Nampak Limited (NPK) Earnings Call Transcript & Summary

All right. Welcome, everyone. This is the Nampak Interim Results Presentation. My name is Teboho Lempe. I'm the Investor Relations Manager for Nampak. In attendance with me today, I'd like to welcome our Chairman, Mr. Andre van der Veen; our Chief Executive Officer, Mr. Phil Roux; and our Chief Financial Officer, Mr. Glenn Fullerton. Thank you for your in person and webcast attendance. We are about to explore an encouraging set of results. Just for today in overview of the presentation: we'll be sharing some color on our critical milestones achieved as part of the transformation objective, our first half for the financial year 2024 performance and our financial highlights and just an outlook. We'd like to say we have 1.5 hours set for the presentation. During that time, we will take questions and an answer session. So without any further delay, I would like to welcome Mr. Phil Roux to take us through.

Thank you very much, Teboho. A warm welcome to all of you in attendance, we greatly appreciate your presence and to all of those online. The most recent period for me personally is reminiscent of Elton John's hit I'm Still Standing. The past 15 months has required a gargantuan effort by all at Nampak. Notwithstanding the significant transformation imperatives which we will update you on, you would be aware of the consequential impact of the invasive cyberattack on Nampak. These incidents have become globally ubiquitous. Nampak has an excellent track record of operating in a secure IT environment, excelling in penetration testing and our recovery protocols were again validated by our auditors. We nevertheless apologize for the delay in our reporting. You would recall 13 months ago, I surfaced what was viewed as early observations requiring intervention. As indicated by the legend, good progress has been made in areas that could be positively impacted. The presentation which follows will unpack this and so too the financial outcome as a consequence. The business environment within which we operate remains under enormous pressure. Consumer spending is constrained in South Africa and volatility in some geographies north of our borders. Nigeria has suffered a 29% volume loss consequent to the weak economy and 40% currency devaluation continues to plague our financial results. No doubt would have observed the news flow on the impact it has had on large companies who are either exiting or have to recapitalize their businesses. The proceeds of the sale of Nigeria is, however, expected by the end of September subject to the fulfillment of the Competition Commission Authority approvals in country. There's been a promising recovery in volumes in Angola despite economic headwinds, which is largely due to the doubling of inflation. Normal trading with our largest customer has been restored having resolved payment disputes over an extended period. Nampak's performance in Zimbabwe is anomalous to the disruptive in-country dynamics. As it continues to perform well, however, does give rise to hyperinflationary accounting challenges. Nampak, however, must cultivate a growth mindset given the multiple vagaries economic or other that these become less of an inhibitor going forward. As a reminder, our strategy is rooted in 5 core focus areas. Portfolio optimization in the first instance is rooted in weed and feed mode, namely divestitures and the repositioning of our metals business in South Africa. We anticipate we will soon be on the offensive in an effort to grow share whilst benefiting from category and substrate growth. The core Nampak business namely the Metals Group, which is our defined end state, has performed extremely well due to multiple work streams. We have reached critical milestones to date. DivFood turnaround has been spectacular yielding circa ZAR 200 million swing in profitability at the half year and generating ZAR 139 million in operating profit. There has been a step change in the Bevcan performance consequent to cost saving initiatives and customer and product mix enhancements. We have eradicated surplus costs and inefficiencies, however, with further value to be unlocked. We've also installed new capacity as promised to capitalize on the specific pack format growth. And furthermore, we have the potential to relocate a spare line that will never be utilized in Angola to further bolster our offensive going forward. A reset around customer obsession, self-directed leadership and frugality are all being established as cornerstones of our organizational culture. Expanding on the success drivers of the diversified portfolio entity; the key contributors included cost curtailment, efficiency improvements, portfolio rationalization and most importantly and shouldn't be undervalued, revitalized leadership and management. There's so much upside for this portfolio as a growth driver for Nampak in revenue and profitability. Numerous value chain initiatives are being considered and evaluated as market and competitive forces evolve. The manufacturing footprint for one is far too wide; we have an abundance, SKU proliferation is vast and complexity is ever present. The business has not been devoid of inhibitors in the first half. African economies are in a mess, however, there is money to be made notwithstanding. The volume in Nigeria, the volume loss per se has impacted our earnings and we also incurred some volume loss in South Africa which we mitigated. Unreliable municipal energy supply at our Springs plant impacted our service levels repeatedly, which will be resolved in the short term. The cyberattack I cannot tell you was so invasive and extremely distracting and resource intensive whilst trying to focus on this transformation agenda. Excellent progress has been made on divestitures in line with our asset disposal commitments, including the high value assets of Nigeria and liquid cartons. Thank you to all of you who approved that this morning. ZAR 243 million was paid to lenders in the first half in line with this requirement. The jury is out as to whether we sell Zimbabwe and Angola so this provides optionality. There's no immediate haste to offload these assets certainly not at the right values. The financial outcome of our effort to date is reflected on this slide. So we focused and split the results for the first time between continuing and discontinuing operations, which makes sense at this juncture. And you would have seen that our revenue is up some 7%, trading profit 133% and operating profit before net impairments 328%. I think it's best to focus on the absolute amount of ZAR 1.1 billion. Insofar as the Metals Group because this is what the new business portends going forward, you're looking at the new Nampak on the right. So the revenue up 6%, trading profit up 108% and operating before net impairments up 134% to ZAR 679 million. I'd like to hand over to my colleague, Glenn, who's going to take you through the financials in a lot more detail, and I'll be back for the outlook and any questions you may have.

