Remgro Ltd Ord

Good morning, everybody. Thank you for joining us this morning and welcome to our final results presentation for the year ended 30 June 2025. Today, the team and I will unpack our financial performance for this past financial year and as become our set format, we will delve into some detail on the performance of our key portfolio companies that contribute meaningful to our overall performance. With that in mind, the outline of today's presentation will be as follows. First, myself and then Carl Forster will give an overview of the salient features of our results for the year, including a high-level recap of our key strategic priorities, which remains consistent with those that we communicated at our recent Capital Markets Day, and a sense of our progress against these. Secondly, our CFO, Neville Williams, will then unpack in more detail our results for the period, And then thirdly, as mentioned, we will then be giving an update on some of our key investments, including MediClinic, CIVH, Heineken Beverages and RCL Foods. The CFO of MediClinic, Jurgens Meiberg, will speak to MediClinic's results. Thereafter, and for the very first time, the CEO of Massive, M. Dietlof Maria, will do the same for CIVH. And then just after that, the Managing Director and Finance Director of Heineken Beverages, Jordi Barut. Incidentally, he's no relation to Jordi Barrett, the All Black Centre, no relations there as he's Spanish. And then Lucas Verwey will do the same for Heineken Beverages. And then finally, the CEO of RCL Foods, Paul Krushenk, will provide highlights of the results they reported on the 1st of this month. I will then close off the presentation by looking at our areas of focus going forward before opening the floor for questions right at the end. If we move on to the performance overview, today I will be presenting our results showing strong earnings momentum across our portfolio which we are very satisfied with. As I reflected on this progress, I came to the view that these outcomes are really a reflection of the resilience of our portfolio in difficult times. as well as the focused execution of the strategy we set in motion five years ago. This journey has involved enormous challenges, but through patience and resilience, we continue to make very good progress. By the same token, it would be remiss of us not to reflect on the impact of the operating environment within which we have operated in the past few years, and that we continue to operate in. The environment around us remains challenging, and this is the reality that I'm sure this audience is all too familiar with. Global trade tensions, Persistent geopolitical instability and muted domestic growth continues to test South African corporates. Our own portfolio companies are, of course, not immune to this. We're not operating on an island. We have spent some time as recently as our capital markets by unpacking the macroeconomic challenges and the resulting impact on our underlying investments. So I'm not going to delve in all of these details today. While these continue, we know that these continue to persist globally and locally. We have also seen some improvements, including some reductions in interest rates, the significant strides made in driving the structural reform agenda through Operation Vendela, including sustained energy availability, which we're all very pleased with, some rehabilitation of the transport logistics, and some regulatory reforms. These improvements, together with the renewed and positive sentiment following the establishment of the government of national unity, has led to an improvement in global investor sentiments towards South Africa. We can see that on some of the currency exchange rates we see recently, which over time we will believe will contribute to improved growth prospects. South Africa has shown many times that its people can muddle through these challenges and survive. Through civil society, I get the feeling that our people's patience is wearing thin with the current situation, and we can see it in the narrative in social media and also some recent election results at the local level. All of these factors are outside of our control, but we remain conscious of and continue to assess any indirect impact that these might have on our businesses, while we also play our role in the areas we can influence and where we can provide support. Our focus remains on what is within our control, strengthening the performance of our core businesses, advancing portfolio simplification, and managing our capital with discipline. I believe it is improved execution in these areas and much closer engagement of our respective management teams that underpins the results we present today, which I will touch on a little bit later. I first want to highlight a few of these positive outcomes that this strategic focus has yielded. We have seen some notable gains in some of our key portfolio companies. AdSurance has again delivered a standout performance. MediClinic has made some tangible progress in its operating model review and turnaround initiatives. As you also would have seen in Rainbow's recent results announcement, the turnaround strategy execution that Martinez and