Remgro Limited (REM) Earnings Call Transcript & Summary

Gentlemen, and welcome to the Remgro Limited Interim Results Presentation. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to Jannie Durand. Please go ahead, sir.

Good morning, everybody. Thank you for joining us this morning, and welcome to our interim results presentation for the 6 months ended 31st of December 2024. Today's presentation will focus predominantly on reporting on our financial performance for the interim period. In addition, I will, as has become a regular practice, touch on key strategic priorities, but not in a great amount of detail as we'll be hosting a Capital Markets Day in a few weeks, where we will unpack our strategic priorities in more detail. With that said, the outline of today's presentation will be as follows. Firstly, I will give an overview of the salient features of our results for the period under review. This will include providing you with a high-level recap of our key strategic priorities, which remain consistent with those communicated at our previous results presentation and also a sense of our progress against delivery against these priorities. Secondly, our CFO, Neville Williams, will unpack in more detail our results for this period. Thirdly, we will then be giving an update on some of our key investments, namely Mediclinic, Heineken Beverages, CIVH and RCL Foods. The CFO of Mediclinic, Jurgens Myburgh, will speak to Mediclinic's results. Thereafter, and for the first time, the CFO of Heineken Beverages, Lucas Verwey, will do the same for Heineken Beverages. Then the CIVH Chairperson, Pieter Uys, will do the same for CIVH. And finally, the CEO of RCL Foods, Paul Cruickshank, will provide highlights of the results they reported on the 3rd of March. I will then close off the presentation by looking at our key areas of focus going forward before opening the floor for questions. We will get into the specific of Remgro's results and the drivers thereof shortly, many of which are obviously situation-specific, but it is always important to consider the broader macroeconomic context in which the businesses operate over the period. Remgro continues to be transparent in highlighting the macroeconomic challenges experienced in the preceding years and the resulting impact on the group's underlying investee companies. While many of these challenges persist, we also saw some improvements in the 2024 calendar year, including ongoing inflation improvements, reductions in interest rates as well as the significant strides made in ramping up energy availability, which resulted in the longest period of no load shedding in 5 years. Despite the recently experienced return of interruptions to the electricity supply, we are encouraged by the progress made. These improvements, together with the renewed and positive sentiment following the establishment of the government of National Unity has led to an improvement in global investor sentiment towards South Africa, although there remains cautious optimism concerning the GNU's ability to execute on the much-needed structural reforms with requisite speed. Like in any marriage, you have good days and bad days, but we believe it will survive in the immediate future. Globally, the macros remain challenging on the back of heightening uncertainty. Some of these challenging macroeconomic factors include the ongoing Russia-Ukraine war and the uncertainty around the Gaza ceasefire deal. We are also living through a growing increase in geopolitical tensions, as you're all aware, such as between South Africa and Rwanda as well as the tensions between the United States of America and South Africa, which potentially threaten the renewal of the AGOA agreement. Further, there is also increasing tensions concerning the ongoing tariff disputes between the U.S. and -- the United States and China. Recently, the U.S. Federal Reserve paused interest rate easing cycle as the risk of recession continues to grow. All these factors are outside our control, but we remain conscious of and continue to assess any indirect impact these might have on our business. While this uncertainty remains, we have been deliberately active in playing our role in the things we believe we can influence, particularly providing support through our portfolio to enable a capable state. In parallel, most of our efforts have been focused on the things we can control, like actively driving performance in our portfolio and setting ourselves up for growth. We have already seen some of the positive gains as evidenced by the results we released this morning, and I will touch a bit on this later. The strategic focus has already started to yield the intended results to name a few highlights. Firstly, we have de-geared our balance sheet, which we believe sets us up to explore other growth opportunities. We have also seen notable gains in some of our key portfolio companies. Mediclinic is gaining traction on many fronts of its operational improvements, delivering on the priorities and outcomes that have been outlined previously. As you would have seen in Rainbow's recent results announcement, the turnaround strategy execution that Marthinus and his team, have been hard at work, has successfully unlocked robust earnings. Linked to that, RCL Foods focused portfolio post the Rainbow unbundling has also delivered a meaningful improved performance. We are also seeing early signs of progress at Heineken Beverages as a result of the strategies and stated intervention that the team there has been driving. While we acknowledge, while we are not where we want to be and while some challenges persist such as the regulatory environment in Switzerland that threatens Mediclinic sustained recovery and the volume decline trend we see in the overall beverages market that impacts Heineken Beverages. The positive gains, however, are proof that our focus on the stated priorities is having a positive impact. I will talk a bit more about how we continue to think about these strategic priorities in a later slide. Now moving on to our results for the period. You will recall when we presented our final results in September, I said that we were not where we wanted to be and considerable work was being done to bed down the operational performance of a number of our key investments in order to drive a sustainable recovery. This morning, I'm pleased to be delivering on our interim results that show a strong recovery across the board. This improved performance is the reflection of the work that our executive teams at our underlying investee companies in partnership with Remgro have been actively driving. For this period under review, headline earnings increased by 38.7% from a restated ZAR 2.7 billion to ZAR 3.7 billion. With the improved earnings, we have consequently seen better cash earnings at the center with dividends received at the center up by approximately 31%. And in turn, we have upped our interim dividend by 20%. A significant driver of the increase in headline earnings relates to improved earnings contributions by Mediclinic, OUTsurance, RCL Foods and Rainbow as well as significantly reduced losses by Heineken Beverages. Neville will provide more detail around these drivers and the headline earnings numbers in his section later on. I want to reemphasize what I said earlier. While we are pleased with the strong contributions that were made by some of Remgro's investee companies, there's considerable work still to be done to bed down the operational performance of some of our key investments, and that is where a large portion of our management time is focused. We also recognized that our efforts will not be easy as the market dynamics in some of our key businesses continue to be challenging. As mentioned earlier, Mediclinic continues to operate in a Swiss market that is not showing signs of easing and volumes remain fluid across the Heineken Beverages portfolio amongst strong competition. Despite these dynamics, we remain confident in the potential of the portfolio to generate sustainable growth over the long term. I will now go back and recap on our strategic priorities on the next slide. During the last few reporting results cycles, I've talked extensively about our key strategic focuses on the medium term. The slide revisits some of those priorities and outlines what we believe is a candid assessment of our own performance against these stated priorities. I wanted to reemphasize the execution of these strategic priorities is not a binary target, but an ongoing journey. Our portfolio optimization efforts, including the execution and embedding of our various transformation corporate action require significant integration work over the past 2 years, and we are proud of the progress that has been made in this regard, despite some unforeseen challenges along the way. We are pleased that most of our portfolio companies have moved into recovery post this disruptive period, as can be seen at RCL Foods, Rainbow, Mediclinic and Heineken Beverages. Good strides have also been made in our sustainability journey with our ESG goals set and greater disclosure provided, as you will have seen in our most recent annual report. We are also proud of the progress made in our shareholder engagements at a management level as well as at the Board level. This affirms our commitment to making sure that it is efficient disclosure giving on our unlisted assets. Through our de-gearing process, we have created capacity to explore new growth opportunities and the work on the rationalization of our portfolio also continues. I've also previously spoken to our focus on driving performance at our investee companies. This is receiving greater attention to a structured approach in place under the leadership of Carel Vosloo. A much more active approach in engaging in partnership with our investee companies is now mostly established. As mentioned earlier, we will provide a more detailed view of our strategic focus and execution plans when we host our Capital Markets Day next month. I will now hand over to Neville to delve into detail on the results for this interim reporting period. Thank you.

