Reunert Limited (RLO) Earnings Call Transcript & Summary

Listen to me a little bit now, but the rest of the team are fit and strong and in good spirits for their portion of it. But a very warm welcome. Just by way of quick logistics. I've got about 20 minutes something like that, just as a quick introduction. There's a few late starters. So we'll probably stop for 5 minutes after that before we go into the rest of the day's proceedings just to allow a few extra people to come in who may have come in, in sort of 10 or 15 minutes whilst I'll be talking. It's a fairly full day, but there's a lot of time for engagement, a lot of time for questions. So I don't think it's going to get too rushed on our way through it. But thank you all for taking time to spend time with us today and taking time out of your schedules to be here. And for those who are on the webcast, a warm welcome to yourself. I just want to do a very quick introduction of a few people here. First of all, I just want to introduce you to the Reunert Executive Directors. For those of you who don't know me, I'm Alan Dickson. In the corner with his hand up is Nick Thomson, our CFO. Next to him -- or close to him is Mohini Moodley, our HR and Sustainability Director, who will be doing a little bit -- or will be talking a little bit more about sustainability later. Then we have all 3 of our segment chief executives here today. I'm just going to start on the left, Terry Lawrenson. Terry, if you can stand up quickly, just so that we can see. He'll be leading the renewable energy discussion later on. I've got Trevor Raman, he is our Chief Executive of the Applied Electronics segment, who will be taking us through the Defence business. And next to him, Graeme Eddey, who is the Chief Executive of the ICT segment. They will be introducing their teams. So there are more team members here that you'll be listening to and taking some -- or be able to pose some questions from. And also, perhaps a special welcome just to the IQbusiness team. When we last spoke to you a couple of weeks ago, the Competition Commission approval was still pending. That has now come through. The effective date is the 1st of July. So we're actually -- one of the discussions today or one of the sessions today is actually on IQbusiness to help you unpack that and to give you some insight into that. And the Chief Executive of IQbusiness, Adam Craker, will be taking us through that a little bit later on. Just a couple of house rules. If I can just put them out there upfront. It will be Reunert's leadership teams that will be presenting all of the content today. So the segment heads will be sort of getting an introduction and then each -- and we have the chief executives of the business units, then talking about their business units. So they will be doing the bulk of it. There will be Q&A after each and every presentation. So each presentation somewhere 20 minutes, 30 minutes something of that order. And then we'll have a period for Q&A. So if I could please ask if you can just hold on to your questions for that particular section just until the end, and then we'll do a Q&A after that. And I'll share the Q&A. So we've got some questions potentially coming in through the webcast and then obviously, for everybody here. I'll chair those and then I'll push the questions to wherever the appropriate person is to answer those. You will have free access to the management, particularly during the breaks. We've got a factory walk around, both here at lunchtime and later on at Blue Nova at our storage factory a little bit later on. So you're welcome, and I encourage you to speak to them, ask them about questions that you may have. My only request is as is always the case, our disclosure only goes to segment level. Please don't sidle up to them and ask them for their management accounts and what their GP margins are and what does the budget look like for next year. So don't put them in that position. They're under strict instructions obviously not to give it to you, but please don't put them into a difficult position. Just in terms of the objectives today, what I'd like to -- what I'd like you to leave with as best as possible is we're going to really try and articulate the Reunert investment case broadly. And then we're going to do a deep dive into several sections to help shareholders and potential investors unpack what those, particularly the growth elements of our investment case means. So we'll be doing it in the ICT segment. We'll be looking specifically where our key investment is into our Solutions and Systems Integration business. So we'll be getting an update from +OneX and then IQbusiness, the newest acquisition we'll be taking you through. In terms of our internationalization drive, we're looking specifically at the Applied Electronics segment or our Defence businesses today. We're not doing electrical engineering today, but we'll be doing specifically at that and then doing some deep dive into 3 of the key growth areas in that business or in that segment, which is our fuses, our radars and our new acquisition of Etion Create, which is an exciting business, and we'll give you a chance to dig into that in some more depth. And then we'll be doing our renewable energy businesses. We call it our renewable energy cluster. So it's got our solar, the solar generation. It's got our storage. It's got our wheeling. And it's also got our energy management. So we'll be dealing all of those. So we'll be looking also into that renewable energy cluster for that. Another objective that we've got is lots of you will typically speak to myself and to Nick. This is an opportunity to see the management underneath. So we're looking to show you the depth of management, the quality of management, the experience of management that we have around Reunert so that it's -- you can actually see those that really do the hard work and the level of expertise and quality of people and knowledge that sit in those underlying assets and actually drive the profit that comes out of it. And other than that, we'd like you to enjoy it. This is a working facility in our radar facility today. One of the investors or shareholders was just asking me a little bit earlier. What did we do here? So Harold will share with us a little bit later. But just as an interesting aside, this business was started 31 years ago -- 35. So there was nothing here 35 years ago. South Africa had no radar, no local indigenized radar capability at all. And if you -- it's probably not a bad proxy for what Reunert's about that what you see here today, every brick, every piece of IP, you're going to see every piece of equipment, you're going to see every example of the future that Harold will take you through has all been developed by local engineers, locally funded. And there's -- that sort of thread typically runs through Reunert. But you're sitting in a homegrown facility where everything that we sell just about is -- goes offshore. We do have a good local market here as well, but much of it goes offshore. And we compete with the very best out there and often beat them. So it's -- but you are in that working facility and a little bit later on, we'll go across the Blue Nova and we'll see the storage facility over there and have an opportunity to see what that looks like. So just very quickly, just to talk -- that's the schedule, like I say, roughly 2 hours a slot. So there'll be a time for a bathroom break and a walk around and leg stretch sort of every hour and 45 minutes or so. We'll put a WiFi pin up in just a moment. So when I break here just to let the late starters then we'll pop up a WiFi connection and you'll be able to connect from that. But just quickly to just remind everybody what and where Reunert finds itself just at the moment. So at the end of last financial year, we had ZAR 11.1 billion worth of revenue. An important metric that we increasingly talk about is what we call segment operating profit. Now that's the operating profit that emerges directly from the businesses. So be easy. You're going to talk to you today, that segment operating profit is a profit that's generated by them before any accounting adjustments or any once-offs or fair measurement and any other elements that come through from an accounting point of view. So it's our view that, that is a very strong and probably the best metric around looking at what the cash-generating capability of Reunert is all about. So Reunert last year, that was ZAR 1.1 billion. And the dividend we paid ZAR 2.99 when I was reflecting on that and putting the slide together earlier and going through it last night, I thought that was quite a good discount on ZAR 3. So quite how we ended up on ZAR 2.99, I'm not entirely sure. But [indiscernible] ZAR 2.99 was a dividend that we paid last year. The 2-year CAGR, I just given it just, that comes out of COVID. So that starts from COVID, we took a bit of a kick through COVID. It was a tough period for us. But if you just look at the 2 full years that we had from the end of COVID, bearing in mind that, that year only started 6 months past the first lockdown in COVID. So that was 1 October 2020. One is on that measurement period. Good recovery in terms of revenue. Segment operating profit and dividend growth through those 2 years. And then rolling forward to this half year, we've had a good performance again in the half year, where we sit now at the half year of ZAR 6.2 billion -- ZAR 625 million worth of segment operating profit at the half year and the dividend up by 11% at the half year. And the prospects that we had given, we positioned Reunert and the prospects we gave were that we would deliver an improved year performance over the 2022 year. So that would give us 3 very solid years after the COVID knock that we took in 2020. I'd like to then just share with you how we are positioning, the Reunert investment case in the minds of potential shareholders and investors. In fact, just before I do that, if I -- how do I go back on this? Is it the red one? Thank you. What -- 2 quick comments on the numbers in the half year that I wanted to share. First of all, the bulk of that performance came out of what I would call the core of Reunert. And that talks to us about the quality of those assets. So what we find ourselves in Reunert today is not with a set of assets that are collapsing and these growth initiatives that we're going to talk about, but the actual core assets themselves are in really good shape. So those -- that core and much of the growth came out of the Electrical Engineering business, so the cables or circuit breakers, came out of the ICT and came out of our defence businesses that we have. But that, in our view, talks about 2 elements of quality. Firstly, on those South African businesses. They face the same macro environment largely that much of what the rest of the South African ink faces. We took some pain. But I think in our view, what it shows is about the quality of management and the way in which we were able to reset those assets to deliver good and strong earnings despite a weak macro South African environment. And I think that talks about the quality of the management and our ability to scale those assets, almost independent of what the market situation looks like. But those are good results in a very tight market. And then secondly, in my view, it talks about the quality of the assets that go out into the international market and are able to compete there. So if we look at the IP, we look at the products, we look at our customer relationships, all of those, none of those disappeared through the COVID period, where effectively we weren't able to travel for the guts of 18 months, and that -- those export order books are run down almost to zero. And we were able to retain and the quality of what we've got, and you'll see a little bit later how that's built back up. But I think it talks about the quality of the IP, the products, and the relationships that we have in the international market that we can retain those also despite difficult periods to that. And I think that both in the course specifically talks about the strength of that and how we believe that will continue into the future. So there's 5 key elements that if we were to put a hook on for the Reunert investment case, these -- I'm going to take you quickly through those. The first of those is we believe we've got a diversified group of quality assets. They are centered in the 3 segments that we have, which is the Electrical Engineering, the ICT and Applied Electronics, which includes our renewable energy business, and historically, those businesses have delivered good solid results over a long period of time. Typically, we have good market positions within the markets that we participate in. And quite importantly, on those traditional assets, the amount of capital that needs to be allocated into those assets is relatively muted. So we -- you can look around about the depreciation rates and a little bit more is what we need to invest into those assets to keep them at the quality and delivering the quality of earnings that you see in this year. Secondly, on the back of that strong core, we have got 3 key growth initiatives within Reunert that we are driving at the moment. The first of those is the investment into our ICT segment, where we are looking through acquisition to build out a new age set of assets that are more focused to higher growth rates and better margins and that we've put into what we call our Solutions and Systems Integration cluster and through acquisition is a key growth driver in our ICT segment for that. Second is our investment into renewable energy. And third is into the growth of our international revenues, specifically in our Defence businesses and in our Electrical Engineering businesses. And what you will see is increasingly the -- not increasingly. The capital that we're allocating is going into one of those 3 areas as we drive typically those growth initiatives across the group. Thirdly, our cash generation remains strong and intact. We have a little bit of cash trapped up just at the moment in working capital, but that will unwind. But typically, and if you look back of our ability to convert EBITDA into free cash flow, sits around about 65% to 70% on an annual basis. And that allows us not only to invest into our strategic growth, into our existing assets and maintain those but also to be a strong and reliable dividend payer. So at the end of last year, we had a dividend yield of about 6.5%. The share price has moved a little bit better at the half year now, still in excess of a 5% dividend yield. And importantly, that dividend remains firmly entrenched in the minds of the Board and executive management in terms of the integrity of that dividend and how important a part it plays in the overall Reunert investment case that we have. Fourthly, and on the back really of those 3 reasons I've just given, we believe that where Reunert is sitting at the moment, there is still strong shareholder value creation that can come out of Reunert even surprised where it is at the moment. All 3 of our core businesses, Electrical Engineering, ICT and Defence have got market trends behind them that we think are sustainable, medium term and positive, irrespective of what we see in the macro environment within South Africa today, which we believe gives that core growth that is sustainable in the future. And on top of that, these growth initiatives, the full impact of those still have to come. So we think that combination of strong core with good growth, market fundamentals behind it, coupled with the full impact of growth still to come positions Reunert well to deliver shareholder value creation over the longer term. And then the final part of our investment case is really ESG credentials. Now we have run factories for many, many years. So we have deeply ingrained ESG in all of our operations. We run detailed quality systems, detailed health and safety systems and the like. What we are specifically in -- and that's why at Reunert, we've elevated sustainability to an executive director responsibility, we perhaps haven't communicated that as well in the investor market, as we should have done in the past or certainly is needed now as we look forward. So we're in the process of escalating that. We think there is a green benefit to come out of it or an ESG benefit to come out of it. But it isn't that we have to redo what we do in Reunert. We need to package it correctly. We need to make sure we pick the right criteria against which to measure ourselves, and we need to set some good objectives around which we're going to pursue. But on the back of those 5 credentials, we think we've got a fairly compelling investment case for shareholders. And that's my lot other than just to highlight, this is the group structure. Those are the 3 segments that we have. In electrical engineering, power cables and circuit breakers, we won't be talking to those today. In our ICT business communications, total workspace provider -- which has got the Nashua brand in it, excuse me, rental based finance and then Solutions and Systems Integration. There will be dropping into the Solutions and Systems Integration for the deep dive within that ICT segment, which will be the first part of the session today. And then in Applied Electronics, we have Secure Comms, which is basically radios and encryption, not talking to that today, but we will be talking to fuses, radars, Etion Create and renewable energy as part of the Applied Electronics segment. So ladies and gentlemen, thank you. That's my introduction done. We're going to take 5 minutes to see if there's any other people we can get in and to get ourselves a WiFi and the like. And the ICT guys will then position themselves for the next section, and we'll kick off with Graeme Eddey, who will take us then through the ICT segment from there. Are there any questions before I wander off and see you in just a moment to chair the Q&A.? Good. See you in a sec. Let's just see if there's anybody else out here.

Good morning, ladies and gentlemen. So thank you for taking the time again. So as Alan introduced, my name is Graeme Eddey, and I'm the Chief Executive for Reunert's ICT segment. So we'll be taking you through primarily our solution systems integration cluster and in particular, the strategic rationale for IQbusiness or our strategic rationale behind IQbusiness, how it will fit in to Reunert, ICT, how we see it fitting in and then the key opportunities that we believe it will bring to the group. So yes, from my side, I know you're all eager about renewable energies given where the country is at the moment. But I promise you, ICT is just as exciting, and we've got a good story to share with you. I'm then going to hand over to Adam Craker on my left over here. And Adam is the Chief Executive of IQbusiness, and Adam will give you a good detailed overview and insight into IQbusiness. And then we're going to hand over to Rob, the Chief Executive of +OneX. And I'm sure many of you know, Rob, and Rob's going to give us a good update on what we've been doing at +OneX over the last year or so. So also very exciting. So yes, let's get into it. IQbusiness. Why? What was the strategic rationale behind it? So first and foremost, it supports the Reunert ICT growth strategy and it enhances our vision of solving our clients' needs with innovative high-tech solutions. Importantly, though, it's the leading South African independent management and technology consulting firm that has 25 years roughly of trading. It's got a strong well-known brand in the South African market. And more importantly, IQbusiness has a team of over 1,000 people, and they are guided and led by a very experienced management team. We've got a proven track record of delivering growth and profitability. I think from the outset, it was important for us, and you'll see on the wall there, we've got our group values to really find the alignment between the culture and the values of the 2 organizations and is there a good fit. And I'm pleased to say, most definitely. And I'm sure Adam will talk to that in his presentation as well, but we'll see that through -- and it's manifested itself through the partner and the manage the partners and the management of IQbusiness, continuing to hold 25% of the shareholding in IQbusiness going forward. So I think that's very encouraging for us. Then, I'm sure as many of you know, probably about IQbusiness, to some degree, they've quite -- they've got quite strong capability in technology and management consulting, especially in the financial services industry but other industries as well. And that opportunity -- so the consulting-led offerings opens up additional access to clients that allows for the sale of additional solutions and services. And they're very well positioned to enable their clients' initiatives around the digital transformation space. And many organizations have had to accelerate that post the COVID-19 pandemic. Likewise, the acquisition of ITQ business solution some time back, I think, about 4 years ago, Adam, 3 years ago, added significant annuity revenue and also diversified their offerings, and it added to their project-based revenue and created a further platform for additional growth. Their blue-chip client base. So they've got a very strong blue-chip client base. And again, Adam will take you through that. But they are very well entrenched in the financial services sector, and they have a very strong position in the financial services sector. So overall for us, we see that together with +OneX, IQbusiness will add complementarity and synergy, and I'll talk to that, and it will position Reunert ICT and increase our presence quite notably in the South African ICT market. All right. So how do we see it actually fitting in? We see it sitting alongside +OneX in our Solutions and Systems Integration cluster. And what it really allows us to do is cover all 4 of the dimensions of Solutions and Systems Integration. So as many of you know, over the last about 3 years, we've been building +OneX through acquisitions and through organic growth. And as I said, Rob will take you through that to really have strong capability in managed services in the digital transformation services and in digital consulting. What IQbusiness will then bring to this as well. is additional managed services capability, very, very strong capability in technology and management consulting, as well as then digital consulting. So again, it positions us and enhances our client value proposition and our go-to-market. We see 2 key opportunities that this will then bring to Reunert's ICT segment. the first of these being around enhanced complementarity. And this really is about it centered on enabling our clients and enabling them to win in this digital economy and around their digital transformation strategies. So what does it give us? I've already mentioned that expanded offering, the coverage around the 4 dimensions, but there's a lot of complementary skills sitting inside IQ and +OneX that we can cross leverage. But additionally, on top of that, there's deeper skill sets. So within both organizations we can cross-leverage the additional skill sets and the deeper skill sets in some of those key areas that I've mentioned over there. And that we see will position us better and enhance our ability to go and offer our clients a total end-to-end value proposition. The second key opportunity that we see with IQbusiness and the acquisition of IQbusiness, again, sitting alongside +OneX in the Solutions and Systems Integration cluster is around synergy. And that's really how we go to the market and the customer base that we are servicing. And there's a lot of opportunity to cross-leverage the customer base within both organizations. There's the opportunity to expand into both the enterprise and the small medium enterprise space, and it also positions us well from an economy of scale perspective. It really allows us to leverage the service offerings and increase our presence quite notably within the South African market and also expand into international markets. So yes, I've got the brief part today because, overall, that is our strategic rationale. That is how we saw the opportunity of IQbusiness, becoming part of Reunert ICT. So to wrap up, we see really that it will allow us additional capability, enhance complementarity and synergies and significant scale and position our ICT segment, but overall, our Solutions and Systems Integration cluster has a strong end-to-end system integrator in the South African market space. So sweet and short, I've left lots of time for Adam and for Rob who will give you a lot more overview, a lot more in-depth, and I'm more than happy to take some questions right now if you'd like to go through those. And before I hand over to Adam to take you through an in-depth overview of IQbusiness.

Can I jump in?

. Yes, sure.

In terms of coming to offshore markets, maybe you can just state your ambitions? I mean obviously, you're on your own life cycle [indiscernible]. What's the time line for that?

So I'm going to let Adam talk to it through his presentation as well, but just quickly, so IQbusiness has international opportunities at the moment. So they're actively in certain areas. So in their research and insight analytics, they're providing certain services into clients. In the financial services, they've been providing consulting-led and technology-led services into some of the financial banks up in Africa. And we see through that platform and through those opportunities and through those entrenched relationships, the opportunity to grow further. But I think, Adam, you'll talk to it in your presentation as well.

It's more specific [indiscernible] traditional businesses that [indiscernible] business communications and workspace provider, those are local.

Local based.

Yes. It's only in the S&SI cluster.

Okay. Any further questions? Yes.

Just thinking a question around ICT. I think previously your guidance has always been -- this is steady kind of business, but how should we think about that [indiscernible]?

That didn't take long. No. No worries. So just on the guidance that we've historically given are based on the assets before IQbusiness has come on board. Now the guidance that we've traditionally given and typically, the performance that we have is that the ICT segment, we view those earnings to be a CPI plus GDP plus a little bit type growth. So they're not -- it's not 25% type number. So if you take CPI around about 6%, you take GDP, say, 1%, 7% plus a little bit, 8%, so sort of an 8% per annum is the traditional assets that we have in there, which excludes the IQbusiness leg to it. The IQbusiness obviously brings a binary step change. We'll disclose the quantum of IQbusiness in the year-end at. So there will be a full disclosure on that as we are required to do, and you'll be able to see what the quantum of that binary would be. And our view would be is that combination and with the accelerated growth that we now see in the S&SI cluster, we would be aspired to be slightly better than that, call it, that 8% that we had spoken about. I don't think it doubles the growth rate. We're not in that type of space, but it gives us a binary step on the back of that acquisition coming in and then accelerates the growth of the S&SI cluster.

Thank you. Any other questions? No. Okay. And we're running a little bit ahead of time. So Adam, you've got lots of time there to answer all the questions. So thank you, and over to you, Adam, welcome. So officially not part of the family until about a week or so's time, but we welcome Adam already. So thank you.

Thanks, Graeme. Are you the steady Eddey that we were referring to there that might be most appropriate. But it's really wonderful to be here. As Alan and Graeme has said, we're just about a week away from concluding the transaction, which, believe it or not, has been initiated in March of 2021. So just over a 2-year process. And I'd like to say up-front that in that process, we -- I think certainly, Alan and I had a view that this was a transaction. This was a relationship that we could see the potential of and that we wanted to really accelerate and move forward with as quickly as possible. When you're part of a private equity-backed structure, the private equity investors had to run a very extensive process of engaging with potential suitors to take up their equity stake. That actually took a year, just over a year to conclude that process. And the outcome at the end of that was that, of course, we're now lined up for the transaction that we absolutely wanted to do from the outset, even having met about a dozen other potential suitors. And I hope that this morning, that will become a little bit clearer for you why we felt so positive about the chemistry, the opportunity and the relationship between 2 South African enterprises to come together to really forge a future. So this morning, I have the pleasure of taking you through a little bit more of a detailed introduction to IQbusiness and understanding of what we see then as the market and the market opportunity that we're operating in locally and internationally, what our approach is to value and how we go about really engaging with our clients in the local and international marketplace and how we've built a very successful business over the past 25 years. And then really just to round up on what do we see moving forward together. And as Graeme has said, the relationship with +OneX and the other businesses that form the ICT segment. And then also more broadly, the Reunert Group and the opportunity that's there. Just by way of introduction, I'm going to play our corporate overview, our corporate advert and just give you a sense and a feeling of the organization. [Presentation]

