Remgro Limited
Registration number 1968/006415/06
Audited consolidated results for the year ended 31 March 2001
Headline earnings per share 28% increase
Dividend per share 35% increase
Five year compound growth rates: (pro forma)
- headline earnings per share 21% per annum
- dividend per share 21% per annum
Restructuring of Rembrandt Group Limited and creation of Remgro Limited,
Implemented during September 2000
Redemption of half of the preference shareholding in British American
Tobacco
Exchange of investments in Billiton and Gold Fields for interests in
FirstRand and RMB Holdings
Abridged balance sheet
2001 2000
R million R million
pro forma
Assets
Property, plant and equipment 2 242 2 259
Goodwill and trade marks 3 493 80
Investments - associated companies 12 523 10 660
- other 115 150
Loans 10 11
Deferred taxation 9 -
Current assets 3 395 2 283
(includes cash and cash equivalents of
R1 810 million (2000: R1 034 million))
Total assets 21 787 15 443
Equity and liabilities
Interest of own members 19 536 12 556
Minority interest 888 809
Total shareholders' equity 20 424 13 365
Interest-bearing loans 300 403
Other non-current liabilities 52 42
Other current liabilities 1 011 1 633
Total equity and liabilities 21 787 15 443
Net asset value per share (Rand)
- at book value R37.43 R24.05
- allowing for market value/directors'
valuation of investments and listed
Subsidiary companies R64.32 R51.43
Abridged cash flow statement
2001
R million
Cash flow from operating activities 442
Taxation paid (116)
Dividends received 1 155
Dividends paid (303)
Net cash inflow from operating activities 1 178
Investing activities 356
Financing activities (631)
Net increase in cash and cash equivalents 903
Cash and cash equivalents at the beginning of the year 897
Cash and cash equivalents at the end of the year 1 800
Abridged consolidated statement of changes in equity
2001
R million
Balance at 1 April 2000 as previously reported 12 635
Prior year adjustments (79)
Adjusted balance at 1 April 2000 12 556
Net profit for the year 6 590
Dividends paid (292)
Exchange rate adjustments 892
Change in interests in subsidiary companies,
associated companies and joint ventures (51)
Change in reserves of associated companies (159)
Balance at 31 March 2001 19 536
Abridged income statement
2001 2000
R million R million
pro forma
Revenue 7 358 5 738
Operating profit before depreciation 741 615
Depreciation (173) (167)
Finance costs (67) (36)
Operating profit 501 412
Share of after-tax operating profit
of associated companies 2 919 2 317
Amortisation of goodwill (159) (33)
Exceptional items 3 422 (339)
6 683 2 357
Taxation 14 (100)
Profit after taxation 6 697 2 257
Minority interest (107) (86)
Net profit for the year 6 590 2 171
Reconciliation of headline earnings:
Basic earnings - net profit for the year 6 590 2 171
Plus/(minus) - attributable to own members:
- exceptional items (3 541) 333
- amortisation of goodwill 159 33
- net surplus, after taxation, on disposal
of property, plant and equipment (6) (29)
- impairment of assets 9 -
Headline earnings 3 211 2 508
Earnings and dividend per share
2001 2000
cents cents
Headline earnings 615.1 480.5
- diluted 614.7 480.5
Basic earnings 1 262.5 415.9
- diluted 1 261.5 415.9
Dividend 126.00
- interim 56.00
- final 106.00
Comparable dividend of Rembrandt
Group Limited 120.00
- interim 44.71
- final 75.29
Additional information
Shares in issue
- ordinary shares of 1 cent each 486 493 650 486 493 650
- B shares of 10 cents each 35 506 352 35 506 352
Total 522 000 002 522 000 002
- In determining headline earnings and basic earnings per share the total
number of shares in issue was applied.
- In determining diluted headline earnings and basic earnings per share the
total number of shares in issue was adjusted for the dilutive effect of the
company's long-term share incentive scheme.
