Good day, ladies and gentlemen, and welcome to the Remgro Limited Annual Results. All participants will be in listen-only mode. If you have joined via the web course 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 Jannie Durand, CEO. Please go ahead.
Good morning, everybody, and welcome to the annual results presentation of Remgro 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, where we'll rate ourselves against our strategic priorities. Then I'll also briefly discuss the operating context of the environment that we've been operating during the past 12 months. I will hand over to Neville to give a more detailed overview of our results for the year. We deviated a little bit from our usual format in previous years. We will then be giving an update on some of our key investments, and I welcome Ronnie van der Merwe and Jurgens Myburgh, the CEO and the CFO, respectively, of Mediclinic, who will speak to the results of Mediclinic, as well as their strategy.
Then Pieter Uys, the chairperson of CIVH, will also do this exactly the same for our CIVH company. Finally, we've got Paul Cruickshank, 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. 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 to the operating results for the year, and we're actually quite proud of the results. If you look at the results, headline earnings per share are up by 8.7%.
Our total headline 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 dividend also increased 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%.
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 the next year. 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. INAV 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, 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 is 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 periods I've experienced in my 30-plus-year working career. I mean, various factors. We talked about load shedding, infrastructure collapse in South Africa, inflation, economic growth, the global supply chain disruptions. All of these things has 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 Boer Maak 'n Plan. We're fixing sometimes our own water infrastructure.
We fix, fixing sometimes the municipality substation, just to keep operating, so the factories keep operating. And I think, and 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. And we'd always talk about the controllables and the uncontrollables, and really, if we can fix, 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's uncontrollables, but the only thing is that we can look at the controllables, make sure our cost base is alright, 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 Remgro side, on a macro level, I'm involved with a business or SA collaboration, trying to helping 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, and 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 a 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 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. As you can see, either we're on track, it's all in progress, or if we haven't started yet or not yet executed. I can... At least the one thing I said, we didn't rate ourself on any of the red things, so we probably scored half a pass on some of these things.
Let us just quickly, the 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, through the portfolio. I'm going to go into much more detail in the next slide. 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. 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 earning 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 Remgro level.
I think it's just because of accounting rules, it's not really, so it's not actually a true reflection of the return on equity on the Remgro portfolio, because we don't account for any earnings, for instance, on 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 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, so but it's. We've I think we've executed quite well on that. We've delivered the Heineken Distell transaction. We've delivered the Mediclinic transaction. Grindrod has been unbundled.
We also did the share repurchase program, and I'll get back to that later as part of our capital allocation program. Then RCL, we talked about the Vector Logistics disposal, the Rainbow turnaround, and the one that really a key focus 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 ZAR 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 this balancing between these three priorities is actually done in a balanced way into the enhancement and the most efficient way of unlocking value for our shareholders in that respect. We 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, 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, to our portfolio. But I think it's, well, it's now also in, what it does, it also puts more responsibility on Remgro 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 slide, still focusing on strategic priority number three. So how have we deployed capital?
As you can see, in that instance, we've actually made quite a few investments into our core portfolio, which really relates to the Mediclinic transaction, where we spent quite a bit of money on that, as well as the 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 also realized some investments as well as 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, dividend space, and investments back into our core portfolio.
Then the 6.7%, obviously, we have to pay some taxes as well, plus also the cost at the head, from the head office side as well. Okay, what is the, if we turn over the slide, still on strategic priority three, and we're focusing quite a bit on capital allocation, because I think that's probably one of the most important things that we do. If you look at the slide, clearly, if you look at 2023, 4.2%, we've got the yield that we've delivered to the shareholders, and that consists of three elements. It's one is a dividend paid just over ZAR 1 billion in 2023, and I think what we must. Just on that dividend, it's an old dividend. It's not a dividend that we declare today.
So today, if you actually put the dividend today, it will be how much higher than 4.2% than 4.2%, but that will only come into the 2024 financial year. Dividends in specie, we've unbundled Grindrod, plus we did a share repurchase, share buyback program of ZAR 830 million. Why it doesn't really relate to the ZAR 1 billion that I mentioned before? The balance was done after year-end. So total return to shareholders in the year under review, nearly 3.5 billion rand. Putting it on a market cap of just over ZAR 82 billion gives us a 4.2%.
You can clearly see the strategy is 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, to our shareholders going forward. 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 Mediclinic and the Distell 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 core portfolio.
