisition of 37% (on a fully diluted basis) of the issued ordinary
shares of KTI. The purchase price, including transaction costs, amounted to R463
million. KTI is an established black empowerment company, with a sound
investment track record, and has an investment portfolio and strategy
complementary to that of Remgro. With their combined industry expertise, the
acquisition will present an opportunity for Remgro and KTI to jointly pursue
investment opportunities.
For the year under review, no income from KTI was accounted for. In future KTI
(that has a June year-end) will be equity accounted by Remgro for the twelve-
month period ending December each year.
Nampak Limited (Nampak)
During September 2005, Nampak"s shareholders approved its BEE transaction. The
operative date of the scheme was 31 October 2005.
In terms of the transaction, Remgro sold 10 Nampak shares for every 100 held.
The price per ordinary share was R15.13 and Remgro received R131.3 million
during October 2005. On 31 March 2006, Remgro"s interest in Nampak was 13.5%
(2005: 13.7%).
Distell Group Limited (Distell)
During September 2005, Distell announced the introduction of a BEE partner. In
terms of this transaction, Distell disposed of 15% in its operating company for
a consideration of approximately R869.4 million.
Repurchase of Remgro shares
During the year under review, a wholly owned subsidiary company of Remgro
acquired a further 8 549 237 ordinary Remgro shares at an average price of
R114.34 for a total amount of R977.5 million. Wholly owned subsidiary companies
sold 37 691 443 shares, held in treasury, to Remgro Limited during March 2006.
These shares were cancelled as issued shares by the latter. After this
cancellation, 1 379 635 ordinary Remgro shares (0.3%) are held as treasury
shares by a wholly owned subsidiary.
During the year under review, The Remgro Share Trust purchased 21 000 (2005: 660
018) ordinary Remgro shares at an average price of R134.46 (2005: R90.93) for a
total amount of R2.8 million (2005: R60.0 million), while 1 308 790 shares were
delivered to participants against payment of the subscription price.
Subsequent to the year-end
Gencor Limited (Gencor)
On 14 March 2006, Gencor announced that it has been placed under voluntary
liquidation and that a final liquidation dividend of R0.20 per share will be
paid to shareholders. During May 2006, Remgro received R7.6 million as a
liquidation dividend.
7. Cash resources and application
The Company"s cash resources at 31 March 2006 are as follows:
Local Offshore Total
R"m R"m R"m
Per consolidated balance sheet 4 628 1 729 6 357
Less: Cash from other
operating subsidiaries (562) - (562)
Cash at the centre 4 066 1 729 5 795
Attributable share of R&R"s - 1 524 1 524
cash
Available cash 4 066 3 253 7 319
The final ordinary dividend per share has been increased by 15.2% to 228 cents.
Total ordinary dividends per share in respect of the financial year to 31 March
2006 have consequently increased by 15.0% from 314 cents to 361 cents.
Given the Group"s strong cash position, the Board has decided to also declare a
special dividend of 400 cents per share.
The total distribution to shareholders in respect of the financial year is as
follows:
(Based on total issued shares at time 2006 2005
of payment)
R"m R"m
Ordinary
- Interim 694 606
- Final 1 104 1 033
1 798 1 639
Special 1 937 3 132
Total 3 735 4 771
The Board is of the opinion that, after the above distribution to shareholders,
the Group will have sufficient cash resources to pursue investment opportunities
and to continue its share repurchase programme.
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.
Tribute
On this occasion, the Board of Remgro wishes to pay tribute to the late Dr Anton
Rupert, founder of the Rembrandt group of companies from which Remgro emanated.
Dr Rupert"s business acumen and visionary leadership laid the foundation on
which this Company could further build successfully. He left a legacy of which
the Board, staff and shareholders can be justly proud of. We also should like to
convey, once again, our deepest condolences to his family.
It was with sadness and a feeling of great loss that the Board of Remgro
received the news of the passing away of Mr Eric Molobi, a non-executive
director of the Company for many years, on 4 June 2006.