2001 2000
R million R million
pro forma
Listed investments
Associated
- book value 5 123 5 286
- market value 9 943 9 080
Other
- book value 50 18
- market value 131 51
Unlisted investments
Associated
- book value 7 400 5 374
- directors' valuation 18 442 13 954
Other
- book value 65 132
- directors' valuation 75 142
Additions to and replacement of property,
plant and equipment 176 182
Capital commitments 100 117
(including amounts authorised, but not
yet contracted for)
Dividends received
- dividends included in operating profit 33 5
- dividends from associated companies
set-off against investments 1 482 683
Exceptional items
Exceptional items of subsidiary companies
consist of the following:
Restructuring costs and discontinuance
of operations (7) (2)
Net capital surplus on the sale of
investments and businesses 1 518 234
Net capital surplus on the sale of property,
plant and equipment 16 -
Other (4) (30)
1 523 202
Share of exceptional items of
associated companies 1 899 (541)
Restructuring costs of British
American Tobacco plc (BAT) (273) (362)
Capital surplus on redemption of
convertible preference shares in BAT 2 202 -
Impairment of mining assets of
Gold Fields Limited - (205)
Other (30) 26
Total before taxation 3 422 (339)
Taxation 120 3
Total after taxation 3 542 (336)
Attributable to minorities 1 (3)
Attributable to own members 3 541 (333)
3 542 (336)
Comment
1. Restructuring of the former Rembrandt Group
At an Annual General Meeting of Rembrandt Group Limited (Rembrandt) held on
21 September 2000 the restructuring of Rembrandt was approved by
shareholders.
Rembrandt's underlying interests have been reorganised into two separate
companies, namely Remgro Limited (Remgro) and VenFin Limited (VenFin), with
effect from 1 April 2000. This company (Remgro) mainly includes Rembrandt's
tobacco, industrial, mining and financial interests. The share capital of
Remgro has been restructured to also create unlisted B shares, which were
issued to Rembrandt Trust (Pty) Limited. Remgro's issued ordinary shares
were listed on the JSE Securities Exchange South Africa (JSE) on 26
September 2000.
2. Comparative figures
The pro forma comparative figures in the income statement for the year ended
31 March 2000 and in the balance sheet on 31 March 2000 represent the
figures of Rembrandt after making adjustments for investments transferred to
VenFin in terms of the restructuring and are based on the audited financial
statements of Rembrandt.
No pro forma comparative figures are available for the consolidated
statement of changes in equity and for the cash flow statement.
3. Accounting policies and restatement of comparative figures
The annual financial statements are prepared on the historical cost basis in
accordance with South African Statements of Generally Accepted Accounting
Practice and incorporate the policies which, with the exception of
accounting for goodwill, are consistent in all material respects with those
of Rembrandt in the previous year.
Sage Group Limited (Sage)
Besides its primary basis of reporting in accordance with the Financial
Soundness basis, Sage also complies with the South African Statement of
Generally Accepted Accounting Practice in respect of consolidated financial
statements and accounting for investments in subsidiaries (AC 132), which
now also applies to long-term insurers. For equity purposes, Remgro now uses
Sage's figures based on the AC 132, as opposed to the former basis in the
previous year. Remgro's pro forma figures for the year ended 31 March 2000
have been restated, as indicated below.
Restatement of comparative figures Year ended
31 March 2000
Pro forma
Per share Cents
Headline earnings as previously reported 485.6
Changes in accounting treatment of Sage (5.1)
Restated headline earnings 480.5
4. Results
- Headline earnings per share
Headline earnings per share increased by 28.0% from 480.5 cents to 615.1
cents. The main reasons for this improvement were the increase of 31.5% in
the earnings of the tobacco interests, of which 11.2% was contributed by the
weaker rand, and a 66.3% increase in the contribution by the mining
interests. The contribution of industrial interests to headline earnings was
1% lower than the previous year in spite of Rainbow Chicken Limited's
increased contribution to the Group's headline earnings, from R7.7 million
to R63.3 million. Dorbyl Limited and Malbak Limited reported decreases in
earnings.