So we've made an effort here to give you a sense of the proportion that we think that fits into the various baskets. We've got many questions about that in the past, so we just give you a sense of that. Obviously, we're not going to tell you which of our 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 and with the challenges that's been facing there in that respect. I think may...
Just to reemphasize the point that I made right at the beginning, we acknowledge that certain parts of our portfolio is not performing optimally, and that is 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, just, I'm not going to deal with the first-round shares and the aging 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, but also value unlocking, allocating of capital is in the Gordon's that we sold.
The Gordon's Gin distribution contract to Diageo for a consideration of ZAR 1 billion. 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. But 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 Capevin that we actually sell that contract back, and we think that both sides of the parties that, Diageo's side and our side, we're quite happy with the transaction, and that also, always an indication of 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, I think I just want to emphasize in this thing, ESG and sustainability has always been part of the DNA of Remgro. 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. 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.
Marthanette 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 and 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 as 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 disclosure requirements of 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, that we report exactly on a consistent basis, and going forward, everybody can evaluate us in that respect. So what is going forward for us? What are we going to do, and what is our focus areas now? It includes improving our reporting on 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 TCFD report will be published as part of our integrated annual report later this year. I think it, the annual report will come out in October, October.
We've proud of what we've achieved in terms of sustainability, but it will be a focus and continued priority for us going forward. Turning over to slide, strategic priority five, and I think this is critical for us, especially as our portfolio evolves around 70% unlisted. I think we have made considerable progress, and are committed to continue to do more. I've made that promises in the past, and you, you can hold me responsibly if we 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 with the board as 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 of effort 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 assumptions with 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. So 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 this valuation. I think it's also going to... What is important, we're going to do some of these investment roadshows. We're going to do some of these capital markets case 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 INAV calculations. Neville?
Good morning, everyone. Jannie has alluded to the noise that was created by corporate actions over the last two years. In this slide, on the right-hand side, I'm just giving an analysis of the impact of corporate actions at Remgro level as well as OUTsurance Group level over the last two years. The impact is a negative swing of approximately ZAR 949 million year-over-year. If you exclude that impact, the underlying portfolio actually increased by 27%. That thus maintaining positive earnings momentum, despite a very challenging business environment that Jannie 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 Remgro's headline earnings.
The adjusted earnings increased by 15%, and that 15% represent 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 Youi Australia, as well as lower funding cost. 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 Rate over the year under review on higher average cash balances. KTH benefited from a once-off debt forgiveness gain of ZAR 520 million. Remgro's portion in that increase is ZAR 226 million.
We've already disclosed this also during the interim period. Then, Pembani Remgro Infrastructure Fund paid a significant dividend to Remgro of ZAR 358 million with the sale of their interest in ETG. Also, included in the increased contribution by FirstRand is a special dividend of ZAR 454 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 ZAR 171 million 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 TotalEnergies is mainly due to negative stock revaluation losses, resulting in a swing of approximately ZAR 900 million year-on-year, negatively. And this also creates volatility in headline earnings. The other, the proof significant dividends, as well as that KTH once-off debt forgiveness gain, all created this volatility in headline earnings. So, excluding all these corporate actions, the comparable headline earnings of Remgro actually increased by 27%. Next slide. With this, 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 Jannie has also alluded to that. In line with one of Remgro'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 assurance on the valuations of unlisted investments, thereby ensuring the robustness of Remgro's intrinsic net asset value. This function has become increasingly important, as Remgro's portfolio has now evolved towards more unlisted investments. So more than 70% of Remgro's portfolio is now unlisted. And then in addition to that, if you look at the year-end, the INAV table is actually part of the audited consolidated financial statements.
So the auditors do perform an independent assessment on these valuations, and the outcome of these independent assessments is that all of these valuations are actually in range with the auditors' 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 listed unlisted investments. And here you can see what the primary approach is for each investment, and the type of discounts that we applied to the valuation, and that's for improved disclosure. Just want to mention three or four major investments.
So at 30 June 2023, two significant investments, namely Mediclinic, which was previously listed, and 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 Remgro's INAV, it's more than a quarter of Remgro's INAV. Remgro 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. The three big businesses are Southern Africa, East London, and the Middle East. 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 country's companies.
The increase of 7.6% represents the uplift in pound, in the pound price per share from the transaction price of GBP 5.01, to the current value per share of GBP 5.39. So that GBP 5.39 is the mid-range of the independent expert value, valuation range, which the valuation 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 Distell-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.
