AECI Ltd (AFE) Earnings Call Transcript & Summary

Hello. Good morning, everyone, and welcome to our results presentation for the half year ended 30th of June 2024. This is the usual cautionary statement. Just in terms of safety, I won't go through everything that's on the slide. Please be careful when you go up the stairs, make sure you hold your handrail. We do have safety officers in the room that they are at the back, Neil Franklin. So in case of an emergency, please go to the safety officer. He'll be able to show you where to go. And then if there's an emergency, anyone who needs assistance, please contact Neil at the back. We do have designated smoking areas outside and please report any injury to our safety officer in the room. So today we're hosting our results presentation at our Mining head office. It's the first time doing that for AECI. Welcome. Our mining operations hold a very significant history for AECI and that's why we've -- on the journey that we're on in terms of executing on our strategy, we've decided to host our results here. 2024 was a year of transition for AECI. And as I mentioned, the main focus for the Group was the execution of a strategy that we announced in November 2023. On top of that, we had a new segment structure that we needed to restate the comparative numbers in the first half. We also implemented a SAP -- we implemented SAP at AECI Chemicals. And in terms of our first half, we had a lot of activities, including the ones that I've mentioned. As a result, as management, we took a decision to not do our quarterly report. But going forward that will be reinstated and we'll continue also with our pre-closed calls that we've had in the past. In terms of our presentation overview, so I know for interim results, we usually don't go into detail in terms of the strategy update, but for these results and the significance of the work that we've done in the past 6 months, we thought it's prudent to start with giving you a strategy update before we go into the group performance because that lays the foundation of our results for the first half. So to take us through the strategy update, I'd like to call on stage our Group Chief Executive Officer, Holger Riemensperger, to come and take us through. Thank you.

