PPC Ltd (PPC) Earnings Call Transcript & Summary

Good morning, everyone. Welcome, and thank you for joining us at PPC's Capital Markets Day. My name is Kwame Antwi, and I'll be your host or emcee for this evening. As usual, we are hosted by the Group CEO, Roland van Wijnen, and his executive team. We also have a number of PPC senior management team available here as well to join us. Before we start, there are some housekeeping rules. This webcast is also being broadcast live. So for those of you in the room, please turn off your phones. If you need to use the bathrooms, it's in the passage on your left-hand side, you see the ablution facilities. For those of you that want access to the WiFi as well, the passwords are on the sides of the walls, so you can see that and log on to it. As I said, we are being broadcast live. So we need to try and keep a tight schedule. If you ask questions and the questions run over, we would defer it to the end. Because at the end of the presentation, we'll have quite a long question-and-answer session to be able to engage with management team. [Operator Instructions] So yes, without taking too much of your time, let me hand over to Roland and the team to take us through the presentation.

Thank you, Kwame. Good morning, ladies and gentlemen here in the room as well those online. It is a pleasure to host you today at our Capital Markets Day. It's been quite a while that we had an opportunity to interact like this. And as we do it in these days, it's so-called hybrid. So we'll take the questions both from people that are in the room as well as those that are online. As mentioned by Kwame, we will try to stick to the schedule that we have set out for the day. I will, after my welcome and a few introduction slides, hand over to Njombo, who will take you through South Africa and Botswana, one of our key markets. Afterwards, we have a Q&A session on that market particularly. Then we'll have a break around 11:30, and we continue -- sorry, a break around 11:15, and we continue at 11:30 with our international operations, starting with Zimbabwe, followed by Rwanda and, again, a Q&A. We have no more topic on the DRC on this list, as you have seen. As we have announced previously, we have restructured the DRC. We've actually finalized -- I put my signatures on the documents earlier this week. And therewith, we are well underway as we have announced that we will deconsolidate DRC out of our PPC Limited numbers. Then in the afternoon, I will spend some time with Delon, our Head of Operations, on the topic of industrial excellence and decarbonization. You will see throughout today that industrial excellence, in order to mitigate cost increases, is crucial to the success of PPC in the past, in the present, as well as in the future. And throughout the day, you will hear a number of examples on how we mitigate cost increases in our business through specific dedicated actions that will address variable and fixed cost. After that block, we'll start to close out today with the financial section where Brenda will talk you through the capital structure that we have in mind, the capital allocation principles that we follow and a rough idea of the capital outlay that we see for the coming years. And then I'll wrap it up with a little bit of an outlook. And then we have another session around Q&A. That will bring us through the whole day. I look forward to it. I hope that it will be an interactive day where you have an opportunity not just to ask your questions to myself and my colleagues in the ExCo, but also to the broader management team that we have with us here today. We have the business unit heads of both our cement inland, our cement coastal, our materials business, and we have the Finance Director of our international operations, so we are well covered for all the areas that you might want to dive into. Without further ado, this picture is hopefully well known by now. PPC is a purpose-led and performance-driven organization. The purpose of PPC is to empower people to experience a better quality of life through the products and through what we do in the communities where we operate and what we do with the development of the people that work with us. There is no business that doesn't have and start with fulfilling a customer need. So we are, and you will see that throughout the day, customer-focused. We want our customers to be loyal. We want our customers to understand the value that we deliver to them, and therewith, extract the prices that we demand for our services. No business can serve its customers without engaged people. And you will hear throughout the presentation today, the enormous importance that it is not only to have engaged people, but also to have skilled people. And that goes from artisan, welder, operator all the way through to myself. And then obviously, in a business like ours, that is a high-fixed-cost business and a high-cost business, cost control is key. And cost control you will achieve through process excellence. All of that governed by proper government structures, social responsibility and, of course, a financial performance at the end. We are well aware that nothing in the business turns without the money that you and our lenders entrust us with, and you are demanding a certain return on that capital. So that makes the loop round. This picture has been referred to as the rocket or the sausage, depending a little bit on how you look at it. When we think about PPC and where we take this company forward, we obviously look at the strategic context in which we operate. And the strategic context can be summarized in these 6 bulbs. There is, of course, more detail behind it. But if you look at our markets, we have distinct markets. We have South Africa and Botswana, which can be characterized as a more mature market, modest growth, but relatively low risk, if you compare it with some of the other markets in which we operate. Sufficient capacity, you will see throughout the day that South Africa has sufficient clinker capacity in the country to serve the cement needs for the foreseeable future. And with some of the projects that you will hear about today, we know that we can actually extend that clinker into more cement without having to build big new expensive cement plants. Then in contrast to East and Central Africa, DRC, Rwanda, Kenya, Uganda, Ethiopia, Zambia, Tanzania, those are immature markets, high-growth markets, markets with more risk, as we are very familiar with after our investments that we made in this part of the world. And a need for new capacity, there is insufficient capacity in these markets to deal with the growth that they are facing, relatively high risk, as I mentioned. Then around us, we see increased stakeholder awareness of climate change and the role that the cement industry and the concrete industry has to play to decarbonize the building materials that we all need for the infrastructure that we need to build in all the countries where we operate. That also gives opportunities for new revenue streams, low-carbon building materials. And we'll touch upon those today as they will start to play a bigger role in PPC over the next 10 to 15 years. We have made a deliberate decision that our capital allocation will be focused on Southern Africa. Now if you see that back in the context that I just mentioned to you before, Eastern Central Africa is a high-growth market and will require capital to keep up with the demand. We will be looking for other partners to work with us in order to serve those markets as we go forward. We also do that in the context of the fact that our human capital at the moment is relatively thinly spread over a wide part of the geography throughout the continent. And by focusing on Southern Africa, we want to make sure that the position we have across South Africa, Zimbabwe and Botswana,, as strong as today, will get stronger as we move forward. It is no secret that we come out of the phase that we have dubbed here, stabilization, a difficult phase that PPC went through in the last 3 to 4 years. But we've come out of it successful. We have strengthened our financial position. We decoupled the international business balance sheets in DRC, Rwanda, Ethiopia and Zimbabwe completely from PPC Limited. And therewith, every territory is self-sufficient. Specifically important was the restructuring of the debt in the DRC. That now has been restructured and has no longer the recourse back to the group. That enabled us to reduce the South African gross debt-to-EBITDA to less than 1.3 at the end of February, coming off more than 3 when we were in March 2022, just before we saw the impact of the lockdowns. You will hear today that Zimbabwe is now completely debt-free. The last debt payment was made in December last year. And therewith, Zimbabwe is debt-free as we speak today. Rwanda is on that trajectory as well. And if things play out as we expect, Rwanda will be debt-free in financial year '25. We've also worked on the optimization of our portfolio and have divested from noncore businesses, PPC Lime and Botswana Aggregates. All those transactions have been completed, passed, and the proceeds have been applied to reduce the South African debt. We launched last year our decarbonization strategy, and we'll touch upon that today because we do see the necessity for a business like PPC to contribute to reducing its impact on climate change and on global warming. And without speaking too much about ourselves in the room, we celebrate SPPC 130 years in this very year, a milestone that we're proud of. If I just add up the cement experience that is sitting in this room, I will easily pass that 130 years between the few people that we have with us today, despite the fact that we even have a few youngsters in the room, which is always a pleasure to see. Within PPC, we use a visualization of the journey that we have been going through. And this is the journey map at group level. Coming out of the stabilization phase, entering in the phase where we want to strengthen the leadership position that we have carefully built up over the last 130 years, with a focus on Southern African cement and materials, with a focus on operational equipment efficiency, OEE, you will hear that term a couple of times today, and it's an important term for us. And OEE for a equipment like a kiln, which is a key piece of equipment in our factories, if I say to you that OEE is 100%, it means that, that kiln is running 24 hours, 365 days a year at the designed capacity, at its best possible capacity. That 100% you will never achieve because a kiln will need times of maintenance. The benchmark that the cement industry would always strive for is to have an OEE for their main equipment that is higher than 85%. So you can calculate more or less what that means in downtime that we see as acceptable for maintenance. You will hear about OEEs throughout the presentation and the actions that we have to bring that OEE to 80%, 85% and the financial benefits that, that will have on the variable cost to run our business. That will drive a further improvement in cash generation. Throughout the day, you will hear the word, and I actually saw it 3 times on this slide, of prudent capital allocation. We are very strict when it comes to how do we apply our capital, where do we put our CapEx. And probably, if you loosen up some of the business unit managers here, they might moan a little bit about the fact that for every little thing that they would like to buy in their plants, they would have to go through quite an approval process to make sure that we spend that capital right and that they actually earn the right to apply that capital to their business. Dividends come back on the horizon. We have been in a position for many years where we were unable to pay dividends. And we are very grateful for the patience that many of you here in the room and online have displayed, and we would like to come back to territory where we pay dividends on a regular basis. Accelerating decarbonization and starting to explore low-carbon revenue opportunities are then the next phase that would enable us to go forward in the future in a more expansionary phase. Right now, our focus is on strengthening what we have and drive the value creation out of that. That makes PPC a compelling investment case, extremely performance- and return-focused, with leadership positions in the markets where we operate, with a good asset base, an asset base that, for example, here in South Africa, is capable of dealing with any uptick and upswing in demand as we demonstrated during the post-lockdown phase where there was a sudden spike and PPC was the only player in the market that could serve the needs of their customers. Therewith, we are well positioned to take advantage of upside that we see in the growth of infrastructure demand not only in South Africa, also in the other geographies where we operate. We have mapped out a value-accretive plan for decarbonizing our business. All the initiatives that Delon will speak about later today have a positive NPV in their projects. And he will explain you why all these projects have a positive NPV and are not only CO2-reducing measures. We now have a healthy capital structure, a good capital structure. And Brenda will speak about the simplicity that we apply in our thinking what the best capital structure for our group is going forward. And as I mentioned to you before, we have an experienced and highly motivated team to deliver upon the promises that we make to our Board and to our shareholders and other stakeholders. The focus areas of today will therewith be consistently throughout all the countries that we'll speak about, how do we strengthen our market leadership position? How do we extract values from our customer base? How do we drive operational efficiency? What is it that makes it possible for us to expand our margins despite the cost increases that we have in our major cost drivers, which are, not surprisingly, electricity, coal and transportation? We'll talk about the acceleration of decarbonization. And throughout today, the word performance-driven culture will come back and back and back, underpinned by a strict capital allocation framework in order to enable us to create stakeholder value and deliver above the market expectations of shareholder returns. A committed team, I said, a committed team along a number of points. We're instilling throughout the business, whether it is our executive committee or the operators in the plant, a mentality where we want people to run the company with a mindset of a long-term owner that has in mind the fact that he's working with capital provided to him by shareholders and funders and that there has to be a return on that money. Otherwise, our growth will come to an end. We therewith also made a deliberate decision that we'll prioritize initiatives and capital for margin improvement over unsustainable growth of the top line. We are not chasing the revenue line. We are chasing and hard the cost line in order to expand our margins. If the revenue line comes, it's great because we're ready for it. We know we're ready for it. But we cannot influence the market to the extent where there will be big infrastructure spend, to the extent where the imports will be taken out of the markets, all things that we lobby for. But what we can control is the cost in our business, running the most efficient kilns and running them well. Therewith, I have come to the end of my introduction. Before I hand over to Njombo, we do open the floor just for a few questions that you may have on what you have heard so far, either here from the audience or people online. It seems that the audience here is not used to the fact yet that this is a live event, that you can actually speak up. You cannot hide behind your camera, switch the camera off.

We don't have anything online as well.

Okay. So if we're all anxiously awaiting on Njombo's view on South Africa and Botswana, I will hand over to you, Njombo. Thank you very much.