Going forward, and consistent with Remgro'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, et cetera, would be applicable, which would affect the valuation in future. For this 30 June 2023, the valuation committee and the board has decided on the price of a recent investment methodology to value the Heineken Beverages merged entity. The valuation of CIVH is performed internally and tested for reasonability with the outcome of the annual external valuation done at a CIVH level. Peter will also provide more insight on the valuation of CIVH later on in this presentation. Capevin, which is the offspring of the Distell-Heineken transaction.
Capevin's valuation increased by 50.5%, and that 50.5% represents the uplift in the sum-of-the-parts valuation from transaction price of ZAR 15 per share to the current value of ZAR 22.60 per share. 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. Gordon's Gin operations also continued its good performance since the Heineken transaction announcement to the transaction effective date, which also had a positive cash flow impact on this valuation. Then the whiskey business over the last 2 years, the performance improved, which is reflected in the DCF valuation of the whiskey business.
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 Capevin. 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 Remgro's 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, mainly because of the pref dividend that we received and the KTH once-off 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 revaluations at TotalEnergies. If you look at the INAV per platform, the significant contributor to INAV is Mediclinic with increased contribution from 25 to 34% 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, 15%. We've also accounted for, a transaction cost, our portion, during the lag period, amounting to, that ZAR 539 million. So Ronnie van der Merwe and Jurgens Myburgh 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 rand valuation, mainly due to an 18% increase in the pound value per share from the GBP 4.58 close at 30 June 2022, to the valuation of GBP 5.39 at 30 June 2023. We've also acquired an additional 5.4% interest, indirect interest in Mediclinic through the Manta structure, at GBP 221 million. And then the rand valuation also benefited from the weakening of the rand against the pound year-over-year. Next slide. Consumer goods, it's a busy, busy slide. If I quickly go through, the main components of headline earnings in consumer goods.
If you look at Distell, Distell'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. Distell 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 Savanna and Hunter's are the standout performers in that category. Heineken Beverages results is included for 2 months, and that 2 months' result amount to a loss of ZAR 75 million. And included in that ZAR 75 million are amortization and depreciation charges of ZAR 56 million relating to the intangible assets identified with the merger.
Excluding these charges, the contribution amounted to a loss of ZAR 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 malt and glass, due to global price volatility, local supplier constraints, and volatile demand. Just quickly, an update on the Heineken Beverages, Distell integration process. The IT integration was implemented at the beginning of this month, on the third, the fourth of September. For the 2023 year, the priorities for the merged entity include the setup of the new organizational structure, harmonizing of systems, network consolidation, and joint planning and reporting. In 2024, the business expects increased synergy deliveries as the merged entity settles into new ways of working.
Capevin's results for the two months amounted to ZAR 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 whiskeys and as well as Scottish Leader. RCL had a challenging year, reporting a decrease in underlying headline earnings from continuing operations of 20%, which Paul Cruickshank, RCL Foods CEO, will unpack later in this presentation. Siqalo, 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, inflation and interest rates. Siqalo 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 costs, driven by volatile commodity prices, commodity prices and exchange rates, resulted in an 8% overall decrease in operational EBITDA. Okay, 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 Holdings earnings increased by 44%, mainly driven by pleasing financial and operational results from Youi Australia. As strong premium growth continued and favorable weather conditions supported a significant increase in profitability. OUTsurance announced their annual results a week ago. On the infrastructure, mainly the investment in CIVH.
The increase in headline earnings is due to improved performances by CIVH's underlying business, businesses, DFA and Vumatel, which Pieter Uys, CIVH chairman, will elaborate on later in this presentation. Just on the industrial portfolio, I will quickly just comment on the results of Absa, TotalEnergies and Wispeco. Absa also experienced 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 Weldamax, a welding consumables and equipment supplier, further enhanced performance in this division, despite significant cost pressures.
TotalEnergies, excluding the volatility of that stock revaluations, their contribution to headline earnings decreased by approximately 30%. The decrease is mainly due to higher input costs, heavily impacted by supply chain challenges experienced in the importation of their finished fuel products, as well as crude oil. Wispeco, 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. You can see the main driver of cash earnings at the center is dividends received from our underlying investing companies. This year, amounting to ZAR 3 billion.
