INTEGRATED ANNUAL REPORT 2020 Originally established in the 1940s by the late Dr Anton Rupert, REMGRO AIMS TO BE THE TRUSTED INVESTMENT COMPANY OF CHOICE THAT CONSISTENTLY CREATES SUSTAINABLE STAKEHOLDER VALUE. The hexagonal theme used in this year’s Integrated Annual Report draws inspiration from the hexagonal honeycomb structure that bees use to build one of the most effective and durable structures in nature. This shape represents the multi-dimensionality of our business and our people that work together in an organic way to bring forth prosperity to all our stakeholders. INVESTOR TOOLS Cross-reference to relevant sections Download from our website: View more information on our website: within this report www.remgro.com www.remgro.com Contents OVERVIEW OF REPORTS TO 01 BUSINESS 02 SHAREHOLDERS 3 Remgro’s approach to reporting 23 Chairman’s Report 6 Salient features 25 Chief Executive Officer’s Report 8 Group profile 30 Chief Financial Officer’s Report 10 Company history 38 Investment reviews 12 Our business model 14 Understanding the business of Remgro 16 Key objectives and principal integrated risks 18 Directorate and members of committees 20 Executive management structure 21 Shareholders’ diary and Company information GOVERNANCE AND FINANCIAL 03 SUSTAINABILITY 04 REPORT 65 Corporate Governance Report 116 Audit and Risk Committee Report 77 Risk and Opportunities Management Report 119 Report of the Board of Directors 84 Remuneration Report 125 Report of the Independent Auditor 103 Social and Ethics Committee Report 126 Summary financial statements 105 Abridged Sustainable Development Report ADDITIONAL 05 INFORMATION 142 Five-year review and share statistics 144 Shareholders’ information 147 Notice to shareholders Attached Form of proxy Integrated Annual Report 2020 1 OVERVIEW OF 01 BUSINESS REMGRO INVESTS IN BUSINESSES THAT CAN DELIVER SUPERIOR EARNINGS, CASH FLOW GENERATION AND DIVIDENDS OVER THE LONG TERM. 2 Remgro Limited OVERVIEW OF BUSINESS | REMGRO’S APPROACH TO REPORTING REMGRO’S APPROACH TO REPORTING The 2020 Integrated Annual Report provides a holistic view of In order to ensure that we address all the material issues that Remgro’s business model, how the Company is managed and matter to us, our shareholders and other stakeholders, we also also how it manages its investments. In this regard our main focus report on matters such as: is to provide a complete analysis of our business to satisfy the • Our business model; information needs of key stakeholders that use the Integrated • Our most significant business risks and opportunities, as Annual Report. identified through our integrated risk management process; The information presented thus aims to provide our stakeholders and with a good understanding of the financial, social, environmental • Governance processes. and economic impacts of the Group to enable them to evaluate the ability of Remgro to create sustainable value for our stakeholders. REPORTING SUITE The table below contains the Remgro reporting suite information detailing the assurances obtained and frameworks applied to each report. APPLIED PRINCIPLES SUITE AND FRAMEWORKS ASSURANCE OBTAINED Integrated Annual Report • IIRC <IR> Framework • Reviewed by: • King IV Report on Corporate − Management Governance™ for South Africa − Internal audit/Finance (2016) (King IV™) − Audit and Risk Committee • Companies Act (No. 71 of 2008), − Board as amended (Companies Act) − JSE sponsor • JSE Limited Listings Requirements Consolidated Annual Financial • International Financial Reporting Independent audit opinion by Statements Standards (IFRS) PricewaterhouseCoopers Inc. • Companies Act • JSE Listings Requirements Sustainable Development Report No specific framework applied • Reviewed by: − Management − Internal audit/Finance − Social and Ethics Committee and Audit and Risk Committee − Board • Carbon Disclosure Project (CDP) verification of certain non-financial indicators Annual results presentation Not applicable • Reviewed by: − Management − Finance − Executive directors − Investor Relations BBBEE certificate Department of Trade and Industry’s AQRate Proprietary Limited generic Code of Good Practice Integrated Annual Report 2020 3 REMGRO IS AN INVESTMENT HOLDING COMPANY AND ACCORDINGLY ALL REFERENCES TO “THE GROUP“ IN THIS CONTEXT DENOTE THE COMPANY AND ITS SUBSIDIARIES. King IV, which was published on 1 November 2016, contains a set of principles that are fundamental to good governance, as well as related leading recommended practices. The JSE Limited has incorporated certain of King IV’s recommended practices in the JSE Listings Requirements, with the effect that some of King IV’s recommended practices are in fact mandatory in respect of companies listed on the JSE (such as Remgro). The Board is satisfied that the Company has applied the principles contained in King IV during the year under review. The Corporate Governance Report on page 65 explains how Remgro has applied the principles enumerated in King IV with reference to Remgro’s own practices. REPORTING BOUNDARY 1 INTEGRATED REPORTING BOUNDARY Includes the financial and non-financial boundaries as explained below. Furthermore, material matters as they relate to stakeholder concerns, risks and opportunities and governance matters, are included in the disclosures of this report. 