Remgro Ltd Ord

Good day ladies and gentlemen, and welcome to the Remgrove Limited annual results. All participants will be in listen-only mode. If you have joined via the webcast link, there will be a presentation visible throughout the event. If you have joined via the HD web phone, there will only be audio and a keypad on the screen. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, Please signal an operator by pressing star, then zero. Please note that this call is being recorded. I would now like to turn the conference over to Yanni Durand, CEO. Please go ahead.

Good morning everybody and welcome to the annual results presentation of Remgrove Limited for the year ended 30 June 2023. Just to run you through the contents of the day, I will start by giving a performance overview. We will rate ourselves against our strategic priorities and then I'll also briefly discuss the operating context of the environment that we've been operating during the past 12 months. Then I will hand over to Neville to give a more detailed overview of our results for the year. And then we deviated a little bit from our usual format in previous years. We will then begin an update on some of our key investments. And I welcome Ronnie van der Merwe and Jurgens Meijberg, the CEO and the CFO respectively of Mediclinic, who will speak to the results of Mediclinic as well as their strategy. Then Peter Ace, the chairperson of CIVH, will also do exactly the same for our CIVH company. And finally, we've got Paul Kruschenk also on the line, the CEO of RCL, that will speak to RCL's strategy and most recent performance as well. I will then close off with our key areas of focus, looking ahead, and then also open the floor for questions right at the end. And we've got all my colleagues around the table that will be assisting me in answering some of the questions. Specifically, it's also relating to CIVH, Mediclinic, as well as RCL. Just to turn across to the operating hours results for the year, and we're actually quite proud of the results. If you look at the results, headline earnings per share are by 8.7%. Total headline earnings actually up a little bit more, up by 8.9%. And the main reason between the difference uplift is 29 basis points in headline earnings per share. And that's really our share buyback program that we've commenced during the latter part of 2023 financial year. And also we did some purchases just right after year end. Then we've increased the dividend by 60%, the final dividend by 60%, so the year dividends also increase by 60%. It's not exactly in line with the earnings. As you can see, the earnings is up 8.9% per share, but the dividend 60%. But what you must realize is that the cash flow at the center trails the earnings by about a year because they declare the dividend after having a good year in earnings, and we only receive the dividend at the next year. So we only get the benefit of the cash flow in the following financial year. And last year, we had quite a good increase in some of the underlying performance of the companies. INF per share up nearly 17%, and we'll unpack that in detail later in the report. I think what is also critical to note, there was a Tremendous amount of corporate actions during the past year, as you're probably quite aware of, and if you're actually comparing apples with apples, and it's very difficult sometimes to eliminate all the noise in the results, but if you're just comparing apples with apples, the underlying earnings are up about 27%, which is quite a resilient performance going forward. The discount is still at 40.8%, and we'll unpack that later as well. Neville will discuss this quite in detail later, so I'm not going to elaborate on that. And maybe we can just quickly turn over to the operating context of how we've operated in this environment. I don't have to teach you or tell you exactly how tough it's been. It's probably one of the toughest environments. I've experienced in my 30-plus year working career, I mean, the various factors we talk about, load shedding, infrastructure collapse in South Africa, inflation, economic growth, the global supply chain disruptions, all of these things make it a very, very tough environment. Put that on top of since 2013, if you look at the South African economy, there's hardly been any growth. People talk about the missing years, but if you just look at the actual numbers, it's actually quite a few missing years since 2013 for the last 10 years in the economic environment, especially for locally domestic operating companies in the South African context. Despite this, I must say I'm proud of some of our companies and what they've done. We call it a Burma Kaplan. We're fixing sometimes our own water infrastructure. We're fixing sometimes the municipality substation just to keep operating so the factories keep operating. And I think I must congratulate my team and the management teams that in a very, very difficult and constrained environment with collapsing infrastructure, we're managing to keep our companies afloat and going forward. Turning the page, if we look at our portfolio context, clearly there's some positives, there's some negatives, and then there's some actions that we can take. We always talk about the controllables and the uncontrollables. And really, if we can focus on the controllables, then we can actually outperform the opposition. I think it's important to realize that South Africa is not an island. We can't get away from what's happening on a global environment, so we're exposed to input costs and commodity costs and all of those things, and we have to deal with it. A lot of that is uncontrollable, but the only thing is that we can look at the controllables, make sure our cost base is right, our efficiency is there to make sure that we can maximize margins in our underlying companies. Clearly, some of the things that we're doing from a Remgrove side on a macro level, I'm involved with a business called SA Collaboration, trying to help to fix some of the aspects in the country. Really, my portfolio, as you all know, is involved in the crime and corruption work stream. Then via RCL, they've done tremendous work on the chicken and the sugar master plan, and we've seen some of those benefits starting to pay off, not without its challenges, and Paul can elaborate on that later on. At the micro level, clearly we've started energy exchange. We're investing into renewables in our underlying companies. And we also see some opportunities, and we've actually made an investment, as you all know, that we've alluded to in the past on the energy exchange platform going forward. So despite some of these headwinds, we also see some opportunities, and we focus on the controllables. If we turn the page... It's a little bit like a scorecard and when you get your scorecard at the end of the year at school and we've actually took the bold step to say let's rate ourselves on our strategic priorities that we set ourselves at the interim. We show you these things at the interim, and we've rated ourselves, and what we said is a green, a yellow, or a red. And as you can see, either we're on track, it's all in progress, or we haven't started yet or not yet executed. And I can, at least the one thing I said, we didn't rate ourselves on any of the red things, so we probably scored half a pass on some of these things. But let us just quickly... Priority number one is the portfolio optimization, the unlocking of the value, capital allocation, sustainability, improved disclosure, and then sustaining the momentum and the resilience through the portfolio. And I'm going to go into much more detail in the next slides. Maybe just focusing a little bit on point six, because I'm not going to deal with that specifically later on, because that's really a function of our results that you see coming through. But I think it's, I must say, And you're probably all aware some parts of our portfolio is not where we want it to be. Some of them is, as we call, in the recovering bucket, and there's a huge focus on the earnings and the earnings delivery of the portfolio that we all optimally deliver the desired results and the return on our investments. Just to, and Neville will probably talk about that, just to make the point, remember we've got some portfolio investments that we actually don't equity account, so we only account for dividends, and some of them don't pay dividends, so that is put a drag on if you just do a normal accounting number of return on equity at the Remgrove level, and I think it's just because of the accounting rules, it's not... not really, so it's not actually a true reflection of the return on equity on the Remgrove portfolio, because we don't account for any earnings, for instance, on a discovery, a big part of our NAV, but we don't get any earnings on that. So there is a drag on the earnings from an accounting point of view. So we flip the slide, we go to just evaluate ourselves on Strategic priority number one and two, which really is what we talk about, unlocking value and portfolio optimization. I think it's been a busy year. We've lost a lot of year, and we're all a year older here, but I think we've executed quite well on that. We've delivered the Heineken-Destel transaction. We've delivered the MediClink transaction. Grinrod has been unbundled. We also did a share repurchase program, and I'll get back to that later as part of our capital allocation program. And then RCL, we talked about the vector logistics disposal, the rainbow turnaround, and the one that's really being focused for the rest for the next financial year is to deliver on the Vodacom CIVH transaction that is now being referred to the Competition Commission Tribunal. Just on the repurchasing side, I think it's something – that we've been asked a lot about. Clearly, at the current levels and at the current discounts, we think it's a very attractive capital allocation decision, and we've completed the program shortly after year-end, a total $1 billion just after year-end. I think it's also, we must realize, it's a balancing act as well between paying dividends, doing shareholder returns to the shareholders, as well as also allocating capital to our underlying companies into our core portfolio. And we're acutely aware of this and to make sure that there's balancing between these three priorities is actually done in a balanced way and to the enhancement and the most efficient way of unlocking value for our shareholders in that respect. You can turn over the page and then the evolution toward asset scarcity, also part of strategic priority three. And I think it's not something that we do deliberately. I think it's something if we say we just want to delist companies for the sake of delisting to create scarcity, I think that would be the wrong incentive and the wrong reason for that. The reason why we're doing these things is because we think it's unlocking our value, it's done at the right prices for us in that instance, and also in the best interest of the underlying companies. And I think that is the important message that I actually want to hear. But we've achieved now that our portfolio is now over 70% unlisted in that respect, and so it creates some scarcity to companies. to our portfolio, but I think it's now also what it does, it also puts more responsibility on Remgrove as an investment holding company, as well as a lot more transparency that we have to show, especially in the underlying valuations of the unlisted investment and the disclosure that we're going to do. Turning over the slides, still focusing on strategic priority number three. How have we deployed capital? As you can see in that instance, we've actually made quite a few investments into a core portfolio, which really relates to the mediclinic transaction where we spent quite a bit of money on that, as well as a share purchases program, as well as dividends that we've paid to that. Where did we get the cash from? We get the cash from investment income, as you can see on the right-hand side of the pie graph. We've realized some investments as well. as well as also the investment income return on our portfolio. That is where we got the cash from, and we spend it into, as we said rightly, on share repurchase, dividends, base, and investments back into our core portfolio. And then the 6.7%, obviously, we have to pay some taxes as well, plus also the cost from the head office side as well. Okay, so what is the, if we turn over a slide, still on strategic priority three, and we focus in quite a bit on capital allocation, because I think that's probably one of the most important things that we do. And if you look at the slide, clearly what, if you look at 2023, 4.2% with the yield that we've delivered to the shareholders, and that consists of three elements. It's one, it's a dividend spate, just over a billion in 2023. And I think what we must just, on that dividend, it's an old dividend. It's not the dividend that we declare today. So today, if you actually put the dividend today, it will be how much higher than 4.2%, but that will only come into the 2024 financial year. Differences in species, we've unbundled grain rot, plus we did a share purchase, share buyback program of 830. Why doesn't really relate to the 1 billion that I mentioned before? The balance was done after year end. So total return to shareholders in the year under review, nearly 3.3 and a half billion rand. Putting it on a market cap of just over $82 billion gives us a 4.2%. And you can clearly see the strategies paying off for us in 2021, albeit the COVID year was 0.7%, last year, 2022, 1% and this year, 4.2%. And we hope to continue on this trend of returning capital to our shareholders going forward. Then turning over to the next slide, also slide number three, the net deployment of capital into the core portfolio. I think I've touched on that a little bit. It's really the reinvestment into MediClick and the Distel portfolio. We bought some additional shares in the market. And we also classified our portfolio, as you can see on the right-hand side of the slide. We're talking about what we call growth assets. cash generating assets and also then assets in the recovery within our portfolio and so we've made an effort here to give you a sense of the proportion that we think that fits into the various basket we've got many questions about that in the past so we just give you a sense of it obviously we're not going to tell you which of us children are not doing so well in their scorecards but you can probably guess some of them of where some of those turnarounds needs to happen The one obvious one, you probably saw some of the sense announcements this morning on the chicken side, and I think that everybody accept that that's a huge turnaround thing with the challenges that's been facing there in that respect. I think just to re-emphasize the point that I made right at the beginning, we acknowledge that certain parts of our portfolio are not performing optimally, and that's a big focus going forward over the next couple of years with very strict performance criteria that we're putting into place, aligning that with incentive schemes in our underlying portfolios going forward. Then just turning across the slide, I'm not going to deal with the first-round shares and the hedging on that side, as well as some of the underlying investments into our funds. We've done that during the interim phase, and the information is here for you to see. But I think just also, albeit a bit on a smaller scale, also value unlocking, allocating of capital in the Gordons that we sold earlier, The Gordon's General Contract, distribution contract to Diageo for consideration of one billion rand, we think that was a good deal for both parties. It was a trademark that did not belong to us, it belonged to them, and we had the distribution right. Given the complexities of the transaction, of the agreement, and of executing on the distribution contract in a different environment, we thought it was the best for shareholders in Kaivin that we actually sell that contract back, and we think that both sides of the parties, on Kiaja's side and our side, we're quite happy with the transaction, and that's always an indication that you've actually concluded a good transaction in that respect. Now, if we get to... Strategic priority number four, which really deals with our sustainability drive. And I think I just want to emphasize in this thing, ESG and sustainability has always been part of the DNA of Remgrove. We just haven't articulated in the past probably so well, and we actually haven't measured it so well. I think that's important, but it's always been part of our DNA. But I think given the new environment and what is happening out there in the world, I think we've made some good progress to get in line of what is happening there. We've appointed Ms. Dennis Brown, who has over 20 years' experience in this field, having worked for large listed corporations like Discovery, and we look forward to her driving our ESG strategy, working with our portfolio companies, and I think she will add a lot of value to that. What we've done as well, we've also completed our baseline assessments across the portfolio. and that will help us define our current footprint and what it looks like and also help us to set our targets going forward. This is a key milestone in our approach, and we want to have measurable targets and KPIs, and also then we can measure ourselves better because it's also part of our remuneration KPIs, and we also delve that down to the underlying companies that also become an important part of their scorecards. Obviously, we've completed the gap analysis looking at our current disclosure versus the disclosure of the crime on some of the widely used rating agencies. We're not there, but it's key to ensuring that we report appropriately in line with market practices. We're all exactly on a consistent basis going forward. Everybody can evaluate us in that respect. So what is going forward for us? What are we going to do? What is our focus period now? It includes improving our reporting of the ESG matrix. We're going to use this baseline assessment to set the appropriate targets, as I alluded to, and then increase level of disclosure. That is going to be quite important. And the first CFD report will be published as part of an integrated annual report later this year. I think the annual report will come out in October. So we're proud of what we've achieved in terms of sustainability, but it will be a focus and continue priority for us going forward. Turning over the slide, strategic priority five, and I think this is critical for us, especially as our portfolio evolves around to 70% unlisted. And I think we have made considerable progress and are committed to continue to do more. I've made that promise in the past, and you can hold me responsible if you don't do it properly. Over the last 18 months, we have created more engagement platforms for shareholders to engage with our management team and also if the board is appropriate. We've had our first governance roadshow with more than 43% of our shareholders in the last month. We're also making a lot of effort to improve our disclosure, noting that I think it's important that it's an ongoing process with efforts to continue. We also will value your input on that. We've also added additional disclosure on our material unlisted assets in this presentation. And Neville will spend considerable time on the valuations and methodology and assumptions in how we calculate the INAV. Clearly, it's important to note that since two years ago, we formed also a valuation committee. So just to have all of what we call these checks and balances in place on the valuations, we've got a valuation committee. We've got an audit committee that signs off, and then the third one is the board, as well as the thing that we also use independent valuators in the portfolio to actually do some of these valuations. I think it's also going to do what is important. We're going to do some of these investment roadshows. We're going to have some of these capital markets going forward, and I think that is going to be an important part of this promise and transparency that we've promised to the market. I'm going to now hand over to Neville. He's going to go into the detail of the financial result as well as the INAF calculations. Neville.