Thank you, Jannie, and good morning, everyone. After a challenging 2024 financial year, the theme for this first half of financial year 2025 is sustainable recovery in headline earnings from period to period. So just to recap again for the period under review, Remgro's headline earnings increased by 38.7% from the restated ZAR 2.7 billion to ZAR 3.7 billion, while headline earnings per share increased by 38.6% from the restated ZAR 4.85 to ZAR 6.72. Just some comments on the restatement. Remgro restated its previously published headline earnings and earnings for the comparative period December 2023, reason being that during the finalization of TotalEnergies' annual financial statements for its year ended 31st December 2023, which took place after the publication of Remgro's 31st December 2023 interim results, it was determined that the fair value of its disposal group being mainly its investment in Natref was initially incorrectly accounted for. This error has now been rectified, resulting in an increase amounting to ZAR 574 million to a restated headline earnings of ZAR 2.7 billion for the comparative period. This graph depicts an overview of the main drivers of the more than 38% increase in headline earnings. If we exclude the negative impact of significant corporate actions, implemented during the previous financial year from the [indiscernible], ZAR 343 million in the comparative period and a reduced ZAR 77 million for the current period. The resultant increase of ZAR 775 million or more than 25% can be summarized as follows: firstly, much improved operational performance from most of the investee companies, of which the most significant are increased contributions from Rainbow, up by ZAR 237 million; RCL Foods, up by ZAR 224 million; OUTsurance Group up by ZAR 195 million and Mediclinic, excluding the Mediclinic acquisition cost, up by ZAR 152 million. Heineken Beverages, excluding the Heineken IFRS 3 impact returning to profitability, driven by volume growth and margin recovery. And that's a positive swing of ZAR 274 million period-to-period. However, these gains were partly offset by lower contributions from TotalEnergies, mainly due to higher negative stock revaluations during the period and CIVH, mainly due to increased borrowing costs as a result of higher average debt balances and a negative fair value adjustment on an interest rate hedge. Secondly, the positive impact on headline earnings of lower finance costs due to the redemption of preference shares amounting to plus ZAR 226 million during this interim period. We will provide more detail on these operational results during the presentation. An important KPI for Remgro, as an investment company, is the growth in its intrinsic net asset value. So this graph provides an overview of the significant changes in INAV since 30 June 2024. The INAV increased by 10.5% to ZAR 153.9 billion from ZAR 139.3 billion at 30 June 2024, while the INAV per share increased by 10.3% to ZAR 276.89. The difference in increase between INAV, which is up 10.5% and INAV per share, up 10.3% is due to the allocation of treasury shares to share scheme participants during this period. The main drivers of the increase in INAV are the outstanding performances of our listed investment market values, especially OUTsurance Group, up by 43% and Discovery up by 44%, contributing these 2 companies contributing approximately ZAR 12 billion or more than 80% of the increase since 30 June 2024. The net cash increased by ZAR 3 billion, mainly due to the redemption of the preference shares on 5 December 2024, partly offset by a decrease in contribution by FirstRand due to the disposal of 31 million shares for a gross consideration of ZAR 2.5 billion. This table, which we also disclosed at previous results announcement, provides a snapshot of the outcome of the valuation process conducted for the interim period ended 31st December 2024, also disclosing the principal valuation methodologies followed as well as an indication of discount ranges applied to the individual investments. The information is intended to provide investors with additional insight and comfort around the veracity and the governance processes informing this critically important process that is conducted twice a year. As previously mentioned about the governance process, I just want to reiterate again, the valuation subcommittee assists the Audit and Risk Committee in gaining assurance on the valuations of unlisted investments. The valuation subcommittee is now well established in interrogating the valuation assumptions used in the DCF models as presented by our corporate finance team, thereby contributing to the robustness of Remgro's INAV. Then you'll see on discounts in addition to the discount applied for lack of marketability and control, we also apply a forecast risk discount to some of the DCF valuations, which is a subjective overlay to the DCF outcome. And after considering factors such as the outcome of back testing of management forecast to actual results, the assessment of the assumptions by underlying management teams about forecast growth, margin evolution, et cetera. We also assess how up to date the forecasts used in the DCF models are. And after considering that, we either apply a forecast risk discount or not. This graph depicts the top 5 unlisted investment valuations and their evolution since 30 June 2023. These 5 unlisted investments contribute just over 50% to Remgro's investment portfolio. You'll see Mediclinic is the biggest single investment in Remgro's portfolio. And the valuation was done on a sum of the parts methodology with the 3 main components being Southern Africa, East London and Middle East valued on a DCF basis and the 29.7% interest in Spire valued at its closing share price. Mediclinic's Board approved 5-year plans were used as a basis for the DCF, which are the same approved forecast used for June 2024. And these forecasts for this period were risk-adjusted with reference to the actual performance of each division for the 9 months to 31st December 2024, the year-to-date numbers. In rand terms, this valuation represents an increase of 3.8% to ZAR 42.3 billion from June 2024 and 0.4% in U.S. dollar terms. We also applied discounts to the DCF valuation for lack of marketability and joint control. CIVH, the second biggest unlisted investments. The DCF valuation of CIVH is performed internally based on a Board-approved forecast, and discounts are applied for lack of marketability as well as a forecast risk. Pieter will provide more insight on the valuation of CIVH later in the presentation. Heineken Beverages, you'll see in the previous financial year, the impairment that we have applied to the value of HeinBev, and that was due to the operational challenges that they experienced. This valuation is also based on a DCF methodology. And for 31st December 2024, updated Board-approved forecast information was made available on which we have based this valuation. The valuation outcome of ZAR 7.2 billion represents a slight increase of 1.3% in the valuation since 30 June 2024. We apply discounts to the DCF for lack of control, lack of marketability and forecast risk. So it's the full suite of discounts that we apply for HeinBev's valuation. Siqalo Foods, there's a slight increase in the valuation of 1.3%, and this is mainly the result of a slight decrease in the WACC rate with a positive income -- positive impact on the valuation, partly offset by a decrease in the assumed perpetual rate, which was adjusted downwards as a result of continued pressure being experienced in relation to profit volume growth in the current environment with a negative impact on the valuations. So I'll go into the detailed results per overview. And you will see in the template that in addition to the intrinsic value and the headline earnings disclosure per platform, we have included the cash dividends received for the 6 months as well as the last 12 months headline earnings and dividend yield for improved transparency. The healthcare platform consists of Mediclinic and is the single biggest investment in Remgro's portfolio, contributes approximately 28% to INAV and 24% to headline earnings. Mediclinic is currently not performing optimally from an earnings yield and dividend yield perspective. And Mediclinic's, including the holding company Manta Bidco's headline earnings, contribution increased by 56% to ZAR 883 million. But included in the comparative numbers is that transaction cost of ZAR 165 million. If you exclude that transaction cost, the Mediclinic contribution to headline earnings actually increased by 21%. They also report adjusted earnings to remove volatility from certain significant income and charges, thereby providing the user a better understanding of underlying financial performance. And for the 6 months ended 31st September 2024, their adjusted earnings increased by 25% to $83 million. So Jurgens will unpack Mediclinic's results later in the presentation. The consumer goods platform -- consumer products platform consists of RCL Foods, Rainbow, Heineken Beverages, Siqalo and Capevin and contributes approximately 16% to INAV and 35% to headline earnings with improved contributions from RCL Foods and Rainbow. Dividends contribution also improved due to contributions by RCL Foods and Capevin compared to 0 in the comparative period. Heineken Beverages contribution to Remgro's headline earnings amounted to a loss of ZAR 11 million compared to a loss of ZAR 386 million in the comparative period. Excluding the IFRS 3 charges in these numbers, Heineken Beverages return to profitability was largely driven by volume growth and margin recovery. So Lucas will elaborate in more detail on HeinBev's results later in the presentation. RCL Foods reported an increase in underlying headline earnings from continuing operations of 29%, mainly due to strong performance in Baking and Grocery as well as the Sugar business maintaining its positive momentum. And Paul will elaborate in more detail on RCL Foods results later in the presentation. Siqalo Foods headline earnings contribution amounts to ZAR 255 million, representing an increase of 7.6%. The trading environment showed signs of recovery during the period under review. And Siqalo Foods was able to offset inflationary cost pressures through a focused savings agenda, and this allowed the business to drive profitable volume growth, resulting in a 2.3% increase in volumes but a 6% increase in operational EBITDA for the period. So overall, a very pleasing set of results in a challenging environment for Siqalo. Rainbow listed on 1 July 2024. The contribution by Rainbow increased substantially to ZAR 255 million from ZAR 18 million in the comparative period. Rainbow's strong financial performance was driven by consistent operational improvements underpinned by the brilliant basics turnaround strategy, improved agricultural performance due to the full impact of the 2-year transition to the new breed, the Indian River breed that has now been completed. Also enhanced efficiencies and a disciplined focus on cost management, together with lower commodity pricing relative to the comparative period. The reduction in cost related to energy load-shedding and Avian Influenza challenges in the previous comparative period, and these delivered a combined positive effect on the business. Rainbow reported revenue for the period under review increased by 8.9%, largely due to improved channel mix, focus on product mix management and higher volumes. The resultant EBITDA increased by 119% to ZAR 581 million, driven by EBITDA margin improvement of 3.7 percentage points to 7.4%. Rainbow released the interim results on the 7th of March 2025. Capevin contribution to headline earnings decreased by 70% to ZAR 17 million. This decrease is largely driven by a decline in global sales of Scotch whiskey as well as the exit of the distribution and marketing of wine and Amarula, and that distribution agreement was transferred back to Heineken Beverages during the period under review. The Scotch whiskey sector, in particular, high-margin single malt sales has experienced a slowdown in shipments to global markets compared to the previous period. Consumers struggling with continuous cost pressure and along with a decrease in disposable income have resulted in softer demand and down trading. Capevin's valuation decreased by 4.6% to ZAR 1.7 billion, mainly due to a dividend of ZAR 1 per share being paid out to shareholders during the period under review, while the valuation of the Scotch whiskey business and the properties remained flat. The Financial Services platform contributes approximately 22% to INAV, 18% to headline earnings and 37% to dividends received at the center for this period. OUTsurance Group is the most significant investment here. Their contribution to headline earnings increased by nearly 46% to ZAR 624 million. And this increase was mainly due to OUTsurance Holdings normalized earnings increasing by 44%. The increase in earnings was driven by significantly less natural peril claims incurred by Youi and OUTsurance South Africa, coupled with strong organic premium growth and higher investment income. This increase was partly offset by a material increase in the share-based payment expense, and higher start-up losses incurred by OUTsurance. They released their interim results on the 14th of March. And then the infrastructure platform consisting mostly of CIVH. CIVH's contribution to headline earnings resulted in a loss of ZAR 141 million compared to a profit of ZAR 6 million in the comparative period. And this decrease is mainly due to increased borrowing costs due to higher average debt balances as well as a negative fair value adjustment on an interest rate hedge. Revenue growth portion of this is ZAR 132 million. However, CIVH achieved single-digit revenue and EBITDA growth of 8% and 6%, respectively. And Pieter Uys will elaborate more on CIVH results and the valuation later in the presentation. The industrial platform companies are profitable on a sustainable basis, as you can see here, and our consistent dividend payers with high cash conversion ratios as seen in the contribution to headline earnings and dividends received with attractive earnings and dividend yields. Their valuations are also not very demanding. Just some comments on the valuations. On Air Products, the valuation decreased by 3.3% and the decrease in value is mainly due to the decrease in the forecast free cash flow due to the announcement by ArcelorMittal SA to implement the final wind down of its long steel business based in Newcastle. Air Products supply oxygen over the fence in Newcastle to ArcelorMittal. TotalEnergies' increase in value is principally due to an increase in the net cash position after the conclusion of the sale of Natref in December 2024 as well as lower FEC settlement balances. And this was assisted by a minor decrease in the WACC rate. Wispeco's increase in value is due to a slight decrease in WACC since June 2024 and a marginal improved margins projected over the forecast period. From a results perspective, Air Products contribution to headline earnings increased by 20% to ZAR 341 million, mainly due to volume and turnover growth in all business divisions, coupled with cost efficiency improvements leading to this improvement in profitability. TotalEnergies contribution to Remgro's headline earnings resulted in a loss of ZAR 19 million, down from a profit of ZAR 312 million in 2023. But included in these numbers are negative stock revaluations amounting to ZAR 403 million for this period compared to ZAR 8 million in the previous period. And these are caused by the volatility in the Brent crude price during period to period. TotalEnergies contribution, if you exclude the stock revaluations, actually increased by 20% to ZAR 384 million. And this was mainly due to an improved marketing performance after the 2024 industry margin increase as well as supply import performance above the basic fuel price, partly offset by a decline in volumes. And then Wispeco's increase in earnings is mainly due to a higher revenue and gross profit margin in its aluminum extrusion business. If you look at cash and debt at the center increased by ZAR 668 million to ZAR 7.5 billion, the cash at 31st December 2024. The net cash at the center, however, increased by ZAR 3.2 billion over the reporting period due to the redemption of the preference shares, that last batch of ZAR 2.5 billion during December 2024. If you look at the cash flow waterfall at the center, the main driver of sustainable cash earnings at the center is the dividends received for this period amounting to ZAR 2 billion. We've also sold 31 million FirstRand shares for gross proceeds of ZAR 2.5 billion and utilized ZAR 2.5 billion of cash to redeem the last tranche of the preference shares. Then this slide gives you the dividend evolution from the last 3 interim periods. The dividends received from investee companies, as I previously mentioned, amount to ZAR 2 billion for December 2024 interim period compared to December 2023 of ZAR 1.5 billion. This increase period-to-period was mainly driven by a financial year 2024 dividend of ZAR 250 million received from RCL Foods. No dividend was paid in the previous period as well as a special dividend of ZAR 188 million received from OUTsurance on top of the final 2024 dividend. And then based on this cash earnings, the Board declared an interim dividend of ZAR 0.96 per share, up by 20% from the ZAR 0.80 in the comparative period. Yes. So that brings me to the end of my presentation, and I will now hand over to Jurgens to talk to Mediclinic's results.