his team have been hard at work on has successfully unlocked some robust earnings and linked to that, RCL Foods' focus portfolio has also delivered a meaningfully improved performance. Building on this momentum in the current year, I'm excited by the progress made in the CIVH Vodacom transaction and look very much forward to its conclusion, positioning us to unlock further shareholder value through this critical transaction for South Africa's digital future. We have also made some progress in addressing the smaller portfolio holdings. The announced unbundling of e-media investment was a notable example, and subsequent to year-end, The disposal of our remaining shares in BAT and Grow in Grinrod has also been done. Lastly, we have de-geared our balance sheet, which we believe sets us up to be more front-footed in capital allocation opportunities into the future. Very importantly, whilst we are not where we want to be yet, and whilst some challenges persist, such as the regulatory environment in Switzerland that threatens medically sustained recovery, and volume decline through aggressive pricing trends we see in the overall beverages market that impacts Heineken beverages. The positive gains, however, are proof that our focus on the stated priorities is having a positive impact. Carl will talk a little bit more about how we continue to think about these strategic priorities later. I will now move on to our results for the period which we are very proud of. You will recall when we presented our final results in September 2024, I said that we were not where we wanted to be and considerable work was being done to bear down the operational performance of a number of key investments in order to drive a sustainable recovery. This morning, however, I'm pleased to be delivering our final result that show a strong performance across the board. This improvement is a reflection of the work that our executive team at our underlying investing companies in partnership with Remgrove have been actively driving. For this year under review, headline earnings increased by 38.6%. With the improved earnings, we have constantly seen better cash earnings at the center, with dividends received up by approximately 24%. And in turn, our final ordinary dividend declared is up by 34.8%. The total dividend for the year is now sitting at, if we look at the slide, is 344 cents, which is up by 30.3%. I'm also pleased to announce a special dividend of two rand to share. We have earmarked the proceeds of the sale of the BAT shares to pay this dividend to our shareholders. A significant driver of the increase in headline earnings relate to improved contributions by Mediclinic, Health Insurance, RCL Foods and Rainbow, as well as significantly reduced losses by Heineken Beverages. Neville will later provide more detail around these drivers and the headline earnings numbers in his section later on. I want to re-emphasize what I said earlier. While we are pleased with the strong contributions that were made by some of Remgrove's investee companies, there is considerable work still to be done to improve the operational performance of some of our key investments. We also recognize that our efforts will not be easy, as the market dynamics in some of our key businesses continue to be challenging. As mentioned earlier, MediClinic continues to operate in a Swiss market that is not showing signs of easing, and volumes in pricing remain challenging across the Heineken Beverages portfolio amid strong competition. Despite these dynamics, we remain confident in the potential for the portfolio to generate sustainable growth and cash earnings over the long term. I will now hand over to Karl to recap on our strategic priorities.

Thank you, Yanni, and good morning, everyone. As Yanni mentioned, I will recap briefly on our progress on the strategic priorities. As Yanni said, they've not changed since we last spoke, but to briefly just mention them. The first one is active performance optimization across the portfolio. Secondly, to follow a considered capital allocation strategy. And then lastly, to lead sustainable businesses and embedding our ESG strategy across our portfolio. So to deal with each of them in turn on active performance optimization, I hope that those numbers that Yanni flashed will be evidence of good progress on this front. We are very happy that the active partnership with our management teams is yielding good results. Credit here absolutely goes to the underlying teams that deliver these earnings, and we're pleased for the partnership with all of those. As Yanni also mentioned, certainly the work is far from done here, but this is a big step in the right direction. Also, on the optimization of the portfolio, we've had some good progress during the year, and I'll just recap on that over the next page. On considered capital allocation, Yanni has touched on all the highlights there, but again, to say that we feel there's been good progress during the year, you'll be aware that we sold down a portion of our first-round shares and used those proceeds to settle all of our outstanding debt. As Yanni mentioned, we will be distributing our e-media exposure. That happens next week. And then