Good morning. Unlike Kwame, I'm operating on South African time, so it is morning. All right. Today, I'm going to tell you about these 3 aspects of our business, which is the market, our operations and our people. So in terms of the market, I'm going to tell you how we strengthened and how we intend strengthening our market leadership position in South Africa and Botswana, how we intend to improve our operational efficiencies and, lastly, tell you about our people. In PPC, we always say our people is our strength, and that's what is important in our ability to be able to deliver the results that we talk about. So firstly, I just want to talk about the capacity in South Africa. And just if you look at that map, we basically cut it off with the blue line, and we talk about what we call the inland region on the top and the coastal region at the bottom. Now if you look at that map, we're basically talking about the capacity, which is about 16 million tonnes per annum of active capacity and the total capacity of 19 million tonnes in South Africa. Now in active capacity, we're talking about all the kilns that are actively operating and ready to operate. Now this is one of the challenge. If you then look at the market size, we are sitting at around 14 million tonnes, which means we've got this overcapacity in the market. And yes, the biggest challenge, various challenges in the areas in which we operate, if you look at the coastal region, obviously, the imports are the biggest challenge, with imports coming into the Western Cape and coming into the Eastern Cape in Port Elizabeth. And then also, we do have some challenges in the inland. One of them is the concept of blending. And that is encouraged mostly by the availability of extenders in the inland market. So we do have a blender rivalry. And the biggest issue with blenders is just the input costs are so low to extend and that creates a price issue. However, we also do have internal imports coming from Namibia. And also, Mozambique is starting to creep in with the capacity that has been actually extended in those regions. I'll tell you a little bit more about that as we go along. So we are in a business whereby, obviously, it's dependent on the infrastructure. And when we look at the challenges that I've mentioned, we actually see opportunities as well. So conservatively, we've estimated that the domestic demand will grow by 2.5%. So if we look at the base as 2021, in terms of the consumption, we're saying, should we get the relief on the imports, that will add another 1.1 million tonnes. And then at the 2.5% average growth, we add another 1.5 million tonnes and estimate that SA demand by 2025 will reach about 15.8 million tonnes. Now if you think back on the volumes and capacity that I mentioned, we're still okay to be able to meet that. Now the government has announced an infrastructure at about ZAR 595 billion. And if we estimate about just 10% of that taking off, we're looking at another 3 million demand that will come through. So all of that, for us as PPC, the upside is that we believe that we have the capacity that we can bring in immediately to take advantage of this particular growth. And that's why we see this as an opportunity for our business. Imports, it's been quite a challenge. We have actually seen that if the government is quite serious about assisting the industry, it does have an impact. So if you recall, around 2015, '16, we got the relief with the tariffs that were imposed on the Pakistani cement. And you can see, when you look at the graph, that we actually saw a reduction in the cement. And actually, the Chinese imports vanished completely. The Pakistani cement lingered around because we had Lucky Cement that only had about 14% tariffs imposed on them as opposed to the others that went up to about 47%. However, what then happens with the import is they switch to another country. And basically, they switched to Vietnam, and we started seeing this escalation of imports coming from Vietnam in and around 2018 and they continued, dampened a little bit about the COVID situation, but they still continue to increase. Now one of the challenges is that Vietnam has become a primary importer or exporter into South Africa. And we are looking with the iTe application was to just cap this situation where import has just jumped from one area to another. However, it has been very slow. We are working quite hard with the government to try and see if we can really get the relief against those unfair competition. And currently, we're also looking at an opportunity to see if we can impose the same or prove dumping from areas like Vietnam, which has been proven, and all the data shows that Vietnam is currently dumping into South Africa. So that's one of the areas in which our forecast is going to go into. Now on the inland region, the blender activity has stabilized. And this is good in terms of the pricing in the market. And the reason, the main reason for the stability on the blender activity is because of the reasonable pricing that has been done by the producers in and around the 2019, 2020. If you recall, around 2019, we went on a double-digit increase and there was following from the industry. And basically, as it stands, we've got 3 big blenders and a lot of other smaller ones. Of the 3, they are actually backed by manufacturers. So if you look at it technically, that's basically used as their own route to market into the bag market, which then, considering that the pricing of the input material is actually starting to get to reasonable levels, that also caps the destruction of price by the blenders. Now we talk pricing. So again, if you recall, where we come from, there was a lot of price erosion as the new competitors came into the market. And unfortunately, that coincided with the reduction in demand of our heydays of the World Cup. And we basically took a decision in 2018 and 2019 to say we're going to go for a double-digit increase. What is interesting is it's still not yet at the levels that we would like to, which are sustainable. However, the most interesting part is that the industry followed and we are able to keep those prices. And the indication is that the industry is actually on the path of recovery as far as pricing is concerned. And this is always a challenge when the demand is not increasing enough, there is always that risk that somebody will renegade on the pricing. But also, the increase in input costs is basically forcing us to really try and recover those in the market. But so far, the trend is actually looking very good. Now in our business, the trick is to understand your market. And what we pride ourselves with as PPC is our understanding of the playing field and the market structure in which we operate. So our BI team has done quite a lot of work in the recent past years to try and understand where does our product go. And as you can see on that picture, the industrial and the construction, that's what the infrastructure project of the government would actually influence. And this is areas where we're quite strong. And the most important is that, if you look at the industrial, 95% of that product is in bulk. And mostly, the bulk product we've got full control over in terms of where it ends up and the pricing that we can put into the bulk product. And that's what goes mainly into the industrial side, and that ends up in the infrastructure. And then also on the construction side, especially on the inland region, we've got an offering of bins, which we basically are able to supply into all those codes, be it residential or nonresidential. We've got these 8 tonne bins, which are doing very well in terms of distribution of product in and around the inland area. Then when we look at the retail, currently, it's between 60% and 65%. It peaked last year just after the hard lockdown, which should be in a normal situation, be running at between 50% and 55% on that retail sector. Now one of the things that we have done as a business is to start considering how we can strengthen those partnerships with the retailers because you do need them as a route to market. However, we also have a special focus on what we call the end user. And most of our marketing is focused on that end user because what we actually try to do is to get those individuals that use our product to ask for PPC by name. And with the retailers, the pricing of product is just equally important for them in terms of being a revenue generator or cash generator for them. Therefore, we look at value propositions that are in partnership with them in terms of how we can be able to create more value than putting focus on the pricing. And that understanding comes from the fact that we try very hard to get to a situation where we work on what we call a delivered model. That delivered model gives you enough info about where your product ends. And being able to generate that kind of information, then you are able to get hold of all the leverages that you can move to get at least the value proposition rather than the forecast on the pricing. So what are those initiatives that we've put in place to improve our profitability? So based on the previous slide, we looked at optimizing our existing assets to improve profitability. So we talk about optimizing customer portfolio. And when we talk optimizing customer portfolio, it's basically to look at the best-margin customers that we can be able to deal with. And there is quite an upside on the construction and industrial, so we have spent quite a lot of effort in making sure that technically we are still the leaders in the market. The construction and industrial sector, those people are more concerned about the quality of the product than the pricing of the product because they actually inevitably use the product to produce something that they sell on, whether it's roof tiles, bricks or any other construction product material. And on the industrial, in most cases, it's civils, and there is a lot of liability for a construction that has not gone right. So the focus in terms of them is the quality of the product. We also focus on the zones of natural advantage. And now that is in 2 ways. One is that we are in a logistics business in some way. And when we reduce the logistics costs, and that reduction of logistics cost is to focus on areas that we can still get the highest margins instead of stretching ourselves, increasing our lead distance and ending up with high logistics costs. We also spent quite a bit of time in terms of our supply chain as well as our BI to get a lot of data from the market, which then helps us to utilize data-driven models in terms of delivery of products. We've just last year launched our OSM, which is an optimum sourcing model or dynamic sourcing models, which then gives us an opportunity to balance between our production and delivery from a proper source to a specific customer that is driven by the margin that we generate on that. And our supply chain team has spent quite a lot of time in terms of optimizing of those. Then Roland mentioned earlier that throughout the day we will be talking about optimizing on our operations. So we talk about the clinker reduction initiatives that will reduce production costs. The LC3, that is the calcined clay, specifically for our coastal business, calcined clay is basically an extender that we are working on. And it's got advantages in the sense that, that will relate to -- you can produce calcined clay in a kiln. You're utilizing about 40% less coal in producing the calcined clay. And that translates to about 60% reduction on carbon because you're obviously not burning it up to the same extent as what you do with clinker. And that then can be used as an extender with quality benefits. And we're looking at the reduction of between 15% and 20% on the cost of the clinker that you will produce, and that obviously will translate to the cement pricing. We also look at announcing the total value proposition in terms of the quality -- I mean the product that we offer into the market. In terms of that fit-for-purpose at lowest cost, we basically look at our Sure range. When we launched the Sure range, the whole idea was to say we need to have products that are purpose-fit. So we have launched a precast specific product, which is used mainly in CPMs, the guys that make bricks or preformed products. And the advantage of it is the fast setting time, and it actually adds a lot of value to somebody that basically depends on the setting time or ability to tend their molds around. And that has done very well in both large CPMs and also the small brick makers that we have targeted in terms of that product. So we also leverage the materials business. We call it a basket of offering. But basically, we just take a construction site and making it our playground. We don't just go there and sell ready-mix or aggregates. We also see that as an opportunity to put our cement products into their markets, so there's an integrated approach in terms of how do we approach a construction site as PPC, and that has given us a lot of advantage. So speaking of the materials. Materials business for us is very important to extract value, especially in a competitive environment. So if you look at the map there, we are quite strong in what we call the inland area with regards to our materials business. And that consists of the ready-mix business. We've got 24 operations throughout the inland region. And then we've got 2 aggregate quarries as well as 2 sites for fly ash. One is at the power station in Kriel, and the other one is at Ngodwana, which we actually constructed together with Sappi, where we get some fly ash there. And that gives us an advantage in terms of being closer to the Gauteng market as well as being in the Mpumalanga market. So biggest issue with materials is that it is a very good value protector for our business. Now if we go deeper into some of the insights on how does this add value to us, so if you look at the ready-mix concrete, for instance, we are maximizing the cement pull-through at very good margins. We don't actually sell the cement to Dave, for instance, at the price that we are not willing to get out of the market. In fact, if he had a choice, he would be getting his cement from elsewhere. And most importantly, it accounts for between 15% and 18% of our inland bulk sales. So without Dave, that will be volumes that we would have to go and get some way. And as I said earlier, that also provides us an opportunity to do that basket offering by improving the cement product portfolio. And Dave and his team are basically one of those specialized cement or concrete manufacturers with the specialized concrete mostly in their minds and as well as the warehousing. They do very specialized flows. If Dave starts talking to you about the beauty of concrete and all the innovations that they do, and that gives us that technical expertise in terms of how we get the product into the market. And as I mentioned earlier, the fly ash is basically an extender. And it is a key input into our products in terms of the extension factor to save that clinker. And I'll tell you a little bit more why that clinker factor is so important to us. It's also a strategic input in terms of the decarbonization strategy. Because from an environmental impact, fly ash, it is actually a waste product. What we're doing at the moment with all the other CPMs that are utilizing the product like your tile manufacturers, tile cement manufacturers, we are actually focusing on increasing our classified ash sales into those, which has got a much better margin than the unclassified ash. We also have a potential to be able to put up another plant at Coselo as soon as the power station is stabilized. We have been awarded an opportunity to do so. And then that guarantees us with the ability to be able to take the fly ash business and the advantages that comes with that business forward. Now aggregates normally, when people look at PPC aggregates, we are very much into the west of Pretoria, and we don't seem to have a very big covering. But it is a profitable business, and it's got very much divest. It's not your typical aggregates business that sells aggregates into concrete. We actually have a very diverse range of products from chemical, agri line, we sell dolomite into the steel industry. It is, for instance, has got metallurgical and construction grade dolomites, which we basically sell into the steel industry. We sell some of the products from into areas like for chemical treatment of the waste. And Lazonia has got a very special rock called which is used in road construction. And that is one of a kind in terms of like availability in and within the inland region. So what we focus on in terms of the aggregates business was to expand our current zone of natural advantage. The aggregates business is set to cover a radius of about 30 kilometers. We've expanded that now, and we are about 70 kilometers in terms of our radios and still a potential to can grow that, and that is with clever logistics solutions. We've also optimized our customer portfolio. And by doing that, we increase our margins. So in the customer portfolio, we look at direct sales specifically to what used to be traditionally known as in formal markets, and when you do direct sales to that, you get even better margins in terms of getting into those sites. So if we get to the next slide, we spoke quite a lot about the ambition for a 3 mega plant strategy, and implemented it and it's starting to deliver benefits in terms of cost reductions. And as we said, there is a strong focus on industrial excellence and increasing output from those. So we've settled on operating most efficient So if you consider a wellbore, we've got 2, those are the 3 mega plants. And basically, in each one of those, we've got kiln 1 and 2 and kiln 8 and 9 and kiln 5 and 6 on the different sites. But the idea about last year, we were talking about swing kilns, which means the first kiln will be a stream. Now we're starting to talk about standby kilns. Because throughout that process of utilizing those swing kilns, especially with the high demand, we actually got those kilns to be operating quite well. And basically, now they are so available that we can switch them as and when we want. Obviously, we would like to focus on the most efficient kilns in terms of the production and switch on the standby kilns as the demand comes up. And that claim that we are able to take advantage of any upswing in the market is based on the fact that we've got those kilns available to take up any upswing in the demand. So when we talk about the clinker factor reduction, we're talking about and ability to reduce our cost of production and the carbon intensity in terms of extending our cement of products. Again, we talk about this OEE, which Roland mentioned earlier. When you start operating at OEE of above 80%, then it means you've got reliable equipment and you've got efficient equipment, which means your product -- I mean, your process is optimized. And when you do that, if you consider that starting up a kiln unit you need to utilize extra fuel to actually get it going without getting any production. So when your OEE is improved, which means your number of downtime is reduced, then it means you're actually doing very well in terms of your energy consumption. And I'll tell you just now about how energy is so important to us. And obviously, you get sustainable, higher outputs from your units. So if you look at our costs, and what contributes to our cost of sales, as I said, we -- in the logistics business, distribution cost contributes about 27% of that. And the one big one is electricity as well as coal. So basically, all of those are energy that we require into driving our business. And that is the major cost drivers for our business. So the focus is to offset those variable cost increases. So when we talk about distribution costs, we have done a lot of work on our supply chain to maximize the utilization of dedicated transport, which means you negotiate the numbers or the fees or the rates to an optimal rate in terms of the distribution. And when you know and have a very structured market, then you have this so-called fixed address, you're able to then optimize in terms of the transport cost. Using smart allocation in terms of optimized sourcing model and also driving higher payloads. So we basically have discussions with the transporters to say when a truck is supposed to be loading 32 tonnes, it should low 32 tonnes, nothing less than that, especially on the bulk. So just to give you an idea, in terms of our contract fleet, that translates to about 8 million rent savings a year when we managed to get the contracts correct that we can be able to optimize on dedicated transport. Some of the inflationary savings can amount to about ZAR 10 million. And one interesting 1 is the lead distances just by changing the distances and optimizing the sourcing, we are actually to make about ZAR 12 million pay on the lead distance. So there's quite a -- very good contribution that comes from a very dedicated and optimized sourcing or supply chain department. And in terms of electrical energy consumption, as we mentioned earlier, when you have control over your equipment and you can run it when you need to, Ascom rates have got different segments of rates. There is a setting rate that we get charged in terms of the demand charge in winter, specifically on the Western Cape, it's quite a significant cost. Now when you've got those high OEEs, you actually have control over when do you run your units and when do you run -- do not run them. Because of the reliability, you can actually predict how you will be able to meet demand. And in that case, we are able to actually stop the units and do the maintenance at the time that the cost of electricity is quite high, and we optimize in terms of the electricity costs. And we can pick and choose when we want to run our equipment and therefore, we are able to participate in that Eskom peak pricing program. And obviously, the increase in the extension factor of clinker plays a very big role in terms of our running of our milling units in reducing the electrical consumption. Coal is a very big factor. As you've seen, the energy cost in terms of cost of production. So we do look Johan and his team in the Western Cape. They're spending a lot of time looking at how they can improve on the alternative world to replace the coal. If you look at the 5% coal reduction, translates to about 2% reduction in your variable cost of clinker production. So it is a very important element in terms of how it would have an impact in your cost of production. When we look at the inland, we have a choice of running SK8 or SK9. And if we run SK8 efficiently, we actually are able to produce all the kiln SK9 and not have to run SK8. You're talking between 8% to 10% of the cost of clinker variable on the SK9 in terms of the production of the clinker. And the increase in extension factor on the clinker, when you talk about the 1% reduction for clinker extension, that translates to about for Inland about ZAR 7.2 million just on a 1% reduction of clinker usage. So it is a very important element in terms of how does that translate into the costing. Now the one focus area that we have is retaining and developing talent across all business. It is very important to build critical skills and competencies. Cement is a very unique industry with very unique skills, and we want to believe that we've got the best of those skills. And for us to be able to do that is to ensure that our people strategies are able to ensure that we give our employees an experience where they believe that it's a unique experience in within the business. We talked about employee engagement. I'm sure at some stage Roland will tell you about our Jabali program that we run in PPC to improve employee commitment and engagement into the business, as we stated earlier. And the most critical is our stakeholders and the stakeholder management and the compliance, obviously, with the rules of the land. That's a focal area for us going forward. Now you can put a lot of effort into talent, however, to retain the talent, you have to have a talent management plan, which is something that we are working on. We've actually delayed the upcoming year as the year of talent with a lot of programs that are focused on retaining and improving our skill levels in the business. So lastly, just to sum it up, we've been talking about how do we make our business sustainable. We spend quite a bit of time our route to market. We spoke about the 3 mega plant strategy. And that has resulted in a very good, fixed cost savings on to the business. We optimized our manning. And yes, we did have to say goodbye to some of our colleagues to restructure ourselves to be able to meet the challenges of our market. We implemented that optimum sourcing model, and it has delivered value in terms of reducing our cost of delivered product. And I think for me, the highlight is the integration of the materials business under the leadership of Dave, which has really delivered value, not just on to the materials business, three businesses, but also to the cement business in the inland. Now we talk about strengthening our leadership position. And basically, we have to have ourselves in a situation where we continue to optimize our existing assets and obviously improve our profitability. We are very comfortable that we've got sufficient capacity. So there's no need for major expansion CapEx for us to be able to operate in an environment where there is an upswing in demand. We enhanced our product portfolio. We're spending a lot of time. We're not putting in new products. However, we're looking at those products and saying, how will we align those products with the decarbonization in mind and actually making cost-effective products. As has been said, we're focusing on plant efficiencies with the OEE. And yes, we have to end our cost of capital. So we're looking at accelerating the decarbonization plan and making it part of an integrated way of doing business. And exploring again low-carbon specific initiatives, which will create new revenue streams. The ASH provides a lot of opportunities within that but there is all other initiatives that we do in the business. The in terms of the coastal and inland business provides an opportunity to do that. And we're restructuring ourselves to be able to meet those requirements. The future, yes, with the sufficient capacity that we have, there's no need for major CapEx expansion, but we need to scale up the new revenue streams. And as I said, alternative building technologies, AFRs presents us an opportunity to create a lot more value going forward. I thank you. I have brought my team here back in is the Head of inland. Dave Myles is Head of Materials and Jan Foster is the Head of the coastal business. And I thought -- I told them when I get questions, I'll direct them to. Any questions, yes.

