Metair Investments Limited ($MTA)

Good morning. My name is Paul O'Flaherty. I'm the Chief Executive Officer of Metair Investments Limited, and I'm joined today by our CFO, Alastair Walker. If I may just remind you during the webcast to load any questions you may have, and then we'll do our best to answer all of them at the end of the webcast. You'll also note this year that when we've launched our results, we have 3 distinct reporting suites. We have our integrated annual report, we have separated with a stand-alone sustainability report, and our annual financial statements are also completely separated. Today, we'll be taking you through my update, and it's more an update around the industry but also going a little bit into an operational review. I'll hand over to Alastair for the financial review, and then we'll deal with some outlook and prospects. I think this slide is a really important slide and a precursor to the discussion around the context we find ourselves in. Metair, as you know, is a 77-year-old company, and its roots are in OEM component manufacturing. So that's how it was set up. When the OEMs entered South Africa, Metair was set up as part of the localization initiative to make the component parts for the OEMs in South Africa. And so on the left-hand side, that remains fundamental to our business. We have 6 key companies that operate and they manufacture for the OEMs in South Africa. However, on the right-hand side is what we call new Metair. We have realized, on the left-hand side, that we face a lot of risks in this particular part of the industry, and we need to deconcentrate our risk. And so we're putting a lot of attention into our Aftermarket Parts and Retail to balance the portfolio of what Metair has to offer. At the moment, that portfolio of Aftermarket Parts and Retail accounts for about 30% of our revenue, but we need to grow that quickly and get to 40% as quick as we can. The map below just represents where we operate, but also indicates where our customers operate and where the vehicles that we add the component parts to are sold. So I'm not going to repeat over the last 4 to 6 months, many commentators in the automotive industry and particularly the OEMs and the CEOs of the OEMs, but we are definitely at a crossroads as an industry. If you look back to the South African automotive master plan, our OEM production levels for 2025 should have been around 900,000 vehicles, and we are way below that. There is a strong influx in new vehicle sales from Chinese and Indian brands. And obviously, that creates massive competition for the local OEMs. The lots of noise around industry closures, certain OEMs closing, but also extending to the wider manufacturing industry in South Africa. And we, through our industry body, support all the initiatives to ensure that government brings strong interventions to make sure that this industry can survive. If you look at the graph on the right-hand side, that's a really telling graph. We are Metair, we are local component manufacturers. And if that local content continues to decrease, then you are destroying the manufacturing base within the country. If you look on the left-hand side, yes, sales of new vehicles in South Africa did increase in 2025, but they're not yet at pre-COVID levels. So we'd say they're stable. And again, the big influx of Chinese and Indians into the market is a major concern. So actual production, which is what we look at because these are the customers that we support, we'd say it's stable. 602,000 vehicles versus the 593,000 last year, but 2023 was already at 649,000. And not surprisingly, Morocco has now surpassed South Africa as the largest vehicle production country in the African continent. The automotive industry is about 23% of the output of manufacturing in the country. So the whole industry is really important for manufacturing in South Africa. The auto industry has 2 avenues. The OEMs have 2 avenues for their production; local, and there, we've seen the influx of Chinese and Indian; and exports. And their export revenue grew -- accounts for about 15% of SA export revenue. But the local OEMs export sales only increased by 1.5% in 2025. So the context we find ourselves in as a company, if we kind of bring it down to our micro level, with the type of industry we're operating in. And you can see why we really need to fast track the deconcentration into Aftermarket Parts and Retail. But even in that industry, as Motus reported recently, lots of strong competition, but we're really, really confident that we have good building blocks for that part of the industry. We did, on the left-hand side, in the operating conditions, have strong battery sales in Romania. So Romania had very good battery sales. But obviously, whether we operate as Metair in Romania, continue with that operation, that's something that will unfold over the next year. You're all aware of the large fine imposed by the EU on the Romanian business, which has been fully accounted for by the Romanian business in the current year. So strategically, and we've been talking about this for 2 years, we had to simplify our structure. We had to move away from a completely decentralized model where all of the companies effectively made their own decisions in terms of the delegation of authority, and we've had to pull control to the center. We've had to pull cash management to the center. We've had to pull key decisions to the center in order to protect our capital allocation and protect the assets that we manage. We've prioritized on revenue growth, cost reduction, cash, everything in our control. So where we've had to streamline factories, we've done that. Where we've had to follow retrenchments, we've done that. Where we've had to simplify operations, we've done that. We've put in shared services across Metair and we will continue to drive synergies out of these businesses and really squeeze the cost bucket while we are in this position as we find ourselves. Very pleasingly, we have finally consolidated Hesto into our results with effect from 1 April. That has been a journey to get there, but we're there. So the results that Alastair will present you now has full