We've also utilized approximately ZAR 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 GBP 221 million. And that results in a net cash outflow of ZAR 3.2 billion year-on-year, with a cash balance at the center of ZAR 9 billion at year-end. Next slide. This 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 ZAR 3 billion, ZAR 2.7 billion in 2020. The impact of COVID in the first half of 2021, down to ZAR 1.5 billion, as well as the recovery path since then.
So if you look at currently, ZAR 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 rand for rand. 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 ZAR 1.60, an increase of 60%. So the total dividend for the year is two rand forty, 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 in dividends.
The 60% is not an expectation of things to come in the next few years. It's just, I think we are now recovered on an absolute basis from cash generation at the center since COVID. If you look at yields, Jannie mentioned the yields. The cash yield on the dividend yield for this year, 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%. Also, an improvement in the cash yield from Remgro in respect of dividends paid. Thank you, Jannie, 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 Myburgh will discuss the operation, 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, for our shareholders, first of all, and secondly, also to reposition the business for the future, for growth in the future. 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 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 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 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 datasets, the integrity of our datasets, 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. A 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.
We are looking at growth prospects in our divisions where in which we are, by way of investing in the continuum of care, and we're making good progress there. Then we are still also looking at, expanding our footprint to countries in which we are not at the moment. Thank you. That is, all from me. I think just to add to that is to say that we are really, we really believe that this strategy will position Mediclinic International very well for the future, and we are quite comfortable with the progress we've made. I'm handing over to Jurgens Myburgh, CFO of Mediclinic International, 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, 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 on 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, you know, revenue for the year ended 31 March 2023 increased by 1% to CHF 1.9 billion, 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 FY 2020 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 CHF 280 million 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 FY 2023 period. In particular, inpatient admissions are stable compared to FY 2023, with an ongoing shift towards generally 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 aimed at 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 ZAR 9.5 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 was down 1.1% compared with FY 2022, reflecting an expected change in mix following the prior periods with more pronounced COVID-19 cases. Paid patient days were 3.6% above our pre-pandemic FY 2020 levels.
Adjusted EBITDA increased by 10% to ZAR 3.8 billion, driven by the revenue, 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 days sold compared to FY 2023, the comparable period within FY 2023, 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, onto the Middle East. Revenue for the year ended 31 March 2023 increased by 8% to AED 4.5 billion. 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 FY 20 levels, given the growth trajectory of the division. Adjusted EBITDA increased by 4% to AED 641 million, 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're 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 Pieter Uys, 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 gonna speak as CIVH chairman, but also as a Remgro executive. So as CIVH, we also have two other shareholders, CIH, Joe Madungandaba, and also New GX, Khudusela Pitje. CIVH then also has the Remgro shareholding of 57.03%. On the left of the slide, you will see the recent formation of the MAZIV 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 CIVH group, we're also slowly starting to look outside the borders of South Africa. On the right-hand side, you will see CIVH 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 MAZIV, which is open access, wholesale, uncapped fiber. Around the center, you can see how the business has evolved over time. 2007, it started with fiber to the telcos. Vodacom, at that time, was the anchor tenant, and that evolved then into metro fiber. Metro fiber is mostly used to connect our other customers, the non-mobile operators, for example, the ISPs, and then from there, it evolved to fiber to the business. This is where we provide products into the actual enterprise or corporate. At the top, you will see the residential or consumer products. On the left, where we started in the leafy suburbs of Sandton, Parkhurst, Parkview, with FTTH, we call that Vuma Core.
On the right-hand side, Vuma Reach, where we expanded into lower layers of the pyramid, with coverage into places like Soweto, Mitchells Plain, Vosloorus, and then more recently, we launched a trial in Alex, Alexandra, near Sandton, with the Vuma Key internet product. I'm gonna go into each of these in a little bit more detail now. The first slide just shows some of the consumer metrics, with Vuma Core 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 300 or 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 Mitchells Plain, Soweto, Vosloorus.
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 1 million. So in total, now we almost have 2 million homes passed. Subscribers in the reach areas, 263,000. On the right-hand side, Vuma Key, it's a trial. It's Alex. I mentioned it earlier this 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.
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. 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. 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 Mbps, and then also affordable. Our target price, and we are achieving it, is to get to close to ZAR 100 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 1 Gbps. We've done a few of those across the country, not just in Alex, but also in, 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 speeds in the month, which is a very positive development that we didn't expect to happen. On the next slide, I'm gonna 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 FTTB 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 gonna 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 ZAR 6.2 billion at the CIVH's 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 ZAR 4.3 billion was generated at CIVH level. Of that, we paid ZAR 1.6 billion in interest, and that delivered ZAR 2.2 billion cash.
