Bid Corporation Limited (BID) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Bidcorp's annual results presentation. We're very pleased to report another year of positive growth in a very volatile and difficult macro environment. Our results continue to be enabled by our entrepreneurial culture and [ decentralized ] structure enabling leadership to react quickly to volatile and changing conditions. Bernard and Dave will unpack results when I hand over to them. But before I do, I'd like to thank a few people. Firstly, our founder, Brian Joffe, who continues to provide wisdom and support to our Senior Independent Director, Nigel Payne, to the Head of our Audit and Risk Committee, Helen Wiseman, the Chair of our Social Ethics and Governance Committee, Tasneem Abdool-Samad; and our other nonexecs, Paul Baloyi, Cliff Rosenberg and Keneilwe Moloko, who are always available and work very hard whenever they need it. We also welcome Trevor Brown and Kathy Ostin as new Board members, who I'm sure will play a significant role in governance and guidance going forward. Finally, a special thanks to Bernard, David, the head office teams, Ashley and Leigh and the leadership and people around the world whose dedication and commitment enable Bidcorp to deliver a positive growth story year in, year out. I will now hand you over to Bernard and Dave to take you through the results. Thank you.

Thank you very much, Stephen. Good morning, good afternoon, good evening, everybody. It's a privilege to be talking to you again and going through our results for the year just ended. In addition to the thanks that Stephen has given, and thank you to Stephen for your continued guidance, support and wisdom and inspiration in enabling us to do what we do. I want to extend my thanks, first and foremost, to our 31,000 team members around the world. We operate in 31 countries. We really do have an amazing team of people, an amazing management team who lead us in these countries and enable us to achieve the results we do. We're in the fortunate position that we get to talk about it and seemingly take the credit, but it really is their hard work, dedication and more importantly, ability that brings us to where we are and allows us to talk about what we're doing. So I will move around the shop a little bit here as is my style, I try to give you a feel for what happened in the year. But I think more importantly, I'd like to spend more time at the end talking about the future. What's past is past. And I think what's more important and certainly more exciting is what the road ahead looks. So once again, overall, I think this was a very successful year. We don't need to overplay the volatility, the macro geopolitical problems, the economic headwinds, all that negative stuff we can talk to and we can make excuses for. That's just reality, get used to it, probably not going to change. And we operate in the world we operate in, and it's up to people like us and our teams to make the most of that situation. And I'm really proud of the way our business has stood up and reacted to the circumstances. And it's another year of growth. And I think it's a year of very, very solid growth. Now obviously, on a very high level, when you look at the numbers, they're impacted by the strength of the rand, which has about a 1.5% impact on the numbers. But we tend to focus on constant currency. We actually manage our businesses in local currencies. So the Polish business, we only talk about it in zloty. And in Chile, we talk about the business in Chilean pesos. And whatever they add up to at the end of the day, they add up to. We have no control over currencies. It is what it is, and it adds up to what it adds up to. Over 95% of our revenue is not in rands, is in various different currencies. So we talk about constant currency, which is the best measure we can find of measuring things on a consistent basis from year-to-year, but we absolutely look at our businesses in their local currency, and they have to perform according to their local conditions. So we've carried on doing what we do. It's a story of consistency. And I think the results are consistently good. We've seen another very, very solid year in challenging circumstances. And once again, I'm not making apologies for it. It is what it is. And we've got revenue up 5% in constant currency terms. Bearing in mind there's very minor GDP growth. The weighted average GDP growth of the economies in which we operate, weighted for the size of our business is in the low 1%. It's 1.3% or 1.4% GDP growth, annual GDP growth. So there's very minimal GDP growth in the environments we operate. And food inflation is also a similar type of number. It's only about 1.5%. Now there was a lot of talk in February, March about the pending doom and gloom situation of inflation, particularly on food and food chain supply. Let me just say we haven't seen it. It might still come. We don't believe it will. There's very, very little food inflation, and it's running in the low 1%. The offset to that is general inflation is running in the 3% probably. And that's primarily in the labor line, which is the biggest driver of our costs. And a lot of that actually is coming from government inefficiency from imposts from social securities, from minimum wage levels, et cetera, where I believe I should get off my political box here, but governments are passing the burden on to business. And they're taxing business for the inefficiency of government. Once again, no good crying about it. It's reality. We've got to do what we're going to do. We have to seek out the efficiency gains to offset those impacts that are unilaterally imposed on business to various different degrees around the world. So we've got revenue increasing by 5%, which maybe is a little bit shy of where we think the ideal level would be or our aspirational level. There's also very little acquisitive growth in that 5% in the current year. We made 5 small acquisitions in the year. Combined, they actually don't shift the needle by any meaningful amount on the revenue line. From a gross margin point of view, we've seen a pleasing improvement, small improvement, but an improvement off a very reasonable base. And that comes out of our strategic imperatives of moving up the supply chain of developing house brand, of moving into more vertical integration like manufacturing and conversion process. Our expense base has been relatively well managed, bearing in mind the bulk of our cost is labor. We were impacted by high fuel prices from March onwards, which started coming down again in late May and June. And in most of our businesses, we made the election not to panic, not