So when we engage with our clients, there tends to be a business problem, an issue or an opportunity that our clients are seeking to pursue. And we like to position ourselves in the conversation as they go to. We want to be the very first organization that they turn to. And what really underpins that is our purpose as an enterprise, which you can see presented before you essentially to grow people, grow business and grow Africa. And our purpose was inspired in 2015 when we really started to recognize as an organization that we should be, as a nation, feeling very, very uncomfortable about the growth trajectory of our economy. And in 2015, we started an initiative called Growth.co.za, and that initiative was an annual focus that we brought to really dealing with the opportunities that we think our clients face and we have in South Africa to really pursue a greater growth trajectory than being a zero growth economy that we are today. So that emphasis in our purpose really underpins and undercuts everything that we do. It's part of our value system. It's part of our method of engagement. It's part of our philosophy as an organization to really look towards how do we stimulate growth locally and internationally. And we're very proud of the fact that we turned 25 on the 9th of July. So shortly after, hopefully, when Nick makes the transfer to our existing shareholders, we will then become a part of Reunert in our 25th year going forward. And what's very exciting, I think, in building a local enterprise here over that length of time is that we really have established, we believe, a presence in the business services sector in South Africa and building that internationally. And the statistics that you can see before you are really, I think, testament to what has been achieved in that time. What hopefully stands out though is how we bring our purpose and our organization into life. You'll see that there are 2 brand names or ecosystems that are represented there. The COBRA ecosystem stands for the COVID business rescue assistance initiative, which was launched 2 days after the announcement by President Ramaphosa that we were entering the first stage of lockdown. And if you remember back to that announcement and the fact that we were all in shock, that we were entering a 21-day period of national lockdown, imagine if he stood there and said, well, actually, it's going to be over 700 days of lockdown. So we recognize very quickly that we needed to do something about the threat that was represented by lockdown, in particular to small, medium and micro enterprises. And we launched COBRA together with 120 partner organizations that came together supported, technologically by Microsoft and expanded by a range of financial organizations, legal services, business services, technology services organizations. And the ecosystem provided support to over 600 enterprises during the period of lockdown. The second brand that you can see there is SAtion. And SAtion is a business unity South Africa initiative. We were asked by [ KasKavadia ] in response to what we had done with COBRA to put together a growth initiative that really leverages the fourth industrial revolution. And SAtion is really a fantastic example of once again how we can bring together a group of partner organizations into a single ecosystem and really drive engagement around the particular issue opportunity or challenge. And the 4IR is really in the epicenter of what we've done with SAtion. Now with those 2 initiatives as examples, just the last 2 things on this slide that are worth just pointing out, in 2018, we were very proud of the fact that we were recognized as the winners of the Conscious Companies Awards, in South Africa, which really brought to before that whilst we are obviously a business that works for profit, we apply our profit in areas of purpose that really are going to drive an impact. And secondly, you may be aware of the Global B Corporation movement. And when Alan talks about Reunert's ESG focus, we started in 2017 a focus using the B Corporation community. And B Corporation now is around 7,000 enterprises in about 150 countries. And we're very proud of the fact that IQbusiness is the largest B Corporation on the African continent, where we really bring into focus how we impact society, the economy and the environment. And we go through a regular certification process, which involves about 200 different criteria that evaluate our performance using the B Corporation criteria. In terms of how we gear for growth, how we really drive forward, as I mentioned, our purpose is really what underpins our decisions, our direction, our strategy the opportunities that we pursue. But we -- I will talk a little bit more about our vision, where we see the opportunity to really impact our clients and bring value to our clients through bringing together the various elements of our business into creating what we think the African continent needs, which is a homegrown business services capability. And I'll touch a little bit more on what we see with some of our international competitors. And so bringing that mission then into play to help shape our clients' growth -- help our clients find new growth and opportunity. In terms of our development over time, just to share with you the period that I'm most familiar with, I joined IQbusiness in 2009 and was appointed as CEO the following year in 2010. In 2011, I led the management buy-in that brought together 3 partners that invested in the equity, underlying equity of IQbusiness. Today, we have 22 partners. And these are owner-operators in our business that have each invested, put skin in the game and participated in driving the growth trajectory of IQbusiness. That management buy-in led to a period of significant organic growth, and that organic growth in 2016 attracted the interest of our current private equity investors, Capitalworks and Tiso Investment Holdings. And they came on board for a fixed 7-year investment term. Their focus was really initially to capitalize on our organic growth trajectory, but then also their influence was really to help us launch our acquisitive growth trajectory. And that led in 2019 to the first acquisition in the consumer insights space with the acquisition Genex, which was followed shortly thereafter with our second acquisition in consumer insights with the acquisition of Nudge. Those 2 have now been fully merged together, and we refer to the new entity as IQbusiness Insights and that's a team of about 120, which makes us now the largest South African consumer research organization, which really is a differentiator that we believe is really forging a new direction and a new value proposition for our clients. As Graeme mentioned, we followed that with our ITQ and iSolve acquisition which brings a new dimension to our business in terms of longer term annuity-based projects that tend to run over a 3- to 5-year period. And lastly, the acquisition of Kryptonite in the digital space, which essentially brought many new methodologies and approaches that really are forging a new way of engaging with our clients. Extensively, Kryptonite was developed during the period of lockdown, where strategic planning, digital engagement really underpin the Kryptonite methodology for bringing together groups of leaders in organizations to develop digital transformation agendas. And then lastly, at this point then, in 2023, we are hugely excited about the next chapter ahead. And if we look back over the 25 years, in fact, IQbusiness has pretty much been in private equity structures for the entire 25-year period. So I say to my partners, I think we really do deserve the long service award to private equity and it's time to move into an institutional investor and a structure as part of a listed enterprise, which is really what we're so excited about with this new chapter with Reunert. So in terms of the market, the market opportunity. And I guess if I can just pause for a moment and give you a little bit of a personal background. I'm sure by now you've picked up that my accent is not entirely local. And position myself as leading the largest or the leading management and technology consulting firm in South Africa. I came to South Africa for the first time in 1996 and then decided in '97 that I'll come down for a couple of years. By now, I've completely overstayed my welcome. And this has really become over the last 26 years. home for me and my family. I'm doing something very unusual at this point, and that is that I'm currently a permanent resident but I'm applying for South African citizenship. And you might say, well, that's a good idea because the queue must be very, very short at this point. Well, I can tell you there's a lot of Zimbabweans that are in that queue and they deserve before I do to get their citizenship. But it's very important, I think, to reflect that firstly, when I came in 1996, I came because our belief that there is and still is a significant market opportunity here in South Africa on the continent and more broadly. And I've really decided that, that needs to be reinforced at this point. Although I can share with you perhaps over a coffee that it's not very easy to do. Despite having a Chairwoman at this point who is an [ ANC ] stalwart and very connected when I spoke to her yesterday, she said that she is very much in contact with Aaron, and this will be done, but I'm still 18 months into a process that, by the way, it took 7 years to get my permanent residency in South Africa. So I'm not holding out for a short process. So let's talk about the market and the market opportunity. And I think in our sector, very much that opportunity is driven on a global basis, and it's driven, of course, by some very large brand names, the gamma brand names, which I'm sure you're familiar with the Google, the Amazon, Microsoft, Meta and Apples out there. If you saw earlier on in the week, on the back page of Business Day, there's an excellent article there about Microsoft, is an article from Bloomberg that are basically saying that it's quite a shock and a surprise to see Microsoft is potentially positioned as the leading AI beneficiary in the global marketplace at this point. And this feels like 1995 all over again when Windows 95 was launched and released. But they really are driving a major wave, a major wave of change. and we see that coming through in terms of local and international opportunities. We, at this point, are perhaps not proud of the fact that despite being the largest South African management technology consulting firm, we have a single-digit market share. Well, therein lies the market opportunity. Why are we so dependent in our home market on international firms? Why is that? Why have client organizations decided to provide their support to firms that perhaps have damaged their reputations in recent times? And why have we not grown a solid business services sector for our own use? And for that matter, for the international marketplace, but we really see a significant opportunity to grow in that regard. And then secondly, if we think about the trends that we're seeing in areas like software development, the IT service market, the data sector, the AI sector, there really are significant growth opportunities, and we are very well positioned for that. And as Graeme was saying, the opportunity to really leverage and connect and look for synergies between ourselves and +OneX is what really is very, very exciting for us. And I think between +OneX and IQbusiness, certainly, we've been very impressed by the trajectory that Rob and the team have led from a consolidation perspective, looking for businesses that really would benefit from having a bigger brother or bigger sister to engage with and be part of a growth trajectory. And we obviously have seen the same opportunity. And if we're critical of our home market, it is a very fragmented marketplace with typically in the business services sector organizations that are 5 to 10 years old. Our teams have up to 30, 40, 50 people. Some make it to 100 or 150. Getting through that ceiling is a real challenge for business services organizations. You have to invest significantly to get through the kind of 150 threshold. Rob and the +OneX team have done that with the support of the Reunert team. We did that many years ago, and we see a real opportunity to continue that growth trajectory in the market. In terms of our business strategy, we refer an IQbusiness to what we call the 3 horizons. And the 3 horizons internally, we talk about the 3 economies, the gig economy, the solutions economy and the digital economy. And we've organized ourselves around these structures because we see a fundamental shift that's happening in the marketplace. And if you're familiar with the strategic planning methodology using the 3 horizons framework. What we've seen is that typically in the gig economy, we are responding to request for skills. And we very much operate in a scarce skills marketplace locally and globally. We really target areas, of course, where we can be ahead of our clients by having the scarce skills that they need to really embrace opportunities that they see. In the solutions economy, using our Insights team and our Consulting team that's where we go beyond just providing skills into shaping our clients' agendas. And in the digital economy, which is a very new frontier. It's really about defining new digital enterprises. And what we see there are significant growth opportunities. So in the gig, we moved from selling those skills to solutions by solving overarching problems. And in the digital economy, what we evolve and develop with our clients, our clients are saying, "Well, we want you to partner." and that really presents a whole new way of leveraging our competence and capability. We started with a largely specialized workforce. We have been in solutions, got a group of specialists and generalists. And now in the digital space, we're onboarding industry experts and digital experts that really have got great insights and great perspective. And the underlying commercial or the business model shifts from an hourly rates business model to new commercial constructs and solutions where very often, we're getting opportunity to put at risk our fees in return for higher reward against those fees. But then in the digital space, what's really interesting is the co-investment opportunity. And once again, I think that's where -- in our conversations together, that's where we see a lot of opportunity to really from a IQbusiness, +OneX and Reunert ICT perspective is to say, well, if we back ourselves, our ideas and the clients that we're engaging with then why not co-invest and see the opportunity to really drive new value arrangements with those clients. And lastly, we moved from the expertise in scarce skills space, which is still, as you'll see in a moment, a high-growth sector into the insights and solutions space into digital transformation. In terms of that changing landscape, we refer to what we call our world in 2025. Since 2010, we've had a 5-year planning horizon that changes each 5-year cycle. When we reach the end of that cycle, we then set a new theme, a new direction, a new set of business goals. I'm sure you'd agree with me that at the moment, 5 days can be a long time. 5 months can be very difficult to predict. 5 years is really challenging. But we've stuck to this methodology, and it's really helped us to define direction and achieve the growth trajectory that we spoke about earlier on. From a gig perspective, over the last 5 years, we've been achieving and what some would say is actually quite a saturated marketplace, a decent compound annual growth rate in that segment probably the biggest challenge. If I'm absolutely honest with you, of course, from a South African perspective is that we're seeing people emigrate and semigrate like they've never done before. And that movement in terms of the workforce is a real challenge, and I'll talk to you in a moment about how we're responding to that. And then secondly, as I mentioned before, the stagnation in our local economy and then the fact that so many of very strongly branded competitors in our market sector have really damaged their brands in the local marketplace. So our clients are saying to us, "we want a strong local alternative. We want an organization that can engage with us without being compromised by state capture. We want an organization that is not looking for quarterly dollar-based profits in the home marketplace because, of course, as our rand weakens our market becomes less and less attractive to those international firms who are trying to consolidate quarterly dollar-based profits. So we really see that landscape shifting and changing. And we've created a business model that we think, really has adapted to that. And perhaps this will help you understand a little bit more about the mix of the commercial models in our business. I've mentioned the research and insights focus that we've brought into play over the 4 years. And those insights are being delivered to clients like MultiChoice, FNB, Nando's, Diageo, where we do local and international research and in particular, we've developed a strong reputation now with multinationals for our knowledge and experience of our home market and the African marketplace and the methods that we're using to gather information relating to consumer trends. And that's getting close to about 10% of our business. The next 2 in terms of our consulting capability really split between management consulting and technology consulting. Pretty much everything that we do has got a technology element to it even in the pure management consulting space, even in the risk and government space that we engage with our clients. But that really at the core of our business. And then with the addition of ITQ, the managed services capability that we've really brought into play there. And whereas on the research side, we tend to be signing 2 to 3-year contracts, with our clients and on the managed services side, 3- to 5-year contracts. In that mid-space, these tend to be more project-based contracts that are shorter term over 1 or -- 1 year or 18-month cycle. We've aligned our business model across those and I'll just reflect for a moment perhaps on the core at the moment between the gig economy and the shift that we're seeing over to the solutions economy. The digital economy has just completed its first year and we've broken even in the first year. We've never done that before in any new area or investment. It's typically a 3-year investment cycle, but we've really landed with the team very, very solidly. The underpin in our business model is that each of these descriptors that you see here represent P&Ls or lines of business within our organization, each headed up by a partner or an associate partner that, has an equity stake in the business that is an owner manager of these areas of focus, and that's repeated in the solutions space and then once again in the digital space. So a very tight bond between each of the elements of our business. The makeup from a client-facing perspective and an industry perspective, and as Graeme was saying, historically, we've come from a very strong banking background. When I first came to this building as part of our discussions, I was very familiar with driving to the top of the hill and turning left to go to Capitec. And I'd often wondered what this interesting looking building with all these things on the roof that we're spinning around and stuff that was going here. But banking really is at the core of our focus. More recently, we've seen significant growth in the insurance sector locally and internationally. And then because of the convergence that we're seeing between financial services, retail, telco, again, we're seeing an extension of our role and activities in that space. If I'm really honest with you, we weren't expecting to see the growth in the manufacturing space. Our clients started asking us to come and engage with them. And over really a 3-year period, we've seen a very significant step forward in really bringing into play our manufacturing capabilities there. In terms of our approach to value, here's probably one of the sides that I'm certainly most proud about when we look at the brands and the organizations with whom we provide support and service. And it's very rare to see a brand name in our organization once that appears for that to not continue with us. Unlike our international counterparts that actually really do, once you invite them in, they stay forever. We continue to focus on the value that we deliver and the next role that we can play in really driving that forward. So the brands that you can see that really make up our client engagement focus. When we engage with our clients, we take a content-led approach. We really deploy our visible experts and the teams into play. We rely on, of course, our case studies, our advocates in our clients, our referenceability and then the role that we play in really leveraging our own perspective around digital media content and engagement and thought leadership. What our clients are asking for really we've clustered into 5 themes, and purpose, as I mentioned at the beginning, is very important for us, but something happened during COVID globally that really shifted the dial in terms of organizations and their employees, looking for more than just profit and looking to pursue purpose. And we're often asked to my exemplify that. And in fact, we've only got to think for a moment in the past week, here we are in Stellenbosch. Thank goodness, we're on top of the hill, because I think at the bottom of the hill, there was a lot of damage that was done. And if it's not clear to us now that STG -- ESG rather needs to be very focused on the environment and the organizations need to be purposeful in that regard, then I think it's too late. Client centricity and the focus on, again, in a zero growth economy, there aren't new clients or customers coming into the economy. So you actually, if you want to grow, you need to go and steal somebody else's customer or you need to go and offer them an extended value proposition that takes greater share of wallet. Being agile is not about running around quickly or in a frenzy. We've built the continent's largest agile consulting team. We've got a team now of about 70 agilists as they call themselves, and we've trained in the last 8 years, about 12,000 clients have gone through our agile training programs. Governance, risk and compliance, despite the fact that it's really tough out there competitively, of course, government is imposing new regulations, new requirements, new steps. Hence, we are often asked to assist our clients to in some instances, keep their directors out of jail, they say. Let's make sure that we put the compliance steps into place but it's really important that, that is undertaken. And then lastly and probably the fastest growing and the most exciting and the least steady I would say at this point is in the digital transformation space. The last couple of slides. Firstly, just to round up that we do, of course, have a very simple business model. It's a demand and supply business model. We look for demand with our clients. We have to be able to provide a supply of talent and capability to really be able to engage with our clients. And from a supply perspective, we really focus on our employee value proposition and making sure that we get an unfair share of great talent in the local marketplace. I won't go through each of the various dimensions here, but these really do represent the focus that is constantly evolving. One thing perhaps just to reference is that IQbusiness was the first company in South Africa to register in the 4-day week pilots, which is currently underway that we embrace the opportunity. Our clients were asking us, is this coming? Should we prepare? How do we adapt? And we said, well, the best way to find out is to put 100 of our team members into the pilot which is being monitored by Stellenbosch University, Stellenbosch Business School and is currently about 4 months into execution. And we're getting some very, very interesting results and output from that, that mirror what has taken place in the U.K., the U.S., Australia and New Zealand so far. So we really do embrace change and opportunity to be at the leading-edge of that. And then lastly, where are we going? Where are we going together? Well, we certainly recognize the opportunity that presents itself of being part of Reunert ICT, Reunert Group, partnering with +OneX and Rob and the team there. And we're really excited about moving forward in developing the business services sector in South Africa, for South Africa, for the African continent and more broadly than that. Thank you very much. Any questions?

Any questions for Adam? There might be some more questions -- yes, sure, Arthur.

Let me just give some practical examples of the kind of context [indiscernible]

What we actually do. It's a great question. And I'm often asked that question by my family, in fact. And they say to me, what exactly do you do on a daily basis? I'll give you a couple of examples in the -- I'll start with the banking sector. We are very actively involved in the digital transformation, digital products, the rollout of new customer-centric systems. So at Nedbank, for example, we've been very involved over recent years in the latest customer propositions. We have user experience teams that work in the design development of those systems for our clients and then the rollout of those systems. In the insurance space, we're currently working with one of the leading insurers in the development of their new banking application and the rollout of that. So we have a team that are running the agile iterative process, which goes through a whole series of very short cycles of developing concepts and then piloting those concepts and using those to then develop the underlying banking application, that's there. In the manufacturing sector, we're working very actively with Bridgestone, the world's largest tire manufacturer on a combination of activities in the governance, risk and finance space, helping them to really build out their controls, their procedures, their financial management, and financial compliance activities, as well as their supply chain activities. So really looking at optimizing the supply chain activities, how they source product into the Bridgestone manufacturing environment, but then also how they then distribute that on a national basis. So our data and systems teams have basically put together the modeling structure and approach for controlling the supply of products that leaves the factory. Does that answer your question, 3 examples?

Understand that it is nice to talk [indiscernible] without mentioning AI ?

I did it deliberately because everybody mentions AI now and -- but it's very, very important. It really is. I mean I mentioned Microsoft, who have, I think, certainly been very highly regarded. They've invested about $13 billion to date in the Open AI space. I mean would it help if I explain to you what we're doing in the AI space or...

You can push for choices like other [indiscernible] business to create an opportunity for [indiscernible].

I like Graeme Codrington's perspective on this, which is that, it's not AI that's the threat that's going to put you out of business. It's the people that understand how to use AI that are the threat. And so our approach is very much about ensuring that we're on the leading-edge that we're learning, we're applying AI. The good thing about AI is that all of us can, on your phones, on your laptops can get access to it and start learning right now. And despite the fact that some of the major internationals are putting billions of dollars into advancing AI, it's really the application of that, that we think, is presenting many opportunities. So our software development team, for example, is working on the use of co-pilots, what are called GTM hub copilots, but it's a bit like having your phone with Waze on in your car that directs you where you want to go to. The co-pilots are actually looking over the shoulder of our software developers and prompting them on the next line of code or a better way of doing things. And you may have seen that Microsoft are going to be launching their own copilots for Outlook, for Word, for PowerPoint and Excel, which is very exciting. The second area is in our insights space in terms of the consumer research and insight space where we have an AI team that are really driving the data and insights analysis using AI. And then thirdly, I'll give you a very personal example, I had a PA for 20 years. And 18 months ago, my PA resigned and left me, and I decided to that I wouldn't replace her, and I've replaced her with an AI software-enabled PA. And it really has changed the way I work and the leverage of tasks and activities. And we apply those principles into a number of areas that we're seeing opportunity to automate repetitive tasks or activities.

[indiscernible] maybe just to net-net, you see as a supporting driver in IQbusiness's future or a risk to it.

It's both, the greatest threat and greatest opportunity simultaneously. And we very much want it to be on the opportunity side. And that's why we've taken the steps we have in leveraging the tech that we see there. And we really are very, very excited, the team are very excited about how those opportunities are opening up. And I mean, let's face it. It's a very confusing space out there and where there's confusion and change and adversity like that. That's where in the last 25 years, we have really excelled in being just several steps ahead of the market, learning, applying, developing and stepping forward in the role that we play in creating value for our clients.

So can I just ask -- in terms of [indiscernible]. In terms of your strategy with the rest of Africa, is that any different, especially since you've likely been with the company over the past few years, you understand how the South African strategy worked and played out? And how is that -- is there like a different strategy for the rest of Africa in terms of your goals?

Yes. So we're very much, I think prior to COVID saw opportunity on a project-by-project basis. We've worked in 13, 14 countries across Africa, mainly for organizations, South African organizations that we're expanding internationally, where we would follow them into those markets and provide project-based support. We then -- interesting enough during COVID, we started to get calls from Kenya, Nigeria, Ghana and Mauritius, to provide remote support to clients, local clients in those markets on digital transformation projects where they were looking to have new channels of engagement with their customers or to enable their teams to work remotely. And we've established now in excess of 10% of our business is Pan-Africa at this point and seeing very good growth opportunities in those -- in each of those markets. We're at a point now where we have local teams that are in Kenya, Ghana, Mauritius and Nigeria. And when I say local teams, they're nationals on the ground because we very much believe that this isn't about exporting with the greatest respect, South Africans into those markets. It's about having locals there. And we've seen good momentum building. And certainly, we look forward now that we're out of the Competition Tribunal and Commission process really sharing that information now and seeing how we can jointly leverage and grow and establish proper physical presence in those markets. And then Graeme touched on the fact that we've seen other international opportunities from an Insights perspective. So Insights, we've just signed a very significant 3-year deal with Diageo to cover the Diageo market for consumer research for their products. And then Nando's, who we've worked with locally in South Africa have asked us to provide the same service in Australia. And MultiChoice, we provide all of the sub-Saharan African consumer research analytics to MultiChoice. So we're starting to see those propositions really building. And as part of the emigration and semigration theme, we now have 2 of our partners. One is based in Perth. The other one is based in London, and they both work remotely back. And what we're really looking at, at this point is how we start to grow opportunity in those marketplaces locally. It's interesting to note that client organizations in those markets are very familiar with South Africans. There's a lot of South Africans in Perth and Sydney and Melbourne and London and New York. We've got a lot of our team ex-alumni that are in those markets. And so we're using those networks to establish a pipeline of opportunity and to then open a remote delivery model from South Africa, even considering how we might help some of our team members to relocate into those markets if there is client demand that's there. It's just part of the fluid model that we see. I hope that answers your question.

Just take one more, then we'll move on to other business and then we'll have some more time at the end of that.

I picked up from your presentation some numbers might be dated, and I'm very cognizant when I talk about numbers, but I saw EBITDA margins of 14%, I think 2002 to 2018, something like that. And I think in the last presentation, Alan, you spoke about ZAR 1 billion being generated from IQbusiness. Can you just maybe, number one, just give us a sense of is that number still there? And also, I mean, if I look at ICT, margins are around 24%, at least over the last couple of years. How should we think about that going forward? Probably my question for Alan.

Yes. So I mean the guidance we've given is the revenues are in excess of ZAR 1 billion. So that we have specifically given. I didn't actually catch -- did you mention something about it? Was it a growth for the -- for instance or was it a margin? The first part.

It was margins, about 14%.

Okay. So I'm not sure of the margins. We haven't given any guidance on the margins themselves. The revenues are in excess of ZAR 1 billion, and we think that's sustainable going forward. So the guidance we've given around ZAR 1 billion is correct. As I said, at the end of the year, we'll actually give the prior year's number. So you'll actually see the exact numbers that are in there, so you'll be able to work the margins out in terms of that. Broadly, however, if you take that, say, 20% operating profit margin that sits in the ICT segment operating profit, the margins that will be generated by IQbusiness will be slightly below that, but they are above, I would argue the typical ICT margins you would see in many of the other large businesses that are out there.

We're seeing margin growth, as I said in the -- if we go back to the 3 economies, there's a different margin model that applies to the 3 economies as there does in terms of the different business models from insights to the managed services structure that we've put together there. So there's certainly good opportunity to continue to see that growth move forward.

Perfect. Thanks. Rob?

Thank you very much. Good morning, everybody, and welcome, mine is an update, not a deep dive, and thanks very much to Adam, really looking forward to working with Adam and the IQbusiness. And what Adam didn't tell you a bit about is, is his history and his story. Obviously, when he came to South Africa with Accenture. But I first met Adam at Dimension Data, and we worked together for 4 years. So it's nice to have him as a colleague and working with them again. So as I mentioned, mine is an update. I'm not going to go into as much detail as Adam has around +OneX, so it really is an update on the growth of our new age Systems and Solutions Integrated on the back of the +OneX platform. And Adam made interesting comments around how do you scale businesses and the opportunity to scale businesses and he mentioned that you get to a certain level and it's difficult to scale exponentially. And what we've built from a +OneX perspective is that ability to bring on businesses to deliver services to our clients to scale their businesses further. So I'll talk a little bit about that and how we're doing it. Firstly, just a quick video, a reminder, about +OneX, and what we are about and how it operates. And I'm just looking with those hi-fi. [Presentation]

Thank you very much. So really my session today is just giving you an update of what we've done and where we've got to. I'm going to address the AI question straight away for you because just if you look at our last element, which very much our elements aligned to the Reunert values is around always discovering. And what's happened within our organization, given the nature of the people that have joined it been entrepreneurial in making things happen. The teams have got together already to work out how do we utilize AI in our various businesses. So within our Software Dev business, for example, very much like Adam said, with a copilot and what Microsoft have -- working on, the opportunities there, and I'll just give you a real example and an opportunity and a threat to a business that does online training. We are able to take a training that would have cost us a fortune and 6 months, and within 6 minutes put together collateral for our software developers to learn whether it's Python or Java off the back of that, using AI models. So what does that do? And for us, just using AI has accelerated our ability to upskill and train our software engineers. Other parts of our businesses are looking at in our managed services side of things, basically, how do we use AI to connect machine to machine because actually managed services is all about monitoring machines, devices, and we're using AI in there. So we see it as a great opportunity for us. I think one of the beauties have been in technology for so long, and I've lived through the Y2K and all the implementations of SAP and Oracle and PeopleSoft, created opportunities, then the dotcom then cloud and now AI. So for us, as technologists, it really does create opportunities for us to scale our businesses further. So I'm very excited about what's happening in that space. And it is all about how do you embrace it, how do you utilize it? And then having the expertise and the knowledge to use that to solve business problems for our clients. So that's always been our mantra and that's where I see the opportunity from an AI perspective. So my update is just the developments. What's happened since we last had our investment update? From a +OneX perspective, as I mentioned, we built out the platform, we're scaling the platform. But ultimately, what are we looking to do is to deliver services to our clients. And that's where the alignment between ourselves and IQbusiness is so good. They're in the business consulting side of things. We're in the technology side. So we've continued to build out our service offerings through what we call -- we don't call them acquisitions. We call it companies joining us to scale out. And I'm going to talk a little bit later in a little bit in detail around the service offering that we've built out. The second one is around our brand awareness. I felt that it's quite young. When Adam said 25 years that they've been around. As a brand, we've been around for 3 years. And as Kea said in the video, our brand is all about our people and the agility. What we say is we've got the agility of a start-up with the scale of the enterprise, the scale of the enterprises, the business and the backing, we have with Reunert. And we scaled up to, we've got around 400 consultants in the business, a mixture between permanent and contractors. But we've built that out. So brands out there. You'll see later on I'll talk about clients that we've onboarded, that ability to deliver services. From a key talent perspective, again, attracting people, again, some very similar to IQ, it's all about making sure that we get the people on board. And it's a big challenge for us. We're seeing our competitors having attrition rates of around 30%. We've kept ours at about 7.5% to 8%. So retaining that talent is critical because if you want to deliver services to your clients, and you've got a revolving door, you've got some real challenges. So we've retained our key talent in the organization. From a client perspective, again, through the relationships we have with our clients, through the fact that we're over 50% black owned, 30% black female owned, level 1 organization, we've been able to onboard with enterprise clients. So we've got a great credentials with our clients. If I look at, again, IQbusiness, where the opportunity, their client base, our client base, we're strong in banking, we're very strong in other services, manufacturing, mining and the universities. The one area that we're not strong is in insurance. So great opportunity to take our services into the IQbusiness insurance clients. And then we've seen the growth, again, I can't talk about the specific numbers, but you'll see some of the leading indicators that show that we as +OneX are growing the business. So when we set up the business 3 years ago, it was all about that client focus as +OneX and being able to deliver those end-to-end services to our client because a client just doesn't buy AI or just doesn't buy a cloud or just doesn't buy digital media. Some do. And there's some -- sometimes we're in there. But most of the time, they're buying a set, they've got a problem, and they need a set of technologies to solve those problems. So whether that's our unified communications and collaborations business with some data insights with some digital consulting, whether it's us taking our unified communication platforms that we're delivering to clients and moving that onto the cloud side of things. From a cloud perspective, you build out your applications, so your software dev, you need to host that, you put it in the hyperscalers, and that's whether it's Amazon Web Services, Google or Microsoft. How do you go about doing that? Or do you put it onto a local cloud and platform. And here in South Africa from a +OneX perspective, we have our own cloud platform, so we are able to offer clients either opportunities to go into multiscalers or into the South African cloud platforms. And we're seeing actually more and more people putting, either moving it from their own current data centers or from hyperscalers into our cloud platform. So we've got one of the leading manufacturers of glass where they had moved the SAP workloads onto our cloud platforms and all the rest of their infrastructure is sitting on our cloud platform. The leading airline that flies to about 42 countries. Airlink also moved all their workloads onto our cloud platform. And the reason for not going the hyperscalers for them is a couple of challenges with the with the hyperscalers, great economies of scale. Cost is great if you've got the people to manage what goes into the hyperscalers. And part of that challenge in South Africa, even if you're a mid-sized organization, having those people to manage those workloads. If you don't manage those workloads, the costs go up and they invoice in dollars, which is another challenge and why we're seeing such a demand for our cloud services here in South Africa. You need to be a bank around the corner here. You are moving into AWS to have all that expertise and knowledge to manage it cost effective. From a managed services perspective, again, just to understand between ourselves and IQbusiness, our managed services is much around the technology side of things. Their managed services is around the software side of things. So again, when you look at Graeme's slide that he put, we are in the technology managed services side. So that's what we do, rep any of the services, whether it's cloud, whether it's data, whether it's technology with a managed service. So that's looking after supporting and maintaining those devices. End user computing, obviously, in our sister company, Nashua do the end workspace side of things. But ultimately, we're seeing more and more opportunity in that end user computing space where a company that joined us, EUC Africa, delivering the services from a platform perspective on your devices. And that, again, with the security challenges that we're facing is becoming more and more -- how do you connect with your devices? You are sitting here with your iPhone or your Samsung, you're connecting to your enterprise applications and how do you manage that? And what happens when, not if you lose your device or your device just get started or gets hacked how do we, from a technology perspective, manage that for you. So great opportunity in that business. Around the digital media services and again, in the last slide, Adam put up their go-to-market -- as part of their go-to-market is using digital media. And underpinning that digital media is our digital media services, helping them make the most of Facebook, Google, TikTok, I mean, it's unbelievable. At first, I'd say, that's just my 13, 14 -- those young kids that are on TikTok. Now you're seeing TikTok as coming into the enterprise space, influencing that side of things. So, but -- so what, if you've got your ads out there, how do you make sure that you're getting your return on investment. And that's where our digital media services and our data businesses are working very closely. So for us, we do, we both the key e-commerce site, but there, we're doing our digital consulting, digital media, data, and we host -- they host their applications on our cloud. From a software dev perspective, that is the design, build and operate of systems, whether that's banking systems, building society systems, whether that's, as I mentioned, Kia car aircraft. So what we do there is we design them, we build them and then, and that's where our managed services and managed services are similar. But ITQ, which is mainly their business doing that is in the health care side of things, ours is in the banking and retail side of things. Our technology security services, as you would have seen in the market, we acquired a business called MMC. And that was because we realized that everything we do from a technology perspective needs to have the security side of things. So MMC very, very strong on the Microsoft platform. Microsoft being the largest cybersecurity vendor in the world by double the second place. And whilst they've got massive investment in AI, what sort of gone unnoticed is their massive investment in security and a large petroleum company in South Africa has decided that they're going wall to wall Microsoft in the security space, which is a big decision. But when you back Microsoft like that, the complexity of the security, cybersecurity landscape for organizations to manage it end-to-end, we'll see some dominated players there. And because of that complexity, they will become the consolidation. So those are our service offerings that we've built out. In the next slide, and it is part of your pack. I'm not going to go through each one of them. It's just the explaining them in a little bit more detail. And I'm also looking just to make sure that I didn't miss any of them. So I've covered all of the service offerings from a +OneX perspective. So really, where we sit now, we're very comfortable besides a few that I'll talk about now very comfortable as a new age systems integrator. In the technology space, we will be able to deliver to our clients' needs. And as mentioned, with IQbusiness being in the business consulting side with a flavor of technology and us being on the technology side, it's a great partnership going forward. Just to explain to you, so how did we scale out in 3 years, +OneX to where we are today. So we've acquired capabilities. As I mentioned, we don't like to use the word acquisitions. We got people to join the business. We did buy them yes, but we call them joiners because we don't want to lose them. It's about keeping that key talent on board. Plus, we acquired key talent people out in the industry to come leave parts of the business to subject matter experts. So it was those 2 together that they have us are scalable new age systems integrators. So how do we -- what is the platform for success and our Chief Finance and Operations Officer of Reunert, [indiscernible], Rob. But you can't put all out there, that's the secret sauce. That's what makes us successful. I said, it's almost impossible to copy and paste because there's a lot of things you've got to get right to make it happen and fortunately, we've got it right. So firstly, it's around that 1 brand from day 1 with +OneX. So when we acquired Code Maven, the software dev business, when they joined, they automatically became +OneX software dev. And just as an example, when they joined there are roughly 80 software developers, close to 200 software developers, within +OneX. How did they scale so fast? Couple of key ingredients there. Firstly, it was access to clients that they wouldn't have had because they didn't have, they weren't onboarded at Investec or at Absa or at FNB or at Swaziland Building Society. So firstly it gave them access to clients, and secondly, it gave them access to do design build of large solutions where they were doing the smaller solutions. So they were able to scale up very quickly, plus the working capital that we provide, and they were able to do that and improve their gross margins. The second one is that go-to-market as an end-to-end business. So we're not doing the cloud side of things. You add the software dev and you're able to solve the clients' challenges from day one. The next one around it is moving to the +OneX system. So we've built out a robust front-end Microsoft CRM systems, SAP from an ERP perspective, HR systems and then the governance and frameworks that we have from Reunert perspective. So when they came on board, we didn't acquire the entity. What we did is we took over the -- we moved their client contracts onto our platforms, on to our contracts, moved their people onto it. So we have 1 system, so we've got total visibility. So they continue to run their businesses, but on our platform. So again, the financial controls in place from day 1. So really what it is, is we're allowing the leaders of those businesses to come on board and to scale the businesses. As Adam mentioned earlier on, when you have 30, 40, 50 people, It's very hard to go from 50 people to 180 people like I've given you the example with Code Maven or our software dev team. Access to enterprise clients, and I'll show those to you a little bit later as well. But they got great access to whether it's the Standard Banks, the Investecs. But they didn't have to go to procurement and onboard on that side of things. That's one of the toughest things to do as a start-up and how long it takes to onboard with the enterprises. As I mentioned, our black ownership and level 1 also helps them. The Reunert governance and frameworks that are in place, ensuring that there's a delegation of authority. So they know they can continue to run their businesses to scale their businesses. I'll say to them, their focus is solving clients' problems and making sure that you've got the right platforms and people to solve those problems and to scale the business. So what we do from a Reunert perspective, it gives them the frameworks to allow them to scale the business through the delegation of authorities. And then most importantly, as well as those people that have joined are retained in the business to lead because those are the people that really understand the clients' challenges, they understand the technology and they understand the platforms that they're utilizing to scale the business. Further scaling of +OneX, the security one. So that acquisition of MMC is completed, and we're building out and scaling that. So Adam, who heads up that business -- other Adam Whittington joined with his business, deep knowledge of security as I mentioned earlier on in the Microsoft space, but we know because when he was on his own, his ability to onboard and have other technologies that he could partner with was difficult. Nice part of +OneX. By default, we are able to partner with other technology providers in the security space based on our client requirements. So the security side is done. The digital agency side, and again, myself and Adam have been talking about how do we do that? It's in his third horizon. We do believe there's an opportunity to create scale by bringing on a digital agency. And we've seen Accenture do that. Why would we want to do that, is going back to that business consultancy? What's happening around the marketing -- sorry and the problems that our clients are facing? And by having that front end, it allows you to pull through the technology. So same logic for having a business, a business service, business consulting IQbusiness. We need to have the digital agency side. And then the other areas in our managed services side. And that's our technology managed services. So that's further been expanded EUC Africa, which is our end user computing platforms and MMC, real driver dedicated sales focus on it. So that's the technology managed services side. And then by taking parts of the business that are doing managed services, as +OneX, we are able to scale that further. What does the leadership team of the business look like? I call it the exponentials because these are the people that are engaging with the clients. So we have a small sales team that own the relationships, get us in front of the clients. And then we have, by each of the service offerings. Adam called them the lines of business, we call them service offerings. But again, they're the same thing. So we have our service offerings that I talked through. So Karind Ori runs the cloud services; Grant, the digital media services; Paul, managed services; Norman Annette, EUC as a service. So that's a platform on Citrix on Azure that we deliver services into our clients, really on the data side of things, Adam, security, and Phume and Johnny, the Unified Comms and why Phume and Johnny, that business has scaled out. So Phume has the sales team; Johnny has the design build and the managed services sits in Paul's world, and then Dawie and Morgan on the software dev side. So on the right-hand side, we have optimization as a service, and that's looking at helping clients to ensure that they've optimized either or any of the services that we've delivered or all the services that they have in that. So that's our business model, the team that scales it up. It's underpinned by Kea, our Chief People Officer. And as she said in the video, people are the oxygen of our business and critical. And then the most important person that actually, I say to people within +OneX, the real boss at +OneX, is [indiscernible] who runs finance and operations. So that's the team that has grown the business exponentially. And I will show you a little bit of the growth numbers. From a brand awareness side of things, obviously a young brand and I do feel I'm probably the older one in the room here, but the younger one from a brand perspective, if we look at what we've done, well, I say to people we don't color in champagne from getting our stories out there and then using our digital media on a limited budget because we keep the founder's mentality in the organization. So we get Grant and the digital media team. So these are just some stats of the coverage that we've had. I'm not going to read through every single one, and we'll share it with you. But out there, we have through LinkedIn, Facebook, Google created that a great persona out in the market. We just share a quick story there as well. That goes back to the security side of things that people saying it's the truth. It's not a case of if you're going to be hacked. It's a case of when you're going to be hacked. One of the services we deliver is how do you recover once you've been hacked? And what reminded me about it is that there is a fake +OneX Facebook site out there. Somebody has taken the time and effort to build a +OneX digital media presence on Facebook. I don't -- we don't know yet, which we found out on -- choose that. We don't know yet why they've done it or who's done it. But I'm just giving you anecdotes, having our digital presence and then somebody going out on Facebook and creating lookalike +OneX. So the only reason I can think about what's going to happen is it's part of somebody doing some security hacking or fraud thing. So just the awareness there, it could be brand awareness, but we've got other awareness. But really where I go to that one for us as +OneX, again, it's around the security offerings and services that we deliver to our clients. Just some of the great stories and again, the alignment between ourselves and IQbusiness, I didn't put in for them, it's around understanding what that client's problem, same for us, how do we solve it. But what's really important is, actually, how do we then tell the stories to our clients about our capabilities and what we've done in the market. So for example, Exxaro run the unified comms platform is run by +OneX. Harmony's unified platform is also done by +OneX. So I can again go through many of the stories that I mentioned. Kea running their platforms Airlink. So great stories out there like IQbusiness. It is all about telling the stories and the case studies of what we've done. It's the proof points. Our clients want to know that if they're going to move to our cloud, where have you done it before, how have you done it and how have you kept and ensure that your cloud stays up 99.999% all the time because if it goes down, obviously, this business through a repercussion. So again, from a +OneX perspective, we're getting our brand out there, our stories out there. And most importantly, we're delivering to our clients' requirements. So examples of enterprise clients that we've onboarded and, again, I was saying to Nick earlier on, one of the good things about our business model and the way we do it, when we have business being acquired into +OneX, we don't take on the legal entities, they automatically join onto our platform. But what they get is access to these clients and the ability to go do work. And as I mentioned, the software dev side of things, we're doing some great work in -- at FNB, they would never have had access to FNB. And the optimization and the end-user computing side of things, we're doing work with Cup, same with HomeChoice. Airlink, I've touched on a couple of times. Sasol, we're doing a whole optimization project with them. Shoprite, we involved in the end-user computing side and on the ShopriteX side of things, Pick n Pay doing the -- working on the data side of things. So these are just examples of net new clients that we've been able to onboard through our relationships, through our ability from our B side of things to deliver and then through our case studies and stories. Just the last one is just a slide on our growth. So revenue grown nicely, 39%, 35%. Again, I can't exact numbers. Clients that we've invoiced. So we assess solutions there. We do have 2 legal entries, a historic one of the communications one and a solutions one. But most of our work comes through the solutions one. So we've increased the number of clients that we've invoiced from 64 to 264. So the exact number of 200, so grown up -- grown nicely. The number of employees it's gone from 211 to 321. So those are fixed permanent employees that are working in +OneX. We are roughly about 400 consultants that are delivering services. We have +OneX in India that deliver services. So we own +OneX India. It was Code Maven India. And there, we have about 40 software dev engineers that deliver services into South Africa. So it's directly into building out our squads within South Africa. And then we have the bulk of that -- the rest of those are -- we call them associates or people call them contractors. So that gives us a roughly 400 people that are delivering services into South Africa. Majority of our work is in South Africa in the digital media space. We do, do some work into the U.K. into the U.S. And again, the opportunity for +OneX and IQbusiness is around the international side of things. As part of the original business plan that Reunert signed off, we look to -- we are looking to set up in the U.K. and in Europe. And the reason for that is twofold as being able to deliver those services from South Africa in there. And the second one is for us, it's all about keeping key talent, and we wanted to ensure that we invest in that talent if they want to leave to go to the U.K. or somewhere in Europe, that we -- they're still going to stay with +OneX to deliver those services, either back like Adam has done or we would have acquired and done the same model that we've done or +OneX would have done in the U.K. side of things. Obviously, now with the opportunity working together with IQbusiness. They are a little bit ahead on that side of things. So we'll leverage off that. But majority of our services are based here in South Africa. And that's my story. So any questions for me?

