Nampak Limited ($NPK)

Good morning, good afternoon and good evening to everyone joining us online today. On behalf of the Board and management team, I'd like to welcome our shareholders, analysts, investors, banks, members of the media and other stakeholders to our results presentation. We appreciate your continued interest in the company, and thank you for taking the time to join us as we reflect on our performance for the reporting period. Today's presentation will provide an overview of the financial results, key operational developments and strategic priorities that continue to shape our business. Following the presentation, there will be an opportunity for questions and discussions. Before we begin, I'd like to remind participants that certain comments made during this presentation may constitute forward-looking statements and should be considered in conjunction with the relevant cautionary statements contained in the results announcement. It is now my pleasure to hand over to Riaan Heyl, our Chief Executive Officer, who will take us through the highlights of the period.

Thank you, Teboho. Good morning, ladies and gentlemen, and welcome to our results presentation for the 6 months ended 31 March 2026. Also my first as the CEO of Nampak. The first 6 months delivered the muted group performance with aggregate beverage contribution, specifically fueled by Angola, contrasted by significant headwinds in the diversified portfolio. sustained debt reduction and lower finance costs, however, underscores the resilience of the group at the back of the strategic clarity, revenue growth management and cost efficiency focus instilled over the past 3 years. Revenue for the period ended 1% lower at ZAR 5.6 billion, but was 6% higher, excluding diversified Similarly, normalized EBITDA was 6% lower at ZAR 816 million for the 6 months, 9% higher, excluding diversified. Cash generated from operations, lower net debt position and softer interest rates resulted in a 33% reduction in net finance cost with normalized headline earnings consequently 9% higher, notwithstanding the challenges experienced in diversified. Net debt reduced by 30% to ZAR 2.2 billion compared to the same time last year with the net debt-to-EBITDA ratio, excluding Angola, a key debt covenant ratio down to 2.2x. Important to note that including the beverage Angola EBITDA contribution, this ratio now stands at only 1.6x. Although the latter part of the reporting period saw significant changes in global macro dynamics, specifically related to the Middle East and related fuel cost impact, these had no material impact on Nampak results for the 6 months. FMCG demand remained relatively muted, notwithstanding relatively lower levels of inflation, confirming sustained consumer pressure. Beverage [indiscernible] reported stable performance with volume growth marginally ahead of those reported recently by a major beverage industry player, whilst manufacturing efficiencies showed sustainable improvement towards the end of the period. Beverage Angola accelerated its contribution with an improved outlook resulting in a significant impairment loss reversal during the period compared to an exemplary performance in the prior year 6 months to March, diversified results were disappointing, albeit not unexpected following the structural lives of business as well as seasonal timing dynamics related to fish and fruit supply. Category volatility and a significantly lower volume base exposed the fixed cost within diversified with material profit deleveraged during the period. The strategic review of this part of the business has been completed and more on this later in our presentation. The sale of our 51.4% interest in Nampak Zimbabwe Limited to [indiscernible] remains in process following the unsuccessful transaction earlier this year with due diligence activities currently in flight. Debt reduction has been sustained and bodes well for recommencement of dividend distribution in the future. The lower raw material stock position adopted in select categories as part of working capital optimization, as I even limited the agility to service volatile demand consistently from time to time. This is being addressed through considered working capital investments. Beverage South Africa sustained its performance with larger pack sizes, specifically 500 mill ready-to-drink and energy remaining key volume drivers. Nampak recognized quality distinction, sound cost management and tangible manufacturing efficiency progress noted towards the end of the period, counted raw material quality and supply disruption as also reported by the salt South African supply of aluminum can coil material, lower exports to select markets, including Nigeria ends with the disposal of that business initially slower than planned manufacturing efficiency ramp-up in aggregate softer-than-expected demand. Although regular production volume and spoilage records are being achieved on a shift, week and even monthly basis across our respective beverage lines, significant upside remains. Beverage Angola delivered another stellar set of results, accelerating the recovery noted since 2024. Economic stability through currency dynamics, lower inflation with April 2026 inflation at 11.58%, the lowest since June 2023 [indiscernible] to over $100 per month. Further [indiscernible] at shift from returnable glass bottles to aluminum as well as additional regional bottling capacity, enable 30% revenue and 28% EBITDA uplift with Angola now representing 23% of group normalized EBITDA. Reported rand-based performance could have been even better. That had not been for sporadic raw material outages at the back of underestimated demand. as well as an 8% depreciation of the rand compared to the same period last year. The diversified business saw period-on-period volume decline across all categories compared to the stellar 2025 performance reflected on screen with inhibitors grouped as structural, seasonal and one-off in nature. Structural business loss included customers transitioning from local to import supply through cost considerations product format changes away from cans as well as Nampak deciding to exit select participation. Seasonal dynamics related to [indiscernible] fruit volumes and availability of fish for canning locally and specifically imported frozen with our biggest fish can customer recently reporting 72% lower canning volumes for the 6 months ended 31 March. And then lastly, [indiscernible] of volume loss through amongst other, the largest aluminum aerosol customer, making brand and product changes with resulted rundown in exit stocks. Year-to-date, structural loss contributed 44% of the revenue decline versus the prior year with seasonal 30%. I will provide an update on the strategic review and related actions. With that, I'm going to hand over to Glenn for the detailed financial review before I return a little bit later with the full year and strategic outlook. Over to you, Glenn.