All of that cash was then put into building network, most of it in the Vuma Reach area. However, we also added, one point three 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 Vuma Reach. 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 ZAR 50 billion. Take off the debt, ZAR 18 billion, it increased from the ZAR 15.9 or 16 billion, and most of that went into building the network at MAZIV, delivering a massive equity value of ZAR 31 billion. Then at Remgro, we apply some discounts, almost ZAR 6 billion, delivering the twenty-five billion.
If you take our 57.03, gives us the ZAR 14.3 billion valuation. Neville also mentioned independent valuation. We, that was recently done to do a sanity check. That came out at almost just short of ZAR 40 billion, 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 Vodacom investment into MAZIV, 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. 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. 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 Dietlof Mare, who is Chief Executive of Vumatel. Dietlof, tell us a bit about what you're doing in Alexandra Township.
Thanks, again. Yeah, we're here today. I mean, listen, we're trying our best to roll out fiber into Alex. I think, you know, we start-
He will take that number down, and that's the way that he's going to order on our system as well.
Okay, so each one of these small lines is a drop into a home, and it equals a connection.
It's gonna be a different world, and connectivity is super critical. So I would say my biggest competitor at this point is time. You know, we have to get the houses connected, and that's what we're trying here. You know, 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, you know. So it has to be reliable, because if you look at disposable income, I mean, that's scarce here, you know?
So, your service here must actually be better than basically in the Sandtons of the world, you know. That's how we see it.
Computer-
Yeah, with the laptop.
With the laptop.
Yeah.
My laptop's on, my phone's on.
How many gigs a month do you use, roughly? What's your usage, you know?
This one is unlimited, so-
Yeah
... we don't know how to count. We don't know how.
So, so effectively it's a POC, but it's live, huh? It's, it's we got customers on this, you know, we got-
Paying customers.
Paying customers, yeah. So, so it's working.
Thank you. I'm handing over to Paul Cruickshank now, who will tell us more about RCL FOODS.
Presentation this morning. 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. If I capture the strategy in one sentence, RCL FOODS is trying to create a value-added branded business of scale. I'll just draw your attention to the left-hand side. Following on a strategic portfolio review, which was 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 in time, Rainbow and Vector would be separated from RCL FOODS, mainly to drive a consistent and better quality of earnings.
With this strategic intent clear, we've spent the last couple of years sharpening our strategic focus. I'll bring a bit more color to that on the next slide. On the right-hand side of this slide, this slide just shows our operating structure, where we're in three business units: groceries, baking, and sugar. Sitting under groceries is the Siqalo Foods business, which was mentioned earlier, which we manage on behalf of Remgro. The last comments on this slide, I'll just draw your attention to the strap line at the top. We've spent the last 12 months unpacking our purpose and bringing clarity to RCL FOODS's 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. Under 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, is partnering with our strategic customers. Future fit, best in class, best quality manufacturing, as well as lowest 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 nicely positioned now to enable growth, as well as bolt on potential partnerships and acquisitions.
Vector's been mentioned earlier, sold 20th of August 2023, is the first big step in our strategic transformation. Robo- Rainbow, while it remains part of the group, is focused on low-cost value chain, its new breed, doubling Hammarsdale and growing market shares as a consequence of that volume coming to the market, and then managing risk, which is, evident in a, in a chicken business, particularly AR. If we just go to the next slide to talk through some of the, 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, two graphs, which show a five-year trend of revenue and EBITDA. Starting with revenue, it's been 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 pricing pieces that have come through. Just to mention there as well, is that during F 2023, 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 F 2020 to F 2022 sadly took a turn in F 2023, and 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 Randfontein, affecting our pet food business, and I'll come to the numbers on the next page. But ZAR 158 million is our load shedding impact of direct cost of load shedding. This excludes the indirect costs. Rainbow also significantly impacted by load shedding, making sure that the birds on the ground have food and water; it's an element 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 cost. 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, ZAR 2.2 billion-ZAR 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 gonna call out the one which is material in the current year. It's the third bar from the right, which is the sugar levy. Neville also touched on this, and this is a consequence of Tongaat and Gledhow's business rescue process, and the business rescue practitioner suspending payments to industry. And I'll come back and give an update on that in the following slide. In the middle is 11% decrease in our operating performance, and there four big blocks to highlight there.