Thank you very much, Neville. Thank you, Jannie, and thank you for the opportunity. The Remgro team asked us to use less slides, and so you'll see there's a lot more content on every slide because of it. For Mediclinic, the past 6 months have been characterized with good progress on our strategic goals and key priorities as well as a satisfying set of financial results. This notwithstanding, we continue to operate in a healthcare landscape that is changing faster than ever before. Our strategy is aimed at adapting our organization to the changing healthcare environment and is preparing to take advantage of emerging opportunities, while our key priorities inform the progress on our strategy and improved financial performance. Our strategic goals have remained in place, which is to strengthen the core, focus on clinical care and develop a comprehensive service excellence differentiation. Within focus on clinical care, we continue to drive the optimization of clinical service lines and care delivery models, whereas the development of comprehensive service excellence differentiation includes the implementation of defined service excellence standards across the group. Our strategic goal of strengthening the core is encapsulated in our key priorities of growing revenue, driving operational performance and through that, improving return on invested capital. I'm pleased to say that we've made progress across all 3 of these priorities. On revenue, we've seen good volume growth across all 3 divisions and an incremental improvement in some of our tariff structures in Switzerland and the UAE with more work to be done. Our expansion across the continuum of care has yielded good growth. By way of example, the Southern African business has increased their revenue from the continuum of care by approximately 20% on the period-of-period with more to come. On operational performance, we've seen an improvement in employee benefit and contractor cost efficiency. I'll discuss this and the revenue growth in more detail as part of the results. More broadly, we've embarked on an operating model review aimed at transforming the group to create the required capacity and capabilities to deliver our strategy and invest in future growth. This includes structural changes to our operating governance and operational design, demand and spend management and intelligent automation of processes. This project is expected to be completed within 18 months, and we will discuss this in detail during our Capital Markets Day in April. As always, the shifting environment and the changes they bring about highlights the importance of remaining true to our purpose of enhancing the quality of life in the communities that we serve. This drives our strategy and priority setting and more importantly, motivates our everyday behavior. On the numbers, the group delivered a satisfying set of results for the 6 months ended 30 September 2024, against the backdrop of persistently challenging regulatory and operating environment. As mentioned, we're responding to these challenges through a comprehensive plan aimed at reducing costs, improving efficiencies and adapting the business to a path of sustainability and growth. The group's performance for the 6 months ended 30 September 2024 was driven by good volume growth across all 3 divisions. Group revenue was up 6% at $2.3 billion and up 5% in constant currency terms. Inpatient admissions and day cases grew by 2.3% and 2.1%, respectively. The group's adjusted EBITDA was up 13% at $323 million and up 12% in constant currency terms. The group's adjusted EBITDA margin was 13.8% compared to 13% this time last year, reflecting good revenue growth and cost efficiency, partially offset by higher consumable and supply costs mainly because of ongoing mix changes. Adjusted operating profit was up 26% at $166 million and up 25% in constant currency terms. The group delivered cash conversion of 102% with improved billing and collections in Switzerland and continues to target 90% to 100% conversion rate at year-end. Because of the progress on our key priorities and improved operating performance, return on invested capital has increased incrementally to 4%. Looking at the regions in turn and starting with Switzerland, where revenue for the period increased by 3% to CHF 930 million in an environment, as Jannie pointed out earlier, where simultaneous pressure on tariffs and operating costs is impacting the performance of healthcare service providers broadly. Inpatient admissions grew by 3.1% and general insurance mix was stable at 52.6%. Growth in inpatient admissions, partially offset by an increase in the average length of stay, resulted in improved occupancy rate of 56.5%. The average revenue per inpatient admission after provisions was in line with the prior year. Within this, we had a positive effect of higher base rates, partially offset by a reduction in the supplementary insurance tariffs, which signifies the incremental progress made on tariff structures in Switzerland, while highlighting the high priority of tariff negotiations. The revenue growth delivered a 2% increase in adjusted EBITDA to CHF 106 million. The adjusted EBITDA margin was broadly stable at 11.4%, reflecting disciplined cost management, offset by higher consumable and supply costs driven by increased volumes as well as mix changes. As mentioned previously, we're in the process of executing a comprehensive plan aimed at reducing costs, improving efficiencies and adapting the Hirslanden business to a path of sustainability and growth. The plan is focused broadly around the following work streams and deliverables. Firstly, improving the operating model through optimization and automation; secondly, strengthening the core business through volume gains, staff and consumable cost reductions; and finally, evaluating opportunities to optimize the strategic positioning of our healthcare infrastructure. As part of this plan, we've already delivered an annualized saving of CHF 23 million through head office employee reduction, supply cost optimization and reduced contractor costs. Going forward, we will target additional staff cost savings, drive savings in consumable and supply costs and seek to optimize the hospital portfolio of the business to enhance its resilience. We will deal with this in more detail during the Remgro Capital Markets Day. For the year ending 31 March 2025, we expect the volume growth to remain broadly in line with the first half and ongoing cost efficiencies to deliver a stable EBITDA margin compared to last year. Cash conversion is expected to be impacted by delays in billing due to ongoing doctor tariff negotiations in the western part of the country. In South Africa, revenue for the period increased by 8% to ZAR 11.2 billion, amidst a challenging economic environment. Compared with the first half '24, paid patient days increased by 1% with day case growth exceeding inpatient growth. Occupancy improved to an average of 69.9%, as admissions growth was partially offset by a 0.6% reduction in average length of stay. Average revenue per bed day was up 6.6% compared to the first half '24, reflecting year-on-year tariff increases and specialty mix changes. Adjusted EBITDA increased by 10% to ZAR 1.9 billion, resulting in an adjusted EBITDA margin of 17.8%. For the year ending 31 March 2025, we expect the volume growth to remain broadly in line with the first half of the financial year, driving above-inflation revenue growth and a slightly improved EBITDA margin. Finally, in the Middle East, revenue for the period increased by 6% to AED 2.5 billion, driven by the continued growth in client activity and increased pharmacy revenue. Inpatient admissions and day cases were up 10.3% and 3.8%, respectively, and outpatient cases, which is a key driver for us in that business, increased by 2.3%. Adjusted EBITDA increased by 27% to AED 351 million, driven by revenue growth and strong cost discipline, especially on staff productivity. The adjusted EBITDA margin increased to 14.2% from 11.9% this time last year. For the year ending 31 March 2025, we expect revenue growth to be broadly in line with the first half of the financial year, with operating leverage and staff cost efficiencies driving an improved EBITDA margin. That brings me to the end of my presentation, and I'll hand over to Lucas.