Good morning, everyone. Yanni has alluded to the noise that was created by corporate actions over the last two years. And in this slide on the right-hand side, I'm just giving an analysis of the impact of corporate actions at Remger level as well as outsourced group level over the last two years. And the impact is a negative swing of approximately 949 million rand year on year. If you exclude that impact, The underlying portfolio actually increased by 27%. That was maintaining positive earnings momentum despite a very challenging business environment that Yanni also has described now. The main contributors to this increase are firstly Mediclinic. Mediclinic reported a 75% increase in headline earnings. resulting in this significant increased contribution to RemGrow's headline earnings. The adjusted earnings increased by 15%, and that 15% represents their underlying operational performance. Then secondly, the outsurance group normalized earnings from continuing operations, and that's excluding the discontinued operations, increased by 62.2%, mainly driven by outstanding results from Yowie Australia, as well as lower funding costs, where last year they utilized the proceeds from the Hastings sale to reduce their debt at head office. Also, we've earned significantly higher interest income due to the 350 basis points increase in the repo rates over the year under review, on higher average cash balances. KTH benefited from a once-off debt forgiveness gain of 520. Remgrove's portion in that increase is 226 million rand. And we've already disclosed this also during the interim period. And then Pembani Remgrove Infrastructure Fund paid a significant dividend to Remgrove of 358 million rand. with a sale of their interest in ETG. Also included in the increased contribution by First Rand is a special dividend of $154 million that they paid in October last year. The decreased contribution by RCL, mainly as a result of continued under-recovered input cost pressure in Rainbow, the chicken business, the load-shedding impact as well as a payment of a special sugar levy of 171 billion after tax, and that decrease was partly offset by an improved financial performance by the sugar division. And then if you look at total, the significant decrease in contribution by total energies is mainly due to negative stock revaluation losses, resulting in a swing of approximately 900 million rand year-on-year negatively. And this also creates volatility in headline earnings. The other, the PRIF significant dividends as well as that KTH once-off debt forgiveness gain all created this volatility in headline earnings. So excluding all the corporate actions, the comparable headline earnings of Ringgro actually increased by 27%. Next slide. This is a new table that we now include, and with the inclusion of this table, we attempt to provide more insight on our valuation process, as well as improve disclosure on the valuation methodologies applied. Firstly, some insight around the governance process, and Yanni has also alluded to that. In line with one of RemGrow's strategic priorities, namely portfolio optimization to improve the asset scarcity of the portfolio, the board established a valuation subcommittee during the 2021 financial year to assist the Audit and Risk Committee in gaining insurance on the valuations of unlisted investments. thereby ensuring the robustness of Remgrove's intrinsic net asset value. This function has become increasingly important as Remgrove's portfolio has now evolved towards more unlisted investments. So more than 70% of Remgrove's portfolio is now unlisted. And then in addition to that, if you look at the year end, the INAF table is actually part of the audited consolidated financial statements. So the auditors perform an independent assessment on these valuations, and the outcome of these independent assessments is that all of these valuations are are actually in the range with the auditor's valuation ranges. So that's also now been signed off by the auditors. Secondly, the table provides a snapshot of the valuation approach for each of the large unlisted investments. And here you can see what the primary approach is for each investment and the type of discounts that we apply to the valuation. and that's for improved disclosure. Just want to mention three or four major investments. So at Citi, June 2023, two significant investments, namely Mediclinic, which was previously listed, and the Heineken beverages were valued as unlisted investments for the first time in this regard. Due to the significant contribution of the investment in Mediclinic to Remgrove's INAF, it's more than a quarter of Remgrove's INAF, Remgrove engaged the services of an independent expert to perform the valuation. The valuation methodology used was the sum of the parts methodology, which was underpinned by the discounted cash flows of the underlying businesses and the three big businesses involved. are Southern Africa, East London, and the Middle East. And each business valuation range was performed in their currency and based on that country's forecast signed off by management and the board of that company's. The increase of 7.6% represent the uplift in the pound price per share from the transaction price of £5.01 to the current value per share of £5.39. So that £5.39 is the mid-range of the independent expert valuation range. which the Evaluation Committee has signed off and was approved by the Board and the Audit and Risk Committee. Then regarding Heineken beverages, given the short period since the Distel Heineken transaction implementation at the end of April 2023, the Heineken beverages investment was valued using the price of a recent investment methodology. Since limited integration has taken place, as at 30 June 2023, and reliable consolidated forecast information is also limited. They are still busy with the integration of this merger. So going forward and consistent with Remgrove's valuation approach, it is most likely that a different valuation methodology be used. For example, the discounted cash flow methodology. In such an instance, various discounts for lack of marketability, lack of control, forecast risk, etc., would be applicable, which would affect the valuation in future. But for 30 June 2023, the valuation committee and the board has decided on the price of a recent investment methodology to value the Heineken beverages merge entity. The valuation of CAVH is performed internally and tested for reasonability with the outcome of the annual external valuation done at CAVH level. So Peter will also provide more insight on the valuation of CAVH later on in this presentation. Then Cape Vinh, which is the offspring of the Distil Heineken transaction, Cape Vinh's valuation increased by 50.5%. And that 50.5% represents the uplift in the sum of the parts valuation from transaction price of R15 per share to the current value of R22.60 per share. And that uplift is mainly due to the disposal of Gordon's gin to Diageo, resulting in net cash received to date. So that's additional cash that sits on the balance sheet. And Gordon's gin operations also continued its good performance since the Heineken transaction announcement to the transaction effect of that, which also had a positive cash flow impact. on this valuation. Then the whiskey business, over the last two years, their performance improved, which is reflected in the DCA valuation of the whiskey business. And then in addition to that, the RAND valuation also benefited from the weakening of the RAND against the hard currencies. Therefore, the resultant 50% increase in the valuation of Cape Verne. Next slide. This is just a summary of the contribution per platform to headline earnings, as well as INAV. Here I just want to highlight on the headline earnings side, the contribution by healthcare increased substantially relative to the other platforms. to 25% of RemGrow's earnings, headline earnings, from 18% in 2022, mainly due to a 76% increase in headline earnings year on year, partly offset by additional transaction costs that we've accounted for during the lag period. Another significant increase in headline earnings contribution is the diversified investment vehicle platform. And that's mainly because of the PREV dividend that we received and the KTH1s of debt forgiveness gain. Decreased contributions are from the consumer goods due to the underperformance of RCL, as well as industrials, and mainly due to the impact of the negative stock valuations at Total Energy. If you look at the INAV per platform, The significant contributor to INAV is Mediclinic, with increased contribution from 25% to 54% year-on-year, mainly due to a 60% increase in the ZAR value. And I'll unpack that 60% increase later. So in the following slides, I will highlight some key takeaways from our respective investment platforms. And while I will not go into too much detail on each, In the annexes to this presentation, which you can download from our website, we have provided more detailed information on the underlying performance measures and valuation considerations of each of our material investments. Next slide. So the healthcare platform, as I alluded to, the headline earnings contribution increased by 76%. While if you look at the adjusted earnings in pound terms, that's up by 15%. We've also accounted for transaction cost, our portion, during the lag period amounting to that R539 million. So Ronnie van der Merwe and Jurgens Meijer will unpack these results later on in this presentation. Just want to highlight on the right-hand side the 60% increase in the ZAR valuation, the rent valuation, mainly due to an 18% increase in the pound value per share from the £4.58 close at 30 June 2022 to the valuation of £5.39 at 30 June 2023. We've also acquired an additional 5.4% interest, indirect interest in MediClinic through the Manta structure at £221 million. And then the RAND valuation also benefited from the weakening of the RAND against the pound year on year. Next slide. Consumer goods, it's a busy slide. If I quickly go through the main components of headline earnings in consumer goods, if you look at the still, the still's numbers are included for 10 months up to end of April this year, and that's compared to the 12 months of the previous year. The still reported normalized earnings adjusted for abnormal transactions and currency movements for the 10 months. And that increased by 16.3%, mainly due to an increase of 14% in gross revenue on 6% higher volumes. And that was mainly driven by double-digit revenue growth in ciders and ready-to-drink categories. And Savannah and Hunters are the standout performers in that category. Heineken beverages results is included for two months. And that two months result amount to a loss of $75 million. And included in that $75 million are amortization and depreciation charges of $56 million relating to the intangible assets identified with the merger. So excluding these charges, the contribution amounted to a loss of $19 million, mainly as a result of constrained consumer environment, and load shedding affecting customer behavior, as well as supply chain challenges, most notably on the molten glass due to global price volatility, local supplier constraints, and volatile demand. Just quickly an update on the Heineken-Destel integration process. The IT integration was implemented at the beginning of this month on the 4th of September. So for the 2023 year, the priorities for the merge entity includes the setup of the new organizational structure, harmonizing of systems, network consolidation and joint planning and reporting. And in 2024, the business expects increased synergy deliveries as the Merge entity settles into new ways of working. Kaepernick's results for the two months amounted to $14 million. If you look at year-on-year profit from their continuing operations, that's the whiskey business, increased by 13%, mainly due to strong revenue growth. of the single malt whiskies, as well as Scottish leader. RCL had a challenging year, reporting a decrease in underlying headline earnings from continuing operations of 20%, which Paul Krushenk, RCL Food CEO, will unpack later in this presentation. Cicalo, the spreads business, the same message, the trading environment remained challenging due to volatile commodity prices and exchange rates. increased load shedding and rising inflation and interest rates. Socalo has experienced a decrease of 5.2% in volumes as consumer spend was negatively impacted by elevated inflationary environment. The decrease in volumes coupled with a 17.6% increase in material cost driven by volatile commodity prices and exchange rates resulted in a 8% overall decrease in operational EBITDA. Then on the financial services, the major investment here is the listed outsurance group. Outsurance normalized earnings from continuing investments increased by 62%, mainly driven by higher earnings from outsurance holdings and lower funding costs as the Hastings proceeds were utilized to settle group debt. Outsurance earnings increased by 44%, mainly driven by pleasing financial and operational results from Yowie, Australia, as strong premium growth continued and favourable weather conditions supported a significant increase in profitability. Outsurance announced their annual results a week ago. On the infrastructure, mainly the investment in CAVH. The increase in headline earnings is due to improved performances by CAVH's underlying businesses, DFA and Vumatel, which Peter Ace, CAVH chairman, will elaborate on later in this presentation. Just on the industrial portfolio, I will quickly just highlight comment on the results of APSA, Total Energies and Waspecu. APSA also experience erratic and generally low levels of demand, especially from several large tonnage customers, combined with high levels of plant maintenance activity. And these factors weighed in on the results of their tonnage division, which is the biggest part of their business. Their packaged gases volumes continue to improve, and the acquisition of weldermax, a welding consumables and equipment supplier, further enhance performance in this division, despite significant cost pressures. Total energies, excluding the volatility of that stock revaluations, their contribution to headline earnings decreased by approximately 30%, and the decrease is mainly due to higher input cost, heavily impacted by supply chain challenges experienced in the importation of their finished fuel products as well as crude oil. Waspeco's aluminium extrusion volumes were negatively impacted by lower business confidence as well as reduced activity levels in the commercial and residential business building sectors. Next slide. This is the normal cash flow bridge that we supply to the market. And you can see the main driver of cash earnings at the center is dividends received from our underlying investing companies. This year amounting to 3 billion Rand. We've also utilized approximately 6 billion cash in investing activities during the year under review. of which the most significant is the acquisition of an additional 5.4% indirect interest in Mediclinic for £221 million. And that results in a net cash outflow of £3.2 billion year-on-year, with a cash balance at the centre of £9 billion at year-end. Next slide. This... The graph shows the evolution of cash generation to the center of the current portfolio since pre-COVID period in 2020. So you can see it's just under $3 billion, $2.7 billion in 2020. The impact of COVID in the first half of 2021 down to $1.5 billion, as well as the recovery path since then. So if you look at currently 3.1 billion dividends received at the center, so this current portfolio has now recovered from and surpassed pre-COVID levels on an absolute basis. So rant for rant. And I think it's a good story if you look at the increase from last year to this year. And in the next slide, this increase actually – drove the declaration of the dividend, the final dividend, of R1.60, an increase of 60%. So the total dividend for the year is R2.40, and that also is an increase of 60%. But you'll see the evolution of the recovery path since COVID, 66% increase in dividends from that low base last year, and then this year another 60% increase last year. in dividends. The 60% is not an expectation of things to come in the next few years. So it's just, I think we are now recovered on an absolute basis from cash generation at the center since COVID. And then just if you look at yields, Jannie mentioned the yields. So the cash yield on the dividend yield for this year is based on the 30 June 2023 price, is 1.6%. Last year, it was 1.2%. And in 2021, it was below 1%, 0.8%. So also an improvement in the cash yield from Remgrove in respect of dividends paid. Thank you, Yanni, and I'll hand over to Ronnie from MediClinic.