Paul Whitman from Rozendal Partners. A question around the margins. I mean, when you look at that price increase over the last 6 years, it's about 10%. We've got inflation coming at us at a much higher rate now. Assuming no government infrastructure spend, you can't get the imports out of South Africa. Do you think your price increases will stick? And what sort of guidance do you give for SA sort of EBITDA margins going forward with all these initiatives that you've currently got going.

Okay. There's a part that I will be reluctant to answer and that's giving you a guide on margins. But yes, you have a point. The input cost, especially when we look at the fuel and all of that, then I must complement that Tim, we've done a lot to negate some of those input costs and inflationary costs with all the initiatives that we've put in place. However, in terms of the market, we have seen a positive trend in terms of competitors actually understanding that it's not about the volume, but actually the profitability of the business. And we are at a point where we ourselves decided we're not going to go out chasing price, but actually quality earnings for what we do. And that has been positive. However, this industry still needs good price increases to be able to recover, that's for sure.

[indiscernible] From Ashburton. Just given your 3 mega plant strategy, can you just give us a bit of insight in terms of the cost differential for the kind of standby kilns that you do have available should demand pick up in the future? What is that cost differential? .

I think I mentioned earlier in terms of the comparison between SK9 and SK8 in slurry that you're looking at...

The differentiation for the inland kiln, which is kiln 8 and 9 at the slurry plants, you talk about the variable cost differentiation, which is as a result of coal rate of consumption. So efficiencies on coal and kiln 9 gives you better variable cost. So when you run 8, you talk 8% to 10% increase on variable costs.

from Just a quick one on the play opportunity. Is that specific to PPC? Or is that a benefit that the whole industry can sort of capitalize on?

Johan?

In the is replacing the clinker in In the coastal region, we've got our cost of coal and manufacturing of the clinker. Extenders in the inland or ASH, and to put investment in there, I think firstly, there's less clay deposits in England. So the coastal region of the Western Cape is best positioned. Internationally, of course, there's other opportunities for the players that are beyond RSA borders.

Calcined clay is very new in cement, but I mean in Europe, there has been some advances in terms of the usage of the clay. In South Africa or actually we will not be the first in Africa, but in South Africa, we're definitely or Southern Africa will definitely be the best in terms of utilizing calcine clay. It's newer technology, and it has been proven.

Can I just pick up on a comment you made in this morning's operating update that the -- you've seen a little uplift in the government demand for cement given the locally produced guidance that you gained. And then you mentioned that you're looking to get some sort of tariff relief protection under ITAC from Vietnam. Can you give us a bit more color on those 2 parts please? What is going on with government? And secondly, is fairly good at giving out protection if as a well-deserved case. How far down a track are you with that?

Okay. There's 2 questions in one. I think the first one is on the government infrastructure subject. The designation was given and we welcomed it. But it is not very useful if government is not spending money. So government spend has been quite slow in terms of implementing those projects that they've spoken about. There is some traction on the side of [indiscernible]. They're starting to spend money and there is a lot of tender activity around that. And we were hoping to benefit from that. But actually, the designation of the government spend is -- has not actually given any benefit as yet. The second part of your question in terms of the application. Obviously, there is a process that needs to go through. ITAC, in terms of the application for protection, it takes much longer than actually proving a dumping case. And that's why we're tossing around with -- having looked at the Pakistani, you have time lines. And when those time lines are approached, we were able to get granted the relief on Pakistan. And at that time, the idea was that we will at least reduce the imports. But obviously, they switched to Vietnam. And we thought to avoid the switching let's go for an ITAC application, which is a longer route. And at this point in time, as an industry to the CCS, we're looking at both avenues as to applying for protection accounts, specifically Vietnam and at the same time, doing the ITAC application, but it has taken long.

Rowan Gallo from Research. John, when it comes to costs, we can see fuel and coal are going to be going up. But are there any other costs that might over the next 3 to 5 years, have any consequence for you and that might be changes to carbon tax, emission reductions costs that you might need to do in your plants? Is there anything you need to do to sort of comply with regulations outside of normal cement costing?

No. Well, there is, yes. In terms of our packaging costs, that's 1 area that is of concern. We have looked at alternatives in terms of sourcing of the packaging, and we seem to be successful with that. And the team has done very well to update some of the increased costs of packaging. In terms of the carbon tax, we have been given again a relief until 2024 from the government in terms of the increases. So we still have our rebates that the government offers in terms of the carbon tax. However, we're working in the background to demonstrate that. And what is encouraging is there is an acknowledgment that cement industry is a hard-to-abate industry, which then -- it's a recognition that it will be very difficult for us to get to the levels that South Africa is signed up for. However, we've got a break till around 2024.

I think that's for you Roland. The first one is from Myron Rajaratnam. He says, what is the replacement value of your assets?

Thanks. Replacement value of our cement assets, if I look at South Africa, so we got about the capacity, I'm looking at John as well, about a capacity of 6 million tonnes in South Africa, as you count $200, $300 per tonne, you'll probably come to about EUR 1 billion, about ZAR 15 billion, I would guesstimate for our South African cement users more or less.

The second question is on Jonathan Block. He's from Ally Minerals & Petroleum PTY Limited. He says you're speaking about managing transport costs. In general, you've got 3 costs, electricity, coal and transportation. What are you doing about them?

We discussed that already.

Well, I think we can skip that. The next 1 is from Charles Boles from Titanium Capital. He says, please, can you clarify on Slide 18. Slide 18. So he says that are you saying that A, B and C are owned by clinker manufacturers. And if that's so, why would they give -- why will the industry be under such pricing pressure, i.e., why is it rational for the manufacturers to debate prices like that?

Okay. No, they are not owned by -- they are not owned by clinker manufacturers. And secondly, it is an opportunity to get to the market in some of those manufacturers because blender is closer to the extenders. And therefore, they are able to take a bulk product and put it into the market. Rationality, we can debate that. But actually, that saves a producer from putting up a unit that is closer to the market, and that's the model they choose. But this particular trend has gone on for quite some time to an extent that some of the suppliers into those channels have lost their channel into the retail market. And this is the quickest and the easiest to get into that channel.

All right. We have more questions. The next one is from Chris Reddy Capital. He says, what are your time lines regarding receiving regulatory approval to curb imports? That's number one. Why do you think this process has taken so long? Please, can we get your views on the competitive environment in SA? Then who is gaining and how is losing market share? And then he says regarding the input cost inflation and impact on margins, how much of this can be offset by price increases and how much by your cost containment strategy? So it's quite a lot. So maybe let's thought 1 by one. Your first one, timelines on getting regulatory approval.

I wish I knew. Look, we have been engaging with the government, and we expect that we will get some response. But what we have decided as an industry is to say what other avenues can we be able to utilize for ourselves to, as I said, maybe go for a particular country in terms of the importation.

Okay. He says, why do you think the process is taking so long?

I think we need to understand that behind every one of these, there's bilateral agreements that the government has got. And we can't -- we're not operating as an island as South Africa. So therefore, there is a lot of processes that the government has to go through in terms of obviously putting something like that into place.

And then the next question is can you give insights into the competitive environment in South Africa?

I think we went through a period whereby the environment in South Africa was about making sure that you get all your volumes out and get the cash flow right. Within effect from around 2018, '19, I think the industry was in a very terrible state that they realized that it's very important to drive margins up. And it's also for the benefit of the country. We were getting into a situation where we are operating an unsustainable business. And the current situation is that outside the imported product, the local manufacturers are actually trying very hard to create value for their shareholders.

Okay. His last question is saying, basically, he wants to understand with regards to dealing with input cost inflation. So how much of that do you intend to recover from price increases? And how much of that do you intend to recover through your cost basis?

It's very difficult to give percentages. But actually, we've done enough on our fixed cost. You can only reduce your fixed cost up to a certain level. And we've actually done enough in terms of that. From a variable cost point of view, as we have indicated, most of those initiatives are focused on the variable cost to reduce that variable cost. Now the issue is inflationary increases will be there and mostly driven by events of the day. If you look at the price increases on the fuel that we are, they were unforeseen and they are there. And we always have to do all sorts of things to say how do we negate those. And basically, if we -- even if we didn't have current fuel price increases, we would actually be improving our margins because those initiatives will still be in our plans.

You've got another question from Mark Telos, SBG Securities. He says, what is your view on the continued recovery of demand in the retail sector, in the retail -- basically retail cement demand, given the increases in interest rates?

Yes. We do expect that -- and we have seen the slowdown since after the post lockdown. However, the industry has been supported quite a lot by private sector. And those developments are still taking place. We do watch approved plans, both on industrial level and households. And we still see an activity on that. And in some areas or regions that we operate, we see an increase in approvals of those, specifically this part of the region with this internal migration from to the Western Cape. That has had a positive impact on the residential market. And that is positive from a retail point of view.

Last one is from Perpetua. He says assuming that SK9 is the benchmark in terms of energy efficiency other than SK8, how do your other kilns compare? And then say, if they are below SK9, is there capital required to get them to a more comparable level?

Actually, the other 2 kilns will be and SK9 virtually the same technology. 2 at least. And the kiln, it's a different technology. But again, now you have an element of different input costs. So in terms of the costing of the would be very different. But TKI and SK9 very comparable.

Well, that's all from the webcast.

Sorry, just 2 questions. So in terms of the current pricing pressure on fuel and coal, do you have any sort of longer-term pricing contracts or hedging in place that defers that pressure materializing in your margins was immediately reflective? And then the second question, you flagged Mozambique as a new source of imports into just SA, can you maybe speak to the land cost of Mozambican product relative to SA production? And what sort of spare capacity they're sitting with as a country? And I suppose, ultimately, if the ITAC comes into place, does it also cover Mozambique or not?

Let me start with the last comment. If we get the ITAC application in terms of protection, then yes, it will cover every import because it's not country-specific. If we then apply for a specific country then it means we will have to do one for the region as well. And the region is guided by all other aspects in terms of the agreements or gain in terms of the regional bilateral agreements. And then in terms of the amount or the capacity with regards to Mozambique, it fluctuates quite a lot. It's very difficult. We spent some time starting the Mozambiquan market in terms of the capacity and the market structure. It all depends on what happens in Mozambique. So when there was talk about oil, Mozambique did not have enough capacity. In fact, we did export today. And as soon there was -- as there was a problem with that, then it slowed down, and there is all of a sudden overcapacity. So it's a moving target in terms of how much is there. I can't remember the other question. Contracts. In terms of coal, yes, we do have contracts, and it also guided by the export coal indexes, but we do have long-term contracts. With fuel, it's very difficult to actually lend long-term fuel contracts. So we are basically bound to the fluctuations in terms of the coal. With our transporters, we have some kind of leeway in terms of when does the price increase kick into the rates.

We don't have anything on the webcast. So we'll take a break. And we will return at 11:50. [Break]