Thank you, Riaan. This is my final presentation as the CFO of Nampak, and it's my 22nd presentation. So I thank the shareholders, the Board and all the financiers for the support over my tenure as CFO. I think one can summarize the results for this period is a very strong and solid performance by beverage lifted by the Angolan growth and very significant reduction in finance costs, which is very pleasing, materially reduced gearing and very pleasingly, balance sheet capacity. If we have a look at the revenue, Riaan's touched on that at ZAR 5.6 billion. It's down by 1%. There is a prior year amount of ZAR 75 million that was included in the revenue of the comparative period for sales that related to transitional services agreements. And if one strips that out, we're actually flat on the previous year. And if we take out the diversified position, the core business, you're sitting 6% up on last year, which is pleasing in the current market. Beverage South Africa has contributed ZAR 3.6 billion, up 5%; Angola, ZAR 700 million to the revenue, up 30%, very pleasing and diversified has been impacted by the factors that Riaan has touched on with revenue of ZAR 1.4 billion, down 18%. Our normalized EBITDA of ZAR 816 million is down 6% from the ZAR 865 million in the previous period. But is up 9%, if you exclude diversified with contributions from Bevcan South Africa at ZAR 533 million, up 4%. The Beverage Angola, EBITDA of ZAR 187 million, up a very pleasing 28% and diversified, indicating quite significant deleveraging with the contribution of ZAR 131 million, down 44%. The key feature of our results this period is the capital and other items. There's been a swing on those items of ZAR 318 million. There were once-off credits that came in the reporting period of the previous period. There was an advanced interim settlement of the insurance claim of ZAR 100 million. There was a ZAR 65 million credit that came from a pension fund surplus and ZAR 32 million from the sale of a property, which haven't repeated themselves in the current period. The relocation costs for moving the line from Angola to South Africa of ZAR 94 million in terms of accounting [indiscernible] because they are in group costs that have been incurred moving an asset from 1 location to the other. That's partially being offset by a gain in a pension fund and certain retrenchment costs. That resulted in an operating profit of ZAR 899 million being down 6%. I think big contributors to that are the lower contribution from diversified, supported by a strong result from Angola with a very positive outlook in that market resulting from -- resulting in a net impairment loss reversal of ZAR 319 million. And that ZAR 319 million offsets the ZAR 318 million negative swing on those capital and other items. We're very pleased to report the net finance costs of ZAR 189 million or down 33% in the previous year from ZAR 282 million. That has been assisted by the asset disposal proceeds that we received in Q2 in FY '25. That only benefited that prior reporting period by 2 months and as reported, effective reporting period positively this period. For the full 6 months, we've also generated further cash and lower interest rates have assisted. Normalized headline earnings per share of ZAR 346 million is up 9% from ZAR 317 million and that resulted in a normalized headline earnings per share of ZAR 4,133, up 8% from 3,817. There have been slightly higher weighted average number of shares in issue in the period. If we turn our focus to the balance sheet and our cash flow, our operational cash flows and lower finance costs have reduced our gearing. We're very pleased to report the net gearing is down 30% to ZAR 2.2 billion from ZAR 3.1 billion. If we roll back the clock 12 months for the 12 months ended March 2026, we've generated ZAR 1.5 billion from operations, which is pleasing. The net working capital, we've released another ZAR 300 million. We spent ZAR 500 million on capital expenditure and ZAR 400 million in interest costs. Net gearing has dropped from 149% to 69%. We've got a significantly improved debt position. And even if you include the capitalized finance leases, that improvement has come from 189% down to a gross gearing position of 92%. This has resulted in a net debt-to-EBITDA covenant, excluding the contribution from Angola at 2.2x, down from 2.9x a there's adequate headroom in the threshold. We've got a covenant threshold of having to be below 3.25x, and you can clearly see there's headroom there. And if we include the Angola contribution, as Riaan just mentioned, that ratio is very healthy at 1.6x, down from 2.1x. The Zimbabwe disposal would assist the gearing further and would improve that gearing ratio even further. Working capital outflow has been ZAR 338 million in the period, down from an absorption of ZAR 742 million in the prior period. So there's a ZAR 404 million lower absorption of working capital 36 million of that improvement has come from discontinued operations. But in the period, we have had to increase our investment in trade receivables, which I'll unpack for you later in the presentation. We've generated ZAR 256 million from operating activities, which is up 212% from ZAR 82 million in the previous year. There's lower absorption of working capital, reduced finance costs of ZAR 129 million and reduced income tax paid in that period. This is culminated in a return on invested capital of 14.6%, which is in excess of our WACC rate of 12.4% and from the prior period, our return on net assets remains in the 21% range. And our net asset value per share, excluding our intangible assets is up 70% at ZAR 330 a share. We have a look at the bridge statement of comprehensive income. I think we've touched on many of those numbers, just some key features around the revenue. In the Beverage South Africa business, there's a growing energy sector, particularly in the 500-milliliter category and the ready to drink categories. We have been impacted by lower sales of exports in ends to Nigeria. Our previous Nigerian business, we supplied 100% of the export requirements, and that's no longer in the numbers. And there has been some slower progress in the manufacturing efficiencies, and there are certainly capacity abilities within that business and a good future. In beverage Angola, there's a strong economy that's driving those numbers. There's been increased demand. And as Riaan has mentioned, despite 8% stronger rand, it is a dollar functional currency business, the Angolan business. We've still managed to produce a very, very meaningful improvement in those results. despite the rand strengthening in the period. Diversified has impacted the revenue through certain structural and one-off changes. Fish availability has certainly impacted the numbers and the seasonal fruit dynamics have contributed to that revenue at the top line being 1% down. I've touched on the big move in the capital of the items, so I won't go over that again. But I think just to focus there is the asset impairment reversal has neutralized that position. And when we look at the operating profit, the improved beverage performance has been offset by quite a tough