to knee-jerk and not to pass on the increases by way of surcharges to our customers. And I think that will stand us in good stead going forward, and we'll talk about that in the prospects. So we did take a little bit of a knock to the cost base as a result of the fuel price increase, but we managed that relatively well. The result of all of that is our trading profit in constant currency is up by 8.2% in the year. And we don't like to play this game. But if we did play the game of normalizing that, on an underlying basis, we believe our operating profit was closer to 10% better than the prior year. And the normalizations we talk about, they are very simply the direct impact to our Middle East business as a result of the war from late February onwards. Clearly, that would have had a direct impact. Volumes were down substantially for a period of time. Costs were elevated. Supply chains were in disarray. So there were significant challenges, which obviously did cost us both top line and bottom line in the Middle East. And also, if we adjust for the raw impact of the fuel price increase, which once again, we're not going to do because it's just reality and it's just part of the game. But if we did like others and did that normalization, we think there's a very healthy 10% increase in trading profitability for the year. What is exceptionally interesting about that is in the first 6 months, our trading profit was up 6.9%. In the second half, our trading profit was up 9.5% year-on-year comparative 6 months, 6 months. So notwithstanding the impact of the war and the higher fuel prices, et cetera, and that's on an unadjusted basis. On an unadjusted basis, our operating profit was 9.5% higher in the second 6 months compared to the same period the year before. So that obviously tells you there's an underlying sequential improvement or sequential increase in our profitability. Like I said, 5 acquisitions completed in various jurisdictions. It's not a year of huge acquisitions. We are alert for acquisitions. We are very responsible in what we buy. It's not acquisition at any price. So that -- on that front, we were relatively quiet this year. They've all been bedded down and are contributing. As we look forward, the runway of acquisitions is a little bit fuller. We have made 4 small acquisitions or 3 small and 1 relatively small acquisitions so far this year in 2 months, and we'll unpack those a little bit later. Technology is a huge component of what we do. We don't talk about it a lot, and that's for strategic reasons. We understand that others look at what we do. We are seen as the benchmark food service operator around the world. Our margins are at the top of the scale. And obviously, technology plays an important part of that. And we continue to evolve our technology, and there's no one solution in technology and AI is proving that theory. It's micro solutions through various different streams of the business. And there's incremental improvement in a multiplicity of areas. There's not one thing that's going to fundamentally change the business. There's a whole lot of things that are going to change the business to a micro degree, which all added up are going to have a significant impact. So we're an exceptionally data-rich business. We have 0.5 million customers. We sell 400,000 different products. Every customer gets their product -- almost every customer gets their product at a different price to everybody else in every different market. So there's a huge amount of data out there. We have a huge amount of understanding. We've got a huge amount of historical data. And it's amazing what we can do with this in terms of looking at potential in terms of sales, in terms of margin, in terms of efficiency, in terms of missed opportunities, in terms of future opportunities, baskets, comparatives. There's just a lot that's going on. And I think our decentralized culture is actually encouraging this because the best results we're getting are where our people have the ability to do this very, very quickly. So the cost of doing it is becoming incrementally cheaper. As long as you can get your data and you understand what you're doing, you can derive benefit relatively quickly. And we've got a multiplicity of these projects going on simultaneously around the world. And where we do get on something that looks like it's got potential, it obviously gets rolled out to whoever wants to take advantage of it, which generally is everybody who can. And we found we're able to get very speedy execution and take-up of technological improvements and enhancements. Our teams around the world remain relatively stable. We've got a few transitionary situations, which are being very well managed. And our preference is always to have a strong bench to build the talent from within. So you've got the correct cultural fit, the correct understanding, and we can continue the growth trajectory in those businesses. So we've got a few of those going on at the moment. We are a team who have been together for a substantial number of years. Hopefully, we've still got a substantial number of years to go. But we are very cognizant of the fact that there are a whole lot of younger, probably far more energetic and far more capable people than us who are chomping at the bit and who are getting into positions of leadership in the group. And that's really exciting for us because they are pushing us, they're challenging us and they no doubt are part of the reason for our success moving forward. So I think just moving through it, what are we doing? This story remains fundamentally the same. We don't come to you every year and telling you we've got a strategic refresh, and we're changing things and we're getting consultants in and we're having to change our strategic path. We're on the path. We know where we're going. We know we can improve the scale of the business. We can increase the scale of the business. We know we can improve the margins in the business. There are various different components that have -- some have less, some have more upside, but they've all got some upside. And the challenge for us is to achieve that in some type of harmonious speedy way. We do what we do, and we don't plan to be good at everything. We're a reasonably competent foodservice distributor, and that's what we do. We do understand that we're also a relatively good manufacturer of product, and we're extending our capability in that. And there's no doubt that, that is giving us enhanced margins and benefit through the group. So we'll continue to drive that. We have a substantial number of manufacturing operations in the world -- around the world now, doing lots