Good morning, and welcome back, those who are joining us online. As per the agenda, I'll first start with Zimbabwe. And today, we'll cover a few topics around Zimbabwe. As Roland mentioned, when we started, we have a fairly strong position with our debt fully repaid now. And perhaps we're all asking yourself, what are you going to do with the cash? I would show you some of the work that we've done in terms of being able to repatriate some of the cash to our shareholders. And our plans to also continue enhancing our market leadership position in that market. And how do we do that? We'll cover some aspects around obviously, reducing or improving our efficiency. And lastly, our efforts to invest in our people, not only for now, but also for the future. So this is a very simple slide but there's a lot of effort behind this slide. When I went to it was introduced in Zimbabwe, we had a significant debt exposure. And I'm pleased today to say that in December of last year, the debt in Zimbabwe is fully extinguished. And this is basically the principals were actually paid by the authorities as part of the legacy debt, but the business in Zimbabwe continue to also pay for the interest because we paid interest on a biannual basis. And I would like to thank our team in Zimbabwe because they really supported us through this process, in ensuring that relevant engagements do happen with the authorities in Zimbabwe. And I mentioned that we've paid some of our -- we paid our interest out of our own cash. And this picture just shows a split between ForEx sales and domestic currency sales in this financial year. So you see that approximately 55% of our sales are coming from -- are actually foreign currency denominated. And we've got further initiatives that we've put in place. And the sources of this foreign currency, we've actually implemented the Diaspora platform. It was quite an innovative solution. Basically, it allows Zimbabweans out of the country to buy cement from anywhere in the world, and we deliver in country and they pay in foreign currency. It's something that's still at an interesting stage in terms of growth. I think in the next few months, there will be a lot of effort put in place to try and market this quite extensively because I think it can unlock quite a lot of value. And as part of this -- the launch of this Diaspora platform, we actually got a sign off by the Reserve Bank because we actually took them through the process to make sure that we respect all the required legal requirements. The other part of our domestic forex is coming actually from domestic sales. And this is what you call free funds. I think we've always mentioned the whole issue of free funds. And lastly, FDI-funded projects also contribute quite extensively to some of our foreign currency earnings. And what I mentioned earlier about free funds is that we can easily repatriate the cash. If you look at the next slide, you'll see that in the last 18 months, we've been able to pay PPC Ltd. dividends amounting just more than $10 million. Now with our debt extinguished, we've got 2 options, obviously to reward our shareholders, and secondly, to obviously continuously invest in our business and making sure that we entrench our leadership position. But I think more importantly, if you look at this slide at the bottom, you'll see that since 2010, this business has been able to -- we have been able to get close to $95 million out of Zimbabwe. And I know a lot of -- there's a lot of [ hesitancy ] around Zimbabwe, but it actually shows the potential of this business going forward to the group. And I think now that I've sort of increased your excitement around the ability to get cash out of Zimbabwe, we need to also understand the market a little bit. But also what are we planning to do in this market to make sure that we continue rewarding our shareholders with some returns? We had a few operations in Zimbabwe, only 3 integrated cement plant. Our plant is located down here, and we also have an another integrated plant up in Harare. And then you also have another integrated cement plant here in the middle of the country. And the rest of the others are actually grinding station. This is our Harare grinding station, and we have a Bulawayo grinding station here, which actually shows that we've got a fairly nice network because the bulk of the cement in Zimbabwe is consumed in the north and a smaller portion, probably 40% or maybe 30% to 40% -- 35% to 40% in the South. So we are positioned, well positioned, in that regard. But if you -- we are surrounded obviously by Zambia, where we know there's excess capacity in Zambia, and we've seen some imports coming into -- from Zambia coming into the north. And also we've seen from Njombo that there's obviously overcapacity in the south in South Africa, which obviously it's a threat to our business in Zim. And the question is what is happening in the market? What do we see in the market, domestic market? We've seen, from 2016, steady growth over the years. In 2022, we've seen sharp growth. And what one should be careful as well about the peaks that you see in Zimbabwe. Because some of the peaks, for example, in 2018, '19, they were driven by exchange control regulations changes because people saw cement as a way to protect their money. So they actually put money into housing. But what we've seen also, in recent times, there's a very strong growth in individual home in retail driven by individual home builders. And there's a beauty about the Diaspora inflows because there's a lot of money coming from the Diasporas put back into the country for housing. Because most of the Zimbabweans that left the country, they obviously intend to come back and they want to actually come back to a solid house. So we've seen that being the big driver. But the other part is we've seen quite a strong investment in the infrastructure projects. And I'll touch on that as we go down further to show how our bulk volumes have evolved over time, driven by strong CPM and infrastructure projects. And with this growth, we've maintained our margins in Zimbabwe quite stable, actually above the mid-55%. Quite strong in that market. So we actually command quite a very strong position in Zimbabwe. And on this slide, actually, everybody spoke about -- we spoke a lot -- Roland introduced the concept of OEE. If you look at -- the red graph here actually shows cement equivalent capacity, meaning if you take all the clinker capacity in Zimbabwe and you convert it to cement at the clinker effect of, on average, 67%, this gives you the total cement capacity. But what you'll see here is you say, "Well, how is this going up?" So if you look at here, the overall OEE of the industry, and we estimate it to be not far from 70% because of various issues. One is -- power is a big issue in Zim. We had a lot of power instability, power outages. But secondly, historically, there was -- most of the players did not invest well into newer technologies, efficient capacities or even in maintenance CapEx that actually, over time, starts to catch up with some of the players in the market. So what we actually estimated here is assuming this, we all jack up the OEE from the low 70s to 82% 84%, how does that relate to our forecasted growth in cement demand over period? And you can clearly see it's very tight. And that's why after the ban of imports in Zimbabwe, the government had to open borders because one of the competitors had a major breakdown that created a huge shortfall in the market, and the borders were temporarily opened just to be able to serve the market. And therefore, what we're saying is we need to do something to make sure that the market is self sufficient at all times. And we've looked at combining some of our decarbonization initiatives also with capacity increase. And the interims, I mentioned that we've won [indiscernible] 400,000 tonnes of fly ash coming out of the new power plants being constructed, and the aim is to convert that as an extender to obviously increase our volumes. And secondly, you'll see when Brenda talks about the CapEx, there's a peak on maintenance CapEx in Zimbabwe. And the idea is, with a 45-day stop that we have mid-April to do the [indiscernible] the environmental project retrofit, we would like to at least address most of the issues that we're actually experiencing with regards to reliability. So as when we start the plant, we are able to sort of fill up the market with enough clinker. So this is what is giving us this projected increase at the top here is coming from our decarbonization initiatives. That also includes our plans for LC3. A lot of work has been done, and we're actually looking at, obviously, increasing our clinker capacity in a much more carbon-friendly manner. And this actually just shows you basically, our market. A simplified version of our market. I think Zim has been quite instrumental in really defining route to market studies. I think we've been a leader in that market. When we started introducing container strategy in that market, everybody thought this is not going to succeed. But I mean, containers, basically, the model as you take your own customer in town and you start expanding that customer into the rural markets and making cement accessible into those rural markets. And what happened over time is we grew these customers so well into new markets that our volumes coming out of retailers actually at some point were 10% of the total sales. So what that means is you actually have much stronger retention because that growth is actually linked to your container strategy. And the second thing that we've also -- and you'll see on the next slide, it's actually about how do we better serve the CPM market in construction? And we've actually -- we are the first to introduce bulk in Zimbabwe, including bulk spreaders for road construction because there's a load -- a lot of road projects that are underway, and we've introduced bulk spreaders in that market. That actually gives us an edge, and everybody is following. So there's quite a lot of some of these innovative solutions that we've put in place. In retail, we are the first to introduce pelletized cement. And to this day, most -- we are actually the leader in [indiscernible] pelletized cement in Zimbabwe. Okay. I think I spoke a little bit earlier about our bulk. If we look at historically where we started with bulk, I remember in 2020, I gave the guys -- actually, 2019, we gave the guys, our team in Zimbabwe, target of 60 in 2020, and that was at a time when there was huge foreign currency shortage. And as we said, look, because -- bulk of our foreign currency requirement is for packaging. So we said try to get to 20% paper because paper was produced locally, 60% on polypropylene because at least you reduce your import requirements, and 20% bulk because bulk, there's obviously no need for packaging. And actually, we were able to get additional bulk tanker capacity, and you can see how these volumes have grown quite nicely. But this was not done in isolation. We actually had to -- we coupled this with provision of bulk silos because there's no point of any bulk tender with other silos. So we provided our customers with silos. We bring bulk, we put into our silos, and we actually were able to calculate the turnover out of those silos as part of KPIs for our customers. And that has actually worked quite well for us. If you look at in tonnes [indiscernible], we've seen quite a strong stability on a bulk volumes, which really shows that we're retaining most of the customers as part of this exercise. And from a product offering, you'll see we offer quite a wide product offering, and to make sure that we cater for different market segments. And the one area that is obviously developing in Zim is the mining sector. You've seen on the previous slide on segmentation it's a sector that requires, obviously, a specialized product and we are tapping more and more into that space. And as you've seen in the news recently, there's a lot of investment on the mining sector in Zimbabwe. So we need to get the forefront in making sure we can serve that segment quite well going forward. I think most of the stuff here in terms of the initiatives already covered. There's another thing that we are working on. It's obviously -- it's something that we've actually developing in the DRC. We call it [ digi ] cement, and digi cement is basically an app where you can -- to increase access and penetration in the micro retail sector. Because with an app, you can do small drops to micro retail. So it's something that we are coping in other markets to make sure that we've got much wider penetration into the micro retail sector. I've covered most of stuff I mentioned here, and yes, we can manufacture all these beautiful products. But if you look at our cost structure in Zimbabwe, you'll see 50% of our costs actually inbound logistics, outbound logistics as well as raw materials. And you say, well, what is power and thermal energy? We are in the land of coal, so at least coal prices are not that high, but we've made a commitment that Delon will touch on with regards to TCFD. And you'll see some of the initiatives are touching on the 10% of coal and electricity, but it's not purely just cost, I must emphasize, because there are other benefits to that. The reason why we spent time in coal is because got multiple rippling effect. One is obviously cost; two, decarbonization; but three, is sustainability of supply. Because as I said earlier, when I looked at -- I showed you the demand supply cap in Zimbabwe. What really impacts on the industry performance is stability of power supply. And the reason why we're doing this solar project is to make sure that we can at least sustain a high level of operation out of our plant and now they have disruptions and obviously [indiscernible] market. But -- and if you look at the raw materials, bulk of it is actually clinker that we had to import because suddenly, we're running out or because of the reliability, and we want to bring that down. So by making sure that we get our kiln to design capacity and even beyond, we are able to also bring some of the raw materials cost significantly down. On the inbound logistics, the nature of our footprint is we're moving clinker from Colleen Bawn, we rail it to Bulawayo and then we rail it further to Harare. That we cannot change. That's the nature of -- but what we can do with optimized extension, we can reduce the volumes that we actually have to move from the clinker source into the grinding stations. So that can -- that will help us to at least reduce the inbound logistics cost. Outbound is really, I think with our footprint, actually our -- in terms of our outbound logistics cost, I think we are not too bad in terms of controlling our sourcing and making sure that we've got an optimized sourcing model. And as I mentioned -- and things like maintenance, what we do in terms of the CapEx, maintenance CapEx, we are investing in technologies that has got much lower maintenance requirements or maintenance costs. And then obviously, the other focus, as I mentioned, is on the clinker factor reduction. We've secured strategic raw materials for extension, and that actually positions us quite well going forward. And obviously, fixed costs, you'll see there's an element on the next slide where we actually talk about some of the initiatives, including automation. Actually, I think with the project that we are doing at Colleen Bawn with artificial intelligence, we will be probably the first plant in the continent run on artificial intelligence. And the aim is to do proactive diagnostics and making sure that we run our plant at the highest efficiency levels. So that's actually one of the exciting projects that we are working with an OEM to make sure that we take our operation to the next level. But coupled to that, we're also doing OT/IT integration, and this is aimed at really making sure that this all operational data gets linked directly to our ERP system and you just do a reconciliation of the numbers month and then you're able to generate your reports real-time. You don't have to run multiple spreadsheets. So that's a project that we are doing in this coming financial year. And as I said, in April, we have this 45-day stop. We'll really address all the issues that we've had on our [indiscernible], and we actually have the groundbreaking of our 20-megawatt and 10-megawatt solar project in April. So construction started. The aim is to actually have one of them up and running before the end of the calendar year. So that's -- we're pushing the service providers to get that up and running. Because the sooner we get that, it means our investment in the maintenance of the kiln will start to yield results because there's no point of having this beautiful kiln but then power is an issue. So that's why we're pushing for that. I think this, for me, you can't have all these successes without people. And we've done -- we've made quite a lot of strides in Zimbabwe regards to the investment in people. We actually revamp our whole HR team. We've set up a learning and development team. In fact, my colleagues last week, they were in Zimbabwe attending -- we organized the corporate finance training with one of the [indiscernible] professors in Zimbabwe to make sure that we lay a solid foundation. As Roland said, we need to have an entrepreneurial mindset. Everything that we do, we need to think of how do we unlock value and create value for shareholders. And that's quite important. And these are some of the topics that we'll cover going forward with our team. We've actually launched our online platform in Zim with some of these online institutions, where it allows our people to do a whole lot of training online, get tested, get certified. And it's a structured program where each individual will have individual development plans for the year. So it's quite exciting. I think it's, for me, a fundamental step. If we really look at the future of this industry, it lies in solutions in decarbonized products. And the thing is how do we prepare people for the future? And we have to make sure that we lay a foundation now. I think if you look at in South African context, I think people have been moving from 1 industry to 1 industry, but there's not been quite a lot of effort to really build new talent from the bottom. And I think that's quite key. If we really want to see this industry making leaps going forward, a lot of deliberate actions have to be put in place to develop talent. And this is actually what we're doing. We've actually brought in quite a lot of Zimbabweans Diasporas back into the country. And for me, it talks to a topic of diversity. It's very important. Single-minded, it's a problem for many businesses. You need to have people with different mindsets because that's why we challenge each other and we challenge our decisions. And that's what we've seen because being involved, exposed to 1 environment over time starts to define your horizon. But by bringing people that have seen other part of the world, still Zimbabweans, it actually brings that little bit of diversity in the team. So I think, and Roland mentioned, I think for me, one of the things that makes me [indiscernible] this company is the purpose. If we look at not only with our own employees, if we look at what we're doing with communities, in Zimbabwe, I mean, we started now making all our overalls at the plant. The communities are making all our [ outfits ]. The uniform for the children, because we have school at Colleen Bawn, manufactured by the ladies from the community. For me, these are the projects that really touch my heart because you cannot have an oasis in a desert. We need to make sure that we develop people around us. And I think to summarize what we've discussed earlier, I mean, around Zimbabwe, for me, I'm not going to bore you with a whole lot of details, but [indiscernible] for me is cash generation, reward shareholders and trench our market leadership position and obviously, accelerate there a lot of decarbonization. I think those are the 4 main things. And if nothing changes with regards to the legislation in country, we will continue, obviously, to reward our shareholders who have been quite patient with us over time. I think that's it on Zimbabwe. I don't know if there are any questions. And today, I'm surrounded by people that are smarter than me. They will be able to answer all the difficult questions. Yes. And I'm certain a [indiscernible] question will come so I will have a specialist here.

[indiscernible] from [ Ashburton ]. Just around your local currency versus foreign currency sales. I know you target to try and match as much of your local cost base with local currency sales. I mean, how are you doing on that? Does that 46% of local currency sales actually offset your local cost base? And just maybe just talk to that mix, if you don't mind.

I can answer that, but I'll ask [ Chrissy ] and Chrissy is the [ FD ] of PPC International. So she can answer that one.

Thank you very much for the question. So in the cost structure is also skewing towards the same ratio. So we always try as much as possible to match our cost to the revenue that we are generating in foreign currency, so there is no exposure from our side. But I would say that in terms of forex, our generation in terms of the revenue [indiscernible] much higher compared to how much we are paying in forex for our costs.

Thanks, Chrissy.

Maybe just to clarify on your ability to repatriate cash. So you said, I think you can repatriate in line with the extent to which sales are generated in forex. Does that mean you can essentially repatriate 100% of the sales revenue generated in forex as a dividend? I mean your payout rate would never be that high. Is it a case of the split in profits that you can pay out as the -- in line with the forex local currency sales?

Yes. So to answer that is if -- everything you call in U.K., but I mean you still have foreign currency input costs. So that you need to make sure that you can run your business on a sustainable basis.

And then just maybe just to clarify the economic benefits that are expected from that fly ash project and the LC3 CapEx project as well.

Well, yes, so I'll start with the fly ash. We got close to nothing. We'll basically cover the logistics cost from the source to plant. But what it does is you'll still be deliver cheaper than your clinker. So replacement of clinker with fly ash has got an impact on obviously your variable cost positively. On the LC3 is 2 ways. One is you also minimize your inbound logistics cost because it's closer to your grinding station. Two is the cost of producing [indiscernible] is much lower than producing clinker. And three, because the market is clinker deficit, you've actually been able to sell clinker into the market to make sure that actually you fill up the entire market with products. So you can actually generate even double revenue, not only from cement, but you can even fill up the market with additional excess clinker that you may have. Thank you. So can we get to the next one?