Thank you, Neville. Thank you very much, and good morning, everybody. I'm going to spend the next few minutes on the long-term group strategy of MediClinic, after which Jurgens Meiberg will discuss the operational performance. We've been working consistently over the last four years on our long-term group strategy, and The purpose of this strategy is to deliver value for our shareholders, first of all, and secondly, also to reposition the business for the future, for growth in the future, and we can only say that this is important for us in a fast-changing healthcare environment as it stands today. Things are moving along quite fast. The strategy consists of six components, as you can see there on the slide. and they are all interrelated to one another. Starting off with integrated healthcare provider, we redefined ourselves four years ago, not as a hospital, pure play hospital group anymore, but an integrated healthcare provider. That gives us the opportunity to start investing and developing revenue streams outside and around the hospital care setting. It also gives us the opportunity to to develop our referral channels into our facilities a lot more effectively. The second component is digitalization, and there we talk about digital health transformation as well as digital operational transformation. What we want to do there and busy doing objectively is we are improving patient access and engagement with MediClinic. We are working on and developing digital health functionalities Also, virtual care functionalities that will interact seamlessly with our physical care environments. And we are quite excited about what we are doing there. The last thing we're also doing under digitalization is robotic process automation. The third component is innovation, and there we're taking a dual approach. First, starting with a bottoms-up approach, where we're really making use of the innovative technologies and really good ideas of our people on the front lines to improve our operational processes and operational efficiency in the hospitals and also to improve our care processes and therefore getting better patient outcomes. On the top-down part of innovation, what we do is we are developing new revenue streams as well as new business models. The fourth component is data. Healthcare is a very data-rich environment, as you all know, And data, good data, is becoming an asset in healthcare. So what we are doing is we are working by developing our data sets, the integrity of our data sets for that to be much better. Also, our ability to use our data much more productively. We want to make sure that we make better decisions faster in all layers of the organization as well as in all functions of the organization. And we're quite happy with what we have been doing so far. Also, we want to track our patients and we want to monitor them inside of hospitals but also in all the other care settings. The fourth component is operational excellence. Tough environment in which we are, Jurgens will unpack that a little bit more. There we're looking at staff deployment and staff scheduling. On consumables and supplies, we are looking at standardizing that ever more. We're looking at process redesign and automation. And lastly, we are streamlining back office wherever we can. The last component is growth. Growth. We are looking at growth prospects in our divisions in which we are by way of investing in the continuum of care, and we're making good progress there. And then we are still also looking at expanding our footprint to countries in which we are not at the moment. Thank you. All from me, I think just to add to that is to say that we really believe that this strategy will position MediClinic very well for the future and we are quite comfortable with the progress we've made. I'm handing over to Jurgens Meiberg, CFO of MediClinic Group, to talk about the operational performance.

