Nampak Limited (NPK.JO) Earnings Call Transcript & Summary

All right. Good morning to all the investors gathered here this morning. This is our 2025 Nampak year-end results. I'm happy we hosting this at the vineyard. Maybe we can have a couple of glasses of wine, because as you would have seen on the SENS this morning, the results were quite palatable. But yes, I'd like to welcome our CEO, Phil Roux; our CFO, Glenn Fullerton; and on my right, André Van der Veen, our Chairman; and our CEO designate, Mr. Riaan Heyl. Welcome. Look, we wanted to start the session off with prayer, but we thought this would have been a lot more appropriate. So we hope you just enjoy 2 minutes into the presentation. And then after that, Mr. Roux will come, give his address. Thank you. [Presentation]

Thank you. So James, please just get your dancing boots ready for that site visit. Yes. So I think if we can please give Mr. Phil Roux a bigs round of applause as he comes to the stage to share his very last address. Thank you. And as a CEO.

I must say the energy in the room is in stark contrast to when I arrived as a Non-Executive Director 3 years ago. A warm welcome to all of you attending in person and those online. It's lovely to have you here. So Chapter 1 was all about saving, stabilizing and restoring the company. Then Chapter 2 has to be about growth and optimization, both of which put in good value uplift. There isn't much I can educate you on in respect to South Africa other than to say if the private sector doesn't remain relentless and bring our A game to work every day, South Africa is going to continue to battle. There would, however, appear to be some positive indicators in respect of the interest rate reduction, recent rand strength and lower inflation, all of which bode well for the economic outlook. At the heart of all of our challenges is that the economy isn't growing. Numerous FMCG categories, who are our customers are, in fact, in structural decline. We continue to witness municipal degradation, which impacts our operations, forcing us to become more self-reliant. Angola, on the other hand, seems to be more stable. Oil production has increased, and we've been very privileged to have currency stability over the past 18 months, which we believe should remain that way given an imminent election. You would have seen an improvement in the debt-to-GDP ratio in Angola, and it's now ranked as one of the 10 top African economies by the International Monetary Fund, and they too are starting to experience a decline in inflation. So how did the numbers play out, which I'm sure you've read by now. Really pleasing set of results with the top line up 8%. Our trading profit almost -- well, just over 3x operating leverage of ZAR 1.3 billion. And arguably, something that took an enormous amount of effort was to reduce our overheads by 7% off the back of an already reduced overhead base. Our EBITDA similarly was up 26% to ZAR 1.9 billion, and we expanded the margin -- the EBITDA margin, that is from 14.8% to 17.3%. I'm pleased with the cash generated because it's a combination of the sale of assets, but importantly, the business has generated strong operating cash flow. So that's ZAR 2.2 billion. And on a rolling basis, our return on invested capital at 22.7%. Glenn will delve into the detail, particularly in respect of our debt and how we managed to smash the debt by half to ZAR 2.1 billion. So our net EBITDA now as a consequent is 2x, and we set a target at that level by 2027. Segmentally, Beverages South Africa revenue up 6%. I personally am disappointed with that number, but we scored an own goal. As you will recall, we mentioned to you at the half year that the newly installed Line 2 stalled. We stumbled with that installation. They're always tricky. So we missed the critical summer period and also Easter, which is often a bigger trading period than summer. So that number could have been a lot bigger. Nevertheless, also strong operating leverage, with trading profit up 14% to ZAR 794 million and EBITDA of ZAR 907 million. Diversified, somewhat disappointing, only up 2%. And the trading profit down 12%, and I will elaborate that in the slides that ensue with an EBITDA of ZAR 310 million. We had a wonderful performance in Angola, up 12% top line. In fact, one of our biggest customers has ceased producing PET in favor of the can substrate. Trading profit also up 12%, ZAR 337 million; and EBITDA up 30% to ZAR 360 million. In summary, then, what were the performance highlights? Well, in this market, particularly South Africa, sustaining growth ahead of GDP in real terms takes some doing. And you would have seen so in all the FMCG numbers that have been published of late, either they ex growth or giving you a very, very slow single-digit growth at the top line. The Angolan performance was certainly a step change. And within that muted beverage number, we grew the 500 milk pack 20% in volume. Now this is very important because that's where we invested your money, given that this is the pack of choice by consumers currently and the Angolan line installation is close on the heels of that investment. Had we not done that, you would have seen a really disappointing performance out of beverages. The interest cost and debt, halving concurrently. We mentioned the 7% reduction in total overheads. And coming off the back of an expanded margin, we increased that yet again. And what was very, very important and not always easy to do, we literally overhauled the entire manufacturing leadership. There isn't one person that was in a leadership position that currently remains in those positions. This is important, and I'll expand on it later because this is where the fuel for growth really lies in our business so that we can increase our operating efficiencies and unlock significant value, placing us in a competitive position by utilizing these gains. We're very proud of sustaining our Level 1 BBBEE score as well and not to mention the importance of our private equity structure that we entered into with Cambrian. So the performance inhibitors, let's start with Diversified, and I'll speak a bit more about Diversified later again, strategically, that is. But the factors that undermine the Diversified performance were threefold. In the first instance, akin to the declining growth in FMCG per se, with the -- on the receiving end of that. Secondly, in some ways, we are at the behest of our customers, not always, we must manage our own destiny. But one of our large customers converted an infant formula pack from the can substrate to bag in a box. And then thirdly, there was a limitation in the amount of raw material available for fish canning that affected the entire industry in the second half. You will recall we had a bumper performance in the first half, and we actually aren't supplying many cans as we speak. But I would like to talk about that in a bit more detail later. So when we say we have a manufacturing performance and skills deficit, the old guard and many of you experienced canners have exited over time, although we've invested heavily in. Glen will remind me of the number of hours that we invested in training, 113 hours we invested in training our people. But notwithstanding, we're not at all happy with the performance coming out of our plants because we benchmark against exemplars, the best in the world. And the one that we've identified, in particular, is the Ball Corporation, which for interest sake, produces 104 billion cans a year. We produce about 4 billion cans a year. And in beverages, we hold 60% of the market, just to give you an idea of their scale. So a wonderful exemplar that we can learn from and constantly benchmark against. Now this is where it becomes tricky in South Africa because the protectionist legislation, if you want to put it in place, it takes long. And when we sold the Nigerian asset, they ceased buying ends from us, that had a profit impact, and they import their ends from China. And it remains a risk in South Africa. Having said that, our customers are accustomed to buying the can and the end from us for technical reasons and the phenomenal technical support that we offer them when those two parts of the end product come together, and that gives a distinct advantage. But still, we have to be very vigilant and constantly watch our cost. We cannot accept any overhead creep in the business so that we can remain competitive. In the interim, though, we've made the necessary applications to get protection, but that wheel turns very slowly with the government authorities. We continue to suffer from inland municipal interruptions. They take the form of discontinuation of water supply. We have people stealing our cables. So the importance of becoming far more self-sufficient and expanding CapEx in that area is of vital importance going forward, given that Springs will also become a super site as we put the Angolan line in place. This is just one of the industry vagaries I spoke of. We know how to make wonderful cans, but we haven't quite learned the art of ushering the fish into the can. That's the role of our customers. And you would have heard no doubt from the fishing industry that the government was late again in announcing the top-up, total allowable catch this year. So they are fishing, but that's a very small part of the total amount of fish that's procured for the industry in South Africa. Circa 80% of the fish is imported from countries like Morocco. And that resource in itself hasn't replenished well. So as we stand here today, we are supplying very few cans. And I'm hoping that we'll start supplying cans in full around January or February, which will affect the first half performance for F '26. But I'm staying very close to Neville at Oceana, given that they're the market leader and the market-leading brand in the country, and we'll keep you updated on that. At this juncture, I'd like to hand over to the Minister of Finance, Glenn, and then I'll come back to talk a little bit more strategically and focus on the outlook.