Yes. Good morning, everybody, and welcome to our Mining head office platform. So it might have come a little bit as a surprise that we invited you to platform. Reason is that this should underpin the importance of the Mining business for what I would call the new AECI. And as a nice little goodie for those interested, we also have our innovation and digital showroom here, just upstairs. So if you are interested, I think you should just have a look. There is some guys that know what this is about and can talk you through. So let me take you back into November '23, last year when we presented our new strategy at the Capital Markets Day. So what we can say today, the strategy execution has successfully commenced. We are absolutely convinced still that all the goals and ambitions we have called out then are still for us in reach. As I say, we are executing against it. I will take you through the details, but it is important for me to reconfirm, yes, we are still on track to double the profitability by '26. And yes, we still hold our ambition to become #3 in our market. So this slide shows you the different topics that I will go through. So therefore I will just quickly touch on it. People and culture, for me there is a reason why that is on top of the list. It is for me the most important one. And I am just quoting Peter Ducker, who said culture eats strategy for breakfast. And when we talk about changing culture in AECI, I also want to say this is not because we have a bad culture, of course. This is about we want to drive a culture of performance and a culture of execution excellence. So this is what this is about. We are going into the optimization of portfolio that talks to the divestments where we are on track. We will go through what we call the TMO, the transformation management office, where we have the excellence work streams. So we already have delivered in the first half this year ZAR 400 million EBITDA run rate, which is absolutely on track. I'll show you the details then. We have defined ZAR 800 million extra growth projects. That is on top of the average historical CAGR. So that projects are defined and also starting to execute. We will talk to our capital allocation. The framework is in place, we are executing against it, we are applying it and we are not shying also away to take a stand when as a fact of applying it, not everybody may like what it turns out to be. So we speak to IT and digitalization. Zanele already mentioned the SAP project and what I'm really proud about is that if you listen around in the industry, in other companies, so most companies would call an SAP rollout project their key project for a year or 2. So this team has executed that SAP rollout alongside of much bigger transformation projects. I think that really speaks to the capabilities of AECI to execute projects. We will also talk about the new operating model, where we are actually transitioning away from the previous holding structure into a modernization corporate matrix structure. That change takes out some roles and also some duplication of roles as we are no longer having the matrix. So we are also currently in a Section 189 process for that reason. So allow me to manage a little bit of expectations. So when we said last year that we want to deliver doubling of our profit and to become #3 in the market, what we said for doubling profit is that this is a 3-year project. So this is not something that just falls from the blue sky. This is hard work and we are on that. We are now 6 months in and I hope that nobody did expect that we present today an additional ZAR 3.2 billion of EBITDA. So the project actually could only kick off in February. Remember, we, at the time, had not our full executive team in place. So Rochelle, our new CFO, only joined in Jan. So that was delaying the project a little bit. And then we had to pull the right skills, the right people together and the right capabilities in the transformation management office and it took us some time. So that is staffed since March, April. So you also need to understand that what we are talking about here is not a full 6 months of executing strategy. But since then all the work streams are in execution and we are seeing first benefits coming through. So please keep in mind the full benefits will only be visible as of '27. But of course, they are gradually coming into our P&L. What does that mean concrete. So this is a little simplified view, but actually it tells you the whole story again. So please let me start here on the side. So we committed ZAR 3.2 billion additionally, based on the 2022 result of which ZAR 800 million are coming from organic growth. And organic growth the way we defined it, was the historical average CAGR of AECI that was applied. And actually when you take that over that 3-year period, that brings you to the ZAR 800 million. So to close the gap, we have another ZAR 2.4 billion EBITDA, which we then spread over 3 years. So that's relatively simple mess. That brings it to ZAR 800 million per year. And if then you look into the first half, so as I said, we have delivered ZAR 400 million EBITDA run rate in the first half. So that's on point. We are even slightly above. And I said we have not executed for the full 6 months. We have also already a P&L benefit coming from that. But what we actually expect for the full year is that the ZAR 400 million which are now executed and coming into the P&L will show by end of this year. So to be more precise, we expect the ZAR 400 million upside from those projects by end of year in the P&L. And we have also defined all the projects for the second half, that's also in execution, and also the projects for '25 are defined. There is more projects coming in over time. So we are very confident that we will get there. And again, it doesn't fall out of a blue sky. So before you harvest, you have to seed. And I know that's probably nobody likes that, but it's a matter of fact, if you just expect that something comes out of the blue, that's hope, that is not management. So we had to invest a substantial amount to ramp up that whole transformation program. I was always challenged from some of you, whether or not AECI has all the skills and capabilities to execute a program like that. And yes, we have the skills and the capabilities, but not all. So it would be super naive if we would believe that we can do that on our own. So therefore we decided to go with consultants. And for me, the thing is, if you want to really deliver, you go in or you're not going. And therefore we are working with top notch global consultant firms that are helping us to deliver. Now this comes, as I say, with cost, but this comes specifically with cost front loaded. And as you can see from the red bar here, so the front loaded costs in the first half represent about 60% of what we need to invest in '24, and they represent about 40% of the total investment over the 3 years. And what you can see here is also that, after this year, we expect that costs are fading away and it goes more to systems and not so much to consulting costs. But it's also important to say that if you look to the 2 different parts, you see that the return on investment of this cost is below 2 years. The other important part of the transformation, we said we want to focus on mining, we want to become stronger in the Mining segment, to globalize the business. And I always said we have spread ourselves too thin over the past. And so we decided to divest 6 businesses. We announced that again in November in the Capital Markets Day. We started in February, we didn't start in November. And why? Again, AECI never had an M&A team in the Group. So that was not existing. So we had to find people, the right people, hire some people, and only then we could kick off. So since then we made significant progress. So you have heard that we have signed sales and purchase agreement with Nutreco on our Animal Health business. So the business is now in a closing phase. There are some closing conditions, not the least [indiscernible] approval. So therefore, we are actually now waiting to close. Also important to say is that, again, even divesting is an investment. So we are running well-governed processes here. And that requires legal advice that requires -- environmental advice, that requires investment bank support and so on and so forth. So what we expect here is that the divestment cost will range somewhere between 7% to 8% of the transaction value, which is relatively in line with what you find on an average global basis. So we also committed to deliver that divestments within a period of 12 months to 18 months, which basically brings you to November '24 to '25. And what you can see is that we're actually executing faster than what we have said last year. But remember my most favorite quote when I talk about M&A, M&A is like going to casino. You never know the number, you never know the color. If you hang in long enough, the color comes, the number comes, and when you are lucky, the number and the color come the same time. So that is why you should take that not as a hot commitment, but as an update where we are at. So over the next 3 quarters, we expect to sign 2 businesses each and the next 2 businesses not selling everything. And then in quarter 1 next year, the least advanced one. I know there is a question in room specifically about one of the divestments, but please accept that we will not make or disclose details on individual businesses because there would be a risk to damage the sale processes. So therefore, we are just telling you what we can tell. So what is also important to keep in mind, I know it's a bit of a big range to say ZAR 3 billion to ZAR 4 billion, but that relates a little bit to what I said about casino. You really not know. We have an idea, and our idea in a moment would about range into ZAR 3 billion to ZAR 4 billion. Also important to say that with that divestments, we are selling off some EBITDA. And again, things are moving. So it's always a bit difficult. But as a reference, I think the closest is the first half this year, which was ZAR 250 million EBITDA out of those businesses. So you can double that and say on an annualized basis, we are divesting in a range of ZAR 400 million to ZAR 500 million. So how will the business look like after completion of the divestment program? So the focus is clearly on mining. And you know, we have a chemicals business and I'm coming back to that, but just jumping the gun a little bit. So we said last year that we are keeping the businesses where we believe that they have a substantial synergy potential with the mining business. And that's how you need to look to the chemical side here. And we will talk about a few projects that we are doing in a moment and some that we have successfully concluded already. So -- but the business of course will be on the bug explosive side. It will be -- continue to be on the initiating systems. And you know, we are very, very proud that we can say with great confidence that we are Tier 1, global Tier 1 initiating system supplier. So I would say we are definitely very peer with the other 2 we consider as Tier 1. So we can say #1, 2 or 3, that doesn't really matter. This will require investment going forward. I said invest, invest, invest. This is a business that requires innovation. And I also said that over time and that's not probably the right moment, also not only because of the financial update that we give, that doesn't scare me, but more to not overstretch the organization. So we said we want to double the investment into innovation going forward from a current about 2% to 4% and really believe that, that is important, and specifically there. So the Mining Chemicals business, we -- this, as of today, is still a relative South African focused business. There are some products that we are exporting, but we want to internationalize the mining chemicals business as well, alongside the footprint of the explosives. And why it's simple, because we want to come to our customers with a serious value adding portfolio and not just come with one or the other product. And then we're calling out digital solutions. We are rolling out our mining digital platform as we speak. I said there is -- you are invited to have a look what we are doing here. And I also always said, don't expect that mining digital or digital will become a business unit one day. This is not the way we look to it. We do believe it is absolutely critical to do business. So it's an enabler to do business. It's not a business unit per se. And I will speak a little bit to what we are doing there. So from a regional perspective, we want to definitely defend our #1 position in Africa. We are very proud about holding that position and we will do everything to defend that position as long as it is reasonable, because in the end of the day, you'll not defend the position, you want to make money. But the Asia Pacific business, we are now being bolder, let's say we want to grow to a #3 position in that region as fast as we can. There are -- there is not only organic growth, we are also looking into how can we accelerate that growth. We are ramping up Latin America. I am coming to that on a later slide, but very important as well for us. So I already said we have entered Europe. We did. We are there now. I'll come to that as well. And we are preparing North America. So there's a fair chance that by end of the year we can say AECI has successfully added 2 new regions to its Mining business. Let me start with our safety numbers. And I do not want to make a deep dive, but I want to take you back here as well into last year. So in January and February last year, this organization suffered 2 fatalities. And that is not 2. It's not the number. This is for us, it's humans, it's colleagues, it's friends that we have lost. And that was a significant impact, mental impact on the organization. The management has taken immediate intervention and specifically focusing not only on safety management, but more so on safety leadership, where we called not only the managers but every employee to action and to take leadership responsibility. And you never really quote, but I'm very happy that we are standing here now 12 months later and can say there was no fatality since. And the only true number here is 0. Our ESG goes actually tracking well towards our 2025 goals. The exception was now our CO2 footprint was slightly up year-over-year. But we have measures in place, so we are very confident that by end of the year also the CO2 footprint will show again to a downwards trend and deliver towards the '25 goals. Now going into mining. The first slide, I'm very proud to announce that Stuart Miller is joining AECI as the new Executive Vice President for Mining. So this