of different cool stuff. And that no doubt is pretty exciting about future prospects. I've always said that there's organic growth within our business. We're not reliant on acquisitions to grow this business. There's plenty of organic growth in every market we operate in for sustained continued solid growth. Obviously, we'll enhance that with organic growth, but there actually isn't a requirement that says this model doesn't work unless you've got acquisitive growth. The acquisitive growth is a little bit of a kicker, but the organic growth is the key driver of our growth, which I think is a great story and talks to the strength and the quality of the underlying business. And by having that strength, the acquisitions really do give you a much larger boost because you can get the synergies out of them relatively quickly. Our cash generation has been, I think, excellent in the year. We spoke about the fact in previous years that we had a bit of a catch-up on CapEx. We haven't deliberately held back on CapEx, but we have gone through the peak of our spending phase, which was catching up on some of the COVID delays. So that should flatten out over a period of time. We will continue to invest in capital because that provides the organic growth. And that growth is a whole lot cheaper and a whole lot less risky than acquisitive growth. We know we can put new distribution centers in, we can put incremental capacity in and we get a relatively quick payback and they're long-term assets. So we're very proud of the strong underlying cash generation of the business and the continued generation, and that's actually going to get stronger. The balance sheet is exceptionally strong. David will talk to that. We've spoken about the investment that we continue to invest as required. We've got state-of-the-art infrastructure. We continue to invest in further infrastructure. Our returns are all improving. So all the metrics are going the correct way. The ROFEs, the ROICs, the ROEs and all of you have got a different way of measuring things. All of you think you're right. I don't know what the right answer is. But I think the fact that they're all heading upwards and are all at I think, very acceptable levels speaks to the success of what our people have delivered. From a sustainability point of view, I know that the urgency of that has sort of left the investment world, but it's actually an important part of what we do. We do need to do the right thing. And by doing the right thing, not only are we doing the right thing for the planet, we're doing the right thing for our people, we're doing the right thing for our business as well. So by having modern infrastructure, by having energy-efficient refrigeration, by having an electric vehicle fleet where the charging infrastructure allows for it and the metrics allow for it, all has a financial benefit as well. And we have seen a substantial reduction in our emissions in the current year, and we are well on track to achieve our targets that we set out -- our 10-year target that we set a year or so ago. Moving on to the regional analysis. We'll start off with Australasia. Now you will recall that for many years, the Australia-New Zealand business were the poster child of the group. And I guess for the last year or 2, they've had a little bit of a breather. There was some growth out of Australasia this year, 2% in constant currency, which is both out of Australia and New Zealand, there was some growth. Obviously, it's not at the levels we were expecting -- we were hoping for or that we've come to expect in previous years. Like we said, this is nothing fundamental. This is purely just a breathing space while they adapt to reality. The New Zealand business has rebounded very, very strongly from about October last year onwards. And the Australian business has rebounded in this calendar year. We've seen quite a sizable improvement. The trading margins are still very, very healthy in the 8%. I'm comfortable that we'll see that improve. We will see revenue growth. It's not going to be at the 10%. We'd love it to be at the 10%, but it is going to be in the higher single digits, not the lower single digits. So both the Australian and New Zealand businesses are in very, very good shape. They did achieve all-time record results, notwithstanding difficult economies, difficult macros, whatever else might exist. And the future continues to look bright there. They continue to innovate in terms of products, manufacture, vertical integration, house brand strategy. All of those issues are very well implemented as well as technology. There's a lot of technology that does come out of that part of the world that then gets adopted in our other businesses. So Australasia continues to be a very sizable part of our business and performing at very, very strong levels. The U.K. had a very pleasing year. I told you we'd improve the margins, and we've taken them from 3.7% to 4%. Now that doesn't sound like a lot, but it's a lot. That's a 10% -- almost a 10% improvement in trading margin, which is reflected in a 12% increase in trading profit. We have 7% revenue growth. That business is doing well on most fronts, notwithstanding the fact that the U.K. isn't in great shape, U.K. macro picture. The economy isn't really doing anything. The mood is negative, consumer sentiment is negative. It's not a totally happy place. Once again, we ignore what we can't control, and we focus on what we can control, and our team in the U.K. have done that exceptionally well. So it's a great story. They're well on the road to where we want them to get to. It's not going to happen in 1 year, but it will happen over a few year period. The one spot that we are seeing a little bit of challenge in the U.K. market is in the leisure, the hospitality market. And that's just purely related to consumer spend. The consumer just isn't spending in that segment as much as maybe they were, they're under pressure, cost of living, all the rest of it. So that is under a little bit of pressure. Fortunately, we've got lots of other business that offsets that in the nondiscretionary side in health care, aged care, education, military, et cetera. So all in all, thank you to the U.K. team. They've delivered according to plan. We're well on the road that we choose, and we should continue to see good improvement coming out of the U.K. Europe, once again, was the poster child, good on them. You can see margins have improved from 5.5% to 6%. There's still some more to go there. Almost every business in the European cluster showed an improvement and performed well, some to a lesser degree, some to a stronger degree. Italy had a great