trading period for diversified. The profit before tax is up 6%, and that's really been assisted by a 33% reduction in net finance costs. The taxation rate is at 26.2%, up from 24.9% in the period, the comparative period and the increase there is due to lower foreign tax rate differentials. Our headline earnings per share has been impacted by the adverse swing in the diversified profitability, nonrepeat of certain of the one off items and the Angolan line costs that we've expensed of ZAR 94 million. When we turn our attention to the total operations, there's been a loss of ZAR 114 million in total operations, and that's really through an asset impairment that we've done in the Zimbabwe business. And if you compare it to the previous year, we disposed of the Beverage Nigerian business, and there was a foreign currency translation reserve recycling of ZAR 2.4 billion. And in the current period, there's been a post-tax asset impairment of ZAR 136 million in this period. And the net effect taking into account Nampak's 51.43% of that impairment is only ZAR 70 million at that level. If we look at the divisional numbers, you will see at a revenue level, the beverage division is effectively up 8%. The diversified revenue is down 18%, and that brings us to a total ZAR 5.6 billion for the year. If you have a look at the normalized EBITDA, the metal or the beverage business is up 9% fueled by a 28% increase in Angola and the total is up 6% -- down 6% at ZAR 816 million. The bridge from the ZAR 865 million in the previous period to the ZAR 816 million now. There's been a ZAR 21 million increase in the Beverage South Africa. EBITDA, a ZAR 41 million increase in the Beverage Angola. There's ZAR 103 million decline in diversified. And then at the corporate level, we are no longer benefiting from the margins that we made on the transitional services arrangement. The normalized EBITDA margins within Beverage South Africa to 14.9%, or slightly lower than the previous period. Beverage Angola, pleasing margins there remain at 28.2%, just slightly lower than the previous period. And in total, the beverage combined businesses margin is at 17%, up from 16.8%. As Riaan has mentioned, the lack of volume within the diversified business and a high fixed cost base is exposed the margins there where the margin has reduced from 14% to 9.6%. And at a group level, the overall margin is at 14.5%, down from 15.3%. If we unpack the net finance costs, those have reduced by ZAR 93 million in the period. We've benefited from the disposal proceeds where we received ZAR 1.2 billion from Beverage Nigeria disposal in 31st of January 2025. In the period, the repo rate has reduced to 6.75% from 7.5% in the comparative period. We do see a 25 basis points change in that interest rate yesterday. There have been lower interest rates within our financing arrangements due to the improvement in our leverage ratios. And if you look at the interest rates in the period for the first half '26, they ranged from 9.6% to 10%, and the comparative period, that range was from 10.8% to 11.5%. Those benefits have been partially offset by ZAR 126 million funding that we've absorbed in the relocation of the line to the Springs business. And there has been a lower capitalization of borrowing costs where there's been a ZAR 2 million capitalization in this period compared to a ZAR 35 million capitalization in the prior period. There are abilities for us to lower those funding costs as we continually improve this leverage ratio will benefit from the structures of the ratchet interest rate. The cash generated from operating activity in the period has fully funded our capital expenditure and that's limited the financing costs associated with that expansion program. If we look at the bridge for the profit growth in the period, the profit has grown from ZAR 503 million to ZAR 524 million, ZAR 62 million of that has come from the normalized EBITDA improvement within the beverage business. There's been a reduction of ZAR 103 million in the normalized EBITDA for diversified. And then at the center, there's been higher depreciation as well as lower contribution from the transitional services agreement. And this clearly shows that the capital and other items have been neutralized by the asset impairment that has come from a very positive outlook in the Angolan business. The net finance costs have reduced by ZAR 93 million, and then we've had to pay certain taxes of an additional ZAR 19 million to get us to ZAR 524 million. If we look at the headline earnings per share and the normalized calculations behind that, the headline earnings of ZAR 285 million has decreased from ZAR 471 million if we adjust those and strip out the one-off items in the prior period, there was a pension fund surplus is the after-tax effect as well as the COVID impact of the insurance claim, we get from ZAR 344 million down to the ZAR 272 million. And in the period, getting back to normalized earnings, we've added back the once-off costs for the Angolan line relocation and we've also put into this category, the benefits or losses on sublease arrangements and certain other items that are associated with restructuring. So the normalized earnings at ZAR 346 million or 9%, up from ZAR 317 million and when we translate that into a normalized headline earnings per share, that's up 8% because of the increase in the [indiscernible] average number of shares in the period. If we look at the balance sheet, I think the conclusion on our balance sheet, we've got a sound balance sheet with financing capacity in it. We're still -- we're operating at an asset base of ZAR 10.7 billion, which is 5% up on the previous period. Our equity in the period has increased by 63% to ZAR 2.9 billion. And we're going to pack the big moves in these numbers on the property, plant and equipment. The asset impairment reversal in Angola has contributed to ZAR 319 million increase. We have spent ZAR 319 million in CapEx in the period. And then in the other noncurrent assets, there's been a ZAR 99 million reduction in the deferred tax asset as businesses with assessed losses have become profitable, and we're using those assessed losses, and there's been a ZAR 52 million decrease in the retirement benefit asset. We have got 7% lower inventories. As Riaan has mentioned there has been some timing issues with certain of the inventories and those have related to Beverage Angola and has been intentionally scaled back and you'll see in the cash flow, the creditors matched that position in line with the structural change in that business. Our trade and other receivables have increased by 9%, and it's really been impacted by phasing of the revenue. But we do have a very high-quality trade receivables book, and we have not incurred any expected credit loss charges in the period. We've got a very strong short-term liquidity position with the current ratio at 1.7x, down from 1.9x in the previous period, and that ratio has changed slightly by the asset impairment in the Zimbabwe business. The net debt, excluding the lease liabilities of ZAR 2.2 billion, as we've said, is pleasingly down 30%, and that translates into a reduction of ZAR 921 