also, as Yanni mentioned, we dispose of our BAT shares after a strong recovery in that share price, and that enabled us to pay a special dividend or to propose a special dividend. Lastly, on leading sustainable businesses and ESG, really good strides have been made during this year. I'm hoping that when you see the integrated annual report that will be available next year, next month, you'll see the improved disclosure and the progress on this front and the maturing strategy around ESG. Much of that maturing strategy has had to do with engaging with our underlying investee companies and making sure we understand the metrics that are important to each of them. This is not a one-size-fits-all solution. We've certainly identified some additional opportunities, some gaps in our approach, but I am confident that we're getting to a place where we are really embedding ESG as part of how we do business and not just a tick box and sort of disclosure exercise. Also, under this banner of ESG, and particularly under governance, you would know that enhancing our communication with stakeholders and specifically with investors has been something that we've committed to, and we're proud of decent strides there. As Yanni mentioned, we had our second Capital Markets Day earlier this year that gave us the opportunity to engage with investors I think it was around 200 investors that were there either in person or virtually to unpack not only the RemGrow investment thesis, but also delve a bit deeper into a few of our investee companies. Similarly, we've got a good panel of executives from across our portfolio assembled here this morning, and I hope that gives the opportunity to understand in greater detail the performance across the portfolio. Over the slide, looking just specifically on the transformation of the portfolio, we've been sharing a version of this slide I think since 2020 when this transition of the portfolio started. So maybe you've seen 10 different versions of it and you could be forgiven at times for not being entirely sure of these arrows that have been moving. Some of this progress has been frustratingly slow. But I'm very hopeful that this will be the last time that we'll share this slide with you. And the one important milestone that we achieved in this last year or just shortly after year end was the approval by the competition authorities of the CAVH Vodacom transaction. I don't want to jinx this deal. It's still subject to ECASA approval, which we hope will be imminently in hand, but a great milestone. And Ditloff will later talk about what that transaction means for CAVH. We are very excited about the high road, not only for us as investors, but certainly also for the customers of CAVH. I'm not going to talk about any of these other transactions. I think most of them are now firmly in the rearview mirror, and the executives from these companies are here with us today, so they'll give more color on how these businesses are coming along. The one exception perhaps is Rainbow, but as Yanni mentioned, Rainbow's had a really strong start to its life as an independently listed company. I think if they carry on on this track, then we'll have to find a slot on this agenda for Martinez next year as well. Then just looking at the portfolio performance, Yanni mentioned this and Neville is going to delve into it in more detail, so I won't steal Neville's thunder. But just on the schematic, you can see that more than 80% of the portfolio has chalked up positive earnings momentum in the last year. That sort of range from modest single digit growth on the left-hand side of that schematic to very robust growth here on the right-hand side. I think what's particularly pleasing is that some of those companies that contributed very meaningful increases in earnings were probably the companies that a couple of years ago, even as recently as a year ago, we would have said is sort of in the intensive care ward. But they are all now in different stages of recovery and really pleased about those contributions to the growth in our earnings. It's almost easier to talk here about the names that are not on the slide. If we say 80 percent of the companies enjoyed improving performance, then what's the 20 percent that's not here? There are two notable companies absent from the schematic. The one would be CAVH. And again, we are very encouraged by the underlying performance improvement at CIPH. But there was interest rate derivative that caused a downwards adjustment to earnings, which resulted in a negative headline earnings result for the year. But the operating performance has got good forward momentum. And the second one would be Total. Again, underlying performance at Total was healthy. But again, there was a stock revaluation adjustment that resulted in the headline result being down for the year. But again, both of those companies, good underlying momentum. And if you had to add that to the 80%, you'd be comfortably ahead of 90%. We realize this will not be the case every year. There will be ups and downs. As Yanni also mentioned, the work is far from done. We know there's much more earnings potential in the portfolio than what we're showing now. But certainly, as I