So one of the larger limiting factors like growth for a lot of these ICT companies is the staff component. So then what are you doing to keep the staff? And how do you see it limiting you going forward on all the expansion that we hear through the presentation?

Yes. Excellent question. So there's two answers to that question. Firstly, around that skill shortage we have in South Africa back to the video. We have to create our own staff here -- our own people here in South Africa. And what do I mean by that? There are a lot of organizations that are doing the education part of getting people up to speed on Python or Java. It's very much in that digital side of things. So there's lots of WeThinkCode, CodeX, Michael [indiscernible] doing it. The challenge is actually getting the work experience. So people get that education qualification, but how do you get that gap to get that work experience. And that's one of the things, as part of +OneX, what we do is we bring people in on the work experience platform? It's a [ block ] the good old days of like boot camp so that they sit and work with the experienced people so that in 6 months' time, they can say to either -- we can say to our clients, we've got a more experienced person or actually, we don't mind if they go out into the industry and get a job. But that's what -- and this is what Code Maven or the software dev Morgan and Dawie had built, they call it the missing midway. We need to solve for that missing midway. And we haven't solved it. We've accelerated it, but we need to accelerate it further and again, see the opportunity with the scale that we would have between IQ and ourselves, that opportunity will allow us to do more of that. So that's the first part. The second part of the question, which is the more difficult one to do, is how do you retain those skills. And within +OneX for us, it's retaining that entrepreneurial mindset of the team, that ability to do work on different projects and also to work for the right people on the leadership side. And sans, I don't try, but it's like, it is about the people connection and that sort of thing. And we've -- that source is working because we -- most of our competitors are running between 20% and 30% of staff turnover. So then there's a whole lot of, obviously, lot of things that you need to do around that staff engagement, the team building, they're getting them together, working on cool projects, having the right mentors. So it's a lot of small things that I've added up. But when I talk to my colleagues -- competitors in the industry, they cannot believe that we're below 10% on the attrition in this market, and we're growing as fast as that. So easy answer is to throw more money at it, but that's not the answer because our profitability goes, would go down. And then we argue, okay well, then we're not going to have a sustainable business. So I'm a big believer that you've got to get that engagement of the different leaders in the business with their teams, and you've got to -- it's got to happen on a smaller scale that all adds up within a framework. And so there isn't a magic formula, but there is a lot of little things that the teams are doing, and it's about that engagement, with the teams to ensure that they don't leave because the demand is there. And that's also why that international expansion is also important. We are seeing the younger generation wanting to go get that experience. And ultimately, as a South African, I'd love to, you get that experience, but you want them to come back into South Africa to do good and to scale the economy.

The other question is for Rob.

Just maybe more of a broader question. We've seen quite a few acquisitions recently. Just trying to get a sense of what do you think from here? I think Adam spoke about a fragmented market, Rob speaking about a lot of joiners. Just what's your overall thinking about more acquisitions in the future?

So I mean I can -- I'll answer that. So the opportunity from a, call it, Reunert perspective. There are certain areas where when -- even when you look at the call it, the road map of +OneX and IQbusiness that we are subscale. Now there are opportunities, and Adam and I talked about one yesterday, where I said to [ Moe ], have you got this. There's a great opportunity to get this business on board. It will create scale and he said, "Yes, we've got a little bit of that." But there is this opportunity to bring on more businesses because I believe between ourselves and Reunert, we've got the formula right. When we set up +OneX, we, as part of our business plan, we worked very closely with Karen who runs the M&A side to get that formula right. So we can plug in very quickly businesses to scale. So as an example, MMC, 'we started on the 1st of December with the discussions on the 1st -- it was not on the 1st of April because we would be April Fools. We made it on the 2nd of April. So it was actually the 3rd because the Saturday was the 1st of April. But that's the time from engagement, full due diligence by external party to actually onboarding them that we can do it there. So to answer your question, it will be where we see between us gaps in the market because it is fragmented. And that's what we have is +OneX plus IQbusiness. Now we have scale, and we have the opportunity to identify it. So a good example, again, we discussed it, your question around AI. If we can find somebody that's ahead of the market, that's done work in the AI side of things, they'll probably want to be paid a fortune, but that's not going to happen. But how do they scale if they've got some solutions. They can plug in very easily into this ecosystem and scale it further. So we'll continue to look for the opportunities like we've said in our space, the digital agency side.

Sorry, just to add on to that, though, if we just take the, if you look at the next 12 months, it's really important for IQbusiness to come in and get integrated and deliver on that business case. So that's a really key focus for us. So if you just look at the relative scale, the likelihood of us doing another IQbusiness, is unlikely, whereas the opportunity within the complementary bolt-on that -- of the nature of what we've done in IQbusiness. And if you look, you can look at the typical scale of those. They're relatively small. They do bolt-on, they're very specific at targeted areas with -- and because of the size of them, they're actually really cheap, so we get them -- we're very rigorous in terms of what we pay for those. So I think it would be -- I wouldn't expect it to be an acceleration of what we do, but there are still opportunities that sit in there, and I wouldn't expect any of them to be at the scale of IQbusiness.

I think you have answered one of my questions. I was going to ask about the bid criteria in your sort of acquisitions. But I suppose for the bolt-ons, you don't really disclose that, right?

You can. You'll probably see them in [ Fs ] and so you'll see the nature of the last couple that we've bought. If you go back to the last 2 apps, you'll see them there. And you'll see the multiples that we've paid, but they are well below the Reunert multiples.

And there will be bolt-ons to scale up?

Yes.

I'm going to put myself. Alan says to me, Rob why so small. And I say to him, it's key in this area and it's going to scale. And the nice thing is we proved that it will scale. And also, we've proved the model by plugging them and it does scale quickly. Sometimes you -- Alan is right. It's like no, that's too small, but it is that bolt-on. And what's most important is that it needs to meet a client need. We're not doing the acquisitions just to do the acquisitions, needs to meet a client -- specific client need. And then obviously, it needs to be in the technology. And then the last one is most important has to be the right people fit into the culture and stay within the business to scale it further.

Any final questions?

Just one from me, please. I was wondering maybe generally across the Reunert ICT business. And just with looking at -- I mean at the IQbusiness, it seems that 50% of your revenues is generated through projects -- project-based services. So I was just wondering, I mean, what is your view on the robustness or your continued ability to generate growth in that part of your business? And just to provide context, I think you said in IQbusiness, one of your big clients is MultiChoice. So I mean they're one of many businesses in South Africa that's really under pressure. So I'm thinking businesses like that is probably going through the cost lines and saying, where can we cut the next round of costs? And just on that basis, I mean where is your competitive edge in bidding for sustainable growth in that business?

So maybe I'll answer the first question. I'll let Adam to the one about MultiChoice. So to answer your question around a large portion of our business is managed services. So managed services on the tech, managed services on the unified comm. So we do have a new tier side of things. What's important about that as well is if you're in doing the managed services, you are able to spot the opportunities where you can drive out efficiencies and get more work based on those efficiencies. So at Airlink, we were just doing unified comms to start with. We then were able to go -- okay, we'll move your current platforms onto our cloud platform. We will then take over the device management as well. So -- and so that cost pressure creates opportunities for us if we're there and we can solve the problems for us. I'll leave Adam to answer the MultiChoice, but it probably also creates opportunities.

Perhaps offer a thought first, that is that the marketplace in South Africa has got tighter in the last 6 months, principally driven, as we know, by the impact of load shedding, the pressure of inflation, the uncertainty from a sociopolitical perspective that we find ourselves in at this point. And on the one hand, we're seeing a number of clients implementing austerity measures, as you suggest, curtailing external costs, and some of our clients, we're seeing cutbacks on investment initiatives that are really focusing then on utilizing internal talent as opposed to external talent. And on the one hand, we see that happening in a group of clients. Others are actually upwardly investing and doing the opposite. And what we have to do is make sure that we've got a very diverse portfolio of activities projects and many of those projects, particularly in the governance, risk and compliance space just can't be stopped. They have to deliver on time. It's in the other areas of customer acquisition or centricity that perhaps we see things being curtailed. The good news is that many of our clients actually go too far in their austerity measures too quickly. And that then results in an opportunity to be part of their growth trajectory when it starts. And we typically see a 3- to 6-month cycle of these kind of sharpening of the situation and then a reopening up. And we've just got to make sure that we've got that presence and activity. And without talking specifically about MultiChoice, there are instances where we're seeing the termination of international consulting projects and we're being asked to replace them because we have a much more compelling proposition price point to actually step into those environments. So again, it creates opportunity for us.

I guess two points on that, which is, it's exactly the same. One is that the fact that with austerity comes the fact using expensive, our competitors, the global firms that are priced in global -- either global dollars or they're looking at it. So that creates an opportunity because they're looking for -- you can deliver more cost effectively locally. And that for us is a big opportunity. And then the second one, as Adam said in the beginning of his slide, it is a fragmented market, and we've got a small percentage point to that. So the opportunity for us is really now with the 2 organizations alongside each other is to go get unfinished share of the market. And I really believe we can do that under what we're doing. So that's where also our opportunity comes from is to take market share from the competitors. And we're fortunate because the competitors are not doing a great job and they're not client sensing -- changing. They've got their own challenges looking internally.

So last one.

One for Adam. Just curious, is it fair to assume that the [indiscernible] from understanding it was the that portion of the managed services [indiscernible] firstly and then given that as percentage more revenue [indiscernible] is it safe to assume that those acquisitions [indiscernible] those post-private equity being involved. I suppose the follow-on question, where is that -- M&A is obviously a major source of risk for us as equity investors and there's almost M&A on M&A from what I can see. So what bind there in place to give us comfort that it's not something that's going to jump up [indiscernible]?

Do you want to answer that? Do you want to answer the first one?

Firstly, we've been developing an M&A target list for a couple of years as part of our organic growth trajectory. And when Capitalworks Tiso came on board, they brought a professional engagement model and structure that helped us start to realize that. And in the first instance, the acquisitions of Genex and Nudge were really a test case. And what we were able to do was to refine our organic growth model of the partnership that we created to -- as we -- and I like the term joiners, that Rob uses here as the leadership of these enterprises joined us, part of the transaction was that they joined the partnership, and they became equity owners in the overall IQbusiness structure, which was a very important step in terms of the bond that we created with them, the longevity of the time. We weren't just going to create an earn-out structure and then enrich them and say, right, emigrate now. We created a structure that really brought them into the bigger enterprise, again using Rob's term that bigger platform, and they participate as leaders in a much bigger enterprise model, which I think was very positive. Then with the Managed Services acquisition, it wasn't 50%, it was more 25% because the organic growth that was coming through. So ITQ has been a really good step forward because although it's a low growth trajectory, it's a very solid. We call it the metronome because each month, it just continues to apply the skills and capabilities on a longer-term model and the deals in that space tend to be what we refer to as longer, larger and more leveraged, so a 3-year term, larger scale and they leverage back into the organization. They also take longer to negotiate. So whereas a project is, can be fairly instant on a 3- to 6-month cycle. The negotiations with ITQ can be 6 months to 12 to 18 months of a tendering process. But the price at the end is longer, larger and more leverage. So we see the scaling trajectory and that growth curve, although it's with the existing projects, it's when the next project comes in and you're able to then move to a new cycle with it. So we're very excited about what's happening there. And as Rob says, the combination of our software focus with their more infrastructure focus really presents some good opportunities for us.

And maybe just to close it off. If we just look, I mean, I think we've done with Rob 5, there was 3 in the run up to that. So we're talking 8 over, let's say, a 4-year period. So it's that type of number, again, if you, just to pick the example that you used, they were probably doing that every 6 months or a year or something like that. So that's not the nature of the acquisitions that we're going on. I think I've sort of indicated that if I was to look at the scale going forward, the scale of something of the IQbusiness is unlikely to take place. In terms of then the size, they would very much fit into that complementary bolt-on, so it would be small in nature. Then let's just talk about perhaps the guardrails that go into it. First of all, which I think has been successful in all cases. The leaders of the organization own roughly 26%, both in the case of +OneX and in the case of IQ -- in IQbusiness. In the case of IQbusiness, none of the partners were able to take any equity off the table at all. So they were motivated and happy to join Reunert that they have just transferred all of their wealth across in its entirety. It's not our attention to water that down over time. So whilst we have a call in particular events that we may invoke the intention in both cases is to keep that management participation at a very meaningful level. So I think not -- so it's even from the management, their wealth sits in this. So an adverse acquisition blows everybody. So I think there's a very strong alignment between us, let's call it as the Reunert shareholders with the leaders of the business. I think that's the first element to it. Within +OneX, we followed a very rigorous element to it. So we buy the company -- there is a question from Sanlam. So when we acquire, we have not bought the company in any case. So there is no legacy threat that comes ahead. It takes a little bit longer, but we bring the people across. We bring the contracts across, but they all come across and we leave a legal entity behind. So any skeletons that are in the closet get left in the closet. Nothing that comes across with that. Rob spoke quite a lot of length about the systems that they come on to. Now they come on to in its entirety. So there's not a single bit that can go out from anyone in +OneX without it going through the single bid system has got -- which has got the governments attached to it. So it's not possible to bid without that governance and those criteria being followed. They come on to our accounting system. So there's nothing that can be built outside of that. So all of that Reunert governance is in from day 1, and it all comes into that in terms of it. So I think those for me would be probably the stronger guardrails that we've got to it. The evidence, I think, of that working well has been every single, we haven't lost a joining yet. So every single person that's come in. They all still work for us. We do also then warrant them. So we typically pay about 50% up-front and, call it, 50% over a 3-year period. Not one of those businesses is behind us warrant. So every single one of them is at its warrant or ahead. So the evidence of the process we've followed has actually been pretty successful going forward. So my sort of guidance would be we're not trying to build through acquisition. I think what we've got here is highly synergistic, but I don't see a buy and buy and buy and buy and buy to generate growth. The scaling comes from within. So we're not looking to acquire to scale. The reason to scale is not through acquisition. They will be picking, it helps. But -- so I think I might guidance to [ Shell ] to be the likelihood of something that we've seen in the other corporate challenges, I think it's low.

Our strategy in front of us is not to be a perpetual acquirer. So that is not what we're doing. So we've identified the key areas of how we want to grow, what at ICT does it align to the strategy. And then how do we scale those businesses once we've got them on board. So that's the strategy.

Okay. Good. Folks, let's stop for tea. If I can ask, it's just before quarter past 9 and we'll be back in by half 10, and then we'll kick off on the defence side of the business. [Break]

Just to give you quickly a quick structure of it, Trevor, who is a segment CEO; and Marcus Capuzzimati, who introduced as the segment CFO, will give us a segment overview. So that will give you the overall view of all of the businesses as a whole and then we'll drop down into the company-level presentations thereafter. So the segment portion will complete, get some questions in, and then we'll go into the individual businesses thereafter. So Trevor, over to you.