million. In our assets held for sale, the net assets were sitting at ZAR 544 million at a gross position. Our share of that is ZAR 280 million, and that predominantly includes the net assets of the -- is a [indiscernible] business and then certain remaining assets within our Kenyan operations that we are looking still to sell. The decrease is primarily due to the impairment of the Zimbabwe asset. If we look at the capital expenditure in the period, we've spent ZAR 134 million on expansion. That translates into 56% of our spend with ZAR 126 million of that being attributable to the Angolan line relocation to Springs. We spent 44% of the total spend of ZAR 239 million in replacing our assets. We have a very well-maintained asset base, and there's no major future capital expenditure expected going forward. What we have done is we've expensed the ZAR 94 million, and that related to the Angolan line relocation, which includes the decommissioning, the relocating and recommissioning. This has been an exceptionally big project that has been very well managed internally that will create flexibility and capacity in our Beverage South Africa business. If we look at the debt position and the cash flows, I think the net debt position has been well managed and a key feature from this is that 35% of our free cash flow that we've generated in the period has been allocated to expansion CapEx. We generated ZAR 830 million. We absorbed ZAR 338 million in working capital, and we spent ZAR 105 million in replacement capital, resulting in free cash flow generated of ZAR 387 million. If we index that 387% to 100%, we've spent 50% of that being ZAR 193 million on financing costs and running the business in operations, ZAR 236 million out of the ZAR 387 million, which translates into 61%. We've then spent ZAR 134 million in expansion CapEx, which translates into the ZAR 35 million. And if we look at the graph on the left-hand side, we started the period with ZAR 2.1 billion. We repaid effectively ZAR 387 million from cash flows that we generated. We reinvested in the business, ZAR 236 million to operate it. We spent ZAR 130 million on the investing activities. And then there's certain other items of ZAR 55 million to get you to a closing debt position of ZAR 2.183 billion. The net debt has a reduction has strengthened the balance sheet and created capacity in this balance sheet, with ZAR 921 million reduction in the period. That follows a reduction of ZAR 2.2 billion in the period from September '24 to September '25. And what I've done in this slide is presented in the top right-hand corner, the breakdown in how those net debt reductions have occurred. In the 12 months to September 2025, you will see that 68% of the debt reduction came from disposal proceeds and 32% from operating activities. In the current period, there have been no proceeds from disposal. So effectively, 100% of that debt reduction is coming from operating the asset. And if you compare the ZAR 1.45 billion to the ZAR 123 million, there's been a 14% improvement on the rolling 12 months cash generative ability in the business, which is pleasing. Sorry, if I can go back to that. And if we extrapolate the closing debt position and you apply the expected proceeds from disposals. The net debt position is forecast to be just short of ZAR 1.9 billion. And if we look at that in an extrapolated leverage ratio, based on the ZAR 816 million produced at half year and annualized to ZAR 1.6 billion. Our extrapolated leverage ratio at 1.2x clearly indicates capacity in this balance sheet going forward. The statutory cash flows. I think when analyzing this, we must remember that the comparatives included the discontinued operations, which a cash flow always does, so those disposed assets no longer contribute to the cash flows of the group. There have been a nonrecurrence of one-off items, a lower contribution from diversified, and that's been partially offset by improved beverage performance -- it has been a lower utilization of working capital, which I'll unpack for you later. And essentially, that's been a reduction of ZAR 366 million from discontinued operations, but we have had to fund ZAR 192 million in our trade receivables. Our cash flow from operations, we've paid ZAR 129 million less in interest paid. That number is slightly different from the income statement, and it really is the difference between the reduction in the capitalized interest costs that get you back to that figure. And we've paid ZAR 57 million is tax. Our capital expenditure of ZAR 239 million has been funded from our cash that we've generated internally with ZAR 105 million replacement and ZAR 134 million expansion. We have used certain of the opening cash positions at the first of 30th of September to settle certain debt to maximize the net interest position. We unpack the working capital. The ZAR 338 million, we've primarily had to fund the trade receivables. That increased from ZAR 232 million to ZAR 424 million. This Has been impacted by phasing of certain of the sales. And you can see, as we've contracted the diversified business, so have we contracted the inventories, which has resulted in a ZAR 253 million inflow, and we've utilized ZAR 167 million less in trade creditor funding. And the big reduction is essentially the reduction in the cash that the discontinued operations used and we're pleased to report that only ZAR 2 million has been considered in this period by the discontinued operations compared to ZAR 368 million in the previous period. Our net working capital days is sitting at a healthy 53 days, down from 62 days in the prior period, primarily impacted by further an improved use of trade creditor funding. We're sitting with the healthy current ratios and asset test ratio of 1.7x and 1.0x, respectively. If we reflect back on the investment thesis that we set out on 3 years ago, I think we're sitting now with sound beverage margins, a very pleasing Angolan growth. There's an action plan for addressing the changes in the diversified business. The net finance costs have reduced by ZAR 93 million or 33%, and further reductions are possible. The debt reduction is being spearheaded now by operational cash flows as opposed to in the past, a combination of operational cash flows and disposals. We're sitting with a very healthy leverage ratio of 2.2x and with a sound and positive trend for the future and a pleasing return on invested capital of 14.6% compared to our weighted average cost of capital of 12.4%. If we look at the concluding slide from my perspective, we have a very sound balance sheet that has capacity. We've got strong cash flow generative abilities lower debt and lower finance costs. And we've got a sustainable and resilient cash-generative ability that is being filled by margin preservation and reduced funding costs. And I think further reduction in net debt and gearing is possible and with a clear focus on dividend resumption, which will hopefully feed into the share price going forward. So thank you for the privilege of being the CFO for this business for 11 years, and I wish my successor, all the best as she takes over from me in due course. Thank you.