mentioned, a step in the right direction. Then the last slide I want to talk about is just very briefly on capital allocation. We have showed you a version of this slide before and what we have here is the different priorities of usage of capital for RemGrow and also some commentary on our current posture. As we shared with you before, the highest priority for us when it comes to capital allocation is making sure that we've got capital available to pay the debt on our own balance sheet. On that front, I think we're in a good place. You see we give it a green tick or a green blob there. We've fully repaid our debt in the current year. And then secondly, and equally importantly, making sure that we can provide resilience to our portfolio companies and support them with capital when they need it. On that front, again, with improved performance across the portfolio and also the CIVH Vodacom transaction, which is looking very promising and hopefully imminently will be approved, we think there's a stronger foundation there as well. If the foundation in those first two priorities are secured, it does allow us to adopt a somewhat more front-footed posture on the alternative uses for capital, and we've got those in those next four blocks. As we say, these priorities are dynamic and informed by the specifics of the situation as it unfolds. Certainly on the cash dividends front, as Yanni showed you, a decent increase in our dividends. There was also the special dividend following the disposal of BAT. Share repurchases, we haven't undertaken any further repurchases this year, but that remains compelling given the discount to INAV. And then follow on all new investments, obviously something we remain keenly on the lookout for. We're not giving you any specific colour here on how we rank those priorities between those four. I can reassure you this is a topic of live debate amongst the executives and at the board. And we're very thoughtful about the implications for RemGrow and for our shareholders on the trade-offs that we make here, both implications in the short term and the longer term. So this is a live debate and something we'll continue to talk about. So thank you very much. And with that, I will hand over to Neville.

Thank you, Carl. And good morning, everyone. After a challenging FY2024, the theme for FY25 is sustainable momentum in headline earnings growth year on year, with over 80%, as Karel mentioned, also now of the RemGrowth portfolio achieving headline earnings growth. So for the year under review, Remgrove's headline earnings increased by 38.6% from 5.6 billion to 7.8 billion, while headline earnings per share increased by 38.4% from 10 rand 18 to 14 rand and 9 cents. The earnings growth momentum experienced in the first half of the year under review continued during the second half culminating in the 39% increase in headline earnings. If we exclude the negative impact of significant corporate actions which were implemented during the previous financial years, this year amounting to 140 million, And you will see on the right-hand side of the graph, the 140 versus the 766 million in the comparative year. And on the left-hand side, you'll see the 766 million. The adjusted headline earnings increased by 24%. And I think this increase provide a better assessment of the underlying financial and operational performance of the portfolio. The graph also depicts an overview of the main drivers of the increase in headline earnings, and this can be summarized as follows. Firstly, improved operational performances from the majority of the investing companies, of which the most significant are increased contribution from Mediclinic, a positive impact of 362 million this year, Outsurance Group, positive 318 million. Rainbow Chicken, up by 324 million. RCR Foods, their contribution increased by 264 million Rand. Then Heineken Beverages, excluding the Heineken IFRS 3 impact, returning to profitability. and this was driven by volume growth and margin recovery and it's a positive swing of 406 million this year however these gains were partly offset by lower contributions from total energies a negative 359 million mainly due to higher negative stock revaluations as well as a lower difference from momentum a drop of 160 million following its disposal secondly the positive impact on headline earnings of lower finance costs amounting to 403 million due to the redemption of the preferences. So we will provide more detail on these operational results during the presentation. This graph provides an overview of the significant changes in the valuation outcome of our unlisted investments, as well as the movement in the market values of our listed investments. the main drivers impacting positively on the growth in INAV are the growth in market values of listed investments. You will see there in the middle of the graph, outsurance market value increased by 69%. And that represents approximately 27 rand per rem gross share. Discovery is up by 59%, or approximately 6 rand per rem gross share. The net cash increased by $4 billion, mainly due to the proceeds of the sale of the first-run shares, as well as the redemption of the preference shares, amounting to $2.5 billion. The