Thank you, Jurgens. Good morning, everyone. Before we jump into the numbers, I just want to talk about our strategic rationale and the journey so far. So the strategic rationale is to create a regional beverage champion for Southern Africa. This is achieved mainly by integrating the 3 legacy businesses, Namibia Breweries, the legacy Distell business and Heineken South Africa to create first scale and a strategic entry point into the high-growth African markets. Secondly, leveraging the unique portfolio that we have, spanning beer, ciders, wine and spirits and very few companies have that. The portfolio caters to a broad range of occasions and preferences. Then thirdly, combining Heineken's global scale and operational excellence with access to global sponsorship platforms with legacy Distell's deep expertise in the non-beer category. Then the progress to date, a long list. We are in the final stages, I must say, of the integration that took a while with one unified system, optimized organizational structures, site consolidations and efficiency improvements across the board. We also successfully launched the Heineken 650 returnable bottle, which was a big investment north of ZAR 2 billion, improving relative price positioning, margins and sustainability through a reduced carbon footprint and environmental impact. We have achieved strong growth in our export markets and specifically in Namibia Breweries. We slowed down the beer market share losses. We achieved revenue growth in all 4 categories for the 6 months compared to the prior year. We managed to achieve most of our cost savings initiatives with fixed cost increasing and remaining below inflation. We implemented some of our merger conditions. One of them is implementing a new ESOP scheme with 6% ownership in the SA business. We partnered with Soufflet Malt for EUR 100 million maltry investment at the Sedibeng brewery to localize our malt supply. We also focused on cash flow management to reduce our take on debt. Now going into the performance. On the table to the right, you can see the revenue -- net revenue grew by 11% to ZAR 30 billion for the 6 months compared to the prior year. Mix and margin management was critical to expand our margins within this high inflationary environment. The returnable bottle project also supported this margin expansion. The result is our headline earnings improved from minus ZAR 2 billion in the prior period to almost flat in the 6 months for 2024. Cost control and cash flow management have safeguarded our profitability and maintained stable debt levels. This slide just shows the category and the region contribution. Our business contribution by category is on the top left and ciders and beer contributes 2/3 of the portfolio and wines -- followed by wines and spirits, but what you can see there is how important all 4 categories are to the business. All categories achieved mid-single-digit to high-teen revenue growth. Recovery in beer is our main focus as we intend to win again in this attractive growth category. Focused investments on our key brands are the priority, upweighting expenditure behind our biggest brands with the biggest potential so focusing on the core of our portfolio. Ciders continued to expand with Savanna, now the largest cider globally by volume, which is a great fit. However, we see cheaper entrants gaining market share and aggressive price promotion behavior in the market. Spirits is still very important and showed robust growth led by mainly Brandy and Amarula. Wine is still under pressure from a volume and margin perspective with corrective measures in place to address the recent declines, and we focus -- refocus the portfolio to more profitable SKUs. From a regional perspective at the top bottom left, you can see SA is still the majority of the business, more than 75%, but our strategy is to grow the Heineken International business where we see strong double-digit growth coming. Namibia Breweries is also growing in a relatively small market with strong volume growth, and we see many opportunities unlocked by having access to the legacy Distell portfolio on their network. The next slide is just showing from left to right, the headline earnings in the prior year to the headline earnings reported in this financial year. The improvement is mainly driven by an improved operating performance of more or less ZAR 1.3 billion that you can see on the slide, a reduction in the IFRS amortization in FY '24 compared to the prior year as the majority of the revalued stock items due to the purchase price allocation were sold during FY '23, mainly ciders and wines. The spirits will take longer to sell through because of aging. And finally, a reduction in our once-off costs compared to the prior year, still some integration costs coming through, and that leaves us with almost flat reported headline earnings for 2024 for the 6 months. Then if we move on to the reconciliation of reported headline earnings to normalized headline earnings, the main item still remains the IFRS amortization relating to the additional assets identified upon acquisition and purchase price allocation. This is, however, much lower than the prior year. Like I said, last year, we still have once-off costs. If you strip that out to get to the normalized number, there's some FX as well. And then we get to a normalized headline earnings for the 6 months '24 of ZAR 562 million. This is still below where we want the business to be. And while we have a clear strategy and road map in place, the current performance remains behind our original business plan, but we have focused efforts underway to bridge this gap. Thank you. I hand over to Pieter.

