Our business activities concentrate on three main areas to deliver on our strategy, as described in our Business model on page 20 of our integrated report.

Because of the nature of our business activities, the group goes through cycles as we execute on our strategy.

Our current focus is on building our divisions. We have invested significantly over the past few years to support their future growth and market leadership positions, aligned with our investment criteria, both from a capital allocation and strategy development perspective.

We have considered optimising our portfolio through material divestments of underperforming businesses. However, after thorough analysis and evaluation, we see more value in improving the performance of these businesses, although we would still consider the divestment of less material underperforming operations or activities.

Given the conclusion of our recent investment cycle, growing our portfolio through investment in new sectors is not a focus area over the near to medium term, as we are committed to realising the full value of our latest investments.

We completed several major multiyear projects in FY24, amounting to c. R2.6 billion, which were fully ramped up in FY25. These include PG Bison’s new MDF line, which increased the division’s production capacity by 33%; Safripol’s HDPE conversion and extruder project, which increased operational efficiency and the production of higher-specification polymers; and Feltex and Sleep Group’s fibre-tearing lines, which support lower raw material consumption and increased production of products from waste textiles. We are currently focused on the following material items, which we believe will support improved group performance and returns over the medium term:

• Realising the value of our major projects: We are committed to realising the full value of our major projects, as per our feasibility expectations (internal rates of return (‘IRRs’) greater than 15%). These are long-term investments, and the associated assets have useful lives of more than 20 years.

• Addressing underperformance: Some businesses in the group are performing below our expectations, with Unitrans being the largest. We have made significant management changes in these businesses and have either restructured or are in the process of restructuring them to support improved future performance.

• Reducing net debt: Our major projects contributed to increased net debt levels in the group. With these projects completed, we expect their additional cash flow contribution and an improvement in the performance of underperforming businesses, especially Unitrans, to support a reduction in net debt.

In conjunction with the above, we remain focused on enhancing the performance of all our divisions. We are therefore implementing several other strategic initiatives in the group which we believe will deliver value over the medium term, including revenue growth, optimised procurement, digitisation of group systems and processes, operational efficiencies and asset optimisation.

The execution of our strategy is enabled by: 1) Our business principles; 2) Our investment criteria; and 3) Our capital allocation framework.

Although our divisions operate in different industries, they share a common set of principles. We believe these principles enable them to offer customers fit-for-purpose products and services that are differentiated from competitors and enhance their competitiveness, to support market share gains and protect revenue and margins.

Value-add/differentiation
We strive to develop products and services with high value-add to meet and exceed consumers’ and customers’ needs and expectations.

Operational excellence
We invest in processes, technology, channels to market, backward integration, sustainable business practices and innovation to build brand equity and deliver products and/or services at the lowest cost.

Best employees
We seek to employ the right people, in the right roles, across the group to instil a culture of excellence and ensure successful strategy execution.

Strategic stakeholder relationships
We nurture strategic stakeholder relationships through regular engagements and collaboration on relevant matters.

Our investment criteria guide our capital allocation decisions in relation to our divisions and potential new businesses. While we are sector agnostic in terms of new businesses, we prefer to focus on areas where we can leverage our competitive strengths, predominantly in manufacturing, logistics and related areas.

Economically attractive, aligned with our values and purpose
Investments should have the potential to generate growth, attractive financial returns and free cash flow. Investments should align with our values and contribute to fulfilling our purpose.

Market leadership and growth
We prefer to own businesses that are, or have the potential to be, market leaders. Investments in our divisions should enhance their market position and increase their competitiveness to support growth.

Diversification
Investments should support a level of diversification in our portfolio to mitigate risk and secure growth through economic cycles.

Value enhancement
We endeavour to enhance the value of our divisions by supporting their growth through strategy development and specialised corporate services.

Our capital allocation priorities support our strategic objectives, value creation and the long-term sustainability of our group. With the completion of our latest investment cycle, we are prioritising a reduction in net debt ahead of capacity expansions, acquisitions, share buy-backs or dividends.

Debt
Debt should be at a level that provides balance sheet flexibility and resilience. We target a net debt to EBITDA ratio of less than 2 times. ¹

Replacement (maintenance) capital expenditure
The maintenance of our asset base ensures the sustainability of our divisions.

Efficiency and resilience capital expenditure
Efficiency improvements and increased resilience enhance the competitive positioning of our divisions and ensure continuity of supply to customers.

Capacity expansions, acquisitions, share buy-backs and dividends
We consider expansion and acquisition opportunities (subject to our investment criteria) relative to share buy-backs and dividends.

¹ Our debt covenant requires a net debt to EBITDA ratio of less than 3 times.