Groceries, I've already spoken to that, 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 challenged, it's been referenced previously. I, and I'll talk to the turnaround plan shortly. In group, there was a once-off adjustment in group, which is an impairment of our international investment and our plant-based joint venture with the LIVEKINDLY Collective. If we go to the next slide, it just gives the context and scale of the relative business units. I'm not gonna touch on the numbers.
The sugar results, just to highlight, we, the 785 in F2022 was its second highest profit ever, and F2023, its highest profit ever. Very good operational performance in sugar. I'll just talk to Rainbow turnaround, which Jannie alluded to earlier. Progress has been made in that, despite the numbers 75% down, which is largely the inability to recover costs in pricing. 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 F2024. 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 Hammarsdale, the 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 on. While I'm on this slide, I'm gonna touch on the two master plans. Sugar master plan ended on the thirty-first of March. There will be a master plan 2.0, but right now, industry is dealing with the Tongaat Hulett 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, the statutory payments and the business rescue practitioners should not be able to suspend that payment. That matter was heard in court last week, and we should get the results soon. Then, obviously, what's critical is that Tongaat's business rescue 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, were 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 gonna go through it, it's for information. Just shows you the scale of the brands between ZAR 100 million and ZAR 1 billion. So six significant brands within the RCL FOODS portfolio, and quite a wide range, as you can see from the slide. 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.
I'll just quickly talk through some of the challenged ones. I mentioned earlier the pet food brands, 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. 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% shares is too high, and more of a correction in Nola towards the 41%, but somewhere between 40%-45% is where we need to operate. Sunbake, 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 their value-added parts of the Rainbow, performing very well and improving over all periods. And with that, I'll hand back to Jannie.
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, that the discount widened significantly since the FirstRand unbundling, because of the relative size of our portfolio has got smaller, and maybe that had an influence. But we are acutely aware of that, and maybe I'll discuss three levers that we actually going to focus on actually to drive the performance of Remgro 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, a fine balance between what do we put behind our core portfolio, or 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 a non-core assets that we need to clean up. We're aware of that, the smaller investments, and we spoke about that in the past as well, and...
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 intimately with the management team closely, get them aligned with our philosophy and way of thinking, and we've actually, some of these layers of listed company boards actually make the reporting lines and the interaction much easier on a much more regular basis. And then clearly, across the whole portfolio, disciplined 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 improve disclosure and stakeholder management.
We've done that today. We spent a lot of time today exposing our shareholders to our underlying companies that are not listed, bar 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, we use 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 combined 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 technolo- methodology next year when we do the Heineken Beverages SA. As we've... 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, don't want to go into that completely. Also, it's... You must realize the companies only became integrated in September. From 8 May to September, it operated three separate companies. On the beer side, there were some challenges that we experienced. Apart from the constrained consumer, there were also some in the market, a lot of discounting happening, load shedding had an issue in where the beer was available. And there were also some significant ones, of course, on the Heineken side, regarding some issues on the supply chains and the brewery side and things like that, but they were all one-off costs. So we think the two-month period is not a real reflection of the underlying business.
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 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 Remgro valuations going forward, where we do DCF, and we apply discounts on that. So, I’ve 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. The auditors will qualify your account, 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 with our sustainability drive and to position Remgro as an ESG industry leader. On that note, I want to conclude, and we can go over to questions and answers.
Thank you, Jannie. We'll start with the questions on the webcast. We've got a few questions. Maybe the first one for you, Jannie: 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. It's a balanced approach. So, clearly, it will be returning capital to shareholders. I think that has become a, one of our core capital allocation decisions, increasing the dividends and share buyback program. Although it's, 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've said in the start, share buyback at these discount levels makes economic sense. In other corporate actions, I think I've mentioned, we need to... There's still some assets that are non-core that we need to clean up, and then we said some, 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 ourself a yellow, and there's still work to be done. So we're not going to sit back and relax after CIVH valuation. There's still a lot of work to be done.
Maybe linked to that, Jannie, with the discount remaining elevated, would you consider using some of the portfolio investments to fund an accelerated buyback?
I think that I've given that answer, so that's a balanced approach. So depends on other capital commitments that we might have, but I think we've shown that we've already now executed on a big buyback program, so I think it's part of the core strategy. So clearly, that will remain, and we continuously evaluate that going forward.