Good morning, everyone. The period since we reported last time end of last year has been a period of consolidation and continued focus on fixing the DFA network, driving penetration in the Vumatel network. And the Maziv and CIVH year-end is a March year-end. And most of the results that I'll be sharing with you today is then informed by the Maziv and CIVH half year results as at 30 September last year. During this period, a lot of our energy and focus went into the competition regulatory process. We -- if you can remember, we started the process with the filing of the Vodacom-Maziv transaction in December 2021. That carried on leading up to the tribunal hearings that started. In fact, it started during the elections last year in May, and it culminated in the tribunal, then supporting the commission in the prohibition of the transaction so almost 3.5 years since we started with that regulatory process. We continued the focus, as I said, on the DFA network, spending a lot of effort and CapEx on building a more modern network by improving the way that we distribute the fiber into the network. We've built more modern distribution cabinets across the network. Vumatel has also focused more on penetrating the homes that they have already passed versus just building new homes passed. Maziv also started rolling out Salesforce, and that is to improve the service delivery firstly, in Vumatel, but the plan is also to next roll out Salesforce into DFA. We also built on the team strength at Maziv. We appointed a few senior people from the industry. The first one is Phila Dube. He's the Chief Commercial Officer at Maziv. Also appointed Moses Mashisane, he's the Chief Regulatory and Governance Officer; and then also Ndivhu Nepfumbada. She's the Chief of Human Capital at Maziv. With the uncertainty around the Vodacom transaction, Maziv has also agreed a set of covenants with the banks that will be giving Maziv enough runway and headroom in the event that there is no Vodacom transaction going forward. I can also report that in September last year, Maziv received the BBB Level 1 status, which was a good and big achievement for them. Next, I'll focus on Vumatel. They had good operational performance during the period. I already mentioned that they shifted their focus from just building new network, passing new homes, to also focus on penetrating the assets that they already have in the ground. The total number of homes that are now passed by Vumatel is more than 2 million. And on the slide, on the right-hand side, you can see that they grew the number of connected subscribers to the network by 9% in the reporting period. Also, if I just look at the last quarter of the calendar year at the bottom, you'll see a further 4%, just reflecting the continued focus. Those numbers shown there based on the 2 million homes passed gives them now a penetration of the base of more than 40%. Then also, you might have picked up from the media, most of the fiber network operators and telcos have put through tariff increases recently. Maziv also followed by increasing tariffs on most of their products in DFA and Vumatel, and that will take effect from the 1st of April. Next, to shift the focus to DFA. A lot of remedial costs were driven by increased activity from contractors and security personnel, mostly at night as a result of still mostly vandalism on the network. And these normally happen in areas that are relatively dangerous to work in. So most of this work then happens at night with the security personnel supporting those maintenance contractors. The total CapEx that we've spent so far on rebuilding, re-architecting the DFA network is now probably close to ZAR 750 million. And on the right-hand side graph, you can actually see the impact that this has had on the network. A year ago, it took us on average 40 hours to fix a fault, which is called the mean time to repair or MTTR. That has now dropped down to around 5 hours. Our target is to have the average across the network below 4 hours. This is a good achievement from the team. A big part of the CapEx also went into upgrading the active layer 2 network. So DFA has got basically 2 networks, have the original dark fiber network, but also they have a layer 2 network. Now the layer 2 network has been -- equipment has been replaced by more modern switches and routers, and that has improved the reliability of the active network. So you'll see that there's a new positive momentum in the fiber to the business segment of DFA. And it comes at the cost of customers switching from dark products to more reliable layer 2 products. And the reason it is more reliable is there's a lot of resilience built into an active network versus just having one dark fiber as a product. Next, I will unpack the valuation. And on the top left, I can start with the enterprise value. It comes from a DCF done by Remgro, using financial information as at end of September last year, also using a 10-year forecast from management. Just to the right of that, you will see ZAR 19.5 billion debt at the operating company Maziv. I can also just mention that ZAR 1.7 billion of that debt is actually lease liabilities, which then takes the bank debt to ZAR 17.8 billion. This then gives a Maziv equity value of ZAR 32.4 billion. Just to the right of that, you see some other assets. This sits in the CIVH Group. Then we apply the customary Remgro discounts. Neville mentioned them, tradability, also management forecast risk discounts. And then what we do is we take that equity value and roll it forward from September to December to align it with the Remgro results, which then gives the CIVH equity value of ZAR 26 billion post the discounts and Remgro's 57.02% of that is then ZAR 14.9 billion. I can just also mention the multiples that you see it in the current reporting period, those are based on historical data as at September -- end of September last year. My last slide, just an update on the regulatory process. And we have the 2 transactions currently in front of the regulatory authorities. The one on the right is the Maziv Vodacom investment. I mentioned on my first slide, started in December 2021. The tribunal decided at the end of October last year to support the commission's prohibition recommendation. We have lodged our intention to appeal subject to the reasons for the prohibition coming out. So far, they haven't published the reasons for the prohibition. We are told that it might be coming out this week. Based on that comment from the tribunal, the Competition Appeals Court have now set the hearing dates for the 22nd to the 24th of July. We're also continuing to engage with Vodacom to agree a set of revised terms to support the transaction, once it is then finally approved by the appeal court. On the left-hand side, Herotel, again, a long, long history. We filed that shortly after the Vodacom-Maziv transaction. It was in May 2022. The commission then took almost 3 years to do its homework on that transaction. And then recently, they recommended it to the Competition Tribunal with a supporting recommendation for approval, subject to conditions. We have been part of setting those conditions, and we are happy with the conditions that they are recommending in their proposal to the tribunal. Yesterday, we also had the pre-tribunal hearings trial. MTN once again put up their hand that they're going to intervene in the transaction. The Competition Tribunal also informed us yesterday that they are very busy, and we might only be able to have the tribunal hearing early next year. So that's in a nutshell where we are with those 2 transactions, and I'm handing over to Paul.