year, and that's -- they've executed well. We've grown into the infrastructure that we put in a year ago. It's enabled us to move pieces around and get far more efficient logistical coverage through the country. We have to go through that process again. So the Italian story is not going to be a linear line. It's going to be a little bit lumpy that we have to put in the investment to continue that growth continuum. But as you get larger, as the base becomes larger, the disruption from those investments becomes much less, which going back to the U.K., we actually put in some capacity last year, which came on at almost no cost to the overall P&L. So once you start scaling, the ability to add that additional infrastructure becomes far more diluted and non-impactful and then you start getting the benefit in the years that follow. So Italy had a great year. The Czech Republic, Slovakia and our small business in Hungary had an awesome year. The start was a little bit slow. The summer last year wasn't all that great, but we picked up that slack as the year went on and ended up strongly. Poland, doing amazingly well, brilliant business there. Great margins, great revenue growth, fantastic young team driving that business. We've got some investment -- infrastructural investment going on there. We're diversifying into manufacturing. So they're doing all the right things now, and we'll see continued growth out of that. The Baltic business is maturing and becoming a sizable business in all 3 countries. We've paid our school fees that's profitable. It's operating at the correct levels, and we should start getting some real strong growth coming out of that. We have the base. Bearing in mind, I think there's only about 4.5 million or 5 million people in total across all the Baltics. So it's never going to be the hugest business, but it will be a very solid, profitable, sustainable business. It is already. And we're at that point of its development now that it's out of the development phase and it's more into the maturing phase. Netherlands and Belgium both had a reasonable year with some growth. I know there has been some narrative from others that the market is disastrous and terrible. The market is not great. The consumer is not overly joyous and spending easily. But we continue to work hard at it to grow our share, to grow our revenue base and to grow our profitability. So both of them saw an increase in profitability and are doing fine. We're certainly not where we were all that many years ago. There's still some improvement that can come out of the Dutch business, and that will happen in the next few years. The Belgium business is operating at the correct levels of profitability, and that will scale up on the revenue line, which needs to drop down into the profit line. Spain and Portugal are our future stars. We're still at the early stage of it. We just need to be a little bit patient. These things don't come together in a year. Many of our countries, when you look at them, there were overnight successes that were 10 or 15 years in the making. And it's no different in Spain and Portugal. We're on the right track. The businesses are profitable. We're doing the right thing. We're investing. We're putting infrastructure in, we're putting people in. We're putting the correct building blocks in place. We've got excellent teams. We've got good businesses, and now we need to scale them up, which will happen over a period of time. It won't happen in 1 year, but will happen in a period of time. So overall, the European cluster had a 13% increase in profitability and trading at 6%. Emerging markets was a challenge, which is a tale of 2 different stories. There's some very strong performers in the basket, and there's 1 or 2 that have held us back. In terms of the ones that have held performance back, Greater China continues to be challenging. I think the year was a decline on the previous year, not a material decline, but it was a decline. And we are taking steps to address that, to simplify the business to get out of some areas that don't make sense. But it's not easy doing business in China, in particular, where you're selling Western product. It's not an overly generous market in terms of margins you can achieve at the gross level, highly competitive. The customer is highly price sensitive. So it does create challenges. The Hong Kong and Southern China business is actually remarkably resilient. So we're seeing an improvement in tourism and throughput numbers in that part of the world. And I think what's happening in that region is Hong Kong, Shenzhen and Guangzhou are becoming a Silicon Valley, if you like, of China. And that's going to be a region going forward. So I definitely think that's something we'll focus more on as opposed to the whole of China and trying to be everything to everybody in China. The other business that we had some challenges with that had challenges was our Middle East business. Everything was hunky-dory up until February, making very reasonable progress. And then obviously, the war came along and very quickly that changed. We are still profitable in the UAE and in Saudi, but not to the extent we were. We're hoping for a relatively quick recovery. If we look at volumes, they are almost back to where they were before, but it remains volatile and it remains unpredictable. So our teams there went through a really traumatic difficult time. So obviously, we thank them for their dedication and achievement through a very difficult time. Not only was the demand hit, but the supply chains were totally. Shipping couldn't happen. Most of our product has to arrive by ship. It doesn't arrive by plane or road. And almost all the product in that part of the world is inbound. It's not domestic. So there were huge disruptions in logistics. They had to move things around. Things had to be airfreighted in when they could be airfreighted in. Shipments were delayed, shipments came in at the same time. Ships were canceled. Then you have date issues on product where you don't have demand, but you've got the clock ticking on the date of the product. So they had to really contend with a lot of issues. They did it great. But overall, obviously, it has an impact on profitability. In Turkey, we saw an improvement in the business. It still remains a developmental issue. We are still too small. We need to grow into our skin there, and we're working very hard at that. South America had a much improved year, and we're well on track there. Chile, we're starting to see some benefits of our labor. Brazil had a very reasonable year in a disruptive political environment. I got the election this year, and that's