Release Date: September 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Remgro Ltd (FRA:RE7, Financial) reported strong performances from OUTsurance, TotalEnergies, Air Products, Siqalo, and RCL Foods.
- The company increased its final dividend by 15%, resulting in a total dividend increase of 10% for the year.
- Progress was made on strategic shifts at RCL Foods, including the separate listing of Rainbow.
- There were encouraging signs of macroeconomic improvement, such as lower inflation, fewer incidents of load shedding, and a reduction in fuel prices.
- Remgro Ltd (FRA:RE7) made significant strides in reducing non-core assets and leverage at the center.
Negative Points
- Headline earnings decreased by 20% from ZAR7 billion to ZAR5.6 billion, and headline earnings per share decreased by 18.8%.
- The company faced intolerable execution time frames on corporate actions, such as the Vodacom-CIVH deal, which has been pending for nearly three years.
- Losses at HeinBev were significant, and the company needs to work hard to recover.
- The operating environment in Switzerland remains challenging, impacting Mediclinic's performance.
- The overall performance for the year was unsatisfactory, with a particularly challenging first six months.
Q & A Highlights
Q: Can you comment on the share price of Capevin that's used in the valuation in these results? And also maybe on the acquisition that's been recently announced by Campari?
A: Our share price or our valuation translates into something around ZAR24 and ZAR42. The transaction that was announced was around ZAR51 or just north of ZAR50, so roughly double the price that we carried at in our INAV at least. That was a bilateral deal between two third-parties. So it's not an offer that was available to us. We've always been consistent to say that we'd like to think our valuations are conservative. It's certainly not a price list, INAV, it's not the price at which we would sell our investments. So it's pleasing that there are reference points out there that are meaningfully higher than the INAV, but yes, it's also not for us to mark off our valuations to third-party deals. So we're comfortable with that price now.
Q: Can you give a sense of what the plans would be if the Vodacom deal doesn't go through?
A: If the Vodacom transaction is not approved, then this is not a crisis for us. The business will carry on as is. We have got plans in place with the banks, where we have extended the decline in covenant measurements, where they measure debt-to-EBITDA. So there's no immediate crisis. The biggest impact probably is that we will have to slow our ambitions to roll out Vuma Key into many parts of South Africa. The company will continue to use -- it will continue to be cash flow generative, continuing to invest in both DFA and Vumatel, but unfortunately, KEY will be slower than planned. We will get there, but it will probably take 5 to 10 years, whereas we can do it in a much shorter period of time.
Q: With this being 30% of INAV, how would Remgro frame the investment case? And what excites Remgro about the investment, given the tough environment in Switzerland?
A: I think it's the bottom of the market for us to a certain extent in Switzerland. I've got a lot of confidence in the management team that they can turn things around in Switzerland. The plans are starting to bear fruit. We're relooking at the operating model. And then loan build, we've got some good growth opportunities in the UAE. And South Africa actually is now with the new momentum behind the business with the new momentum in terms of the Government of National Unity, some good engagements with the President in terms of the NHI. I think even on the South African side, we're seeing some good pockets of growth in that respect. So we're comfortable with the investment case at the moment.
Q: Can you comment on the share price of Capevin that's used in the valuation in these results? And also maybe on the acquisition that's been recently announced by Campari?
A: Our share price or our valuation translates into something around ZAR24 and ZAR42. The transaction that was announced was around ZAR51 or just north of ZAR50, so roughly double the price that we carried at in our INAV at least. That was a bilateral deal between two third-parties. So it's not an offer that was available to us. We've always been consistent to say that we'd like to think our valuations are conservative. It's certainly not a price list, INAV, it's not the price at which we would sell our investments. So it's pleasing that there are reference points out there that are meaningfully higher than the INAV, but yes, it's also not for us to mark off our valuations to third-party deals. So we're comfortable with that price now.
Q: Can you give a sense of what the plans would be if the deal doesn't go through?
A: If the Vodacom transaction is not approved, then this is not a crisis for us. The business will carry on as is. We have got plans in place with the banks, where we have extended the decline in covenant measurements, where they measure debt-to-EBITDA. So there's no immediate crisis. The biggest impact probably is that we will have to slow our ambitions to roll out Vuma Key into many parts of South Africa. The company will continue to use -- it will continue to be cash flow generative, continuing to invest in both DFA and Vumatel, but unfortunately, KEY will be slower than planned. We will get there, but it will probably take 5 to 10 years, whereas we can do it in a much shorter period of time.
Q: Can you comment on the share price of Capevin that's used in the valuation in these results? And also maybe on the acquisition that's been recently announced by Campari?
A: Our share price or our valuation translates into something around ZAR24 and ZAR42. The transaction that was announced was around ZAR51 or just north of ZAR50, so roughly double the price that we carried at in our INAV at least. That was a bilateral deal between two third-parties. So it's not an offer that was available to us. We've always been consistent to say that we'd like to think our valuations are conservative. It's certainly not a price list, INAV, it's not the price at which we would sell our investments. So it's pleasing that there are reference points out there that are meaningfully higher than the INAV, but yes, it's also not for us to mark off our valuations to third-party deals. So we're comfortable with that price now.
Q: Can you give a sense of what the plans would be if the deal doesn't go through?
A: If the Vodacom transaction is not approved, then this is not a crisis for us. The business will carry on as is. We have got plans in place with the banks, where we have extended the decline in covenant measurements, where they measure debt-to-EBITDA. So there's no immediate crisis. The biggest impact probably is that we will have to slow our ambitions to roll out Vuma Key into many parts of South Africa. The company will continue to use -- it will continue to be cash flow generative, continuing to invest in both DFA and Vumatel, but unfortunately, KEY will be slower than planned. We will get there, but it will probably take 5 to 10 years, whereas we can do it in a much shorter period of time.
Q: Can you comment on the share price of Capevin that's used in the valuation in these results? And also maybe on the acquisition that's been recently announced by Campari?
A: Our share price or our valuation translates into something around ZAR24 and ZAR42. The transaction that was announced was around ZAR51 or just north of ZAR50, so roughly double the price that we carried at in our IN
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