Thank you Pieter. Good morning, everybody. Nice to have an opportunity again to put some additional color to the RCL Foods results. Just to start with a snapshot with Vector sold and Rainbow unbundled, our strategy remains clear and has enabled us to focus on our execution. And as a result, we've managed to produce a pleasing set of results in what remains a very challenging consumer environment at best. On the left-hand side is some of the metrics, which were in the announcement. I'll unpack the EBITDA 25.1% improvement in a little bit more detail later on. And I'd just like to call out the return on invested capital at the bottom on the left-hand side, improving for the period ended December '24 and now more or less in line with our weighted average cost of capital. Some key features which will be unpacked further. I've mentioned the portfolio repositioned, and we'll talk a little bit about growth and the market conditions in which we're operating. Our growth plans are absolutely clear, but these become challenged in an environment in which we're operating. This enables us to focus on our continuous improvement program, which previously we called best-in-class and net revenue management, and these become critical initiatives in the current economic conditions. They are currently yielding tangible benefits, and you can see that coming through in our margin improvement over the period. We've also seen some welcome price relief in some of the commodities, nowhere near declining to the levels pre the Ukraine war, but certainly some relief over the prior period. And the absence of load-shedding in the period, whilst immaterial from a rand perspective, has a major impact on the operations and the ability to focus on what is important in the period. And we've seen the impact of load-shedding, whilst briefly over the current last couple of months, has quite a disruptive impact on the operational performance. Then just talking about the market. And whilst the market has improved from an inflation perspective, it remains extremely challenging from volume. If you just look on the left-hand side, we're just unpacking and this will not be new news to anybody on the call, the inflation factors in food for both the 12-month and 3-month moving being more or less between 4% and 5% and pretty much in line with what is expected coming off this time last year, very high inflation periods in the early teens. Volume continues to remain challenged, some muted growth in the food as a total basket in both periods reflected there, whilst the 12-month period still see staples declining, in the near term a slight improvement, and that's to December '24. On the right-hand side, we show the volume trend by month over an extended period. And you can see from December '22 through all of 2023, volumes in decline virtually every month, an improvement from April '24 to December '24, although slight, you can see volume growth of between 1% and 3%. But the months, which is outside of the reporting period, and there's been a lot of media coverage of this in the last couple of months, so we thought we'd add it in as additional context, but January and February's volume consumption down significantly. So the consumer remains under significant pressure. How have we performed within that context? And I always say that market shares are a signal of your relevance in the market. And on the left-hand side, we show the market shares by our key brands. And I think it's worth calling out that other than Nola Mayonnaise, all market shares for the longer-term period remained pretty much in line with prior periods, which is a pleasing performance within the conditions in which we find ourselves. Nola Mayonnaise has retracted to the 42.5%, and this is more in line with historical trends from mayo perspective with the prior period being impacted by supply issues due to an egg shortage within South Africa, and we benefited from that. But we are peaceful with our 42% to 43% market share in Nola. The shorter-term periods are largely in line, 1 or 2 categories or brands in which we're slightly off the longer-term view, but nothing that would concern us. I think it's worth calling out Bobtail and Catmor and whilst they look in line with the prior period, if you go back in history, they still remain off historical levels mainly as a result of the impacts -- extended impact of load-shedding in our Randfontein plant. On the right-hand side, we've just depicted a few packshots of innovation that's come to the market. I think what's worth calling out is that our innovation has been quite subdued over the last couple of years, and it was a deliberate decision by management to focus on our process around innovation to ensure higher success rates, although not all innovations will be successful. We'll be the first to acknowledge that. What I can mention is that we have a number of exciting innovation initiatives, which are coming to the market over the next 12 months. CapEx is approved and in play on most of those. So we look forward to some nice innovation across a number of categories. Just from a performance perspective, I mentioned earlier, the outer 2 bars are the 25.1% EBITDA reconciliation, showing the statutory performance December '23 to '24. Within the middle section is our underlying operational performance, up 20.5% with very pleasing recovery in Groceries and Baking, albeit both of them off a lower base. The other reconciling items from a statutory perspective relate to the historical fire at Komati and insurance proceeds and timing thereof and IFRS 9, which is a historical adjustment we've always made to get a better reflection of operational performance and IFRS 9 relates to our commodity procurement positions. The only one I would like to call out is the special levy recovery, the ZAR 72 million, second bar from the end on the right. This relates to the Tongaat Hulett business rescue process. This does not relate to the legal matter, which is still in play and is currently in the Supreme Court of Appeal. And that number is ZAR 525 million, which is reflected in the business rescue plan, of which our share is ZAR 110 million. That remains outstanding and subject to that court case. This was money that was in SSA and has been paid across by SAA to the relevant millers and growers in the current period. Just to touch on the 3 business units in a little bit more detail so starting with Groceries, improvement of 29.1% and our margin moving up to 12.2%. This is largely a recovery of historical margins in groceries, but a pleasing result, nevertheless, given the economic conditions I set out earlier. A couple of drivers being mainly pet food mix and so driving up our more premium offerings in pet, some production efficiencies and cost savings initiatives, which we've driven through our continuous improvement program and then load-shedding, although a smaller number in terms of impact. Baking, which covers operating units bread, milling, specialty and pies, all 4 business units have performed well versus the prior period, up in total at 72.5% and margin moving up to 8.9%. But we were the first to acknowledge that, that margin is not where our aspiration is and opportunities to improve that margin still remain. Pies and bread, we call out as specific areas which are challenged and remain challenged, particularly bread, but we have seen encouraging improvement in both areas over the prior period. And then lastly, Sugar, whilst the result is down 3.7%, this comes off a record 2-year performance in sugar and the business continues to perform well. There are 2 areas impacting the results, one positive being a higher share of local industry through our bigger crop. Just a reminder that the sugar industry works on its allocation of proceeds on a production share. So lower crop impacts in KZN has a positive impact on our results through the redistribution of the sugar proceeds. But this is offset by local -- by lower world market pricing with -- in the period, the U.S. cents per pound of sugar reducing from $0.27 to about an average of $0.19. So this quite nicely offset by improved crop over the period relative to KZN. Sugar, there is still opportunity for continuous improvements in operational efficiencies, and we continue to drive those out and appropriately invest where those opportunities make the most sense. And then finally, what are we focusing on over the next period. Now that we have a more branded business. Growth is critical. Despite the economic conditions, we believe bread and pets are opportunities for growth and look forward to some innovation projects in both of those spaces. Net revenue management and continuous improvement are going to be vital, whilst volumes continue to decline and we don't see any letting up of that, as I mentioned. And these projects will continue to drive profitability as well as to improve our margin. Sugar agricultural yields remain critical. We have invested in some additional replant in sugar, bringing down our return age to more in line with what would be industry norms, and we should see a continued improvement on agricultural yield in the season, which we are about to start up now. Then the last few is around energy and water supply risks. We have worked on resilience plans and water, in particular, is critical right now in the food production environment. And by the end of this calendar year, we should have sufficient cover across our various facilities. I mentioned the Tongaat appeal that is in the Supreme Court, and we'll actively participate in this appeal, as we have done throughout the process as we believe that money is due to the industry. And then finally, we continue to look for growth opportunities to scale up our portfolio, both organic and inorganic, and look forward to driving those opportunities as they come about. And with that, I'll hand back to Jannie.