Good morning, ladies and gentlemen. It gives me great pleasure to take you through the financial results. I think as Phil has mentioned, it's been a period of extremely hard work made more challenging through an unfortunate cyber incident. But I think Nampak has come through that very strongly and it has certainly shown the strength of our IT systems and our recovery process. So to all of my colleagues who have assisted in that, I thank them. If we have a look at the financial overview and we'll start with the continuing operations. The group revenue of ZAR 6.2 billion is up 7% from ZAR 5.8 billion and pleasing increases in Metals, Plastics and Paper with revenue up 6%, 9% and 10%, respectively. At an operating profit before net impairments, we've delivered ZAR 1 billion in operating profit, up 328% from the ZAR 235 million in the corresponding period and operating margin of 11.6% has been delivered. If you include the post-retirement medical aid gain, that margin is 16.3% and compares very favorably to the 4.1% delivered last year. An operating profit of ZAR 992 million that is after impairments has been delivered compared to a loss of ZAR 558 million in the previous period. A very, very pleasing turnaround in the DivFood portfolio where there's ZAR 186 million positive swing, a very good step change in our Bevcan South Africa business where profitability is up 62% and a significant cost saving at the center has delivered ZAR 159 million in cost savings. The impairments in the period have decreased from ZAR 793 million to ZAR 13 million and that has assisted the profitability. Through negotiations with the post-retirement medical aid members, we have delivered a gain of ZAR 290 million. We have continued to offer a solid post-retirement medical aid benefit to those members, but we have capped the increases going forward and limited the plans that are encompassed by that plan. That liability has now reduced by 42%, which is a pleasing impact on the balance sheet. And if you just index this relative to the value of the rights issue last year, this represents about 30% of the net proceeds that we got from the rights issue. So a very meaningful initiative internally to deliver that number. If you index it relative to the net asset value per share, it effectively represents a ZAR 25 improvement in the underlying net asset value and clearly that process has not involved any dilution to shareholders. The net finance costs of ZAR 459 million are down 7%. It has benefited from the net ZAR 960 million that has been utilized to repay debt that we got from the rights issue. It has been a higher interest rate environment and I'll unpack that for you just now. And the ZAR 243 million that we paid late in the period to the banks should benefit the second half. If we look at the profit for the period of ZAR 395 million, it's a positive swing of almost ZAR 1.3 billion in the period and there's a slide that will show you how we've achieved that in the period, which resulted in a headline profit of ZAR 447 million compared to a headline loss of ZAR 327 million. This has culminated in a return on investment of 12.1%. That excludes the post-retirement medical aid. If you do include that number, it is 17.1%. What we have done is taken decisive action around the noncore assets and this has resulted in an asset disposal program that has got ZAR 2.2 billion worth of assets classified as assets held for sale. There are associated liabilities with that of ZAR 442 million and those have been classified in the balance sheet accordingly. There is a loss from the discontinued operations of ZAR 530 million, 98% of which is represented by non-cash flow items and that compares to a loss of ZAR 1.6 billion in the prior period. The net debt is down ZAR 1.3 billion from the comparative period down to ZAR 4.6 billion. That's obviously the net rights issue proceeds have contributed to that and we've repaid ZAR 243 million from the assets that we've disposed of in the period. We are due to pay another ZAR 477 million on or before 30th September this year and are well positioned to do so through the asset disposals that have now received approval from the shareholders. The cash generated from operations of ZAR 905 million is up 53% from ZAR 591 million in the first half of last year. There has been very strong working capital management where we've consumed only ZAR 27 million compared to ZAR 570 million in the previous period. If we think back to the full year of FY '23, there was a significant release of working capital so the balance sheet at September '23 was an optimized position. So the relative utilization of ZAR 27 million of revenue increase has been well managed. Looking at the free cash flow for the business of ZAR 810 million. That is a significant turnaround from the outflow of ZAR 109 million in the previous period. It's obviously been generated from a strong operational turnaround as well as working capital management. On the right hand side of the slide there, you can see strong compliance with the covenants, headroom in those covenants and a pleasing performance overall. And most notably available liquidity of ZAR 1.7 billion, which exceeds the ZAR 650 million minimum required in terms of the lending agreements. If we have a look at the detailed income statement, I think you know most of those numbers. I think it's encouraging to see the growth in the revenue that's been boosted by some good performances in Bevcan South Africa. The trading profit up ZAR 440 million. It really reflects the very strong initiative on a cost reduction drive that has been successfully implemented and that's resulted in a margin expansion to 12.5% and 5.7% in the previous period. Clearly the post-retirement medical aid gains of ZAR 290 million have assisted the profitability. There have been higher interest rates in the period so despite the reduction in the debt, the relative interest rates are significantly higher. The headline earnings of ZAR 447 million for the period is pleasing. As I mentioned earlier, of the ZAR 530 million loss from discontinued operations, 98% of that actually relates to marking to market the Nigerian asset to the recovery amount that we expect from the transaction. That includes ZAR 335 million goodwill impairment and ZAR 184 million on an asset impairment. If we look at the segmental information and we start from the revenue by substrate point of view, you can see how consistent this revenue contribution is with the Metals business making up 86% of our business and if we look at that from a geographic perspective, 77% of it coming from South Africa. I think the big takeaway from these slides is the step change in the Metals margin and you can see that, that Metals margin has moved from 5.7% to the 13.4%. Of the ZAR 1 billion operating profit, there's been a ZAR 706 million contribution from the Metals business. The impact of the Paper and Plastics business, the numbers get quite complicated to understand because of the hyperinflation effects and the significant devaluation in the ZWL. The ZWL has devalued from ZWL 920 to the dollar to ZWL 21,000 to the dollar in the relative period and there's not a perfect correlation between the hyperinflation adjustment and the devaluation in the currency. But I think very pleasingly you can see a strong South African margin where that's improved from 5.2% to 12.3% and the Metals has improved from 5.7% to 13.4% and that is really off the back of a significant turnaround in our diversified business and compliments to the management team for achieving that. If we just look at the Metals continuing operations business, it's produced a profit of ZAR 706 million in the period, up 149% off a revenue of ZAR 5.3 billion and you can see very pleasing margins achieved in that period reflecting good operational turnarounds. There have been volumes that are down, but there's improved sales mix and pricing, which has improved profitability in Bevcan South Africa. We have seen a volume shift to one of our competitors due to certain capacity constraints. The Springs Line 2 CapEx that has been spent is seeking to address that where the large format cans will be manufactured on that line in the not too distant future. There's been a significant margin improvement due to the stabilization of commodity pricing and robust overhead management. In the diversified and food business, the volumes are down in Q1, but they have been largely stabilized in Q2. We have closed the loss-making paint business and the margin correction has been a key building block in building the profitability in this business. Excellent cost reduction programs and optimization programs are in progress. And I think a really good point to note here is there is still scope for further growth and efficiencies out of this business. So this is not a 1 half return. We think this thing can be sustainable. If we look at Angola, the macroeconomic indicators are improving. The currency has only devalued since September '23 by 2% and you'll see in the numbers in Note 5 in that pack, the foreign exchange losses have reduced from ZAR 40 million down to ZAR 3 million in the period. There has been intensified working capital management. As Phil mentioned earlier, there were some payment issues with one of our customers. We had to put them on hold for certain portions of the first half, which did impact volumes, but it sent a strong message to our customers that we cannot operate without them meeting their payment obligations. We do have a spare line in Angola and we are considering the potential of relocating that line to increase our offensive in South Africa. We've not disclosed this level of detail before and as you can see on this slide, it gives you a very good insight into what the beverage can business in South Africa does and the