hire really proves among other hires that we have done in the first half, that we can attract global talent. So we have made a number of hires early in this year. And we are very happy with the skills that we could attract. And those skills come to AECI because they believe in our strategy and they believe that they can make an impact. And I'm very sure that Stuart will. So Stuart comes from Orica, where he hold different positions. The last one as a Vice President, Asia. Very happy, to be honest, that finally we have a Mining Engineer leading that organization, which I believe is very important to understand. We are technical business, so that should not speak to other degrees, but we are technical business, we are mining business. So I am happy that he ticks that box. Over 25 years of experience. He will start in September. And I'm sure that he will be a great addition to the newly created Executive Committee team. And I'm sure he will help us to execute our globalization strategy. Looking a little bit into the market. So what we have seen year-over-year is global growth in mining of 6%. You can see that APAC is growing 5% -- sorry, APAC is growing 6% and Africa 5%. So the outlier, unfortunately, this is now continuing and trending since a long time with South Africa. The market is down 9% in SA. But that actually for me speaks really to our strategy and that it is right what we are doing to also focus growth outside of South Africa. Not that we are going away from South Africa, it's our home market. We are proud and a proud South African company and will not let that market go. But if this is a shrinking market at relatively slow margins, then you rather focus on other markets. Also, it creates quite some resilience if you have a widespread footprint, because the geographies can also change. In other words, there might be days when South Africa is growing faster than other geographies. So I think that really creates a lot of resilience. Then looking to our portfolio, as you can see, we have a very robust portfolio. So our main 4 commodities are sitting around coal and gold, the platinum group and copper. And you can see that the prices vary here with gold going up and copper also in a good space where the platinum group and coal are lower priced in the moment. But again, we are not depending on a single commodity, we have no lumping risk, we have a very good spread. And actually also that creates a nice resilience for the business. So you know that we always said that when we go international, then we are doing that on the back of our customers. In other words, we actually have a contract in place and we move with the customers. And that has proven to be a good strategy and we continue that. But with the ambition of becoming a global company and the #3, we also have to choose ourselves where we want to go. So we cannot just wait for customers to tell us where to go. So what we are doing here is we are looking into some of the critical minerals and where you find those minerals or where the global bigger deposits are. And what you can see is kind of repeating countries like Chile, Australia, Indonesia, DRC. And that ticks absolutely Indonesia, not to forget, big one for us, that ticks the box. So we are actually already there, but we want to go stronger and faster. Talking a little bit to the ammonia supply chain, so you know that we are depending pretty much for the South African and SADC part of our business on local ammonia supply. You know, there have been some hiccups in the past, so we have taken action. And one of the more important things was to ramp up our Richards Bay facility for import. We have also increased our capacities, both on rail and road for inland and more the long term, but important, and I will show later a small -- not a small one, but an important project actually to find alternative supplies, because we cannot continue to rely on one or the other supplier. So just quick again on the prices, please remember, we have in our contracts, what we call a put through mechanism or rise and fall. That means the prices for our key products are actually linked to an index, Fertecon Index, actually. And so that our prices swing with that index. That means if the price goes up for ammonia, our price goes up. If the price goes down, our price goes down. And that creates a stable margin on an absolute run base. So you can say there is actually no impact from an ammonia price on the margins. Of course there is an impact on the revenues, as I just explained, but it doesn't make a difference for the profitability. That is important. Yes. And from that end to the next, and this is a very important slide, you have seen that in our SENS release. So I want to talk you through that, what happened there? So number one important thing is, if you look to the picture on the low side of it. So normally what we would have is a one statutory shutdown every year. So you spread that out and actually you have a normalized situation where you have one shutdown a year. Now, it started in COVID times. There was -- it was not possible to do the statutory shutdowns because of the restrictions and similar then in '21. So there was no statutory shutdowns then. In late '22, the management decided to defer the '23 shutdown. Now, you see that we have not done 3 shutdowns in the recent past and we have done it now. So we have done 4. Why? And again, the Modderfontein facility serves predominantly the South African and SADC market. The market is depressed, as I showed you, one. And second, the first half typically is the slower half in the AECI year, mining year. So therefore, we said, okay, we do it now, we do it all and we not wait -- actually, we are not also spreading it over the year. On top of that, what we said is, as the factory comes anyhow to a kind of a standstill, it makes sense to pull the maintenance from the second half into the first half as well, because you are anyhow on maintenance, so to speak. That's what we have done. Not everything, of course, as much as you can. So we pull that into H1. And all that together then comes with some consequences. We, of course, were not producing ourselves, so there was no plant recovery. There was no underutilization, if you like. We had to buy in the ammonia nitrate solution at market price. And for a period, as the raw materials still were incoming, we had an elevated working capital during the standstill or during the statutory shutdowns. And the high maintenance costs are actually explained. What is important is, there was no effect on the sales or the volumes. So we continued to supply the market and the customers. That's what we decided. But of course we had to swallow the cost. Now important to say is that when you then have higher costs, you cannot of course pass through the higher cost. So we still stick with our pass through mechanism, but the higher cost actually impact on the margins, and that's what we have seen. And honestly, let me just go back. I understand the numbers, and I'm not saying I like the numbers, if I just look to the numbers. But what tells you this is that the job is done. So there is no statutory shutdowns coming in the next 3 years for those plants. And we are normalizing. So that is, I believe, an important take that you should have. So talking about globalization strategy, and I said we were not always only talking about explosives, and I know some understood it that way, but we are also talking about the chemicals. So remember, we had to shut down one of the Schirm plants, Wolfenbuttel, because of a structural change in the German chemicals market that led to a structural underutilization. Then we looked into the factory and actually this factory is pretty efficient if you can utilize it. We have decided to ramp that up again, producing mining chemicals. So we have a reduced workforce now. We have done all the trial production. The product is qualified from the customers. And as we speak we are commercializing the products from the new Wolfenbuttel mining chemicals site. That site allows us now to grow further more faster in Europe and other geographies, because we can export from there. It also brings us capacity back or available in our SA plant, which now enables us to grow the local market respectively, export from there. And then we have 2 export hubs now. I hope one day we'll have a lot more, but now we have 2. And actually you choose then what makes most sense from a logistic perspective. So the other project that I wanted to update you about is the Lihir project. We are a little delayed from what we have said last time recently is that first we had serious weather conditions at the island, which delayed the arrival of the plant. And then there was labor shortages from our contractors, which also hit us a bit on the timelines, but everything is fine, the plant is there, the assembly started, and we are expecting commissioning in quarter 4. I said earlier that we are focusing on growing Latin America. And remember I was talking about critical minerals and there was a number of countries popping up, that was Chile, that was Brazil, it's talking about Peru. Those 3 countries particularly are very interesting mining countries where we see future growth. So we have made a second small acquisition actually of a distributor in Brazil to improve our go to market and accelerate growth. Our Chile plant is on track for commissioning in December this year. And as we speak, we are preparing to enter Peru. And I am sure we can give you more details in a couple of days from what I have heard this morning. So this is a very important growth geography for us. Then talking about the chemicals and how chemicals can support as the growth in mining. So we are looking into also repurposing some of our local chemicals assets. So we done for oleochemicals, emulsifiers and just talk to -- which is also in relation with the new German facility. And specifically Sulphur. Sulfur and Dean will talk later a little bit to it as well. But the Umbogintwini side, remember I said that utilization of that plant is pretty low since many years. There's a structural reason the market is not there. Simple as that. So we have a lot of capacity, but no business because the focus of that business goes into industrial applications. Now we are repurposing that and also targeting the mining market. So I'm sure that this will help going forward to grow also the chemicals business, both export and local. So we talked about the ammonia side and how important ammonia is for us. So what we have done, we have not only looked into international and local alternatives, but also we looked about how can we participate in the growing green ammonia market. And remember, I always said the market is coming. It's not yet there, but we see definitely it's coming. Some of our Tier 1 players are really focusing on it, so they're really moving that way and one has to be prepared. So we have signed an NDA with a partner and we expect commissioning in '27, '28. So that is still some time out. But, as I said, this is a market to come, and we are prepared. So we cannot just look in the next 6 months. We also need to think about the next 6 and more years. Digitalization, as I said, this is now rolling out. We have accelerated the program. What we are doing here, what we are targeting, is actually using big data in the mining value chain and through the explosives and the blasting we can help our customers to optimize rock fragmentation. And optimized rock fragmentation is actually the biggest lever when you want to drive efficiency in a mine because all the upstream process depends on that. So these are the numbers as reported. And as I said, there is all the different impact from the strategic decisions that we have made. You can see here. So TMO [ cost ] statutory shutdowns, market maintenance pulling forward and I will show you then also how that looks like normalized. But what I want to say, and this is super important for me as well, you know, we have also committed to say what is the key measurement for us, what is our major KPI? And we said our major KPI is free cash flow and we continue to focus on working capital as that has a significant impact on free cash flow. And I'm very happy that despite everything we said, still working capital in the mining business is reduced year-over-year. It is elevated, by the way, if you compare to end of year, but that has to do with the mining cycle, as I explained earlier. So if you compare apples-to-apples, then you can see that we have reduced. If you normalize that, in a nutshell, it is simple to say we are flat year-over-year. So for me that is a good result. And it is a good result because please remember that the last year, first half year of '23 was a record year. So it is always difficult to add on a record year. So with all what we are doing, I think that is a very good result, flat on a record year. So why we believe that the second half will look better? So it's not only, and of course that's the big lever is that all the statutory shutdowns, all the maintenance, everything that is behind us, the TMO [ cost ] reducing. But from a business perspective, we are -- we have won new contracts in Asia Pacific that continues to grow, it continues to outperform, actually. I'll show you a number on the next slide. The Central Africa continues to perform extremely well. And yes, we do expect a recovery of the South African mining industry. It's not that we now say everything flips around in a day, but if you look to the market that is underperforming against global and the fact that the margins are still low. But also what we have seen is that some of the infrastructure issues have eased and we are experiencing that ourselves. So we should expect that the same is true for our customers. As I said, the business continues growing, and I think that's an important message. And that this graph shows you now specifically on the bulk explosives and also what you should read from that graph is, one, our South African business volume-wise is stable. So it's not that we are actually losing market share. But what happens is that the international grow outperforms South Africa, which again, is what we want. So we have moved meanwhile to a 70-30 split. Just to not confuse, I was always talking about an 80-20 split. That difference comes from -- we are looking to volumes here, we are looking to profits on the other hand, and as SA is a lower margin business, that explains you why the spread looks different. So on an EBITDA view, you would see that on a normalized EBITDA view, you would see an 80-20. So that's the number I wanted to share, which really talks to our success in Asia Pacific. So remember, 6% market growth, we are growing 35%. I think that's not too bad. Dean?