Thank you, Alan. Is the mic on? Okay. Good. I must say it's a tough task to follow on from that ICT presentation, even tougher when we talk about defense. When Alan said to me, "Trevor, you and your team are going to be included in the Capital Markets Day." I said, yes, no problem. It's my boss. Believe me, we're very anxious. I'm in the defense environment for 28 years. And this is my first time I'm talking to an audience, an investor audience. Now don't get me wrong, we do these presentations fairly often, just to a different audience, an audience that like slides that have 3 and 4 letter abbreviations and acronyms and lots of pictures, very different pictures from what you've seen in the ICT segment. But at the end of the presentation, with all the sales, yes, that's what we want. So if any one of my team and myself included goes into defense mode and we slip in an abbreviation or an acronym, feel free to stop up to say, "What do you mean by that?" So that's the first part. The second part is I have to confess. We don't have any good videos. Well, we do have good videos, but maybe we don't want to show them. The second thing is, this is one slide that I'm definitely going to skip through. You are not as square as this. So I'm just giving -- here's my team. We smile and -- yes, we -- I'm going to take [indiscernible] out for the dinner and going to say, listen, help us with this whole thing about smiley pictures especially Rob and also help us with the videos. I think a key takeaway from us is that, yes, it is -- we need to do this more often. And as we do it more often, we will get better at it. We need to understand that there is various stakeholders and audiences, not the traditional audience that we have. So let me start by introducing the team. I have a CFO who's got a fairly difficult Italian surname. Marcus Capuzzimati, got it right. And then I've got Petrus Pelser with us. He is the founding member of Etion Create and also the CEO. Etion Create is an exciting new addition to the segment. And then we've got some main stales, Mike Tucker, is the CEO of Fuchs Electronics. Last but not least, our host for today, [indiscernible] Berfield, the boss of Reutech grade assistance, mining and defense. So let me get a difficult part out first. The narrative in South Africa with regards to the defense industry and stakeholders is fairly negative, yet we want to come out and talk about our story, where we believe it's a very positive story. We have come out of COVID. We've come out of a global electronic component crisis. We've come back fighting. We are doing better than our pre-COVID levels and the future is looking extremely positive. So what I will do is I'll unpack first, the global market, the global defense market, it's dynamics. The impact that, that has on our key markets, why we believe we are attractive and why we believe we'll continue to grow in those markets, our competitive advantage, our strategic imperatives to continue to win markets and to execute and grow profitability. Last but not least, I'm going to take some time to explain why we believe that we do operate in a stringent regulatory framework and why we believe that we do responsible business in defense. So if I can start with the global defense market. So to throw some numbers out there, fairly intimidating. The world defense expenditure is now sitting at $2.2 trillion. Over the last 10 years, it has increased by 19%. In the year, in just this year, it has increased by 3.7%. Yes, it's an arbitrary number. For me, what's important is if you have to look at where the growth is in which market area and when in that market area in which countries. And this is where it comes where we believe we have a positive outlook because we are in those market areas. And in those countries that are growing with defense spending. Now you may ask why? But it's driven by geopolitical instability and tension. It's very seldom that when we put the TV on these days, we don't hear about U.S. and China tension. Is it going to go away soon? No. That's what we believe. It's here for the medium term, if not the long term. So defense spending is going to grow. Now what's the main takeaway? It's actually changing the way our customers do defense acquisition. Fundamentally, if you look at a country with increasing global stability, they look to their rate interest levels when it comes to a potential contract. That means they don't necessarily have to be involved directly in a conflict, but they do need to do more training, more exercises. And that automatically means there is no need to consume more defense equipment. The readiness levels of all the countries. This is ubiquitous, is increasing. I guess South Africa is the one country is declining. But I'll talk about our diversification from the local market later on. I think -- so what does that mean? Well, if your demand is outstripping our global supply chain, and there's opportunities. So let's talk about this transition in market. What happens is you have companies that are based in different countries. When the demand outstrips the supply, they tend to focus on their companies and their regional affiliations. Well that opens up markets that we never thought we were entering into. That's we see happening, and we see greater opportunity for growth in those markets. That's the global perspective. And let's zone in to the key market areas. Let me get spill into that slide. If you look to the right of the graph, you've got growth in Middle East and Africa, Southeast Asia and India, North America and Europe. These are the market areas that we are actually targeting outside South Africa. Let me take a step back and talk a little bit about defense acquisition and how it has changed over the last 40 years. If we go back some 40 years, you had to be in the privileged club to be able to buy modern defense equipment. You -- and when you did acquire that equipment, the seller determined the level of participation with regards to their equipment, whether it was maintenance, repair and overall in-country, whether it was a participation in technology transfer rate to produce in country. The game was very different then. Now, to buy in the sites, how you're going to participate in their market. So they have introduced things like offset. National industrial participation offset, direct defense industrial participation. These are all sub elements of internationalization. So when Alan spoke about us unpacking our internationalization strategy, one would immediately think, okay, this is market diversification, you're going to go out. But it's a little bit more complex than that. It is actually understanding the customer market, understanding what they really want. They may be chasing sales efficiency and may be chasing self-reliance, they may be chasing security of supply. And in certain instances, they are passionately promoting an indigenous defense industry. They not only will supply to their local customers, but it will also encourage them to go into export customers. Now this may scare some people. But in reality, it's actually an opportunity, and I'll unpack that a little later. What is important is that we see a push or rather a move to what we call a smart buyer and a smart user and our willingness to interact with smart buyers and smart users is what makes us attractive. When you do this and you migrate to just not just buying product, but also starting to look at things like requirements and how to change requirements and how to do concepts and self-design. You introduce something in the customer environment called make-or-buy decisions. Now that's important because normally, a customer would look to a local company to advise on make-or-buy decisions. And if you partner well with local industry, then you automatically take it into that process of make and buy, and that gives you longevity. So let's talk about Europe. Europe has been pushed to something like 2% of the GDP spend on defense. They were sitting at 1.1% and now they're ramping up to 2%, and that's excluding all the special programs that they have to support the Ukraine crisis. If we look at Southeast Asia, the Southeast Asia or China sees tension is still there, and continues to drive that market. If you look at India, the Make In India campaign, the strategic [indiscernible] of the Modi government is something that's on the lips of every Indian businessmen. And also, it has been embraced by the customer. So let me just put out the first acronym. IDDM, indigenous, design, development and manufacturing. You have countries like India that have previously had defense policies that drove indigenization. That's a little bit of answer because indigenization means that it was designed somewhere else and all they're doing is doing a bill to print on somebody's ideas and innovations. They are moving towards indigenization or rather indigenous. Indigenous allows you to participate in a build of -- for solutions for customer requirements, which is local customer requirements. And if you partner right, you involved in programs that continue for 5 to 10 to even 15 years. And when those products are brought into operation, they have a life of 30 to 40 years. So another area, you have in the Middle East, Saudi Arabia, you talk about Vision 2030. It's diversification away from the oil economy. The defense industrial complex of Saudi Arabia is integral to the diversification away from oil. Saudi Arabia has got a large population. Job creation in Saudi Arabia is extremely important. Unlike the UAE, in the UAE, job creation is not that important, automation is more important for sure. Self-reliance is important and indigenous is important. Now we take a lot of time to analyze these markets and what the country and the customers want. And we position ourselves very well with local partners so that we can win more market. And I can tell you, if you don't have this as part of our business model, then you're not going to enter these markets. The one thing that is quite a good indicator is actually to look at the big importers of defense equipment. India and Saudi Arabia in the top 5. What you'll notice is that even though the defense spending has increased, the imports are decreasing and that translates into that they are pursuing localization. Now our strategy is built along meeting the customer localization requirements. So let me go to the next slide. So let's start with our diversification away from the decline in South African market. So today, we sit towards [indiscernible] contracts. That's the acquisition agency for South Africa, reliance of about 12%. It's very different from 5 years back. We've diversified. What is important is we diversify to foreign markets, not via government-to-government agreements. We've gone in with our product offering, which is high quality, high tech. We've completed in the global market space, and we have won. We have won markets not only in Southeast Asia, or in the Middle East. We've also won market in Europe. So that's extremely important to us. The United States, Russia and China, they are fairly self-reliant. So we don't pursue those markets. We have a finite amount of resources that we have to use and deploy to win markets, so we choose our markets very carefully. Once again, our focus area is the Middle East, Africa, Europe, Southeast Asia and India. All those markets have got localization as their key policies. So what makes us attractive to the partners? Our willingness to indigenize. Our willingness to co-develop. We do technology transfer that covers production technologies, et cetera. Also, our products -- our product mix. We've got an endorsed product portfolio by the customer environment. So our competitive advantage. Let me start with extremely advantages if you've got a friendly face in a country talking to the end user. In a recent campaign that we did in one of the Middle East countries, we're working very close with another company that's been designated as a strategic and sovereign capability of that country. So we've been working with them for some 5 years. We set it and it was the local person that stood up to the presentation on our products, got the key messages across to the user and got the buy-in to let's continue on the next phase of that product. We determine it, to be local in a market, you have to be local. So our key competitive advantages. We have trusted capabilities in radar, in fusing, in communications and encryption, now recently adding in to navigation and into remote controls weapon stations. Now if you look at the segment, that's a fairly impressive span of capabilities. It gets even better when you draw on the synergies in those different business units and elevate your product offering to a solutions offering. We have long-standing relationships, and these are both B2B relationships and B2C relationships. We consider mainly as a Tier 2 supplier and we work with Tier 1, what we call platform suppliers. So they make vehicles, they make ships and they make aircraft, et cetera. So we have excellent B2B relationships there. I can tell you, if you've got a radio qualified on an aircraft, the costs associated with taking that radio out of that aircraft and putting something in is huge. So once you're in, you're in for 30 years. And that's where we tend to work very closely with what we call platform OEMs, Tier 1 suppliers. Then you have the relationship with customers there as well. Once a customer is confident of a product, whether it's an electronic fuse, whether it's a radar system, it is extremely difficult to move that product on that market. Yes, there are sometimes political situations that force customers to do that, and they will embark on that, and they will do. So once again, I will look our openness to localization and co-development. We consider as an advantage. Our pricing and our quality is extremely competitive. And we're willing to work in developed and developing nations. We definitely take product to market fairly rapidly. So when it comes to entering a market, I spoke about to be local, you have to be local. The other thing is when you look at our partners, they are engaging in programs that are fairly lucrative and when they have the support of their end user, they become what is called single source responsible. If you are in that partnership, automatically, the slowdown comes to you. For sure, it reduces the effort required for marketing and winning a market. Your launch customers, I definitely guaranteed. So now I'm going to talk a little bit about R&D spend. On an average, we spend about 8% to 10% of revenue on our R&D, and that's made of 2 components; privately funded or partner funded. In privately funded, we wholly own the intellectual property, and partner funded, we co-own the intellectual property. The key attribute to this partnering agreement is to also talk about market share and work share. We prefer to do the difficult decision upfront. And in majority of our co-development initiatives, we have an equal share in markets as well as in ownership of intellectual property. The other thing that's extremely important is because we have a partner that's close to the customer, we are able to understand the changing needs of the customer much earlier than our competitors. The discussions go about what is working in the field, what's not working in the field, how the conflict is changing, how does this help us? Well, with that sort of information, you can very cleverly design your R&D spend. You will be investing in the right projects, you will be investing in the right product portfolios. And that helps to not only guide your technology for site planning, or product portfolio, it also allows you the opportunity to shape the market you are trying to get into. So sometimes, the clients don't really understand all the technologies and you're allowed to bring in and say, but we are working on this. And we think we can address your requirement with these key technologies and these key products. That for me is extremely important. We collaborate with tertiary institutes and with the research institutes. On some -- let's say, much further looking technologies so that we're prepared for whatever changes are coming. When it comes to people, we have strong retention policies in place, but in reality, we are a bunch of engineers. What really excites engineers is getting them involved in groundbreaking technologies and products. We're all around January, we've been in the industry for 30, 40 years, and we haven't left the industry yet. We do some exciting stuff. That's for sure. Okay. So let's go now to very important area. We're working on our ESG. We're working on our image. The next time that Alan decides to invite us to another Capital Markets Day, we definitely will have a different look in for you. We participate in a lot of CSI programs from assisting with building of schools, to upgrade of schools, to building of casinos et cetera. I'm going to touch on 3 flagship programs, and I have a team per program. The first one is, we focus on improving math and science and improving the intake of previously disadvantaged individuals into the high-tech space. So the Reunert learning college, it's a metric bridging cost, that's afforded to the students that enter the institute. The Institute is at Fuchs in Al Road. It's -- I really very proud of this endeavor. It has produced excellent results. When Mike has his talk, you talk about doubling the capacity of books. But in that, he's also going to talk about how this program is going to also double. I think moving to something like 60 students from 20. So that's -- it's extremely exciting. It also affords the students the opportunity to get workplace experience you located at the factory. The second thing I'd like to call it closer to the customer. Now this, we are extremely passionate about, and it's endorsed by the Ministry of Defense. We provide groceries to the children of fallen soldiers via the South African National Defense Force Education Trust. There's nothing better than going to the annual event. And having these students come up from previous leaders advantage communities and say, "Today, I'm a medical doctor because I got [indiscernible] from this Education Trust." We also take care of the military veterans. It is extremely difficult when they do enter into retirement, how to continue and have a support to their pensions, et cetera. So we've embarked on entrepreneurship programs, training them to become entrepreneurs. We looked at the communities and we've started what is called [indiscernible]. This addresses or teaches the farming techniques to have food self-sufficiency. And we continue to expand those programs. So our key strategic imperatives. Internationalization is the cornerstone of growth. Where we started with just business development offices, we're looking forward now to operations in those countries. Some of our customer countries demand that we do foreign direct investment. If anything to address the whole issue with regards to secured supply. We have established a footprint in every one of those market areas, not necessarily in every country within a market value but at least within the countries that are made parts of those market areas. The successful integration of Etion. When we -- when we looked at Etion, we realized very quickly that they have got a very, very good foothold in a key market, and we started -- we thought that this was an excellent acquisition, and we must definitely pursue this and allow them to take us into this market. Alan is saying, you've got to go on. So -- Okay. So we spoke about market diversification, and we continue to invest in our key business units to improve execution of our order book and to drive up efficiencies and become more sustainable and profitable. So let me go into the next slide. So Alan introduced it earlier in the morning, we divided into 4 clusters. I'm not going to go down into the 8 companies that make up the 4 clusters. I'll leave that to my colleagues. But just to recap, we have the [indiscernible] company that look at defense offerings of radar and navigation, and also commercial offerings of mining safety equipment as well as wireless detonation. Petrus will go into detail with that. We have Fuchs Electronics, was one of the few electronic fusing companies in the world that deliver fuses to [indiscernible] caliber of ammunition. We have Secure Communications that offer technical secure communications, products and solutions to land and sea markets. We also have Nanoteq that does encryption products that are afforded to the commercial sector. Last but not least, we have Logistics and they focus on maintenance and repair and overall, the business model is product-agnostic, that allows them not only to support the segment products that the SANDF require but also other products, including competing products like, for example, [indiscernible] they would support it. They also support legacy systems for network management in [indiscernible]. So let me get to the difficult slide. I said when I started that we conduct business in a professional and responsible manner, we operate in a highly regulated environment. We have the national conventional arms control committee that is the issuer of import and export permits. They have to obviously comply to various acts, both local acts which is the NCA act, the United Nations Security Council or Arms Embargo, et cetera. What is really important is that if you look at the NCSECU construct in South Africa, you have the minister that's not part of the security cluster, that shares the organization. You have a Secretary of Defense, which is a civilian that shares the scrutiny committee, and you have a Secretary function, which is we call the director head, that is also shared by a civilian. So all these committees and bodies, this is a lot. I'll just try and summarize it. When discussing an export permit or an import permit, you have to take into consideration, firstly, the upholding of human rights and fundamental freedoms. You have to ensure that you don't supply to a country where you will escalate a conflict. You have to comply to Arms Embargoes on to ITA regulations. You have to make sure you're not contributing to terrorism and crime. And you've got to know your customer. In fact, in our environment, every end user has to sign an end-user undertaking and then only will they get any export permit. So to summarize and to close, Glass Lewis is a leading provider of global governance solutions. I think it's important for us to note that Glass Lewis does not read any of the defense offerings as controversial. I think this is extremely important. I'm now going to hand over to Marcus, I'm sorry, I took too much of time. Thank you.

Thank you, Trevor. Good morning, everyone. It's a pleasure to be here this morning. It's nice to see some familiar faces in the room. And for those who have not met -- not yet met, I look forward to engaging with you all during the course of this afternoon. Just I know Trevor introduced me a little earlier, but a little bit more about myself. So I obviously support Trevor Raman as the segment CFO, focusing largely on the defense clusters within the segments. So my role, I've been in an executive role within the Reunert Group for the last 8, 9 years, majority of my time in the Reunert Group has been spent at -- well, as CFO, alongside Mike Tucker at Fuchs Electronics, and I transitioned into a segment role during the course of last year. It's a pleasure today to be able to stand here and take you through the financial highlights of the segment, especially coming out of the post-COVID era. There's 2 slides I'm going to take you through. So my presentation will be short and sweet and to the point, and there's really a couple of aspects I want to highlight to you this morning. The first slide will really focus on order book. Order book backlog, the growth of that order book over the past few years as well as the change in diversity and diversification of that order book. The second slide will really focus on revenue, and I'll try to highlight the perspective of how order book translates into revenue and really operating profit within the segment and how operating leverage is a key factor for us in our businesses. Okay. So what you see on the first slide is really pointed into 2 areas. And before I go into it, let me just start to say that revenue in the segment is predominantly driven through order book backlog, okay? There are some exceptions. We have, for example, the mining radar sales within the Reutech Radar Systems, which doesn't necessarily follow the same pattern. However, coming from a contract manufacturing majority segments, order book backlog, the size of that order book, as well as the diversity of that backlog is really a leading indicator to the financial health of the segment and where we're going. Two key messages from this slide, the top half and the -- the bar chart that you see there as well as the bottom charts with the pie chart. So on the top, there is the order book backlog. The things to note is you'll see the significant growth in order book backlog that we've had, not just coming out of COVID, which is a given, but even since before the pre-COVID era. Because that's really a notable point. The second aspect is in the pie chart. Now those colors are somewhat difficult to point out, and I'll highlight that. But on the one on the left, you'll see a limited diversity of that order book backlog, whereas going into the current order book, there's a far more significant diversity in our market of that order book. So if we talk about the quantum of that order book backlog, the top part of the graph, you see that the growth has come from 2 aspects. It's been both organic as well as inorganic, the growth in the order book. And that's really the core businesses have delivered growth in the order book on the back of what Trevor has spoken about some opportunities in the market as well as the successful acquisition of Etion Create bringing in at the end of last year, around ZAR 600 million ramdom order book. But even so continuing to maintain that strong order book, given a strong financial performance in the first half of the year. So both of those aspects are really positive. This really sets up the segment nicely to be able to grow back to and beyond those pre-COVID levels that you see there in 2018 and 2019. It's important to note also that the order book that we be seeing now, what Trevor also alluded to was the fact that this is not just -- the order book is a multi-year order book now. So this gives us sustainability in our results. and also helps reduce the somewhat lumpiness nature that you would have known in the defense contract manufacturing industry previously. And this is really around the customer buying behavior that's helped us grow this type of order book. The second, with the bottom part of the chart where it talks to the diversity of the order book. I've really highlighted to 2 years. September 2018 I chose as well as our current order book backlog. And those 2 years really because they both have strong order book backlogs going into those periods. 2018 really, that backlog of order book resulted in strong 2019 financial year performance. However, it was reliant on 2 key markets. The local market back in the day was really a key reliance for us as well as the India and Southeast Asia markets. And that came off the back of 2 significant contracts, both in the secure communications cluster as well as the fuses cluster. Whilst that resulted in strong 2019 performance, it was difficult to maintain that level of order book and the consistency of those revenues going forward. Now of course, COVID exaggerated that as we went into 2020 and 2021. But what that fundamental reliance on 2 fewer markets drove us into the key strategy of diversification and internationalization and that effort was really done over those 3 years, 2019 to '20, '21 quite strongly. So even though during COVID the inability to travel, the inability to actually land significant contracts, there was a lot of work done to set us up in the market such that where the opportunities exist now, we have been able to travel than those contracts again and really increase our order book quite sizably in the last couple of years. Slide 2 really just points out the -- I guess you can kind of talk to the correlation between revenue and order book what I was getting to. So you can see that going into the COVID era who wants the order book fell away, the revenues struggle to maintain those high levels. Key aspects or 2 key points I want to note from this slide is that really within our segments, operating profit is significantly impacted by factory throughput in the manufacturing environment. And fundamentally, we are well geared to be able to execute revenues in excess of ZAR 2 billion without materially increasing our fixed cost base. So where back in 2018, you would have seen from the financials that fundamentally the segment can deliver operating profits around the 15% mark. We are set up at the moment to be able to as the heading points out, grow back to and beyond those pre-COVID highs from a revenue and hopefully a profit generation perspective as well. One other aspect I really want to point out in the determination of profit and revenues and the impact is that our diversification into the 4 key markets now being Europe, Southeast Asia and India, the Middle East as well as the local market, there's a greater emphasis on exports. And so we are able to capitalize on the weaker exchange rates, where we sold predominantly in USD and EUR into those markets. A large portion of our cost base is still ZAR faced with labor both in the manufacturing and the R&D space, predominantly in the ZAR side. So that really allows us on a weaker ZAR perspective where it may negatively impact some other businesses that sets us up both financially and competitively in the market to be able to capitalize on that. So in summary, basically 2 slides, what I'm trying to point out and our case here in the market is that, one, we have excellent order coverage going into the medium term. Two is that this should result in a much improved factory throughput that we are seeing, which in turn will result in improved margins from the last couple of years. And finally, the diversity of that order book means that there's less reliance on the local market. There's less reliance on one or 2 markets, which gives us better sustainability and better effectively less lumpiness into the medium term going forward. Thank you.

Any questions for [indiscernible] here?

I'll steer it to you if you need.

Any questions for Trevor and Marcus? It's such a good job. Here we go. Okay? Are we going to -- I'm going to -- there's been some challenges on the webcast hearing the question. So I'll repeat the questions if you don't mind, before I answer them or before we answer them.

My question is just on your third bullet there. Do you have a sense of like the time line just in terms of where you think the revenue and operating profit will go up beyond the pre-COVID or it is that over the long term, you...

No, I don't think it's over the long term. So those pre-COVID highs had effectively all of the businesses running at full capacity. The only one that isn't really running at full capacity at the moment is the [indiscernible] plant because we don't have the local order. But we're well positioned to get back to the pre-COVID highs in the short term -- to get towards the pre-COVID in the short term. And if you look at that order book coverage, I would expect us to exceed that in the next 1 or 2 financial periods. This is not a medium-term trend that we see. We see it as a relative year because of that coverage, we expect to get back to that quite quickly.

In terms of order book coverage? Is it -- are we now -- are those the levels going forward? We're looking at -- is there a bit of cyclicality in there that we should have...

So the question is, are we at, call it, stability on those order books? So because I'm in charge, those order books are nowhere near fully enough. The guys are under strict instructions to double it. So yes, absolutely not. But on a more serious note, the trend that we give, if you look at those 3 macro trends upfront, which really relate to that insecurity that we see from a geopolitical point of view, we think these are medium- to long-term trends that support the activity inside of our business. So even though the businesses are project driven, we think that we have access to enough markets and enough products to be able to replace the project nature of them by new orders going through. So you may have some flexibility around that, but I think we're in an elevated stage of order book receipt.

Thanks for the numbers. My question is around the margins for the division, the segment. Even pre-COVID, I think it was around 2016, yes 2016, your margin was around 50%, but if I look at the trend, it's been in the downwards, they've been declining, why is that? Why have they been declining?

I think, as I mentioned, a big factor of the margin is factory throughput at the end of the day. Where are we positioned? How much capacity do we have to deliver revenues and where is our fixed cost base at? So the order book you would have seen in those years, and there is an element of exchange rates variability in there that we can capitalize on or not. But fundamentally, when I'm talking about the defense aspect of the segment from a 14% to 16% operating margin is where typically you would see it, and 2018 was a good year of that. There may have been 1 or 2 other factors in there that can change that, but that's not a sustainable level that we would expect to target going forward, that makes sense.

[indiscernible] Capital. Trevor, I've actually got a question for you. On the R&D spend of 8% to 10%, it's either private or you're doing with a partner. What's the split of that roughly over the past few years? And if you do it with a partner, is there a 2-year conservatory you do a cost plus only to that partner? Or I just want to understand how that R&D or that IP gets monetized?

Okay. So we currently, I would say, work between 3% and 5% with the partner development and 3% private. The contracts that we enter into with regards to co-development are fairly fixed contract expenditures. We definitely build a business case on that expenditure. And our expectation, as I explained before, based on our interactions with certain offtake customers is that we realize that market in about 2 to 3 years. That's what we focus. That's how we work.

Sorry, just a quick one. Essentially, since 65% of the revenues in the segment is now generated offshore. Do you have a hedging policy in place?

We don't hedge accounts, but we have governance procedures around how we take our forward cover, when we take it out. We have management meetings monthly. We -- there are firm points in what we discuss at every management meeting across every business unit. So it's a critical part of what we discuss on an ongoing basis. And fundamentally, the bigger decisions we take within the segment or within each business unit, it is discussed with group treasury and the key management in those businesses as well as segment and group.

Maybe just 2 things to add on to Marcus' question. When we did, we tend to utilize, we escalate the escalation or the exchange rate, so we tend to over cost and under book in the bidding process. So we're quite conservative in the bidding process, where we could amplify any margin risk that's there. The second part, fundamentally within that governance that Marcus has described, the intention is not to speculate. So whilst we're on a steady declining environment, you're going to pick up some margin enhancement. We don't play margin. So we don't sit with big open hedges where we fix all the costs at, let's say, contract stage, and we hope that the ZAR is going to blow out at the end. We keep tight control over that with the general principle being we're not trying to speculate on a weakening ZAR.

Sorry. In your defense applied electronic segment, how are you viewing AI? How is the segment adopting AI? And how is it adapting to AI? Are you seeing this the greatest opportunity as the ICT segment stated earlier? Or is it a check for your business?

Have a go. I don't know the answer.

I do. AI is not new to defense. We've been building sensor systems that helps us with decision support. So it's not something new and exciting for us. I can give examples of passive systems that today -- I mean we are speaking to AWS 8 to 10 years ago about pattern recognition with regards to what's the difference between a shirt and a T-shirt. We would take that technology, that AI, and we put into a passive sensor system to differentiate between somebody shooting you at you with a missile versus a bullet. So we've already been part of that entire artificial intelligence much earlier than the rest of the segments and the trends that we see now.

Nick, do you want to add something? You look like you're standing there. . Okay. sorry. I thought you took one because you wanted to add to something. Anything? Yes...

[indiscernible]

I'll repeat [indiscernible].

I think it's a question that perhaps sort of briefly asked but what is the gray listing? Have there been any issues with your partial contracts or projects that you would need to secure?

Yes. Marcus, again, can handle that very comfortably. Sorry, let me just repeat the question. The question for the webcast was with the gray listing, is there increased challenges in the manner in which we bank and book our international contracts?

Debbie, there's no doubt we've seen increased challenges with the gray listing. I think the environment and the industry we're in, together with the gray listing gives us a greater challenge than others would probably experience. However, we do sit on the backbone of the strong governance requirements, and that really supports us. It's leading from a global perspective, a governance and regulatory control which helps us and supports us where the environment that we sit in from a gray listing kind of contradicts that. So we have to find ways and we do to work around that. And yes, we engage if we can't find one solution, we'll engage with other parties or other banks, other institutions that can assist.

Any final questions before we go into the deep dives? Perfect.

Thank you. Good morning, everyone. Before I start, maybe just to correct something that Trevor said, I'm not the founding member, I was one of the founding members. Otherwise, I may run into some of my colleagues that we were offended. Just a quick brief history before I go into the company, and try to explain what we do. We founded the company roughly 25 years ago, a couple of young engineers, still has hair at that point in time, decided to start a company. They have a strong strategy. We're going to build, which is XYZ, really said we will start a company. We very quickly found ourselves into an environment where we were firefighters. I'll come back to the firefighters a little bit later. In other words, people came to us with items that they were struggling to get designed to manufacture. So we ended up being the firefighters that solve those problems. We fairly soon after that said we need to develop our strategy, and I'll show you what we then -- how we develop the strategy from there. And then in that 25 years, we changed our name. We started as a company called Parsec And about 7 years ago, we rebranded to Etion Create, the name that you see today. And last year, we were acquired by Reunert. So one of the questions I face quite regularly in the last couple of months is so now what happens here? You are part of Reunert when I was at Reunert and I think it's important to unpack that very quickly. When the decision came that we must find a new home for Etion Create, it was quite important for us to get on what environment that understand the type of technology that you do. We're a high-tech company. We have to operate in an environment that understand exports, defense business and nondefense business. At the same time, we wanted to have a cultural fit and at the same values. And I must say I'm quite happy to say that we really enjoy the Reunert environment. The cultural fit from a technology point of view, it's a perfect fit, and the same message gets conveyed from our executive team quite regularly. So let's talk about how this journey ended up a bit. And I'm not -- I don't have as many slides as Adam. We've got stuff to show. So Adam, this business is a bit more conceptual. So there's a lot of slides that explain the business. We just show pictures and repointed stuff. So -- but from a firefighting point of view, we moved on and we said we have to finalize our strategy. And if you look at the engineering environment, there's typically 2 directions that you can go, either you're services company or you're product company. And how will you call it OEM, original equipment manufacturer or you're a services company. The route that we followed, it became clear that we don't actually want to box ourselves into one of those areas. So you'll see that we used the original equipment manufacturer of design and manufacturer, ODM. And what it implies is we design and manufacture. And I'm talk a little bit what it allows us to do is we can either commit to our clients and we design a product for them and we manufacture it or we can do our own products and manufacture and supply into our clients. So the fact that we can work with our clients and design and manufacture a product for them. Implies that we get deeply embedded into the value stream. So -- and I'll show you the examples a little bit later on. These clients are not clients for 1 or 2 or 3, we talk multiples of decades. Okay. So we end up doing full start to finish solutions for them. And if you look at the ODM element of it, and you'll see the examples when I go into that, this firefighting principle that we had stuck with us a little bit in the sense that the stuff that we do are not making else. It's complex solutions that we have to provide. And that's where our key competitive environment is. We don't compete with somebody operating out of the graph. We compete where people really need a strong engineering team that can stick through a very complex problem, solve it and ensure that it gets industrialized and manufactured. So the fact that we're not OEM and we're not a service company, also allows us flexibility in other sectors. We don't have to sit into one sector. We operate in defence, in aerospace, mining and industrial cybersecurity and rail. And if you think about it, that's actually quite a broad spectrum. And it would be difficult to do that if you were an OEM as an example, equipment manufacturer. So again, the ODM model supports various revenue streams. And it's important to understand that when we talk about various revenue streams, they don't just flow out. This is actively driven in terms of how we operate. The one revenue stream is where we go with clients, these clients have a requirement and a leverage of our capability to develop the product and to manufacture the product. And I'll show you examples. This is not a once off type of item. It becomes a long term, typically 20-plus years relationship. We've redeveloped the product, we remain in the design authority, and we manufacture and enhance the product as we go on. That's the one revenue stream. That's effectively what we call an ODM service model, we design and we manufacture and we become the strategic partner that's deeply embedded into our client [indiscernible]. The other one is when we do our own products, typically, what we would do is we would not look at the environment when we compete with our services' business. So we will do products that's either in a different segment or complementary. So that our services clients don't feel threatened by the business that we do from a product point of view. So these two live quite comfortably together. The other advantage that we have is ODM is when we go into clients and spoke about localization, we're quite open to the client needs. If they want a product, we have the product or we can develop the product and we can provide it. If they say no, they actually want their own product, but they don't have the capability to take it further, we're also comfortable with that. And that enable like localization for us. And that's part of the reason why we are success, and I'll show you a little bit about that. We're quite open and able to adapt to our client needs. We don't go in with a very stringent business model. So from a geographical point of view, we operate in South Africa. South Africa, we typically focus on what we call golden clients and its clients that's big and they have international focus. So there's an indirect international route for us as well. And there's other region, that's a key region for our system, Middle East. We've got a strong brand, and we've got a strong track record in he Middle East and operating there for many years. So this is the easier portion. And this is now where we have a cheat sheet. We don't do what Adam is doing. We show pictures, but I can't point to them so you're going to have to follow our instructions. So if we start on the left, right at the top, you'll see a small picture of CheetahNAV, what we call the it's a tactical navigation system. And the vehicle that you see there is a typical land systems vehicle. And this is where these units into. Now if you think about a navigation system, that's a GPS. So it sounds silly, and it sounds silly that we're doing huge business with this unit. But a normal GPS is not going to work in a military environment. You need something that's ruggedized, that's military qualified this various standards that you have to get to be able to go into those vehicles. But another key element associated with it is, if the GPS signal has been denied and in warfare, that can actually happen, you want to make sure that you can continue to navigate and the system will continue to navigate into -- up to a very accurate position without any GPS signal. It uses an INS, or inertial navigation system, to do that. So from a defense point of view, that's quite crucial so that you know your signal is being spoofed or if you are not getting any GPS signal, you can continue to navigate. What we've also done with this, it's already designed into a couple of programs. And when we talk to the growth opportunities, I'll touch a little bit on this. But we've already cut this designed into a couple of big programs and we supply. This middle left is now an example of what I would call a pure ODM-type That's the Eurofighter and helmet tracker you see there. And -- but you can see that little black box is a camera. And the electronics that go into that camera is something that we designed. I'm just going to come back to the firefighting, which is the easiest portion to understand our business. I'm going to contradict a little bit. But we said we take product to market quickly. I'm going to have multiple examples that show the opposite. But remember, I'm talking about difficult stuff. When we designed that it doesn't exist. When our client approached us, they wanted to show an international client and wanted to do a POC, proof of concept, to show that they can actually master this technology. They approached us. They didn't have in-house capability. That was in 2003. 2009, the first production -- series production started. We've manufactured over 4,000 of those cameras. And as we stand here today, we are still working with this client talking about future upgrades. And that's the portion I'm talking about becoming deeply embedded into the value stream. It goes with the design authority, we remain in that path. We continue to manufacture. We continue to management, anything else that goes with that product. It's almost as if it's our product, but it's not our product. And that's important to understand. Otherwise, I will also get funy side of the market. The one at the bottom is a combination of the two. It's a typical jammer that's used in the military environment to jam the radios. And that one leverages one of our signal processing cards. So we developed our own products. It's our IP. It is high-end signal processing cards. So that jammer runs on our signal processing card. This is now bottom left, sorry, at point. And we've also developed algorithms on behalf of the client. And again, this is a very old relationship. And actual fact, I think in his previous slides was part of that. So these relationships really do go on long. I think that was almost year 2000, so it's a 23-year-old relationship, and we're still working with that client. And our product is still going in. And as they do new products, we work with them to supply new products. So 3 models, own products, and this is just an example. I cannot take you through everything that we do. Top one is our own products, big business for us. Middle one is long-lasting high-end business, is a purely services business, but again, that deep entrenchment. And the bottom line is that we do a combination. And that's what we also like to do is when we go to a client and we see this opportunity to embed, some of but also provide that continued service as we do both. Then in the middle of the mining, at the top, the one that Alan referred to is, the electronic detonations. Now you may be aware that there's a normal route of wave that is done today and they do electronic detonations, they sequence their explosions so that they can actually fragment the rock better. That's typically done by wired detonations. And just to contradict for this. We started with this development probably 8 or 9 years ago. This is our complexities. Why is it complex? Because we're doing wireless detonations with our clients. Wireless detonations imply that you actually have to communicate through the earth at a fair distance because you want to be away from those exposures. And if you think about it, for wire, you can actually communicate with the detonator. And you know and you can communicate backwards and forwards and make sure that you've actually iterated each program to timing. In this case, we have to do it wirelessly. And we have to do it through rock, various types of rock. There is no way to communicate that because we're communicating at a very low frequency. So the effect is that our Terra that transmits is quite big, low frequency container communicating back is not possible. So you actually have to be very sure there's high safety standards that apply to this. So this is why it takes a long. First, you have to do research to understand how you're going to communicate through earth. Then you have to develop it and then you have to qualify it and you actually have to get it to work very, very effectively. So in the mining industry, again, just to reiterate, this is where it's not our product, designed by us. We continue to design the new versions of the product, and we manufacture the electronics assembly self assembly on behalf of our clients. Typically, if you look at the wired environment, millions of units per year. The wireless environment is not supposed to go to those volumes. And when I get back to the growth opportunities, I'll touch it a little bit of on that again. Then the bottom 2 is mining safety equipment, very similar story. Our client came to us they don't have the ability to design and manufacture these [ here ]. This one started about 2006. We're still designing and manufacturing on behalf of our client mining safety equipment. The middle one is a collision avoidance system. So if you're aware, in the mines, they cannot see where they drive and they actually drive over the mines. What this does is it warns the driver that it he can see the miner and the miner also knows that the vehicles on its way. The bottom line is a more commonly known problem in the mines, and that's gas detection to warn miners if they have either slow gas exposure or if there's a quick pocket and they need to get out quickly. Again, middle is all of those ODM services. And the reason being that if you want to be in the mining and you want to supply directly to mines, you have to have a broad footprint. And this is why we can leverage the defence and mining fairly efficiently. We don't have to have that broad footprint to support these items in every mine. Our clients do that. We bring the design and manufacturing capability to the table. On the top right, we also do cybersecurity and where we focus on network security -- high-end network security. And then we do rail equipment [ tax ] side, this is effectively monitoring where the vehicles trends are. And then also onboards. An onboard equipment ironically look very similar to the system that you're seeing right at the top left. And the reason we could develop that a bit faster and that's where is correct, our ability to take the navigation system to the market. What we did is we used our rail equipment as a starting point because it had a very similar looking device, but it was obviously not military qualified, and it wasn't an education system. And then we leverage that into the product that you see at the top, okay? So just to reiterate, own products and then services that we supply into clients very, very long-term relationships. Talking about the growth drivers or sustainable growth. And Alan was sort of joking about the fact that we went smiling, and you could have heard Alan say our order book must go up. Now you know why we're not smiling. It's the pressure that's being applied by top manager, but [ I didn't joking ]. I think it's because we went close to the when we were taking the focus. So if we look at our growth drivers, the first one is the growth. And there, I would focus on the Middle East. We have a very strong track record of collaboration. We started quite a while back with our ODM business model in the Middle East. And this is obviously a very strong or rapidly growing market. And the fact that we were busy being localization gave us a very good footprint to take our business further. So we're very well known of in terms of being good localization. If you go into these regions, they talk about us quite openly the fact that we do through localization. What didn't mean by that? There's a lot of, let's call it, other countries that go in and they promise localization, but they actually trying to create a dependency. The clients see through this fairly quickly. They want to see through localization and they want to feel that you actually working with them in terms of the longer-term strategy, and that's what we do. So what we know today is there's various land system acquisition and upgrade programs planned over the next 5 to 10 years. The quantities is in thousands. We're already on 2 of those programs. So we have a proven product already embedded in those programs. And there's a lot more coming in terms of the programs. So Trevor talked about it earlier, the way that we work our localization plays in our favor because we grew through localization, we recently went to do some client demonstrations again to the end user. Our partner did the presentations. We were sitting there, listening to the discussions and trying to look pretty, which, as you can see from our we're not good at doing that. But if you're in a position where you go internationally and your client effectively sells to the end user, then they start seeing this as being a truly local product. And that's why you can actually grow your business into that region. And that's what we've really done successfully. So 5 to 10 years, lots of programs, and the nice thing about land systems is higher quantities. Typical programs can be easily be in the region of 1,000 vehicles. So our tactical navigation system is really well positioned. It's already selected by 2 programs. And typically, what the nations are trying to do is they realize that there's a support cost associated with equipment. So every time you use a different piece of equipment to actually drive up your support cost because you now have multiple suppliers that want to support while you can actually spread that support cost by having one supplier and also you get scale of economies of scale. So they bring bigger volumes to us and they obviously have ability to drive price and localization either. So the other thing was the tactical navigation system as we go forward because remember, we're doing localization, so if we don't do something new, somewhere we're going to run dry. We have to constantly work with the client on the future. And what we're doing, the navigation system actually brings a nice way to do this. It's just a scale if you look at it. And to give you an idea on the first program, we just did tactical navigation. Second program, if you look in these vehicles and you go into the inside, you said it very congested from a space for all of these 3s with the various functions, cameras that they want to see what's going on outside, various functions that they want to handle. So what we did is we said, no, we can actually integrate the cameras on the vehicle and show the same image on the navigation system. Clients immediately said they liked the idea, we pay the chart a little bit extra. We add a new feature. We add that to the product line. Somebody lost a fairly big deal because they couldn't sell an additional screen, but that's part of the game. And now we see additional features. We're looking at more features that we can add on. So we see the navigation system as a platform on the vehicle. Once you're there, we can add blue force tracking, we can do better management systems. And all of that gives you a road map to work with your clients beyond the current futures that you have in the product. Being on the nondefense growth, the safety standards imposed by the South African Department of Mineral Resources is driving a fairly big drive, especially in the collision avoidance portion of it, where in the past, these systems were not mandatory. They recently became mandatory, almost think around about in January this year, which means that all of mines have to act fairly quickly, and they now have to roll out this technology. So obviously, our client is seeing huge demand and they're working closely with us to try and ensure that we can deliver that demand into their client base. The other area that we see huge growth, and I've touched on this, is the wireless detonations, I mentioned that this was quite a long development, a very complex development, but our client is very successful. What they're actually seeing is the expected wireless detonations to only absorb a portion of their wired business. But the use case for the wire to wireless detonations actually increased. It's more than the portion of business that they thought they would take. So what we're seeing is that they're actually going at a faster rate than they anticipated. And we're seeing the flow-through of that as we manufacture the electronic self assemblies. We also look at what they're forecasting and we can see that they're expecting this growth to continue. So this gives us a nice continual business. We called all of the mining business in our world is what we would call -- we don't have annuity business like Adam, that says it's a tiktok. We have to work, and that's why I don't have here. We have to work every year for our business sadly. But the mining business does bring this repeat business. And repeat business, especially in an environment where we guys are selling more and more at quite a rapid rate, gives us a growth opportunity, quite a good growth opportunity. Then the last one, we touched on the synergies already. I mentioned that coming into the Reunert Group, and I'm not saying this because Alan is sitting there, probably as well, but no. The synergy is really set well. Adam is going talk a little bit later, and you'll see that Adam is also in the mining industry. And I think the rest of my colleagues will also have pictures to point that when they talk about what they do, sorry Adam. Your videos will speak to us. But when we came in, one thing that David touched on this, we've got a strong footprint in the Middle East. We're already working. And just to give you an example, when we do trials later in the year with our navigation system, I'll try and take -- make sure that we take away what it comes, their radios along. There's other radios in the play, but maybe we demonstrate by taking our group's radios along and how this client sees different solutions. One, they see a bigger solution integrated solution. Secondly, if they start looking for radios, Reutech is already part of the demonstration and the trial that they are doing. So that's one way that we're trying to drive that in. We're also leveraging the brand. We really do have a strong brand. And we've taken Trevor as well as the rest of the CEOs in, and we're trying to make sure that we taken leverage off our brand. But the counter is to the rest of the applied electronic holdings is strong in other regions where we are not. And that time to take -- it takes to get into a new market, the lessons that you have to do, we can have a short that by deleveraging of the group going to get into those markets quicker and through our sister companies or subsidiaries. So we're working both from a sales point of view, but then in the last bullet there, talking about collaboration of the business unit of this. If you think about it, we're now in the group 9 months. Generally, for a -- if any company gets [ bought ] 9 months, you're going to start thinking about synergies. It's a slow process. In this case, it was almost immediate. There's a couple of collaborations already running. I've talked about the radios. We're looking at one of the other groups, period tracking system, embedding that into CheetahNAV. So there's a lot of collaboration opportunities where we can take bigger solutions to the client. Bigger solutions drives it up in the systems hierarchy and it drives up your revenue stream. And that's my story. I hope you've got an understanding despite the lack of nice videos.