Thank you, Ronnie, and good morning to everyone. Before I speak to the contents of the slide that you see in front of you, just to recap some of the group numbers that Neville mentioned earlier at a mediclinic level, for our year ended to March 2023, revenue was up 12% at a group level, up 4% in constant currency. Our adjusted EBITDA, which is in line with the way that we've presented this in the past, It was up 9%, up 1% in constant currency, and our earnings, as Neville indicated, adjusted earnings was up 15%. What I'd like to do is go through this in a per-division basis, and what I will do is firstly talk about a little bit of detail on the year ended 31 March 2023, and then provide an update of trading up to the end of August of where we are right now. So starting in Switzerland, revenue for the year end of 31 March 2023 increased by 1% to 1.9 billion Swiss francs, driven by inpatient revenue growth of 2% and outpatient and day case revenue growth of 3%, offset by reducing revenues from COVID-19 related testing and vaccination activities. Inpatient admission growth of 1.4% was impacted by nursing capacity constraints in certain parts of the division. Inpatient admissions were 4% above pre-pandemic FY20 levels. The constrained revenue growth in the period, combined with the elevated spend on temporary staff and employee overtime costs, resulted in a 6% decrease in adjusted EBITDA to 280 million Swiss francs at an EBITDA margin of 14.7%. In terms of the current trading to the end of August, there's been a continuation of the trends, the challenging trends experienced during the FY23 period. In particular, inpatient admissions are stable compared to FY23 with an ongoing shift towards general insured patients. and we continue to see elevated operating costs relating to temporary staff and overtime compensation resulting from nursing capacity constraints. Additionally, we expect the usual seasonality we experienced in the first half of the year due to the summer holiday period impacting on the margin. To address the challenges relating to nursing staff shortages, we've enhanced already existing initiatives and improved attraction and retention of clinical personnel as well as improved resource management. Over the page on Southern Africa, revenue for the year ended 31 March 2023 increased by 6% to R9.5 billion, reflecting strong growth in patient volumes. Compared with the previous year, paid patient days increased by 7.1%. This was partly offset by the average revenue per bed day, which is down 1.1% compared with FY22. reflecting an expected change in mix following the prior periods with more pronounced COVID-19 cases. Paid patient dates were 3.6% above our pre-pandemic FY20 levels. Adjusted EBITDA increased by 10% to R3.8 billion, driven by the revenue performance and responsible cost management, delivering an improved adjusted EBITDA margin of 19.4%. In terms of current trading to the end of August, there's been modest growth in overall bed day sold compared to FY23, the comparable period within FY23 driven by strong demand in day case admissions. Average revenue per bed day is impacted by the speciality mix and we continue to absorb rising diesel costs due to increased load shedding. Finally then, on to the Middle East, revenue for the year ended 31 March 2023 increased by 8% to 4.5 billion dirhams. Demand for our services was strong, with inpatient and day cases up 17% and outpatient cases up 14%. The volume increase was partly offset by a decrease in the average revenue per case, reflecting mixed changes. Patient volumes in the Middle East are significantly ahead of pre-pandemic FY20 levels, given the growth trajectory of the division. Adjusted EBITDA increased by 4% to 641 million dirhams, reflecting additional headcount compared with the prior year period. Given investment for continued growth in new and existing facilities, which combined with the growth in pharmacy revenue, resulted in a modest decrease in adjusted EBITDA margin to 14.4%. In terms of the current trading to the end of August, we are encouraged by the continued benefit from the multi-year investment program resulting in strong growth in volumes across the inpatient, day case, and outpatient environments compared with the prior year period. As always, we expect the first-half performance to reflect the seasonality of the quietest summer period in the Middle East. With that, I'd like to hand it over to Peter Ace, the Chairman of CIVH.