Good morning, ladies and gentlemen. It gives me a great pleasure to present the Nampak 2025 financial results for the year. I think in summarizing these results, it's been a period of strong earnings growth with significant reductions in debt and our finance costs, which we'll take you through as we go through the presentation, and has been supported through significant disposals during the year and improved cash flows. I think when we looked at the investment thesis in September '23 when we did the rights issue, all the things that we said we'd go and do in terms of reducing the debt, I think, are reflected nicely in this particular set of numbers. Overall, I think there's been pleasing progress in the period. Our revenue of ZAR 10.7 billion is up 8% from ZAR 10 billion in the previous period. We can see Beverage South Africa revenue of ZAR 6.5 billion is up 6%. The Diversified is up 2%, at just short of ZAR 3 billion. And Beverage Angola at ZAR 1.1 billion, up very nicely by 12%. Our trading profit of ZAR 1.3 billion has increased by 26% from ZAR 1 billion in the previous year. And the main contributor to that is Beverage South Africa at ZAR 794 million, up 14%. Diversified is down by 12% to ZAR 275 million. That is disappointing in the period, but still a very significant contributor compared to 2 years ago where it was not making any money. Beverage Angola, up 12% to ZAR 337 million, a very pleasing result for the period. Our EBITDA of ZAR 1.9 billion is up 26% from the ZAR 1.5 billion in the previous year, and Beverage South Africa at ZAR 907 million, up 13%. Diversified down 5% to ZAR 310 million. And Beverage Angola, very strong performance, up 30% to ZAR 360 million. Our operating profit of ZAR 1.9 billion is up by 13%. Included in those numbers is the successful conclusion of the insurance claim with a COVID claim. That was a gross amount of ZAR 250 million. There's a thing called a swing premium that we've had to pay, that results in a net credit to the income statement of ZAR 237 million. And then there's been a pension fund surplus of ZAR 65 million. Remembering that in the previous year, there was a credit for the post-retirement medical aid claim of ZAR 290 million. So essentially, what has happened is those first two items have been compensated this year by a nonrepeat of the post-retirement medical aid credit. There has been a change in the net impairment loss reversals. This year, there's been a loss reversal of ZAR 351 million. And I think one's got to look into that and show that, that's reflective of an improved outlook for the Angolan economy. In the prior year, that impairment reversal was ZAR 470 million, and that really was a partial asset impairment reversal for the diversified business in South Africa and the Angolan business. Very key feature of these results is the finance costs being down 45% in the period, down to ZAR 508 million from ZAR 926 million in the previous year. And I think the asset disposals of ZAR 1.5 billion have significantly contributed to that, coupled with interest rates that have been in our favor in the period. Headline earnings, there's been a turnaround in this number from ZAR 278 million to ZAR 872 million, up 213%, and that's translated into earnings per share of ZAR 139.71 and the headline earnings of ZAR 105.10 compared to ZAR 33.61 in the previous period. Our net debt, excluding the capitalized finance leases, has reduced from ZAR 4.4 billion to ZAR 2.1 billion. So that's down 52%, a very pleasing result for us in this set of results. And really, with the proceeds from disposals of ZAR 1.5 billion, we've also generated ZAR 2 billion in cash from operations. And in the period, we managed to settle in full what was classified as the disposal facility of ZAR 1.3 billion. So a far improved position on the debt front. This has resulted in a significant improvement in the net gearing, where that is down from 312% to 77% in the period. And really, it's a combination of two things that is happening there; the improved debt position, and then the equity base of the group increasing by 97% to ZAR 2.8 billion. One of the key features in the debt profile is we have no more exposure to dollar-denominated debt. And historically, that has been something that's played the business. There's no dollar exposure. Our net debt-to-EBITDA ratio has come out at 2x. That's ahead of the plan for this period, as Phil has mentioned. There wasn't a requirement to meet a covenant period for the previous year. But just to give you some kind of indication of what that number might have been, it's increased -- improved from 3.4x down to 2x in the period, so a nice position. And I'll show you later in the presentation what a pro forma position would have looked like, had the Zimbabwe sale have gone through, but it does reflect further upside in that ratio as we go forward. Our cash generated from operations before our working capital changes is up 38% to ZAR 2.2 billion, up from ZAR 1.6 billion in the previous year. And our improved trading profits are reflected in that performance. Working capital, there has been an outflow of ZAR 153 million compared to an inflow of ZAR 175 million in the previous year. And really, you've got to break that up into continuing and discontinued operations. In the continuing operations, there's been an inflow of ZAR 113 million. And the discontinued operations as we've sold those businesses, wind them down, we've had an outflow of ZAR 266 million. The return on invested capital has been reported at 22.7%, up from 17.2% in the prior period, and that is ahead of our weighted average cost of capital. If we look at the more salient features within the income statement, the revenue in South Africa, as Phil has indicated, has been assisted quite significantly by good growth in the 500 ml can. There's been a position where the demand has exceeded our ability to supply. So as Phil has said, with the Line 2 upgrade, if we had managed to get our production to the levels that we wanted to, we probably could have done better on the revenue level. The diversified is a moderate growth. It has a softer second half than in the previous year and a very pleasing position coming out of Angola, where we've had volume growth, and there has been a relatively stable kwanza in the period. The trading profit of ZAR 1.3 billion. There's been a margin improvement from 10.5% to 12.3%, and that's obviously assisted the earnings. And our operating profit of ZAR 1.9 billion is up 13%. There have been ZAR 120 million less in asset impairment reversals in the period with those asset impairment reversals in the period of ZAR 350 million. Our profit before tax is up 83%, and our profit before tax is