contributions that DivFood has made. And you can see of the ZAR 4.8 billion revenue from these 2 businesses, ZAR 3.3 billion is coming from Bevcan South Africa and approximately ZAR 1.5 billion for the first 6 months from DivFood. You can see a very strong increase in the profitability in beverage in South Africa from ZAR 274 million to ZAR 444 million and a very significant turnaround from a loss of ZAR 47 million to ZAR 139 million at an operating profit level. If you look at the bridge from the ZAR 227 million that was produced in the first half last year to get back to the ZAR 583 million, Bevcan South Africa has contributed ZAR 170 million and the diversified and food business ZAR 186 million. And on the right hand side, you can see very pleasing improvements in the operating margins that have been delivered. This slide unpacks the movement from the loss for the period of ZAR 878 million through to the profit of ZAR 395 million. And what you can see is ZAR 440 million improvement in our trading profit with ZAR 192 million of that coming from the turnaround in the diversified and food business and then a very significant contribution from a very slimmed down head office structure. The capital and other items of ZAR 357 million, the primary contributor to that improvement is the post-retirement medical aid gain of ZAR 290 million. And then through the stabilization of the Angolan business and the significant turnaround in the diversified business, there'd been no further impairments and that increases the relative move by ZAR 780 million and there's been a ZAR 32 million reduction in interest costs. Those interest costs have been almost offset by smaller contribution from Zimbabwe and our associates and then we've had to pay an additional ZAR 308 million in tax. The period has seen a significantly different outlook from interest rates. There's been a higher interest rate environment. The SARB has increased interest rates significantly during that period. It's a worldwide phenomenon with high interest rates. And then in the refinancing arrangements in September 2023 for the extension of our funding of ZAR 8 billion, there were high interest rates associated with that particular refinancing. The interest costs have been partially offset by the proceeds from the rights issue. And then there have been significant reductions in the financing costs associated with refinancing, but those have dropped from ZAR 88 million in the first half of last year down to ZAR 14 million this year. I think noticeably the ZAR 335 million that was incurred for the full year last year is obviously unlikely to repeat itself in the current year. So when you're doing your analysis for the full year, that is a very significant change that will happen in the second half. What you can see is the local interest rates effectively on average period-on-period have increased by about 27% and the international rates are up significantly by 81%. Now we must remember that there was a 10-year rate that was associated with the U.S. private placement funding, but that rate was at a fixed rate of 5.25% for 10 years. That ended in March 2023 and that rate was elevated to 12% so that had a significant contribution. The interest rates will -- the interest cost will be benefiting in the second half from the repayment of ZAR 243 million late in the period. If we look at the balance sheet and we don't need to go through all the detail. We have ZAR 12 billion worth of assets. We have a shareholders' equity of ZAR 1.8 billion. I think overall the asset disposal program is progressing well. We've got ZAR 2.2 billion worth of assets classified as assets held for sale and associated liabilities of ZAR 442 million. We have lower debt and there's very good short-term liquidity in the system. Our short-term liquidity has improved from 1.6x at the current ratio level to 1.8x and we have an acid test ratio that's also improved from 0.8% to 1.1%. Over the period we have reduced debt of ZAR 1.2 billion. If we look at the movement overall in cash, there's been effectively a ZAR 42 million change in cash and what I've done on the right hand side of the slide as said is ZAR 905 million generated from the business. We've consumed ZAR 27 million in working capital. In order to sustain the business, we've invested ZAR 69 million in the replacement CapEx and then we've got free cash flow of ZAR 810 million. We've spent effectively 84% of that running the business and primarily financing the business where we spent 59% of that in interest costs in the period and then you can see the indexing all the way down. What we have managed to do is sell certain assets and the proceeds that we've got from the assets have exceeded our expansionary CapEx that we spent in the period. And the ZAR 4.6 billion that we started off with, we've utilized the free cash flow of ZAR 810 million to repay that. We've consumed ZAR 681 million in the financing predominantly. There have been certain net inflows from the investing activities. And then there's certain repayments of finance leases and the like of ZAR 222 million. But net debt is relatively stable from last year despite the expansionary activities that we funded for the Springs Line 2 in the period. If we look at the potential debt reduction profile, we're sitting with ZAR 4.8 billion on the left hand side. This is debt that is computed for covenant purposes. It is different from debt on the balance sheet and you can see there's about ZAR 242 million in the cash position that is not deemed to be an appropriate jurisdiction for covenant purposes. That is why the debt for covenant purposes is higher than the debt for the balance sheet. We've got a position that if you just take the net proceeds that we are expecting from these disposals, the ZAR 4.6 billion debt would drop to approximately ZAR 2.9 billion in debt. Those are key determinants to get the leverage ratio down to a zone that we are happy with. We'll clearly utilize those proceeds to repay debt and we are sitting with an objective of trying to get the leverage ratio to lower than 2x in the foreseeable future. Our capital expenditure program is tightly controlled. Just about all the expansionary CapEx of ZAR 113 million is related to the Springs Line 2 expansion activity. That project is critical for the growth that we see in the 500 ml can market. The project is being split on a capital expenditure basis over 2 years and we are expecting to come in under budget and on time with that project. The looking-forward CapEx is approximately ZAR 350 million to ZAR 400 million per annum. And really in the period the lower depreciation has come off a base of prior impairments to assets. But the business remains very well capitalized and very well maintained so there are maintenance costs were maintaining these assets particularly well. If we look at the cash flow statement, I think you know most of these numbers in that previous slide that I presented. I think the big takeaways here are really strong cash generated from operations even after the working capital funding where we've generated ZAR 878 million. We've paid ZAR 480 million in interest of the high levels of borrowings and much higher interest rates. But overall we've generated very pleasing cash flows in the period. We sit with adequate cash balances at the end of the period. I think the business is in far better shape than it has been for some time. If we look at the working capital, you can see the components where we've actually released ZAR 355 million from inventories. We've had to invest in the trade receivables to the extent of ZAR 600 million and there's been improved creditor funding of ZAR 220 million. That leaves you with a net ZAR 27 million. It gets quite difficult to reconcile those numbers off the face of the balance sheet. So I have provided a reconciliation on the bottom right hand side, which takes into account the assets held for sale and it also shows you what the foreign currency translation of those impacts are. I think the takeaway here, the working capital has been well controlled. We're sitting with a net working capital cycle of 86 days down from 95 days and overall very strong focus from management. If you look at the culmination of all these activities, I think you can conclude to say there's been positive triangulation. There's been a very, very strong focus on the margin expansion, which has assisted in generating significantly improved cash flows. We've also achieved a reduction in debt and hopefully those all bode well for share price appreciation in the future. If I reflect for a minute and then also look forward, I think there have been some historic capital allocations and the choices made in various jurisdictions that have placed cash flows under pressure and profitability under pressure for some time. I think the decisive action that we've taken on disposals will reduce those effects. Once we receive the cash, there will be positive impacts on the net debt levels and we'll end up with a business with substantially lower gearing and sustainable leverage ratios. We have got certain initiatives in place and there are many of them to continue the good progress that's been made in the first half to convert Nampak into a highly focused and sustainable cash generative business going forward. I think looking forward, there's renewed confidence given the turnaround to the end state that we've achieved in the first half of this year. And really in conclusion, I'd really like to thank all the staff at Nampak and the employees right across the board for a fantastic effort in the first half. They have been incredibly dedicated. We've been tested and had our metal tested, if I dare say, by the cyber incident and have come out the other side I think in a far stronger position. So thank you.