transparency over the operations of Hesto, which is fundamental to us. In terms of our capital structure, when we reported this time last year, we were in the throes of renegotiating our whole debt structure. We had come out of the sale of Mutlu with debt still lingering on Mutlu. We had started the turnaround of Hesto, but with significant investment required in Hesto and balancing of shareholder loans in Hesto. And so we're happy to note, and we did note at the interims that we concluded our SA Obligor ZAR 3.3 billion debt package and our Hesto Obligor ZAR 1.4 billion debt package. Most importantly, and particularly in the SA Obligor, we met all of our debt covenants, including the quite strict EBITDA requirements that we were supposed to achieve every quarter. So we had a good year, and we achieved everything that we committed to do in terms of our covenants. Important to that cash packages was the centralization of cash functions in South Africa, which we've done, and that is fully operational. We still have high interest on our outstanding debt, and we continue to negotiate with our funders on how we bring down both the debt and the interest on that debt. But on the right-hand side, we've got to talk about growth. And we've launched our new Aftermarket Parts and Retail division. We've significantly changed the management within each of those companies in South Africa. So whether it be in AutoZone, QSV, MOVE, First Battery Retail, ATE, all of the management in those operations has completely changed. And we are confident in the new management to make this really successful going forward. I've spoken about the realignment of the operating model, which was fundamental to this turnaround. And we now report in OEM Direct Manufacturing as a component and our Aftermarket Parts and Retail. Those are our 2 distinct divisions in which we operate. But as Alastair will point out, we also bear in mind at all times the entities that form part of the SA Obligor, Hesto Obligor and Rombat. So it's a balance of focus in making sure that we achieve what we set out to achieve. You'll remember this slide. I just joined Metair 2 years ago actually, and the results presentation were at the end of March in 2024. And I presented this slide after a month in the seat or 1.5 months. And you can see we've made significant progress in this regard. And so this would be the last time I'll present this flywheel. We've stabilized the leadership. We continue to hold MDs to account. Those MDs that cannot perform, we need to move on and find people who will perform. We've appointed the new executives at the centralized level that we needed to do in order to take strategic control of the company. Our debt levels, we faced in '24, if you can go back to those painful times, really trying to sort out a preference share that we still owed on Mutlu, the investments we have had to make in Hesto and how could we balance this whole debt package, and we've done that. Restoring Hesto to profitability. Really good year from Hesto this year. And so we're really pleased with the turnaround from Hesto and starting to generate the cash that we expected. On the left-hand side, we've sold and closed noncore businesses and noncore production lines. So it wasn't only Mutlu. We've closed down in the current year, the First Battery Industrial. We've closed down the Dynamics Batteries. We moved out of the East London plant and stopped the contracts for Automould. So we will continue to look at our operations and make sure that the return on the invested capital satisfies the requirements that we need as a company. And I'll talk a little bit about the EU Comp Comm. So we now know what the fine is, but I'll point out the next steps in that regard. So in December, of course, as they do just before Christmas, like they did with a statement of objection in December of '23, they came with their final decision, and they imposed a fine of EUR 20 million on Rombat. In terms of their rules, there's a presumption under the EU rules, which we absolutely refute and we will challenge, that there is parental liability. So they look through the corporate veil, and there's a presumption and an assumption that Metair must have known. And if you recall, we acquired Rombat in 2012. The statement of objection or the first investigations were in 2017, and it was for practices that had been going on since 2005, so way before Metair's involvement. Nothing in the due diligence, and we've been back through all the files, we've been back through all the detail. Nothing in that due diligence reflects or reveals any knowledge of any undertakings by Rombat that they were doing something illegal. So we're very, very clear from a Metair perspective that there is no parental liability. Of the EUR 20 million fine, the EU has associated EUR 11.6 million of that as joint and several with Metair. So what are we currently with? We are currently we've lodged an appeal against the fine. We lodged that on the 27th of February, and that appeal follows process. Three major arguments. Firstly, the joint and several, we dispute that, we dispute the parental liability. The gravity of the fine. Rombat was 2% player, a 2% player in the European battery industry and got a fine of EUR 20 million versus some of the bigger players who got a lesser fine or a fine that is not proportionately makes sense to us. So we're challenging the gravity of the fine and the gravity of how the fine was determined. The third issue we're challenging is the inability to pay. Rombat today, in its financial condition, how is Rombat going to pay EUR 20 million. And yes, the commission has given it over 4.5 years, and we don't think that's doable. And so we've challenged the commission on that. From our perspective, as Metair, where there's a presumption that there's joint and several, well, quite frankly, in the Hesto Obligor and the SA Obligor, all our assets are secured to the banks. And so there is no outflows that can be attributed to this fine. So we will follow the appeal process. Our understanding is, if you recall, the statement of objections was landed in December of '23. It took 2 years to get to a final judgment. Our understanding