Thanks, Jannie. Question for Neville, on the CIVH 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 pot is the cash generation on the Gordon's Gin operation 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 Remgro level, we actually felt that because we didn't receive any dividends over the last two years from Distell. So that also had a positive impact on the valuation.
That's, 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, Ronnie, 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.
I think in this first 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 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, you know, that there are aspects of this that are globally relevant. In South Africa, we do have training facilities aimed at bringing, you know, 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, Jurgens. 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. We will... 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 Remgro 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 daycase admissions. What that does is it brings, through a change in specialty mix, it impacts our average revenue per case. But the underlying growth, we're also seeing in related businesses, like an increase in, you know, and some of this is organic, some of this is acquisitive, through exposure to mental health, oncology, precision medicine, dialysis.
These are sort of things that sits outside of our existing inpatient capacity that we see growth in the South African environment.
Thanks, Jurgens. 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 surgical is 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 daycase admissions. But other than that, what we're seeing is basically in line with last year.
Thanks, Jurgens. Maybe on CIVH, Pieter, 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 MAZIV integration with Vumatel 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.
On Vumatel, Pieter, what's the negative impact on headline earnings of while revenues increased by 15%?
Firstly, Vumatel is now also starting to pay taxes, which is good. Then all of the additional debt that was added to the cash coming from the business was used in Vumatel. The big difference there is the increased interest rate payments on that debt.
Sure. And on the debt, Pieter, your debt is up ZAR 18 billion, up to ZAR 18 billion. How much can its balance sheet still be pushed up before it becomes a problem at the MAZIV level?
Yeah. So we measure ourselves on the debt EBITDA ratio. We were 4.5x a year ago. We're down to 4x now. Eventually, we want to get down to a level of 3x. 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 Vodacom will invest equity into the business, to help us, free up some additional investment opportunity.
Thanks, Pieter. Jannie, just on disclosure, what specific measures are you putting in place to ascertain reporting transparency for the large unlisted portfolio going forward?
I think it's—today is part of this, so that we expose our management teams underlying to, you know, unlist—to, to the shareholders. We also, again, as a capital markets, they will do additional disclosures and, and, and presentations on that. As you've probably seen, we've published on our website, we have published a full set of Mediclinic results for the year ending March 2022. That was done. I think you'll see more of that going forward on that, total transparency. I meant—I mean, to... It's a journey, so we'll also again 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, but some of the things might be competitor sensitive, et cetera, et cetera. All this...
It's a journey, and we'll try to be accommodating as possible.
Another one for you, Jannie, just on general portfolio management. As an investment holding company, how do you see your competitive advantage over a 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, or wouldn't have invested into Tracker as a startup. And I think that's, that's an 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, Mediclinic 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're unashamedly investment holding company, and I think we play a critical role in capital allocation, not just from a Remgro point of view, but also from a South Africa Inc.
point of view, where we see some of these opportunities that we can participate in 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 on the food side, some of their foundations. So I think we play a critical role in that respect.
Thanks, Jannie. 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?
Thank you, Yolanda. Yeah, we became aware of these allegations in August, the allegation of billing irregularities in 6 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, ENSafrica, under the leadership of Steven 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. We-- 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 these, any, 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 no, 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 and transparent, and trustworthy relations with our, in, medical scheme partners that we work with, and we've been doing this for all the 40 years we've been in South Africa. We are very transparent with them, and they, obviously, according to their own governance rules, they also investigate from their side whether they can find anything. At the moment, it's not impacting, this hasn't impacted on our relationship with the schemes because of the foundation that we've formed over years and the reputation that we've built up. We all collaborate with one another at this point, so there's no impact on trading with regards to our relationship with schemes.
If and when we 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, Ronnie. Last questions for Pieter 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, Lwanda. As the Energy Exchange has been in existence, must be 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 2022, so they're actually live now. They have traded electricity, probably more than 1 GWh quantum of electricity that's gone through there. Which is still small 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, Pieter. 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 a touchtone 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 Rey Wium of SBG Securities. Please go ahead.
Hi. Hello, Jannie. Well, first of all, congratulations on the presentation format. I mean, it's really informative. Thanks for that. Just a quick question on the—I mean, it basically deals with the Heineken Beverages valuation. You—am I correct that you said that it is based on the transaction value? If that is the case, then should we use that ZAR 165 bid price as a base to get to the ZAR 12.45 billion? Just to that, I just want to clarify the Capevin value of ZAR 1.6 billion, does it include the Gordon's Gin termination fee?