Thanks, [indiscernible]. Let's shoot. [indiscernible] I don't think I can help you too much here.

all know the government and get us on the right track. But I just want to know the challenges that government has with Eskom and Transnet. There's obviously opportunities there to grow the order book, especially on the rail side and then also on the substations and power stations. And I know the DAA has mentioned that they want to focus on rebuilding their rail network. So what is your focus there? I know finance is a challenge. So...

Obviously, I didn't list it and the complexities would be the reason why I didn't list it. But we do see growth opportunities. The timing of that is a little bit more difficult to estimate. And that's why it's not part of my -- but we definitely continue to drive. And you're right, we're starting to see that requirement to reestablish infrastructure.

If I can just add into that, my expectation is that it looks to us like these business government conversations are more real than they have been in the past. My view more about necessity than maybe ideological alignment, but I believe a number of these -- the rail lines will move to greater private participation. And I think that trigger is probably the timing trigger that we start to see the activity -- the increased activity in what we are seeing or the opportunity that sits within Etion [ product ]. But I think that's closer than further away would be my sense. But that's the trigger. The trigger when we actually get a private gets allowed on to those ones.

I got a very quick one. On the wireless detonations is the mining company the client? Or is it the Etion and the client?

I'm not going to mention any client names. We're under India and Asia. So we supply into the OEM that supplies to the mines. We don't supply to the mines directly.

If you look at your revenue splits between those different businesses, what is just plus minus the percentage split between those different pillars that you have?

Are you talking about the revenue streams or the segments? Mining and defense, or...

Mining, defense and then cybersecurity, what is?

The cybersecurity is smallish. Our 2 big revenue streams is the mining and the defense. And David, depending on the year and the growth of the various, they're sitting around about 50%. It's not exact, but -- and it's also going to be a function of the growth that we see.

The last question, I think, and then we'll move on to Mike, I think next.

I just want to get an understanding of what's driving the strong performance of Etion in this year? At the half year results, you -- the presentation showed that the business needed about ZAR 262 million in revenue. And last year, the business made ZAR 280 million for the whole year. So what's driving this strong performance in 2023. Are there any exceptionals in the numbers? Or is this a new base that we can expect this [ process to grow more? ]

The growth drivers that I've listed here are exactly what's actually driving it. So we're seeing the impact of that, and we're seeing future growth of that. So we're definitely seeing quite an uptick in the mining business, we've seen that. And in the defense business, we've received some large multiyear orders on the tactical navigation system. So the same drivers that I've listed has already impacted the company as we stand. I think something else to mention there and some of the graphs that you would have seen is where the company went into down to also went through a downturn during the, the lockdown period. But what we did do, and I think that's true for most of the group as we retained our capability and our capacity. And that gave us the ability to bounce back quite quickly.

Perfect. Thanks, well done. Mike?

Maybe this should just take some time to qualify my statement.

[indiscernible]

I really conveniently discounted the whole R&D space made a statement regarding it takes us 2 to 3 years take something to market. In defense here, what is called technology readiness levels. R&D takes care of right up to technology readiness level 6. So -- and then at that point, that we then say, right, we're going to take that product to market. So in that context, I'm talking to the 3 years when we have already established a high technology business level.

Thanks, Trevor. Good morning, everybody. Thanks for your time. It's a privilege to be able to touch you all. In contrast with the previous speakers, I have neither cool videos to show nor cool pictures, they're steering away from -- steering away from details and really to explain three things. My presentation is very simple. It's firstly, a little about the Fuchs story, the background of -- excuse me -- got it. My presentation is very simple. Firstly, a brief introduction to Fuchs Electronics and Fuchs as everybody knows it. A little about our value proposition. And then the interesting story about those factors and the growth story about Fuchs going forward. Fuchs, unlike some of the other speakers who are relative newbies to Reunert, Fuchs has been in the Reunert Group for as long as anyone can remember. The company was started about 60 years ago, and it was actually started with the objective to bring defense electronics into scale, starting actually with military radio production in the factory in Reunert. Started as a family business originally and then being absorbed into Barlow Rand, which, of course, isn't -- much of it is now Reunert. So a long story. And the business that Fuchs finds itself in at the moment is a result of that legacy. So Fuchs is effectively a manufacturer -- a designer and manufacturer product. And we have relatively little diversity as compared with my colleagues on ICT and to Peter's presentation with a diverse range of products. However, we do find ourselves in an interesting -- having had an interesting history and also with some diversity in other areas in the future. Unlike many of our peers internationally, Fuchs is actually not linked to big government agencies and entities. Privately owned, of course, and many of the companies that one will find in the U.S. or Germany or elsewhere are very strongly linked into their defense industries. And Fuchs has found its roots initially in the 1980s and 1990s on the back of the strong defense spend at the time. We very quickly found that with the decline of the local market that Fuchs had to internationalize and had to actually expand itself internationally to be able to firstly stay alive, and we find ourselves actually growing in that space. A little about our value proposition. Fuchs' products over time have evolved into offerings which suit international customer bases. And we've managed to integrate into a number of systems in many corners of the globe. We've -- the internationalizing drive actually started with export contracts in the early 1990s. And we find ourselves with a relatively small group of engineers, investing time and effort and energy into making those products relevant in customer markets. And Fuchs is actually a relatively small entity based in Southeast of Joburg. And we have a company which is at the moment about 400 people strong. And those people find them -- the people that we employ are engineers and semiskilled staff on the production side. The site itself in recent years as many as 700 people assisting with production on big orders. An example of one of our long-term partnerships that we're very proud of and an example of what Fuchs -- how Fuchs has made a difference in the international market is a partnership that existed in Southeast Asia and the partnership have existed or started about 20 years ago. And it started very small as a small challenge. We have the local defense industry couldn't supply equipment to a challenge which this company had. They approached us. We designed a solution for them, and that led to a complete set of products, and that relationship has actually survived 20-plus years and some -- approaching 3 million units that we've actually sold into that country. If I talk to the growth drivers, further to what Trevor mentioned in terms of the international situation, specifically with the Ukraine crisis, we are experiencing on the back of the increased defense spend that Trevor alluded to. We are seeing significant changes in the past year, specifically coming out of COVID. In that markets that [ Reunert ] would actually not have place any more contracts than approximately the execution time span, which was 6 months to a year. We are seeing multiyear orders from a few different domains and a few different customers. And in the history -- in my history at Fuchs, we have never actually experienced those multiyear orders. And we believe that, that's a trend, which is to continue also based on our customers, mostly being either OEMs in the munition space or end users and ministries of defense in a few jurisdictions in the globe. We deal with multiple countries and the primary areas of the company actually sells into Europe, Middle East and also India and Southeast Asia. In terms of the drivers, the multiple year orders is very much back in the trend of the very lumpy order intake that we've seen over the past 10 or so years and that trend we see continuing. In terms of the movements that we have is one of the projects which has been -- which is going to assist us with the growth in the market is expansion of Fuchs' facilities. We've recently started on a project to reflow the production lines at Fuchs [ reaching ] the facilities to make those Fuchs -- those -- the facilities where we build the Fuchs more amenable to volume production and also more friendly in terms of the staff accommodations. An offshoot to that is the project that Trevor alluded to. We're proudly home to previously known as the Reunert College, now Reunert Learning Institute, where a few years ago, there were 18 students and a few teachers. There is about to be a complement of 60 students and more support staff and proudly housed adjacent to our factory and very much a part of, let's say, the where we hire a large number of blue-collar workers and the youngsters who come to the college come from the same environment that many of our workers do. So it's a great story, and I'm very proud to be able to be part of that. Now the refurbishing of the plant is going to lead to our quicker turnaround of product. Especially having come out of the COVID crisis where we've really struggled to obtain semiconductors and some difficult to plan equipment, we're now seeing the tail end of that, and we are able to convert product more quickly, serving the backlog which exists in some of our OEM partners and customers and we'll be able to clear space for future work and for future projects. The -- what we see in the Middle East and South Asian region, we have long-standing partnerships, as I mentioned earlier. There are also -- there's huge potential in the UAE and in some of the markets serviced by Etion Create. And those potential partnerships in the same model that we've actually -- that we've used in places like India, where we've worked alongside customers where they access the market, we assist them with building factories and facilities, and that customer effectively builds the full product from kits that we supply. So we believe that's an absolutely scalable model that could work as well in the Middle East as it does in places like India. In terms of the rest of the world, the -- our drives in Europe include last mile partnerships with OEMs. And what we mean by that is because the goods that we make or the products that we make are hazardous require hazardous goods transport, which leads to cost and leads to logistic delays. To circumvent that, we are working with partners in Europe who are actually adding value on the back end, which enables us to export goods which are nonhazardous and are able to be values added by the partners on the ground, and it achieves 2 objectives: Firstly, compliance in those markets; and secondly, reduction of the logistic challenges and the costs involved with being on the southern tip of Africa, supplying into markets that are very far away. The -- it's also in terms of other world access and part of the Fuchs growth story. A few years ago, we absorbed a company Dopptech into Fuchs as an acquisition at companies with its engineers and its products operates in the 40-millimeter weapon space. And that is an area which is complementary to the usual Fuchs products, which are used on motor artillery and rocket systems. The 40-millimeter space is one where there is -- has been significant growth in -- over the years, and we expect to be able to get those products into not only Central Europe but to be able to access other markets such as Middle East and India for that product line. Trevor also alluded to other markets, which to date have been inaccessible by ourselves. And these markets are typically being sold to by various governments, government-to-government engagements. We've seen numerous approaches, multiple approaches, and we've actually achieved sales into those markets where both products and also assistance with facilities into world regions, which were the doors were previously closed to us. So in conclusion, we believe that the Fuchs story has got legs. The trends that we're seeing at the moment, where we are inundated with interest from all corners of the globe, that trend seems to continue. And we've got a model and that we've got the people and scalability to make that relevant for years to come. Thank you.

Thanks, Mike. Any questions to Mike?

So seeing as a lot of the outlook is based on the international clients, especially for just the segment as a whole, is there any like policy risk, social political risk that could sort of affect the outlook where policies change in these other countries where a lot of the outlook or a lot of the growth is being anticipated from? Is there a risk factor we should maybe be considering in terms of just policy changes and so?

No doubt that there is risk in particular areas of the world. The Fuchs story is one of not so much diversity in product, where there is -- we are very, very niche in what we do. But the diversity into regions of the world where there are multiple countries. The slide we showed earlier was necessarily upto in terms of the actual countries that we deal with and companies that we deal with because of NDAs. The-- if there are threats in particular areas of the world, we believe that there's enough diversity to counter that by equivalent business in other areas of the world, especially now.

Just to add on, I think that would not only apply in Mike's world, but generally across the segment, and that's why that sort of order book that you saw that's sort of split almost equally across 4 jurisdictions or so important to us.

I think it's a question for almost all these businesses, but how do you balance the need to protect your IP with the customers' demands that you localize and do technology share?

I guess the short answer is careful contracting. And the model that we use, if I can use a case in India as an example, that we remain relevant as an OEM to a company that generally builds blueprint. And in terms of protecting that IP, the key elements of those kits that we sell to the company that's actually building them adding that value, which are not easily replicable in country because there is development or technology required in those areas. So that's the -- and of course, agreement by agreement as well. So -- but in generally, we do a lot of handholding deep into the life cycle of projects. And in many cases, we try to do as good a job as we can to, let's say, discourage. So the customer doesn't actually need the expertise in the engineering support and the test ranges and everything else that the business needs and so keeps us relevant.

Maybe just a quick question to Trevor. I think you spoke about relationships and price as being a key competitive advantage. Could you just maybe talk about the, the competitive landscape, where do you see the threats?

Okay. I think when we talk about internationalization, and as I explained to you, our willingness to do localization, we believe that our competitors in those markets are falling behind. When you look at not co-development but actually competition, I think we've done very well in the local market. We retain a strong position there. When we look at the overseas markets, if I look at Fuchs and how we're expanding into Europe, I think we are definitely punching above our weak category. We're offering products that are -- meet the customer requirements at the right quality and at the right price. Whether this will now put us into the, let's say, the sites of our competitors, and they come back more strong, it is possible for sure. But at the same time, as I said, the competitors that we are up against is so consumed with their local demand -- their regional demands. We believe the gap is there, and it will stay there for the medium to long term.

If I can say also that the other area that typically in those areas that we've picked up, Europe aside, the customers in those areas are actively looking for nontraditional sources of the products that we deliver. So that -- then -- so I think it just -- not minimizes, but it optimizes a competitive environment where they're actually looking for alternate sources and not western sources. Thanks, Mike. We're going to -- we're over running about -- but no rush, we'll be running about 15-odd minutes behind. So Harold is going to take us through his presentation. We'll take questions, and then he will give us the logistics for the site visits and lunch thereafter.

Thanks, Alan. I see you've scared Adam of totally. He's not even pleasant anymore. So I will not be able to use him as what we call a scapegoat. We'll take radar. Thank you very much. Just there's an introduction, and I will also be rather brief, as Alan has pointed out that I only have a few minutes. The company was founded 35 years ago or 36 -- in the 35th year, becoming 36 quite soon in with the intention of creating a radar capability in South Africa. So there were some technologies in the CSR and other sorts of university spaces, but it was never in a position to commercially actually build something. And at the time, industry in South Africa being some of the bigger corporate players that you see around you still today, and the defense force and [ mining scored ] together made a decision to create something like this in South Africa due to the political complexities at the time. And they went about it by going to the University of Stellenbosch taking the master's class in electronics and engineering and the professor and creating a company in Stellenbosch. And we are actually quite fortunate that one of those founding members is still in our employee full-time. And the professor himself spends 2 to 3 days a week in the company, still looking after our young engineers and skilling the people that are in the company. So quite a long good history. So at the moment, we'd like 220 people. We will probably be around 240 people by, I would say, middle of next year, also due to actual requirements in the work that we have to do in the order book that we already have in hand and that we foresee will be coming in, in the next month or a few months that matter. radar quite different from some of the other companies, but quite similar to has 2 portions. So we have a defense portion, which is half the revenues of the company. And the other part we would call nondefense, maybe industrial or commercial, if you like, but they are quite distinct. They feel off the same technology and the same engineering base in the company and the same support structures, but they are really 2 very distinct markets. And it's worth having to look at the world map there. We seem to be covering from Reutech radar quite a wide portion of the market. You'll see the circled areas are actually the defense specific ones, and there's an area in sort of Southeast Asia, which is also defense, but the rest of the world is actually the mining radars that we sell. And these mining radars, we have been selling since 2005. And I'll touch a little bit more on them when I get to pictures as Peter just told you, we do pictures, engineers to pictures. Just, obviously, to sell that wide into the world and we cover all the continents, we do need significant channels into market, and we support different channels into market in some places in Australia, we own a company, which we used to sell our mining product through. And in the rest of the world, it's -- by some other arrangement, be it a forward seller or an agent or some commercial arrangements and the products get sold in that way into market. I think we can quite clearly state that we are the #2 in the world market in mining radar product, which is a good position to be in. We also took a bit of a COVID knock as everybody else probably did, and it was difficult to service your product and service the clients, but we've recovered quite well. We're back to pre-COVID levels in terms of that market area. So the internationalization drive that we've been on, I'll mention it in a bit more detail as we go on. Some of the previous speakers have alluded to the South African defense market being quite lumpy, and lumpy is a soft term for what the defense market in South Africa can do and does. So you do need really other markets to be able to create a steady state or a proper growth picture for the products that we build. And I think we've been able to actually achieve it quite successfully. It's been driven for quite a while. In the past, we've even delivered. As you can see, there are 1 or 2 small spots in Europe, which are not just mining products, there also defense products. But really our ability to grow is in the Middle East, very similar to what Peter has been telling you, slightly different clients also at scale. So we expect quite good medium, longer term actually business coming from the Middle East. And then in Southeast Asia, we've been -- for a few years, we've been doing some business. And we see it growing and continuing as it is. Certainly, we have tried to, to push the defense products into a wider world cover. But in radar itself, radar is a strategic capability. And especially in the first world, governments fund their strategic capabilities in their own countries, they protect their markets, they put the technology in and the funding and the people there to make sure that they are self-sufficient. And if you are France and you have been building radars for French use for 50 years, like probably all the in the world have done, we, as a South African company, cannot come in there and cannot compete against own home market where you are government-funded and strategically protected. But the rest of the world, obviously, there we can play very hard because we have competitive technology. We have competitive products and competitive pricing. So that's the game we play. Radar, specifically not as easy to get into Europe, but all the other markets are quite open for us and we're playing quite hard. I think the other -- it's been mentioned a little bit today as well. The focus in Europe is such in terms of their spend on the product at the moment that they are defocusing from some of the other markets where historically they've been quite strong, and I'm taking this Southeast Asia picture as an example of that where opportunity is created because of European focus by European large OEMs. And then I mentioned there that we have well-established preferential partnerships, and this is one of the key drivers that we are seeing at the moment that's enabling us to grow. The technology is very complex in radar. So it's not just electronics, it's not just software, it's not just mechanical engineering. It's all combination of these engineering skills to create the product. And that means that if you have a long-term relationship with someone that really wants an high-tech product on the other side, you can leverage off the relationship. And many of our contracts are in a noncompetitive environment in terms of negotiated supply. And due to the localization willingness that we have, we are able to then negotiate deals instead of just pushing on price and trying to compete on price and time, okay? Then we get to the pictures. Just quickly before we go into the picture space, I don't think it's been quite clearly explained up to this point. But in defense and specifically, in defense space, when we sell a product or pursue an opportunity, it takes anything from 6 months to 18 months to actually close the deal. And after that, it takes anything from 1 year to 3 years to fulfill that specific transaction. So it's a long cycle and you need many of these cycles actually running concurrently to make sure that you have an even loading and a proper growth picture. And I think we are actually achieving that at this point in time. So again, without pointing, defense and mining split into two. Defense, the products or radars, radars just to sort of make it a simple comparison, you transmit energy and you look for a reflection of something that you want to identify and the energy that's reflected back into the radar itself is processed and then you can show it in some other form on a map. So people, you can track planes like you would expect an airport. You can track vessels on the sea and you can track vehicles that people driving and walking around. And this is the information that you typically would expect from a radar. So they are divided into categories in the defense space. They are tracking radars. These are radars that can lock on to a target that you have flying or running, walking or whatever, and then keep track on that quite accurately for you to know where it is. And the other one is called the search radar. So the search radar will either be turning mechanically and turning a beam of energy around it to get reflections and to find things, which we've come back to the search concept or it could electronically be steering the energy so that you don't have to mechanically turn the antenna, but you can electronically steer the energy and then you can still find detections and show that information on a map or whatever display you need to use. So that's the defense space. We started as a top one. The middle one is a search one. Top line tracking. The bottom one, it's sort of a combination of these types of ideas that you have a tracking and a search capability, but that will be a tactical radar and they become quite big and complex their systems. You can see a picture there of radar, which actually consists of 2 vehicles, 2 shelters, one for personnel, one for the radar equipment, and these are deployed as part of a larger defense deployment with area protection and things like that. So that's the defense products. These are just a few examples. We -- the portfolio is substantially wider than what we are showing. But I don't think we need to go into all the details. You will be able to see some of -- some of the products and technology when we walk around in the building right after this. In the mining space, the area in mining that we sort of sell into that world picture that you saw is slope stability monitoring. And I can explain that just quickly. Open cast mines are big holes in the ground, if you like. They dig the stuff out of the bottom as efficiently and as quickly as they can because that makes it the productivity high and the yield high. But the trick is if you want to increase the volume that you take out to make the slopes of the hole in the ground steeper, and the risk that you can create these things can collapse and kill the people and fall on the equipment that's in the bottom of the hole, and then you have a big problem. So you have to optimize the mining [ shelf ] for productivity. And by -- to do that, you have to protect the people and the equipment that's in the bottom and you have to measure whether the slopes are stable, and this is where these products come into play in the world market. Peter spoke about the South African context about safety in mining, but that's the whole world trend. And most countries have very stringent rules, let's say, you have to monitor, otherwise you can't mine because otherwise you put people at risk, and that creates the market. So we sell these mining radars. There are currently 260 of them sold around the world. Since 2005, we sell roughly 50 plus per year, and that market will sort of keep on going. We see it growing actually a little bit in terms of what the market can take. And they are relatively high value items. So it's not high volume, it's high value, and you have to look after them once you've sold them. The middle right-hand picture is the newest technology of that type of mine slope stability monitoring radar. You will see in the picture at the top there is an antenna that is steered like this, the new middle one sort of is an electronically steered antenna, so you don't have to move the physical antenna. You can move the energy and you can solve the picture that you see. If you look at the background of those pictures, you will also see the environments that these things operate in. So the first one looks relatively cold, and the second one looks relatively warm and dusty and weather and all sorts of other complexities come into play. So it's harsh environments and quite complicated product that you sell, relatively high tech. And then in the -- look what that be -- let's not add up -- there we go. The bottom on the right-hand side is ancillary, other products in the mining space. They are not specific to open cast. They are used for all sorts of other productivity things in mines. And in our expansion and growth strategy, we are also moving into some of the normal underground mining operations as well. So we have ground penetrating radars, that thing that looks like a paintbrush. The other one is [indiscernible] measurement device, it replaces a compass in the underground space. And the other product on the radar is a laser-based scanner for any sort of surfaces in the mine that you have to measure and say it is of a safe dimension and it is used quite extensively. So that's the picture of the product space. In terms of services that goes with the product, we obviously need to be able to integrate and display information. So we have system integration, and we have software that can take multiple sensors and combine the information from the multiple sensors into some other piece of information that the mining operators and engineers can work and plan accordingly. And then products like these need quite complex installation and commissioning activities. You'll see a console there, which is typically of a naval vessel. We have a radar on sort of the top of the platform. And then you have to have tables and interfacing to the vessel systems and you have to have displays and control, and everything that you would expect to. We are able to commission, install and test sort of, in that environment, then the radars being complex beasts need to be supported over a period of time. And we have quite a few maintenance contracts that are running which we -- in the mining space specifically, it's a 24-7-365 support activity, which we run. And you need call centers and you need all sorts of planning around that so that people at any time of the day or night, anywhere in the world, can actually get support. And there needs to be logistics plan and [ spacing ], all sorts of things that you would expect in that space. And then certainly, we do have to do production and verification of these systems. It's not mass production like Mike does, but it's low volume, high-value items that we build, okay? In terms of growth, I think most of these items would have touched unlikely, but you will see the mining revenue, and that is a pie chart of the world market. It's quite well mixed, and that's -- in terms of revenue, it's all over the place, so that if there's some issue politically, commercially in some region where we would previously have been doing business, you need a few other ones to be able to step in to make sure that it's sustainable and growth orientated. And I think we covered quite well the market space that you see and from all continents. The defense revenue picture that you see there, it obviously shows that there is quite a growth in the Middle East. If you were to normalize that over a few years, you wouldn't have just 2 pictures showing like that. It's just a bit of an art effect of the timing of that specific piece of information. But certainly, South African market, we will keep and maintain and aggressively compete in and we've been doing that for a long time. But we are planning and we are actually achieving growth in other markets, the Middle East and Southeast Asia being the driver -- the driving spaces. Yes, let me -- I think that's sort of my story, I can obviously bore you a lot more for much longer, but that should be sufficient for now. Can you flip over? I just have one last. So just to give you really a feeling of what a radar would look like if it's operating somewhere and you must have seen in movies and all sorts of places. But that's actually the picture that you get. You see targets that are being tracked and reported on and managed and maintained in the database. And obviously, in the middle where that line is taking around, that is the location of the radar itself. This is just a recording. It's not live, but we have live things like this, which we can show as well. Yes, just to get a feeling, alright? Now, you can ask questions.