All right. Good morning, everybody, and also greetings to everybody online as well. It's a privilege that I can stand up today and talk to you about our Chemicals business. And I think maybe just to set the scene, our Chemicals business really comprises our agri business, our industrial chemicals, specialty chemicals, and our water chemicals business. And I think, again, as I've always said before, this business is predominantly dependent on the South African market. And again, we can see, the revenue in the business down, really based on obviously the chemical industry decline that we've seen in South Africa over the years. And also we've seen the lowering of the commodity chemical prices as well, which started more than a year ago. But despite that, I have a great team and I think they put real hard effort into the first half of the year, you'll see our EBITDA up 7%. And that's really on the back of excellent cost and margin management which we do in the business, number one. Also if we look at the growth that we've seen in our Specialty Chemicals business, which is a combination of our traded business, our agencies that we represent, but also the good growth in our oleochemical business, which really is our products that go into the mining sector. And I'll talk a little bit about later as and when I move on to the major projects. But also, we've been able to grow our export in our oleochemical products. These are our corrosion inhibitors, as well as some of our asphalt additives, which we are shipping into Europe, into the USA as well. And then, of course, you will recall that last year we had a really tough year in our water chemical business, a lot of write offs this, that, and the rest, but the team has really stood up in our water business and I think they've delivered a fantastic recovery, strong focus on debt collection in the business, number one. Number 2, the recovery and reduction of our working capital by moving a lot of our excess stocks down quite significantly as well. But more importantly, all 3 of the businesses, the municipal, the industrial and the mining chemical businesses have got new contracts in South Africa, particularly in the Western Cape, but also on the African continent as well, up in Ghana, Senegal, Burkina Faso even as well. So the team has done a splendid job and I really want to thank them for that as well. You can see our EBITDA percentage, of course, also ticking in the right direction as well. So we're really focusing on the quality of earnings in the business, and of course, ROIC as well, which we're keeping a strong eye. The one challenge, of course, for the business has also been for the first half of the year. Now we always talk about this business being delivering cash for AECI. We did deliver free cash flow, as you will see over there. It was a bit down compared to last year and that was really on the back of a number of projects. Well, first of all was the statutory shut we had in our Industrial chemicals business. Secondly, of course, as we prepare for the second half of the year in our agri business, we put money into stock as well. We've done that and I always say it's been a long time since I've seen the agri people being so optimistic for the second half of the year. So we've obviously prepped ourselves accordingly. But also we did stock up in our chemicals business, particularly our Industrial Chemicals business, as we moved ERP systems from [ SYSPRO ] to SAP. And I think sometimes the salespeople get a bit nervous. We just wanted to make sure we had the right stock levels so that we did not let the market down. But we are very confident that in the second half of the year, we'll unwind that inventory and we'll deliver the free cash flow like we've come to do year after year in AECI as well. Just a bit on the major projects. We've done a lot of work with the mining teams as well. We produce a number of products, particularly in our oleochemicals business, that are complementary to the Mining Chemicals business. This is for flotation of different ore bodies, phosphate rocks, lithium and things like that as well. So we've got some strong projects that we're working on together with them finding the right routes to market as well. The other big project that we've worked on is the sulphur plant optimization. And Denvor and his team, I think we've come up with some very good opportunities for that plant. You will recall that Holger mentioned that the challenge that we've had with this is the demand for sulphuric acid is down. Therefore, we've had a number of commercial shuts over the last year and a bit, which is a costly process. We've really worked on reducing those shuts by managing the burn rates of the sulphur burner itself. But more importantly, being able to produce some products that we can use within the mining sector as well. And I look forward to those projects coming online. And I think these are probably projects that are not made -- there's not major capital investment required for those as well. And then, as I mentioned earlier before, strong focus on the water treatment products, particularly in the mining side, where we work very well with the mining team in Africa as well. Then on to the managed businesses, as Holger said, we won't go into the individual performance of the businesses because we are part of a process. But again, I think we always said that we would manage these businesses responsibly. And also I have to take the opportunity to thank the management teams that are in these managed businesses that have taken their business very, very seriously. They've kept the growth going there. You can see the improvement in EBITDA as well. And I must say I'm very proud of the team. They've really stayed focused to the business until we, of course, find the right owners for these businesses. And of course, over time, you'll get an update from Holger on the status of our managed businesses as well. Right. And that's really chemicals. I'm going to ask Rochelle to come up and give you an insight on the financials. Thank you, Rochelle.