ZAR 1.4 billion; and that's a consequence really of improved trading profits and lower finance costs. Our effective tax rate is at 19.3%, marginally down from the 20.1% in the previous year. And as we've said, the headline earnings up 213%. If you do a normalized HEPS number, which I'll take you through later in the presentation, that has come out at ZAR 77.39, and that's up 46% on a comparative basis. Total operations, there's been a profit of ZAR 3.5 billion compared to a loss of ZAR 381 million in the previous period. And really, there's a foreign currency translation reserve credit that has come through in the income statement of ZAR 2.4 billion, and that's reflective of an asset that was bought in Nigeria, Bevcan Nigeria when the exchange rate was ZAR 10.79 to the dollar. And on the date of disposal, the disposal exchange rate was ZAR 18.67. So we've had to recycle that through the income statement. If we look at the revenue growth and the couple -- that coupled with operating margin improvements, you can see there's been an increase of ZAR 100 million in the Beverage South Africa operating profit. There's been a reduction of ZAR 26 million in the Diversified business. An increase of ZAR 73 million in the Angolan business. And in the Corporate Center, through the activities that we've undertaken through various initiatives, has contributed an additional ZAR 203 million. What is pleasing is to see the operating profit margins in the Beverage South Africa business increasing to 12.2% and the very, very strong margins in Angola at 30.7%. And overall, an operating profit margin of 14.9%, up from 12.5% in the previous year. If we unpack the finance charges, there's been a reduction of ZAR 418 million in the period. I think if you go back to 2023 at the time when we were refinancing the business and incurring quite significant costs to do that, it's very pleasing that we haven't had any of those costs come through in the current year in 2023, that was an amount of ZAR 335 million. There's no such repeat of that in these periods. And you can see overall, the financing costs have reduced from ZAR 926 million to ZAR 508 million. And that's benefited from the disposals. There's a ratchet interest table within our financing agreements that as the leverage ratio improves, the interest rates improve with it. So there's been a combined benefit of the repo rate reducing in the period as well as our own leverage ratio improving. It's been partially offset in the period by higher-than-expected working capital levels for a portion of the year, and then we have spent ZAR 383 million in CapEx in the period. If we look at how we've moved from a ZAR 626 million profit for the year to ZAR 1.1 billion, really two big contributors. It's been the trading profit increasing by ZAR 268 million. Capital and other items have improved by ZAR 82 million. It's partially offset by these reduced asset impairments. But the big takeaway is the net increase in finance costs of ZAR 418 million. We have had to pay additional tax of ZAR 119 million, and that's resulted in the net profit for the year of ZAR 1.1 billion. On a normalized headline earnings per share, we're up 46%. And really, if you just common size both periods, if we take the earnings from last year of ZAR 278 million and we adjusted for the net after-tax effect of the post-retirement medical aid, which is the ZAR 290 million minus the 27% tax on it. And then in the slide last year that we presented, we showed you a whole lot of operational issues that occurred in the last year, we get to an earnings of ZAR 438 million. If we take out the pension fund surplus and the COVID insurance claim for this year, we get to ZAR 642 million, and there's the position on a normalized basis increasing from ZAR 52.95 to ZAR 77.39. If we look at the bridged results in the divisional results, I think what's quite interesting from this picture is the significant improvement in the trading profits from 2023 of ZAR 438 million to ZAR 1.3 billion in the period, and the trading margin improvement from 4.4% to 12.3%. So there's been a significant focus internally on margin preservation, both at the gross profit level and at the operating profit level. And you can see as we've journeyed through these years, those numbers have improved substantially. The operating margin also was very marginal at 2023, sitting at 14.9%. And the contributions to the group at a revenue level, Beverage remains the biggest contributor at 60%. The Diversified has come back slightly because of the slow -- relatively slower revenue growth and they're contributing 27%, and Angola is consistent at 10%. The reason why those three numbers don't add up to 100%, there's a ZAR 205 million sales to third parties as a result of the transitional services agreement in the disposals. Those revenues will not take place in the future year. If we look at Bevcan South Africa or Beverage South Africa, there are market share gains that present a strong avenue for growth going forward. We're positioning the business ready to take the opportunity of a change in pack size. We're relocating the Angolan line, and there's a significant growth opportunity coming from that particular business. The underperformance that was initially in Line 2 has now been resolved. Operating efficiencies are improving. And we'll expect a better result from our Beverage South African business. Diversified, there has been volume growth across several segments. We have battled in the fish total allowable catch has been a problem for our fish customers, and that's translated into lower sales for us in that area. There's been a strong first half in EBITDA and that outperformed the prior year, but then there's been a much slower second half in the current year. A very more stable currency in Angola has helped that business quite significantly. We've only incurred a foreign exchange loss of ZAR 3 million compared to ZAR 41 million in the previous year. We have invested in what they call dollar bonds in that market. The recovery rate on those bonds is very close to 100% when you'd convert them back into cash. And we've also prepaid for inventory and managed the foreign exchange position well to avoid those losses. There is an increased customer base with new customer fillers in the market, and there's a filler that's being commissioned in the DRC, which presents opportunities for us going forward. If we look at the balance sheet, the assets -- the total assets of just short of ZAR 11 billion have contracted slightly by 3%. We've managed the inventories with a very, very active focus on those. We've been looking at the forecasting, trying to improve that wherever we can. And then the trade