Thank you, Glenn. As we look ahead, Nampak is well positioned to compete with some recalibrating required, specifically within diversified. If I look at our beverage business in aggregate, it has strategic advantage through its capacity investment now demonstrated and sustained efficiency progress and product differentiated quality. The graph on screen shows operational efficiency on a rolling 12-month basis since August 2025. And confirms the accelerated improvement led by Rosslyn, the top blue line with springs also improving, but with significant upside versus Rosslyn as reflected in the graph. We need to sustain this process, progress rather complete the Springs now new Line 4 project and Line 1 conversion and then leverage the additional capacity and agility to realize market share opportunities. Post completion of the Springs project with first line 4 commercial production in August and then additional 500-milliliter capacity through line 1 conversion by the end of 2026. The business will require limited for the foreseeable future, as Glenn mentioned. In addition to the capacity and efficiency enabled growth opportunities, we are also navigating increased Chinese can ends or lids imports through relevant duty protection application that's been raw material supply engagement and ongoing customer price volume margin management. We continue to explore long-term customer contracting and will sustain Angola momentum through customer service and quality focus, with additional working capital investment to support growth and customer service. During the reporting period, we completed the strategic review of Diversified with implementation of the relevant actions in progress as we speak. The review resulted in 3 distinct work streams in various stages of completion. Firstly, portfolio clarity, then optimization and lastly, leadership capability investment. And from a portfolio perspective, we've decided to exit metal closures produced in our Epping factory with Twist off already completed and roll on Pulsar [indiscernible] or ROPP currently in process. We are committed to remaining in food, mono block and tinplate aerosol as well as Polish with relevant equipment, maintenance focus and the sales team now motivated to pursue new business with confidence and where possible. This business is being kept on hold for a while, and we're now fully committing to our future participation on a defined basis. We are accelerating long-term supply agreements in terms of optimization. We are moving from 4 to 3 factories with Poland Epping factory consolidation and related fixed cost savings. This is a complex project with the primary focus to ensure uninterrupted supply of seasonal customer demand and is expected to be completed during the first half of 2027. We are also driving a number of other cost optimization work streams across plant, divisional and head office structures to give recognition to a smaller business. And we are accelerating sublease opportunities in respect of vacant spaces within all the diversified factories and, of course, [ Pol One ] bank vacated. It's important to note that Nampak property sale and leaseback commitments entered into during 2016 and currently extending to 2031, informed portfolio and footprint decisions. In terms of leadership, we've appointed 2 new plant managers within Diversified and concluded recruitment for a new general manager for the business following the resignation of Andrew Hood last year. Diversified remains strategic to the Nampak business with a medium-term objective for the 12 months following completion of all the strategic work streams outlined of having a smaller yet sustainable 10% to 12% margin business with a fixed cost base fit to weather the storm of volatility and sometimes volume uncertainty. In terms of full year performance, the global macro disruption is expected to have a more significant and pronounced impact than in this reporting period. Whilst we don't expect supply disruption as a result of these developments, raw material positions are being extended in select areas, specifically imports, including for Angola. Consumer inflation has already started to accelerate, with specifically beverage cans that will see significant price inflation in the second half of this financial year compared to the same period last year as London Metals Exchange aluminum or pricing has increased from 2,600 a tonne to 3,600. Consumers will undoubtedly experience more pressure with the impact on demand uncertain. Although we are not yet seeing any material changes to customer forecasts, inflation lag, however, it takes time. Beverage SA should continue to benefit from the aluminum format with performance that will be supported by the sustained manufacturing progress. The springs capacity and flexibility benefits will only come evident in '27 though, as outlined earlier. The outlook for Beverage Angola remains encouraging with the business able to extract cash and expect it to be debt free by the end of the financial year. Within diversified, restructuring activities will take center stage with the financial contribution from the business in the second half of this financial year, largely dependent on the availability of fish for canning. From a debt perspective, we expect sustained reduction with no dollar debt exposure in our continuing operations. The Zimbabwe disposal efforts will be progressed and we continue to pursue the recovery of previously written of Zimbabwe and treasury bills, along with other similar organizations. We expect a further reduction in unproductive interest with some inventory investment to approve improve agility, customer service and support growth. Strategic clarity anchored in 5 pillars gave Nampak stability and resilience. Whilst I don't believe there is any need for material departure from this strategic direction to focus on people, culture, capability and processes will be elevated to become truly brilliant at the basics. In many ways, Nampak of today is a reborn business with redefined substrate and geographic participation that we now need to take from operational infancy to maturity. In support of this, we have already made deliberate investments in leadership and capability with Chris Santron having joined us in this manufacturing executive in November last year. Alina Kaka, joining us as the new GM for diversified in July; and Thiru Naicker taking over as CFO in August. All 3 of these are experienced individuals with the skills and drive relevant to Nampak's next chapter. Today, however, marks the last time we have Glenn presenting Nampak results. As he said, after 11 years and 22 results presentations, he will be leaving us at the end of August. Glenn, thank you for your loyalty, commitment and extraordinary efforts to secure a sustainable future for Nampak. You've helped lead the business through challenging times and should be proud to leave with the restored and significantly derisked balance sheet. Your contribution has been enormous, and you leave behind a lasting legacy and impact. Thank you also for the great support you have given me in my first 4 months within the organization. In closing, the next chapter of Nampak will be highlighted by beverage-led growth and diversified optimization with beverage capacity and flexibility, Angola and its regional outlook, a stronger balance sheet consider the investments in efficiency CapEx and working capital as well as effective customer partnering that will enable growth. Nampak is a business with significant potential, strongly cash generative with the expectation of dividend reinstatement in the near term. That concludes our formal presentation. Thank you. We will be back in a minute to take questions. Thank you.