from an appeal process is another 2 years. So we'll see it as it unfolds. However, from an accounting perspective, because now there is a liability, it's not just a contingency, Rombat has provided fully for the effects of that fine, and Alastair will talk about that in his presentation. So our new Aftermarket Parts and Retail division. This is a really strategic focus for us with 5 distinct parts to this business. We have our AutoZone, which is our retail shops. We have our MOVE, which is our outlet for workshops and mechanics in terms of aggregated procurement for those industries. So we'd be the main buyer or the main seller of the inventory required in workshops and fleets. We have ATE, which is a brand that we own and are registered to own in South Africa, and that is for our breaks. And our First Battery Retail. So we've spun off our First Battery Retail from the manufacturing operations. And the reason to do that is to make sure that the manufacturing operations are actually producing at the costs required in a very competitive market for the First Battery Retail. And then obviously, our QSV, which is our warehousing and wholesale distribution of our aftermarket parts. Very fragmented market, and AutoZone operates in the niche of that market. And we really need to go back to the fundamentals of AutoZone prior to its troubles through business rescue. It's a path for scale. We're confident in the new management team, and they've already started to make a difference in the performance, and we can see it as we track the daily sales. We're also looking at Africa, as we spoke about. So we did a full investigation of Africa last year. We understood all the car parks, we've understood all the risks in those countries, we've understood all the regulatory environments in those countries. But we have a perfect footprint to leverage off. We own 25% of associated battery manufacturers in Kenya, and it has good footprints in Tanzania, good footprints in Uganda, good footprints in Rwanda, and we're looking how we can capitalize on those footprints for other aftermarket parts through those channels. To make sure that this unit is really focused on sales and customer service, all the back office, finance, HR and IT is done from a centralized manner so that they can really focus on what they need to do. So operationally, if I talk about our performance, we're really operating in the 4 buckets. The left-hand side being the OEM Automotive Component Manufacturers and the right-hand side being Aftermarket Parts and Retail. So Hesto, great performance. For the full year, Hesto's revenue, ZAR 5.9 billion, up 8%. Good EBIT of ZAR 454 million, up 79%. EBIT margins at 7.6% and compared to last year of 4.6%. So a really good turnaround, continuing to drive the profitability. The rest of our manufacturing, our OEM manufacturers, Smiths, Lumotech, Automould, Supreme and Unitrade, combined, ZAR 7.3 billion revenue, up 4%, EBIT of ZAR 523 million, up 40%, really good performance. And EBIT margins pleasingly at 7.1% versus last year at 5.3%. If we look on the right-hand side for our Aftermarket Parts and Retail, in the top quadrant, our battery businesses, revenue at ZAR 4.3 billion, up 2%, really tough market, particularly in South Africa. So we've seen lots of strong competition in South Africa in our battery business, particularly from imports. EBIT up to ZAR 292 million, up by 4%. So we had some one-offs in First Battery last year. Those didn't repeat. So that business has been under challenge, but a really pleasing performance from Rombat. And overall EBIT margins at 6.8% versus '24 of 6.6%. ATE, AutoZone, MOVE and QSV, which is pure Aftermarket Parts and Retail. Revenue at ZAR 1.8 billion and a loss of ZAR 46 million. We recorded a loss at the half year of ZAR 24 million. And I said to you, our target was to break even by the end of the year. We haven't achieved that. We had a loss of ZAR 22 million in the second 6 months. And where we judge it, we're about 6 to 9 months behind our turnaround plan. The good news is that the months of November, December were definitely in profitability, and we can see the swing through January and February. So we're still confident on this. It's just not at the perhaps aggressive time lines that we set. I think I just want to talk a little bit about this. This is really important to Metair. We've published a separate sustainability report. We spent the year really debating and focusing on our 15 key areas from an ESG perspective, using a double materiality impact assessment. Under climate and energy, our Scope 1 and Scope 2, we're in the process of negotiation -- negotiating PPAs, putting solar on the roofs of many of our factories to bring down our carbon emissions in Scope 1 and 2, but also, and most importantly, reduce operating costs compared to the significant electricity prices that we've seen. And from a per person hour worked, our Scope 1 and Scope 2 emissions actually decreased, which is a good sign. Health and safety, no work-related fatalities and our LTIFR still below 1, unfortunately, increased to about 0.34. We need to get that back down again, lots of focus on that. In terms of water and waste, another key focus area for us. Our average scrap at 2.5%. So we've been really focused in those factories, not only because scrap is a waste, but it costs us, it costs us money. So there's a lot of focus in that. Pleasingly, what we need to do in our factories is not put any of our waste into landfill and rather recycle what we use. And so we -- our total nonhazardous waste to landfill decreased compared to the prior year. So we're really happy with that. Water consumption per person hour worked has unfortunately increased. And there's a lot of focus to improve. And there's a variety of issues that are spelt in the sustainability report, why that happened. And then on the right-hand side, you can see probably our most important asset, which is human capital, and how we promote that and how we invest in the human capital. We have 13,000 people in South Africa. That's our core asset. That's what we need to invest in. Thank you. I'll now hand over to Alastair for the financial results.