receivables, we have contracted those by 1%. Despite an 8% growth in revenue, we've got a digital transaction center that is focused on all the processing. And there's been a significant improvement in overdue receivables, and that's reflected in that improved number. In the trade payables, we're trying to maximize those to the extent that possible. And we've -- the combination of all those three items, we've ended up in a current ratio that's very healthy at 1.8x, slightly down from last year's 1.9x. And on an asset test basis, both periods reflect 1.1%. The asset held for sale still remains in the Zimbabwe business, and we're in the process of looking for additional acquirers of that business. Our pleasing results here is the total equity is up by 97%, and that's to ZAR 2.8 billion from ZAR 1.4 billion. And we've spoken about the significant improvement in the debt position where our net debt is sitting at 2.1%. The gearing, 77%, down from the 312%. And the net asset value per share has increased by 110% from ZAR 142 to ZAR 298. We've got strong funding capabilities, and we've got significant facilities available for future growth. We have secured the requisite funding for the relocation of the line from Angola. So there is adequate funding for all those initiatives. I think the takeaway behind the capital expenditure, we continue to be disciplined in this particular area. We have spent ZAR 383 million in the period, marginally down from ZAR 393 million in the previous period. You'll see the mix has changed to some degree, where it was, I think, 68% focused on expansion activities in the previous period that's related mainly to the Line 2 relocation. In the current year, there's been a switch more to the replacement expenditure, and we look to optimize the benefits of the Line 2. We have packed up the lines in Angola. There are approximately 130 containers that will leave Angola and arrive on a ship in Durban, and then be transported at the N3, and reassembled in the Springs plant. And I think that will elevate certain of the CapEx spend in the FY '26 year, and the benefits will only accrue in the main from FY '27. The CapEx spend from FY '27 would be in the region of ZAR 300 million, and we'd expect those to decline to about ZAR 250 million in the subsequent years. If we look at the net debt position, we started at a ZAR 4.4 billion net position and moving down to the ZAR 2.1 billion. We've generated cash after working capital changes of ZAR 1.7 billion. We've funded ZAR 749 million in running the business, and that's ZAR 555 million of that has been physical cash paid in finance costs. So that represents 31% of the ZAR 1.77 billion that we've generated. The retirement benefit requirement funding is still ZAR 54 million, and then we've paid ZAR 140 million in tax. There's been an inflow from investing activities, and that's primarily because of the disposal of the Beverage Nigeria business, which contributed ZAR 1.3 billion. And in the year, we've increased the cash position by ZAR 838 million. I think getting to a leverage ratio of 2x ahead of the initial plan is very pleasing for the group. And this slide attempts to demonstrate that had we managed to close out the Zimbabwe deal at a disposal value of ZAR 25 million, we would -- that we would have ended up with a net leverage ratio of 1.1x. So we're still focusing heavily on trying to close that transaction, and then it gives a very, very strong balance sheet to ourselves. And a point to make here is this leverage ratio excludes EBITDA from Angola. It is only South African EBITDA that gets taken into account in this particular position. And you can see over the period as well, how we've managed to reduce the dollar exposure. And at the end of September 2025, there was no exposure to foreign exchange risks in our funding package. I think we've gone through the majority of the cash flow statement, but I think overall, very strong cash flows from operations. We have absorbed some working capital, but one would expect that where the revenue has grown by 8%. There's been a reduction of ZAR 405 million in the funding costs and the proceeds from disposals have clearly assisted the cash flow. And we ended the year with a very strong cash position with ZAR 1.4 billion for total operations. If we unpack the working capital position, we have invested ZAR 185 million in working capital in inventories. There's been a release of ZAR 79 million from the trade receivables. And then there's been a slight investment in trade creditors, but that's how the ZAR 153 million is made up, and that's made up of ZAR 113 million generated from operations, ZAR 251 million of that comes from the Beverage South Africa business generating cash. Our Diversified business has absorbed ZAR 104 million. The Angolan business has absorbed ZAR 37 million, but that's really as a consequence of hedging activities where it's prepaid for inventory ahead of time. And then in the discontinued operations, as we've wound those businesses down, there's been an absorption of ZAR 266 million, and it's predominantly come from Bevcan, Nigeria and our Kenyan operations. Our inventory days remain quite efficient at a net working capital position of 47 days. So I think if we go back to the original investment thesis, sustaining that investment thesis, there's been a successful implementation of the asset disposal plan with further upside as we look to dispose of our Zimbabwe asset. There's been improved leverage ratio at 2x. That's ahead of our schedule. There's been improved operating margins with a very significant laser focus on operating costs. Our net finance costs have reduced by ZAR 418 million or 45%, with further reductions possible as we improve that leverage ratio. And bearing in mind that the proceeds from the Bevcan Nigeria deal only came in at the end of January. So they're not in for a full period in this period. And our return on invested capital of 22.7% ahead of our weighted average cost of capital. So I think the turnaround is gaining traction. There have been strong cash flows, lower debt, lower finance costs. And this just happened to have turned out this way and I have put this whole position is balancing on a turnaround reflected in headline earnings where that's increased from ZAR 278 million to ZAR 872 million. And it's just amazing how those numbers have come out that particular way. I think margin expansion has driven it, reduced funding costs have driven it. The proceeds from disposals have been a significant contributing factor to the reduction in gearing. We've been targeting improvements in free cash flows and hopefully, that continues to fuel an improvement in the share price. Thank you.