Thank you Jurgens. My first slide will show the landscape that CIVH operates in. I will also just mention that I'm going to speak as CIVH chairman but also as a RemGrow executive. So as CIVH we also have two other shareholders. CIH, Joe Mandugandaba, and also New GX, Kurupicic, CIVH, then also has the REM grocery holding of 57.03%. On the left of the slide, you will see the recent formation of the massive group that's put together, Vumatel and DFA. During the process, it was also rebranded to Vuma and DFA with the new logo shown there. As a CRBH group, we're also slowly starting to look outside the borders of South Africa. On the right-hand side, you will see CRBH Africa. We are looking at opportunities. Currently, we're focusing on Tanzania. Maybe do something there with Vodacom. In the center, you will see the core strategy and makeup of MASSIVE, which is Open Access Wholesale Uncapped Fiber. Around the centre you can see how the business has evolved over time. 2007 it started with fibre to the telcos and Vodacom at that time was the anchor tenant and that evolved then into Metrofibre. Metrofibre is mostly used to connect our other customers, the non-mobile operators, for example the ISPs, and then from there it evolved to fibre to the business. This is where we provide products into the actual enterprise or corporates. At the top, you will see the residential or consumer products. On the left, where we started in the leafy suburbs of Santon, Parkhurst, Parkview, with FTTH, we call that Vuma Call. On the right-hand side, Vuma Reach, where we expanded into lower layers of the pyramid with coverage into places like Soweto, Mitchell's Plain, Forslerus. And then more recently we launched a trial in Alex, Alexandra near Sandton with the VumaKey internet product. I'm going to go into each of these in a little bit more detail now. The first slide just shows some of the consumer metrics with VumaCore on the left hand side. At the top I show the homes passed. It's almost a million homes passed at the moment. And of that we have connected almost 400,000 customers. You will see that the focus there is not so much on building more fiber, but on connecting and penetrating those areas that are already covered. Vuma Reach in the middle, that's the Mitchell's Plains, Soweto's, Fosloresus. There we've invested heavily and most of the capex for the year went into the Vuma Reach product, increasing the homes passed from 664 to over a million. So in total now we almost have 2 million homes passed. Subscribers in the REACH area is 263,000. On the right hand side, Vumaki, it's a trial. Alex, I mentioned it earlier the week. We took some journalists to Alex and just showed them what progress we've made there. But maybe the next slide depicts it better. This is a picture from Google Earth in the Johannesburg area showing the contrast of the digital divide. You can see the core market segment, 2.2 million reach, estimated at 5 million, but then the core homes, together with REACH can be supplemented by the key market which is really the bottom of the pyramid with another 10 million homes that can be passed and potentially connected in the future so in Alex while the journalists were there we took some videos as well and right at the end I will show some of the videos there but really what we are trying to deliver into Alex is a product that is equivalent to what we offer in Sandton uncapped internet, unlimited internet, but at good speeds, 20 megabits per second, and then also affordable. Our target price, and we are achieving it, is to get to close to 100 rand for uncapped internet in the month. While we're doing this, we also continue to connect schools. Wherever we pass a school, we give them connectivity of one gigabit per second connectivity. And we've done a few of those across the country, not just in Alex, but also in the leafy suburbs. The demand in Alex seems to develop quickly. What we are seeing is we also have customers upgrading from a Vuma Key product to a Vuma Reach product, where they are paying more for more speed in the month, which is a very positive development that we didn't expect to happen. On the next slide, I'm going to show you the enterprise side of the business. This has slowly recovered post-COVID. You'll see in the middle, we've grown 4.5% on the FTTV product. On the left-hand side is the FTTT, or fiber to the telcos. Not a lot of growth recently. I'm expecting to see some growth in that segment once the mobile operators start building their 5G networks, because then they will require more bandwidth to connect the high-speed base stations then. My next slide is then some of the financial results. I'm not going to go into the detail. It's there for completeness and also showing more of the granularity of the financials. At the bottom, the revenue growth, 16.7% to 6.2 billion at the CIVH consolidated level. Headline earnings that was mentioned, 361 for the consolidated CIVH. But what's more interesting is if I start looking into the cash flows generated. So the $4.3 billion was generated at CRVH level. Of that we paid $1.6 billion in interest and that delivered $2.2 billion cash. All of that cash was then put into building network, most of it in the Vuma Ridge area. However, we also added 1.3 billion extra that we got from additional debt facilities that we had. So the total capex... almost three and a half billion that went into the network during the year and as i said most of that capex build is fuma rich the next one just shows the valuation build up starting on the left with a massive enterprise value based on a discounted cash flow of almost 50 billion rand Take off the debt, $18 billion, it increased from the $15.9 or $16 billion, and most of that went into building the network at Massif, delivering a Massif equity value of $31 billion. Then at Remgrove, we apply some discounts, almost $6 billion, delivering the 25 billion. If you take our 57.03, it gives us the 14.3 billion valuation. Neville also mentioned independent valuation. That was recently done to a sanity check. That came out at almost just short of 40 billion rand, which you can then compare to the CIVH equity value there and add back the discounts. Next, I want to conclude with the current status of the whole Varicom investment into massive and the regulatory process. The transaction was submitted to the Competition Commission in ICASA during December 2021. Recently, on the 8th of August, the Commission recommended to the Tribunal that the transaction be prohibited. We have a process that we're going through now. There are third parties that could possibly intervene next, and we should hear what they have to say by the 10th of November. Depending on how many interveners, the date is currently set for May 2024 as the final hearing. Then I mentioned the recent visit to Alex with the journalists. I've put together a short little video. I've taken some of the videos that Tech Central has put onto their website, but I've also added some of my own video. And you will see... what it looks like in Alex, but also the difference it's making to people's lives in Alex right now at this moment.

I'm here with Diklof Marais, who is chief executive of Vumatel. Diklof, tell us a bit about what you're doing in Alexandra Township.

Thanks, Nathan. Yeah, we're here today. I mean, listen, we're trying our best to roll out fibre into Alex.

I think, you know, we... And he will take that number down, and that's the way that he's going to order on our system as well. Okay, so... And each one of these small lines is a block into a home and it equals a connection.

It's going to be a different world. And connectivity is super critical. So I would say my biggest competitor at this point is time. We have to get the houses connected. And that's what we're trying here. And the second thing is... You have to do a quality connection. It's not a Wi-Fi highly contended service. It has to be a type of service that's uncapped and it's at a speed where people can use it. So it has to be reliable because if you look at disposable income, that's scarce. So your service here must actually be better than basically in the Santans of the world. That's how we see it. So effectively it's a POC, but it's live. We've got customers on this. Paying customers. Paying customers, yeah, so it's working.

Thank you. I'm handing over to Paul Kruschenk now, who will tell us more about RCL Foods.

