Final results for the year ended 31 December 2016 Presentation to the Investment Analysts Society 28 February & 1 March 2017

Transcription

1 Final results for the year ended 31 December 2016 Presentation to the Investment Analysts Society 28 February & 1 March

2 Presentation overview Overview Financial Results Underlying Investment Performance INAV Questions 2

3 Overview 3

4 Key investment sectors Food Healthcare Financial Services & Infrastructure Restricted BEE Property structures RE AFRICA Other 4

5 Contribution to Intrinsic Gross Asset Value 5

6 Dividend history (cps) , , * * LHC unbundling Special Dividend Ordinary Dividend 6

7 Financial Results 7

8 Financial Highlights Intrinsic Gross Asset Value increased to R9.3bn Intrinsic NAV increased by 21.4% to R5.1bn Intrinsic NAV per share increased by 22.9% to R21.40 Dividend income increased by 10.3% to R340m Operating profit increased by 147% to R459m Final Dividend increased by 20% to 42 cents per share 8

9 Group Income Statement (R m) Change Year Ended 31 Dec 2016 Year Ended 31 Dec 2015 Revenue Sales and fee income Dividends 22% 24% 10% Operating profit 147% Fair value losses -83% (71) (430) Share of profits / (losses) of associates and JVs 98 (342) Finance costs 17% (261) (224) Profit / (loss) before tax 284 (746) Taxation (86) 78 Profit / (loss) after tax 197 (668) Basic EPS (cents) 70.9 (284.8) Basic HEPS (cents) 48.0 (295.3) 9

10 Dividends Received Investment 2016 R m 2015 R m Oceana Phuthuma Nathi Life Healthcare Equites Aon Re Old Mutual Other TOTAL

11 Fair Value Changes Investment 2016 R m 2015 R m Tiger Brands (91.7) Equites MTN Zakhele / Futhi 12.1 (75.7) Grindrod 9.1 (12.2) Old Mutual (17.5) 88.6 Taste Holdings (26.0) (10.8) Life Healthcare (118.0) (403.8) Phuthuma Nathi (158.6) 96.2 Other 10.4 (27.2) TOTAL (70.8) (429.6)

12 Group Balance Sheet Change 31 Dec Dec 2015 Total assets (R m) 0.4% Interest bearing borrowings (R m) 15.6% Book NAV (R m) -4.1% Book NAV per share (cents) -3.1% Intrinsic NAV (R m) 21.4% Intrinsic NAV per share (cents) 22.9%

13 NAV & INAV history (R bn) 6 4,86 5,13 4,5 4,19 4,23 3 1,5 1,57 1,91 2,00 2,49 2,82 3,61 3,24 3,33 2,53 2, NAV (R bn) INAV (R'bn) 13

14 Share Price & INAV history BRN BRT INAV Dec

15 Underlying Investment Performance 15

16 16 Food

17 Oceana Group Ltd (17%) Oceana accounts for 30% of Brimstone s intrinsic gross asset value Shareholding of 23m shares, market value R2.8bn Received and accrued R108m in dividends and recorded R67.7m in equity accounted earnings Closing price R per share (Dec 2015: R117.00) 17

18 Sea Harvest (85%) Accounts for 24% of Brimstone s intrinsic gross asset value Proposed listing on JSE by end March 2017 Up to R1.5bn private placement Proceeds will be used to repay debt (R303m), redeem pref shares and repay loans held by Brimstone (R575m) Brimstone will hold more than 50% of Sea Harvest post listing Sea Harvest has identified organic and acquisitive growth opportunities 18

19 Tiger Brands (0.9%) Hold shares Matures in Dec 2017 Revalued upwards by R123.3m to R373.3m Closing price R per share (Dec 2015: R316.44) 19

20 20 Financial Services & Property

21 Lion of Africa Insurance Company (100%) Turnaround at Lion of Africa substantially complete Significant improvement in gross loss ratio from 104.4% to 66.3% Positive effect of remedial action and strategic changes Net loss of R15.4m (includes once off reorganisation costs and legacy claims) vs R179.6m loss in prior year Solvency at 4.14 (Dec 2015: 1.02) Shareholder introduced R118m in capital Investment carried at R143m (2015: R40m) 21

22 RE AFRICA AON Re Africa (18%) Received dividends of R14.3m Equity accounted losses R5.7m 22

23 Equites (10%) Total dividends received for the year R29.6m Subscribed for additional R100m worth of shares during the year Revalued upwards by R94m to R551m Closing share price R15.80 per share (Dec 2015: R12.75) 23