Glenn, thank you for the precision in your presentation. If everybody else would clap, I would; but seeing that there's silence in the room, I'll abstain. As we look to the future, our enthusiasm should not fall prey to hubris. The headwinds economically are real and customers are in search of incremental value placing suppliers like ourselves under margin pressure. To compete, you have to compete as trite as that may sound. To do so, you can think big; but not act like a big company failing which, your competitive stature will be compromised. A sustained earnings track record will depend on our ability to deliver against the twin objectives of growth and margin expansion with strong free cash flow as an outcome. The reality is we can no longer allow the external environment to define our future. Can goods remain relevant and increasingly so in beverages and select diversified categories. There is sufficient runway for growth and further reinvestment and we have strategic optionality, as I mentioned, on further asset rationalization, being Zimbabwe and Angola. Our performance anatomy will be underpinned by some critical leadership principles and I will be unforgiving in these areas. Firstly, customer obsession is not the territory of customer management. It's the entire organization across the value chain. We will act like owners. The next important mantra is to simplify inside and differentiate yourself outside and continuously have a bias for action and an ever-present focus on frugality. And the winning formula of course always the people that we employ and have in our employ are superb, but we will continue to hire the best. The Nampak brand architecture is underpinned by several distinctive qualities with a brand essence of quality distinction; after all, trusted brands belong in our cans. In closing, Glenn mentioned it, I have enormous praise for core of the most talented and committed employees in our company. I've encountered incredible intellect and grit. These are people that operated under enormously difficult conditions without salary increases as a consequence of my actions and yet we've managed to keep the organization not only maintaining itself, but excelling. I don't see this as a half year result. We happen to be presenting half year numbers. This has been a 15-month effort from the initiatives initiated by A-squared, Andre and Adrian, to bring about the changes that were required at Nampak. I guess what gives me confidence is that I truly don't believe that this is a falls prey to the adage of one swallow making a summer. We're scratching the surface. We've allowed customers perhaps in some instances to take advantage of us when we've been vulnerable. Same applies to suppliers like a wounded animal. In some instances our customers supported us, in other instances they weren't that kind. Be that as it may as we strengthen our income statement and our balance sheet, we'll be better positioned to assert ourselves. But importantly, can this business grow? What I encountered was an organization that was in a replenishment mindset, order takers. The business comes to you, you pack it and you dispatch it. Now there's a focus on broader opportunity assessment and understanding you're operating in a very positive situation where you have 3 levels of growth. First of all, you have category growth; then you have substrate growth within that and our ability to regain share; but you can't do that when you're limping. Now we can assert ourselves and go after business and we've used the word offensive a few times. So the company is undoubtedly in a more favorable position and I see no reason why we can't sustain this. In any business to business type environment, you'll lose some business, but you're going to have a pipeline that you can refill at a faster rate than you're losing. Holding on to the margin will be critical. As we divest, we're left with stranded costs so there's a plan in place to eliminate those stranded costs by the time we get to the new financial year otherwise we're going to see margin compression and we can't have that drag on our income statement. So they've been identified, allocated to the right people with deadlines and we'll get the job done. Other than that, I'm pleased that we're at this juncture in a positive mindset and still in fairly good shape, as Glenn would say, for the shape that we're in and would welcome any of your questions because it's the first time that we've unraveled the numbers to the extent that we have. I've had 1 or 2 comments that we thought you made a mistake in your numbers. You wind back the clock, I've been in this game for 35 years and I've done optimization work and transformational work. Never have I encountered this extent of work and concurrent work streams all at the same time; divestitures, merging of companies -- of entities internally, rightsizing, negotiating with unions which we'll disclose the outcome of in due course, addressing pensioners, putting people on the street; things we don't really like to do, but we've had to do the tough stuff. So it's taken an inordinate amount of work and effort and then lo and behold, one day you wake up and they tell you we're into your system, you've gone dark. And again it bears testimony to the unbelievable capabilities in the company and the willingness and the resilience and the readiness to actually convert to these manual protocols that we had ready in the system. It's interesting when you look at a company's risk register, you have these one-liners mitigation and it all seems very comforting. But when you double click on it, it's very rare that you'll find activity schedules. How do we deal with reputational management? How do we deal with suppliers? How do we deal with customers? How do we advise the market as to what's going on? What are the legal consequences or the regulatory bodies that you have to inform? So there have been disciplines that have been foist on us by this unfortunate event, but strengthened us as a company and our resolve. To the extent that I've had many Chief Executives phoning me over the past period and I've been sharing our experiences with them and consequently, they have critiqued their own systems. We've also put additional layers into our security protocols notwithstanding the fact that we evaded over 300 hits by Russians on our systems last year ahead of this. So I'm proud of the outcome, I'm delighted with our financials and more importantly, I'm thrilled that we're still standing. So this is the new Nampak and I truly think we've lived up to the rights offer investment case that we put to you and not disappointed you at this juncture. But there's a journey ahead, there are hungry competitors, more markets are ex growth than not, but we're prepared to compete within that environment. So thank you very much.