Just touching on the strategy, our performance in 2023, and then I'll end off with a reflection on our brand performance, which is important given that we are a consumer goods business. If we just go to the first slide on the strategy, and if i capture the strategy in one sentence um oswell foods is trying to create a value-added brand business of scale and i'll just draw your attention to the left-hand side following on a strategic portfolio review um in it which was um taking place in 2021 we announced to the market in august 2021 that our portfolio was not optimally configured And as a result, that at the right stage and time, Rainbow and Vector would be separated from RCL Foods, mainly to drive a consistent and better quality of earnings. So with this strategic intent clear, we've spent the last couple of years sharpening our strategic focus. And I'll bring a bit more color to that on the next slide. On the right-hand side of this slide just shows our operating structure, where we're in three business units, groceries, baking, and sugar. and sitting under groceries is the Sakala business, which was mentioned earlier, which we manage on behalf of RemGrow. The last comments on this slide, I just draw your attention to the strapline at the top. We've spent the last 12 months unpacking our purpose and bringing clarity to Osweil Foods' vision. with a purpose of we grow what matters, and a vision is a purpose-led business that delivers value for all and creates fuel to fund enduring positive impact. And we're confident that this will now pull together our entire strategy and enable implementation thereof to be more effective. If we just go to the next slide. I'll just touch on the strategy briefly. We've got three strategic pillars in blue. The gray section just refers to the parts that I've already mentioned that will be separated at the right moments in time. We've got three strategic pillars, people first, right growth, and future fit. And the people first is about culture. It's about our communities in which we operate. A number of our businesses work in rural communities, and it's critical that we interact and help and develop and support those communities. And then lastly, investing in our strategic capabilities. Growth is about our brands, and I'll share some of that at the end, and new channels and markets in which we want to move into to ensure that we enable some growth in what is a very challenging environment. And then lastly, under growth, it's partnering with our strategic customers. Future fit, best in class, best quality manufacturing, as well as a low-cost producer, and then also building a net positive business, which is a longer-term ambition. On the right-hand side, growing our portfolio, what we refer to as leveraging our dynamic platform. So what we have set up is a back office platform together with centers of excellence, as well as a go-to-market growth team. And we believe that that is a nasty position now to enable growth, as well as bolt on potential partnerships and acquisitions. Vector has been mentioned earlier, sold 28th of August, 2023, is the first big step in our strategic transformation. And then Rainbow, while it remains part of the group, is focused on low cost value chain and its new breed, doubling Hammersdale and growing market shares as a consequence of that volume coming to the market and then managing risk, which is evident in a chicken business, particularly AR. If we just go to the next slide to talk through some of the numbers. At the bottom, I won't go through that. It just gives a sense of scale of our different operations. It's there more for information. I'll just talk to the two graphs, which show a five-year trend of revenue in EBITDA. Starting with revenue to be in a very difficult trading environment, as mentioned, we've needed to trade off price increases against the consumers under monumental pressure. And it's been a fine line that we've walked. And you can see the extent of the revenue growth compared to the previous years, which shows the actual extent of the price increases that have come through. Just to mention there as well is that during F23, At various points in time, every single category in which we operate was in some form of decline. So we're dealing in an environment which is extremely challenging. Moving to EBITDA, our progress from F20 to F22 sadly took a turn in F23. Neville has unpacked some of that, but I'll just highlight some of the key items. Load shedding impact. particularly at our grocery facility in Ranfontein, affecting our pit food business. And I'll come to the numbers on the next page. But 158 million is our load shedding impact of direct cost of load shedding. This excludes the indirect cost. Rainbow also significantly impacted by load shedding, making sure that the birds on the ground have food and water to enable them to grow effectively. Neville has touched on the commodity cycle. I won't elaborate on that anymore, but there's a big driver in our decrease in our EBITDA profitability, and clearly our price increases, although we have taken significant price increases, have not been enough to recover costs. If we go to the next slide, this just shows the bridge between our absolute reported performance. So those are the outer two bars, which is what was on the previous slide, $2.2 billion down to $1.7 billion, 25% drop. And then what we do is we try and strip out the material items, which are either one-off in nature or accounting technical adjustments. And I'm just going to call out the one which is material in the current year. It's the third bar from the right, which is the sugar levy. They were also touched on this, and this is a consequence of Tongan and Glendale's business rescue process and the business rescue practitioners suspending payments to industry. And I'll come back and give an update on that in the following slide. In the middle is an 11% decrease in our operating performance. And there are four big blocks to highlight there. Groceries, I've already spoken to PET, largely load shedding related, having a major impact on the groceries business. We now have generation capacity in place and are playing catch up in that area. With sugar, an excellent performance again in this financial year. And I'll show the context of its performance versus prior on the next slide. Rainbow Challenge has been referenced previously. I'll talk to the turnaround plan shortly. And then in group, there was a one-off adjustment in group, which is an impairment of our international investments and our plant-based joint venture with the Live Kindly Collective. If we go to the next slide. It just gets the context and scale of the relative business units. I'm not going to touch on the numbers. The sugar results, just to highlight, the 785 and F22 was its second highest profit ever, and F23, its highest profit ever. So very good operational performance in sugar. I'll just talk to Rainbow Turnaround, which Yanni alluded to earlier. Progress has been made in that, despite the numbers 75% down, which is largely the inability to recover costs in pricing. But there has been progress in the turnaround, and there's two key parts to that. One is the switch from the Cobb breed to the Indian River breed, and that will be completed in F24. Unfortunately, it's a two-year process to switch breeds, and good progress is being made, and the new breed is performing exceptionally well. And then also the doubling of Hammersdale opening was in the past couple of weeks, and that is a significant play in reducing costs and having an impact on Rainbow becoming a low-cost producer. Just while I'm on this slide, I'm going to touch on the two master plans. Sugar master plan ended on the 31st of March. There will be a master plan 2.0. But right now, industry is dealing with the Tonga and Gera issue and the suspension of those payments and their business rescue plan. And we're hoping that in the next couple of months it will be resolved. In our results, we referenced the industry and the court case regarding the sugar industry agreement, which we regard as legislation. So therefore, it's a statutory payment, and the business registry practitioners should not be able to suspend that payment. That matter was heard in court last week, and we should get the results. And then obviously what's critical is that Tonga's business will actually process and their sale needs to be closely monitored going into this financial year. With regards to Rainbow's master plan, it's been slow progress. The most significant positive impact going forward is that the anti-dumping duties, which were suspended by the minister last year, We're reenacted in August 2023, so this should have positive price performance going forward. If we just go to the next slide, which is the last slide, being a consumer-facing business, it is important for us to focus on our brands, and this is what we call our relevance in the market. The left-hand side, I'm not going to go through it for information. It just shows you the scale of the brands. between $100 million and $1 billion. So some significant brands within the RCL Foods portfolio and quite a wide range, as you can see from the slide. But let me focus on the right-hand side, which is our shares. And just going from left to right, 12 months to June 2022, our market shares. And then what is our performance for the full financial year? And then we've given you the trend of the last six months. And I'll just quickly talk through some of the challenged ones. I mentioned earlier the pet food plants, so dog and cat food down. And that's a significant challenge for us. So we need to regain our market shares that have been lost there. And you can see the most recent trend even further down, which is concerning. But we have clear plans in place to recover that volume. Good performance in Yum Yum. Nola Mayonnaise, the 46% share is too high and more of a correction there. in NOLA towards the 41%, but somewhere between 40 and 45% is where we need to operate. Sunbaked, this represents the national bread statistics. So slightly down in the 12 months, significant promotional activity in the bread market currently, which has put pressure on our results. And to see an improvement in the last six months is we've had more promotional activity to make sure that we maintain our brand relevance. And in all three parts of the rainbow brands, in the value-added parts of the rainbow, performing very well and improving over all periods. And with that, I'll hand back to Yanni.

Thanks, Paul. If I can just get my slide back on the screen. There we go. Thank you. I mean, we're not unaware of what is happening on the discount side, and I think we're acutely aware of that. And maybe just one point that I want to make, the discount widened significantly since the first round unbundling because of the relative size of our portfolio has got smaller, and maybe that has an influence. But we're acutely aware of that. And maybe I'll discuss three levers that we're actually going to focus on actually to drive the performance of RemGrow in the next financial year and going forward. I'm going to actually focus on those three yellow ones that we've rated ourselves. Remember the scorecard right at the start that I gave you, and I'm going to talk briefly through them going forward of what we'll be focusing on the key focus areas. If we can just hop over to the next slide, please. And really, it's accelerated portfolio performance that we talked about, capital allocation, fine balance between what do we put behind our core portfolio, what do we invest into new growth opportunities, as well as returning capital to shareholders, as I've shown on that slide, between unbundling, sale of assets, dividends, and share buybacks. And then very, very importantly from our side, we also have got non-core assets that we need to clean up. Are we aware of that? The smaller investments, and we spoke about that in the past as well. But we need to do that in a responsible manner going forward. Then critically, drive underlying performance with clear performance measurement metrics on our underlying companies. Having some of these companies now unlisted makes a big difference for us. We can interact much more intimate with the management team closely. Get them aligned with our philosophy and way of thinking and actually some of these layers of listed company boards actually make the reporting lines and the interaction much easier in a much regular basis. And then clearly cross the whole portfolio discipline cost management. considering the constrained environment that we're operating in, load shedding and all of those things, become the master of our own destiny, infrastructure, products, water, electricity, and get some price certainty on some of these underlying cost drivers. Then clearly improved disclosure and stakeholder management. We've done that today. We spent a lot of time today exposing shareholders to our underlying companies that are not listed bar an RCL. I think I want to touch briefly because of open and transparent communication with shareholders. Neville mentioned the Heineken valuation and the reason why we used that. We actually bound also, maybe just give you some more transparency, because our underlying NAVs are audited as well. We use independent valuation, but they're audited. And so we also combine by some IFRS rules. and those guardrails are very strict of what we can do. That is why we actually quite openly that we will most probably use a different valuation methodology next year when we do the Heineken Beverages SA. As you've seen, we use DCF and then on top of that we put discounts, so you should expect something along those lines. The reason why we didn't do it this year, as Neville communicated, I don't want to go into that completely, Also, you must realize the companies only became integrated in September until from May to September it operated as separate companies. On the beer side, there were some challenges that we experienced. Apart from in the constrained consumer, there were also some in the market, a lot of discounting happening, load shedding at an issue where the beer was available. There were also some significant ones, of course, on the Heineken side regarding some issues on the supply chain and the brewery side and things like that. But they were all ones, of course. So we think the two-month period is not a real reflection of the underlying business situation. We're getting to grips with it, we're getting the strategy getting in place and it's a business that can turn around very quickly. So some of these challenges in the short term is not a real reflection of the long term performance and the potential of this tremendous portfolio that we've got with also the exciting potential into the rest of Africa. So I just want to put a health warning on that in the valuation. You'll probably see a different valuation that really will be more consistent with the Remgrove valuations going forward where we do DCF and we apply discounts on that. I mentioned that to my team tomorrow. It's a little bit like in the banking industry today. You can't just do an overlay on provisions. Auditors will quantify your accounts, so we can't just do some of these overlays. It needs to be audited. It needs to be done within the guardrails of IFRS, but I just want to For total transparency and communication, we will definitely probably use a different valuation methodology next year. And the last one, I've dealt with that extensively. We'll continue our sustainability drive and to position Remgrove as an ESG industry leader. On that note, I want to conclude and we can go over to questions and answers.

Let's start with the questions on the webcast. We've got a few questions. Maybe the first one for you, Yanni, once we've implemented on the CIVH transaction, do you foresee any other large corporate actions or will the focus shift to returning capital to shareholders through share repurchases?