- Basic earnings per share
Basic earnings, after exceptional items and amortisation of goodwill,
increased by 203.6%, from 415.9 cents to 1 262.5 cents, mainly due to two
material favourable exceptional items. A surplus of R1 371 million was
accounted for on the sale of Remgro's interests in Billiton Plc and Gold
Fields Limited to Anglo American Plc and De Beers Consolidated Mines Limited
in exchange for a major portion of their shareholding in FirstRand Limited.
A further surplus of R2 202 million was recorded due to R&R Holdings, in
which Remgro has a one-third interest, exercising its put option over one-
half of the BAT convertible redeemable preference shares in June 2000.
5. Revenue
2001 2000
R million R million
Pro forma
Revenue, excluding dividends and interest 5 735 5 005
Dividends and interest 1 623 733
Total revenue 7 358 5 738
6. Source of headline earnings
2001 2000
R million % R million %
Trade mark interests 1 599 50 1 247 50
Mining interests 823 26 495 20
Industrial interests 380 12 383 15
Financial services 238 7 217 9
Corporate finance and other interests 171 5 166 6
3 211 100 2 508 100
7. Tobacco
Remgro's tobacco interests are represented by a one-third shareholding in
R&R Holdings, Luxembourg, (R&R). The other two-thirds are held by Compagnie
Financi re Richemont AG (Richemont). In consequence of the merger of
Rothmans International and British American Tobacco Plc (BAT) in June 1999,
R&R acquired a 35% interest in the enlarged BAT. Accordingly, the financial
year ended 31 March 2001 is R&R's first full year of ownership of the
investment in BAT.
R&R has equity accounted its interest in BAT in the financial year under
review, whereas in R&R's profit and loss account for the prior year it
equity accounted the investment in BAT for a ten-month period and included
its share of the results of Rothmans International on an equity accounted
basis for the first two months of that year.
In addition to the effects of the merger, comparison of the results of the
two years is further complicated by the reduction in R&R's effective
interest in BAT as a result of the exercise of the put option over one half
of the interest in BAT preference shares in June 2000. This disposal reduced
R&R's effective interest in BAT to 31.6% for the last ten months of the year
under review.
In terms of the Rembrandt restructuring, the non-tobacco assets of R&R,
including the proceeds of the redemption of one half of the BAT preference
shares, were transferred to R&V Holdings Limited, Jersey, (R&V) in which
VenFin holds one-third and Richemont two-thirds. In the adjusted results for
both years, the income attributable to the redeemed BAT preference shares
and other non-tobacco assets was allocated to R&V.
In line with the practice adopted in the prior year, R&R adjusts BAT's
reported results to take account of BAT's December financial year-end and
the differences in accounting policies applied by the two companies. After
elimination of exceptional items and goodwill amortisation, R&R's
contribution to Remgro's headline earnings is as follows:
2001 2000
GBP million GBP million
R&R's headline earnings for the year
ended 31 March 438 429
Less: Portion allocated to R&V Holdings (11) (75)
Adjusted headline earnings 427 354
Remgro's 33.33% share thereof 142 118
R million R million
Translated at an average GBP/R rate
of 10.8046 (2000: 9.9075) 1 539 1 170
BAT is the second largest listed tobacco group in the world with a global
market share of over 15% and annual shipments of more than 800 billion
cigarettes. It has a share of more than 50% of the market in Latin America
as well as strong positions in other regions. With its strong, broad-based
portfolio of international, regional and local brands, BAT remains focussed
on achieving global leadership in the tobacco business by growing its market
share in the `premium' and `lights' segments.
In its financial year ended 31 December 2000, BAT reported an increase in
sales volumes of 7%, including the impact of the merger. Although the world
market was basically stable, BAT's international brands grew by over 1% in
volume terms. The merger with Rothmans International increased the
proportion of premium international brands within BAT to over 20%, with a
consequent improvement of profitability.
The merger process was achieved smoothly and efficiently. Savings in
operating costs as a consequence of the merger were around GBP230 million in
BAT's 2000 financial year. Overall savings will be in excess of the level
identified at the time of the merger and those realised to date have been
achieved sooner than anticipated. In addition to cost benefits, growth
opportunities were pursued, with new selling organisations and strengthened
sales teams contributing to the successful performance of the company's key
brands in a number of markets.
