Remgro Ltd Ord

All participants will be in a listen-only mode. There will be an opportunity to ask questions later during this call. If you should need assistance during this event, please signal an operator by pressing star then zero. Please note that this event is being recorded. I will now hand over the conference to Chief Executive Officer Yanni Girand. Please go ahead, sir.

Good morning, everybody. Thank you for joining us this morning and welcome to our interim results presentation for the six-month period ended 31st of December 2025. Today we will unpack our financial performance for the first half of this financial year, and as become our standard approach, we will also spend time on the performance of our key portfolio companies that continue to shape our overall results. With that in mind, the outline of today's presentation will be as follows. Firstly, I will give an overview of the salient features of our performance. including the ones that reflect our focused execution against our strategic priorities. Secondly, our Chief Investment Officer, Carl, will give an update on some of the key corporate actions that are central to our portfolio simplification and optimization journey. Then, Neville, our CFO, will take you through the financial results in more depth. And finally, I will turn to updates from our major investments. The CEO of MediConnect, Ronnie, and the CFO, Jurgens, will speak to MedicNIC's results and progress on strategic priorities. Then after that, the Managing Director of Heineken, Jordi, and his new appointed Chief Finance Officer, Raduwan, will together do the same for Heineken Beverages. And then the CEO of Massive, Dietlof, will do the same for CIVH. And finally, the COO of RCL, Paul, will provide highlights of the results they reported on earlier this month. I will then close off the presentation by looking at our areas of focus going forward before opening the floor for questions. This morning, I'm extremely pleased to present interim results that show sustained strong earnings growth across our portfolio. Even more encouraging is that this earnings momentum has translated into strong cash generation at the center, enabling us to return value to our shareholders with a significant uplift in our interim dividend. For this period under review, headline earnings increased by 38.5%, and alongside this, cash earnings at the center strengthened materially, with dividends received at the center up roughly about 34%, supporting an interim dividend increase of approximately 80%, a significant return of value to our shareholders. The main drivers of this earnings growth were stronger contributions from Mediclinic, CIVH, Rainbow, and Heineken beverages. Ignoring the distributions of the period, our INF increased by 1.6% over the period, which is more modest than the growth of our earnings in a function of valuation movement across our listed and unlisted portfolio. But this is a good indication that the increase in the underlying earnings of our company substantially reflect our own valuation models. As I reflected on this marked progress, it is clear that these results demonstrate the resilience of our portfolio, the benefits of disciplined, focused execution, and strong partnerships with our various management teams. By the same token, it would be remiss of us not to reflect on the impact of the operating environment which we and our investee companies continue to operate, which I'm sure this audience is all too familiar with. Global trade tensions, geopolitical instability, and muted domestic growth remain persistent headwinds. Although extensively analyzed, the speed of changes and the resultant unpredictability make forecasting the impact difficult at this stage. Very importantly for us, we must not forget about our colleagues of ours that work in defected regions. Our thoughts are with them in these difficult circumstances, and we applaud them for the resilience and the courage that they show. Instead of dwelling on what is outside our control, though, our focus remains where it matters most, managing what is within our control, strengthening the performance of our core businesses, progressing portfolio simplification, and maintaining disciplined capital allocations. These have underpinned the gains we are presenting today. On this slide I want to highlight a few of the positive outcomes that this strategic focus has yielded. I have spoken about the robust growth in earnings and sustained momentum, which we have now seen consistently over multiple reporting periods. This, we believe, speaks to the strategic clarity and disciplined execution. I am pleased with the commitment of our executive teams at the underlying investee companies, which in partnership with Remgra is actively driving performance, which we can be seen in the strong contributions from our previously challenged investees. We are especially pleased with the long-awaited implementation of the CIVH Vodacom transaction, which positioned us to capture the growth potential we've articulated for some time. We've also made some strong progress in simplifying the portfolio, including the sale of our remaining interest in BAT, the distribution of our media assets, and more recently, the monetization of part of our interest in FirstRand, which has significantly de-risked our balance sheet. The proposed restructuring of the MediClinic business further aligns this investment to our strategy and simplifies the group further. The results of all of these deliberate efforts can be seen in the cash generation profile I spoke of earlier, with our sustainable dividends received up by almost 34%. In addition to this incredible growth, special dividends received have also further strengthened our balance sheet and offer us strategic optionality to navigate the current volatility but also in pursuing future growth opportunities. Ultimately, these results are a clear payoff from strategic clarity, focus execution, and consistency. Very importantly, whilst we are and must celebrate these wins, performance optimization with a dynamic execution across our portfolio remains key to maintain this momentum. particularly with reference to some of our businesses that are still facing some challenges currently, like RCL, especially regarding regulatory issues and the challenging market dynamics. But Paul will elaborate on this further. We also experienced some sharp focus on the volume pressures through aggressive pricing trends that we see in the overall beverage market that impacts Heineken beverages. Jody will also look into that in a bit more detail. Even so, we remain confident in the long-term growth potential of the portfolio. Today's results show that our focus is working and our job is to sustain this momentum. The question of our capital allocation posture understandably featured prominently in all discussions. We think about capital allocation through three pillars. Strengthening the balance sheet, supporting portfolio growth, and delivering value to our shareholders. The strengthened balance sheet of us has created a solid foundation for growth while enabling a meaningful improvement in returns to our shareholders through higher dividends and other value-creative returns of capital. We continue to consider and evaluate options to crystallize value, and that includes share repurchases. We are actively assessing new investment opportunities with greater emphasis on building our new business development pipeline. Key for us is that we view our strong balance sheet as a critical and strategic asset, particularly in this period of heightened volatility. We have been intentionally conservative in our cash preservation posture and believe that this position us well to act on growth opportunities as they come. I will now hand over to Carl to provide an update on our key corporate actions.