disruptive, but they're doing okay. And Argentina, very small, but an exceptionally well-managed business. We learn a lot from that in how to manage in volatile inflationary environment. So they do a good job. South Africa had an awesome year once again. Their profitability was up 15%. Small acquisition wouldn't have really shifted the needle. Great operational excellence. The market is not special. The economy is not special. The environment is not special. Our business is, and our operators have done an excellent job. And yes, South Africa once again, star performer at 15%. Moving back into Asia. Singapore had an overall flat year, but was a very important year in terms of repositioning that business. And the fact that we got through the repositioning and managed to maintain our profitability sets us up for a very exciting future in Singapore where the business is now correctly structured. We've got a distribution business, and we've got a manufacturing business. Simple. Do what they do, they'll do it well. Malaysia, we had an acquisition there in July or August last year of a local dry goods business, which added a whole lot of product to our portfolio, which is very important, so we can move away from imported and agency-based product, which is the right thing to do. There's no doubt that we do not want to build our business on third-party agencies because they are fickle and they're good time, well, I don't know what the saying is, but they're good-time friends. And in fact, in Malaysia, we're exiting one of our larger suppliers, who is now no longer larger because they've been diluted in quite an important category, which has been replaced by some other brands, including house brands. But we certainly understand that our sustainability is built on our ability to control the product that goes through our system, not other people's product, very important. So overall, that's where we ended up. You add all of that together, you get the number. I'm going to hand over to David to take you through all the exciting numbers, and then we'll come back and talk about the future. Thank you.

Thanks, Bernard, and good morning to you all. Thank you for taking the time to listen to us. Listening to Bernard talk about the people reminded me of our founders quote, Brian, where he said, "People create growth and companies report it." So a special thanks to all from certainly my perspective, all the people, our management, our staff out there in terms of having generated this growth. We've -- basically, Bernard challenged us to deliver a reporting suite by the time we put the numbers out, and that has happened. The team sort of rose to the challenge and have delivered. So a special shout out to our finance team at the center for, well, initially our business' finance teams, specifically at the center, for having delivered on that. That reporting suite contains a huge amount of information. It's in terms of every acronym you can think of, IFRS, Companies Act, King IV, King V, and many other regulations. So that has all been achieved. I will just remind you, or encourage you to go through the information, because I think it tells everyone a lot about the group and gives you a lot of granular information about the businesses. We have got new auditors this year at KPMG, so thanks to them. They delivered an unmodified opinion. Also, I guess, a special thank you to PwC, who were the auditors over the past 7 years, for their contribution to the group. Now to the numbers. I think if you had to pick up one sort of comment, I would say it is all about the cash. I think that was something that was fantastically generated, both cash in from the businesses and obviously out and I will talk a little bit about that. Revenue growth Bernard has spoken about. Gross profits were up, which I think is a great testament to the execution of the strategy. Trading profit was up 8.2%, and Bernard has spoken a little bit about the normalizations. HEPS up nearly 7% in constant currency. I will not repeat what Bernard said about the constant currency, but it is the methodology and the truer reflection of the group's performance. Our dividend also for the year is up nearly 7%, which is ahead of normalized earnings. So we are rewarding shareholders because I think also very encouraging stat, which we expected, was that we have got increases in returns, and that is absolutely something that we are focused on, particularly following, I guess, a slightly elevated capital investment program over the past years, and we can see that now starting to deliver. Free cash flow, as I said, was excellent at ZAR 7 billion, up significantly on the previous year. All our metrics in terms of covenants and the like, net debt to EBITDA, are very conservative at 0.2x. In terms of P&L, I am not going to go through each of the lines. A lot of it is already there. I think, as I said, the gross profit up 30 basis points really is just the businesses executing on the strategic requirements, the strategic focus, particularly as one of the strategies, I guess, one of the businesses was to maintain market share and having done that, there was some sacrifice of margins to continue with that, particularly in economies where it is particularly competitive and economies are not doing so well. I think that is in the context and the context of that, there is still an increase, and that is an excellent result. Highlight also, I think, is the cost of doing business, which rose very slightly and that is really in the context of, as Bernard indicated, higher cost inflation, and elevated and remaining elevated. I think just as an example, the U.K., because of these government imposts, absorbed about GBP 7.5 million of additional cost alone, on which they had to get more efficiency. So I think the cost of doing business and a slight increase from 19% to 19.1% is an excellent result. Obviously, in the latter part of the year, the impact of fuel costs, although it is not necessarily a big number in the scheme of the group, we are still seeing across most of the divisions somewhere between 40% to 50% increases, which basically were absorbed as Bernard indicated. Trading profit was up 6.5%, or 8.2% in constant currency and pleasingly, all that translated through to increased trading profit margins. I think that is even more impressive considering that effectively the emerging markets were flat and Australasia went back slightly. So, a very pleasing result from a margin perspective. Looking below the trading profit line. Our first interest was up a little bit in constant currency. That probably was our expectation that, that would come down a little bit, but I think you have got