Thank you, Phil. We proceed to the question-and-answer session. We'd like to take questions firstly from the floor, but we'll also interchange between the online questions and the ones on the Chorus Call. So if you can please pass the mic along to James.

First of all, I just want to say the speed and the scale of the turnaround is extraordinary. Many congratulations. I know you've said it's only the start, but I think it's important to say that anyway. I've got 3 questions, if I may. The first one is just in terms of the cyberattack. Could you just say if there was any particular cost to it and whether it is something that is sort of completely behind you? The second one is the head office cost reduction of ZAR 150 odd million. That's a first half number so we can double that. That seems to be a huge number. Could you talk around -- I didn't even think that the head office cost was that big. So some idea of what that was? And then thirdly, just to sort of maybe rather than the big scale stuff in more detail, you talk about too many footprints still and talk about Bevcan still losing a bit of market share. Just in terms of what you're planning there over the next 6 to 12 months because that's obviously some further improvements that you think that you can make in that margin.

James, thanks first of all for the accolade. On the cyber, you would appreciate that it's an ongoing process with our insurers. We're in for ZAR 20 million as an excess. For the rest, we have no difficulty in clawing back any additional costs that the business was affected by. We also have business discontinuity cover so it won't affect our financials going forward. Then you spoke to the head office costs. I'm always cautious of this doubling up story, James, at the half year. Let me say this that the costs were really high and we've thinned out a lot, but we still have an inappropriate cost base for the end state organization. We have IT costs by way of example of ZAR 112 million that will be ill-suited to the new organization. So some of those are fixed. We need to knock out at least ZAR 35 million of the fixed cost by the end of this financial year and then there are variable costs associated with that, that we'll also address. Then there's a second work stream on the go because that's a big cost item sitting within our corporate costs. There's a second work stream that says what is the IT manufacturing architecture for the end state? And we'll have that ready and prepared, all the associated tenders that we need; any remodeling, whether we run this as a corporate or whether we have our IT setup at the locus of controls, more decentralized as opposed to centralized. These are all options that we're investigating. Look, [indiscernible] asked me this one day and I said to him the job's never done because you think you reach a point of exhaustion. If I left tomorrow and the next guy came in, he'd probably find more opportunities and there are more opportunities. I would be hesitant to impose more reduction of warm body type impact on the organization from a center at this stage. I reckon we fairly lean. But I will do whatever is necessary. If the standard costs become problematic, we have to simply across the value chain reduce those costs in keeping with that. You can't look at a problem and not do something about it. The third question was on diversified where you alluded to the manufacturing footprint. Because of the sensitivity of that outcome as it's being evaluated, it has a bearing as you can imagine on the livelihood of people that work for us. So let me answer you in a more indirect manner if you wouldn't mind. You cannot sustain the quantum of manufacturing facilities in a nutshell that we have. Our first step was to shut down the paint operation in Mobeni, we were losing close to ZAR 60 million a year producing these paint cans. So I'm being pretty merciless about business or SKU entities or categories within the portfolios that are soaking up margin unnecessarily and costing us a lot of money. So you're going to see over a 2-year period, possibly 2.5 years, a rationalization of facilities and a movement of equipment out of assets that we dispose of into other assets. So as we speak, to give you 1 example of feasibilities being done in Kenya, we have a polish making entity in Kenya that is far more sophisticated than we have in South Africa that are solely needed to augment our supply shortfall against the current demand in a very high margin category. So I'm sure you're going to be seeing movements along those lines. I've made intimations about the Angolan line. A new line costs you between ZAR 800 million and ZAR 1 billion and this thing will never be used. We're running at 33% of capacity and at its best we were running at 60% of capacity on the current line when we were making over ZAR 600 million EBITDA. So that line is available and if I look at the call off on the line that we've just put in and it's currently producing and rebuilding stock, the 500 ml capacity. The way I was schooled in FMCG, when you reach 85% of your available capacity, your next line of capacity better be ready and I can see that happening in the short term. So there'll be some modifications to certain equipment and when we need to bring the line in, we'll bring the line in because whilst you don't want surplus capacity in a country because that might connote margin compression, I'm not going to wait for my opposition to be putting in the next leg of capacity ahead of us. So all these preemptive moves form part of that orientation. But the major architectural changes will take place within diversified.

We have a question from Cobus Cilliers, All Weather Capital. Congratulations on a great set of numbers. Given the good performance in Angola, how should we look at the sustainability of the revenue and demand in that region? Can you please expand a bit on the utilization in that region presently?

Thank you, Cobus, and send my regards to Shane. It would have been nice to see him here today. So I mentioned approximately 33%, 35% utilization of our current installed capacity on the 1 line in Angola. The demand patterns are inextricably linked to what happens economically and politically in the country, what happens to oil prices and whatever decisions government elects to make. So Africa remains a volatile environment. That said, there are 2 customers in country, Castel and Refriango. I put my foot down in respect of -- I fight with the customer for only 1 reason and that's if you don't pay me. For the rest, there's always a solution. So that's why our volumes were impacted for a protracted period in Angola. The liquidity of that customer, and it's an enormous customer that's also put in filling capacity in the DRC more lately that we'll be supplying out of Angola, is in good shape now. So you've seen restoration and growth possibilities coming out of Angola I think in the short and medium term. But I hesitate to go beyond medium term because it's kind of biblical doing business on the continent; you get your left cheek slapped, you may as well turn your right cheek in readiness. So I'm positive about it. We run a very efficient outfit. The margins are better than South Africa. So let's see how that all plays out and if we want to sell it, if we need to sell it, we'll do that too.

Do we have a question on the floor?

Phil, firstly, congratulations to you and your team for a job well done so far although you did say there's much more to come. I shan't be my usual brisk self and try and wonder how bad the previous management actually were. I spent the last few weeks visiting a number of food companies and their canning operations. What I've clearly determined from visiting the likes of Rhodes, Oceana, amongst many others is there's significant potential in the canning market in this country both in canned food and in beverages not just in the domestic market, but also into SADC and beyond. You know this market far better than I. What is the underlying potential you see in clawing back market share and growing that category to grow this business going into the future?

Thanks to you too for the compliment, Anthony. I wouldn't berate previous management. I've never done that before. I think it's circumstantial. But we have managed to assemble a highly competent team so we'll keep going. That's why I mentioned the 3-tiered growth prospect. You have to start at a category level and that's a tick. So the beverage category and the food category has got potential based on the value proposition that it portends. Think of the cheaper protein options that are available in a canned format and you've even got [ Chris Kittrell ] phoning me now and saying Phil, can you [indiscernible]. And I said not only can we do that, we can do recipe formulation with you. We've got a pilot kitchen. These are things our competitors don't have by the way. This is what gives us distinction. We've got 12 scientists, we've got a pilot plant, we've got technicians that are on call all the time to aid and abet our customers' requirements. That can't be emulated hence that we're distinctive. So that's the category piece. There's no doubt that in a value economy it can portend growth. Then the substrate growth itself has certain qualities, as you say, north of our borders. It can withstand temperatures and it has long life cycles, expiry type dates. I mean fish is 36 months, Ryan, something to that effect. And then the share gaining piece, of course we've been reticent to have this kind of competitive stature about ourselves because when you're in a crisis, you feel quite insecure and you're dealing with a million things at the same time. But as a team, we've had a number of strategic sessions building up to our budget period in September where we're articulating our growth prospects with a lot more precision. The company has been devoid of that I must say in what I would call proper strategic planning process within a proper strategic framework. So to understand your opportunity mapping across customer segments and various customers, pack format expressions and so on; that will be implemented with as much precision as possible. But having said that as well, if I can just flip to an efficiency discussion while we're talking growth, Anthony, it's insane what we're doing at the moment. We have 1,000 -- and Ryan is our manufacturing executive by the way, we have 1,600 color changes, is that the number, Ryan, just in our beverage entity. Nampak has been all things to all people. You want a small SKU, you can have it. Can you understand the stoppages, the downtime in facilities that are geared for high run production? Now granted if you have a wonderful customer like Switch whose entire growth strategy is predicated on innovation. There's some SKU proliferation that comes with that and you have to make concessions here and there. But make sure that your economics support those types of concessions and then make sure in the same breadth that your economics support the long run high volume business that some of your other big clients offer you that assist you to turn on the water and lights in the morning. So it's really getting the organization to focus in a granular way from SKU up to category up to portfolio that impacts us on our manufacturing facilities and how we squeeze out more margin by running the business better. That of course can't always be done in a vacuum. But I've put pressure on manufacturing to give me a response by way of example where I've asked the question, tell me what we should take out of these factories devoid of demand? And then you bring those worlds together again and find the most optimal mix to push through these facilities to best optimize your output profitably. So this is where the next value will be unlocked in the organization. Proper segmental analysis, proper understanding of customer profitability and how we run and utilize our facilities as a critical enabler to be a strongly demand-led customer obsessive organization. I gave you more than you asked for, Ant.