following graphs show the movement in the valuations and multiples of the five largest unlisted investments in RemGrow's portfolio. These investments contribute just over 45% of RemGrow's investment portfolio, representing approximately 82% of the unlisted portfolio. So the top five represents 82% of the unlisted portfolio. These graphs show all the multiples decreasing, reflecting both earnings recovery, growth of the assets, and we believe an appropriately conservative valuation approach. The improved performance has the multiples reducing over time as the businesses increasingly start to deliver the earnings that underpin our valuations, with the multiples also aligning to relevant market comparables. You will see that if you look at the slides per pillar, that in addition to the intrinsic value and headline earnings disclosure per pillar, we also disclose the cash dividends received for the financial year, as well as the last 12 months headline earnings and dividend yield for improved transparency. The healthcare platform consisting of MediClinic is the single biggest investment in RemGrow's portfolio and contributes approximately 25% to INAV and 30% to headline earnings. MediClinic is valued on a sum of the parts basis with a DCF underpin of the business plans of the three regions. as updated during the year. Also moderated by a multiple based market approach applicable to each region. The valuation benefited slightly from lower weighted average cost of capital in the South Africa and Switzerland against a slightly higher whack in the Middle East. This is an independent valuation conducted by Deloitte as in the prior three periods. In dollar terms, the valuation increased by 4.7% year on year. and 1.8% in RAN terms. The valuation increase represents good delivery against its plan with pleasing performance across the business. Jurgens will expand on this later, but in short, Middle East is a promising growth story. South Africa is a stable and consistent performer, and Switzerland is making good progress on its recovery plan. The implied trailing EV EBITDA multiple of 9.9 times, and that's calculated with reference to MediClinic's March 2025 published results, and is a buildup of the three regions that are reflective of the relevant regions' particular dynamics and aligned to relevant peers in those regions. Jurgens will unpack MediClinic's results later in the presentation. This platform consists of RCL Foods, Rainbow, Heinbev, Cicalo, and Capevin, and contributes approximately 15% to INAV and 26% to headline earnings, with improved contributions from RCL Foods, Heinbev, Cicalo, as well as Rainbow. Dividends contribution also improved due to the contributions by RCL Foods, Cicalo, and Capevin compared to the comparative period. Paul will elaborate in more detail on RCL Foods results later in the presentation. If you look at Rainbow's results, Rainbow listed on the 1st of July 2024. The contribution by Rainbow increased substantially to 469 million from 145 million in the comparative period. Rainbow's revenue increased by 9%. and that was driven by a stronger sales performance, up 9.6% in the chicken division, translating into an EBIT increase of approximately 300%. This strong financial performance was driven by enhanced capacity at Hammersdale, better product mix and channel diversification with strategic customers, There was also additional improvement due to the enhanced agricultural and operational performance, lower commodity input cost and reduced expenses from load shedding and the avian influenza. Further detail is included in Rainbow's results, which were published on the 28th of August. If you look at Heinbeff, just some notes on Heinbeff valuation, Remgrove's valuation for its 18.8% interest in Heinbeff decreased by 4.7% year on year. The slight decline in valuation is attributed to a combination of factors, including the continued constrained consumer environment in a highly competitive market across the categories within which Heinbeff operates, and a decrease in the terminal value growth rate as part of the continued process to standardize the valuation approach to all RemGrowth's unlisted valuations. The DCF valuation benefited slightly from a reduced WAC and the implied EBITDA multiple of 9.6 times compares favorably to the observed global peer set average multiple. Lucas and Jordi will elaborate in more detail on Heinbef's results later in the presentation. Cicalo Foods, if you look at the valuation there, the valuation increased by 5.1% year on year. This valuation is in the context of a persistently challenging trading environment marked by ongoing commodity cost pressures and constrained consumer spending. The valuation benefited from a slightly lower WAC with this benefit being offset by slightly moderated financial forecast and terminal value growth rate. The implied EBITDA multiple of 8.8 times compares favorably to the peer-set considering REM growth, 100% control of Cicalo. From a results perspective, Cicalo Foods headline earnings contribution amounts to 467 million representing an increase of 3.3%. The trading environment showed signs of recovery during the period under review. And Cicalo was able to offset inflationary