Thank you, Dean, and good morning to everyone. I think we're still a few minutes still in the morning stage and welcome to everybody online as well. So I'll be sharing the group financial performance with you for the past 6 months. So if we start by looking at revenue, we've generated 17.5 billion of revenue during the period. It is subdued due in the period, and that's mainly due to lower commodity prices we saw within our Chemicals business, as well as what we saw in our Mining businesses. We also, as Holger spoke to, saw lower volumes in our South African market. Our EBITDA and our earnings performance, you'll see, does reflect the strategy or the investment in the strategy execution during the period. That was firstly to bring in the right capabilities to support us on both the execution of the strategy, and secondly, the divestiture process that we're undergoing at the moment. Secondly, the spend specifically in the mining business, as Holger has spoken to as well, where we had to procure ANS during the period of the shutdown, that does come at an elevated cost and we're not able to pass through that cost through to our customers. And thirdly, severance costs that we incurred in the period related to our Section 189 process in line with the operating model changes that we are going through as well. So we'll go through that in a little bit more detail on the next slide. From a finance cost, you'll see slightly elevated or elevated against the prior year 7%. You'd see that we had incurred an interest paid specifically related to a tax transfer pricing audit assessment that we got in the period that was about ZAR 35 million. Outside of that, once off, we've managed our finances cost quite nicely if we compare it relatively to year-on-year, if we had to normalize for that once off tax -- interest related to the tax. From our HEPS and EPS, we're significantly down. The lower profitability contributing to that. In addition, the higher effective tax rate in the period also contributing to that as well. And we'll go into the effective tax rate in an upcoming slide. So if we had to look at the material items driving our EBITDA performance during the period and look at a normalized view, so if we had to normalize year-on-year, we had to also, for comparative purposes, normalize some of the big material items that also came through in our 2023 interim results, which was also part of the presentation last year. So we normalized for the EST cost. You would have recalled that we had incurred ZAR 106 million for the settlement of the Employees Share Trust. And then secondly ZAR 119 million relating to the Schirm turnaround. We had a huge investment in last year first half related to the Schirm turnaround. That has tapered off. You'll see a small amount still coming into the current year's normalization, but we do not expect that to continue into H2. So we should -- we already -- we should see the benefits of those investment in the Schirm turnaround coming through in this year still. All right. So if we look at the normalization specifically related to the 2024 period, the mining margin was impacted by ZAR 204 million. That mainly related to the ANS buy-ins cost as well as the production variances we experienced during the shutdown of the various plants. There were 4 plants that were shut down during that period. Then on the transformation side, we spent ZAR 255 million over the 6-month period that mainly related to consultants that we had to bring on board to support us on our strategy execution. That includes the likes of project management teams, change management, as well as expertise around the mining industry to really help us set ourselves up for globalization going forward. Specifically related, if I just go back the mining margin that won't repeat itself into H2. Those shutdowns are now complete. From a transformation perspective, we will continue to see some spend coming through. And as Holger mentioned in his slide, we incurred 60% of the investment in the first half of the year for the full -- for the expected full year of FY '24. The divestment cost of ZAR 85 million is the M&A advisors that we brought on Board to assist us with the divestment process. We are running a very professional process as we go through it, and specifically a very strong governance process that has been put in place. From a divestment perspective, we will continue to see more of these costs continuing into H2 as we go through the process. As Holger has shown, we are in various phases of the disposals of the managed businesses. So we will continue to have that support until the businesses are sold off and then severance costs ZAR 82 million incurred in the period. Again, we're running a Section 189 process. We will see a net benefit, annualized benefit coming through. Going forward that will be offset by certain skills that we've recognized that we need to bring into the organization as well. And then the ZAR 28 million is the last bit of Schirm turnaround that we've spent in the period. So if we had to look at a normalized view for the 6-month period, you'll see that the earnings year-on-year is relatively flat despite revenues being subdued. We have improved margin slightly, our EBITDA margin from 11% to 12%. If you look at HEPS and EPS, that's still impacted year-on-year, and that's a result of the higher effective tax rate that we've seen in the period, as well as the elevated finance cost due to the transfer pricing audit or the interest paid specifically related to that. As Holger mentioned, we do expect a -- and what we've seen traditionally a better second half performance in specifically in our mining business, as well as our agri business as the season picks up. Okay. Just to give some view on the tax rate reconciliation, I think there's significant items driving the elevation to 54.5% for the period. Firstly, we have experienced lower profitability during the period, but secondly, there's elevated non-deductible expenses. So, the first, the second -- the second block, 17.7% contributing to the overall effective tax rate. You'll see there are 3 sort of key ones that drive that, which is the interest paid on the transfer pricing, that's non-deductible from a tax perspective, that contributes 2.1% of that 17.7%. Then the divestment program, and that's seen as capital in nature from a tax perspective and therefore non-deductible, that's 4.1% contributing to the 17.7%. And then continued thin cap limitation related to AECI Schirm Germany, which has been in the recon previously, and that's 3.9%. Then the second one to highlight is the foreign withholding taxes that has increased to 11.2% in the effective tax rate. And that's really a result of improved dividends we've received from our foreign subsidiaries. We are repatriating the cash from these subsidiaries, mostly in our mining business, but because these subsidiaries resolve in jurisdictions where there's the foreign withholding tax that has slightly elevated or has elevated compared to prior years. If we had to look in the line sort of across the graph shows if we had to normalize for the items mentioned above, which is really the once off on the transfer pricing, the divestment program will still continue. But if we look at post 2025 and post the managed business disposals, we expect that our effective tax rate will move from the 54.5% to the 42% going forward. And that we see is probably going to be the normalized tax rate going forward because we find ourselves in various jurisdictions where we're operating with various tax rates. And also we will continue to repatriate cash from our subsidiaries via dividends. For the full year, we do expect the effective tax rate still to be at the 54.5%. But going forward, once we've sold off and divested our managed businesses, we expect it to normalize to 42%. So if we focus then on the balance sheet, firstly, you would also see that the balance sheet supports our strategy execution. Working capital; we ended working capital for the period at 18% last -- it's an improvement from last year of 19%. We do expect to end the year and our net working capital to normalize over the period to the target range of 14% to 16%. But also to note that our managed businesses, as you would have seen, current net working capital is at 18%. So that does -- once those businesses get sold off as well will really get us into that 14% to 16% at the lower end of that range. Gearing; you'll see gearing we're at 41% level that has improved from last year by 47%. And here again we're slightly outside of our target range of 20% to 40%, but we do expect that also to normalize to the mid-range of that gearing target or the target gearing range by the year end. Net debt to EBITDA, you'll see we've managed that. It's well within the covenant levels. Capex, 9% down. If you recall, last year we had a large investment expansion capex in our Schirm USA business. And in the current period there's high maintenance capex due to the statutory shutdowns that happened in our mining business. There was also statutory shutdown, as Dean mentioned, in the chemicals business. We utilized free cash flow during the period of ZAR 600 million. And that's really a factor of the spend, specifically related to the strategy execution, what we've experienced additional cost within the mining business as well as increased working capital during the period. If we then focus on working capital, I think this is very much still a work in progress within our balance sheet optimization program and remains a key focus for management. I think a positive element to highlight is that the mining segment for this half year still delivered within our target range of 14% to 16%. At a Group level, we are elevated, that is sitting at 18%. What we've seen, and I think the important thing to note is that we do have a net working capital cyclical trend. From a mining perspective, the first half is relatively slow. And secondly, the agri business is very cyclical. So what we see on the agri business is that we'll have peak accounts receivable and accounts payable at the back end of the year. That tapers off into the first half of the year. And stock levels are usually at a very minimalized level at half year. That then picks up come August to ramp up for the peak season coming through in December, or at the back end of the year, October through to December. So that's important to take into account. As we look at -- if you compare half year 1 '23 to half year 1 '24, you'll see from an accounts receivable and accounts payable, very stable and showing that trend. But if you look at inventory, there's a marked improvement from inventories from the prior year. And that's mainly due to strong volume management. But also as we know, these lower ammonia prices that we experience now. So that does play a factor as well. Gearing percentage, as I mentioned, we're sitting at 41%. You can see significantly down from 47% slightly elevated or elevated from our gearing percentage where we ended the year last year. The movement in net debt for the period was ZAR 758 million. And you'll see the big drivers is really the investment in working capital, which is the cyclical nature that I spoke to. And then the net capex in the period, which we'll go through in the next slide. I think also to note on the far right hand side and Holger speak to the potential proceeds that we expect through the managed business disposals of ZAR 3 billion to ZAR 4 billion. Once those proceeds are realized, which we expect most of the businesses, managed businesses to close out in 2025, we will be in a net cash position in the business and that will set us up for further growth. Capex. Capex, we had the 5 statutory shutdowns that happened in the period. So you'll see in the far right hand, we spent ZAR 591 million during the period, most of that sitting within our mining business. 72% of that spend in the period represents maintenance capex. We've also given you a view in terms of where we expect the outlook for capex for the year. But I think important to note is that the line drawn through the graphic shows that we've -- and we've said this before, that we've underspent on maintenance historically. And if you look at FY '23 and FY '24, we really start -- we're taking this seriously and ramping up maintenance capex in our business. Okay. I think last year, what we shared with the market is the capital allocation framework, right. And what we -- through that framework we were guided, or we guided around prudent allocation in terms of-- or deployment of our capital in terms of free cash flow. Firstly, to maintain financial strength and that talks to reducing net debt levels and ensuring that our debt is within our covenant levels. Secondly, to maintain and optimize our operations. And that really talks to our asset health. And we've had significant investment in the period specifically related to that. We then have excess free cash flow in terms of the capital allocation framework. That then says, okay, if we have excess free cash flow, we can actually return back to the shareholders. So for this period, we've been guided by our capital allocation framework, we've been guided by our policy, our dividend policy that we've put in place, and we committed to adhering to our policy and frameworks that we've put in place. The Board and management has decided to not issue an interim dividend during this period. We do believe that our second half, and as we've seen historically, is usually a stronger second half. And we do expect to pay a full year dividend guided by our dividend target range, which is 2% to 5%. And we do expect to pay at the lower end of that range due to us [ still investing ] in our strategy. Just to give you an update on the balance sheet optimization, also 6 months into this process, we've identified ZAR 350 million of initiatives in implementation stage at the moment. We've realized ZAR 70 million already in terms of balance sheet optimization. And that really was in our water business, where we looked at the optimal stock levels that we need to have in that business, and that resulted in a ZAR 70 million improvement. We've also improved our cash conversion cycle, if you look at H1 '23 to H1 '24 by 6 days. We also support the process through strong governance. So we've got weekly cadence in terms of net working capital meetings, as well as putting in the necessary governance around policy and process as well. So we're relooking our policies and standardizing across all the businesses. We've put in a working capital control tower. I think I did mention that in our previous presentation. And now we're seeing we can monitor AP and AR trends through that working capital control tower that has been put in place. We've also been able to attract new skills. So we brought in a data scientist into the finance team as well to really look at those trends, give us insights, and we can make informed decisions specifically around our working capital. That's the conclusion on the finance, group finance. I'll now hand over back to Holger to take you through the outlook.