Welcome back. Thank you, gentlemen, for the presentation. We have a couple of questions. The first question coming from Rowan from Chronux Research. And his question says, are you insulated from the global aluminum shortage? And does this open up any export opportunities?

Yes. Thanks for the question, Rowan. At this point in time, we don't see any disruption in supply. The biggest driver of the move in LME pricing over the past year has actually been driven by smelter capacity outside of the Middle East. The Middle East supply is roughly 9% of the global total aluminum and about 1/3 of that is impacted by what we're seeing at this point in time in this trade. I am aware that the major aluminum supply in South Africa are seeing certain export opportunities, but that's, of course, related to other aluminum type products. Cans more difficult to export, especially considering the shipping dynamics and costs associated with effectively shipping air. So in short, we don't see any supply disruption at this point in time. We have extended and are extending our raw material position, specifically in Angola. Because, of course, in South Africa, we have, by far, the majority of our supply through the local supplier, whereas in Angola, it's mainly imports from the rest of the world. So that's the only real adjustment we've made on [indiscernible] supply. In terms of export opportunities for our business, there are opportunities within the African continent. That's being led by Angola with regional bottling capacity or canning capacity being expanded, and that's part of the drive growth driver in Angola that we're seeing. In terms of exports out of South Africa, as I've alluded to, we've actually lost a little bit of business. It's not a big contributor to our business, but we have seen a loss in exports to select markets. That has not been driven by the cost competitiveness of our product. but more a shift from the smaller can sizes, which we were supplying in those markets to larger can sizes. And of course, then shipping a larger can is more expensive and less feasible than smaller cans. So in short, no risk, but also no material opportunities realizing for us.