A question for you -- just a question on the order book in general. I just want understanding is that, are those orders that have been -- or rather the way you've got the export payments already? Or is it a secure -- secured those export projects as it relates to your obviously international sales.

I'll maybe take that. So that order book, of course, is a combination of your defense and commercial or industrial, et cetera. So it would be a combination and the defense cycle from accepting order to delivery, as mentioned, can be anywhere from 6 to 18 months and beyond. And there's various permits that you have to get during the course of that process with the final one being the export permit before delivery. The main one that the VIG 12 considers the contracting permit. So it allows you to effectively execute the contract. And once you fundamentally get a contracting permit, it's very unlikely you are not permitted to enable the exports. And that's more of an administration process that allows the exports. So that typically comes a bit closer to the time. there's some aspects of that the go on to that permit like who you're going to use to ship, et cetera, that you may not know right at the start of the contract.

Can I just add one thing. Not all our products are covered by permit requirements. It varies quite a bit. Obviously, the mining products, for example, are totally exempt from permit control. But there are all sorts of categories defined and the higher you move up certain lists, the more controlled it becomes. Some items even in the defense space are not controlled. Okay.

For example, [indiscernible] control, right?

Yes.

And we won't put something on an order book backlog if we don't have the necessary contract improvement.

Yes.

I've got another question for the gentlemen here. You mentioned earlier that applied electronics, they received a high rating of good rating from the agency mentioned on ESG. I find that interesting. And I'm curious to know on what metrics they considered to give you that rating?

Maybe I answer that, if I may. So not -- we weren't referring to the rating, let's say, that the category of controversial weapons is classified as we don't fall into that category. So there's various aspects that give you an ESG rating. The controversial weapons is not something that we fall into and we're clear on that. Hope that answers the question. So there's various ESG ratings. You've got very large defense companies globally that have the highest ESG ratings. But certainly, they won't be -- they won't fall into the controversial weapons category within that rating.

I think what we're trying to highlight is in terms of the risk of what we manufacture, we don't fall in that high-risk category. And we can unpack, as we go through it, it's very important for us that we deal with this matter in our ESG position. So it will become increasingly clear as we go through our development and how we position it within that international domain that what we manufacture and the relative risk of that from a shareholder point of view. But we're not in the big scary stuff. I think that's the real takeout of that, is we're not, despite what it may sound like or defense and these type of elements to it, we're not in that environment where we fill into the high-risk category. Any other questions? Yes?

And you mentioned the government spending on things like radars. I mean given the amount of money that some of these country spend on things like this, does this mean that you seek out specific niches where you can actually -- I think it seems improbable that you could compete dollar-for-dollar against some of these institutions.

Quite correct. We don't compete at all levels of ore product that's available because in radar, you get stuff that track satellites from ground stations. These things cost hundreds of millions of dollars per item. We will not be in that space. But in the areas where we can compete, it's sort of in the middle of the product range, we can compete quite aggressively, but it is niche. It's not -- it doesn't cover everything that can be done, okay? I'll give you one example in that space at the moment. One of the large OEMs in Europe is called Thales. Their radio factory currently has a 6-year order backlog. So if you want to buy a radar, are you prepared to wait 6 years, go for it. But if you want to come to us, we can help you sort of in 1.5 years. That's the type of examples that are out there.

So it looks like the business overall is doing quite well, a lot of growth. We see the order book. Is there a need for additional CapEx in the business to be spent to grow the business appropriately? And then I suppose a follow-on, if the answer is yes to that? How does that play into the operating leverage again mean?

They're not a sales guy where they need more CapEx. Maybe let me ask -- I mean -- so I've got on a serious note, mike has already spoken. So we've released CapEx already into the [ folks ] factory upgrade. So that's already in place. CapEx-wise, if you just talk generally about, certainly, let's say radars, first of all, it's low volume, high value. So there's lot of particular need to implement from a CapEx point of view. [indiscernible], there is. So that's the next area that we anticipate to release capital into, particularly in the wireless detonation space as that expectation climbs up. So we -- from a shareholder point of view, we see this environment as a growing environment. And similar to what we would do in our other factories in the way we allocate capital, we would allocate capital towards this given that there's a robust enough business case underneath it that stacks up. It isn't, however, it doesn't appear to us at this stage. There's hundreds of millions of rand that need to go into the build out of these factories. We call it -- we kind of commercial scale manufacturing. It's not like heavy manufacturing like a cable plant where you could cost you ZAR 1 billion to build a new cable factory type of that. So we can scale quite nicely. We can scale with buckets of CapEx. And typically, what comes out of it is quite positive to that. The other area of CapEx, obviously, would go into the self-funded, the privately funded R&D, which, again, we would look at and that comes along, the typical sort of number sort of 3%, 4% of the segment revenue per annum that we would continue to invest into to make sure our products are relevant, we're able to attack new opportunities and the like. So there certainly isn't an area that is, call it, the void of CapEx or we would not allocate capital to sort of fits into that bucket because it's a growth environment for us. I'm going to take any last questions. There's just 1 from David Fraser, who asked Michael. [indiscernible] He's asking a margin question. Just about historically, your margins have been fairly robust. The question is with your current order book, are you -- is there any reason why those margins are not holding their own.

I think the answer is quite easy as the margins are 100% intact. On balance, the margins are 100% where they were some years back.

Okay. Ladies and gents, that brings us to conclusion on the defense side of it. We had a suspicion that a few of you might sneak off if we did renewable energy first. So we've kept that for the after lunch period. So, we're making sure you all come in for the graveyard session. Harold will just give us the logistics. We've got -- we've set an hour for lunch, if we can just curtail it to be 50 minutes, please. So we'll start off again at 1:30, and then Harold will tell us how we get around the facility and the lunch [ arrives ].

Yes. So -- yes, it's better. I think the easiest is if we just sort of split into 2 groups. One group can come with me and probably somewhere along here. We have a group like that and a group like that. I just want to fetch the chap that will take the second group through. And then we're not going to go everywhere in the company, but we'll walk through the development lab, some of the integration and production areas. We have some radars turning on the roof. So if you're not feeling too weak, we can run up the stairs and have a look at what you see from the roof and the radars turning [ rates ], it's quite interesting. But that's sort of the extent of it. It's not going to take an hour, it will take 10 minutes or so, and that there should be some lunch outside here, coffee and tea and cold drinks and stuff like that.

And for those of you, it's the first time we've seen the sun in the Cape for a month. So I would use the opportunity and get on to the roof if you get a gap.

I'll [ second ] to a go ahead, Mr. Anthony Green.

Maybe Anthony should go first and then take the first half and then the second half will follow. I just check there's 2 routes.

Yes, the 2 -- can I suggest? One group goes back there. Excellent. Well cost in the middle I'll take the other one.

Terry is going to give, first of all, a segment overview as similar to what Trevor did. But I'm going to propose that we don't stop for questions at the end of the segment because we're then going to go straight into the Solar Energy business, Terra Firma Solutions for Lumika. And once that's complete, I think that will be a natural break for some questions. I anticipate there'll be some excitement at that point. So we'll keep going until then, and then we'll stop and take questions then.

All right. Good afternoon. So I'm Terry Lawrenson, and I'm the Electrical Engineering CEO. In a minute, I'll introduce the rest of the speakers, but I'll just quickly take you through what the kind of order of these presentations will be. We're first going to talk about key market developments, what -- we did a version of this about a year ago. And what has happened in this market since then, what has changed? What are the factors that have to be considered. I'm then going to talk you through, again, last year, we shared with you our vision of this renewable energy ecosystem. All of the components of the ecosystem and how it fits into the electrical engineering or the electricity supply chain. Just as a reminder, because it would be a good [ deal ] for some of the components of this ecosystem that we'll show you down the line. From there, we go into some deeper dive into generation. From there, energy storage solutions, energy trading and wheeling. Then I'm -- back to me, I'm going to talk a little bit more about load control and managed metering. And then we hand over to Nico, who does some -- gives you some insights into financial disclosures. So that's kind of the proceedings. I am going to quickly introduce -- so I've introduced myself. After me, Grant [ Bernsten ] is our CEO for the Lumika Group. That's our generation company. James Verster is our CEO for the Blue Nova Energy business, that's our solar -- sorry, our battery storage business. Jenna Harris is our CEO for Apollo Africa, that's our business that is being positioned for energy wheeling and trading. And Nico is the segment CFO and Business Improvement Officer. Him and I worked very closely ever. So those are your speakers and that's the way we're going to do this afternoon. And those are your pictures. Key market developments. On a macro scale, there are 2 things. This is a very dynamic market, and things change and things change quite quickly. At a macro level, things that have kind of risen in our world in the last couple of -- in the last, say, year has been inflation -- global inflation, interest rates that tracked and followed that has an impact on our assumptions around projects, around the long-term modeling of energy prices, funding requirements. So it does have an impact, and we have to make as we develop these projects and as we build and own and operate them, we have to take a view on what that's going to do for the overall returns of the project. The other factor that persists is global supply chain issue. So since COVID started, supply chain is an issue. It seems to -- the shape of it changes over time, but it's almost never disappears completely at the moment. It's reasonably stable. And availability of materials and getting those materials at site is reasonably manageable. But it is a factor that has to be considered in all these projects. So those are the 2 things that, on a macro level, continue to be -- have to be considered as we build out this renewable energy cluster. And on a local level, the scrapping of the 100-megawatt license, these specials. That has stimulated a tremendous amount of activity in the market. There's a huge demand for the solution, very willing receptive market for the solution and a lot of competitive activity. The other thing that we've seen is that government appears to be doing fairly well in removing red tape, enabling the rollout of these larger projects. And the result is a tremendous competitive environment that we're in. There's a lot of competition. This is not just combination for projects. It's competition within the supply chain, competition for materials and competition for talent. So you've -- one of the factors that we deal with this is a very young industry. So this is an industry which is literally almost morphed of nothing in about the last 10 or 12 years. What that means is that the capacity in the industry to achieve its full potential is quite limited. Skills, people and then like I say, even your supply chain is reasonably -- it's an immature supply chain compared to, say, factories that have been around for 50, 60 and 70 years. There's a lot of risk in that competition, the competitive activity. There is risk in that competitive activity, not all competition is sensible. This is the world that we operate in. Towards the end of last year, load shedding came along. That had a significant impact on our market as well. Historically, renewable energy has been almost price mitigated against skim inflation and renewable energy was bought in that spirit. It gave you cheaper, it gave you more predictable energy costs and so on, gave you some control of those energy costs. With load shedding, that has shifted now from being renewable energy versus, say, an [ Eskom ] case versus renewable energy against diesel. And that's a factor of depending on how you look at anything up to maybe 5 to 10x more. So you can imagine what that did for the enthusiasm for renewable energy. Suddenly, you're competing against diesel from a price point of view. Again, just adding to the vibrancy in this market, the enthusiasm in the market, and that everybody loves renewal energy, everybody wants a bit of this action. And it's adding to a very active industry. What that's also introduced, what [ Losha ] also introduced is some complexities around integrating technologies. So it's now not just a matter of -- if you want your solar energy, you generate your cheaper energy. You want these seamless changeovers. So you want your energy to not disappear when load shedding happens. So one of the things that I don't think most people understand is a traditional solar plant, C&I scale solar plant when load shedding happens, that plant switch is off. And the reason it does it is it has no good forming element to track. So that obviously has to be managed now. And so there's a big drive towards integrating these technologies, integrating your solar with your generator and with your battery. These are not simple problems to solve. And so of course, that will create opportunity as well. But it's changed the nature of the game and it's drawing a lot of skills and technical skills towards solving a historical problem that didn't exist until the load shedding hit us. Certainly, we've seen battery. The dawn for battery planning out of again going through the roof. James will talk more about that. In his presentation, he'll tell you that essentially, they've closed production for the year now. Very hard to take out more business simply because the demand is so high. And then this convergence of solar plus gen plus battery, it's a technically complex problem to solve. So these are all things that are happening in our markets driven by factors like load shedding, which adds color and complexity to our game. Yes. So the game is literally now become about energy certainty, as well as energy costs. We have a situation now where I think in this market, there's a realization renewal energy is here to stay. And probably in the 5 to 10, 15 to 20-year horizon, this mix of energy in our industry and in our economy is going to shift significantly towards renewal energy. Most companies, there are demands from shareholders and so on to have a renewable energy plan or at least a load shedding plan or at least a business continuity plan that has to be considered now. So there's a lot of push that people must adopt this technology. We have a very receptive market. Everybody loves our product, which is a good thing. The alternative is a gauge purchase. And our product is -- there's a lot of enthusiasm for our product. So that's correct place to be. From government, government is doing what -- doing reasonably well in terms of facilitating that. Things like, the improved tax benefits. More and more, we're seeing things like feed-in tariffs being adopted, and that's a very good thing, that's -- feeding tariffs are a great enabler towards taking some of the financial risk of renewable energy. And then more recently, winning as a concept in this country is starting to become a little bit more mainstream. Jenna will talk a little bit about that conventional wheeling. I think most people understand, hopefully, most people are saying conventional wheeling these days. But there's some quite clever concept, things like virtual wheeling that also are great enablers for this industry. So our view -- so there's the context of this industry that we operate in. It's actually a surprisingly complex industry in spite of the euphoria for the solutions that we are putting together. Our view of that industry is I think it's quite obvious there's going to be significant growth in the medium to probably longer term. Renewable energy is probably going to become the solution to South Africa's energy crisis more so than traditional forms of energy. So that's a good -- it's a good long horizon that you've got to play against -- our view is that solar will remain a default choice. The reasons for that are solar is probably the quickest and cheapest to deploy. It's less grid constrained, so less geographically constrained, less grid constrained. Solar brings some challenges at that. So it doesn't bring system inertia, which means it's got a very, very dynamic response. That becomes very difficult for the grid operator to manage. So as your adoption of something like solar in the mix increases, the management of the grid becomes very, very technically complex. And so grid stability will be an issue. But the thing to also consider is that tariffs are going to follow. So if you're a grid operator, you've only got 2 or 3 clunky mechanisms to manage that supply-demand equation. Supply and demand must match. From a technical point of view, if supply and demand do not match, you have all sorts of negative consequences, which, in a worst-case scenario can lead to, for example, national blackouts and that kind of thing. The system operator generally has 1 or 2 or 3 clunky mechanisms to manage that supply chain. Obviously, load shedding is one where they simply shed you. The other one is tariffs. So tariffs are really just a pricing signal from the utility. To say to you, if you use energy, when everybody else is trying to use it, you have to pay more. If your maximum demand is very high compared to say your average demand, you have to pay more. And what tariffs are trying to do is to drive behaviors. Our view if we take a step back from that is, we think overall returns in this game are going to organic decline. We've seen that elsewhere in the world. We've seen in South Africa, the returns are going to decline. As a result, we believe in our strategic response, and that's the heart of what we're talking to you about today is we believe in order to manage a crazy, a very active competitive environment and probably declining returns over a protective amount of time, you do need to have a proper strategic response to that, and that's what we're sharing today. As we go through the presentation as often we go, we're going to talk about these converged solutions. And this is something that we have that we are kind of sure that nobody else has an industry. We have one of the components of the renewable energy ecosystem. And we have -- and we're building the tech to integrating and converging those in a way that offers tremendous blended solutions for customers versus maybe just 1 or 2 of the components. So the blue block at the bottom line is, massive market keep growing, but we still believe there are risks in that -- in the market. And we believe we need a clear strategy to mitigate those risks. I'm now going to talk to you about this ecosystem. We shared this with you last year and it's kind of at the heart of what we're doing here. Probably a little bit important to understand as you grapple with what our strategy is. Typically, electricity has been supplied from a centralized generation through a transmission grid, through distribution grid to an end user. In South Africa, that's been predominantly coal-fired and so on. With the advent of renewable energy and the introduction of things like embedded generation. Embedded generation typically closely coupled with your load. But generation can now happen almost anywhere in the grid. You'd have seen in the news that you've been talking about converting coal-fired power stations to being -- should be renewable energy, but that generation can happen almost anywhere along that supply chain closely coupled with your customer in the municipal grid in the transmission grid. Battery storage, similar. Historically, battery storage has generally been quite closely coupled with the load. But that battery storage, can be adopted within the municipal grid. And it can be adopted in the transmission grid, just depending on what the use case is, what you're trying to do with it. And then, of course, wheeling, so what wheeling is a great enabler where you can plant your generation almost anywhere and you can match it with your offtaker almost anywhere and becomes a tremendous enabler for full adoption of your grid and for getting the cheapest energy and getting to also end user, whether they have their facility to create their own renewable energy solutions or not. All of these things come together. One of the things that I'm going to talk to you about a little bit later is this notion of grid interactive buildings. And a good interactive building is a building that understands its energy mix. Understands what its node looks like. Understands the tariff it is in, and can do something about it. So a building that can maybe shed load, can shift load, move it out of peak tariff times and so on. You'll have seen a lot in the media recently about government talking about user controls and so on and so on. What they're trying to do is manage the demand. If you can manage the demand, it saves a tremendous amount of energy that has to be generated, especially peaking energy and so on. If you can move that demand around. So there's a big drive you will have seen in the media recently, this drive towards demand side management. And I think there's a big realization even within government. But if you can do something about the load, it has a tremendous beneficial impact on generation, transmission and so on. So that's a good interactive building, and I'll talk to you a little bit later about our plans for that as well. Holding all of this together is IoT. Yes, we're in the era of IoT platforms. We talk about a single point of truth. If we're able to integrate all of those technologies and all of those solutions and give end users full knowledge of where the energy is coming from, what it's being used for, what comes from battery, what comes from coal, what comes from renewable energy if you have it, you're able to then start to do things like validate these [indiscernible] attributes, [indiscernible] and your carbon credits and those kinds of things. and you have tremendous benefit from having full sight of that energy equation across the whole ecosystem. These are all things that we are busy working towards. So in that ecosystem, what do we have? We have the 4 businesses that we're going to talk about in a little more detail now. We have Blue Nova Energy, that's our battery storage business. James will talk about that. We have our Lumika Group, that's our generation business. Grant will give a deeper dive on that. We have Apollo Africa, which is all about wheeling and trading. Jenna will speak about that. We have CPI Energy, which is around load control and building automation. I'll be back to talk a little bit about that. And then thereafter, we hand over to Nico to talk about the financial disclosures. Benefits to the customer of doing it this way. We're pretty sure, quite certain. We're the only company that has a full end-to-end ecosystem and is developing a tech towards it. We're able to offer tailored solutions to customers. So because we're not a single component player, we can sell blended solutions. We can offer customers rooftop solar as well as wheeling. We can offer rooftop solar and battery, and we can do all of these components, more catered towards the customer, what the customer needs and what we have to sell. We're developing the technology towards the integration and validation of these renewable energy attributes. And we're developing the technology towards having this quite a single point of truth where as a user, you can see your full energy equation through the use of platforms and tech and IoT and so on. Benefits to investors. Investors get multiple access points into the renewable energy value chain. And again, you know the risks in this game. This amount of competition, this young of an industry, this young of a supply chain industry and so on, they're risks in this game. So what we're offering to investors is these multiple access points. Margin protection. Again, the issue with these single component businesses, disruptive technology, things change. This is -- there's a little bit of R&D going on globally in these technologies. Policy is changing. Things like tariffs will change. All of these things make for an extremely dynamic business case. And we believe that by having this ecosystem approach and driving towards this conversions, we believe that we're taking a prudent strategic view on how to manage this industry as best as we can. Carina, you keeping time there. Okay. Well, I'll take, it is fine. I'm going to give you one example around policy changes. Just to show you why it's important to have a pretty good understanding of what's going on in this industry. Eskom announced last week in a presentation talking about good curtailment. They have no policy for good curtailments at the moment. But they said 2 things. There will be curtailment and it will be retroactive. Now for those who could tell me, literally means they switch you up because there's too much supply on any part of the grid at any point in time. So they said there will be curtailment and there will be -- and it will be retractive. What that means is if you developed a plant, if you've built a plant and you've got your returns calculated over 20 and 25 years and so on, and they decide wherever that plant may be that, that part of the grid is going to be curtailed, say, 5% or 10%, has a very profound impact on your returns over those 20, 25 years. And it's going to be implemented retail-free and it has to be so. It has to be so because if you don't manage the grid, the grid's ability is important. So there's one little example of...

I didn't understand that...

So imagine you've got a part of the grid, I don't know, anywhere Northern Cape or something like that. And the grid can handle, say, 2 gigawatts, but the projects that are developed in that area end up being, say, 3 gigawatts. From time to time, it won't happen all the time, but from time to time, when all of those 3 gigawatts become available, somebody is going to switch off. Otherwise, you overload the grid. That's curtailment. Now Eskom's views, you have to curtail because nobody would ever build a grid that is of such capacity that you are always, always underutilized. So far better, you have oversupply, you curtail. Then that you have undersupply, and your grid is overwhelmingly expensive compared to due to the most optimized case, that's curtailment. So these are things, again, it's a fair question because Eskom has no policy today, but the policy is being developed. And what they have said is there will be curtailment because that's the most optimized way of designing a grid. But -- and it will be retroactive. So these are all things you have to be really careful about as you plan out these projects, as you build out these projects and your cost and you get the returns on these projects. All right. I'm getting quite close to the end. So investors get this benefit of having this blended end-to-end access points into these ecosystems. And also, I think it's important for investors to realize that we have it, and we have a plan. We have a strategy. We're not just -- we're not getting lost in the hype around this industry. It is important to know what you're doing. Final slide from me. This is kind of a graphic that shows the overall landscape of how we operate in this industry. Embedded generation, EPC, that's our project business and of course, [indiscernible] our asset ownership business. Storage, that's been over. We have all of the components of storage, as you can see in the graphic there. Wheeling has across the full grid as by definition. That's what wheeling does. Above that, electrical load control automation plays across the whole world of users. So we have access to that world as well. And then at the very top level through our CBR businesses, we have -- we exposed to this industry through our cables business through some very specialized products in balance of plant and that kind of the thing. So that gives you kind of an overall footprint of how we operate in this game. And I think that's me. I'm going to hand over to Grant now, and Grant is going to talk you through a little bit more deeper dive into the generation part of our business.

