Remgro (REM) CMD 2025 summary

Strategic Priorities and Portfolio Evolution

• Focused on active performance optimization, strategic capital allocation, and sustainability, reducing priorities from five to three for sharper execution.

• Portfolio shifted from 23% to 63% private assets and from 5% to 38% global partner ownership between 2019 and 2024, enhancing scarcity and value creation.

• Over five years, allocated ZAR 80 billion in capital, with 50% returned to shareholders, 20% for investments, and 20% for de-gearing, resulting in a debt-free center.

• Emphasized patient capital, active partnerships, and a long-term, Africa-centric investment approach, with a strong focus on South African prosperity.

• Ongoing simplification of the portfolio, with a commitment to exit tail investments and focus on areas where meaningful influence and value can be added.

Financial Performance and Capital Allocation

• Achieved a five-year IRR to shareholders (including unbundled shares) of 20.5% as of March 2025, outperforming key indices, but acknowledged underperformance relative to peers.

• Maintained steady dividend growth since 2021, aiming to increase dividend yield as cash generation at the center improves.

• Portfolio discount to intrinsic NAV remains high at 44.7% (1-year) after unbundling and restructuring actions, with 20% of the portfolio (notably HEINEKEN, Hirslanden, and CIVH) not currently contributing to earnings.

• Positive cash generation has been used to deleverage and strengthen the balance sheet, with significant investments and debt repayments since 2019.

• Capital allocation priorities: support portfolio resilience, pay cash dividends, follow-on strategic investments, share repurchases (attractive at high discount), new investments, and debt repayment (currently no debt at center).

Business Development and Growth Opportunities

• Organic growth prioritized over inorganic, with a strong preference for investing in familiar markets and leveraging partnerships for risk mitigation in new geographies.

• Identified a market gap for mid-sized investments (ZAR 5–15 billion), as private equity and public markets have limited activity in this range.

• Mediclinic and CIVH highlighted as key growth drivers, with Mediclinic focusing on operational efficiency, digital transformation, and expanding specialized care, while CIVH targets closing the digital divide and expanding fibre connectivity across South Africa.

• CIVH’s fibre network now passes 2 million homes, with 860,000 active subscribers and strong growth in lower LSM areas; business model emphasizes sweating existing assets and driving penetration to improve returns.

• ESG and impact investing are integral, with ongoing groupwide initiatives in climate, diversity, governance, and social impact, especially in education and community connectivity.