to bear in mind that we did refinance some debt at higher rates. They are not necessarily higher rates relative to the market. I think our credit margins are particularly competitive and in fact are excellent. It is really that base rates from a few years ago are up and are properly normalized. So I wouldn't expect that, certainly as a world, we are going back to previous levels of interest rates. The one detraction, I guess, from the result, if you are looking at trading profit growth down to HEPS growth, is the tax rate. We did guide to somewhere between 26% and 27%, and that is exactly where it has come out. But it is up versus the previous year, but we think probably stable from here on out. HEPS -- EPS up 9.4%. That is really a function of we had large capital -- fairly large capital items in the prior period, so that reduced the base. So that is the reason why it is slightly above where HEPS are. As Bernard indicated, currency volatility, which we had noted in all the updates going through the year, did impact the results by 1.4%. We did buy back some shares in the period post, I guess, March and that was really allowed because we had massive or excellent free cash flow generation and to date, we have basically bought back to the end of August, and we did have a program in place through the close period, about 1% of the shares in issue. We will see the benefit of that buyback certainly into the results in FY 2027. Final dividend up 7%, well, ZAR 6.25 per share, but for the year up nearly 7%, which is a little bit higher than what the policy is, but in line with or a little bit better than what we did certainly in the first half. On the cash flow, as we have indicated, a very pleasing result almost at every line. Cash flow after working capital, which was up about nearly 18%. It is a fantastic result. Working capital was very well managed broadly. We measure it over three different types of metrics. Obviously, the absolute impact, and we had a generation of nearly ZAR 500 million in the period versus a ZAR 800 million absorption in the prior period. Our net working capital days, we look at on a basically a 3-month moving average. Because we do not hold stock for that long, and generally our working capital cycle is pretty tight and that tightened from 8 days previously to around 5. Then the last area really is the working capital to revenue percentage, which gives us an idea of the amount of the working capital -- absolute amount of working capital invested to generate the revenue. And that was also well managed and came in pretty tight, at 2.8% versus 3.5% in the previous period. Just a reminder, obviously, the period ends are the best managed, from our perspective, so that during the year does track around about 4% to 5%. So we do see some working capital release through the year, but for the period end to period end, it is absolutely correct and genuine. Investing activities, yes, Basically, ZAR 6 billion, of which about ZAR 1.2 billion was into acquisitions. Not a huge chunk. Bernard has spoken about the 5 bolt-ons that were done. The maintenance CapEx is probably a little bit elevated, but I think one has got to just understand that in that maintenance CapEx is a number of depots that were actually categorized as replacement. Although they have added additional capacity, they were replacement of older depots. Net debt, if you look, follow the cash flow, net debt is down at ZAR 3.8 billion, which is as expected after the freezing operating cash flows and the like as it flowed through. Balance sheet is in very good shape. I am not going to spend too much time here. Obviously, it is, from our perspective, competitive advantage. We will use it judiciously as we see fit. In terms of liquidity, we have one maturation going forward, by USPP. I mean, it is hard to believe it is 5 years since Russia invaded Ukraine, but that was when we took out our first USPP debt. That is due for a repayment in March next year. We are looking at options, but we will deal with that closer to the time. Our working -- I mean, our weighted average of interest rates on foreign borrowings is 3.4%, and as I said earlier, I think that is normal and that is our expectation of where interest rates are going to be in the short to medium term, maybe even the medium to long term. Our RCF was renewed this year. It is optionality from our perspective and we are obviously grateful to the banks, all 6 or 7 of them, that obviously supported us through that process and continue to support us in terms of affording us funding. Our funding long term is principally long term. From my perspective, I think we have got it reasonably right. You are never going to get it right over 3- or 5- or 7-year period, but we think we are obviously borrowing at very competitive rates, particularly in the world we live in at the moment. Solvency and liquidity, all those ratios basically reflect a very strong financial position. Going forward, just a few things, but give you some idea of food inflation and core inflation. Certainly I am no economist and could be very wrong there, but that is our sort of expectation. Our working capital cycle will normalize and our expectation once again, as we trade into the festive season, in the first half of the year, there will be some absorption, but we should get that back into the second half. I have spoken about the maturity of the USPP, and we will look at the options for that. Our capital investments, as we have indicated for some time now, are moderating and are likely to be in the 1.5% to 2% range, where we have guided. As Bernard said, we are not going to stop spending, but that is what we think is the normalized range. We obviously, and we have said this before, conscious of balancing reinvestment, with obviously shareholder returns. I think, just to note that we returned, including share buybacks, some ZAR 5.2 billion of the ZAR 7 billion free cash flow to shareholders and where the opportunity exists, we will continue to supplement investment, either in obviously bolt-on acquisitions with share buybacks to the extent that they are accretive both to the group and to shareholders. No changes in the way we are managing the group from a financial perspective. As I said, returns have picked up and that remains an area of focus. Our expectation is we should continue to see us being able to just generate best-in-class returns. The year has started off well. Certainly results for both revenue and trading profit growth in July have been good, and we look forward to those continuing. From my perspective, we are obviously budgeting for continued growth into '27. On that, I will hand back to Bernard.