Glenn, as always, thank you for your professional and detailed presentation. Now that the frenzy has abated somewhat. The thing that gives me the most comfort is that we have a strategic clarity about the way forward, and we have operational momentum. And it's rooted in our five strategic themes, which I'm not going to elaborate on again. However, we must ask of ourselves what takes center stage for F '26 and onwards. And the first point I'll raise is a diversified strategic review. We've been so caught up in corporate activity that we haven't really had the time, believe it or not, to look under the bonnet to the extent that we now can. So let me give you a perspective on Diversified. We forget very easily that, that entity made a loss for 8 years before we got going. We have critical mass with leading food producers in the country, and we forward contracted for the medium term, which bodes very well. Here's the statistic for you, however. Generating circa 21% of the trading income, it attracts just over 50% of our manpower costs in the firm. And the manufacturing footprint is arguably too wide. So now that we take a closer look at it, we use the term fix, sell or close. And this is a strategic review that will take place around Diversified. I'll work very closely with Riaan on this in January, so that we know exactly what we want to do to fully optimize that part of the business. Getting granular growth rolls easily off the tongue, but we truly have identified every market share opportunity. Within Beverages, we hold massive market shares with big global customers, which we're close to securing. And we've also forward contracted a big portion of the business going forward for the medium term. The step change in manufacturing efficiencies is the fuel for growth. We've done the math. Every 100 basis points that you manage to achieve in improving your operating efficiencies unlocks massive funding ability to grow the business and compete more effectively against those that wish to eat our lunch. The cost and frugality mantra is now embedded in the DNA of Nampak, and it will never disappear, and we will only accept 0 overhead growth going forward or less. Glenn and I referred to smash the debt. It's important that we get the Zimbabwean asset out the way and the businesses continue to generate the strong operating cash flow to aid and abate us meeting that objective. And then the appointment of the right CEO, I always find it intriguing. When a CEO resigns, often Boards, fortunately not ours, but often Boards say, find me the best CEO to run the company or find me a good CEO to run the company. And it's absolutely the wrong question. What you need to understand is the need state of the organization as it enters its next cycle and you match the human needs or capabilities to the organizational need states. And that's why I'm so thrilled that Riaan is joining our firm. We had the luxury of working together from 2013 to 2018. We understand each other. We can lift the phone to each other three times a day if needs be. There are no egos in the way, and that can only bode well for this company going forward. This is said without hubris. What gives Nampak the right to win? One shouldn't underestimate the focused portfolio and how our attention is no longer diverted by numerous activities that have taken place over the past 33 months. We can vouch for quality distinction. Our customers want to do business with us because of those quality credentials. And it's underpinned by phenomenal R&D capability, which we retained in the company, which cannot be emulated by our competitors. Scale matters, and we have large market share positions. But having said that, with some very big multinational customers in the country, particularly within beverages, we hold 30%, 35% market share. That should suggest to you that there's ample room for growth. We do business with a global client base, and that's a privilege. And I'll tell you why it's a privilege because they're exceptionally demanding. And the more demanding they are, the more pressure it places on us to make sure that we're efficient and we continue to grow as they do so themselves. And we've worked really hard at the front end to ensure that these long-standing and proven relationships are concretized. The industry we operate in is capital intensive with high industry barriers. And fortunately, Nampak doesn't have to expend too much CapEx in the next 3 years. And if we do, it will be to support further growth, and that's the best investment you can ever make. It's taken time for me to understand our management capability because initially, it was in developing maturity, but I'm pleased with the team and the effort that they've put in alongside me to get us to this point. So what makes for an investable stock and a credible Nampak investment thesis? In the first instance, a revered brand and the privileged position of a revered brand carries with it an obligation to develop and manage the brand to its fullest potential. I've spent 30 years in the branded driven products industry. And you have to respect the brand. And in our instance, it's the parent, Nampak. And what Nampak connotes is quality distinction across the value chain. Secondly, we can grow and we have the capacity to invest to grow. And then we have our people, talented people. And I'm hoping more inspired and have grown stronger through this process, difficult process that we've been through. I can assure you I have, and I don't think anybody has cornered the market on growing. Not many companies can tell you that they have a self-help program, which we do. We have so much more opportunity to optimize this business and further room to open up our margins or release some of that margin if we needed to compete more effectively, but we've got the fuel that we can generate to do so. We're very well capitalized and high entry barriers. And we have distinctive capabilities. Paul Kembe invented that term, an academic. And the definition is it's those attributes that your competitors cannot emulate easily. It's a very tricky exercise. You should go and do it some time. Very difficult to find the distinctive capabilities that your competitors cannot emulate, and we possess a host of those. We have a resuscitated balance sheet and strong cash flow, and the operations have cash-generative ability. I want to thank you for the privilege of leading the organization through this transition. André, I say this to you and Adrian. Without your vision and support and the support of our shareholders in those initial days, the pain of cobbling together an investment thesis that resonated with you. Were it not for you, it would have been game over for Nampak, and this is what people don't realize. André, thank you for the constant guidance and the perpetual prompting to the point of irritation 5 times a day. You know Nampak, André often tells us is a small company, it's a small cap company. I've spent time in large-cap companies. After a while, you stop worrying about the numbers, it's about what you do and what you contribute to society. Had we not got this right, the livelihood of thousands, I mean, thousands of dependents would have been affected by the failure of this company, not to mention related industries. So that in itself is worth celebrating, let alone the numbers. So I don't hold your breath, but I'm letting mine out when I say I bid you farewell for the very last time and to say it's been an absolute privilege. It's extracted every ounce of energy out of my body that I can assure you. But what a wonderful privilege to be able to learn and grow in the latter part of your career. So I'll forever be indebted for those of you that entrusted me with the task alongside my magnificent team in the turnaround of Nampak. But when we say welcome to the grind in our video, we mean it. This isn't a slam dunk. There's still a tremendous amount of work to be done. So Riaan, as I pass the baton to you, you've got some age on your side, which I don't have, whether you're as fit as me is a moot point. But I will say the job is never done. And I said this to Karl Leinberger once when I was at Pioneer Foods or Tiger, I can't remember. And he said to me but can you keep going? Is there more that you can fetch? And it sounds somewhat trite and my retort to him was that the job is never done. You bring in new leadership with new energy, new perspectives. When you've got a solid base like we have at Nampak, I can only believe in the future success of the firm going forward. So I thank you so much for your attendance. Thank you for your support yet again, and I'm more than happy to field any questions that you may have. André is going to say a few closing words, our Chairman, and then we'll go to question and answers, if that's all right with you to walk?