Thank you, Yanni, and good morning, everyone. I wanted to provide an update on corporate actions at two of our investee companies. The first one of those is at CAVH, and shareholders would be familiar with the Vodacom transaction that we've been talking about for the last number of years now. So as shareholders would remember, Vodacom injected cash and shares into Massive for a 30% shareholding in Massive. and then also acquired shares at the CAVH level for R1.8 billion, and that resulted in a pre-implementation dividend from Massive into CAVH and from CAVH ultimately to shareholders. As Yanni mentioned, we're very pleased to have got this transaction done towards the end of last year. It brings a very strong strategic partner to our business. It allows us to accelerate the scaling of the network, including to previously underserviced communities. It also gives us greater balance sheet flexibility, and I'm really pleased to finally have got this done. The second transaction is the second leg of the Eurotel acquisition. Again, we remind shareholders that Eurotel is a service provider mostly in secondary cities and rural towns. They've got an incredibly strong management team, a really great recipe for rolling out infrastructure in this segment of the market. and a great complement to what we currently have in vumatel so again very excited at the prospect of of getting this transaction done it increases our infrastructure our economies of scale and improving unit economics so just to reflect a little bit on the the timeline for these two transactions where we've come from to to where we are It's now almost five years ago when we initially announced the Vodacom transaction at the back end of 2021, and fair to assume it had a fair run-up to get to that point of announcement. So it feels like we've been busy with this for a while. But soon after that, we announced the first leg of the Eurotel transaction, so the acquisition of that first 48%. That was in early parts of 2022. And then things took a little while, but very pleased in August last year to finally get the approval from the competition authorities for the Vodacom transaction. And then relatively soon after that, at the beginning of December, we implemented that transaction. Just to remind people, when Dietlof later speak about the results for CAVH, that's up to the end of September, so it doesn't yet include the Vodacom assets in those numbers. But obviously in time to come, we'll see the impact of that. Back to the timeline then, in December of last year, we were then also pleased to obtain the Competition Authority's approval for the second leg of the Herital transaction, and the only CP that's outstanding there is the CASA approval. And we hope that would be imminently forthcoming. So to remind people what that then looks like in terms of the shielding structure, previously CAVH used to own 100% of Massive. Vodacom now is introduced alongside CAVH with that 30% interest. They obviously bring their assets and the cash, or they brought their assets and cash, and in the process of integrating those assets into VUMA and DFA assets. At the bottom of the slide, you can then also see whether the warehousing vehicle that Trust sits as a shareholder in Herotel with a 49.9%, and when that transaction is approved, hopefully Boomer would end up with 99.9% of Herotel. Maybe a slightly more interesting slide. Hopefully, there are so many moving parts on the valuation of CAVH that we thought we should unpack them separately. And the first part that we thought would be useful to explain to shareholders is just the impact. that the Vodacom transaction has on our valuation as existed at the end of last year, so at the end of June, our year end, June 25. So this is not an updated valuation that you will see later, and Neville will talk to that, but just to give you an impression of the impact of the transaction on the valuation as it stood. So 15.8 billion rand was the INAV value that we attributed to CIVH. If you then add the Vodacom assets and shares that they brought and apply our pre-dilution interest to that, that increases the value by 7 odd billion rand. Vodacom, rather CAVH, then paid a pre-implementation dividend, which was upstream from Massive. So Remgrove's share of that was 2.66 billion rand, so that comes out of the value. And then, of course, we diluted by 30% alongside other shareholders for Vodacom's entry. That takes another 5.7 out. And then we applied the discounts that were embedded in our valuation to the Vodacom assets that were added, but we also slightly increased dividends. a non-controlling discount to the overall valuation. And after all of that washes out, you will see that the valuation ends up almost at exactly the same place where it started, the 15.8, after you take into account the dividend that's been received and now sits in cash in our hands. So just what remains for CAVH on these, let's call them legacy transactions. On the Vodacom side, investors would remember there was also a 5% option for Vodacom to buy an additional 5% in massive effectively directly from Remgrove. That transaction, the price for the transaction is at fair market value. That will be determined at that point in time. But there is an underpin to that price of R43.7 billion. That number might not sound particularly familiar, but just to explain that. The transaction value for the base deal was 36. That stepped up to 37 for this option. Then you have the $11 billion of assets and shares that came in from Vodacom, less the pre-implementation dividend that came out of massive of 4.2, and that gets you to the 43.7. So that's the floor value, if you like, for the exercise of this option. We extended the option period to the end of March 2027. Then on the Eurotel side, upon approval of the second leg and the acquisition of that 49.9% stake from the trust, CAVH will acquire those shares and then will inject those shares into massive for additional shares. The price for