2 FINANCIAL BOUNDARY Remgro is an investment holding company and accordingly all financial data in the summarised financial statements includes associates and joint ventures on an equity accounted basis and subsidiaries on a consolidated basis. The intrinsic net asset value of the Group includes valuations of all investments, incorporating subsidiaries and associates and joint ventures, either at listed market value or, in the case of unlisted investments, at IFRS 13 “Fair Value” valuation. Refer to page 25. 3 NON-FINANCIAL INFORMATION BOUNDARY Data relating to the social and environmental performance of subsidiaries, associates and joint ventures, over which Remgro does not exercise operational control, are not covered in detail in this report. Except where otherwise indicated, all disclosures relating to social and environmental performance thus only relate to Remgro’s activities at its head office in Stellenbosch. 4 Remgro Limited OVERVIEW OF BUSINESS | REMGRO’S APPROACH TO REPORTING SCOPE AND BOUNDARIES OF OUR REPORT SIGNIFICANT EVENTS DURING AND AFTER Remgro is an investment holding company and accordingly all THE END OF THE REPORTING PERIOD references to “the Group“ in this context denote the Company The Covid-19 pandemic and various levels of lockdown have and its subsidiaries. Disclosure is therefore limited to those affected and will continue to affect every investee company. entities where the Group exercises control over the financial Management teams’ focus remains on protecting the and operating policies of such entities, save where those sustainability of their businesses through operational resilience, entities disclose the relevant information in their own publicised responding and adapting to the disruptive environment and annual reports. liquidity risk management. Remgro has four main operating subsidiaries, i.e. RCL Foods On 31 March 2020 Remgro announced that it will proceed Limited (RCL Foods), Distell Group Holdings Limited (Distell), with the full distribution of its 28.2% interest in RMB Holdings Siqalo Foods Proprietary Limited (Siqalo Foods) and Wispeco Limited (RMH) (RMH Unbundling) and retain its 3.9% direct Holdings Proprietary Limited (Wispeco). As RCL Foods and interest in FirstRand Limited (FirstRand). The interest in RMH Distell are listed on the JSE, detailed information regarding amounting to R23 855 million was distributed to shareholders their financial, sustainability and social performance is available on 8 June 2020 in the ratio of 0.69939 RMH ordinary shares on their websites at www.rclfoods.com and www.distell.co.za for every 1 Remgro share held. At that date, Remgro also respectively. ceased to have significant influence over FirstRand, due to among others the RMH Unbundling, and the investment Siqalo Foods and Wispeco are unlisted wholly owned subsidiaries was reclassified from an equity accounted investment to an which are operated and managed on a decentralised basis as investment at fair value through other comprehensive income. independent entities with autonomous Boards of Directors. Based on the above, as well as the fact that Siqalo Foods and Refer to the reports of the Chief Executive Officer and Chief Wispeco represent only 6.8% and 0.9% of Remgro’s intrinsic Financial Officer on pages 25 and 30 respectively for a brief net asset value, respectively, only summarised “non-financial“ summary of these transactions. Besides the transactions above, disclosure relating to social and environmental performance no significant events occurred during the reporting period or will be provided for Siqalo Foods and Wispeco. This is in line after the end of the reporting period, which may have a material with Remgro’s reporting on the financial performance of its impact on the size, structure or ownership of the Group. investee companies. BOARD APPROVAL STATEMENT Following on the philosophy outlined above, Remgro manages The Board, supported by the Audit and Risk Committee, all investee companies on the same decentralised basis, acknowledges its responsibility to ensure the integrity and irrespective of whether they are subsidiaries, associates or joint completeness of the report. The Board applied its collective ventures. Therefore data relating