I think Phil and Glenn has given us a great overview of the business during the last year. The most important thing from my side is looking forward. And then looking forward, the one thing I have to say is that the change in Nampak during the last 3 years, I think, has clearly been personality driven. So the gentleman next to me, I think, gave his heart, his energy, soul to transforming this business from a business that was in deep trouble to one which I can now say we're truly proud of. I addressed the staff about 2 years ago. And I think the one thing I mentioned to the staff and the people that work for us is that Nampak had lost the trust, the trust of its customers, its shareholders and the greater community. And with Phil's tireless efforts and drive, I think -- standing here today, I think we've restored a large portion of that trust. Our customers, I think, trust us again. They recognize our competence. They want to do business with us. Our staff see the future, they're positive. But it was really a personality-driven effort. And as Phil said, it was tireless. Sometimes it took a personal toll on him. But the business where we start and the business now is two completely different businesses. Going forward, I think our challenge is to move away from a personality-driven business, which Phil is pushing ahead the whole time to one where we embed systems into Nampak to make sure that it's never people dependent again. You need very good people, but it cannot be reliant on one person or one person's drive and energy to make the change. So I think we've been fortunate in finding a person like Riaan to take over from Phil. And I've got a great sense of comfort standing here today. CEO transition is always -- you always in a nervous position because you never know whether it's going to work. You hope it is. But standing here with Riaan and Phil together, I can say that I've got very, very little doubt. In fact, no doubt that the initiatives which we started and the activities that are important for this firm will be continued going forward. The fact that they've got a working relationship historically helps. But in terms of the personality and the interactions that I've had with Riaan and the way he sees the business, I'm very, very confident that what you see on the screen here, reflecting 2025's performance will be taken forward in 2026. So we've got a couple of specific challenges, I think, in 2026, and Phil highlighted those in his slides. I'd say internal manufacturing excellence is high on that. And Christian has joined us, and we're very excited. I think you've been here 5 or 6 days and he's been walking around the factories. But I think we're focusing on the manufacturing disciplines and putting systems and processes in place to make sure that the things which we need to do to maintain our margins, which, in my mind, is one of the most critical things which we have to do is the 12.3%, which you've got in South Africa. Maintaining that margin is critical to our financial performance going forward. And the only way you do that is to improve efficiencies so that you can counter any price pressures which are likely to come going forward. And we can see our customers. We're dealing with large multinationals. Like what is the large multinationals' favorite sports, squeezing its customers. That's what they do really, really well. So the ability to navigate that, make sure that the value proposition, which you've got in Nampak is recognized. But secondly, having some fuel in the tank that you have to give away something doesn't impact those margins. That's critical, and that comes from the manufacturing execution, which we're looking at. So that's a key focus. Secondly, what has changed in Nampak in the last years is customer focus. I think there was an arrogance 5 years ago and saying, it's a take it or leave it attitude from Nampak. What we've done with Phil at the head of it is to build a relationship with the customer, to understand what the customer is trying to achieve, and to make sure that we, through our customers, help them achieve their brand goals. So I think Riaan has got an incredible knowledge of what a brand represents, how to deal with the customer. He sat on that side of the fence. And that new insight, which Phil brought to Nampak, I think, will be perpetuated when Riaan joins us. So that's another critical thing. It's like understanding our role in the customer value chain and making sure that we get paid adequately for that, but also deliver on those objectives. So I think Riaan will bring that to the table, and I look forward to that, Riaan. Then finally, the one thing which we've always wanted to do is pay a dividend to shareholders. So in my Chairman's statement, you'll see that one of the objectives we've got is at the end of this year, if we meet our financial targets and objectives, is to reinstate the Nampak dividend. Nampak was always seen as a dividend-paying company. And it was one of the reasons people bought Nampak. And it goes back to the point of trust. So I think one of the final ticks in regaining trust with the investor community and with our shareholders to be able to reinstate a dividend, and we're going to try and do that at the end of this financial year. It's clearly one of the objectives which we set as a Board and we said to the management team. And then finally, Phil is not gone. Phil rejoined the Board. We invited him on to the Board when we just started this journey and he transitioned into the CEO, fortunately. But now he'll go back into the original role, which he played, which will be a non-executive on the Board. And I think being able to do that in a corporate transition is really valuable. And you've got some of these companies that deal with cool-off periods and things like that, and you just lose so much knowledge. But the advantage which we've got, and I think we were fortunate is to manage the transition in a way, and with the right people that enables us to keep Phil on the Board as a nonexec, to help him work with management. And I think the fact that Riaan and Phil have got a great relationship just helps us. So you're not gone, Phil. You've just changed chairs, and we look forward to your contribution going forward. Thank you.