I think it's probably part of my answer as a balanced approach. So clearly it will be returning capital shareholders. I think that has become one of our core capital allocation decisions, increasing the dividends and share buyback program. Although it's a dynamic thing, it's a balance if there's new opportunities that arise and the availability of capital and things like that. But as I said in the start, share buybacks at these discount levels makes economic sense. In other corporate actions, I think I've mentioned there's still some assets that are non-core that we need to clean up, and then we set some of the portfolio assets as well that we also, as I said, probably form part of a non-core portfolio, what we're going to do with that. So the journey is not finished. That's why we rated ourselves a yellow, and there's still work to be done. So we're not going to sit back and relax after CIVH Vodacom. There's still a lot of work to be done.

And maybe linked to that, Yanni, with the discount remaining elevated, would you consider using some of the portfolio investments to fund an accelerated buyback?

I think I've given that answer, so that's a balanced approach. So it depends on other capital commitments that we might have, but I think we've shown that we've already now executed a big buyback program, so I think it's part of the core strategy. So clearly that will remain and we'll continuously evaluate that going forward.

Thanks, Yanni. Question for Neville on the CVH valuation. What was the carrying value of the Gordon's Gin distribution agreement at June 2023, and was the sale value accretive?

So for sure, the sale was value accretive. So if you look at the value of Gordon's Gin, there are two pots, and it's two cash pots. The one is the proceeds of the Gordon's Gin distribution agreement, the sale. And the other part is the cash generation on the Gordon's General Operations since the transaction announcement up to the effective date of the transaction. You can remember the terms. One of the terms of the transaction was the prohibition of any distributions that will diminish the equity value of the entities. And at Rangela River, we actually felt that because we didn't receive any dividends over the last two years from the still. So that also had a positive impact on the valuation. So that was approximately 20%, the two cash pots of this valuation. And the biggest portion of the valuation is the Scotch whisky business, which also improved because of improved performance, contributing around 75% of this valuation.

Thanks, Neville. On MediClinic, Rani, what is the outlook on nursing shortages in Switzerland and do you see a similar dynamic playing out in the South African market given some of the challenges surrounding training of nurses in the country?

I think Jurgens is best positioned to give that summary quickly. Thank you.

In the Swiss environment, it's a combination of two things. Firstly, if we look at our revenue growth, it's constrained firstly by the nursing capacity shortage and secondly also by the changes in mix, which is impacting our average revenue per case. That is then enhanced or increased by what's happening to our cost base, where we're spending on temporary staff and also cash. employee overtime costs. So this is creating a challenging environment for us. And what we're doing about it is firstly engaging publicly on the need for tariff increases, specifically in our base rate. And then secondly, looking at our staff and enhancing what we already have in place with respect to attracting and retaining clinical personnel and also improving the resource management, the way in which we allocate and work with our staff as well. I do think that there are aspects of this that are globally relevant. In South Africa, we do have training facilities aimed at bringing those skills into our organization. And so we could perhaps be a little bit more proactive. And similarly, we also have an agency component in South Africa that we're able to deploy as well. So it's slightly different dynamics, but it certainly is part of a broader global dynamic.

Thanks, Ian. And just on MediClinic South Africa, we've reported a 67.7 occupancy and an EBITDA margin of 19.4 in 2022. Could you maybe comment on the outlook for occupancy and margins in 2024 going forward?

So we don't provide specific guidance. I've given the numbers, you know, an indication up to the end of August. Our half-year numbers up to then September we will make available, you know, through Remgra as and when. But what I can say is just to reiterate what I mentioned earlier is we're seeing an increase in our volumes driven specifically by day case admissions. What that does is it brings, through a change in speciality mix, it impacts our average revenue per case. But the underlying growth that we're also seeing in related businesses, like an increase in, you know, some of this is organic, some of this is acquisitive, through exposure to mental health resources. oncology, precision medicine, dialysis. So these are sort of things that sits outside of our existing inpatient capacity that we see growth in the South African environment.

Thanks, Higgins. And maybe a last one. Can you give a breakdown of your mix between surgical and medical cases and whether you're seeing higher surgical activity recovering towards pre-COVID levels?

What we're seeing at the moment is our surgicals more or less in line with where it was last year. Again, the point to make here is that what we're seeing is the strong growth in our day case admissions. But other than that, what we're seeing is basically in line with last year.

Thanks, Helens. And maybe on CRVH, Peter, a few questions. DFA's revenue is up 6.8 while headline earnings is almost up 1,000%. How did it achieve this substantial growth?

So DFA has used the time during COVID and post-COVID to also look at the way they do business. So they've optimized and also gained synergies from the massive integration with Fumital that has resulted in cost savings. They have also paid down some of their debt, which resulted in lower interest rate payments. So I would say those are the two biggest contributors.

And on Vumatal, Peter, what's the negative impact on headline earnings while revenues increase by 15%?

So firstly, Vumatel is now also starting to pay taxes, which is good. And then all of the additional debt that was added to the cash coming from the business was used in Vumatel. So the big difference is the increased interest rate payments on that debt.

And on the debt, Peter, your debt is up to $18 billion. How much can its balance sheet still be pushed up before it becomes a problem at the massive level?

So we measure ourselves on the debt EBITDA ratio. We were four and a half times a year ago. We're down to four times now. Eventually we want to get down to a level of three times. But in the meantime we're applying all the available cash back into the business. So if I take a step back, if we want to really democratize the internet and do everything that I was talking about in the key markets and connect and pass those additional 10 million homes, the current balance sheet wouldn't have the capacity to do that. And that's also one of the reasons we looked around for additional investors. resulting in the transaction that's currently in front of the competition tribunal where Virocom will invest equity into the business to help us free up some additional investment opportunity.

Thanks, Peter. Yanni, just on disclosure, what specific measures are you putting in place to ascertain reporting transparency for the large unlisted portfolio going forward?

I think today is part of this, so that we expose our management teams underlying to the shareholders. We're also going to have the capital markets. They will do additional disclosures and presentations on that. And then, as you've probably seen, that we've published on our website, we've published the full set of medical results for the year end of March 2022. That was done. So I think you'll see more of that going forward. on that total transparency but I mean it's a journey so we also can have some input from the shareholders if they think there's certain things that we're not disclosing I can't promise that we might fulfill everything some of the things might be competitor sensitive etc etc but all this but it's a journey and we'll try to be accommodating as possible

Another one for you, Yanni, just on general portfolio management. As an investment holding company, how do you see your competitive advantage over normal asset management firms?

I think asset management firms wouldn't invest into CIVH as a startup, wouldn't have invested into Vodacom as a startup, wouldn't have invested into Tracker as a startup. And I think that's the ability that we've got, that we can continue on this journey as an investment holding company. We've been invested in CIVH since 2007, MediConnect since 1984. So it's a totally different set of factors for an asset manager where their time horizons are different than us, rightly so. And that is why we say we understand the investment holding company. I think we play a critical role in capital allocation, not just from a Remgrove point of view, but also from a South African Inc. point of view, where we see some of these opportunities that we can participate in and and drive growth forward, not just for ourselves, but also for SA Inc. I think we've made a tremendous difference in the social impact that we've done just by some of our sustainable investments by Mediclinic, CIVH, RCL and the food side, some of their foundations. I think we play a critical role in that respect.

Thanks, Yanni. And for Ronnie, can you give us an update on the investigations about the allegations by the whistleblower and how that has influenced your trading relationships with maybe contractors or schemes?

We became aware of these allegations in August, the allegation of billing irregularities in six of our hospitals. We were not aware of this prior to this allegation that came about. In the 40 years in which we've been operating in South Africa, we've always been responsible and ethical in our actions. We don't tolerate wrongdoing in our company. So when something like this happens, we take it extremely seriously. We immediately started an investigation. We appointed a third-party investigation firm, ENS Africa, under the leadership of Stephen Powell as a forensic investigator. And they are busy investigating these allegations. The investigation is going quite well, but it's not done yet. The way we understand these allegations, this pertains to a specific part of our company's activities that is represented by a small portion of our revenue. A very small portion, I have to say. I might have to just point out as well that we have very rigorous structures and processes in place for our staff to be able to report any wrongdoing or anything that might be bothering them through an ethics line. both by way of telephone or email. It's all anonymous. It's managed by our risk management team. The ethics line itself is run by Deloitte. In the last five years, we had not a single complaint about billing irregularities. Our relationship with our funders, maybe just to point that out quickly as well, is incredibly important to our business to have constructive relationships and transparent and trustful relations with our medical scheme partners that we work with. And we've been doing this for all the 40 years we've been in South Africa. And we are very transparent with them. They obviously, according to their own governance rules, they also investigate from their side whether they can find anything. But at the moment, it's not impacting. This hasn't impacted on our relationship with the schemes because of the foundation that we've established. formed over years and the reputation that we've built up. And we all collaborate with one another at this point. So there's no impact on trading with regards to our relationship with schemes. And if and when we find, get to the end of the findings, and we find any areas of concern, we will obviously act accordingly and swiftly to rectify the situation should that be necessary.