If I don't get the answer 100% right, Neville can correct me, but the Heineken valuation is what, is the 165. Remember, the offer price was 180, consists of two elements: 165 for, let's call it the in-scope assets, and 15 ZAR for the Cape Wine assets. The valuation to ZAR 12 billion is on the base of the 165, plus the additional shares that we've bought. That's why there's an increase. Remember, we bought some additional shares, so that is why the—so you mustn't just take our previous shareholding. We bought some additional shares. Neville, that's correct, huh?
Yeah, so we were scaled back firstly by around 10%, and we bought additional 13 million shares then.
But yeah, so we got-
Up to 75 million shares in Heineken Bev, that 18.8% interest.
On the Capevin side, the ZAR 15, really, there's an increase to just over ZAR 22, and really, it relates to the cost of the cash in the c- because the Gordon's are sold, so there's more cash in the business itself, plus the uplift in the value of the whiskey asset. Those are the two main things. The ZAR 15, you must compare to the ZAR 22. ZAR 22.60.
Twenty-two sixty.
ZAR 22.60.
Yeah. Now, I just wanna know when the cash comes in of the ZAR 1 billion, whether we should reduce the value of that value of ZAR 1.6 billion to ZAR 600 million.
The cash will be sitting in the Capevin business.
A portion, a portion of the ZAR 1 billion has already been received.
700, yeah.
Yeah. So that's included in the valuation.
Okay, excellent. Just a question, maybe for Pieter. In terms of the competition ruling, you know, let's assume, I mean, just... 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 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 4 million 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 it, scale that up. 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.
Good. And if I may-
Important to note. Okay, you may. I just thought it's important to note that the valuation of CIVH was done, not that some assuming that the Vodacom deal is done. It was done, that it—it was done on the basis that there's no Vodacom deal. I think just that, that's important to note.
... 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 total about over ZAR 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, you know, increase in investment to a sizable size in order to get to significant influence?
Get board seats. I think we see that as more as cash or near cash, our portfolio investments, as you've probably seen now, what we've done on the first round stake, we put hedges around that. Also, mature quite conveniently, sometimes when our debt matures. So it's, this is, this is 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 rather buy some of your portfolio investments, and you actually swap them for your own share at a discount.
So you remember you take a first round sitting at X, and now 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, that's the way from our side, the way we see it.
Okay, thank you.
The next question we have is from Michael Clough of Investec Wealth and Investment. Please go ahead.
Morning, Jannie, Neville. Hopefully you guys can hear me.
Please go ahead with your question, Michael.
Okay. A quick one initially, and hopefully an easy one. On the Heineken Beverages and Capevin 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 20/20 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 time at this point. I don't want to overpromise and underdeliver, so let's see how things pans out. I mean, we went dark on the first of September onto manual system to switch over onto one platform, one system, one invoice, and actually, remarkably, some of it went quite well. But there is still some lots of integration work that needs to be done, so I don't want to commit on anything when we start paying dividends.
Clearly, I mean, as we all know, the market is tough out there. There is a lot of discounting in the beer things 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.
Cape vin.
Okay, sorry, on Capevin, what was,
Also, expected dividends going forward.
Yeah, I've... We, Neville is waiting for a nice dividend out of Capevin.
Yeah. 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 gentleman spoke about moving into adjacent model. 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, 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 them 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 deal with Mediclinic. 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 this, by the party to look at this.
It was, in that regard, and we saw that as a good opportunity to take Mediclinic private, to let Ronnie and the management team focus on the operation, not dealing with the London capital markets all the time, that they can actually spend about 30% more time on the business. Yeah, I don't want to pre-empt what Ronnie is saying. Ronnie, maybe just share briefly on some of your experience of... I think, having people in Switzerland as shareholders, where we are having a few challenges, makes a huge difference as well from that perspective. Maybe you can just share some of your initial thoughts.
Yes, Jannie, thank you very much. I think firstly, the strategy hasn't changed. We still have the same strategy as you would have 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 Jannie has just said, definitely has advantages. It has advantages 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 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 gonna be, there's gonna be big advantages over time.
Thank you.
Thank you. We have no further questions on the conference call.
No further questions.
Okay, thank you. Then 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.