Thanks, Paul. Good morning, ladies and gentlemen. It gives me great pleasure to present the results for the period ended December 2025. As Paul alluded to, when reviewing the results, it's important to note the impact of Hesto from the 1st of April when Hesto was consolidated into the accounts. It has had a significant effect on these results. But notwithstanding the impact of Hesto, the group has delivered a very solid set of results with improved margin being the key feature as the benefits of the rightsizing and restructuring initiatives that started in 2024 are bearing fruit. The group delivered an increase in revenue of 57% to ZAR 17.9 billion. But as mentioned, this does include Hesto for 9 months from April, but also AutoZone for the full year. EBITDA was up 99% to ZAR 1.7 billion, and EBIT was also up 99% to ZAR 1.1 billion versus the prior year, which reflects the improved operating margin for the group. Group net debt finished the period at ZAR 3.9 billion versus ZAR 2.7 billion in the prior year. This increase largely reflects the inclusion of Hesto's debt from April 2025. And the net debt comprises ZAR 5.1 billion of gross debt offset by ZAR 1.2 billion of cash at the period end. It is important to note, as Paul alluded to, this debt is housed in 3 separate ring-fenced obligors, being SA Obligor, which houses all the SA assets, excluding Hesto; Hesto as a separate obligor; and then Rombat in Romania as a stand-alone ring-fenced entity. Our measure of HEPS performance is from continuing operations before exceptional items, i.e., the Rombat fine. This rose significantly relative to the prior year to ZAR 1.91 per share, which compares to ZAR 1.05 per share in the prior year and demonstrates the strong operational and financial performance over the period. ROIC increased to 11.1%, up from 7.2% in the prior year, primarily due to the improved earnings. So turning to the results presented on this slide, which is a summary of the key income statement and balance sheet numbers. On the left-hand side, we've got the key income statement items. I've spoken to revenue, EBITDA and EBIT. So to highlight some of the other items, which are meaningful. The Rombat fine is reflected as an exceptional item, and this amounts to ZAR 413 million, which is a rand equivalent of the EUR 20 million fine that was imposed against Rombat. This has been fully provided for in the accounts of Rombat. And as mentioned, Rombat is a stand-alone ring-fenced entity. The results also include a ZAR 312 million capital loss, which is mainly the fair value adjustment in terms of IFRS 3 to record Hesto as a subsidiary from an associate. Net interest has increased from ZAR 222 million in the prior period to ZAR 532 million in the current year, mainly as a result of Hesto's -- the inclusion of Hesto's net interest for the period as well as the effect of the higher interest rates following the refinance. I'll comment on the refinance in a later slide. This all results in a loss after tax for the period after capital items of ZAR 294 million versus a profit in the prior period of ZAR 312 million, but this is due to the capital loss on accounting for Hesto as well as the impact of the Rombat fine. On a cents per share basis, continuing operations pre the Rombat fine, HEPS is at ZAR 1.91 per share and EPS is ZAR 0.31 per share. On the right-hand side, we set out the key balance sheet items, which reflects our investment in noncurrent assets of some ZAR 5.5 billion and current assets of ZAR 7 billion. This is offset by current liabilities of ZAR 3.9 billion and long-term liabilities, which mostly comprises our gross borrowings, is ZAR 6.4 billion. Net working capital is ZAR 2.7 billion at year-end, which is higher than December 2024, but which includes the Hesto's take on working -- net working capital of just over ZAR 1 billion at April 2025. It's important to note that the net working capital cycle for Metair is fairly cyclical with a reduction at year-end as the factories close and a restocking in the first half of the year as the factories reopen. Given the significant increase -- sorry, given the significant investment in working capital, this is a key focus area of ours to ensure it is tightly managed and controlled across the