Jan Meintjes from Denker Capital. Let me also join the choir in saying thanks for what you've achieved up to now. I think it's richly deserved. Maybe 3 questions if I might and that's around understanding the new Nampak. The numbers have moved around quite a bit. So just maybe if you can comment around cyclicality first half versus second half so that we can maybe understand what is sustainable in what you've reported in this half. And then also just on the stranded costs, it doesn't seem as if you've quantified that. But maybe if you can give some guidance on that. And then also just to understand is all of that stranded cost currently sitting in your discontinued operations or are some of those stranded costs already in continuing operations just to understand where that is? And then the third question, just the tax impact of that PRMA gain that you made so that we understand what the sustainable tax rate can be.

Thank you for the question. Should we start with the tax impact on the PRMA, Glenn? Do you want to help me with that?

The ZAR 290 million is pretax. You need to tax that at 27% so you get right down to the post-tax effect.

Let's talk about the stranded costs, they are quantified or have been quantified. So there are 2 elements to it -- there are 3 actually. So there's a cost at the center that gets charged out to those businesses that we're divesting of. So that's my salary, meager salary, that gets apportioned proportionately. We've got to do something about that charge-out recovery. Secondly is the big IT chunk, I've spoken to that. And then thirdly, there are leases. So as you sell these assets, there are 2 key leases that we have to get shot off very quickly and Michael Dorn and his team are working on that for us. So to try and quantify for you just to give you -- please don't hold me to this. But I want to try and get about ZAR 65 million out the system by the end of September and then the big IT -- and I'm making the assumption that the leases, there will be a solution for those. And then the IT might take us a little bit longer as we reframe what the strategic architecture of that should look like for this end business because you're still offering support. If the sale of Nigeria goes through, you're still going to offer some IT support in a transition agreement to the acquirer. Similarly we have a transition agreement with 1 or 2 of the other businesses that we've sold to. Some of those we have a recovery on as part of our negotiation, some we don't. So there might be a bit of a drag on the IT aspect of our cost structure.

The next one is online. Nhlakanipho from 36one Asset Management. He's asking about the ZAR 2.1 billion of proceeds. How much of that money still needs to be received? And he's asking what is the sustainable debt level post the disposals?

Thank you for those questions. Glenn did present a sustainable debt position. So we've said we'd like a net debt-to-EBITDA type ratio of 2x, 2.5x. That's going to be our target going forward. In respect of the money still to flow, depending on the exchange rate, I mean we put in the presentation, Glenn, it was at ZAR 18.30 of ZAR 18.90 to the dollar. So that's what that number relating to Nigeria becomes that ZAR 1.290 billion type number -- let's call it ZAR 1.3 billion and then ZAR 450 million from the liquids and cartons asset. That makes up the bulk of it.

Do we have a question on the floor?

Phil, very well done. Buffett said turnarounds seldom turn and I think he quantified it that 80% of them fail. So wow, really great. If I can just get some granularity. Your integrated annual report showed that last year you reduced your headcount by 15% from 5,600 to 4,800. Were you not cutting into the muscle there and where is that figure likely to go? I know it's complicated because you're not disposing of assets. And then secondly, a regular feature has been poor capital allocation. Can you give us some insight into how you've remedied that? And just a bit of a provocative question. If you look at the diagnostic of what's been wrong with Nampak in the past that you guys have spelled out; cost, capital allocation not customer-centric. Aren't those all signs of a lack of an ownership mentality, which you do start talking about and obviously there's been some big strides; you talk like, act like owners. Obviously there's been some big strides starting with your Executive Chairman. But are you going to build on that?

Chris, let me start with the qualitative side that you referred to because it's measurable, but it's the most important. Businesses don't destroy themselves, people do. If you can surround yourself with a handful of people who understand what the hill looks like and you can show them a pathway to improvement, nobody wakes up in the morning I'm of the firm belief that says how can I destroy this business today. People want to be part of a winning story. Now that's kind of Chapter 2, which I've just started to launch in the firm, a rebuild sort of phase to an exemplar type program, recognition program because it's easy for me to stand here and say we haven't cut into muscle or bone as you said. What I would never do is an Eskom 2.0 and put this company at risk. But have we merged roles? If people were at 70% of capacity or some of them at 120% of capacity or people growing accustomed to working a day of their weekends or late nights, we've all had to do what we've had to do. Now that's going to be a common theme or a common structure within our organizational ethos and culture going forward. Now that's not for everyone's personal taste. But if you're going to try and put score on the board and you're going to share in the outcome of that, then why not participate in it. Not one person bleated to me when I withheld annual increases. I'm sure they moaned like hell to their colleagues and at home, but it never compromised the performance and the commitment. I've often woken up and I've said why do these individuals show these uncanny levels of commitment to this company having been put through the ringer for so long and it's quite remarkable. There are some really good people in the firm and it's across the value chain. But there also parts of the company in developing maturity. Our strategic IQ is quite low and that speaks to the whole topic of growth and understanding how we extract the best value out of the entire value chain working up that as a team as opposed to an insular approach. There were multiple organizations within the Nampak that I joined. The reference to you're the corporate office. You've got to move swiftly and you've got to do a whole lot of things very quickly in the first 9 months. I'm convinced having done this a few times that if you drag your heels over a 2- or 3-year period with incremental improvements, you're never going to get there. You've got to go hard and you've got to go fast and then the incrementalism follows. So that's sort of like the people stuff. And I've forgotten the first question. Headcount, it's not nice to talk about affecting the livelihood of people. But we've probably extracted about ZAR 300 million in headcount across the organization and it's not enough yet. And as you start to prod at an efficiency agenda, as you start to test manning levels, as you start to look into your manufacturing facilities and look at why you're using so much over time, why have you still got this temporary complement as part of your labor force to the extent that it is. I'll start to ask are your shift structures correct? So the grind has to continue to get us to a level that I think that we'll all be satisfied with not just me.

Phil, we have a recurring question from a couple of people around Zimbabwe. What are the long-term plans and what's the latest update on the repatriation of capital?