Thanks, Rochelle. Yes. Just to give you a sense where we believe that we will end, end of the year, please take note that this includes still all the businesses that are sitting for divestment. So as we expect, and I said earlier, there are some will be signed and maybe most towards the end of the year. But the closing process is going to take us into next year. So we do expect EBITDA on line -- in line with last year. So more or less flat. And same for the EBITDA margin. Again, that's the entire business. Then similar then first half for the cash conversion ratio, slightly improving ROIC. So that is actually a result of some of the work we have done in the first half that should now gradually approach our target. Net working capital, also here same gearing at say lower end, actually in the mid-range. That's wrong, sorry. So in the mid-range of our target, 20% to 40%. We continue to invest into maintenance, we said that. And for me, this is really important because the normal maintenance spend, you would expect between 0.8 times to 1.2 times of depreciation. And the difference just comes from if you have older plants, you would tend to spend a bit more and newer plants less. So that's where the 0.81. So that gives you an average of 1. Technically speaking, you replace your assets by maintenance over time, and therefore you keep the standard. That hasn't been done over the recent past. So you could see we were rather at an 0.6. Then you take the money not into the assets, but into the P&L. And -- but we want to make sure that plants are sustainable in a healthy situation going forward. So net debt to EBITDA same thing. There is no question around the covenant side. And I want to just add something on the dividend. We are absolutely committed to return money to our shareholders. We want to pay dividends, but you know that in the past, AECI also paid dividends from -- with debts. And we said that we do not want to do debt. So as we -- where we stand in the half of '24 is that the situation is that we have not generated cash and that was the decision, but we have fully committed going forward. And as I said always that over the period of the transition, you should rather expect that we are landing at the lower end of the range. And that's what we commit to. Thank you very much.