Mr Molobi will be remembered as an experienced businessman and leader of people.
His invaluable advice and insight into the economic and developmental issues of
our country will be sorely missed. We were privileged to benefit from his
wisdom.
The Remgro Board wishes to pay tribute to a South African who always walked tall
and dedicated his life and his career to the upliftment and empowerment of his
fellow-countrymen. We honour his memory and convey our deepest condolences to
his next of kin.
Declaration of Dividend No 12
Notice is hereby given that a final dividend of 228 cents (2005: 198 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 2006.
Declaration of Special Dividend
Notice is hereby given that a special dividend of 400 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.
Dates of importance:
Last day to trade in order to
participate in the final and special
dividend Friday, 11 August 2006
Trading on or after this date will
be ex the final and special dividend Monday, 14 August 2006
Record date Friday, 18 August 2006
Payment date Monday, 21 August 2006
Shareholders may not dematerialise or rematerialise their holdings of ordinary
shares between Monday, 14 August 2006, and Friday, 18 August 2006, both days
inclusive.
The Annual Report will be posted to members during July 2006.
Signed on behalf of the Board of Directors.
Johann Rupert Thys Visser
Chairman Chief Executive Officer
Stellenbosch
22 June 2006
Directorate
Non-executive directors
Johann Rupert (Chairman), E de la H Hertzog (Vice-chairman),
P E Beyers, G D de Jager*, J W Dreyer, P K Harris*,
E Molobi*#, J F Mouton*, D Prins*, F Robertson*
(*Independent)
(#Deceased - 4 June 2006)
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 - General Financial
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 (Proprietary) Limited,
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc
Stellenbosch
Sponsor
Rand Merchant Bank (A Division of FirstRand Bank Limited)
Website
www.remgro.com
Annexure A
Intrinsic net asset value
Stock
Shares exchange 31 March 31 March
held closing Exchange 2006 2005
Notes million price GBP"m rate R"m R"m
Tobacco
interests
R&R Holdings 3 200.5 10.6437 34 065 26 276
- BAT 1 214.3 1 394 2 987.3
ordinary
shares
- Cash and 213.6
dividends
receivable
- Other net (0.4)
assets
Financial
services
FirstRand 481.1 2 000 9 623 6 941
RMB Holdings 274.1 2 915 7 990 5 874
Absa Group - - - 4 629
Sage Group - - - 120
Sagecor 1 26
Industrial
interests
Medi-Clinic 171.0 2 065 3 531 2 732
Corporation
Unilever 1 984 1 711
Bestfoods
Robertsons
Distell 58.7 3 600 2 112 1 405
Group
Nampak 78.1 1 675 1 308 1 371
Total South 1 889 1 187
Africa
Rainbow 172.8 950 1 642 1 124
Chicken
Tsb Sugar 1 260 1 028
Air Products 801 606
South Africa
Dorbyl 14.1 1 362 191 422
Wispeco 441 304
Kagiso Trust - 710 -
Investments
Caxton 7.8 1 500 117 89
Mining
interests
Implats 3.3 116 500 3 886 1 751
Trans Hex 30.2 1 201 363 529
Group
Gencor 38.0 20 8 6
Other
Sundry 116 72
investments
and loans
Deferred (417) (107)
taxation
asset/
(liability)
Other net (100) 390
assets/
(liabilities
)
Cash at the
centre
- Local 2 4 066 782
- Offshore 2 162.4 10.6437 1 729 312
Intrinsic 77 316 59 580
net asset
value
Potential 3 (1 699) (1 141)
CGT
liability
Intrinsic 75 617 58 439
net asset
value after
tax
Issued 479.8 487.1
shares after
deduction of
shares
repurchased
and the
shares in
The Remgro
Share Trust
(million)
Intrinsic R157.59 R119.97
value per
share
Notes
1. This represents Remgro"s effective interest of 10.2% 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. The listed investments are valued at stock exchange prices and unlisted
investments at directors" valuation.
Date: 22/06/2006 05:03:15 PM Produced by the JSE SENS Department