Thanks, [indiscernible]. Yes, the middle of East Africa, Rwanda, we've totally spoken a lot about before, and I will touch on where we are in terms of our market leadership position. A lot has been spoken about maximizing our clinker capacity and I'll touch base on where we are and why there's been some delays. I think one is to also put that into context. And obviously, how that will translate into cost competitiveness and our ability to defend our position in that market. And the other thing that I will introduce, I think Roland mentioned it. The growth is really cash hungry. And one needs is to look at what are the options if there is a need for growth. So simplified markets, small country, 13-odd million people, 2 cement plants, 1 integrated, other one is a grinding station that came in -- was commissioned last year. What we have seen from the startup of the grinding station, not really impact on our market, our volumes, no impact really on pricing because I think -- so we've seen stability overall in terms of pricing. And if -- yes, and then -- but unfortunately, we surrounded by countries with excess capacity like in Zim. There's quite a lot of cement coming from Tanzania because there's quite an excess capacity, yes. There, we have seen some cement coming out of Kenya. And this became actually quite -- it was -- we never really had a lot of cement Kenya until when the government did a classroom project. Because the classroom project, there was a huge -- suddenly huge demand that we had to fulfill. And the government -- the excess was actually imported from Kenya. And I think that started to open a room for imports out of Kenya, but it was not really a major issue historically. And now with the border between the 2 countries, between Uganda and Rwanda open, we would expect to start seeing some developments with cement coming out of Uganda. And there's also with the discussions happening around the DRC being part of the East African community. We start -- I think we will start seeing more movement as well within this entire region, including Burundi and obviously, [indiscernible] because then they will be part of community. But we're also doing our part because you'll see on the subsequent slide we're doing quite significant volumes. Actually, this side of record volumes into that region, I think we're growing them quite nicely. So we're doing quite substantial export volumes into the north and south of [ Kibu ] as part of our foreign currency earnings strategy. If you look at the market, similar -- I mean we've seen compound annual growth rate of about 6% since 2016. Quite -- very nice, steady growth. Unfortunately, if you look at the next slide, is if you look at the domestic clinker capacity converted to cement and this -- and the demand, and -- sorry, in the grinding capacity and the demand, you see that there is a huge shortage of clinker. And this is also because there's not adequate limestone reserves in the country, and I'll talk about -- what are we doing about that to make sure that we extend our life of mine. So clearly, what it means is the base of your cement product, which is clinker, has to be imported somehow to really fill up the demand in the market, or cement has to be imported into the country to support the demand. Market, also still -- retail, we're growing this sector, micro retail, quite strongly. You'll see what I mentioned about exports. Not a big market when it comes to concrete product manufacturers. If you remember, Zimbabwe is quite -- is double digit. It's quite a very small market, but there's quite strong construction that you'll see on the next slides. We're going to talk about some of the developments in construction and what is happening there. And again, we introduced bulk in Rwanda. Obviously, we were the only [indiscernible], but when we started with the first bulk tanker and the aim was [indiscernible] the market and see if bulk will be acceptable. And what we've seen, the biggest challenge in most of this market with bulk is infrastructure of your customers. They do not have a weighing mechanism. They tend not to believe in bulk. But the minute they can start saying actually, I don't have to move all the bags and throw them away and they can have infrastructure, they will switch over with ease. So over time, we've seen some reluctance somewhat, but now with all these infrastructure projects coming up, we've actually set up silos at most of our big customers to try and obviously link the bulk with the tanker -- I mean with the silos. So this peak is mainly driven by the project that we are supplying. So we've actually increased our bulk capacity and some of our transporters. We are really putting more trucks, and we've seen a very nice growth this year, and we expect this to grow quite nicely in the new financial year. And we have this product range. And you'll see this is not a big market for a [indiscernible] customer in the [indiscernible] because clinker deficit market, if you can engineer your products, [indiscernible] you don't have to go for so much pure cement. And this is exactly what we've done. We're selling at 32.5 and at SUREBUILD, that is actually ideal for [indiscernible], gives you the right properties. It actually addresses the requirement and the needs of the customers. And this just shows our exports over time as we've been going into new territories. And again, in terms of focus, continue growing our exports because you've got better margins, foreign currency, bulk, quite key for us. And we've actually appointed an excellent technical engineer who is really supporting our real growth in the construction sector and CPM, and I think we will start because these customers are quite unique in terms of their offering. It's more about technical support and offering a solution more than anything else. And at the moment, I think we've really exhausted. So when we started our plant in Rwanda and we spoke about Phase 1 of debottleneck, I think this graph which I showed you the work that has been done. And for me, the biggest argument always was, it doesn't have to address the moisture of the limestone wall. Your base is shaky. So we actually wanted to make sure that we address the liability of the plant before we address the last part. And I think a lot of -- not I think. A lot of work has been done to really up the reliability to a point where, I mean, we -- out of -- we've reached quite relatively good performance out of that plant before we do the last part. And actually, we've now done recently Pareto analysis, where we're seeing that this is one of the bottlenecks that is actually impacting on our performance, and it's actually something that we will also address in the next 18 months to make sure that we can reach full capacity of this plant. So you'll see how we gradually build up over time, and this is quite excellent because I think you've also seen on the trading statement, our volumes are gradually growing. And it's not because we spend a lot of money on the [indiscernible]. This is still coming. And what delayed this process, I think it's important to mention it, it's COVID. We wanted to do a technical digi visit. And unfortunately, the suppliers are in China. China is closed. So we -- this was delayed until we actually agreed on alternative countries to visit. And the visit was done in January, and this should actually be tabled now for review by the Board, the governance process. So this is really, I think, the last I think, the last -- and then we should be able to get to maximum capacity. We've also done quite a lot around clinker factor reduction. I think last year, we announced when we actually mentioned that our clinker factor increased quite drastically, where we actually saved -- it was quite a huge saving because of clinker factor reduction. We are now looking at also new innovative technologies available there to energize and activate cement performance with maximum extension. So that means with the same amount of clinker, you can actually sell more cement. And I think for us, that is quite attractive considering that our limestone reserves are not in abundance. And if we -- when we get additional reserves, they may come into the costs. So we need to obviously find ways to offset that going forward. This is the cost structure of CIMERWA and for me, if you look at -- and this has to do the maintenance, for example, it has to do with the design from the of this point. I think the Chinese supplier, [indiscernible] for us in the quality of the equipment, and that's why we've changed the bigger components now. What is remaining is the cooler. So the bulk of this is really what we've seen with the performance of the cooler. So this will be addressed when we do the cooler project. As expected, coal is a bigger component, but there we've combined coal and [indiscernible]. And I think CIMERWA is our flagship when it comes to replacing our coal substitution because we're substituting more than 10% of our coal at the moment in Rwanda. And this is a great milestone for us because coal is our biggest cost in that market. And we've actually -- it's a question of availability. Plastic is not allowed in Rwanda, so you can leverage on some plastic floating around. So we rely on -- if we do all sorts of things from [indiscernible] and all of these things to diversify our energy sources. But I think -- this has been quite a fantastic milestone that the team have made over time to really continuously push the envelope. And we are looking for additional sources of these [indiscernible] to see how we can diversify our energy mix. And distribution, you'll see we are close to 300 kilometers away from the key market of Kigali. It's expected that your distribution cost will be quite significant. However, we have also strong presence in the proximity of the whole plant. So that's great. And gypsum is also an important product. But if we just look at coal and electricity, it's roughly 33%. It's quite significant. So by addressing -- by getting the plant in nominal capacity, you're addressing both because you'll get the plant energy consumption to optimum level and also for the same amount of power that you use, your [indiscernible] increases, meaning your kilowatt per ton gets better. Voila, so that solves the problem. So that's why it's important that we address those 2 projects, the cooler and the [indiscernible] to solve all of these things. I mentioned clinker effect and fixed cost. And again, you'll see a strong drive on OEE. As Roland mentioned, OEE's availability, quality [indiscernible] is one and production index. Production index without a dryer is obviously impacted. So we need to drive that production index up, so as we can maximize this, our capacity. And the cooler has also been the biggest. I mean we're losing quite substantial hours because of the cooler. So replacing this has caused us quite significant volumes. In fact, we've done [indiscernible] the payback is almost [indiscernible]. And then we're doing some R&D work at the moment to see what are the options that we have to actually even extend our cement further. So that's some of the work that we're working on. Alternative world, I've mentioned, we're looking at new sources even in the neighboring countries to try and further diversify our energy mix. Bulk, we spoke about it. Yes, and I think we also do the same project where we simplify, automate and standardize our processes to obviously take our management's time from generating report, but more thinking about the outcome of the performance. [indiscernible], I think we've covered most of the stuff. I think what Roland mentioned as well is we're looking at the debt of our business. Rwanda has been self-sufficient. They have been servicing the debt, so it's getting closer. And yes, what it needs. And then obviously, we are targeting reduction of clinker factor. I've mentioned as well that in Rwanda, we want to tender of flyers coming out of the new power plant. It has started getting grips and reps. And as this scales up, it can give us anything between 50,000 to 100,000 tonnes of fly ash, which is quite instrumental in driving our volumes even further. That's it. Thank you. Over to you, Kwame.

Just given the short life of mine, and from I want to understand the limestone deposits are potentially quite far away from the existing plant. I mean, how does that change the cost structure if and when you do decide to tilt the plant to a new limestone deposit?

Thanks, Lorenzo. I forgot actually to mention the issue of limestone. So there is work locally. I think we've exploited all the reserves in country. And we are now looking at, obviously, the neighboring countries for additional reserves. We are working on a particular reserve at the moment. And once it's firmed up, obviously, there will be incremental cost in terms of our limestone costs, but it's better to start now with a dilution and not to exhaust the existing limestone and come to the end with limestone costs that are high. And that's why it's important that we also address the cost structure of the overall business to make sure that even with this limestone at whatever dilution rate, we are able to maintain some level of good performance or margins over time. I hope that answers your question. But we are aware of the likely impact on, obviously, on your clinker cost. And what can we do to reduce our clinker cost. If you look at just power maintenance, it could give you anything between $4 to $7 a tonne that you can actually leverage and that offsets this limestone cost increase.

[indiscernible]

Rowan Goeller from Chronux Research. Mokate, can you went through demand, please, that we're seeing in Romana? There's been some big government projects, but what do you see going forward? And then also talk to the export markets, particularly the DRC, whether there's anything happening in Burundi. Because I think initially that was meant to be a reasonable market for your plant.

Okay. I'll start with the last one. We haven't done a lot of -- we haven't done anything in Burundi. It has mainly been in the north and south of King. And clearly, because of the geopolitics and I think things are getting slightly better. And if and when that market opens, we're really well positioned because we are much closer to [ Gudumbula ]. So we'll definitely exploit that market. We've got some intel on the ground to understand a little bit about the market because the minute we press the button, we need to have a full understanding of that market. And I don't know if that answers your question. And this one, you want me to take you through this.

The demand from DRC?

Demand from the DRC. On the Eastern part of the DRC, I'll be quite honest with you, I wouldn't -- I don't have the exact demand because the [ East India ] is quite long. So we know basically markets closer to us. Probably estimating something close to 10,000, 15,000 tonnes a month, that part of the lake. Okay.

Nothing from the webcast. We will break for lunch.

Thank you.

Thanks, Mokate. Just a few conclusionary remarks before we break for lunch. We still have 5 minutes. So in between, I'd like to fill those. I hope you have gotten an understanding of the focus that we have on our key cost drivers. And for us, this is a bit of a bread and butter when we talk about electricity consumption, coal consumption, transportation, et cetera. I understand that some of this has to translate into numbers. And when we looked at our foreseeable future in January because our financial year starts, of course, first of April, so we make our budget January, February, we were looking out and said for South Africa and Botswana, let's not count a lot on the volume growth. If it comes, it comes, it's great. We're ready for it. But I look at what do we see in terms of cost inflation. And at the time, we were looking at a high single-digit figure in our numbers. And then when we looked at our variable cost increases, we were looking at something that is half of that, and that's where the margin expansion can come from without having the volumes yet counted in. Now obviously, when a certain gentlemen, if you want to call him like that, in Russia decided to move into Ukraine, and we saw what happened to fuel prices, coal prices and probably consequential knock-on effects, we need now to see how that will play out. But over time, we see that what we have in place on variable cost actions will keep us well below the cost inflation, whatever that cost inflation number is going to look like. In Zimbabwe and in Rwanda, we have similar types of actions in place. And on top of that, there, you have a more favorable market environment. So you have got volumes. In Zimbabwe, we have enough call them expansion projects in the pipeline to catch up with that volume increase through the fly ash and the calcinated clay that we mentioned. Whereas in Rwanda come FY '25, FY '26, we're reaching the maximum that we can do with that plant. And then we need to start looking how do you position Cimerwa within the region to continue its leadership position. So I think that is what we are focusing on in a nutshell. What are the cost elements and how can we constantly make sure that we are halving the inflationary pressure so that the rest can then be passed on, on a price element as well in the market. Rowan?

Roland, quite a few primary production sectors in the world are passing on surcharges or thinking about surcharges now to cover the big increase that's coming in cost inflation. Is this something that you've seen in the global cement market? And is this something that you can do possibly?

So we've had that discussion with -- especially with the South African team. There is pros and cons to it. The moment you put a temporary fuel surcharge in place, when do you pull it out again, right? I have seen it. I've seen it work. I've seen it not work. My personal preference is to pass on your general cost increase so that it sticks over time. Because the moment you start pulling in something temporarily, you are actually upsetting the market a little. You're creating uncertainty in the market. And what you'd like to do, especially as a market leader, is to create this certainty and stability. People gotten used to the fact prices increase in January and July, and they know more or less in advance what the price increases are going to be. One discussion that we now need to have is that we say, maybe we need to pull that a bit forward this July moment, because what we face now in terms of cost increases, we need to recover faster. So yes, it is -- in short, it is a discussion point. My preference is just to stick with normal price increases and not do temporary surcharges.

[indiscernible]

It's [indiscernible] from Ashburton again. You haven't spoken much about the price increase or price changes you've seen in both Zim and Cimerwa much during the presentation. Can you just give us a bit of an update as to what you're seeing on the ground in terms of maybe dollar pricing as well as opposed to local currency?

So Cimerwa, our dollar pricing more or less flat because of the import parities that are dictating it. In Zim, slight increases in the dollar pricing. For us in both these markets, you're running their EBITDA margins -- let's forget Zim's hyperinflation accounting. And if you take a normalized accounting system, you run both the markets at about 30% give or take EBITDA margins. So EBITDA margin expansion there is unlikely to happen. There will be natural forces to keep it at that level.

Can we have lunch?

Now we are going to have our lunch. And we reconvene at 2, right?

If you want, we can reconvene at 10 to 2.