8. Investments
The most important changes related to the Group's other investments were as
follows:
Gencor Limited (Gencor)
On 14 April 2000 Gencor unbundled its investments in Gold Fields of South
Africa Limited (GFSA), Gold Fields Limited (GFL) and Standard Bank
Investment Corporation Limited by way of a dividend in specie to its
shareholders.
GFSA
On 2 May 2000 GFSA unbundled its investments in Northam Platinum Limited
(Northam) and GFL by way of a dividend in specie to its shareholders. On 21
July 2000 GFSA made a cash distribution to shareholders in anticipation of
its voluntary winding up. The shares of GFSA were delisted on 2 November
2000.
Remgro sold its shares in Northam received in terms of the above-mentioned
unbundling. A capital surplus of R152 million was realised and accounted for
as an exceptional item.
Exchange of shares in Billiton Plc (Billiton) and GFL for shares in
FirstRand Limited (FirstRand) and Rand Merchant Bank Holdings Limited (RMBH)
Effective 1 January 2001, Remgro exchanged its interest of 8.2% in Billiton
and 11.3% in GFL for 932 500 000 shares in FirstRand. Thereafter, Remgro
transferred 424 863 144 FirstRand shares to RMBH in exchange for 274 109 670
new RMBH shares. After the exchange, Remgro holds an interest of 9.3% in
FirstRand and 23.1% in RMBH. A capital surplus of R1 371 million was
accounted for as an exceptional item.
W&A Gilbey (South Africa) (Pty) Limited (Gilbey)
The 49% interest in Gilbey was sold for R45 million in April 2000.
Business Partners Limited (Business Partners)
During August 2000 a further investment of R8 million was made in Business
Partners.
Transvaal Sugar Lmited (TSB)
On 29 June 2000, HL&H announced that agreement had been reached with The
Tongaat-Hulett Group Limited for the disposal to them of the assets of TSB,
other than citrus, for R1 billion with effect from 1 April 2000. This
transaction required the approval of the competition authorities.
After receiving representations from all interested parties, the competition
authorities ruled that the proposed transaction be prohibited. This resulted
in the withdrawal of the proposed scheme whereby Industrial Partnership
Investments Limited, a subsidiary of Remgro, would have made an offer to the
minority shareholders of HL&H.
Dividends
Declaration of Dividend No 2
Notice is hereby given that a final dividend of 106 cents per share has been
declared in respect of both the ordinary shares of one cent each and the B
shares of ten cents each, for the financial year ended 31 March 2001. The
dividend is payable to shareholders of the Company registered at the close
of business on 3 August 2001.
Including the interim dividend of 56 cents per share paid during January
2001, total dividends for the financial year amounted to 162 cents per
share.
The final dividend will be transferred electronically on 17 August 2001 to
the bank accounts of shareholders who utilise this facility while dividend
cheques will be mailed to other shareholders on that date.
The Annual Report will be posted to members during July 2001.
Signed on behalf of the Board of Directors.
Johann Rupert Thys Visser
Chairman Chief Executive Officer/
Deputy Chairman
Stellenbosch
20 June 2001
Directorate and administration
Directors
Johann Rupert* (Chairman)
M H Visser (Deputy Chairman/Chief Executive Officer)
P E Beyers*, W E B hrmann, G D de Jager*, J W Dreyer*, P J Erasmus*, D M
Falck, E de la H Hertzog*, E Molobi*, J F Mouton*, J A Preller (Mrs), F
Robertson*, P G Steyn*, T van Wyk
(* Non-executive)
Secretary
J C Engelbrecht
Listing
JSE Securities Exchange South Africa
Sector: Diversified Industrial
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 Offices, Quantum Street,
Techno Park, Stellenbosch 7600
(PO Box 456, Stellenbosch 7599)
Transfer Secretaries
Computershare Services Limited, 41 Fox Street
Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc.
Sponsor
Rand Merchant Bank Corporate Finance
Website
www.remgro.com
|