that, again, would be at fair market value as would be determined at the point in time, but again with an underpin of R2.75 billion. Vodacom would likewise bring cash for that same amount, that's 8.25 million at the floor price, and that cash would be upstream from Massive into CAVH, and that would effectively restore CAVH or rather Vodacom's 30% stake in Massive. So a few sort of complicated steps, but the only thing to tune into there is the end product would be that Herotel would sit inside, or 99.9% of Herotel would sit inside Vuma. and CAVH would have an additional 825 million Rand of cash. On to the second transaction that we will second at Vestide that we want to talk about, which is Mediclinic. Towards the end of last year, we announced a proposed transaction and the in-principle agreement that we reached with MSC to exchange our respective interests in Hearst London and Mediclinic Southern Africa. So, as per the announcement, what we had agreed is that after this exchange, Remgro would end up with 100% of MediClinic Southern Africa and MSC with 100% of Hirsch London. And that will be done on a value-for-value basis, so basically exchange it for equal value. And we would continue as 50-50 owners of the rest of the business, which is our Middle Eastern business, and then also the 29.8% stake that we own in Spire. An important feature of that transaction is that the exchange ratio or the values that we used were arrived at with the balance sheets as they existed at the end of June last year. So to keep the integrity of those valuations, we've got a lockbox in place on both the South Africa side and in Herscheland. And simply what that means is that the value and the cash that accrues in those respective entities are trapped in those entities for the benefit of the future owners. So to the extent that there are dividends that need to flow out or capital injections that need to go into either of those businesses, that would be adjusted and then there would be a sort of cash equalization mechanism to cater for that. the future operating model is in progress but what will ultimately happen is that the group services will be increasingly decentralized and will get to a point where each three of those regions can basically operate as independent businesses we foresee that there would be some limited transitional services that would be provided but substantially the businesses would be able to operate on their on their own Just to recap on the rationale which we had set out in the announcement as well, we believe that aligning the shareholding with the markets where the respective shareholders have the deepest understanding and the greatest conviction on strategy, that would improve the agility in execution. And certainly from Remgrove's point of view, we think that It aligns with our own investment thesis of having ownership, full ownership of a market-leading asset in our home market that we know and understand. Just to remind the audience what it is about MediClinic, Southern Africa that Remgrove finds attractive. It's a large hospital group. We've got 20-odd percent share of the private hospital market, 50 hospitals, 15-day clinics. Really strong management team, market-leading EBITDA margins, and a consistently healthy earnings and cash flow generator. The picture is not particularly complicated of how it will change. You'll see at the moment our partners MSC and ourselves own into a vehicle that owns 100% of the three regions and then also the stake in SPA, as we mentioned, and that will simply change so that those two regions, Switzerland and Southern Africa, are owned by the shareholders directly. A few more sort of steps and gymnastics to get there, but the picture in the end is quite easy to tune into. Hopefully a slide that's helpful for investors just to understand how we get to the answer. There's no new information on this slide, so this is information that is available either in the initial announcement and on the Mediclinic results announcement for September. But we thought helpful perhaps to step people through how one gets to sort of a value equality between these two regions. We announced in December that the implied EV EBITDA multiples for Southern Africa and Switzerland were 6.3 and 9.4 respectively. So if you apply those multiples to the last 12-month EBITDA as that existed at the end of September, And then you can calculate the enterprise value and just to look at the dollar enterprise values for South Africa that means just short of $1.6 billion and the case of Hearst London that comes to $3.3, almost $3.4 billion. So clearly Hearst London is a meaningfully bigger business if you just look at the enterprise value. But then in that second last column, you can see we overlay the debt and other, which is mostly the non-controlling interests. And that then reduces the equity value in both businesses to around $1 billion. Again, these are not the exact numbers as per our valuation. The main reason being that this is using balances as of the end of September as were published. and also FX rates at the end of September. As I mentioned before, our valuation date was at the end of June, so the actual numbers are slightly different, but we still thought a useful indication to help people just to understand how one would get to roughly equal values. And then lastly, just to say what remains to be done, we're in the process of finalising agreements and negotiating the final terms. We will hope to get that done as soon as is practically possible. That will obviously allow us to file the regulatory filings and get that process underway and also to continue the work on the separation and finalising the operating models for the the various businesses, and then obtain the relevant third-party consents that are required, none of which you think would be problematic. So we look forward to updating shareholders again in future on progress. But with that, I'll hand over to Neville to take us through the financial results.