- So we'll be back at 10 to 2. For the people online, we started 13:50. All right. Enjoy your lunch, guys. Thanks. [Break]

Okay. Welcome back, everybody. I trust everyone's had a good lunch. Unfortunately, now for the graveyard shift, that I'm now going to start talking a lot of technicals. But hopefully, we'll bring it back to some operational information that you've heard along the way and how that translates into some of the cost initiatives that we are driving. So throughout the day, you've learned of our focus areas around industrial excellence. And again, just to emphasize, and I'm going to touch on it a bit later. This is simply about getting our units to run as efficiently as possible and consistently. I think that's the most important thing to understand when we're talking about getting the industrial excellence up. And you'll see some numbers later as well. We're also going to touch upon again on alternative fuels and resources. Again, mentioned to various phases of today's update and presentation. But specifically with some more details on what we're currently doing and what we plan to do in the next short to medium term. We will also touch some topics on product innovation and how this relate back to areas of clinker factor reduction, how it could relate back to improving our processing efficiency. And then more importantly is how these 3 pillars feed into our decarbonization commitments that we've recently put down in November of last year, which I will touch through in the following slide. So at this point, it's important just to recap. In November of last year, we published our first TCFD report. And this was a milestone achievement for us because we've put down some firm commitments on how we wish to drive decarbonization and reduce our CO2 footprint overall. In the short term, coming off a base from FY 2020, we said we're going to reduce our CO2 by 10% from the current -- or the FY '20 levels of 756, down to a level of 680,000 kg CO2 per tonne by FY '25. Now at this point, I want to also bring your attention to the CapEx allocation that you see there. A lot of that CapEx that you see, we've been allocated and translated back to the impact on CO2 has been very much touched on by both Mokate and Njombo throughout today's presentation. So apart from driving decarbonization, it's embedded in the value creation and the cost reductions that we have put into our plans going forward. Beyond FY '25, we've made some medium-term targets without highlighting specific CapEx in this regard. But here, with the aim of, again, bringing through projects in a systematic basis to help us drive our CO2 from 680 kg CO2 per tonne in FY '25, down to a very ambitious target of 550. Again, putting a peg on the ground, but ensuring that what we put down drives us towards this number. As you can appreciate, beyond FY '20, it's extremely difficult to make really firm commitments and also to take into account that we operate in an economy that has to just transition, has to be responsible in terms of how we reduce our dependency on coal, for example, and what socioeconomic impact that will have. So beyond that, we are committed to obviously evaluate the technologies that will come online, that will be available to us, and also legislative that's going to help us along the way because we need that support of legislative in order for us to drive this decarbonization going forward. So here's a first insight into some of the technicals. I thought it was useful just to give an understanding of what exactly is our CO2 footprint. You heard the term earlier on of hard to abate. Now cement, by its very nature, uses limestone. And limestone in itself as what we call calcium carbonate, which is when processed in the kiln is transformed into clinker. And then the gases that are processed from the kiln are then predominantly sent out in the form of CO2. Now this is what we refer to as hard to abate. It exists in the raw material and we have to process it. And this currently makes up about 40% of our CO2 footprint. Moving on from the raw material from an electricity point of view, we are an electricity-intensive processor. As such, using CO2 from the grid that's predominantly supplied by coal-fired power stations results in very high grid emission CO2 factor. As a result, just by virtue of the fact that we operate, we do see an impact on electricity usage, and this contributes to about 10%. Moreover than that, I think our biggest contributor comes by, again, the very nature of the fuels we use, and this is predominantly coal and diesel, which currently is probably 98% to 99% from a group point of view, let me stress that. It could vary from side to side. But this contributes to almost 50% of our CO2 footprint. So again, you can see what a focused optimization around reducing coal usage will have not only on CO2, but also the cost side of the equation. So just as a last slide on what we committed to in the TCFD report, you'll see a lot of parallels here in terms of what I presented a bit earlier, but 3 slides away, where we spoke about enablers, enablers of decarbonization. In context of what I just shared in the previous slide, you will see what an impact of clinker factor reduction can have. You can have a high CO2 footprint, driving clinker factor, you can absorb that and bring that down to much lower levels. The use of renewables to reduce our dependency on the grid that has this high CO2 remission factors. The use of alternative fuels. This is a big lever and a big swing that will help us introducing the CO2 footprint, but also from a cost point of view, how we drive those cost of sales from coal consumption. And then again, a term that [ rolling out of wood ], overall equipment efficiency, and I will unpack that in the next slide in a bit more detail. So zooming in into the specific drivers for industrial excellence and decarbonization. What we've put down there is at a group level, we're currently sitting at an OEE level of around 74%. And over the next let's say, 2 to 3 years, up to 2025, we want to bring that up to 85%. Within the cement industry worldwide, that is the benchmark figure. What that simply means is we are running our operations at its best demonstrative practice or what you could call it design output, if not better, but also ensuring that we reduce stock starts, which is a serious detriment to energy efficiency within the cement process. This OEE journey will have to be supported by specific CapEx that will enable us to systematically increase this going forward. And I'll touch on some of them in the next slide. So from an output point of view, Mokate mentioned some of the key projects that we have lined up for Rwanda. And I'm just going to give you a bit more detail on, for example, why the limestone dryer is so important. Now currently, we process limestone, like I said, together with other materials, our current inability to produce enough of it hinders us from running the kiln at its maximum output. And the main reason for that is due to the high native moisture that exists within that specific deposit and the fact that Rwanda is in a region that has rainfall for probably 11 or 12 months in a year. So it's extremely critical in taking that operation up to its design capacity. From a cooler upgrade point of view, again, specifically at Rwanda, from various Paretos, and root cause analysis and from the downtime analysis, we see the potential to improve run time by almost 20 to 25 days, and that has a huge impact on the overall volume that we can produce. So again, focused CapEx aimed at getting our output up to a sustainable level. Coming closer to home, you're going to visit the Duke facility tomorrow. And one of the key constraints that exists in getting the production up relates to what we call a process fan. This is a fan that pulls out these gases from the kiln system, which is currently capacity-constrained. Again, from detailed analysis done by the operations team, we focus on some of the design changes that's required that will unlock this value at this kiln operation together with 1 or 2. A lot of the CapEx is also focused on equipment maintenance. I think one of the ones that was mentioned earlier referred to SK8. And again, we plan to get that kiln up to an optimum level. When it's required as a standby kiln, it will be able to perform at it optimum efficiencies going forward. And again, very focused based on Pareto analysis, RCAs in terms of what was required at that specific line. Another example, specifically at the slurry operation, at our milling unit, we're looking at a specific rotor replacement, again, identified as one of the key drivers of downtime, which we would hope to address in the coming shutdown and then unlock a lot more run time going forward and reliability. Now it goes without saying just by, again, addressing outputs, addressing runtime, it will have a knock-on effect on energy efficiency and will enable us to run at our required heat consumptions going forward. Moreover than that, just from -- let's say, from a more technical process point of view, there's also certain interventions that we are targeting, for example, and you'll see it tomorrow, what we call our [ pre-heat ] structure. How we can improve the efficiency at which our energy input into the system is better absorbed. And these are specific interventions aimed at driving that improvement in energy absorption. From a product development point of view, you'll hear terms like grinding aid, [indiscernible] and we are continuously focusing on that, and that's specifically from a final product point of view. But we're also taking that to the next level where we're going to look at how we can use that to drive our clinker factor. But also from a processing point of view, how can we use certain products, which we are currently looking at feasibilities of testing to improve even the kiln operation, and that will come to in the next, let's say, 3 to 6 months. So the next slide then talks of, again, the key buzzword from today and a key focal area for us of clinker factor reduction. Now, I think before I go into some of the details of it, it's always useful just to again reemphasize the definition of clinker factor reduction. Typically, in the cement industry, it's a commonly accepted practice to take your intermediate product, which is clinker, and then you add extenders or what we call supplementary cementitious materials. Now these are materials that have similar reactivity to clinker, not at the same levels, but when combined with clinker, it ends up through the milling process and in your bag as you see it. That has the overall impact of reducing its CO2 footprint. Because usually, these SCMs have a lower CO2 footprint than clinker. So over the next, let's say, 3 to 4 years, we are looking at reducing or improving our clinker factor, by roughly, let's say, between 80% to 20% by FY '25. And we're going to do this once again by looking at all our products and looking within the conforms of the standards, how we can maximize this. Moreover, from a clinker point of view, we will look at how we can improve our processes to improve the reactivity of the clinker, improving the reactivity of the clinker allows 1 to add a lot more of these extenders going forward. And then again, lastly, the product in ounces, which again is well established within the cement industry, and we just continue to focus on that to see what improvements can be gained from there. So some of the examples mentioned today, I'm not going to go over through all because it was covered in detail: increasing the use of fly ashes, increasing the use of [ potlines ], slags where available. And the one part I probably would like to mention is looking at opportunities for reclassification. Because as you gain access to these fly ashes, it gives you the opportunity, for example, to reclassify a CM2 into a CM4, which has a significantly lower clinker and a significantly lower CO2 footprint. But we will have to do that in a responsible manner, ensuring our premium product offering is not compromised in any way. Again, the strength in ounces, I think I've touched on. The one that I want to just give some insight on in a bit more detail is around calcined clay. So calcined clay has a process. It simply requires the use of a raw clay which is abundant across various regions of our operations, but not necessarily at the right quality. So it requires a lot of work on the mining side to ensure that we do the right testing, get the right material specification to be used for processing. Now one of the key features of calcined clay is the fact that it can be produced at a significantly lower cost, simply because it requires between, let's say, 30% to 40% less energy input. Moreover, there is no CO2 that comes out from this process as a result of the material itself. So by default, you're looking at, again, immediately close to a 50% CO2 reduction if you compare clinker to calcined clay. The other key feature of calcined clay is that it's very reactive. So that pushes the boundaries in terms of how far one can go. Again, within the conforms of the standards, which is typically the EU standards which we operate. And I would say within the worldwide context, it is something that has gained increasing interest over the past 18 to 24 months, specifically in Europe. It's also being currently utilized in Brazil as well in the South American region. So it is something that's very key for us.in driving our CO2 footprint but also from a cost point of view. Looking at thermal energy reduction, simply put, leading up to 2025, we are going to aim to reduce our thermal energy runtime by 10%. And again, it's talking to all these various initiatives around getting the run time up, getting the production up. But also in terms of optimizing the recipe, optimizing how we -- how much of this limestone we put into our kiln. Because as you've seen, it's a big contributor. So if we can reduce that, we will be able to optimize how much energy is required in the process thereof. Mokate touched on automation. I think it's also important to highlight at this point, we currently do have some level of automation, specifically within our South African operations, of what we call high-level control systems. You can liken it to something like an auto pilot one would see on an aircraft. Again, specifically set up for different operations based on specific parameters, all focused on driving improved thermal efficiencies, lower electrical energy consumption and also assisting the operator along the way to better understand the process. The AI solution was touched on. We've actually started the first -- very first phase of this project where we did a baseline assessment of our Colleen Bawn operation with this specific OEM. The purpose of this baseline assessment is to establish basically the gaps, establish what can be achieved and also then in terms of getting firm deliverables and commitments in terms of what efficiency 1 would attain as we implement this over the next 12 to 18 months. The last area, and it was covered as well, but I think important to mention is on training and development. Across our operations, we are going to also look at our gradual development program. We are currently revising a lot of the content around it; firstly, to make sure that it's up to date, but also what can be added. For example, what initiatives around getting AI integrated into our gradual development program. So we're going to relook at that and get that going again. And I think another key one is what we have within our operations of, we call it an audit system, it's a production audit system, but it basically has all the minimum practices and benchmarks required across the various operations that has to be implemented to ensure that efficiencies are driven, systems are in place and also learning takes place. So those are some of the initiatives from a training point of view, which is crucial for us going forward. So alternative fuels. Yes, again, at a group level, you see we are currently sitting around, let's say, 3% to 8% substitution rate in terms of coal. And we wish to gradually get them up to 20%. Even that at a group level is an aggressive target given the markets that we operate and our dependency on coal. And there's many factors that will have to come into play to enable that to happen. In terms of tires, and you'll have the pleasure of seeing our Tire facility at Duke tomorrow. We're currently sitting at between a 5% to 7% thermal substitution rate. And we aim to take this up to 20%. Important to note that currently, we are [ feeding ] whole tires, which is not as easy as compared to if you had a shredded tire, which is easier to process, easier to burn. So some of the long-term ambitions involve around getting those tires in a certain form that will enable that. More importantly as well, we are also investigating the use of tires at other operations. Currently, our project management office is investigating the viability of this. Tires are becoming available within the South African context, not necessarily within a Zimbabwe or Rwandan region because there's different dynamics there. But within the South African context, we see significant opportunities in this regard. Specifically in Rwanda, we currently use a lot of biomass. Mokate mentioned palm kernels, rice husk as well. And we also have what we call pit, and we're currently sitting actually closer to the 12% mark in terms of substitution rate. And our short-term plan is to get that up to closer to the 20% mark in the next 2 years. Another key intervention that we're going to look at from a feasibility point of view is the use of wastage-derived fuels. While entrenched, let's say, waste-derived fuel used in the European market, but to enable that to happen, there's many levers that need to be pulled as well from a legislative point of view to ensure there is certain processing fees that can be generated from this, and this talks to the low-carbon revenue streams. So yes, it can be done. The technology exists, but we need certain enablers to assist us along the way. That being said, the feasibilities are on the way to see what is the other possible across our various operations. So in terms of renewables, I think across the group, I'll talk to SA first. We are quite in advanced stage in terms of getting PPA agreements signed off, and it varies from side to side. It depends on location and also what's required. But the strategy here is to, again, do it in a step-wise process. Currently, we're looking at electrical energy replacement in the region of between 10% to 15% from a solar PV plant. Also included there is some facilities that will have rooftop solar applications as well. But I just want to draw your attention back to the Zimbabwe operation, specifically Colleen Bawn. We are putting actually a 30-megawatt solar PV plant to be supported by a 20-megawatt battery backup system. Now even with that, in the PPA agreement, we were able to get a very competitive rate. Now the bigger importance of the battery backup is that it addresses a key issue from our OEE point of view because power supply is a big challenge for us in Zimbabwe, as was highlighted. And this battery backup will enable us to run the kiln for close on to 3 to 4 hours additional. So it won't be automatic, but it will enable us to get our process back up within, let's say, within 5 minutes, and then we will push on. And that stop start remove so much of inefficiencies, brings in more volumes of clinker as well. And in the long run, will improve our OEEs. And then just from a power wheeling point of view, just to highlight, we are currently investigating certain power wheeling arrangements. It's probably, I would say, probably another 6 to 12 months from now before we can say it's firm and signed. But it's definitely part of the play and part of the mix that we see as significant opportunities to us. So yes, I think just summarizing again on this, we spoke about the stabilization phase. And just from an operational viw -- point of view, and John mention our mega plant strategy. We've also focused on bringing more efficient kit into the mix, specifically SK9 as recent as 2019. So it's about stabilizing our operations from that point of view. We've also ensured our short-range offering has been consistent throughout our operations. It's fully implemented now. So we have that as a solid base on which to build on. And then in the next phase of strengthening the leadership position, it's all about, again, driving the OEEs, accelerating the decarbonization. But I think the key 1 here is integrating renewables because it's not yet part of the play, and that will have a significant upside for us. And then also to start exploring these low-carbon revenue streams. Tires could be one of them, the REF that I mentioned. So it's about embedding that, let's say, in the next 2 to 3 years leading up to FY '25. And then in the expansion phase, I think we will just build on this. So once we've embedded this renewables, we will look to accelerate that to greater levels, probably 30%, 40%, depending on the economics at the time. But there is certain limitations in terms of ensuring baseload requirements are met for certain operations. But we will continue to drive that. We will hope to then start maximizing these carbon revenue streams where the legislation by that time is more enabling, is more supportive for us to embrace that. And then just finally, from a CO2 point of view, ultimately, to get to net 0, it cannot be done with some sort of carbon sequestration, some sort of carbon utilization. So as those technologies in the longer term become more viable economically, we will look at integrating that. But it's very much technology-dependent, but there's more to be gained for us by just focusing on strengthening our leadership position. And I think that's it.