Thank you, David. We can just take one second just to look backward for 10 years. We've been listed as Bidcorp for 10 years. And it's often good just to take a moment, reflect and say, have we done a reasonable job or not? I guess you need to be the judge of that, not us. We can only present the facts. Bearing in mind, 2 years were impacted by COVID, significantly impacted by COVID. But over the 10 years, TSR, including share growth and capital returns has been about an 8% compound growth rate. Our HEPS has grown by 10% compound. Our dividends have grown by about 18%. It's probably a little bit higher than that when you get the final dividend compound over the 10 years. Our returns have improved. Our return on invested capital has improved. So when you look at all these metrics, they're positive. And I think the most important part of it is the consistency. And other than the 2 COVID years, all those graphs are consistently strong and show consistent improvement. So that's been the 10 years so far. And I think more importantly, we need to just look at what the future looks like. And I think there's a little bit of maybe a disconnect as to what the future looks like from your point your point of view and from our point of view. And we're almost probably a whole lot more optimistic than maybe some of you are. And where we are at the moment, we understand that we're strongly cash generative. We've got an exceptionally strong balance sheet. We have firepower to make acquisitions as they become available at the correct price, at the correct metrics with the correct strategic rationale for doing them. There's no imperative that we have to do an acquisition because that's the only way we grow. We've got enough underlying organic growth within our business to continue growing very, very admirably. So when you -- the buzzword now is the algorithm. What's your algo? And our algorithm is actually relatively simple. Forget about acquisitions because acquisitions we'll talk about separately. If we can see real revenue growth of around about 5% or 6% we'd love more than that. We're aiming for more than that in the current economic environment. If we can achieve revenue growth of around 5% or 6% in a low inflation, low economic growth market, that's a good starting point. We will improve our gross margins. There's no doubt they will improve by 0.1%, 0.2%, 0.3% as we continue to implement our strategy, our strategy of house brand, of vertical integration, of mix of customer mix. We will control our cost base. Yes, there's high labor inflation of 3% to 4%. We can manage that. We are getting efficiency gains. So we can manage the cost base. We don't have to put substantial investments into this business. We're well structured. We're well capitalized. We've got fantastic facilities in great locations being able to offer a very high level of service to our customers. So the cost base isn't going to grow at the same rate as the revenue growth and the margin improvement. So there's no doubt we'll see an uptick above 6% in operating profit if those other metrics are in place. Put on top of that, a little bit of efficiency gain as a result of AI, tech and any other things that might come our way, but they're generally related to tech. A truck is fundamentally the same as a truck was 30 years ago. They use a little bit less fuel, but they're on roads that are more congested. So until drones become a delivery methodology, we're stuck with trucks and there's not a whole lot you can do. Yes, you can maybe route them or route them a little bit more efficiently, but it's a small marginal improvement. It's not a huge uptick. But technology will play a role. Add on to that, some acquisition. and put on another 1% or 2% for acquisition in a normal year, which is quite a lot of acquisition based on the size of the base, but that's absolutely available out there. You don't need to be a rocket scientist to work out what the algorithm looks like. And that might not be achieved every single year, but that's absolutely where the thinking is as to what this business should be able to do, which I guess brings us to where we're tracking. And we're 8 weeks into the new year. The Northern Hemisphere summer has been exceptionally hot. Is that a good thing or a bad thing? I actually can't tell you. I think it's a good thing and a bad thing. We certainly sell more ice cream, but has it impacted tourism, has it impacted spend? Not really sure. The football World Cup, was that a positive or a negative? I'm not really sure. Yes, people went out, bought, but maybe they drank more beer and didn't eat so much food or maybe they didn't go on holiday because they went to America to watch the football or they stayed at home to watch the football. All of these things are subjective. You can pull whatever narrative you like out of them. But notwithstanding whatever has gone on, our revenues are up about 6% for the 8 weeks. And the other components of the algo that we spoke about are in place. So we've seen a continuation of the trend I spoke about of the second 6 months being stronger than the first 6 months. We've seen that trend continue. So where we're sitting at the moment, 8 weeks in, is we're very satisfied that we're on the right path. Yes, it's an uncertain world. Yes, there's volatility, but we seem to be managing that and heading in the right direction. Just