So we have paid a small dividend out of Zimbabwe. Zimbabwe by the way is a fantastic business and it produces exceptional levels of profitability and we hold a commanding position in the categories that we participate in. But you're not going to extract the value and the requisite multiple if you go and sell that business today. There's too much volatility going on in the country. So we're happy to leave it as it is. We've got 51%, not so Glenn? 51.432%. So we're happy with the status quo right now and it gets run very well. They've got a solid management team. And what we failed to mention is that we've appointed a really credible party to work on extracting our $52 million that, that government owes us. It's gazetted, they owe us that money. So now we have a party that we've gone into an arrangement with and I won't get into all the granular detail, but they'll participate. If there's a treasurable component, they'll participate in that and we'll send our cash portion of that given the effort straight back to the Isle of Man. We have to get that money back. And then there's other money lying around, massive COVID claim owing to us. We've got joint senior counsel on that too now. So we need this cash to come in from all these extraneous areas that are lying around in the business.

Well, if I can make a point on the Reserve Bank of Zimbabwe money, there's a provision of 97.5% against that in the balance sheet. So any recovery from that will boost the equity and drop the debt quite substantially going forward. And the COVID claim has not yet been recognized. The accounting rules only allow you to recognize that when it's been awarded and certain. That's a several hundred number.

Any question on the floor?

Matthew from Blue Quadrant. I hope you're not too sick of hearing it, but congrats again on a great set of results.

I never say it enough, Matthew. But it just makes me more bloody nervous, but carry on please.

I've got 2 questions. You said a while ago that a lot of the other competitors were eating your lunch and specifically in the beverage sector, have you seen any impact on GZI, Kingsley in the last 6 months? Have they crept up further? Have you been able to keep what you have? And then secondly, I mean we're about 2 days away from the end of Q3 almost. How have you seen volumes evolving in this last quarter?

Thank you for the questions and for the compliment. I don't want to run the risk of forecasting, but I'm more than happy with the run rate that I've seen over the past 3 months and there's nothing within the cost base that has changed to negatively impact the business. We lost volume as I said. I'll be diplomatic in my response. So the manner in which we lost business was completely unpalatable because I'm accustomed to process driven opportunities to do business and it was when we were in a state of vulnerability and there's no doubt that multiple parties were leveraging their position on our vulnerable state. So we lost business from 2 clients on the beverage side. When I say lost, partial volume loss, but it's still meaningful volume loss. But I can't see the impact in our total business at this point in time because we're picking up other business and there's growth in certain sectors that we service.

So in the beverage can specifically, you guys are sort of holding your own.

We're holding our own with category growth notwithstanding.

Not another Warren Buffett quote either. But just a question on the margin in the Metals business. I mean just how much of the improvement came on the GP side as well just given you did mention the input cost move in the period?

A lot we held on to. The business also had a bad habit of immediately paying away any reduction in a lowering of input costs to our clients and so we've held on to margin. We've also priced where appropriate. And then holding a fairly stable volume position amidst all of that, then the reduction of the cash operating expense base has created the leverage that you're seeing in the operating profit. That is a fair chunk up there.

Well, we have a question from Rowan, Chronux Research. He's asking what contributed to the margin uplift in Bevcan and DivFood and how sustainable is this lift?

How sustainable is anything in this world we live in? But I see no reason other than an act of god or significant loss of business that we can't respond to quickly enough that will affect the margin in the medium term. That's our position. And we won't be like the intersect of headlights in any event, but you can't always extract at the same pace if you do have a big volume hit. Remember this is a business-to-business function. And then what was the other part, Teboho?

The reason?

I mean it's across the entire value chain. As I said, there's been price, there's been a holding of volume, there's been significant cost curtailment, there's been some efficiency improvement; not enough, but there've been efficiency improvements; there have been some once-off benefits as we said in the PRMA. But even if you back out that benefit and you look at that margin, it only shaves off 100 basis points. So it's a respectable margin that we've now established. The sustainability is going to take hard work. I just want to get the standard costs out the way so that they don't detract from what would be the ultimate sustainable margin in the business.

Are there any questions from the Chorus call line?

[Operator Instructions] The question comes from [indiscernible].

Congratulations on your results. I just wanted to get a sense of how much has the reduced energy helped to improve your cash position in the period?

Thanks for the question. Conversely, our energy worries were created by a municipal failure. We have kilometers of cable servicing our Springs plant and that wasn't maintained well and a new one has been installed. I suspect that will be ready by mid-July-ish given the enormity of the task. So that's where we had the continuous downtime. Other than that, our plants are able to function amidst load shedding to a point and it hasn't attracted or the restoration of energy hasn't aided and abetted our position given that it doesn't detract from operations to the extent that other businesses might be affected by it. Our Springs factory by way of example is on the same line as multiple other big organizations' manufacturing facilities and that gives you some kind of protection in continuous energy supply.

Just the last one from me. You previously talked about increased competition. What is this new Nampak? What advantage does the new Nampak have currently over its competition at this point? What sort of edge does it have?

I don't believe we've reached that competitive edge yet. We're probably at a parity position. Remember as a conglomerate, you're focused on multiple substrates and lots of complexity in manufacturing facilities. In some ways the deconglomeratization, if there's such a word, of Nampak was foist on us given the high debt levels. But by the same token, there were also assets that were diluting our potential. So as we call it the new Nampak, once we've stripped out all the unnecessary costs and you can see we're on our way to doing so and we become far more efficient and we don't act like a big company, we don't look like a big company, then we'll have the agility to compete with our direct competitors in South Africa that have that type of complexion.

Any more questions?

Rajay here from Excelsia Capital. Well done, Phil, on a good set of results. Just 2 questions. I think the first one for me is just around commercial terms with key customers in geographies. I think kind of whether it's on margin or whether it's on payment terms, are you comfortable with kind of or have you renegotiated those agreements? Are you comfortable with where the agreements sit now? And the second one, just on if you had to look out 3 years and think about DivFood and Bevcan SA, where would you like to see those margins in 3 years?