group. Our gross third-party borrowings amount to ZAR 5.1 billion, less the cash at period end of ZAR 1.2 billion, results in a closing net debt of ZAR 3.9 million. This cash balance peaks at December following the inventory reduction at year-end, meaning the sustainable net debt to EBITDA is closer to ZAR 4.5 billion. Our NAV per share is ZAR 11.35 per share compared to ZAR 13.88 per share at December 2024, which decline year-on-year reflects the loss mainly due to the net fair value adjustment, which results from the consolidation of Hesto plus the Rombat fine of ZAR 413 million. As mentioned at the interims, and Paul alluded to earlier, we have redefined the verticals on which we report to reflect the strategic realignment of the group and core strategic focus, being the OEM segment, which applies components manufactured and supplied directly to the original equipment manufacturers, and then Aftermarket Parts and Retail, which primarily serves the independent aftermarket and retail distribution channels. The OEM segment highlights. OEM production volumes were relatively stable in the period, up 1.5% versus the comparable period. Despite these flattish volumes, operating margin increased for the segment, 2.5% across the segment, which results largely from the restructuring initiatives. On a like-for-like basis, i.e., including Hesto for the full 12 months, OEM revenue would have increased by 5% and EBIT by 56%, which again reflects the margin improvement over the period. For context, Hesto delivered ZAR 4.9 billion of revenue and ZAR 400 million of EBIT since being consolidated. For the 12 months, Hesto was up 79% at an EBIT level, which is due to the significant operational improvement assisted by stable volumes. In the AFM segment, this segment reflects growth of 42% period-on-period, which includes AutoZone revenue for the full 12 months. However, the segment delivered a mixed bag in terms of operating performance. First Battery experienced a challenging market with volumes marginally down 1.5% relative to the prior period, but the margin reduced from 13% in the prior year to 9% in the current period, which results in an EBIT of ZAR 168 million for the period, down from ZAR 236 million in the prior period. As Paul mentioned, AutoZone delivered an EBIT loss for the full year of ZAR 46 million, which is 6 to 9 months behind the recovery plan as it emerges from business rescue, but we remain confident on the prospects for this business. Rombat had a good period with a strong second half with higher volumes and price increases coming through, which delivered an EBIT of ZAR 53 million for the period compared to ZAR 19 million in the prior year. So overall, the AFM segment delivered an EBIT of ZAR 246 million versus ZAR 267 million in the prior period. So turning to the cash flow bridge for the period. The group generated ZAR 1.676 billion of cash and liberated a further ZAR 207 million from working capital. That was largely inventory reductions, offset by payable reductions at year-end. The reduction in inventory, as we mentioned, is largely due to the factory closings at year-end. And given the cyclicality in the business, a lot of the factories restock in the first half of the year. The group paid interest of ZAR 578 million for the period, which is a result of including Hesto as well as the higher interest costs following the refinance and the group paid tax of ZAR 173 million in the period. The investing activities include CapEx spend of ZAR 490 million as well as ZAR 185 million, which was a shareholder loan advanced from Metair to Hesto to allow Hesto to partly repay disproportionate loans to Yuzaki as part of the overall Hesto Obligor refinancing. Finally, the group had a net outflow of ZAR 179 million from financing activities, which reflects the net cash flows of the refinances plus lease payments of ZAR 220 million outflow for the period. As mentioned, the group is managed in 3 separate ring-fenced debt obligors. The SA Obligor, housing the SA assets, excluding Hesto; the Hesto Obligor; and Rombat. Important to note, there's no link between the South African obligor groups and Rombat. During the period under review, the group successfully executed a refinance of the group's borrowings. This