going on to a few other things on technology. And we're putting this in because it seems to be flavor of the day. You all want to know about AI, whatever. You know way more about it than we do. We just know how to use the power of AI to get into the data to give us these micro efficiencies, many of them across many different aspects. One of the important things that is happening, we're putting quite a substantial investment into re-platforming our B2B solution. It's served us exceptionally well since we first implemented in the year 2000, which is quite a few years ago. And it's grown and it's being developed. Unfortunately, the architecture, the under-the-bonnet stuff has moved from an internal combustion engine to electric cars out there. And we need to reengineer the total insights of what this thing does, which will enable us to give a much slicker, better, more comprehensive outwardly-facing product to our customers, which will drive penetration, search availability, product availability, suggestive upselling, all those other things, menu planning, historical issues, which we've got all of that anyway. It just makes it that much more efficient, easier to implement and give our customers the benefit of this technology, which enables them to transact with us easier, which hopefully means they transact with us more. On the rest of the business, there's multiple streams of where technology is heading. Multiple, I've spoken about them micro projects into lots of different areas of the business. And some of the stuff that our teams have developed are absolutely phenomenal. We give them a task. A week later, they come back with a solution that's absolutely mind-blowing. You get an app that does something that before would have taken weeks and weeks of analysis and would have been 80% correct. Suddenly now it's 99% correct and it's instantaneous and live. So there's a lot of that, that's going on. We are implementing agentic AI into certain aspects of the business. It is being trialed. It is being developed. It's being used quite extensively in terms of selling opportunity, health opportunity, where is my order? Can I add to my order? Can I place an order? Do you have this? What's the price of that, et cetera? And a lot of that can be -- is being developed with agentic AI and obviously has quite a long path ahead of it. And it's very exciting. It's very difficult for an old bloke to understand all of the stuff and that's why we've got young people in our business who are teaching us and taking us into the future. And it absolutely is amazing and it's inspirational, and it will be a game changer. It's not going to totally unlock huge amounts of value, but it is a game changer that will unlock efficiencies and help drive margins up. The other important part is what we call our continuum. This is our strategy. There's nothing new in here. We're just doing what we said we're going to do and do a little bit more of it. And you do all of these bits and you'll move up, you'll improve your margins by the 0.1%, 0.2%, 0.3%. So looking forward, we're very confident of where we're at. We're strongly cash generative. We've got a very strong balance sheet. We've got a lot of firepower for when the right acquisition comes along. We're not -- our eyes aren't close to the opportunities out there, but neither are we falling over ourselves to make an acquisition for acquisition's sake.

I've got quite a few questions here. Some of them, I think we've answered. I'll run through them relatively quickly. What is the typical payback period on a new distribution center? That's a very difficult question to answer because you're building real estate primarily. So you're building a 30-year asset that's going to be worth more than you paid for it upfront. So on the asset, you've got no downside. Where you do have a cost is if it's additional infrastructure, you're going to start with low volumes, you're going to not be profitable. We generally finding within a year or 2, a new greenfield site will be at least breakeven or profitable. So it's only a 1- or 2-year payback and then you start getting very quick incremental returns on that. What gives you confidence in Australasia rebounding to high single-digit revenue growth in FY '27, given the economies remain relatively weak? I don't know, maybe it's naive stupidity or maybe it's just the reality. And we can see where we're tracking. We know where we are 8 weeks in. We understand why that's happened. We understand the customer mix. We can see some of the customer wins that we're achieving in both Australia and New Zealand. Yes, there's a pendulum and the pendulum has swung, and we can see that pendulum swung. You're right, the economy is not great. The consumer is not great and most of what you read is negative. The big retailers in Australia have reported their results today and yesterday, and they're both showing solid growth. Now that would tell you in an economy that's not growing if the retailers are growing, that's coming out of the foodservice spend. But we're getting our share. We're very comfortable with how our business is tracking. So clearly, we must be doing something reasonably right. Well done on strong cash generation. What percentage of EBITDA do you think cash generation will be over time? I'll let David answer that. It's about 110%, 120%, I think.

Between 110% and 120%.