Thank you. Another question from [indiscernible] . What capacity is Angola running at? And what does the ramp up of the line arriving in South Africa look like?

Yes, great question. We're talking about massive growth in Angola and then at the same time, talking about a line that we picked up or in the process of installing in springs. Interesting, if you roll back post the significant devaluation of the currency in Angola back to 2016, '17, we were, in fact, selling almost double the volumes that we are currently selling in that market. So that also gives some perspective as to the gradual recovery and now accelerate the recovery that we're seeing in that market. Now you will appreciate that there are sensitivities related to us commenting on any capacity in much detail. But rest assured that within Angola specifically, we've got significant capacity north of 40%. I'm happy to share with you in terms of facilitating future growth within that market. In terms of Springs line 4 and 1 capacity availability, I did have a time line at the bottom of my slide. Line 4 capacity will be commercially available from August onwards, but that line will predominantly manufacture small cans. And then the real net capacity gain that we will have will only come once we've converted Line 1, which follows the Line 4 project. That line will Line 1 will then be able to produce 500 more cans where we currently produce the bulk of our smaller cans. Now that ramp-up will only become effective by the end of and that's why we made the comment that the real gains from that investment will realize as from 2027.

Next question from Anthony Clark of Small [indiscernible] . Riaan, thanks for the presentation. Can you give any further color on the Zim disposal time line? It was supposed to be disposal of the whole. Now it's seemingly in parts.

Yes. Thanks, Anthony. Zimbabwe has keep us a little bit busy following the failed transaction has confirmed at the end of January. At this stage, we are still engaging in respect of both options. We've got interested parties for the whole, but alternatively also for certain parts of the business. It would be perhaps too early for me to comment on how the transaction would play out based on the interest, engagements, due diligence in flight, we remain confident to conclude the transaction. The money may not be in the bank absolutely by the 30th of September, but still confident that we will conclude the transaction either as a whole or in part. And you would have noted the impairment that was processed at the half year, which is still reflective of our view of realizable value of the asset.

Next question from Rory and there is private capacity, what gearing ratio are you aiming at? And what dividend cover do you anticipate?

All right. Thank you. No, I think the business is deleveraging quite quickly. And as you can see that potential net debt-to-EBITDA ratio of 1.2x gets to a position where there's capacity to pay dividends. We can't commit at this point, but from a market perspective, any net debt-to-EBITDA ratio between 1.3 and 1.8x seems to be where sweet spot is, and we will manage the debt levels in line with that kind of outcome. In terms of the dividend cover, that will be determined and the Board reviews the numbers at the end of September.

Yes, I think it's important to recognize that it's most likely that dividend distribution will be dependent on the debt position within the business rather than specific ratios relative to earnings numbers. Quite frankly, the dividend was considered at the half year. Factors that played a role within that, of course, is the much stronger balance sheet, which Glenn gave some perspective to. But we still had to fund the bulk of our expansion CapEx program. And as noted in the results, net of our CapEx investment, we generated ZAR 21 million cash. We're still sitting with some unproductive debt or unproductive interest across our balance sheet, which we're confident that we'll be able to clear out. And then perhaps a secondary conversation is the position in respect of [indiscernible] but that's relatively small in the context of the cash that the business generates. So as per our results sense, we remain focused on resuming dividend and confident that we'll start realizing as with the consideration of our full year results.

On the back of that CapEx discussion, James Twyman is asking, can you provide an update on the CapEx expectations for the full year and roughly an estimate for 2027? And further to that, is there any anticipated impact on the disruptions at Springs as a result of the project?

James, thanks for your question. I think I was asked this at the year-end results presentation. And my response at that point was for the continuing operations capital expenditure forecast for FY '26 of around ZAR 500 million for the continuing businesses. And then that will conclude really the expansionary side of the spend in this financial period. And we don't see a big step out CapEx going forward. So capital expenditure in the range of probably ZAR 250 million to ZAR 300 million going forward. to sustain the business is a reasonable range in which to think of going forward.

Thanks, Glenn. Charles from Titanium Capital. What level of duty would Nampak require to be able to cost to be cost competitive in canes with suppliers like of I think it was strong rolls.

Yes. Charles, thanks for your question. The duty application that's been filed is for an increase in the duty from 14% to 20% which is the maximum allowed bound rate. We're confident that, that would receive due consideration. But the extent of protection is required, we'll have to stretch beyond that for us to be fully competitive, and that rolls down to some industry-related considerations. The quantum of that I would be loath to indicate at this point in time. Comparative pricing is, of course, complex because you have to factor in the length of the supply chain, the working capital investment and the related support. But the application that's been filed along with our ongoing consideration price volume margin will make us significantly more competitive in that space.