24 24 Healthcare

25 Life Healthcare (4.7%) Accounts for 17.5% of Brimstone s intrinsic gross asset value Received dividends for the year of R82.8m Revalued downwards by R118m to R1.6bn Closing share price R32.60 per share (Dec 2015: R35.07) 25

26 Obsidian Health (25.07%) Positive in its outlook to build a world class medical device solutions provider in the long term Recorded R0.7m in equity accounted earnings 26

27 27 Infrastructure

28 Grindrod (6.7%) Accounted for as a JV, investment written down to nil at 31 Dec 2015 Carrying value of our interest in Consortium SPV of R21m, following share price improvement Closing price of R13.45 per share (Dec 2015: R11.29) 28

29 29 Restricted BEE structures

30 Phuthuma Nathi (7%) Received a dividend of R91.3m Revalued downwards by R158.6m to R619.9m Closing price of PN1 - R per share (Dec 2015: R165) and PN2 - R per share (Dec 2015: R163) 30

31 MTN Group and MTN Zakhele Futhi (1.5%) MTN Zakhele scheme matured in November 2016 Received MTN Group ordinary shares and 1.8m MTN Zakhele Futhi ordinary shares on maturity Sold MTN Group ordinary shares to settle related debt Hold MTN Group ordinary shares and 1.8m MTN Zakhele Futhi ordinary shares at year end 31

32 32 Other

33 House of Monatic (100%) Revenue decreased by 3% to R208m Small profit of R40k Poor retail climate Significant chain customer in business rescue Retail footprint of 9 stores 33

34 South African Enterprise Development (SAED) (25%) Provides equity capital to high growth potential small and medium sized enterprises Five investments to date High Duty Castings Tombake Decision Inc ASG Holdings ZAR X 34

35 35 INAV

36 INAV summary change 31 Dec Dec 2015 Book NAV (R m) -4.1% Intrinsic NAV (R m) 21.4% Book NAV per share (cents) -3.1% Intrinsic NAV per share (cents) 22.9% Fully diluted intrinsic NAV per share (cents) 24.0% Market price per share (cents) Ordinary shares -3.8% N ordinary shares -5.5% Discount to Intrinsic NAV Ordinary shares 39.3% 22.5% N ordinary shares 43.9% 27.1% 36

37 INAV detail Asset % held Valuation basis Gross Value (R 000) Debt (R 000) CGT (R 000) INAV (R 000) Oceana 17% Market value per share ( ) ( ) Sea Harvest * 85% DCF & EV/EBITDA valuation Life Healthcare 4.7% Market value per share ( ) ( ) Grindrod - BEE 6.1% Market value per share ( ) Grindrod - Direct 0.6% Market value per share Phuthuma Nathi 7.0% Market value per share ( ) (3 860) Equites 10% Market value per share ( ) (20 054) Tiger Brands option 0.9% Option valuation (80 602) Lion of Africa 100% Price to book valuation MTN Group 0% Market value per share (1 235) MTN Zakhele Futhi 1.5% Option valuation (1 428) Investment properties 100% Capitalisation rate (13 770) (11 406) AON Re Africa 18% PE valuation (11 250) House of Monatic 100% Book value Other investments Various Book value (3 567) Funding 100% Book value (17 268) ( ) - ( ) TOTAL ( ) ( ) Intrinsic NAV per share (cents) (1 464) (291) * No CGT provided on shareholding in Sea Harvest due to potential use of the corporate relief provisions of the Income Tax Act 37

38 Brimstone valuation of Sea Harvest Brimstone s valuation includes R558m of shareholder loans and pref shares (as at 31 Dec 2016) treated as debt by Sea Harvest Sum of parts valuation with Sea Harvest and Mareterram valued separately Sea Harvest valuation methodologies consistent with prior years:- 50% Discounted Cash Flow valuation 50% EV/EBITDA valuation - multiple increased from 6.0x to 6.5x Implied blended historical EV/EBITDA multiple derived from two valuation methodologies of 7.1x Mareterram valued using closing price on ASX at 31 Dec 2016 No CGT provided due to potential use of the corporate relief provisions of the Income Tax Act 38

39 In conclusion Strong balance sheet and cash flows Succeeded in rationalising the portfolio during the year Defined by our ability to enhance NAV over the long-term Solid track record of unlocking value Sea Harvest listing imminent Will continue to seek opportunities that will create long-term value for shareholders Positive long-term view on underlying investments 39

40 40 Questions

41 Profitability. Empowerment. Positive Social Impact. 41