So all those costs are going to bode well for our technology and for our business case that we're actually trying to put forward to customers. We -- [indiscernible] I know Terry spoken about the ecosystem as a whole, but when we talk about embedded generation specifically, we can split it up into kind of 3 rough pipes. On the lower end of the market, which would service primarily residential and small scale businesses, we have a rough cutoff point of around 250 kilowatts. And that's currently serviced within the [indiscernible]. These would typically be homeowners and small businesses who would either own those installations outright or they would look at some kind of lease or rental model on a much shorter-term basis, much more simplistic installations than what you get on a larger scale business. On the other end of the spectrum, which would be more on the utility scale, but still on commercial and industrial, would be your retype applications, which would be in the 100-megawatt type ranges. We're not currently playing in that space as Terra Firma Lumika. We don't intend to in the short, medium term or even long term. And I think there's a number of reasons for that. So I think there's a lot of concentrated risk. You've got a lot of eggs in one project basket. I think one of the most topical reasons that we hear of in the press and in our market is grid constraints. So a lot of these big projects are advanced, have done a very slow and long and expensive path only to be told there's no access into the grid, which places a lot of those risks -- those projects at risk. Margins are significantly lower, and it's a very competitive space out there on these big projects. Where our sweet spot is in the 500-kilowatt to 50 meg range. We can probably stretch that a little bit further north, but that's our current strategy at the moment to really focus on that segment of the market, predominantly embedded generation solutions that might evolve into some wheels, bilateral wheeling scenarios where you've got a fairly simplistic wheeling approach. Otherwise, we'll bring in Apollo on certain customer scenarios as well. We typically target long-term PPA tenors or contract terms at 15 years plus. Returns that we're targeting are slightly higher as well, and we're bringing debt into the financing mix as well, which Nico will go into in a lot more detail. So either on a project-by-project basis or as we're currently doing on a portfolio basis, we'll take a portfolio of projects and get those financed to improve our equity returns on each of those projects. A bit more detail around our exact business model. So we've spoken about EPC, which is really the implementation and execution of these projects, the physical installation works. So the business offer is fairly straightforward. We allocate engineering time and installation time and we derive the margin. And the alternative side is the [ boot ] assets, which we would then own that asset and generate revenue via the cash flows of the business over its life. So based on a targeted equity return. I think we're -- Terry has given a lot of background to the -- in terms of the space and how dynamic our market is right now. And there's a constant flux of players coming in. And it's a very -- it can be very challenging. So I think ensuring the sustainability of our business is key in making sure we're going to be around for years to come. The fact that we were an early mover in this market is significant to us. It places us head and shoulders above the competition, even if we've got foreign competition that's done this elsewhere. The fact that we're able demonstrate what we've done in the country is extremely valuable. That brings a lot of technical, financial and legal know-how within our business. Being able to deal with corporate customers in South Africa is valuable as well and understanding their needs, understanding the technical requirements and being able to integrate the system into something that they don't necessarily want a third-party touching, or even owning and operating over the life. So giving them that sense of comfort and trust is very, very important. Funding relationships, I think, again, it's -- our funding market for renewables has evolved very rapidly over the last 10 years. A lot of the commercial banks in South Africa have been focused on large utility scale projects. And more recently now in the commercial and industrial space. So having a counter party that's done a lot of this and built up the track record gives them a lot of comfort which in turn means we can access more capital, more efficient capital and cheaper capital, which ultimately makes us more competitive and maximizes the returns that we're able to command on all the projects that we're owning and operating. The cluster approach. Terry's spoken a lot about that. I think this gives us a unique sales advantage of our competition. A lot of our peers are only offering kind of one segment of what we're doing, either an IPP-type solution where they're funding and owning it, but they're outsourcing the execution phase of it as well as the offering of our sister companies and other parts of our business such as software development monitoring, metering. Yes. So there's various aspects that we can add to the complete offering, which means we're generally giving a more holistic approach. And ultimately, as the market evolves, it becomes a lot more liberated and deregulated, we can simply offer more almost in the form of a mini private utility to customers in the market. The philosophy around playing within our embedded generation value chain. So that starts from project origination and development through to the engineering -- preliminary engineering, designing of the equipment. Obviously, execution, the funding, owning operations and maintenance and ultimately sales of the kilowatt hours to the customer. The fact that we're wearing all these hats has numerous advantages. Number one, we can take margin across all these different silos and screens. And number 2, so that allows us to be more competitive and obviously, command a higher overall equity return on the projects that we're engaged in. It's a risk mitigant against the shortage of skills as well as the supply constraints that we're seeing in the market. And that's not -- that problem is not going away. So if we look at what new generation capacity needs to be brought online, whether it's large scale or small scale, there are only so many contractors that can actually go out and build these plants. If we want to realize our targets, we need to be able to deploy and install and be able to control that piece of the puzzle. Otherwise, we're beholden and to the rest of the market and we're going to need to wait in line for these contractors to become available and ultimately pay a premium for their services as well. Firm focus of our business model is to build out a large portfolio. So this build on operate portfolio is key for us. As I mentioned, we're well positioned to be able to execute on that through the execution strength and track record we have access to funding only our own equity sources of funding, but debt pools as well. And importantly, governance factors and processes. ESG is a very strong part of the business. I'll touch on that in a minute but just having strict governance processes within our organization, which will allow us to scale the business and meet the demand of the market. I've touched on these aspects around our core focus already. But I think just to highlight, a diversification approach is very key in terms of what we do. So ultimately, every contract that we're signing with customers, we need to be 100% sure that they're going to pay the bills, number one but they're not going to bring any damage to our reputation through any ESG risk that they bring and diversification across different sectors that we operate in is key, not only in terms of the sectors themselves, but jurisdictions as well. So we have executed projects outside of South Africa, and we'll be looking that way in the future as well. I think the South African market is really forming our focus right now. But having that diversification is key to us as well. Credit was the offtake as I've highlighted on already yes, very important for us that we have strict processes in place to be able to do some preliminary vetting, which is closely coupled with the process that our funders will bring on board and utilize as well. How are we going to access this market is the key and I think weeding out the rats and mice is an important focus for us. Really trying to understand how you can service this quantum of electricity that's required and it driven by our customers. Scaling is obviously key, and it's something that we really have to learn some hard lessons on. How do we take a business that used to rolling out a couple of rooftop installations amounts to many tens of installations in a month, if not more. The process of appointing new leadership is ongoing. I personally fall into that category. I have fairly fresh in my position, and then 1 or 2 other key leadership positions we're currently in the process of filling as well. I think as some of you know, the business has started up from scratch really. So it was found, owned and managed until recently. So taking the business to a more professional and larger institution that can service the market that we're encouraging now is a key focus. He skills equally important across the board. So I think whether it's engineering skills, finance skills, legal skills, sales skills, there's a dearth of skills at the moment and everyone is scrambling for that given the rates in the market. So building up a company that everyone wants to work for is kind of primary focus for me right now, demonstrating to the industry, the kind of offering we bring the shareholding base, the various tools that we have within our armory are very important for me to try and retain talent and attract talent and retain that talent. Various other initiatives such as deploying technology, cleaning robots is one such example that we're highlighting here, where it will simply enable us to service more and more facilities. This is specifically on running sites. So currently, we're operating over 300 sites. So we've got a fairly distributed team that are running around low the country cleaning panels. And so we're constantly trying to find ways to do this process more efficiently. And bear in mind, the sites that we actually own every kilowatt hour less that we're producing hurts the return on that project and hurts our business and cash flows, of course. Processes are key. So trying to scale the business, but we really need to put in place the right processes that will enable us to do that. So we've got strict governance that will control that and will enable us to scale up to the next level. I think a key point in scaling is not really just finding a way that we can churn out more, but being more strategic about it as well. I think we are starting to move into the next bracket in terms of size of project. We certainly are going to the 100-megawatt range. But to date, we've been on the lower end of that 50-megawatt limit that we're currently targeting. So being able to source those projects is one thing, but then obviously delivering on them is the next step. So scaling not only in terms of the number of people, but how we actually deliver on larger scale projects is a key focus and one that we believe we are well placed to now step into that bracket and deliver on that. Our lean construction model, so we've played around with this a bit over the last year. In terms of having in a certain number of teams. And I think this flows into the point that I was just making around larger projects. So there really is a drive to try and do slightly larger projects so that we get more efficient outputs from those projects. The ability to flex so we make use of a sort of a hybrid model when it comes to our own installation teams coupled with subcontractors that we bring on as and when required. So we're not sitting with underutilized installation teams and all the baggage that goes with it. And various other initiatives to attract talent, as I've mentioned, including most importantly, development of partnerships. And this is, again, partnerships throughout the chain of what we do, not only at the shareholder level, which we'll talk to you about in more detail shortly. But throughout the execution phase, partnering up with other contractors particularly when it comes to larger scale projects that we can leverage off know-how and track record of those entities. The same goes for ownership. So we currently are partnering with other equity providers who might be our customers as well that end up owning a portion of the asset as well. So there's various creative ways that we look at partnership approach to help us unlock the megawatts that we're targeting ultimately. I think this is quite important for us to highlight a few of the wins and progress that we've made over the last year, particularly on the battery storage front. Pall Mall is a great case study for what's to come. This is one of the largest commercial scale if not the largest, commercial scale solar coupled with battery installations, the 2-megawatt PV system, coupled with 4.5 megawatt hours of storage in Pall Mall. The interesting fact about this is that it's not a load shedding solution that we've provided to this customer, but one where the business case is successful on the basis of a load factor correction application. So essentially, we've got a system in place that allows them to control the amount of load that they're drawing from the grid. And as soon as they bridge that, they pay heavy penalties. So the business case really is strong just on this basis alone. So it's a good case study for what can be implicated elsewhere in the market. Another great success from this week. In fact, we were awarded a while ago, we signed contracts this week. So orders have been placed right now for what will be the largest PV and battery storage for a commercial customer in South Africa. So that's on the other big telecoms provided to in the country. So it's for their head office in Johannesburg, 5 megawatts of PV and 6-megawatt hour storage solution. So that's really sizable and again, will help us put forward a case study for other customers of a similar size and scale. Third point to note, I think the financing of storage solutions is something that is fairly new to the market. So everyone is running around trying to get back up power in place hard to actually own that and sell the capacity or sell the power that's being delivered to customers is not that straightforward there. There are accounting triggers. So you've got to be careful in terms of putting forward a straightforward lease or rental structure and getting that bank as well in getting debt finance in place given the life cycle uncertainty that you've got. So it's really dependent on how heavy you run that battery, which is going to determine its lifespan essentially. So we've made a lot of significant inroads in terms of putting together creative financing solutions plus contracting that goes with it, which will hopefully allow us to roll out many more of these types of installations. And this should give you a sense of how we've been running hard this year, a testament to the team and how we've had to build out our team quite quickly. So we've increased the number of proposals that we're turning out to the market by over 100%. The number of awards has increased by more than 200% and we've got in excess of 40-megawatt hours of storage solutions to the market. So a lot of these are now converting and we're delivering on those as we speak. I think I mentioned already that we have in excess of 300 projects throughout the country and a couple of outside the country as well, which we operate and maintain and about 1/3 of those, we own some equity stake in as well. So it's a very complex business that we're running, but we're bringing in line various processes and applications to help streamline that process going forward. This is my final slide, just to give a bit more color to the partnership with A.P. Moller Capital. So A.P. Moller Capital and Reunert 50-50 partners in Lumica. A.P. Moller Capital for those that I know, you're probably familiar with that little logo there, which is mass shipping. So A.P. Moller Capital is private equity fund manager essentially, a sister company to A.P. Moller Maersk. And they've raised the Africa Infrastructure Fund in 2017, which is a $1 billion fund focused on energy and infrastructure assets in Africa. So the projects, the capital that's rolled out on our projects is coming out of that fund for their portion of the equity, of course. And they're in the process of raising a second fund, which will -- we can tap into as and when required as well. The value that this partnership brings together, I think it's important to highlight a few points. So I think the value system of both businesses is very much aligned. So there's a strong meeting of the minds in terms of how we approach the business, what we do, what we don't do, it's a very strongly aligned process there, which follows into the ethical business side of things. We really need to make sure, particularly in some of the markets outside of South Africa that we are operating in the most ethical manner possible. And having the systems and processes in place from both the organizations is really helpful for us to be able to put forward a strong product and argument to the customers that we're servicing. The same can be set for ESG. Reunert has a very strong ESG driver at the moment across all the businesses within the group. And the same goes for Lumica -- AP Moller Capital. So we have stringent processes for the organization in terms of how we run our business. But I think most importantly, in terms of the projects that we're rolling out. So strict ESG guidelines that we need to adhere to before any project is given the go ahead and that flows, of course, through to the fund. So it gives them a lot of comfort that we -- the ESG risk on these projects that they deploy capital into is low and that we're going to monitor this on an ongoing basis. AP Moller Capital, another strong positive that they bring into the partnership is access to funding, not only through the fund itself at various other debt providers that they have long-standing relationships with European DFIs for one that can come in on a project level if needs be and various other relationships, including the South African bank is also they've been around the block fall for a number of years now, and that allows us to do more from a funding perspective on the projects and within our organization. Reunert, of course, bringing the industrial and operational know-how. Most importantly, local know-how. I think the local knowledge gives the A.P. Moller Capital team a lot of comfort that we know what we're doing on the ground. We have been around here for over 10 years in this business, but Reunert, it's been around for far longer. So leveraging off their experience and the operational on the ground is valuable to the partnership. And then finally, A.P Moller on their own, bring with them a significant pipeline of potential project opportunities. I think through A.P. Moller Maersk and Maersk logistics and cold storage alone, I think they've got a demand in South Africa of around 50 to 60 megawatts split between a number of sites. So there's an immediate pipeline of projects that we're currently tapping into and trying to take advantage of as well. So that creates a lovely synergy for us as well as opportunities on the continent as well. And on that note, I will finish off and hand over to Alan for questions.

Any questions for Grant or Terry on his portion Sean?

[indiscernible]

I'm going to suggest is Nick in the financial portion is going to cover exactly that. So he'll actually talk through the project nature of the revenues and also give you some of the disclosures. So I think it's probably best to hang on to that and we'll actually cover it very nicely in a couple of couple of slides. Any other questions?

Thank you. So I know there's computations between NERSA and Eskom and trying to roll out sustainability and solar panels across the country. So they haven't actually committed on tariffs, and I think you mentioned about the tariff rollout eventually. Will that eventually be resolved? Or is that more a NERSA issue than a question before this audience, sorry.

I want to chip in at a later stage as well. I think the tariff question within this. I mean, NERSA has made a lot of great inroads in terms of the licensing and regulatory aspect of the market. From a tariff perspective, it's currently open for comments. So Eskom and NERSA have put out a tariff structure that's open [indiscernible] which essentially shifts more away from an energy basis to a fixed tariff base where the more and more renewable energy that you have online that's essentially going to eat into that revenue stream is going to be covered by a fixed cost base which allows Eskom then to service its fixed costs across fixed infrastructure. So yes, there will be a change. We just don't know exactly what the quantum is going to be. We've got a sense of what it's going to look like. My business view, I think market conditions are going to prevail and the economics are going to prevail. And I think if they make a fixed tariff that's Skyhigh, no one's going to take up any renewal, they're still going to be faced with the generation issue. So you can do that, but it's going to dissuade the entire market from moving towards renewables, and we're still going to be stuck with low cheating in 10 years' time. So I don't know if you want to add to that, Joe?

Thanks a ton. Eskom has released the proposed tariff structure or restructure. As Grant said, there's going to be a fixed cost component and then the variable costs or your energy charge on the bill will essentially be decreased. So our estimates for a baseload type customer, it's about a 10% decrease in the energy charge, and then that has shifted over into fixed cost. So for a typical base load customer, the price or effective price will pretty much be the same. Those customers who are taking on a more variable load they will be penalized more but we see the increases in Eskom's tariff year-on-year would sort of compensate for the decreases in that energy charge component.

Okay. Yes, perfect. I mean, Nick might correct me on these numbers. But if I look at the CapEx spend for the group, right? You set up about ZAR 260 million on renewable energy cluster. And that is about 33% of your total spend on CapEx over that period cumulatively. But if I look at the contribution of renewable energy, it just doesn't seem to be saving much. So it's currently 8% of your revenues versus it was 7% last year. So where is the lag there? I mean, like I said, just seem like to be scale. And then also, where do you see the renewable energies cluster scale into a business like its contribution going forward? Where do you imagine it growing?

So I think the -- I'm not sure about the numbers. I mean, you've obviously added them up, so I trust them to be correct. What Grant and the team have found through the last 12 months, is that whilst we've been trying to drive towards an increased BOO model, there's been an increasing number of customers we've actually been asking for EPC, so what the team have actually done is they've now throttled the EPC model. So we've now said to customers. We're not taking on any more EPC for the rest of this year and actively driving the BOO model. So that take up, it's not that the overall build has sort of not scaling. It's that -- because the capital that you'll see there is what's being put into boost the assets that we own. And that hasn't scaled at quite the rate we would like it. We've given the numbers I think sort of [ 40 ] megawatts is what we are, and that's moving up. But we're now actively and much harder driving that BOO model in it, and you should see an acceleration in the capital getting allocated to the BOO's. So just as the blend between BOO's and EPC that haven't quite got to the momentum that we'd like them to be over the last 12 months.

[indiscernible]

Yes, but you're looking at CapEx. So if it's CapEx you're talking to, the CapEx will be recognized at the completion of the project, the revenues you'll actually see in the financial metrics a little bit later. So it just needs to look at -- if you're looking at CapEx, that's the number -- you'll see that in the number of megawatts that have been built. If you're looking at revenues, you'll see that in EBITDA, which we'll talk to you about us. Any last questions?

Let's talk about batteries. Okay. So I don't know if you guys know this, but last year, South Africa spent about ZAR 12 billion importing batteries. It's roughly 4% or 5% of the [indiscernible] balance of payments. It's a significant number. And the thing that's fueling it is load-shedding. The inability for people. And let me sort of clarify this a little bit. This segment that has spent this ZAR 12 billion importing batteries was mainly the residential and small business and even larger businesses in the C&I space, but for a small part of their load. We're really saying this year, we've got a lot of Stage 2, and we've got to deal with this. And Stage 2 is quite disruptive, not closely like Stage 4 which really affects the C&I space. So it's in the lower-end business. I'll elaborate a little bit more about what this product looks like, but that's where the money was spent. And this growth was about 3% up from the prior year. And if you look at the numbers for '23, it's just flying. It's just because now the C&I space is saying, hey, guys, the writings on the wall, this with us. If you look at some of the numbers, this deficit of production is going to stay with us for some time. The latest forecast I saw was 18 gigawatts short by the end of next year. So yes, you'll see a huge amount of embedded going flying up, but still, there's going to be a long period where there's going to be this massive deficit in production. And if we have a deficit in production we have load-shedding because that's the only way that we can actually recharge our resources at client and so forth. So if you look at this market segment, that was driven by the residential space demand and small commercial space. And if you see who serviced it, in South Africa, there's only 3 really significant battery manufacturers, it's us, Freedom Won, [indiscernible]. And we only made up about, I'd say, 10% of this number, maybe a little bit more. Freedom one is but bigger. Maybe we made up 15% of the ZAR 12 billion. The rest with direct imports. From China, mostly from China. So it's a market segment that one has to be -- well, first of all, you asked the question, how big is our demand compared to the world production capability, and it's insignificant. ZAR 12 billion, even ZAR 20 billion or ZAR 50 billion worth of batteries is a fraction to the production capacity of these countries. I did a quick calculation, as I said to myself, we should be producing about 40 gigawatts of power in South Africa. I think we're short by about 12 gigawatts or 15 gigawatts. But even if you take South Africa at 40 gigawatts and you say this -- let's run the country for 4 hours of batteries, just property number. That's 160 gigawatt hours. CATL produces 90 gigawatt hours per year of battery power. That means within sort of 2 years production, if we dedicated a CATL to South Africa, we could run stage a 4-hour load shedding with their production capacity. The point I want to make is, this market segment, which is the lower end market segment is can quite easily be serviced by the production capabilities of the big battery producers. I know that Huawei is just placed an order for 2.7 million batteries for the cellphone towers for backup. This is in the 5.2 kilowatt hour range. What happens if Huawei satisfied with the CATL if that demand diminishes, there will be a massive influx of these low-end markets batteries. And I'm telling you this because when we build a BlueNova strategy, we are very cautious to build a big business in that segment because there's going to be a price war. There's a lot of -- it's the era of moving away from when we still build televisions at [indiscernible] for Panasonic to now being as produced by the Samsung and the like. That market segment is going that route. And we're certainly not planning to go and plan that low-margin business, high volume stuff. Okay. So that was the point I wanted to make is that we, as Reunert must definitely focus on areas where we can differentiate ourselves significantly. And it's in the higher, more complex fancier systems where we -- if we look at the renewable energy cluster. And we work together with TFS and Apollo and CPI that more complex, higher power market, the C&I space is where we will flourish. And I'll get -- I'll show you some more detail behind that. So just quickly, what is the application that we service. The obvious one is the back up in the standby power. Everybody knows it. You have the system, it stands there it does nothing. There's no solar connected to it. But when there's power interruption, it seamlessly take over the loads that's connected to it. It's also known as the UPS submarket, uninterruptible power supplies. And we have a big product offering in that range. And it's all about securing the supply of power. The second, well, all the other business opportunities that we're pursuing are the ones that's looking at saving money. The cost of electricity has been flying up compared to CPI. If you look at the numbers, we're averaging around 13% year-on-year from NERSA and Eskom. And you can see that Eskom will ask for a huge number this year. That was probably settled at about 15%. Now what that means is that it creates a huge opportunity to find ways of not using energy when it's really expensive. That's the so-called arbitrage market. Arbitrage market, or load shifting market is essentially -- look at when energy is cheap, which is like at night, like at the moment, typically by rand, ZAR 110 around the country. And then in the morning between 6 and 9, that energy costs 6x more, even 7x more. And if your cost of ownership of energy storage devices, let's say, ZAR 2 per kilowatt hour cycle and you purchase for ZAR 1, you have energy here at ZAR 3 kilowatt-hour. And when the bill comes or when the demand comes at ZAR 6 or ZAR 7 per kilowatt hour, you use your short energy, and this is a huge savings. And that savings so much that you can basically find yourself but having a breakeven on the CapEx of that device in about a 4- to 6-year period, depending on the tariff increases. So arbitrage is a great mechanism to sort of convince the asset managers and companies that, okay, I have to take out a couple of million rand for a backup system, but what happens if load-shedding disappears. And that's one of the big questions that people ask. And the answer is, well, arbitrage is not going to disappear. And a natural fact, I see that if we look at the longer-term strategy of BlueNova the energy savings market will be the one that drives us going into the future, not necessarily so much the energy reliability, which is I'll be crisis at the moment. The other thing, I think you guys understand peak shaving. The whole thing idea is that there is a huge fee. Additional fee on your electricity bill for demand charges. And that's the sort of 30-minute window at the average of the maximum draw in any sentiment window. And you will receive a bill as much as ZAR 250 to ZAR 300 per KVA for that peak demand. And so what we do is we fill up the batteries with energy, and we monitor this peak demand. And as soon as we see that it exceeds the threshold we then discharge these batteries, which means that energy is not coming from the grid. And hence, we managed the big demand charges. And the places that really likes this a lot are shopping centers. We've got the Grove, we've got Pall Mall together with CFS. And all the rates. I mean I've spent a lot of time with [indiscernible] and resilient and growth point and a few others. And they have plans to spend billions of rands on battery energy storage systems in order to manage this demand charge. Backup for them is like, yes, okay, they've got the generators, they've got a plan. They're really not building business models on backup. They're building business models on arbitrage and big savings and demand management. Then another market segment that we address is just self-consumption, essentially where institutions, people, home residential spaces have got BV production that exceeds their actual own consumption during that period of the day, which is normally in the middle of the day. And those guys are taking that excess energy and charge their batteries and then they discharge those batteries over a longer period, let's say, from 4:00 afternoon until the and the self-consumption market together with its benefit of providing essentially off-group application is a big market in South Africa, and that will grow even bigger. And then I think Terry mentioned about grid stabilization. One of the things and features of our batteries, and I'll get to that earlier or later is the ability to quickly discharge our batteries, sort of the so-called 1C battery. Now 1C battery means that you can discharge the whole battery in 1 hour. And that is what unique because it's a high-performance battery. It's really a segment that we focus on. And that is what the characteristics of your batteries should look like if you want to be able to stabilize the grid. And so we definitely position ourselves to provide solutions for grid stabilization as well. So that's just in summary of the areas that we focus on. So how does that map on to our product range? Well, I hope you can see that. We've got essentially 5 products that we bring to the market. On the far left, you see the mobile power series. And these are little 12-volt batteries that you can be using for gate motors, for alarm systems for small UPS systems where you don't necessarily have the power going through the DB boards, but directly at the loads. And it's a highly competitive environment. It's distributed through our big distribution channels like Voltex, ACDC Takealot all these type of channels. It's the market area, which I said to you previously, one must be very careful that you build the business on this area. We do have a strategy where we're going to make these batteries smart. We want to connect our batteries to the Internet. We want to make them think for themselves so that they can communicate their state of health and want consumers of abuse. Lithium batteries they might sound wonderful. But one thing is they're very finicky and they're very fragile. And if something goes wrong, you don't charge them properly, we discharge in too quickly. They age quite rapidly. It's always like a tyre of a car. That's not pressurized proper and the temperature is not right. You could quite easily half the life of your battery. We want our batteries to be smart and smarter than the competitors so that people would feel attracted to buying and maybe paying a little premium for something that is not going to just die after 3 or 4 years. The second segment is the residential segment. We've got a product there called [ RadPower ] also a highly competitive market. I think are we going to check there's about 18 companies that play in that market. Our two big competitors are there, but there's a myriad of other Asian companies that compete with us there. We've managed to secure a very good footing also again through our main distribution channels based on the fact that our batteries have got high-performance characteristics. And we only use A-grade cells. We've got a fairly advanced BMS that communicates to a back end with remote monitoring. So it's a higher-end product. And it's an interesting segment that we're busy with. Then going to our high-capacity batteries. One of the problems with these low-end batteries is that the ability to deal with big surges like double the power requirements is limited. They can normally do about 20% or 30% overlap. But some of the applications, if you start looking at things like lodges and large commercial installations, where there's a lot of inductive loads, like pumps and air conditioners and all these type of and even maybe some transformers. These loads tend to want to have a 300% overload capability. So we developed a range of products called HC, high current, high capacity. And we're very successful to dealers also a 48-volt market [indiscernible]. But very successfully integrated with all the inverter suppliers. And yes, we differentiate very, very specifically there in terms of our performance as well as our remote monitoring and diagnostics. The next step, we go to high voltage. So all these other ones were either 12-volt or 48-volt, and then we do a 10x jump to about 500 volts. And this is where we start dealing in the C&I space. As I mentioned before, this is the segment of the market, which is now really coming to the party. Everybody is waking up. You'll see all the big corporations, big South African institution. I'm talking about 200,000 to 300,000 companies are now at the point where they say, listen, we've got to put something in that keeps the lights on. Terry alluded to the thing about the argument about what's the -- how do you do the ROI calculation or the breakeven calculation. Well, previously, the people were comparing with ZAR 1.60 per kilowatt hour because we competed with Eskom. Now diesel is sitting at close to ZAR 9, ZAR 10, ZAR 11 per kilowatt hour. If you had to compare Stage IV scenario between a diesel generator and a battery storage system, the battery storage system pays for itself after 2 years, and then you're in the money. So if you have a view and remember, that's just on stage 4 nurturing. I'm not talking about the arbitrage opportunity. So this reality has really something in, and we see that this market is just going in this direction. So we will be focusing a lot on the high voltage let's call it component battery business. And then the one behind it is the battery energy storage solution, where we have a fully containerized, fully integrated battery with inverter, with energy management system. So that is sort of a drop-down plug and play. And we've just recently I don't want to say that your 5-megawatts by 6-megawatt hours is the biggest one. We have signed a contract for a [ 6 x 17 ] megawatt hours system, which is the mid-state [indiscernible]. Midstream estate. And I think that thing will go up to double that to 12 x 30. They need 12 megawatts and 50-megawatt hours. And it comprises of those containers, which we manufacturer, you'll see them at the factory later this afternoon. We're going to manufacture them there, and we test them there and the time that we spent on the site is absolutely minimal. And we don't really depend on any of the infrastructure. We tie in on the mid-voltage time points, and our commission is actually a very short exercise. So I'm going to say this again. Where do we focus? What is the Reunert focus? And the Reunert focus is basically to add value in the C&I space with high power, high current and smart battery systems. We've invested quite a bit in our R&D capabilities. We've appointed a whole lot of young and smart engineers, and we see that those our strategy is to provide battery entry solutions in that market segment with our own IP because the applications are fairly complex. One thing they are but you know they all just plug and play, they're not. [indiscernible] Midstream state has got 35 0.5 megawatt transformers. If that load had to shut down, we have to do a fancy start-up sequence. And I've just come back from Germany because we're partnering with some German companies. And they also said, Well, that will also be the first for us to get -- to wake up the so-called black start load. And that's where we're going to focus. We think that the real -- the gated community Industry is a big target for us. Just to give you an idea, if you look at [indiscernible] has got 6,200 homes, by house, they pay more than 40% less for backup than had they done it by themselves individually. A 40% -- and you've got the so-called diversity gain factor, which means you're not limited your 8-kilowatt in the 12-kilowatt hours, you can get 20 kilowatts because everybody is not switch the load. So you've got this diversely gain benefit as well. And I predict in the next 2 years, gated communities will there's thousands of things. They're all emissions. It's the most sensible. They still have distributed PV on the roofs, but centralized storage. Okay. So are we going to move away from this low-end business? The answer is no. It's still lucrative. It's great to manage our recoveries in the factory and all our heads. It is still a very healthy revenue and profit to for us. But we will differentiate by making those products or unique through adding this smart IoT self-testing and reporting systems. And I'll repeat, we will limit our exposure to those segments of the market, which are just pure [indiscernible] batteries. We're going to just fight for price. We won't be doing that. Okay. So what we've done? Yes, this was one of my dreams. We've managed to get our 6 buildings down to 2. We built a 4,000 square meter facility down here in Somerset West. For those of you who have come with us just a little bit later on. And the benefit of it is significant. Just the flow from goods receiving to the stores to kids, to work in progress back to testing, and it's all under one roof, you see this afternoon. This massive improvements in the operational efficiencies and controls. So the other thing is we're only 8 years old, and we're continuously improving the business with improved business processes. We should wrap ISO 9001 this year. And we corporate tie as we go along. So Reunert is now a significant business we've seen year-on-year growth of 50% to 60%. This year, we'll be at least 55% bigger than last year. And so we have to make sure that we have the right governance in place the right controls it becomes -- there's a lot of people who work at Reunert that I don't know. That was scary. I'd like to buy each person a box of chocolates on their birthday cost me about ZAR 11,000 right now. But I have to go and check the names, and I never met these people. 124 people going on 140 by the end of the year. So it's getting significant. As I said, again, the growth, we've manufactured more than 40% in the first half of the year compared to last year. The second half will be bigger than that it will be like 60%, 70% because we've got to finished midstream. And yes, the contract with Midstream, I think, is going to expand. What I like about this contract is that they're significant. They're like sort of 10% of your annual alternate and it's really nice to be able to give this type of contracts compared to all this fast-moving consumer stuff where you have to carry a huge amount of stock. The customers are literally the [indiscernible] for choice. They just want to walk in and buy something. And sort of puts us strange working capital, where the other ones, we're still in the world of luxury where we can as 70% to 80% deposits on ZAR 100 million style contracts and run a cash-neutral project. So again, saying that, that said market segment is the one that we must focus on. I think that's me.

I'm going to ask us to hold our questions and push through to finish the presentation, and then we'll open up the -- for questions for everybody.