Thank you, Rani. Last question is for Peter on energy exchange. How will the exchange compete with existing role players like Discovery and Vodacom? And do you have any clients yet? Are you fully operational?

Thank you, Lawanda. The Energy Exchange has been in existence for five years now, where they've had time to put together a business model, develop the technology and the plumbing behind putting together the business, a trading business. They received their license during November of 2022. So they're actually live now. They have traded electricity, probably more than a gigawatt hour quantum of electricity that's gone through there, which is still soft scale, but it's no longer a pilot. We have live paying customers and we're buying electricity to trade. So we will continue. We firstly welcome competitors to the space. There is enough energy requirements in the country for more than one player. So we think it's good that there's more interest in the space. And we will continue to put energy into making the energy space work for us.

Thank you, Peter. That brings us to the end of the questions on the webcast. We will now take questions on the chorus call.

Thank you. Ladies and gentlemen, if you would like to ask a question, you're welcome to press star and then one on your touchstone phone or on the keypad on your screen. If you, however, wish to withdraw the question, you may press star and then two to remove yourself from the question queue. The first question we have is from Raviam of SBG Securities. Please go ahead.

Hello, Yanni. First of all, congratulations on the presentation format. It's really informative. Thanks for that. Just a quick question on the... I mean, it basically deals with the Heineken beverage valuation. Am I correct that you said that it is based on the transaction value? So if that is the case, then should we use that 165 Rand bid price as a base to get to the 12.45 billion Rand? And just to that, I just want to clarify that the Cape and Valley of 1.6 billion, does it include the Gordon's termination fee?

If I don't get the answer 100% right, Neville can correct me. So the Heineken valuation is the 165. Remember, the offer price is 180. It consists of two elements. 165 for, let's call it, the Innscope assets and 15 rand for the Cape Verne assets. So the valuation to 12 billion is based on the 165. plus the additional shares that we've bought. So that's why there's an increase. So remember, we bought some additional shares. So you mustn't just take our previous shareholding. We bought some additional shares. Neville, that's correct, eh?

Yeah, so we were scaled back firstly by around 10% and we bought additional 13 million shares then. 75 million shares in Heineken with that 18.8% interest.

So on the Cape Wind side, the 15 rand really there's an increase to just over 22 rand and really it relates to the cost of the cash because the Gordons are sailed so there's more cash in the business itself plus the uplift in the value of the whisky asset. Those are the two main things. So the 15 rand you must compare it to 22.

I just want to know when the cash comes in of the 1 billion whether we should reduce the value of that value of 1.6 to 600 million the cash will be sitting in the business a portion of the 1 billion has already been received so that's included in the valuation Okay, excellent. Just a question maybe for Peter in terms of the competition ruling. You know, let's assume, I mean, obviously we hope it will go through, but in a worst-case scenario, I mean, how does it impact your business plans? Does it mean that you will need to look for new investors or that it will slow down your CapEx rollout?

Thanks, Ray. The The quick answer is yes, it will have an impact in the long term. If we want to connect the 10 million homes that's potentially available in the key market and four more in the reach market, we will require additional investment. It will take us 10 years to do it on our own. However, I think it will make a big difference to the country and to the business if we can scale that up. So there is enough capacity to continue with our business plan, but it's really to scale up the rollout of internet into the country. Thank you.

Important to note...

I think it's important to note that the valuation of CIVH was done not assuming that the Vodacom deal is done. It was done on the basis that there is no Vodacom deal. I think that's important to note.

Yeah. And maybe just a quick follow-up. I mean, you talked about a balanced approach in terms of your investments. Yeah, I'm just curious about the portfolio investments. I mean, they're totaled about over $15 billion, and you don't have any sort of meaningful board representation on any of those assets. Is there maybe an opportunity to go the other way and not to realize it, but maybe increase an investment to a sizable size in order to get to significant influence?

Get both seats. I think we see that as more as cash on your cash, our portfolio investments, as you probably see now what we've done in the first round stake, we put hedges around that. Also mature quite conveniently sometimes when our debt matures. So this is a deliberate strategy around some of those portfolio investments. So I don't think you – we are firmly of the belief that probably it's not – You'd rather buy some of your portfolio investments and you actually swap them for your own shares at a discount. So remember, you take a first round sitting at an X, if you unbundle it, but in our portfolio sitting at X minus 40%. So I don't think that would be a good capital allocation decision, but that is clearly that way from our side, the way we see it.

Okay, thank you.

The next question we have is from Thang Dove of Investic Wealth Investment. Please go ahead.

Morning, Yanni, Neville. Hopefully you guys can hear me. Please go ahead with your question, thanks. A quick one initially, and hopefully an easy one. On the Heineken Beverages and Cape Fin side, when would you envisage start seeing dividend flows out of those? And am I correct, it's the 80% profit after tax that I think was indicated at time of transaction, just to confirm that?

Well, to give you the straight answer of when we will see dividends depends on the cash flow generation, how the integration goes. I mean, the integration is not a 2020 game, so it's going to take at least a year to realize some of these synergies to get all the operations going. So I'm not going to commit to anything at this point. I don't want to over-promise and under-deliver. So let's see how things pan out. We went dark on the 1st of September onto manual system to switch over onto one platform, one system, one invoice. And actually, remarkably, it went quite well. But there is still lots of integration work that needs to be done. So I don't want to commit on anything when we start paying dividends. And clearly, I mean, as we all know, the market is tough out there. The east, a lot of discounting, the beer things were happening, load shedding combined with all of those things. So a lot of put all of these things in the pot. It's difficult for me to say and we need to analyze the business. So forgive me for not giving you a firm commitment on that.

I didn't get the second part of the question.

Okay, sorry. Okay, Ben, what was it?

also expected dividend going forward.

We were nevertheless waiting for the nice dividend out of Cape Verde.

The second one, and hopefully legally you can answer this now that the transaction has been consummated, but can you give us a bit more color in terms of the MediClinic transaction and really the introduction of MSC as a shareholder, which didn't really seem to have any strategic sort of adjacency, if I can term it that, in terms of what they were invested in previously. And I mean, in the presentation, the Mediclinic gentlemen spoke about moving into adjacent markets, was part of the reason of taking Mediclinic private in terms of growth initiatives within Mediclinic that you felt that perhaps the market wouldn't be willing to stomach. and that having yourselves and potentially a deep pocket investor in the form of MSC was the right route to go. I mean, I'm just trying to get an idea in terms of from a high level why the takeout was affected and what MSC really brings to the party.

I'm going to ask Ronnie to help me, but just because he's also now experienced him as a shareholder, and I think we also surprised at some of the things that we can do together, but Just so we didn't go actively looking to dealers. Somebody approached us. So there was no that we were worried about the company or there were some things that were going to happen that we were looking for somebody with deep pockets. So that was totally, totally from the left field that we got approached by the party to look at this. So it was in that regard and we saw that as a good opportunity to take action. private to let Ronnie and the management team focus on the operations not dealing with the London capital markets all the time that they can actually spend about 50% more time on the business but yeah I don't want to pre-empt what Ronnie is saying but Ronnie maybe just share briefly some of your experience of I think having people in Switzerland that share all this where we are having a few challenges makes a huge difference as well from that perspective but maybe you can just share some of your initial thoughts

Yes, Yanni, thank you very much. I think, firstly, the strategy hasn't changed. We still have the same strategy as you heard when I explained it. It's a strategy we've been working on for four years, and it's supported by the shareholders. Secondly, having a shareholder that sits in Switzerland, as Yanni has just said, definitely has advantages. It has advantages in for various reasons. They are very well connected in Switzerland. They understand that market, and they can work closely with our local team on the ground to optimize our business. They are very focused on supporting us to become the best version of ourselves. I think that's really very highly appreciated. They are incredibly operationally involved. They're very experienced, and therefore they will very quickly develop get into the depths of what we do and how we do this. And that can only be a benefit to MediClinic. Then just to remind you that they also run medical services on their ships. Their passenger ships takes up to 9,000 people each. They have hospitals on there. So we are looking at various synergies in terms of procurement on the ICT side and on medical services. And there may be more. But in terms of Mergers and acquisitions, we never bank an acquisition purely on synergies, as you know. So there are other imperatives. But also the company is very well connected throughout the world. They operate in 155 countries, and they can give us a lot of advice in terms of territories as well. So there's going to be big advantages over time.

Thank you.

Thank you. We have no further questions on the conference call.

No further questions. Okay. Thank you. And I'm going to end the session. And thanks, everybody, for attending. And see you in probably six months' time. Thank you very much. All the best. Bye-bye.