was affected by way of 2 separate packages, namely SA Obligor in an amount of ZAR 3.3 billion, which comprises a 5-year amortizing loan and a 5-year bullet loan of ZAR 850 million each totaling ZAR 1.7 billion, and a further ZAR 1.6 billion subordinated loan repayable in June 2027. That refinance was concluded in April 2025. Furthermore, in June 2025, Hesto concluded a debt capital raise of ZAR 1.38 billion to refinance the existing Hesto debt at the time of ZAR 438 million as well as repay Yuzaki, the minority shareholder, who had previously provided trade credit support, an amount of ZAR 934 million. Following that refinance, the guarantees that Metair had previously provided to Yuzaki were extinguished. As Paul mentioned, the security package includes pledges and bonds over all of the assets. These refinances were largely cash neutral and the predominant movement in the total borrowings is a result of Hesto's take on with effect from April 2025. Important to note, all covenants and debt requirements were met in 2025. This slide sets out the group's total repayment obligations across all of the obligors, the SA Obligor, Hesto Obligor and Rombat. Clearly, the repayment requirements in FY '27 are onerous, and we are working on options in this regard. Total CapEx for the fiscal amounted to some ZAR 569 million, split between maintenance of ZAR 248 million and expansion and project-related CapEx of ZAR 313 million. The CapEx for FY '26 will be higher than FY '25 at over ZAR 800 million, which includes maintenance and project CapEx. Project CapEx for FY '26 mainly relates to investment for the new Hilux model changeover, which will be complete by the half year and we then expect CapEx to moderate to between ZAR 400 million and ZAR 450 million per annum from 2027 onwards. On the right-hand side, we set out the ROIC over the last 3 fiscals. ROIC for the period ended at 11.1%, up from the prior year due to operational improvements. What's notable is that ROIC has historically tracked volumes. As Paul alluded to earlier, 2023 volumes were 649,000; in 2024, were below 600,000 and have recovered slightly in 2025. However, we expect ROIC to be less volatile going forward as we diversify our revenues and profit through increased exposure to the aftermarket segment. We remain intensely focused on disciplined capital allocation for investments in capital -- in CapEx as well as working capital management. ROIC is our key metric for all OpEx, net working capital and CapEx deployment. We also analyze return on assets, IRR and paybacks to ensure that investments meet the return requirements. In terms of our financial priorities for FY '26 and beyond, we are intensely focused on the following: reducing leverage and improving the net debt-to-EBITDA ratio through a reduction in debt and driving EBITDA; ensuring covenant compliance; focus on free cash flow. We've centralized -- we've implemented a centralized treasury system with daily sweeping of all cash and daily requisitions for funds from the businesses. We also undertake weekly cash flow forecasting, which has significantly enhanced our visibility of the cash as well as planning. As mentioned, the group has sizable swings in net working capital over the period between the first half and the second half. We have implemented inventory reduction measures, and we are assessing all options on receivables and payables, including a supply chain finance solution to reduce receivables. However, due to the elevated CapEx in FY '26, we do not expect significant gearing in the FY '26 fiscal, but thereafter, we expect improved cash flow generation. Capital allocation. Rigorous focus on deployment of capital for OpEx, CapEx and net working capital. We are laser-focused on ROIC and use a range of measures to ensure the minimum return thresholds are achieved. Finally, operating margin. We have seen an improvement in the operating margin in FY '25 due to the work commenced in FY '24 to rightsize and restructure the businesses. We will continue to monitor the split between variable and fixed costs and drive targeted reductions in cost to revenue percentage metrics and thresholds, whilst supported by the implementation of shared services across HR, IT and finance. Thank you.