Thank you, Paul, and thanks to all my colleagues that has actually done the bulk of this presentation, took a lot of pressure off me. But maybe just to start the closing slide just -- so you can see some -- sense some frustration among some of my colleagues about the regulatory environment. I think we -- as a group, we accept that you have to have a regulatory environment you operate within. But as -- South Africa as a country, we just need to be more business friendly. We need speed of execution. We need also speed of making decisions at a regulatory environment because it creates uncertainty. And as you can see, what has happened on the Heineken Bev transaction, what's happening on the Vodacom transaction is taking 2 to 3 years, which is totally unacceptable in an environment where you're actually looking for foreign investment into a country and putting up these regulatory hurdles make it very difficult for people to justify making investment into the Southern African region. But yes, I begin this presentation by showing how we think our group has performed against the strategic priorities we previously communicated. We know that some of these priorities, which are long term in nature, required continuous attention, even so today, we spoke to some of the notable improvements made as demonstrated by interim results. We are happy to celebrate the small wins and it keeps the teams motivated and up for the new challenges facing them in the future. As I mentioned at the start of the presentation, we are adapting a more active investment style under the leadership of Carel, ensuring that each investee company is receiving the relevant support required to drive sustainable performance and deliver long-term value for our shareholders. With that as our goal, we continue to focus on the following: optimizing the performance of the current portfolio, being carefully considered in our capital allocation decisions and finally, driving our sustainability initiatives. These are the 3 key immediate priorities for us as a management team, which we believe, done right, will aid our efforts in achieving our goal of crystallizing value for our shareholders. To give a bit of flavor of how we practically think about each of these priorities in this slide, we set up our sub priorities, which we will unpack when we present on a more detailed thinking at our Capital Markets Day next month. In closing, one of our core principles at Remgro is partnership. What is central to any success we hope to achieve on the above will be such partnerships amongst my colleagues here at Remgro, with our various management teams at the investee companies and with our investment partners across our portfolio. We hope to share with our shareholders how we think about these partnerships in the context of driving growth and ultimate value capital -- ultimate value creation at our Capital Markets Day next month. Until then, I'm personally grateful for all the tireless efforts of my team and all our partners, and I'm equally pleased at what we've been able to deliver so far as evidenced by the results that we have presented to you today. At our previous results presentation, we made known that the Remgro team was up for the challenge. The accepted challenge continues. We're looking very forward to engaging with you next month here in Somerset West, and we thank you for your time. I also want to thank Lwanda and the team for putting this presentation together. I think it took a bit over an hour, but I think we justify the time with all the detailed presentation that we've done. We'll now open the floor for questions. Thank you very much.

Thank you, Jannie. If we may start with questions on the webcast, Pieter, just on CIVH, there's a number of questions, but if we can maybe group them into themes. On the Vodacom deal, maybe just help us understand the process from a competition perspective. What are the implications of the long stop date for the transaction being before the appeal hearing dates? And also, if you are able to give a color for what we mean by looking at revised terms with Vodacom.

Thank you. So we heard from the tribunal in October -- towards the end of October last year, we then had 2 weeks or 15 business days to indicate if we want to appeal, which we did. The tribunal also technically had up till the same date to publish their reasons. They haven't published their reasons, but last week, they communicated to us that they will be -- they're targeting this week to publish the reasons. So when we interfaced with the Competition Appeals Court, they said that they will give us hearing dates on the 22nd of July, but subject to the tribunal publishing their reasons by the 30th of April. That is also the date that informed the latest long stop date extension. Since then, we've now heard from the tribunal. And yesterday, the Competition Appeals Court finalized the dates for the hearing. So it's now cast in stone, 22nd of July, we will have the appeal court. The long stop date, as I said, was before we had certainty. So we will now -- we can now extend until past the hearing dates because the hearing is very short. It's based on information that's already in the record. There are no new submissions of further appeals from any interveners. It is just a review of what was in front of the tribunal. If I consider the terms that we have with Vodacom, I have to start back in 2021 when we did the original deal, then the valuation was based on an EBITDA multiple that was declining up to a point. That point in time was end of March 2023. So that mechanism had no future past that date, and we revisited the terms then. What we did then was we agreed on an escalating fixed valuation as per April 2023. The intention then was we'll escalate it for about 6 to 9 months, then we'll have a deal, but now it is another 9 months after that date. And it is time to review it again. So we are looking at a completely different way of looking at the valuation because everything that we agreed 3 years ago is irrelevant today. However, the investment that Vodacom will make into the business is still at least the ZAR 6 billion cash into Maziv and Maziv will also be acquiring for shares the Vodacom fiber assets. And the fiber assets are typically tower assets, but they are also FTTH and FTTB fiber assets in what is acquired for shares. And Vodacom will then, depending on the valuation, top it up to get to at least 30%. They also have an option to increase it, but they -- according to regulatory approvals, they can never go above the 40% mark. Lwanda?

Thank you. If we move on to maybe just looking ahead for the business. If the transaction doesn't happen, how should we be thinking about the strategy? Does that change? Will you accelerate CapEx rollout for network expansion? And also for the debt, how do you then think about repaying that debt? And what are the options?

So I mentioned during my presentation that we've agreed a set of covenants with the banks that will give us runway and the ability to continue with our business even if there is no Vodacom transaction or investment. This -- just for the 6 months period ended September last year, there was free cash from the business of ZAR 2 billion, half was paid to interest in. So we could, in that 6 months that in the reporting period, spend at least ZAR 1 billion on the network -- CapEx into the network. So typically, in the year, we are spending and have been spending about ZAR 2 billion, improving the network, connecting new customers, and that will continue. If I look at the Vodacom investment, that will definitely assist in reducing the debt and improving the capacity that we have to invest faster into the network and rolling out more homes, specifically into lower LSM areas. So yes, it will help a lot if we have additional investments to speed up our strategy. However, if there is no Vodacom investment, it does not stop our strategy. We will also continue to have a better balance between building network, penetrating the network, paying down debt and hopefully, one day also have a consistent dividend paying policy.

And lastly, if you -- just on the current period, what is the total CapEx that was invested?