André, thank you very much for that summary of the past and flattery gets you everywhere. And I know it was said with an abundance of sincerity. So thank you. Can we now have any questions that anyone may have. Hello, James?

Phil, before I ask my question, I think as you depart your executive role, it's important for other people as well also to recognize the huge role you've played in saving this company. It is an important company for shareholders. But much more importantly, I think it's a hugely important company in oiling the wheels of this economy. And therefore, I think the -- what's happened over the last 3 years is hugely important. And as someone who's analyzed this company for 30 years, I just wanted to say that.

James, thank you very much. It's so insightful because we said -- I think it was one of the first presentations where we said Nampak's position in the middle of a very important value chain for South Africa is so critical. We have the raw material to the left and our customers to the right, equal demands on both sides. And I'm so fearful of the rate of de-industrialization that potentially can happen in South Africa. I've traveled north of our borders. I've practically been to every country on the African continent. And to find really decent manufacturing assets is difficult. And yet, I understand why some of our customers in South Africa are trying to reduce their cost base, but it's coming at the price again of the industrial base in South Africa. They're defecting from us in favor of imports, and we can talk more about that when we have our one-on-one sessions.

Okay. And -- but a couple of more basic questions. I think two of the interesting things from these results. Firstly, the situation with the ends business. Could you just talk around just how important the ends business is? So what the risks and rewards are there? And then secondly, in the Angolan business, it's great to see that business improving. It's got huge potential. You mentioned the DRC there. Now that used to be a huge part of the business. And the fact that you're mentioning that, could you just talk around what the possibilities are around that business? And then I just wanted to not ask a question, but just mention the footnote that Glenn mentioned about the fact there's no U.S. dollar debt. It's a very small comment, but it's a huge change over the last 3 years again in terms of giving this company future.

It is indeed, James. Thank you. So the first question on ends, the profit that we generate from ends shouldn't be underestimated, but we've never disclosed that number, and there's no intention of disclosing it at this stage, but I can say it's material. What isn't material is the quantum of business that we've lost on the basis of not supplying Nigeria, okay? We can definitely do something about plugging that hole. So you should sleep with both eyes closed in that respect, James. But it's important, again, same theme that Andre has impressed upon us that unless it sounds trite to compete, you have to compete, which requires you to have the most efficient cost base possible. The world is a big place. And if people can make a buck by acquiring or procuring goods from other countries, they're going to do it. I only wish we had greater levels of protection and more efficient processes within our government authorities to assist businesses like ourselves because they think it's Nampak being affected, but it's this entire value chain that you speak of. Relegate South Africa to our competitors and eliminate Nampak again, we've got short memories and let's see what transpires. So we won't even let that cross our minds. In respect of the Angolan business and the DRC, so we are transporting product to the DRC. One of our largest customers opened up a new -- opened up new filling capacity in the DRC, and importantly, though, which I really like, is the fact that we no longer really have two big customer dependency in Angola because two new entrepreneurial operators have opened up filling capacity in country in Angola. So if that economy slowly ticks up, and we maintain the stable currencies, although Glenn and the team have got really good at ameliorating some of that risk as well through treasurable and prepayments, so that we don't have too much exposure when we have some surplus cash or cash trapped in debtors in the country. So growth is definitely on the cards for Angola. We see it. I can't forecast, but Beverages per se has started off well into the season in both geographies. So I suppose that's something we're truly pleased about.

Yes. Phil, there's a question from Rowan, Chronux. It appears all can manufacturers in SA are expanding capacity in 500 ml. Is there a risk of oversupply? Or is demand strong enough to absorb the extra capacity?

Clearly over many, many years, we've developed a repository or a database as to what industry capacities look like. Suppliers advice you of the type of capacity that's being installed across the entire industry. And we don't believe it will be too long should the economy even stay in its constant state. Remember, we spoke about three umbrellas of growth in Beverages. One, it's one of the few categories that's growing. Number two, the substrate is growing. To give you an example, in South Africa, within a very, very big client in South Africa, a global client. In South Africa, the can substrate constitutes 13% participation. In Brazil, it's 40%. And you can see that it's becoming a fashion business. And I mentioned fashion specifically having spent time in snacks and treats in this country is that it's not faddish. The combinations and the convenience and the appeal and all these different looks and feels and wonderful textures we can apply to the can is definitely on trend. So that is all positive.

Yes. He's also requested an update on the Zimbabwe asset disposal process.

As Andre always tells me, when you're in the process of selling assets, the best way to sell an asset is to run the business well. So that's what we're going to continue to do. And that's what we're doing right now. Zimbabwe didn't have a good year, but for all sorts of external vagaries. And when you start selling an asset, your customer base starts to move around and wriggle a little bit. But by the same token, we're going to adopt a two-pronged approach. We're going to obtain a resolution from the Board tomorrow in Zimbabwe. We hold 51.3%, of Zimbabwe. We're going to get a resolution to break up the four assets, break up the company in a sense and see if we can sell them separately. There's certainly an appetite as opposed to the sum of the parts. But if someone wants to buy the whole business, they can. But we're not being distracted by it, but we're focused on selling the asset because smash the debt is definitely on the menu.

Another question from Paul of Rozendal. What will the new Angolian line add to volumes? And how long will it take for it to be fully operational?

Respectfully, I think the question demands too granular response from me in respect of our competitive positioning in the market. What I will say is that, that line coming from Angola will produce smaller packs. We're also expanding CapEx on another line to open up 500 ml capacity. And our small pack capacity has been constrained for the past 3 years amidst demand. So this is a double win. You're putting in capacity to grow your 500 ml and you're unleashing capacity for your small packs, which you've restrained.

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For those of you that never heard, Andre, this is a very compelling point about this Angolan line. The one way to destroy efficiencies in a plant is constant changeovers. Think of the setup time, the downtime, the spoilage, which we call spoilage, it's waste. Think about your decorators where you're doing multiple colors and you have to do all these changeovers. Now we have line flexibility so that you can determine I'm going to run this specific raw material on this specific line. I'm going to run these specific products, high-volume lines on these lines. And that's how you're going to get the efficiency ramp up before we even do the hard work. Sorry to put the manufacturing guys under so much pressure, but you chose to attend today.

Yes. Is there another question on the floor?