Next question is from Nick. He's from Coronation. What would Bevcan SA revenue growth have been without the loss of the export business?

It would be approaching double digits.

Thank you for that. Next, Baron from Fort. Please, can you speak through where you have lost business and where you have also won business? And what do you think the key drivers for this were?

Yes. Without going into too much detail, I mean, it is true that it has become a more competitive environment out there. The industry capacity has been enhanced by competitors towards the end of last year. We will have our additional capacity available towards the end of this year. So it's definitely a more competitive environment. At a segmental level, we've largely hung on to shares. We haven't lost customers. But we have seen, in aggregate, a little bit of regression in our participation within the Beer segment.

Next question from Rajesh Excelsia. Please, can you explain how you intend to grow the diversified business? What is the medium term as mentioned?

Yes. I think hopefully, it was quite clear in our approach that the bulk of the relief that we bring to that business and to ensure future competitiveness relates to optimization whereas the rest of the portfolio will be a growth-led strategy. Once we've reduced the footprint and now that we've narrowed the participation, we will be able to compete more effectively in the local market, but also relative to imports. If you unpack that portfolio, the biggest contributors are fish and fruit and of course, they've got their own set of dynamics in terms of availability and size of crop. But our product positioning and total value proposition to customers should realize in growth to the extent that they grow. On the tinplate aerosol side, we've lost some significant business over time, but our commitment to the category and our more efficient operations will enable us some volume recovery there. On the mono block aluminum aerosol side that largely sits in the once-off bucket, where the major customer in South Africa changed brand and also formulation. And there again, we are confident in just normalization of that set of demands. At the back of some of our customers, we do have an opportunity to support their export programs, specifically related to multinational participant. But at this point, it's still early to assess the opportunities. So in aggregate, from a growth perspective, diversified should move forward more on an organic growth basis. and be sustained from a profitability point of view to the optimization work that we're doing. Whereas, of course, on the beverage side, it's a different conversation where our capacity flexibility will enable more confident participation. Our beverage business has seen relatively constrained growth through the lack of capacity at a time when the industry needed it. Nampak, we're challenged with consistent supply to customers, call it in the period, '24 to '25. More recently, through the plant efficiencies that we're seeing, the better output from our factories -- we're able to service demand with more confidence. And of course, that then gives you the right to go and pitch for more business as you drive growth within that portfolio. I think Angola is pretty self-explanatory in terms of what we're seeing there, what we've put forward as the growth drivers and the likelihood of that being sustained based on the dynamics that play in that market.

Next, Francois from Bosco. What gives management confidence that Nampak customers will continue relying on outsourced packaging solutions instead of increasingly internalizing packaging production themselves?

Yes, that's a great question. If you just look at Nampak's value proposition, our investment beyond just the manufacturing of the actual product is enormous in terms of our R&D and technical and support capabilities. So whilst you could potentially compete in terms of the supply of the product as a stand-alone operation, your ability to support plant to drive innovation, to ensure quality compliance, including legislative changes related to [indiscernible] , for example, puts Nampak in a completely different world. And I love to mention capabilities around how do you take artwork design into something that you can run on a can? A PDF flat file is an interesting and easy thing to sign off, but to get it printed that the quality that we do in our cans takes an enormous amount of work with significant investment just behind that very small component. So I think if you look at it from a pure cost perspective, our profitability is plain to see for everybody, then perhaps their top exercises, good support notions like the one muted. But Nampak brings the capability of the stretches way beyond that.

Next timber from Excelsia. What's your outlook on canned fish demand in the second half?

I think it's well documented. The media has kept us abreast of developments up the West Coast. I will be loved to speak on the office, our biggest customer, nothing new there. There are some dynamics at play, potential bolstering of local fish supply through a total allowable cash top-up supply out of neighboring countries. All of those things are at play. Ultimately, the arrival of frozen fish will determine the outcome. And I would defer the question rather to our customer.

And Charles from titanium. This is a follow-up question. Which customers were responsible for the loss in business in the aerosols and projects? And what were the reason for these losses?

Yes, I think it's important to distinguish on the aerosol side between tinplate and monoblock aluminum. I assume the question deals with tinplate It is the major play in South Africa in the home care space and pesticides that reverted to an import program. That was the main driver. And similarly, on the closure side, it's the same customer.

All right. We do not have any further questions. We'd love to cross over to Chorus Call. No questions also. Okay.

We have a question on the conference call from James Twyman from Prescient. Please go ahead. James, if you're online, you can proceed. No response from his line. But we have no other questions in the queue.

All right. Thank you. I think that brings us to the conclusion of our interim results presentation.

Thank you, Teboho. Thank you for hosting us this morning. Thank you for everybody that joined the webcast. Four months in, I've enjoyed my time in this business. I've really enjoyed my time working with you Glen and look forward to the last couple of months. Thank you for all the support. And I look forward to clearly a more challenging environment, but one where Nampak is extremely well positioned to compete and continue and sustain the journey that's now well entrenched in the organization. Thank you again for your time. Have a wonderful weekend, and see you soon. Goodbye.