Those are insightful questions. I can't discuss terms per se so I'll answer you in a generalized manner if you don't mind. I've had to address some of the trading terms. They were insane and it speaks to entities within the conglomerate operating in a vacuum and thinking that they are a profitable entity and that gives them the right to write a checkbook. So there's been close scrutiny of what we prepared to accept both on the margin and the working capital side and to suggest to you that we don't come under pressure daily and weekly. I mean people are paid to squeeze more out of you. So one has to do that in the right manner and defend your position and offer the right commercial context and the commercial insight for me is what was probably lacking. So if you strengthen that capability in your firm on the customer-facing side of the organization, then you won't fall prey to rolling over perhaps potentially as quickly as you typically would do. And then you've got to have a fundamental belief in your brand proposition and that's why I try to construct some type of brand architecture. It's not brand architecture in purist terms that you would find in the world that I come from. But if you don't have a fundamental belief that you do have distinctive capability and there's a value that you can attach to it, then how can you ever go and fetch that in the margin. And we do have distinctive capabilities relative to our peers, there's just no 2 ways about it. But because the organization has operated in such a disparate manner, we haven't harnessed the strength which we now have the ability to do in a very focused way. So I study the Ball Corporation, I watch what they say, I look at their numbers, I look at their margins and our margins are at the topish at the half year compared to even those types of examples in [indiscernible], but we have a very different product mix to those organizations. So if we can stay in a range somewhere between 10% and 12%-ish, I'd be delighted, but we must grow with that kind of margin target and generate the cash congruent with it otherwise it stacks up to nothing, margin and velocity.

The PRMA seems to be a point of interest. There's 2 questions. The ZAR 290 million, is it a recurring benefit or a once-off and is that figure included in the HEPS calc?

It is included in the HEPS and it's nonrecurring. But I'm not going to be apologetic about that. I mean this was a very difficult decision for us as a Board and it exemplifies that we were not prepared to let any opportunity be foregone in this process. So we agonized as a Board, you're dealing with pensioners, but we did it in a very socially responsible manner. There were too many people on these top schemes so we looked at the various levels and we reset the base as to what we thought was fair and reasonable and socially acceptable so that they weren't disadvantaged in these latter years of their lives. And we increased -- yes, that's a very important point, Andre. So the bottom cluster that we're really battling with these schemes that weren't very beneficial, we upped that portion. So it was kind of a squeeze at the top and a lift at the bottom. So we make no apology for that and it hasn't created -- it may have created discomfort, but we haven't impaired the lives of those people to any extent and in any case we had to go and fetch their signatures during that process. So it's done, we move on and we reduced the liability significantly on the balance sheet.

All right. We have 8 minutes left. I think that should be sufficient for 2 to 3 questions max. Matthew?

I'll just do a quick one. Just on the Springs 2 Line, can you just confirm my understanding that, that's going to be able to then take the wide aluminum sheet? And then what is the timing of that to be completed?

So when you put in new capacity, factories have to learn to reach what we call the original equipment manufacturer standards, the capacity that, that plant should produce at, but it takes time. You almost teach that plant to up its capacity and we're in that process currently. So we are in the initial phase of that and it's geared to the significant growth in demand of the 500 ml growth pack format. You'll see people walking to work in the morning drinking cold Switch and the other 10 brands that are out there. So that is what that's all about and I'm very happy with the progress. It's got to step up a bit now because summer is upon us as well. And there's no doubt that it's not only feeding the energy sector, it's feeding share of throat in beverages. No 2 ways about it. And I would go so far to say it's food substitution.

Just a quick follow-up, 2 questions. Firstly, you mentioned what the net debt was that's overseas. That's obviously been a big issue in the past. Could you just talk around what the gross debt is that's overseas and what currency that is in and how that would be affected by the Nigeria sale? And secondly, you mentioned about the volume loss in beverage cans. You mentioned that it's capacity constraint. It sounds like it's sort of competitive pressures or is it like a mixture of the 2? Just trying to understand that.

No, we mustn't delude ourselves. We lost volume not because of capacity constraints from 2 clients. But I have no doubt that we'll be in a position to claw that back, James. These tenders don't mean a hell of a lot. You enter into a 3-year tender and you've got to read the fine print. You're more competitive, the next year you're back in the game again.

And just in terms of the repayment, there's a waterfall and there are certain lenders that will be preferred in that repayment once the proceeds from the disposals come in. So we'll end up in a position with almost no dollar-denominated debt and a very concentrated much leaner financing structure. We currently have 16 funders in the mix, that will be reduced to less than 4 refinancing approach.

Okay. So post Nigeria, very limited dollar debt?

Absolutely. And we are in discussions to refinance the debt profile and we are looking to achieve that before the end of September, which will create further stability for the balance sheet going forward. If I can just make 1 other point around the post-retirement medical aid liability. There's been a 42% reduction in the absolute liability in the ZAR 290 million gain. I think what you've got to also take into account is the flattening of the growth in the liability because we've kept the increases in that. So there's about I think ZAR 35 million cash that gets paid every 6 months in those benefits and there's probably about a ZAR 15 million ongoing benefit that comes from that renegotiation in that process every 6 months and it's in the corporate line. So the kind of post-retirement medical aid liability, there's certain of it that is associated with past disposals and that sits in the corporate line that isn't recovered from the operations.

Chris?

Global beverage can shipments were down 7.4% in 2023 and [indiscernible] were down 3.3%. So quite a big shrinkage globally in canned shipments last year. Can you give us some insights into how South Africa's been and if there's any chance we're going to go into a decline?

It's intriguing because I have a separate data point on what's happening in their core market, the States and the can participation graph is going up. So we must swap notes on those data points, Chris. And then in South Africa if you had to draw a line on a trended basis, there are times when it comes down a little bit and goes up a bit, but I think there's a steady upward trajectory for the format. Certainly what we hear from our biggest client in beer is that there's a consumer trend sitting behind us. It's fashionable to have a can, the design, aesthetics. The insight they provided also is that nobody wants to show that you are short of discretionary income and you can't see how much beer is left in a can. It's quite intriguing. So you could sit with that can of beer all night, but still be part of the social experience. I know it sounds quite harsh, but I mean it's a consumer derived insight and that's not anecdotal. I mean they do proper research. And then the portability of course and how you can change the expressions of value very quickly so from 440 ml to 500 ml to 300 ml. The can allows you to move across the various tiers of pricing to the point that they're calculating what is the cost per ml to get inebriated. That's how they're expressing the value proposition in these different size formats and specifically in the can. And one of the anchor brands in one of these big companies that we service the can format is doing fantastically well. But money is tight.

So we've come to the end of the question-and-answer session. Any closing remarks?

The only closing remarks from myself is that we've built up resilience. We have a plan. There's value still to be had, but we don't operate in a vacuum. The competitors that will be watching this presentation and I can promise you they're going to be coming after us. To the extent that we can enhance our customer-facing professionalism from a commercial perspective is going to be very important and keeping a tight lid on costs all the time and not letting anyone take advantage of any future growth prospects on an installed capacity basis before us. We mustn't be called flat-footed on that and that's why we're doing these evaluations right now. Other than that, thanks so much. I really appreciate the keen interest shown in the company and for following our story and the journey that we're on. Long time since we've had people in the room, which is lovely. And I have no doubt when we do our one-on-ones in a week's time that you'll be even better prepared and I'm just glad that Glenn will be doing that on his own. Thanks so much for your attendance.

Thank you.