cost pressures through a focused savings agenda. And this allowed the business to drive profitable volume growth, resulting in a 1.1% increase in volumes and a 1.7% increase in operational EBITDA for the period. So overall, a pleasing set of results in a challenging trading environment. The financial services platform contributes 23% to INAF, 19% to headline earnings, and 30% to dividends received at the centre, mainly from Outsurance. Outsurance is the most significant investment here. Their contribution to headline earnings increased by 29% to 1.4 billion. And that was mainly due to Outsurance Holdings normalized earnings increasing by 34%. The increase in earnings was driven by strong operational performances by Yowie and Outsurance South Africa. They released the year end results on the 15th of September 2025. Infrastructure platform, just some notes on the CAVH valuation. The valuation methodology used is the sum of the parts based on DCF. Valuation increased by 9% year on year to 15.8 billion Rand. We continue to base the CAVH valuation on the longer term business plans of the underlying operations, which are substantially unchanged year on year, but with operating assumptions refined where appropriate. Just to mention that this valuation does not include the addition of the assets and cash expected to be acquired by Massif as part of the Vodacom transaction. Although the combined CAVH Although the combined CIVH enterprise value benefited from a decrease in the WAC applied to a slightly moderated forecast for DFA and Pumatel, this increase was partially offset by a slight increase in the net debt, with the overall equity value of CIVH before the application of discounts still up. The discounts applied to the equity value in absolute terms were largely in line with the prior year. The Remgrove valuation implies a trailing EV EBITDA multiple of 10.2 times, while below the peer set multiple of 11.4 times. This valuation of 15.8 billion is at a discount of approximately 25% to the value at which the Vodacom transaction was ultimately concluded. Ditloff will elaborate in more detail on CAWH's results in the presentation. Industrial portfolio companies are mostly profitable on a sustainable basis and consistent dividend payers with high cash conversion ratios. as seen in the contribution to headline earnings and dividends received with attractive earnings yield and dividend yields. The evaluations are also not very demanding. Air products valuation increased by 5.3% to 6.3 billion and is largely a result of an increase in free cash flow due to continued cost efficiency, expected solid operational performance and reduced forecast risk assumptions. Total valuation increased by 22% to 4.2 billion Rand. The 2025 forecast shows improved cash flow driven by strong network fuel margins, annual fixed cost reductions, annual capex cuts, however negatively impacted by lower sales volume. The decrease in WAC and higher net cash boosted devaluation, partly offset by a marketability discount applied for the first time now. If you look at the results, air products contribution to headline earnings increased by 13.6 to 643 million rand. Demand from large tonnage gas customers was generally stable, while the packaged gases business performed well, coupled with cost efficiency improvements leading to improvement in profitability. The contribution to Remgrove's headline earnings by total is 194 million down from a profit of 553 in 2024. Excluding the negative stock valuations, Total Energy's contribution increased actually by 20%. mainly due to the scaling down of loss-making refining operations towards the second half of 2024 calendar year, partially offset by supply chain disruptions. The cash at the centre increased by R1.5 billion to R8.3 billion. The net cash increased by 4 billion over the reporting period due to the redemption of the preference shares during the year. Then just on the dividends received evolution, the dividends from investing companies increased to 3.8 billion, representing a 24% increase year on year. And this increase was mainly driven by dividends received of R393 million from RCL Foods, no dividends was received in the previous financial year, and an increase in ordinary dividend of R254 million received from Outshorings. Outshorings also paid a special dividend of which Remgro received R188 million. The cash flow breach, the main driver of sustainable cash earnings at the centre, is dividends received this year amounting to 3.8 billion. We've also sold 31 million first-rand shares for gross proceeds of 2.5 billion and utilised 2.5 billion to redeem the last tranche of the preference shares in December 2014. Then final and the ordinary dividend, the board declared a final ordinary dividend of 248 cents per share up by 34.8% from the comparative period. So the total ordinary dividend for 2025 therefore amounts to 344 cents per share. an increase of 30.3 cents. And as Yanni mentioned, the board also declared a special dividend which they will utilize the proceeds of the sale of the BAT shares amounting to 1.2 billion rand. So that brings me to the end of my presentation. I will now hand over to Jurgens to talk to MediClinic results.