Rowan Goeller from Chronux Research. If we look at your decarbonization strategy and projects, most of them look like they're going to be saving money. So probably positive NPV, which is fine. Given that at the world is definitely focused a lot more on ESG sort of factors and decarbonization, is there any -- is it prudent for a cement company, let's say, to try and create a greener product given that maybe your competitors in South Africa possibly aren't today -- I mean, they're largely still in the stabilization phase to be charitable for some of them. But what is your longer-term focus? Do you want to try and produce a product that is good for the world and the environment? Or do you want to produce a product that is cost competitive in South Africa? And if so, do you -- are adding some benefit and you're getting some decarbonization or you've been having stuff off the grid, which is probably going to save your costs. Where do you sit ultimately strategically as a cement company, given globally cement is a difficult place to be because it produces carbon. You're probably right that the only way you can get rid of that is you sink it into the ground or inject it into cement when you're throwing the cement. But what do you think is PPC? How are you going to go about that? Are you going to try to make a responsible product when your competitors might not? Or are you really going to focus on where you can cut costs?

Okay. So I think it's a balancing act, right? It's not 1 or the other. We have to embrace our decarbonization commitments that we've put down. And like I said, it's very much linked to what we want to achieve operationally. But when we did that exercise, we actually didn't do it from an operational standpoint. We actually looked at initiative that's going to drive our CO2 footprint down. And it does not necessarily mean making a green product. It's the process in which we make that product. That's where our biggest influence and biggest impact can be from. I mean, green products can exist. For example, LC3 can be viewed as a green product. That's part of the mix, but again, later on, in the short term, AFRs, renewables is what's going to enable us in the processing of making cement more environmentally friendly.

Let me you just add to it, Rowan. So ask the question to the person who has just built his house, whether the product we're having is a bad product. I think we're having a good product, period. We've had it for the last 130 years. It's a product that we need as a society to build our infrastructure, and I think we're all benefiting from it. We acknowledge at the same time that the production of cement contributes to global warming. There's no denying about it. So when we set out our decarbonization targets, we're actually in a very good space in the sense that all the projects that you've seen here, as you alluded to, and I can confirm, all the projects that we're talking about are NPV positive, value accretive. So we're not yet in the dilemma that you're sketching whether we have to say, well, is our strategy to decarbonize at the expense of being cost competitive in the market. Right now, these 2 things go hand in hand. And until 2030, that remains like that. In that time, we do expect that governments or regulators, and to some extent, as well the providers of capital, like the investors we have here in the room as our funders, are starting to demand that we are leading in decarbonizing concrete. And I'm saying on purpose concrete here because from what we know today, you cannot decarbonize cement. As Delon explained, a lot of it comes out of the limestone burning. And that problem hasn't been solved. The only solution to that would be carbon capture and utilization. Whereas if you look into the business of Dave, in concrete, you can go 1 step further. And we're actually exploring that as well, looking into absorbing CO2. So on the short term, it's not a question about cost competitive, or. We can actually do both. In the midterm, our expectation is that the regulator and the general environment would come to a point that it's not anymore a choice that we have as a company, that it would actually be guided by the regulatory framework around us. Anything else?

Sorry. So I mean, you mentioned that the ZAR 700-odd million is around -- those CapEx projects are NPV positive. And maybe can you just quantify, I mean, the rates of return? I mean, Mokate mentioned a 1-year payback on some of the projects. I imagine that's the exception. Yes, I mean, just a little bit of color.

Paybacks, I think they vary from project to project. I think some projects definitely within a 1-year payback period. But I think some of the more higher-CapEx items like the LC3 is probably looking between a 3- to 5-year payback. There's some of those assumptions that we still need to validate because we're still in the feasibility stage. I mentioned about assessing the raw materials, but we do not foresee that not being within our guidance for NPVs and paybacks as well.

[indiscernible] achieve, I think, a 70-kilo per tonne carbon saving. I mean, is there any linear relationship? I mean, the next 140 kilos per tonne you're wanting to extract by -- I mean, is it ZAR 1.4 billion? Is that too simplistic?

So it's also a question of timing. So for example, the LC3 project, which is a big portion of that ZAR 700-odd million, really comes into play beyond FY '25 into FY '26. That's where you start to see the acceleration in the drop in the CO2 as well, combined with other projects. So it's more about the timing of these projects. And it's a similar case with, let's say, the scenario in Rwanda. We're going to start now. But as we ramp up production, it will actually start to make -- to come through more in the outer years other than now.

Okay. And does that second batch of project, I mean, is the anticipation -- look, I know you said there's still a lot of assumptions that needed to be clarified. But I mean, is the anticipation that those are also NPV positive?

It would have to be, yes.

Okay. And then can you provide a little bit of color just -- I mean, you talk of low-carbon revenue streams. Is that -- for example, I mean, is that still a cementitious product? Is it something alternative? Is it...

So this is specifically referring to items like the use of tires, where we would be able to generate some revenue for processing it. And that would be seen as a low-carbon revenue stream. The use of refuse-derived fuels, which again, okay, in a European context, you get quite a substantial revenue from it. Obviously, we've got a few runs to put on the board in terms of that, but that could be a low-carbon revenue stream definitely in the longer term. In the short term, we may not get it like that, but we have to start because we have to actually create that market for it. And that requires putting your runs on the board, paying some school fees earlier on. But you have to get that logistics change going.

I think we're done.

Online? Okay.

All right. We're supposed to take a break. But since we're running a bit ahead of time, maybe we should just do the financials and then just wrap up.

Okay. Good afternoon, everyone. I truly have a graveyard shift here. Let's see if we can make it exciting. Right. So what I'm going to cover today -- I'll try to move, not quite able to see actually. [indiscernible] Okay. So I'm going to talk through the optimal capital structure -- that's fine. I'll share with you the disciplined capital allocation, which I think is important for any company to have, our continued focus on cash generation and by implication, degearing. I'll focus on improving returns and hopefully, important to all in the room, our intention to resume dividend payments. So Roland, at the beginning of the presentation, alluded to a very simple, optimal capital structure slide. And I think this is -- can't you hear me? Is that better? Very simple, optimal capital structure slide. And I think this is as simple as it gets. I think simplicity in my life is always good. We all understand it. It's clear, as opposed to having various metrics that move around. Very simply put, our optimal capital structure for PPC Group is gross debt to EBITDA of 1.3x. That has come down tremendously from what it used to be. It's -- there's no science in that number, as you all know. It's a number that makes all of us feel quite comfortable is conservative enough to withstand bumps in the road but certainly does allow for dividends. And maybe just to give you some color to that. So if we split the group into 3 buckets, I think it's important to do that, we have what we call the SA Obligor group, which is SA and Botswana. We have Zimbabwe, and we have Rwanda. And those are our 3 buckets. We're ignoring DRC for obvious reasons. So you would have seen in the operating update this morning, South Africa was the SA Obligor group, or South Africa and Botswana, was already at that 1.3 by the end of February. So what that means theoretically is as we degear either through generating cash to reduce our debt or growing our EBITDA, that creates headroom for dividends. What it means for Rwanda, which, by the way, is also at that number of 1.3 at the moment, is as it repays its debt, it also opens up potential for dividends. But it was mentioned earlier in our -- I think it was by Roland, that we all obviously have a deferred tax problem in Rwanda. We don't want to risk losing that by declaring dividends too early. And interestingly enough in Zim, as we mentioned frequently, it's debt free. Again, it opens up the potential to gear up in Zim. I'm not saying in one fell swoop to 1.3, but you can gear up. And that cash can be used for CapEx and/or dividends. The gearing, I must add, will have to be in Zim and with no recourse to South Africa. We've made that very clear with all the international operations. All clear. On the capital allocation framework, it's a bit of a boring slide, but it's useful to go through. It's PPC's way of describing its CapEx and the prioritization of it through the batting order of CapEx, if you like. So first up is compliance capital. I'm not going to say -- we usually go through the descriptions. You can read that. That's obviously always the priority. We need to be compliant in terms of various regulations, our own fixed asset policies, et cetera. The maintenance capital, you've heard quite a bit about that today, important to maintain our kit. It was mentioned a number of times, we can switch on very quickly with no further CapEx to meet demand. Important to maintain our kit not only to do that, but also to operate effectively and reach those OEs that the guys aspire to. And then comes what I call almost -- I mean, we've split this into optimization and expansion. But both of those -- and it is in that order priority. Both of those need to have 2 things: needs to be funded from facilities; and importantly, it's got to meet our WACC. These things must be value accretive. There's no point spending money on optimization nor expansion if we're not getting a return for our shareholders out of that. Moving on then just to some CapEx -- high-level CapEx guidance. Now a lot of this shouldn't be strange here because it's been talked about both by Njombo and Mokate quite extensively. So right at the top of the slide, you can see what we refer to now is annual CapEx to sustain. Those are the first 2 buckets on the previous slide, right? So the run rate for South Africa and Botswana, we think, will be around ZAR 300 million to ZAR 350 million per annum. I'm just talking through to 2025, okay, sort of a stable run rate at that level. Zimbabwe starts a little high at $6 million to $9 million, and then it drops again to a sustainable level of circa $3 million to $5 million per annum. Those are on dollars. And the reason it's high, in FY 2023, Mokate referred to it in his chat to you, is to make sure that we get that asset properly maintained and fixed so it doesn't have to have these long stops that is currently incurred, okay? So that's really maintenance, once-off maintenance to get that issues fixed. And similarly, Rwanda is sort of a $5 million to $7 million in 2023 and working down to a sustainable of sub-$2 million per annum. And again, Mokate talked to that. That is the cooler that needs to be put in place, if you recall. Then coming on to the optimization [ and strong ] expansion CapEx. You would have heard now quite a number of times about the LC3 project in -- that's that one over there in South Africa. It's mainly a little bit of extra money just to sort of defend our market position. By and large, that's the LC3 project in South Africa. And you can see Delon mentioned it, that the money spent in -- oops, where are my figures, '23 and '24, the main benefits will start coming through in '25, both in terms of cost and reduced carbon footprint. Zim, the $2 million to $5 million is the fly ash project. You also heard about that quite extensively. I'm not going to repeat it. And it, too, has its very own LC3 project. Both of these are regarded as value-enhancing carbon-reducing projects, all of that so far. Right. And then in Rwanda, we talk about the raw mill project, and I think Delon alluded to that in terms of that spend. We actually are starting it quite actively in 2023. This is just the expected cash flows associated, negotiated with some extended payments, which is good. So I think that's a snapshot of our CapEx in line with that allocation framework. Right. It doesn't mean we don't continue to basically focus on cash generation. We're not going to stop doing that. It's important that we gear this thing. And these are 3 areas -- and obviously, there are many, many areas across the group, these are 3 particular ones that are maybe in more in my hands to some extent, I mean, we obviously all work as a team, strong focus on working capital. We need to get our working capital down to good levels, not up, huge amounts of money in a lazy balance sheet. So it will not stop being a key focus to get that optimal. Then the effective tax rate of PPC has historically been quite problematic. A lot of it is optical allusion in the sense that it's silly, noncash things that just go through. But there have been an effect with us, to some extent, in the cash rate. Lots of initiatives underway during the course of the year. We'll continue to get that rate at or below 28% yearly. And then obviously, the financing cost is an area of focus. It -- we did reduce it significantly, in my view, in December with the new long-form agreements with the banks. We don't want to -- so that's embedded this financial year. Obviously, we're not just going to sit on our hands. We need to manage that carefully, especially the volatility in interest rates that we see coming. So that will also be a continued focus area or with a view to enhancing cash generation. When I joined PPC, I was a little bit embarrassed because I didn't know what PPC was. But I now do. It's simply a definition for PPC, economic value creation, all right? Or as most of you will say, now it is EVA. But it's one very bespoke to PPC, and it's not very complicated save for one thing. So what we do and what we aspire to basically generate for our shareholders, amongst others, is that we need to be cash value accretive over and above the returns generated. So what we do is we take our cash generated. We add back financing costs, and we deduct finance income. So that's the base. We then compare that to what is our invested capital, and that's basically our PPE as at and our average working capital over the period that we're looking at. And we apply our weighted average capital to that number, and the sum must be positive. And what we do, while it was a little conservative, is in the invested capital, and I haven't seen too many other companies do this, to the extent the -- being historical impairments taken, we add them back. So we don't ignore historical impairments and saying, "Oh, that's money down the drain. No one ever invest it," we add it back. So we are conservative in that regard. And that basically -- so it's not a simple -- it's not a complicated calculation. It's done for every business unit. Each business unit owns their own PPC. At group, we do a group PPC. And if you pick up our accounts as at the end of the year, you can tick every number in this PPC to that. So you could actually see what we're earning for you [ on average ]. And it's nice to be able to do that. It's not some black box calculation. So that's our aspiration as well, very focused on that. We're all incentivized by it. And then you'll be happy to know, I think this is my last slide. We have every intention of returning to dividends. I touched on it in my capital allocation slide. You now understand the context for it now and which bucket can generate dividends. We expect to be able to do so using the technical formulas that I described at the beginning of the presentation in 2023, certainly from the SA Obligor group. But it would be -- so it's in the near future, not on a horizon or some aspirational out there. It would be remiss of me not to give the caveats. Okay, obviously, subject to, we don't know those things. All things being equal, management's aspiration is to do it. The Board's aspiration is to do it. We know shareholders' aspiration is for us to do it, and we can, but just subject to those caveats. All right. I think that is for me. There's a surprise slide. No.

Rowan Goeller from Chronux Research. Is there a link between your maintenance CapEx and the OEE going forward? So in getting the OEE back up to 85-odd percent from current levels?

I would think so, but I'm going to give the technical guys [ that little pause ].

I mean, the question is, have you -- effectively, have you kept up with maintenance CapEx so that as you move your plants back up to high utilization rates, you're not going to suddenly see maintenance capital jumping up because actually, you've neglected then certain maintenance CapEx issues over the past couple of years because of financial stress?

Mokate and Njombo, do you want to take that? I mean, it's really not my area to answer eloquently.

I can take that. [indiscernible] That's correct, Rowan. If you look at some of the CapEx that we're spending now, some of it are coming actually from, as I said, design issues from the beginning, like the cooler in Rwanda, which is really a once-off. Once we've done the cooler, we've done a similar project in Zimbabwe in 2010, we've never had any issues with that cooler since 2010. And from a maintenance point of view, you start seeing, obviously, a decline in our maintenance cost, but also an increase on your OEE because now, you reduce the downtime. I mean, in Rwanda, we've done an exercise where we lost close to 660 hours a year because of the cooler. So that actually gives your production -- a 1-month clinker production. And you can imagine, it's really -- it's a lot of money. So that's one of the reasons why we're not doing that. And in South Africa, Njombo can also comment about some of the maintenance costs in South Africa. I think where you're seeing peaks is mainly on the international side. And Zimbabwe is mainly to fully utilize this window of opportunity of a 45-day kiln stop because it doesn't happen often that you have a 45-day stop on the kiln. And we want to make sure that we have an issue with 1.5 meters of the kiln shell on that kiln net cooling bond. We've had a lot of downtime this year. I think we probably lost probably 2 weeks because of the issues we have with the condition of the shell on the discharge. This shell was replaced actually when we did the cooler project in 2010. And it shows that going forward, we need to give the shell section at least 9-year before we -- so as we proactively change it. So a portion of the cost goes into obviously replacing that shell section. And also, we're doing some of the major work around the kiln that you hardly do it on a 3-yearly basis, but these are long-term projects that you will normally do on a kiln system. And that costs money. For example, we're doing a whole lot of work on the preheat of the kiln, including replacement of the refractories. That is normally done when the plant is new, and then you will do pressure work over time. Because you have 45 days, we had a lot of patchwork that was done before. It's an opportunity to actually press reset and make sure that when the time you place your part in on that plant, it will run for another very long period before you spend money. So it's a once-off peak. And that's why Brenda said it normalizes very quickly. And the same applies for South Africa. I think it is -- yes, South Africa, they have normalized over time. So this is what we're doing at the moment.