I just briefly mentioned now probably just short of ZAR 1 billion, and that went into mostly the upgrade of the network quality on the DFA side and then also some IT systems that I mentioned, Salesforce, plus then connecting customers on the existing Vumatel network, just short of ZAR 1 billion.

Moving on, Lucas, on Heineken Beverages, you mentioned the strategy involves growing your international business due to its growth potential. Can you share what the key regions or countries are of interest and then what you're targeting for growth?

Yes. Good question. Yes. So obviously, the growth for Heineken Beverages International, which is basically our export business. So we produce a lot of products from the South African production sites that we export through that business. And then we have in-market businesses. So the main -- so probably a big portion of the growth comes from export into countries. The main markets are Kenya, where we have an in-country business and production facilities with own brands and obviously, our new brands. That business is -- has its own board, other shareholders, we own 65% of that business. So that's a key market for us in East Africa. And then closer to home, Botswana, Zambia, Tanzania are the key 4 markets for us. So having said that, we have joint ventures and associates also across Africa. We have a business in Angola. We have a share in AFDIS in Zimbabwe, and we have an export business in Mauritius called Grays. So we have a plethora of entry points into Africa, but we have a focus that is core to the 4 key markets that I mentioned. And then obviously, in Africa, you need to have double-digit growth, actually a high 20s growth to offset some of the valuation or the ForEx devaluation of currencies. So you probably need higher growth. And adding -- and we did experience that in the last year, and I think going forward, our projections are that we need to grow high double-digit growth for the foreseeable future as we also roll out most of the beer that we have -- that we now have onto these platforms like [indiscernible] like in Botswana on the ex legacy Distell platforms, and that will give us some volume growth.

Thank you, Lucas. Jannie, a question for you on the balance sheet. Now that you have a strong balance sheet and increased dividends received, how do you think about the likelihood of increasing dividends paid or buying back shares? Or is it likely that you will hold excess cash for opportunities or tougher times?

Thanks, Lwanda. I think the first question, you will see that we've increased the dividend by 20%. So I think what you will see is hopefully a good sustainable increase in the dividends going forward that we will pay to shareholders. Also share buybacks with a discount at above 40%. I think that also presents good opportunities that we'll continuously evaluating. But despite that, I think we still will have enough cash on the balance sheet or dry powder to actually look at investment opportunities, albeit it might be actually supporting some of our existing investments if they need capital to do certain expansions or looking into new categories or new platforms that we're constantly evaluating. So I think all of those things are on the cards now that we've actually got a de-gear balance sheet.

Thanks, Jannie. Last one on the webcast, Carel, just on Capevin. Can you give us some color on what value you hold Capevin at? And also what engagements have been had with Campari on the plans going forward for the business?

So I think Capevin --Neville correct me if I'm wrong, I think we're carrying ZAR 23.40-odd or ZAR 23.30. So Capevin, obviously -- or Campari, a 15% shareholder. I think fair to say, since we last met, the global spirits industry has had tough times, certainly not helped along by the tariff wars between Europe and the U.S. Campari has also had a new CEO that's in place. And judging by their public commentary, they're relatively internally focused on driving value from their portfolio. M&A doesn't seem to be a current focus for them, but we certainly wouldn't want to comment on their plans. But from our side, we are very focused on making sure that we are providing the right operational support and shareholder support to the CVH management team to ensure that we preserve and are able to unlock value at the opportune time. Yes. So that's where we are with CVH.

Thank you, Carel. If we can take questions on the Chorus Call, please.

The first question we have comes from [indiscernible] Anchor Stockbrokers.

I just want to -- just to elaborate on that question around the strategy. If I look at the cash position up to ZAR 7.4 billion, I don't know if it's a deliberate strategy that you may have in an environment that's quite volatile. I mean, just as a matter of interest, we also see it on the Reinet side with quite a large excess cash position. So I don't know whether you could elaborate on that. And then just the BAT Holding that you have. I mean, it's not large, but I'm also thinking that Reinet has sold their stake, whether you have any plans on the disposal of that stake? And then just -- yes, you mentioned you'll look at share buybacks, but I'm just curious why you have not engaged in buybacks over the -- I think it's now probably like 18 months since you had that other ZAR 1 billion of buybacks.

Just on your first question, thanks for the questions. Yes, so it's actually for us -- as we said, it's the first time that we announced a balance sheet that now have been degeared. So that creates a lot of optionality for us, and I've mentioned those 3 things is specifically increased dividends, share buybacks as well as opportunities in the market, not just in looking at our -- supporting our existing investments because they're also looking for some opportunities of growth, but also looking for new areas of investments. So as I said, all 3 are on the cards. I think in terms of buybacks why we haven't been in the last 18 months significantly so because we were still sitting on debt. We had to clean up the portfolio. So our focus was, as I mentioned my frustration, and we're not exactly sure where we are sitting with on the Vodacom, CIVH deal and what some of the capital if we want to establish new growth opportunities for CIVH outside South Africa. So there's certain of these capital calls that we're unsure about. But I think now that we've got a degeared balance sheet. It's put a new lens on 2 of the things that we might be looking at. And we can elaborate more on that at the Capital Markets Day and the strategy going forward as well. You've asked the question about BAT, we still see that as cash, but at least we're getting a good dividend yield on it at the moment. So it's actually very insignificant in our portfolio. So it's comparable to the interest rates we receive about in pounds...

Yes. If I may just ask maybe a question for Lucas Verwey. Just in terms of the -- if we look at where prior to the Distell Heineken transaction, obviously, the focus was on the ability to get significant synergies -- cost synergies and revenue synergies. Has anything relating to that? Has that changed over the past 2 years since the deal has taken place? Or is that still in the card? So I'm just thinking in terms of where we could probably pitch a medium-term EBIT margin because we know what the margins were for these businesses as separate entities. And one would have hoped that you could aim for a margin in excess of that. And then just a quick clarification on that revenue number that you disclosed. Am I correct to assume that duties are included in that revenue number?

Thank you. So the first question on synergies, we had a large synergy pipeline when we started the business. That is still intact, the total number, although the initiatives in that pipeline changed as we discovered more opportunities or less in certain areas. So in logistics, for example, we see more opportunities. So most of those synergies that we had as a target, we actually achieved in the last 2 years, offsetting some of the pressure on volumes and pricing. So we -- in the last 2 years, we didn't take that much price to protect volumes. Then on margin, you're right, we, at the moment, a fairly low operating profit margin. So we're not -- we're clawing our way back to where we were pre-deal almost for the businesses. We're probably 18 months out to get back to a decent operating margin. But yes, you're right, it needs to be sort of on the low single digits at least. Between the 10% and 12% is probably a fair reflection on the EBIT or operating profit margin going forward, and we're off that pace. The last -- what was your last question again? Duties? Yes, I think it's net revenue. So it's -- duties is subtracted from that.

Okay. I thought it was included because it's quite a high number.

This is the last -- the period for December, which -- 6 months to December, which is basically our peak. So it forms the bulk of your revenue for the full year, probably close to 60%. So it's not a double number that you just double to get to the full year. So this forms the basis of -- because it includes the December peak.

There are no further questions on the conference at this time.

There are no questions on the webcast so over to you, Jannie.

Thank you, everybody, and thanks for attending our interim results presentation, and we're all looking forward to see you in a couple of weeks' time at our Capital Markets Day, where we'll go into much more detail on some of these underlying investments. Thank you.

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.