Okay. Thanks, Holger. Thank you, everyone. That takes us to the end of our presentation. So we'll go into Q&A. So I'd like to ask the people that have dialed in on the webcast, if you can print -- if you can type your questions online, and then we will be able to read them out in the room and the Group exec will respond to that. So we'll start with the individuals in the room. If you can, please raise your hand. We've got roving mics that will come to you. If you can please state your name and the company you represent before you ask your question. Thank you.

It's Rowan Goeller from Chronux Research. Thanks for the presentation. Good detail provided. But I wonder if you can provide maybe, Holger, a bit more detail on your target to double your EBITDA. You spoke about organic growth and then other growth. But within that other, where would that be coming from if you break down into cost savings, new projects, and is there anticipated acquisitions in there as well to get you actual target?

Okay. No, we are not making our lives easy. That does not include acquisitions. So acquisitions would go on top if we do, and they need to contribute on their own. So -- but to your question, so the ZAR 3.2 billion growth, the one, the simple one, so to speak, is the average historic CAGR of the business based on '22 numbers for the core business. So that brings you ZAR 800 million. And then what we have put on top of that into the transformation program is the [ ZAR 2.4 billion ]. And you have 2 elements. I simplify a little bit. So what you would call the cost element that is sitting in our excellence work streams. And then we have a second one, which we call commercial projects. So commercial projects are basically also top line growth projects, but the difference to the organic, and I hope I'm not confusing anybody now, because this is sometimes a bit confusing. So the standard business is growing, business as usual, so to speak. And then the commercial projects are new customers, new projects, new products. So that's how it's defined to differentiate the 2. So that will come as part of the [ ZAR 2.4 billion ]. And then the difference is the cost side. What you will see is that, and that is basically a normal thing, the cost will materialize faster because that's fully in our control. Whereas when you find new customers, new products, that takes time to develop. So we will see that part rather at the end of the 3 years, and in a moment, we will see that the cost side will materialize relatively faster compared, and that's about 50-50 split, give it.

Okay. If I can just ask one more question.

All right.

You are positive about FY '24, but it looks as though you're referring to the EBITDA line there. And there will be -- it looks like, further reasonably large costs for the transformation coming into the second half. So your statement in your outlook of positive on '24 is really EBITDA related, just to confirm?

Yes. Yes, it is. No, I said stable, yes. We said stable. Sorry, did I misunderstand? Okay. Now, we said stable. So it's in line with last year.

The EBITDA in line with last year?

Yes. Totally, yes. Totally, yes.

Okay. Now, just looking at what metric you were referring to, certainly not the HEPS line.

No.

Because with the cost that have come through that would be different...

No, no, no, EBITDA. Yes.

Keith McLachlan, Integral Asset Management. So all the initiatives you're doing make a lot of sense, but the effective tax rate, 40% pushing on 50%, you merely bring that down to a more normalized effective tax rate. You can almost add 30%, 40%, 50% to your bottom line. And obviously that's 100% margin, 100% free cash flow. How much maneuverability, and there should be a full tax team working on in terms of tax efficiency in the group. How much maneuverability, and where do these legacy problems come from? It typically comes from badly structured deals in the past in efficient debt instruments and the like. But going forward, how much can that be corrected?

So thanks for the question. I think it's certainly demanding our attention and focus at the moment. I think if you look at what's happening in mostly globally, specifically around transfer pricing, there's definitely an enhanced focus on transferred pricing. We recently also, as part of the operating model, looked at what is the competency we need within the tax function. I think our tax function is extremely light at the moment and we're also looking at localizationing the tax expertise in the various regions to ensure that we manage our tax quite efficiently and quite effectively. We also are currently supported by partners within the various tax regions that we operate in. And going forward, we're looking at a hybrid model of in-house skill as well as supported by external partners. We do have legacy that we are dealing with specifically around our tax effective rate, the element around paying a transfer pricing assessment. Those go back to 2018. So we do have legacy things that we are experiencing within our environment, and that's due to the heightened transfer pricing focus within the regions. We are on top of it. Like I say, we have the right support from an external perspective, specifically around what we see now coming through, really related to the M&A divestments. The 54.5% won't deteriorate. That's what we expect also to see in the full year going forward. We've got sort of firm opinions specifically around the transformation costs, which is quite a significant cost in terms of whether that's tax deductible or not. And we're working through that as well. But the managed businesses play a big part in where we are in the effective tax rate, specifically around Schirm, particularly. And therefore, the need to dispose of Schirm quite earlier in our divestment process. And there's quite a big focus on, specifically on disposing that particular business outside of just tax, right. So that will help us as well in terms of the effective tax rate. But definitely, the bringing in the right skill in-house to help us, and also we're looking at -- looking at the structure of the group is our group structured optimally from a tax perspective as well. Those are all key projects that we're working on as well, which we don't know the benefit of yet. But certainly just on the disposing of the businesses and the investment we're making, that's capital in nature. We do expect our tax rate to normalize to 42% going forward.

And maybe just to add one other element is also not, let's say, changing what we have, but also looking forward into where do we invest and what implication does that have to our tax. So also that will guide us to some degree on which countries do we want to invest into.