Thanks, Alastair. I'll deal with the outlook. So as we said, the automotive manufacturing sector is at a crossroads. We support our industry body in all of the lobbying and all of the information that's necessary and this is really about stakeholder engagement to make sure we get the right outcomes from all of those discussions. From an operating environment, we're actually very happy with our results for the year. That Rombat fine predates any executive management or, in fact, any Board member at Metair, and it will be dealt with, but it's ring-fenced for Rombat. Going forward, a major customer is introducing a new vehicle that comes with its complexity, but we've been very close to the factories to making sure that they have readiness for that launch in May. Another key customer, as we announced previously in October, announced reductions in its plant and reduced volumes of production this year, but we've proved over the last 2 years of our ability to flexibly adjust in our factories. We put significant effort in those factors, and you can see it coming through in those margin improvements of how we're able to flex with production from the OEMs, provided we have full warning of where they're going. And so it's close interaction with our customers. Post 2026, CapEx should return to normal levels, as Alastair said, of around ZAR 450 million. And the large outflow in the current year is related to the new model, and there were deferrals in that expenditure from 2025. So we believe we're making good progress in this turnaround strategy, but it's all hands on deck here. We have to really boost ourselves in Aftermarket Parts and Retail. We're applying the resources, strengthening the management, making sure we have the capital allocated to make sure we become very successful. We're confident we'll meet our debt covenants. We have very good relationships with our funders and keep them informed all the way. As Alastair said, working capital, ROIC key metrics alongside EBITDA and margins in this company. So it's about what I've spoken about for 2 years. We can hear noise from EU Comp Comm. We can have a funny little accounting entry for accounting of Hesto of ZAR 300 million, focus on what's important, focus on cash management, focus on margins, focus on what we can do, focus on making sure we get the best out of our assets and the best out of our people. And really a lot of focus this year in that Aftermarket Parts and Retail and then slowly look at that entry into Africa. We are in Africa. We're in associated outside of South Africa. We are in associated battery manufacturers. We do have export channels currently out of First Battery Retail. We do have AutoZone franchises in Sub-Saharan Africa. So the consolidation of that and the launch for greater revenue out of those operations will be a key focus going forward. So we'll pause there and take any questions that have been lodged.