Brenda, [indiscernible] from Ashburton. You touched on the opportunity to potentially regear them on a nonrecourse basis, potentially get the capital out. I mean, are there funders out there with that sort of appetite available? Or is that kind of more a longer-term aspiration? Or is it something that you can actually execute on maybe in the shorter to medium term?

Look, I think we can execute on it. But I'm going to ask [ Chrissy ] to -- who have a far more intimate knowledge. [ Kid ], would you like to add on to my...

Yes. So to answer your question, I think we strongly believe that there is appetite still in Zim. And I say this because of the fact that we've had a very good relationship with the various stakeholders, lenders in Zim. So the debt that we just finished paying late last year was TDB, so yes, with the support of the government. But yes, I think in our relationship with TDB not only in Zimbabwe, I think we have got a very strong, I would say, chances of getting back or getting some funding for the upcoming projects. We are actually already seeing some appetite when we engage with them and particularly also because of some of the improvements that we are seeing despite that, yes, still volatile in terms of the exchange control issues. But I think the sentiment that we are seeing in terms of projects, government trying to encourage various players to invest in Zim, I think the funders also, they get interested in that market. So we are very -- we're of the view that they can come through for the projects that we have in the future to fund and also because of the potential that the cement industry has in Zim. So I think the funders would be interested to participate and to grow with that market. So I think that's what I would say for now. Thanks.

Is your intention, though, that you fund projects or is your intention to get capitalized, let's just say, on a once-off basis and then through the year [indiscernible]?

It's a bit of both. Well, I think it's both, let me be clear. So absolutely, Zim has got to be self-funding. Another way, self-funding doesn't mean necessarily generating enough cash. It can be borrowing in country, okay? So there is that -- and that could be a way of doing it. To the extent it was self-funding, there's no reason why you still can't go and borrow under the -- and you'll be investing that money into the ground in Zimbabwe, and you'll just then generate more free cash to repatriate as [ orders ]. So that's sort of how it works. And it will be a combination, as [ Chrissy ] was saying, project finance, which would have to be tied to the CapEx or just general appetite from the banks in Zimbabwe. They do have dollars. They do have the appetite to make money as all banks do. Zim has got 0 debt. It's not high risk other than being in Zim and [indiscernible]. And so I think both are doable. Please don't -- Roland will probably give me a flick on the ear for this. But please don't think we're going to go and borrow 1.3x Zim's EBITDA on day 1, okay? That's just too much, and I think it would be naughty. And we -- it's just sensibly. Okay.

Brenda, this is for you from the webcast. So it's from [indiscernible] in Tuli. He doesn't tell where he's from, but he says that, what is the status of the JSE investigation? Will this require further restatements of previous financials?

Okay. It's -- so we just need to be very -- so the short answer is it's ongoing. Just to remind everybody, that JSE investigation, and I'm just going to talk about PPC because that's who we're representing as -- talking to you about, they have been very satisfied with PPC's response. They put that in writing. There is -- again, to remind you, we -- there was no mal-intent in the mistakes PPC made at that stage, and they've accepted that. They've also accepted and acknowledged the significant progress that we've made in fixing the internal controls. There was no restatement in 2021, again, as you all know. And I'm not aware of anything that risks a restatement in 2022.

Okay. Nothing more from the webcast.

All right. Thank you very much, guys.

All right. So the last section -- and I hope this has been informative for you. We, of course, like to talk about our business. We like to talk about how we understand the market, how we deal with our customers and how we manage and maintain our operations. But just to bring it back to a slide that I showed to you this morning, what we want to transmit to you is something that we share internally all the time: run this company as if it is your own, not on the short term but on the long run. Do the right things today for a good return tomorrow and the years thereafter. We've been doing that for 130 years. So we would like to keep on doing this for another 130 years. That also means that we're currently in a phase where we prioritize margin improvements over top line growth. If top line growth comes, especially out of projects in South Africa or the removal from imports, we'll take it, and we're ready for it. But in our planning of expanding margins, you have heard throughout the day that we have specific initiatives in place to mitigate cost increases that we are facing. We've made a deliberate choice that we focus on our South African and Zimbabwean assets and that we manage how we deal with our East and Central African assets that require the capital to grow further as those markets are growing. And you can expect in the course of the year or maybe a little bit longer, we're not in a hurry, that we find solutions to position our businesses in that part of the world properly on a sustainable path going forward. Capital allocation is something that we spend a lot of time on. I said it to you in the morning. Brenda showed you the framework that we go through, and each and every project is being scrutinized from business unit heads to the MDs in their management teams up to the Exco. When we accelerate our decarbonization strategy, there is one important element that I would just like to highlight as it might not have come across so clearly. When I started in October 2019 and I started to understand the South African business and the landscape, I was told that by a certain time, before 2030, we would have groundbreaking for a new cement plant in Vryburg, and that we have all the environmental permits in place, and that it is a matter of time because of the life of mine that we have in De Hoek as well as the age of the plant that we currently have in Vryburg. Where we stand today with the feasibility to be confirmed, but assuming the feasibility of the LC3 project in the Western Cape, we will kick out any large investment in a new cement plant in Vryburg for the time that goes beyond the permit. So I need to apologize to all the people who've been involved in getting that permit. If we ever need it again, we need to ask for it again, and we need to go through the same process. But at least for now, we feel very comfortable that the LC3 project will kick out a major capital item into the 2030s and beyond. And I have publicly stated and I repeat that for me, the dream for South Africa is that there is never the need any more for a new clinker plant, not because there is a lack of cement demand, but because the time it will take until 2030 and beyond to utilize existing capacity will, at the same time, be utilized to make new building technologies available from which we will benefit as we are on the forefront of that, that will create a world, in Rowan's word, of better building products, even better than the ones we have today. I think that is a very important element. The sustainability drive is value accretive, and we'll reposition our expansion plans quite far out into the future. This is how the house comes together. And I'd just like to touch not upon what you see in the middle because we've spoken about what is in the middle quite a lot. That block that you have there on the bottom, enabled by Jabali, our people, our strength. We run a program together with the odd -- almost 3,000 people in the group, and it started before COVID actually, in the place where some of you will visit tomorrow. In De Hoek, we came together as an executive team and said, "How can we make sure that our people are truly recognized and feel that we invest in them and run this business with the mindset of the owner of the business?" And that is where the concept of Jabali came from. Jabali is a Swahili word that stands for many things. One of the things it stands for is the strength, strong as a rock, which we would like to believe that PPC is strong as a rock. And our people are strong as a rock. Jabali also stands for a person that can guide, call it an elderly in a tribe. And we stand for leading the cement industry in the countries where we operate. And it is something that comes out of the position that we have, and it comes with a lot of responsibilities as well. It comes with the responsibility of taking the floor when you go and interact with the government, be it at a local level in the Western Cape, be it at a national level or be it in Harare or be it in Bulawayo or be it in Kigali. We stand for the principles that have brought us here after 130 years, a sustainable business that looks after financial sustainability, environmental sustainability and social sustainability. And with Jabali, you might see or you probably will see some of the elements tomorrow when you're in the plant. We are entrenching people to think along the lines of, where is this business going? What is the role you are playing in this journey map? And you saw some of them during the day. How do you specifically contribute? And what are the indicators that you are being measured on? How much does it cost the business if we have to stop a kiln for 2 or 3 days? We're trying to make all these translations so that people throughout the business understand the implications of their actions, and that then goes further into rewarding and penalizing good or bad behavior and growing people, continuous improvement. To come back on what Rowan asked before, whether the maintenance is directly linked to the OEE, the short answer is yes. It's an important other element in getting the OEE to 85%. And that is to make sure that all our people in the operations have the ability to contribute. And I think that is where we, as an industry and as leadership of PPC, need also to take ourselves to the task. When the going got rough, one of the things that you start to reduce is the investment in people and their training and their development. And we are currently paying the bill for that. So one of the reasons that our OEE has been dropping lately, it's not that so much that we underspend in our plants. It is more that we haven't sufficiently trained up our people in order to run those plants at the best of their capabilities. If you go to De Hoek tomorrow and you see that we are feeding tires into the kiln, now if you are sitting in an operator room and you're running the kiln, you want to have a stable flow, so a nice coal, like stable, right? Easy. Now if you plunge in a tire in the flame, you can see what that does. It gives sudden spikes in energy. If your operator is not properly trained how to deal with it, he will probably stuff up the plant and the plant stops or it slows down, and that costs money. And that then immediately destroys the value that you have from replacing the coal. So we need to invest in our people, and that is what we're aiming for through the Jabali framework that we have implemented. I think it was Murray that asked the question, so what is next on the horizon? And there's a lot of question mark next on the horizon. What we know for sure is low-carbon cement, and we have the action plans in place for that. It's a matter of delivering on that. What we also have started to look at is alternative building technology/alternative materials. We have probably one of the best labs in South Africa, if not the best lab in South Africa, when it comes to cement and concrete knowledge. It is actually, from what I hear from our customers, the top lab in the country. And that is where we would like to do more and more tests with alternative materials such as fly ash that was spoken about or slag, activated fly ash, chemicals to see how we can implement new construction materials that will over time replace the building blocks that we use today, the bricks, the cement and the concrete as we know it today. Other areas that we are looking at is waste-to-energy. Waste-to-energy is a natural business for a cement business. It sounds a little bit strange. But a cement kiln is ideally, from a technology position, the heat profile that it has, is an incinerator. It's a waste incinerator. So if you look in China, you have certain plants around the mega cities in China that during the time when there is too much pollution, they're starting to shut down the industries. Those plants keep on running because their clinker is a by-product. They don't run the plant anymore for clinker or for cement. They run the plant because of the vital role it has in burning the waste that comes out of the cities. So that is a whole different way of looking at, how can you make that then a profitable business where you take various waste streams and run them through your kilns and your cement becomes a by-product, right? So that is where the idea of waste-to-energy comes from, an area to be investigated. And then if we look further out, you look at noncementitious building materials. Could there be something completely that takes us almost by surprise? And I think the reason that we want to look at it is that you don't want to end up like the Kodaks of this world that one day wake up and realize that something that you overlooked because you thought it would never happen has actually cannibalized your core business. And that's another reason why in our investment portfolio and capital allocation going forward, until 2030, at least, you do not see capital investments in new clinker facilities. I'm not saying clinker facilities become stranded assets if you invest in them today. But I would keep in the back of my mind, if you invest today for something that is going to stand there 50 to 100 years, is whether you think twice whether you make that investment or not. The plant you might visit tomorrow in De Hoek will celebrate its 100 years' existence this particular year. So that is sort of the mindset that cement people have when they start investing. What we wanted to transmit to you today is the compelling case that PPC has to offer. Focus on performance, focus on the returns, you've heard it throughout the day. Strong positions in markets that we understand, we understand what drives the behaviors of our customers and what keeps them loyal to us and how can we further extract value out of the markets where we're in. Very well positioned in our core markets for any upside that will come over time, be it from infrastructure or be it from the removal of the inputs. No choice has to be made between CO2 or carbon reduction and benefits. All the projects that you have heard about until 2030 are value accretive. The capital structure has been fixed. So we've come out of the phase where we can now comfortably say we are below 1.3 in our gross debt to EBITDA. And I must there admit that Brenda won the argument because I was first more towards the 1.5. And finally, the finance people win. So now we're a bit more conservative, and we stay on to 1.3. And I think we're very comfortable managing within that space going forward. And whilst you sometimes might have frowned about the depth in which we have taken you when we talk through our markets, our cost drivers and the actions that we have in place, it was meant to also demonstrate to you that what you see here around you is not only a quite diverse team and a focused team, it's actually a team that does know very well how to run a cement business in the various countries where we operate on the continent. And with that, ladies and gentlemen, I'd like to close the presentation side and open the floor for some last questions that you may want to ask, and then we wrap it up for the day.

Roland, [ Charlie ] again from Ashburton. I mean, can you maybe just talk us through your -- well, the different possible permutations for your rest of African portfolio, particularly Rwanda and Ethiopia, et cetera? And are you looking to maybe introduce a partner of some sort? And just how you see yourself extracting reasonable value for those assets, given where they are in their life cycle at the moment and market conditions. And maybe just a few ways as to how that can play out over the next kind of 2 years. As you mentioned, I think 12 to 18 months is a likely time frame for that.

Yes. So various ways. CIMERWA on the short term is in a very good space. If we look at CIMERWA on the longer time, it would fit better in a regionally consolidated play. So you could expect some investments in Kenya, most likely. Kenya is still quite heavily import-dependent. So there are some greenfield opportunities in Kenya. The moment those plants are built, they will have an overcapacity in the market. So they will start to look for outlets, Rwanda being one of them. Eastern part of the DRC, similar things are happening. You also see some activity on the ground, and people are thinking of putting up clinker plants. So 5 years from now, fast-forward this, it might well be if you do nothing around CIMERWA, that CIMERWA becomes very attacked from various sides. So one of the reasons that we're looking at, is there a strategic partner out there that is looking at building a regional portfolio, is to place CIMERWA in that regional portfolio. Then our other international assets are obviously the DRC, where after the restructuring, the value that sits in that business for its owners is extremely long term. So you're not talking about an immediate value extraction, but it could very well be of value for someone who's building up a position in the DRC because it's a good plant. We have good local partners. We have good relationships with the government. Ethiopia is a different case. So Ethiopia does need about USD 15 million in capital to actually get the plant to a good performing level. We have been looked at to inject that $15 million. We have very clearly said we were not going to inject that money. Whereas if there is, again, a strategic player who wants to put in fresh capital, we would be diluted. So we're currently at 36%, that would go down. And we would then, over time, depending on the partner, actually leave the management of the facilities in Eastern and Central Africa to the partner. So permutations are, somebody would come in and we keep a minority stake in these entities indirectly because they're all sitting in one holding company to the most extreme case where somebody says, "Look, we don't want this partnership. We actually want 100% of these assets that you're holding in that holding company, and we buy the whole holding company out." Depends a bit on what the desire is of any strategic parties. It's -- we're very early on in a process. We still need to engage with the various parties that we have in the countries itself. That's why I'm saying sort of a 12 to 18 months kind of outlook.

Is there appetite in the market at the moment for partners of that plant [indiscernible]?

Yes. Yes. To be confirmed, we're not in a hurry either. So we would be looking at something that is fair valued. Then I hand it back to the emcee of the day. Good night, Mr. Kwame.

Yes. We don't have any questions on the webcast. So thank you very much, everyone. Thank you for joining us. We hope that you've had a good understanding of PPC a little bit more than when you came here today. And yes, if you have any more questions, please reach out, and we'll assist. And for those of you who are joining us on the site visit tomorrow, we'll see you. That's it. Thank you very much.