Okay. We'll take a few from the webcast. So Shaun Bruyns from Mazi Asset Management. Consultant costs look incredibly high if the returns on this investment do not materialize, is there a clawback?

The -- from [ our outlook ] I mean, this is a question, a subjective question in a way. I don't think they are high. They are -- they look high. The fact is that as I presented end of this year, with what we have in the pipeline today, we have actually paid that cost. So I guided towards an ZAR 800 million. And you could see from the graph that the cost, the total cost over the 3 years are below that number. And we have already ZAR 400 million in the books on a run rate basis. So I am not concerned that will be below one year. And I am very sure. So the thing is, do you want to bring in a quick fix and then it falls apart or do you want to skill up the team? We have decided to skill up the team. The consultants will go. So that group, the large transformation support end of the year. And as I said we will have specific topics going forward. But part of that is also a transferring skills from the guys to our internal people. There is a transferring of systems programs that is also included there. So this is a value that I'm sure and it will pay back.

Okay. Second one from Paul Whitburn from Rozendal. So this is the question, and it's got 3 questions in one. Are you not overextending the business capabilities by entering the AU and U.S. explosives markets instead of gaining further market share in existing markets? That's question one.

Answer is no.

Okay. Question 2, do the returns look similar across all existing geographies? And with the new regions dilute returns as they lack scale?

Okay. So of course, kidding. It's not just no. Again, we want to internationalize the business is one thing, but one important part here is that we want to spread the risk to create more resilience. So that is part of what we are doing. And the Europe -- entering Europe is a very easy opportunity as there is a factory standing. We have that, we own it, we can do nothing with it and it creates negative value. Or we can use it and we use it and we know what to do. There is a market actually in Europe which is served out of South Africa. So it's not existing. So I think that, that makes a lot of sense for us. The different geographies create, of course, different margin levels in general speaking. But it's not only the geographies, it's also the customers that you serve. So there are different, let's say, kinds of customers that are requiring different kinds of services where you can extract more or less margin. The South African, again market is the lowest margin market for us. We see more value in specifically also in the Australian market, if you compare, all depends. So I really strongly believe that going into further internationalization will prove as the right move forward.

Okay. Thank you, Holger. Any other questions in the room?

John Arron from Standard Bank. I'm intrigued about your strategy on green ammonia and your potential partner. Can you give any more information around that? And thinking who is the largest player there, probably someone like Sasol. And if it was Sasol, then you still have the same constraints about transportation to Modderfontein. So are you looking to build a plant in Durban import instead of using Sasol, are these alternatives you looked at?

Now, I'm saying something that I shouldn't, but I do not want to make our competitors smarter. So I think we have an opportunity here. And I do not want to disclose who and what exactly, because this is market advantage for us. It does reduce the current risk. It's not the same company that I can say. And just let me also say, one, it's a bit further out [ '27, '28 ]. But it also creates an opportunity for us to participate in that green ammonia space. We are not investing ourselves. So it is a partnership actually. I do not believe, and I know there's different opinions. I personally do not believe that a backwards integration into ammonia makes sense. I said that before ammonia has become a commodity, there is little conversion rate -- conversion margin in ammonia. So we will -- it's very unlikely that we will ever invest in an ammonia factory.

And also, is this demand driven by the mining companies? Or is this something you're trying to offer to convert them into green?

You mean the sustainable ammonia?

Yes.

It's a bit of a mix. There are some geographies, specifically Europe and North America. There is some interest, but this is not -- the market hasn't flipped around. And the market will probably not move completely to green ammonia. There will be some customers that are willing to pay the premium for it. And the others will not. So we have the flexibility, actually, to take that green ammonia to the places where we can make an additional margin with. And that's how we approach it. So we are not pushing into the market. We serve what the customer wants. That's our philosophy. And to create value where they believe they can create value. So what I do believe actually over a longer period, and we're not talking now 5 years, but probably 10 years plus the green ammonia will be the most cost effective ammonia because it's free energy in the end. Once you have depreciated your investment, it's actually not a bad deal.

Okay. Any other question in the room? Okay, we'll take questions from the online platform. So from Siphelele Mdudu at Matrix Fund Managers. Can you please elaborate on the point we had in one of the slide that said SAP rolling out mining digitalization platform. How much is this going to cost and what has been the spend to date?

Okay. So if I can answer...

You take the SAP, I'll take the [indiscernible].

So one part on the SAP. So as was mentioned, we've implemented SAP within our chemicals business. That was the last of these sort of chemical businesses that we deployed SAP in. We have spent and it's included in the transformation costs that we showed on the Board as well. It's just under ZAR 30 million that was spent on the SAP roll out during the period. We don't expect to see that cost continue.

Yes, but also you need to look to that in a different way. So now being on SAP with the core business completely, that enables us to implement, for instance, the centralized purchasing, which will contribute to cost savings and it will govern processes in a much better way than if you are decentralized. So there is a lot of upside that we are creating through that. And we need an ERP system and SAP was the choice. That is not so nice since many years. So we should not forget there is an upside coming in. So with regards to digitalization, there is 2 elements to it. The one is, let me call it the internal digitalization that we are eyeing, but we still need to prepare our IT environment. It is not where we want to have it. Once that is done, actually, then we are looking into digitalization of internal processes which then should lead to a high efficiency for that. And then there is the front end of the digitalization towards the market. And again this is -- there will be some cost. We will look into always the business case. The point is you can say you are not investing it, but that means you say goodbye to your business over a period of 5 years to 10 years because this is an enabler, as I said. And if you not have the enabler, you not have the business. So again, there is a business case. We are not spending money for the sake of spending money, but we are investing responsibly into growing the business in the future.

Okay. Second one from Marang Morudu from Northstar Asset Management. So, okay, the first part you've already asked, but I'm going to ask just so that we can repeat the response to. Of the ZAR 2.4 billion EBITDA unlock, how much of that is dependent on the disposals? For clarity, the full year EBITDA guidance is not -- is on reported EBITDA and not normalized EBITDA.

Correct.

Yes, to the last one. To the first one?

Yes. And the first -- the first one, it is not. It is not. So what we have decided early in the process. So the transformation program is focused on the core business. So there is no activities in the managed businesses. So it would not make sense for us now to invest there. So we continue to run that businesses responsibly and the ZAR 2.4 billion are purely EBITDA unlock in the core business.

Okay. Thank you. Any more questions in the room? Nothing. Okay. I think that's it. Thank you. Thank you very much, team.

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