[Operator Instructions] The first one is from Capital One Partners. Given that there's a lot of focus on growing within Africa and the recent EU fine, has the Board given consideration to disposing of Rombat?

Yes. So as I said in my opening remarks, we had to wait for the outcome of the EU Commission. Rombat, despite all the turmoil around it, had a really good year. So this year, together with the Board, we will need to consider our next steps with Rombat. But as we said, it's ring-fenced. It runs its own debt packages. We make sure that it conforms to its covenants, and then we focus on the SA and the Hesto Obligor, but we will, with the Board, consider the future for Rombat in the current year.

Coronation asked, what would be the impact have been if you had consolidated Hesto from 1st of January? I think we've answered that in the presentation.

We did answer that. The EBIT for the first 3 months before we consolidated was virtually a breakeven.

The EBIT was about ZAR 50 million. The PAT was a breakeven.

PAT was breakeven. So from a headline earnings, no effect, but from a PBIT, ZAR 50 million.

Another question from Capital One. Other than distribution synergies between AutoZone and First Battery, has management given thought to consolidating the retail footprint of these operations?

No, no, no. These are very important distinct brands and channels that we operate in. So the First Battery channels and the franchises that we have, they are very distinct from our AutoZone and our QSV and it's very important for the market as well as our ATE brand that those channels are kept separate. We have a management team at the top, a really senior management team who makes sure we comply with that, and we chase those channels with different customers separately.

We have a question here from a private investor. How much scope is there for further margin improvement through optimization efforts?

Yes, we still believe you can -- there's always continuous improvement, right? You can squeeze these assets and squeeze the people who work with these assets more. Some of our big initiatives for next year is looking at centralized procurement. What are those items we could do centrally and get benefit through scale. We need to take a look at our commercial units, what is commercial in our terms. In the OEMs, those are the people who interface with the customer on pricing, et cetera. We need to look at how we maximize in that area. And the last is engineering. Are we using our engineers appropriately, particularly when we come into big capital projects, where each of these units might look at it differently for a new model launch? How do we capitalize on that and make sure we fit for purpose? So there's always opportunities for us to improve on these margins.

A question here from Excelsia Capital. With recent reportings of some Chinese OEMs looking to enter South Africa, could Hesto potentially be a beneficiary?

Yes. I think all of our subsidiaries could be a beneficiary. The important thing that we well know is we service Toyota and Ford and Volkswagen, and that's well known. So we don't really service the other OEMs in the country. What's really important as Chinese manufacturers come into the conversation is that we have the upfront conversations because you need to get into the design, right? You need to be part of that design. So the designers and the technical partners that service those OEMs, that's where we need to make sure that we are understood in this market, make sure we have our credentials in that market, and that's what we're doing. We're busy engaging with those, and making sure we fit -- can fit into their requirements accordingly. And that would relate to all of our OEM companies.

We have a similar type of question. Chery recently took over Nissan's facilities and GWM is at an advanced stage to share factory space with Mercedes. Has the company engaged Chery in its offering? And if so, what is management's feeling post those engagements?

Yes, we engage with all of the new end, as we did with Stellantis, if you recall this time last year, everybody was talking about Stellantis, that hasn't moved a lot. But absolutely, we continue to engage. We need to see the investment. We need to see what they do. And this is why the broader stakeholder conversation is so important. The APDP, the incentives for localization, et cetera, and making sure that whoever enters the market is coming on complete knockdown manufacturing, which enables the local component industry to grow. So those are the conversations that are very important.

And we have a question from [ Comercia ]. What are your options to deal with the 2027 debt settlements?

Do you want to take that?

Yes, we're looking at a range of options on how to rephase, resculpt and retranche the debt. So we're in discussions, but nothing firm yet, but we're pursuing different options there.

Just to add to that, the one clear benefit we've had for '25 is we delivered. We were set strict targets. We hit them. And when you hit them, that puts you in a much better position because you've earned the confidence of your lenders, and that enables you to have a conversation.

We have another question from Excelsior Capital. What is your outlook or target for AutoZone for 2026? What was driven -- what has driven the reduction in losses? What is your target margin over the medium term for AutoZone?

Well, let's start with the medium term. And different products, perhaps different type of inventory balance, but let's start with Midas, 5.5% margins. That's got to be our long-term target. And those are the margins that AutoZone were achieving in 2001. And that's where we got to. Where we want to go over this year is get us up, if everything goes right, certainly to that 1% to 2% margins as we recover, and then in the medium term of 2 years up to the 3% margins. That would be our goal, and also making sure that, obviously, we increase our inventory -- our revenue to the levels we expect.

We have no more questions.

Okay. Well, thank you, everybody, for your attendance, and thank you for the questions. And please look at our reporting suite. We're quite proud of that feat, and we take any recommendations and suggestions that anybody may have in that regard. Thank you very much.