Thank you. Phil, our paths have crossed at many companies over the decades. So from myself as an analyst, I echo what James has said. Well done in the tenure to you and your team for the last few years. And I think as I said to you the last time you said that you were leaving, and I'm glad you're staying on as a nonexec, you're far too young to retire. So I'm sure our paths may cross again at some point in the future. From my perspective, can I ask on the 500 million cans? What percentage of your product lines comes from energy drinks, which has seen a huge growth in market share and volumes in the last few years? That's question one, please.

And I've got enormous respect for you. And again, I think that's just one level of disclosure too much. Let me say this to you, it's enormous, okay? And importantly, we hold really, really big market shares within that growing category. And by the way, Anthony, I'm not so young. I'm 60, okay? I know I look in showroom condition, but my wife is also on this call, and she'll say, God, help you if you offer him another job.

You're not much older than me anyway. Second question, you mentioned that you're frugal and thrifty at Nampak. My friends at Premier are also very frugal and thrifty with the Rhodes transaction they've undertaken. And in conversations we've had in passing, they're now taking on several new canning lines. They mentioned that they're looking to cut costs. What percentage of Nampak's business is aligned currently to Rhodes?

Rhodes is our biggest customer in the Diversified portfolio. and I have had a long-standing relationship built on commercial substance. People often say, oh, you've got a good relationship with your customer. A relationship is a consequence of doing things well and in a commercially astute manner. The relationship follows. That said, we've had a very good working relationship with Peter over a long period. Half of Tiger resides in Premier that I worked with for many, many years. And we have a term contract with Rhodes that I'm very pleased to have. And I see no reason for that to change. We've looked after each other in a very balanced manner commercially.

And again, on the, call it, the cultured line, I was with Neville last week. And we had a good chat about the potential for Lucky Star and other brands as they move further into Africa. What potential do you see again for further growth inside Nampak for the canned fish lines for your business?

We fortunately supply the bulk of the fishing industry and again, secured a term contract with Oceana, who is by far the largest participant in the category. But you have to appreciate that you're contending -- I spent 12 years of my life in the fishing industry, and I sat on the Oceana Board. You have to understand the vagaries of fishing. Now there's some climate change stuff happening, but often there's a resource management issue. You have sluggish bureaucracies in announcing your TAC in the country. There's an amalgam of aspects happening in the industry. But right now, the challenge, as I understand it from Neville, is that historic destinations where you find your frozen fish requirement for repacking in South Africa, they're battling to find fish. But given the strength of that brand, let me tell you, they will move heaven and earth to make sure that not one less can is sold during whatever period. All I can say to you right now is we're supplying very few cans into the industry. But that shouldn't bother us. I mean it's ebbs and flows, and that's what happens if you're in businesses that are governed by a total government.

Phil, another question from Paul from Rozendal. Why do you want to reduce debt to 0? Is it not more accretive to rather buy back shares and keep the net debt-to-EBITDA ratio stable?

I don't know if we mentioned reducing the debt to 0. When we say smash the debt, we'll have the optimal capital structure for the firm as we deem appropriate at the time. And if that translates into a share buyback, Andre has made a commitment that if we have the luxury in the near term, our first priority is to begin paying back something to our shareholders. It's been a drought. You can't survive in total shareholder returns on capital appreciation alone.

All right. And then the next one, Matthew from Blue Quadrant. He's asking about the CapEx elevation in FY '26. This is before it returns to $300 million from FY '27. He was just asking about capital ranges, what it's likely to look like in 2026.

Glenn, do you want to give a precise number because it's the tail end of the Angolan installation?

The Angolan installation will elevate that number quite significantly, but it's going to come in at a fraction of the cost of procuring a new line. That's almost a sunk cost within the Nampak Group. So I would think for probably FY '26, ZAR 600 million is a more realistic number.

Phil, congrats again on the results. I mean just a question on competition in the Bevcan space. I mean just what is happening out there in the market? Do you guys are adding capacity? What are you seeing from your competitors? Obviously, now that you're making a reasonable margin does kind of increase the opportunity for them to undercut it? Just maybe an update.

I was once accused of having overheated margins by a customer. And without being or meaning to be arrogant, I said, don't worry about my margins, we're trying to run our company to the best of our ability. If that translates into good margins, then so be it. We're still not best-in-class globally. So how the competition reacts to that speaks to us in the first instance, doing as we say, fulfilling our commitments with our customers, making sure that these efficiencies in our plants coming through, making sure that we keep a lid on costs so that we always have a war chest. But we've made a point as well of forward contracting. That is very important so that one understands the annuity effects of business going forward. And that arguably is the most compelling point. The rest are just critical enablers. So do we take competition lightly? Not at all. They'll always try and undercut us on a price basis. But you do not build a brand's proposition on price alone, it's perceived quality or perceived benefits over price. And if a customer understands that brand proposition that Nampak has to offer, then price doesn't get relegated to a nonsense issue, but it forms part of the equation, not the entire deciding factor.

Nick from Signal. Bevcan goes into a seasonally strong period. Can you provide some guidance on your projections for the season?

Can you repeat that, Teboho?

Can you provide some guidance on your projections for the season? And this is for Beverages.

Well, it's very hot. It's very windy in Cape Town. We have an insatiable thirst. And what I'll -- the only thing I'll commit to is that we've had a very good start.

Clear. Are there questions from the conference call line? No questions. All right. Any further questions from the floor? I think.

In closing, thank you very much, and it would be like hugely remiss of me not to thank the team that I've worked with over this difficult period. We've come out in a better place. You know that the work starts now. There's no rest for the record. But I've said to you, and I'll say it again that the CEO always gets shouted with far too many accolades. You bet a chief conductor. And if you want this orchestra to split out a half decent sound, then you've got to make sure that all the players do as they have to. And that's why we've worked well. We've had great team cohesion, and we all want to achieve the same thing, and that's sustained success. So thank you very much for your attendance, and look forward to seeing some of you over the next couple of days.