Good afternoon, ladies and gentlemen. I think it's needless to say that you are quite aware that the South African electricity market has liberated in the last few years from that Eskom monopoly of old to a more fair and equitable access to the national grid infrastructure. So we believe that Eskom is not the generation or the retail business of the future and there'll be multiple retailers and generators entering in the market, and they'll become as ubiquitous as it is in, for example, the states and in Europe, where you can switch between providers of choice. So we're seeing that there's a significant opportunity in the market, and that is what we're here to pursue. So the total grid-based electricity supply industry in South Africa, just to put it in perspective compared to other industries. It's about 3.5x the revenue generation of the South African gold market. And in contrast with the transition to more renewable resources, there isn't a depletion and natural resources inside for that industry. So the Eskom municipal electricity revenue generation was about ZAR 160 billion last year. And the market is largely occupied in terms of demand by the energy intensive users group, which is up about 50% of demand and then everyone else sitting over share at about 60%. Just to flip back to introductions really. My name is Jenna Harris. I'm the co-founder and Chief Executive of Apollo. Which is the group's grid-based renewable retail business. I have an engineering and business background and have been working in the power and energy sector in both South Africa and Australia for the last 20 years. So just prior to starting Apollo was on one side, advising these blue chip companies and the energy intensive users group on their energy procurement strategy in the wake of the 2021 market liberalizations with the generation cap being invested and how they could go about their procurement strategy to buy renewable power themselves and wheel it to themselves over the grid. On the other side, I was assisting RPPs on their new projects to burden to the government procurement rounds, the REIT and the risk mitigation program. And I think it's all quite common knowledge that those projects are really on a race to the bottom in terms of returns on equity. So they did emerge the opportunity for that segment of the market, the everyone else section to also get access to this lower-cost wheeled supply solutions. Where that everyone else is sort of the under 10-megawatt size fractions where they don't necessarily have the buying power or the knowledge to transact and private sector trade of electricity. So these type customers are typically buying in the 50- to 100-megawatt size fractions of that utility scale supply. So Apollo has really been born to service that segment of the market, retailing to customers in the 0.5 to the 10-megawatt size fraction and giving them access to that more affordable cleanup power solutions. So market size at this point is simply huge. I mean there's a number there of 180,000 gigawatt hours per year. That's currently been consumed over the grid. And as I mentioned, energy intensive users group, occupies 40% of that. So everyone else this year, they're going to be resorting to a mix of rooftop solar, the embedded solar supply balance of Eskom and the wheel supply going into that market in the future. So what is wheeling? I think the -- some of the basics are wheeling are quite well known, but I will go through that with you today. Wheeling is essentially the mechanism under which private trade can be facilitated over the grid. To put it very simply, if you imagine the national grid infrastructure being like a swimming pool, but water and on one side, the water out on the other side, you've essentially got a balance. So because of the complete fungibility of electrons over the grid, the same can occur share where the geographic location of our social supply and where our customers are actually relevant to trade of electricity. The only thing that makes more complex is the grid network that a customer is connected into. So whether it's a municipal grid or directly connected into the Eskom Grid, it's really a credit flow process that flows over other one network or two networks. So to give an easy demonstration, the simplest form is an Eskom connected generator to an Eskom connected customer. Our supply is generated at high-yield areas, where perhaps you might be aware that yield varies across the country. We're in the more centralized or the more interior regions. We have higher solar yields. And then as you move out, you got to get drop about 30% decrease in yields more towards the coast. So we generate in the high-yield areas, feeded into the grid, and then we notify the grid operator to whom that electron credit is to be transferred to ends up being a credit process. So Eskom then supply the balance of supply to those customers. So the difference between our price I can point out here. So this is our supply contract to a customer, the difference between our price and the credit that the customer sees or which was actually the Eskom wholesale price because we're shopping out Eskom wholesale electrons for electrons. That's essentially the savings that the customer experienced. No savings are compounded year-on-year as the price between the Eskom wholesale price and our prices start diverging more. Our prices increased by CPI, whereas we've seen with Eskom over the past decade have increased on average about 14% per year. This year, we've seen a market shocking 18.4% approved by NERSA. And next year, we've got 12.4% increase. So I think it's needless to say that every customer in the market is scrambling to reduce their exposure to Eskom price increases. So the way Eskom actually gets their prices determined as by the national regulator, the prices are determined by a cost-plus method or a pass-through cost method instead of a competitive pricing method. So you have inefficient pricing basically coming through the Eskom system. And that is why would like to most customers would like to have a hedge against them. So our retail products are designed with the customer a month to provide flexibility and maximize on the green energy coverage. So that's the amount of green energy they have on their electricity consumptions, offering them supply, which covers about 50% of their needs from day 1 which far exceeds what you could typically get out of a rooftop solar. Then we're able to upsell in future when we bring in more blends and could typically achieve about 100% supply to those customers. So product maturity and market maturity. We're obviously in a very nascent electricity market, and there's varying levels of maturity across products and then markets and mechanisms to facilitate transfers of credits. So we've had a number of iterations of commercial models and market testing to find a recipe that works in today's nascent market. The markets, financial mechanisms and our products range from under development to early stage deployment. So we're driving betterly deployable products now with an eye on ongoing policy and regulatory changes in the market on both the national level and the municipal level, which we're preparing to capitalize on as they actualize. Within the electricity markets, the most mature already is the Eskom connected generator to Eskom connected customer. So that wheeling framework has actually been underway for probably the last decade for approved generators. So for example, Eskom frequently wheels between their Secunda and their Sasolburg facility. So that mechanism we tried and tested and well deployed. Just out of interest, in the past, Eskom's always used an e-mail system for nominations of credits to customers. Obviously, with the huge influx of new nominations coming in for credit transfers, they're moving over to an RPP port to start to digitize those because I'm sure 1 million e-mails as come every month would probably kill them. Okay. The next market maturity as an Eskom connected generator to municipal customer. We have a few examples of that under play with Powerex and some of the generators supplying into Nelson Mandela Bay. And then the least mature is the municipal connector generated to municipal connected customers. So there's no sort of one size fits all on the municipal side. And each municipality is at varying levels of readiness to facilitate wheeling. There are some municipalities to our debt against it and then some municipalities who are actively working towards it. On our customer taps, large power users with consistent base loads are the ones that are easiest to serve in the retail market and we've developed new instruments to start dealing with customers who have seasonable variable loads, for example, typically customers who have shutdown periods we've developed instruments to make custom products for them. And then in our side of the smaller power users in the domestic market, which we have on for deployment next year. On our products, we currently offer that conventional retail product for that customer size in a 0.5 to 10-megawatt size traction. And then we're expanding that to a wholesale product to customers who use an aggregate over 10 megawatts across multiple sites. So this could be, for example, business -- like a Nandos, for example, as many sites across the country. Then we contract directly at the head office. And finally, the Virtual Wheel product, which is available on both a wholesale and retail basis. So this is in the pipeline for next year, which is suitable for very much any size customer. In any district, whether it's municipal or Eskom as long as they're in a municipality or a good financial standing or the customer and good financial standing. Okay. The environment we're operating in have a balance of incredible opportunity and very difficult challenges. Some of the inhibitors that we have are firstly around municipal debt. Since Wheeling is a credit transfer process, Eskom is not willing to transfer credit to municipalities that owe them huge amounts of money. So that eliminates a huge chunk of the municipal market where there are really good customers facing those municipalities. So I think that, that will change in the future because we are seeing incredible pressure from those customers to be able to access will power. And I do understand Eskom's working on a mechanism to facilitate that. But it is currently at an inhibitor. As Terry mentioned earlier, the NRS load sitting framework or load curtailment. So this is on the flip side, the load curtailment of customers. And that's really instead of a customer being load shared, they are just asked to turn their consumption down consistently. This has very recently changed previously, there was no allowance made for customers who are buying wheeled supply to mitigate the low curtailment requirements. But very recently, we've heard that the NRS groupings are going to update their loading framework so that there will be some relief for customers on low curtailment who do buy wield power. So that's a big game changer for us. Then on municipal deposits. So literally in the time that between the slide being developed and now, municipal deposits was an issue and it was a blocker for us accessing any municipality, except for City of Cape Town. Basically, what this is that an Eskom customer needs to have a deposit with Eskom for their associated with their account and Eskom had called for everyone's deposits to be updated if they wanted wheeling. So for municipalities, this was a huge amount of money that none of them could raise the funds for, except for City of Cape Town. So since the making of the slide, Eskom has actually said that they're going to waive that deposit update requirement for municipalities and good financial standing. So that has opened up huge opportunities in those other markets like Ekurhuleni, eThekwini, Nelson Mandela Bay, most of the A municipalities. Game-changing opportunities. Eskom's virtual reeling framework, which is currently being piloted is a huge opportunity for us. And this essentially bypasses -- enables us to bar pass the municipality in the credit flow process. So municipal credit and municipal risk is something that we have to carefully manage and through virtual reeling that credit flow through the munic can be bypassed and we can essentially retail to any customer in any municipality without having to go through them as it's basically a credit stock process. The Eskom open market system. It's been well publicized in the public domain, and that provides us spillage risk mitigation for our business. And that's not been there in the past. This quite critically provides us with some level of load shedding resilience, as supply that we can't get to customers due to load shedding can be sold into Eskom's open market system. So the more load shedding there is, the higher the price that Eskom offers to the market. So as an example, just over of the last 3 months, Eskom's offer prices almost doubled due to low shortages. So that price is closely linked to Eskom's marginal cost of production, whereas they're burning more diesel on their diesel peakers for emergency dispatch which is in the ZAR 4,000 to ZAR 5,000 per megawatt hour range that offer us that they're offering the market to avoid them from dispatching on the diesel peakers goes up. So load shedding in our industry actually offer some benefits because you're owning a commodity and a supply shortage. So the risks in the industry, I think tariff restructure was mentioned. So tariff restructure beyond the currently proposed amendments. We're quite familiar with what amendments Eskom has put on the table at the moment. Anything beyond that or policy change was served to stagnate the current wave of investment in the space poses a risk to this industry. So far to date, the government and Eskom have actually created a very good enabling environment for public participation in the space. And that's quite evidenced by the over 4,000 megawatts worth of new generation capacity that's been registered with NERSA to date. Sorry, that's just over the past 1.5 years since the generation cap threshold was lifted. So there's definitely a very strong call from business and the investment community at large for those frameworks to be maintained and other government obstacles and new generation capacity deployment to be lifted and alleviated. So I think just to sum up, I don't think I have any more slides, but yes, I think just to sum up, we've been very fortunate to have Reunert as our majority shareholder who shares my vision and the transformative changes to put in the energy sector and how best to capitalize on these changes. Additionally, it's a very highly complementary business within the renewables cluster covering generation storage and no control. So all of these businesses can leverage off each other from mutually springbolting the group forward. So our business model is not capital intensive. It revolves around our legal, commercial and financial IP. That's a contract business. And then the digital technology is under deployment to facilitate trade. So the business has been for highly scalable offering opportunities as far as the market is big and provides annuity revenues based on medium- to long-term supply contracts. Forward to reflect back just to the size of the market on the first slide, if we were to occupy just 0.07% of that market, we would have a good business. That's definitely not our aim. Our aim is much higher. Anything higher than that is a fantastic business, okay.

To try and explain this concept, I just want to give a few examples here. One of the first things you do when you install solar in your own home, for example, you try and take load off of the system. So the most obvious example is you'll change your incandescent lamps, your lighting, you will change to LED lighting. Depending on the size of your home, if you can cut out 1, 1.5 kilowatts of load and you're burning those lights for maybe 4 hours in an evening, just in the battery capacity that you would need to support that load overnight, you're probably saving ZAR 30,000 to ZAR 40,000. When you add the panels that you need and the big inversions and so on, you may be moving closer to ZAR 40,000 to ZAR 50,000 in the capital that you're saving by taking -- by managing your demand. Similar, if you've ever had solar installed in your home, you'll see the first thing they do, they split your DV and they have essential loads and nonessential loads. During load shedding, only the essential loads run. And that, again, is because you don't want to spend the money to size this overall system that big that it can handle your whole load, you want to take load off. That's -- those are very simple examples of demand side management. Grid interactive buildings, let's say, for example, this kind of building where you may have hundreds of nodes that will operate independently of each other. And a good interactive building is a building that understands load, understands its time of use tariff, understands where the energy is coming from. So for example, if you're in load shedding and your generator is running, that building would prefer not to run certain nodes. You wouldn't want your hydro works to run, you wouldn't necessarily want your aircons to run. You wouldn't want your geysers to run. Otherwise, you have to size your generator so big that the capital cost is much higher. That's at the heart of what a grid interactive building is. It's a building that is smart that understands its load, understands where its energy is coming from and understands what the cost of that energy is. By doing that, if you look at that curve on the bottom right, you can do what we call flattening the load. So if you can see on that curve, you'll see kind of a purple raw curve and then you'll see the kind of life blue flattened curve. What you've done there is you've cut load out of peak tariff times and you move them into standard or you move them into off-peak and you're paying less electricity. In the process, you flattened your load. What that means, just like in your home example is you can use less solar, you can use less battery to achieve the same result. Very significant. Managing the load, managing the demand is very significant in the overall deployment of renewable energy. So by doing this, you avoid these undesirable peaks and penalties, you pay penalties for maximum demand. You flattened that load profile. You restrict electricity wastage. So for example, almost every building I would think overnight the hydro bills keep running, the urns keep running, the geysers keep running, all of these loads can be switched off with no impact on the human experience of operating in that building. And then, of course, there's this issue of optimizing the sizing and cost, this high capital cost of deploying renewable energy. That's at the heart of what we have filed in the process of developing at the moment. The [indiscernible] solution that we've -- that we are in the process of rolling out right now, puts this kind of control, this demand side management control in the hands of the user. So users can now shape that load in their building. And any user with the time of use tariff would benefit from moving those loads around from flattening the curve from eliminating things like maximum wide. Our estimation is that Eskom has 100,000 commercial industrial customers. And there's probably another 100,000 within the various munics. There's no equivalent solution for what we are in the process of rolling out at the moment. So building management systems have been around for many decades, but they're a very clunky, very expensive, very disruptive technology to deploy. If you look at the right-hand side of the curve, you can see the hardware that we've developed. And you'll see there, there's the 4 by 4 plug point. It literally fits where the passive plug point would have been. You can remove that passive device. You can install this intelligent device. And it's an edge controller. So whatever load you've got against it, you have full knowledge of that load. You know what the load size is, you know that it's on or off, and you can switch it on off. So you can imagine if we take the one at the kind of top leftish is an isolator, very typical, everybody's seen isolators. There's an isolator on every geyser. There's normally an isolator on pool pumps and those kinds of things. So the deployment of this hardware is quite the installation is not disruptive at all. You literally remove passive devices, you install active devices, and you created a smart building -- a building that can interact with the grid. So I hope I've explained the concept here. Demand side management is important. It's been tried for decades and decades, where the most typical one is the little curve on the sABC. Back in the day, people remember sABC that little curve and they would say, please go and switch off your loads. That's demand side management. They're trying to encourage behavior to limit the demand so that it can match your load. What we've developed here is this demand side management solution, which is in the hands of the users, okay? So we're designed, we've developed, we've certified the technology, the hardware and we're in the very, very early stages of rollout of this technology. The mechanical form and fit, which I've explained, is it's equivalent to the existing passive devices which means it's inexpensive, low disruption to implement and it's backwards compatible in the sense of even a building of, say, 20 and 30 years old can be converted to a smart building, you don't have to follow the installation of new buildings or new construction and so on to move into this era of grid interactive buildings. We're in the process now of rolling out partnerships with a body of insulation and implementing communities. We've designed this to have an annuity income. So we -- of course, we manufacture and sell the hardware, but we want an annuity income that comes from the deployment and use of this solution. And we're literally in the throes of the first orders right now in the first [indiscernible]. So that's a little concept I wanted to explain, the kind of missing link, if you want to put it between this whole renewable energy ecosystem and something we're quite proud of. So I'm going to move -- I'm going to hand over to Nicko now because we need to move quite quickly.

Thanks, Terry. Afternoon, ladies and gentlemen. Yes. I see a few of our guests left after [indiscernible] and I waited for the wheeling staff to be over at the interesting part and now have the real graveyard shift here. But yes, I'm going to try and give you some more information about a very complex, in my view, thing we had to deal with in terms of disclosure and how we communicate to the market in terms of the guidelines and regulations which we are bound to. So in my presentation, I'll talk -- I'll refresh a little bit about the main business archetypes that we have in our cluster, which each of the speakers talked about now. Then I will delve a little bit deeper, specifically into the Lumika Terra Firma business, where we will speak about the main objectives, the creation behind that. Looking at the structuring of how we're structuring Lumika as well as diving a little bit into a PPA and how we structure a PPA contract. Then looking at the typical profile of a 1-megawatt PPA. Also getting to short question a little bit about the EPC versus PPA profiles. And then do some of the items that most of you have been waiting for since last year's Capital Markets Day, and this is what we will be communicating to you guys in the very near future in terms of the renewable energy. Okay. So if I jump into this. So we shared last year pretty much the same with you guys than this. Just to refresh, we have 2 main business archetypes in the renewable cluster being our product sales business, which is typically BlueNova as well as the EPC portion of Terra Firma, which is characterized by a low upfront investment other than some working capital. And then sustained -- not sustained, but immediate profit and cash profile that comes out of it. On the flip side to that, we have the more investment base annuity business which is the Blue business in Terra Firma and Lumika, which is the PPA contracts as well as our battery financing models that we are also undertaking. And then to some extent, the load control, which will be implemented that will also generate some sustained revenues and profits for us. These businesses are characterized by higher upfront investments, but it does deliver the sustained cash and profit profiles that we need. So in the past 12 months, very recently, actually, Jenna joined us from Apollo Africa, and that introduced a third archetype typically for us, which is sort of in the middle of these 2 archetypes. So Jenna mentioned that the business is not heavily capital-intensive upfront, but the business will deliver sustained long-term solutions because we're also entering into long-term contracts with our customers there. So to say, nice third archetype to add to the offering that we have. What we need to remember, however, is that the main objective for this cluster is for us to build an asset base that will deliver us with sustained profits and cash over a long-term period. But in this period, and sure coming to your question a little bit, we will keep on augmenting that business with our more immediate product sales and our EPC contracts as we go along. So we're not dropping that base and just building asset base. We're continuing to do that, but our strategy is to build the asset base on the long term. So if there's a fight for resources, in Terra Firma's business and we've to choose by -- between building an EPC or building a PPA, we would build the PPA, and we will build that asset base. Diving into Lumika and again, Grant touched on it in his discussion. The main reason why we created Lumika was for us to build this asset base to get into a partnership with a partner that can add capital that has ties to debt providers as also various operational arms, which we can access and shares the same values as us, with who we can build the asset base to deliver the sustainable geared returns, which is in excess of our weighted average cost of capital. The structuring of the Lumika Group is we are structured basically in 2 main components: the one being we have the operational arm, which is Terra Firma solutions, that houses the people, houses the functions and actually rolls out most of the projects. Under Terra Firma solutions, there is some asset companies, which is companies that was created before Lumika was created with some partners and which will continue existing into the future. And in under Lumika itself sitting next to Terra Firma solutions, there will also be some asset companies or SPVs. The partnership as those goals, which is 50-50 JV target of building roughly at 485 megawatts worth of boost within a 5- to 7-year time span, which we estimate at this stage will cost around about $100 million between the 2 partners. Looking a little bit more at the structuring and touching on why we are structuring it through asset management companies or asset holding companies or SPVs. There's 2 key reasons for that. First is risk management. So we want to refence our debt portfolio into this specific asset company. And we also want to ensure that we have limited liability in those asset companies. So we have the portfolio of assets in there. We believe our portfolio of assets speaks for itself and is good assets. And thus, the debt goes into at that level and the liability is managed at that level without exposure to the ultimate shareholders. The second reason why we have specific asset holding companies or SPVs is, it depends on the partner or the opportunity that we deal with. So we deal with various partners on the ground and those partners either than offering an EPC to the partner, we might say but let's enter into a joint venture together and build a portfolio of boost together which they typically have roof space or ground and we have the capability to build that and both of us make a good return on it. So typically, the asset companies can either be 1 of 2 being either subsidiary or joint venture, again, depending on the partners or the opportunities we go into. The asset holding companies are highly geared companies. So it's companies that operate at the project level. So it's typically project level gearing, looking at anything between 60% and 75%. The debt is nonrecourse, so we don't want to intend to recourse debt to the ultimate shareholders. And then the debt profiles are also sculpted in the beginning of years to ensure that the project remains viable, especially in the beginning period of that project rollout.. If we look now at our structuring of our PPAs and what the typical elements is within our PPAs, the main objective of our PPA is ultimately to provide us with an ability to own a well-designed and constructed plant from which we can sell energy to a bankable off-taker over a 15- to 25-year period. So that is the key objective for the PPA. We believe that we can achieve this by mainly 2 key objectives, having the in-house capability as talked about by Grant of engineering, construction and O&M, it's all under our own roof. This allows us to ensure the quality of the plants that we build ultimately and ensures that we can easily stand behind the plant that we build and offer our generation guarantees to our offtakers. This we affectionately refer to as a generation or a sell-side guarantee. On the flip side of this, however, is the fact that we need to protect ourselves in terms of what Terry spoke about. I think Terry or Grant mentioned it, whereby if the grid goes away. If there's a grid failure or load shedding or whatever, the plant shuts down ultimately. And that causes us to not be able to generate electricity and sell that electricity ultimately to an off-taker. So we need to protect ourselves against that. Same that Eskom and municipalities, let's call it, charge, a capacity charge. We're putting a line there and you need to pay for that. We are building a big piece of plant for an off-taker. And for that reason, we would charge -- we'll not charge, but we had, let's call it, buy side guarantees in that, where the consumer ultimately pays for deemed energy for energy that we could have sold, but due to grid unavailability, we didn't get to do that. There's also irradiance inconsistencies. So to the best efforts, we can plan to sell power during a period. And like we've had for the past month in Cape Town, no sun, and ultimately, we can't guarantee to our offtakers the fact that we're going to deliver energy in a period where we can't control the sun. So I think a key aspect linking to, I think, and this is a -- this is something that I've heard all through the presentations today is governance and this is key to what we do in Reunert, and this flows through 2 important things that we heard today is values and governance. So in our PPAs we run a comprehensive governance process which includes which is most important on our side, we would say, is the credit vetting of our offtakers. We're entering into extensively long contracts, 15, 25 years. We would know that we would want to know and ensure that the party on the other side of that contract can pay us with -- for the next 15 to 25 years. Diving a little bit deeper into that, our approach to this governance and our risk management strategy is typically that we undertake what I referred to as an onion approach. So this is looking at risk through various levels from your industry, your portfolio, your project up to your offtaker. And the thing here is the more you peel back the layers and as we develop a PPA or we develop the project and we peel back each of these layers and we mitigate these risks, the project becomes more valuable ultimately. And the reason for that is that the safer a project is, the lower the required cost is to invest in that project. And ultimately, the higher the return is that you will get out of the project. The key risk factors that we typically deal with is credit risk that sits on your offtaker or even your industry side. Exchange rate risk, which sits largely on our importation side, and we manage through -- there was a question, I think, to the defense side with hedging policies. So we ensure that we follow hedging policies. Liquidity risk, which is in 2 buckets being debt side as well as working capital side. Interest rate risk, which is a very topical thing and for -- everybody wants to know whether you are targeting fixed versus variable rates and there's arguments for both as well as the grid availability, which I referred to a little bit earlier, which can be managed through 1 of 2 aspects, a commercial approach or a technical approach. If we dive into how a typical 1-megawatt site looks over a 20-year period, one would notice I can draw a line almost in the middle at, let's call it T12. And so up to T12, you can typically see a scenario where you have higher debt payments with low tax payments and lower or subdued shareholder returns in your first 12 years. If you go back -- if you go on from the 12 years, generally, your debt falls away. So you've paid off your debt. You have increased tax payments and you have accelerated shareholder returns on top of that. The reason why the tax is low in the beginning period versus the second period is ultimately due to the influence that interest has on the debt portion as well as the wear and tear effect of the plants. And that's the reason why the tax is stretched. Over the portion of the period, however, we remain and we keep to our required rates of return. So the project over the project term meets our required rate of free returns. But Charl again, coming to your question, -- there is a lag in cash fund. There is a lag in shareholder returns as we build this portfolio, which is a natural thing if you insert the CapEx. But this is augmented through EPC that we continue doing. Now getting to the exciting part. So I'm not sharing any numbers or figures with you today if you expected me to do that. You will see that in our FY '23 report at the end of this year. What I will share with you today is what you can look forward to in our year-end report. So again, putting the context into this is we can only disclose certain items which is allowed for because this is at the company level, and as Alan rightly said, we disclosed at the segment level typically. And we can't dive deeply into it. But we want to take you through the journey. We want to take you guys and show you that the stuff that we are talking you upfront all time about how we're executing our strategy that you are seeing that and that you can buy into that with us with some more accurate data. So in 3 key buckets. First of all, we will look at our portfolio based on effective ownership. Now effective ownership. There's ownership, there's total ownership or total build and then its effective ownership. So in models where we have partners in it, and we will look at the effective ownership that we have in that plant. So if we have a 50-50 partnership. We've built a 10-megawatt plant on [indiscernible] ownership on that plant is 5 megawatts. We will look at the plants that we've completed building that has been built. We will look at the plant -- the amount of megawatts that is work in progress at that point as well as look at the amount of PPAs that we have signed but haven't executed yet. So that gives you a little bit of a glance into what can come into the years upfront. It must not ever be noted, that in that pipeline, it's typically a shorter duration than what you will typically see in your utility scale projects, which takes years. So you won't see us sitting with thousands of megawatts in our pipeline to be executed because that stuff has a quicker turnaround period. The diversification portion and exposure. We will share with you the number of plants that we've built, which will give you a fairly good idea when you look at the megawatts and the number of plants that we are not. There's no exposure to 1 major customer or to 2 major customers, but it's across various industries and across many customers. And then on the returns and financial effective ownership, we look at the normalized EBITDA. Now if we refer to normalized EBITDA, there's a lot of plants that we built during the year. Those plants will have only generated a small smidgen of EBITDA during that year. And what we will aim to do is to normalize that EBITDA to say to you if that plant was switched on from day 1 in the year, what that EBITDA would have looked like for the entire year. So that's what we effectively referred to as normalized EBITDA. We will look at the portfolio of debt. So how much debt have we inserted into the various portfolios up to year-end. The average interest rates on those debt. And then the portfolio value, which is effectively the cost of the portfolio. Speaking to your question as well. So I think you will see all of these disclosures ultimately come out at year-end. And then the average yields, which you will see, which will typically be our EBITDA across our cost. Now we believe, if you have most of this information, you guys can put it into your models and do some calcs. I know last year, we put some multiples and stuff on, I think -- I can't remember the gentleman at the back, but he asked us, but it's not our job to do that. It's your job. We will not do that. You guys will slot it into your models and you should be able to do the calcs. But I believe we have a good story to tell them. Exciting cluster. And yes, challenging, it's a challenging environment and remains challenging and -- but we have a good strategy going forward. Thank you. So that's me.

Thanks, Nicko. Okay. Questions.

[indiscernible]

When you say aggregate or maybe you can just...

My understanding aggregator buy from somebody and sell to somebody else. Is that correct for the [indiscernible]

Yes. So I think different names could be used, say, trader, but we're not doing day ahead market trading. Aggregation, we aggregate our customers and our portfolio of generators but something more simply understood as a retailer wholesale supply down to retail customers. So yes, aggregation is part of the function.

Maybe just a question to Terry and James. Terry, I think earlier you sort of touched on the smart meters by government. Do you see any opportunity there? I mean I've got a CVI electric switch in my house. I mean, is that an opportunity for you guys?

It's -- am I live? It's technically possible. it's going to take quite a big social effort. So to switch a geyser, if you -- when we are walking around, I'll switch my geyser for you if you'd like, it's on my app. To switch a geyser is technically very easy to do. There's a lot of social resistance to government now starting to interfere in your home and your geyser and so on. And then, of course, there's the effort to roll out. So if you take something like 1 million geysers, if we could switch 1 million gases, that's roughly a power station. So -- and the costs -- our estimates to switch those million geysers maybe -- and I'm speaking at the top of my head, now ZAR 2 billion to ZAR 3 billion. To build a power station, maybe 100x that is -- yes. So again, demand side management is a very, very attractive proposition. But to switch 1 million geysers, you need to get into 1 million homes, you need 1 million receptive individuals, et cetera, et cetera, et cetera. So it's technically [indiscernible] technically easily done. It's the social acceptance. It's the rollout. It's the -- it's getting buy-in that -- so you'll have seen articles in the news recently about the notion. So the answer is it's probably the cheapest power station government will ever build if they did that, and it's technically feasible for sure. But it's a big social effort to make it happen rather than a technical effort or even a financial effort.

All right. And then, James, so earlier this year, I went around just speaking to various people, especially the wholesalers who now went to ARB and AC, DC, et cetera. And they sort of indicated that the audience want to stock some of the unknown brands in terms of batteries. I mean, they spoke about Freedom Won is probably the key one, BlueNova, I think Solar ND as well. So I'm sort of trying to get a sense, I think, earlier you said there's about 18 players in there and mostly Chinese, minor thing is that they don't have further route to market. So why is that a risk?

It's a question of time. It's -- 2 years ago, people -- I was one of the disciples explaining to people what lithium batteries are. Now people understand the benefits, the quick charge and all these things. The moment you get to a point where you understand what's inside these batteries and you start establishing repair facilities, then you become more familiar with it. And so the likes of ARB, AC, DC, voltage, all these other guys will become much more comfortable as they build relationships with these foreign suppliers over time. And so we can see that. One of the reasons why they like us is because we do the complete customer installation assistance. We have the ability to upgrade all the hardware, all the software inside the systems and we can do a full turnaround maintenance repair facility in South Africa under 5 working days. That's our agreements that we have. If AC, DC has to go and establish that with another company, they're going to have to invest in the capability of doing that internally. And I think over time, they will. And that's why we're very careful to put too much focus and attention on that market second for ourselves. But we will still sell there, but it will be elite products with more features and higher margins.

All right. Maybe just the last question, sorry, if I have a chance. I think, Alan, maybe a question to you. When you sort of talk about the size of renewable energy I actually forgot to check the numbers for the first half. But I think for the full year 2022 you mentioned about 39% of applied electronics. Do you also factor in some of the other, I suppose, businesses from Nashua selling all those kind of things, or not really?

Sure. So if you just -- the important slide is Grant's slide that he put up when he spoke about that target market. So when we talk about renewable energy and the disclosure that I'm giving although that number, the 39% of last year, and I can't remember what it was in the half year. We're only talking about that portion between that fits into that middle area. So it's only these businesses here. So Nashua as an example, is not included in that number. It's only the revenues flowing from at the moment, basically, it's only BlueNova and Terra Firma Solutions that form that number on the disclosure we've given the applied electronics. At this stage, Apollo isn't generating any income. [indiscernible] made some enormous commitments, which have doubled now that to sell fund went off earlier. And so that's still flowing. So it centers just out of those 2 businesses. So the cables that flows into the [indiscernible] space that is not included, that's accounted for in the electrical engineering segment. And the Nashua that business is in the ICT. So it's only for those 2 businesses at this stage. Just while I'm on, there was a question from the webcast from Javan, very similar to the question around the lower end. He's asking a question in the containerized solutions for the red soil or the property developers, what benefits does BlueNova have in that space? And why would a customer select BlueNova over an alternative in that space.

I think the first thing is that we are extremely well positioned to respond quickly. Our time to market is, at the moment, about half of that of our competitors. We're available locally. It's not an easy system to design and so you see that there's a lot of knowledge being built on the customer side, and we are assisting them. So the amount of time we spent and still spend with the likes of Growthpoint and Resilient and all these other guys. And we're learning and they're learning. Having a strong local engineering presence, 24/7 is essential. And that's what the foreign companies struggle with. They need to get themselves into that position. Tesla has basically said, not interested. They're too busy with other things. I've seen a lot of Chinese companies come to South Africa, worked with EPCs, some of your competitors, and they failed dismally because, it's not a plug-and-play solution. It's -- you need to customize this thing. Now you've got 6 to 8 hours to lay it back to China. It's [indiscernible]. So it's only once those companies, those foreign companies established partnerships domestically with local support and local engineering design capabilities will we see the competition rising. But at that stage, we should be strong.

Maybe 1 for Nick and just the funding of the [indiscernible]. And I mean if you do the $100 million, so $50 million is your contribution to that. I mean, are you going to take money from Quince and reallocate it into [indiscernible]? Or just maybe just talk about the capital allocation and the interplay between Quince and the JV.

Good afternoon, everybody. I was hoping to get away completely unscathed today. So thank you, Sean. Thank you for waking me up in my corner. The answer is probably a bit of everything. So yes, we control from Quince. We will redeploy the capital that we have on loan with Quince, put external funding into Quince and redeploy that to Lumika. That would be one way of doing it. And alternatively, we will have facilities within Reunert itself and then we have the positive cash generation within Reunert itself. So it will be the optimum combination of those 3 sort of financing areas that we'll use to effectively fund Lumika.

Sorry, just to add to that. Just in terms of the [indiscernible]. So did I understand correctly you are currently at about 40 megawatts of unbuilt and you intend to get to 485. What's your sort of annual run rate? What do you anticipate? How fast are you going?

Again, you're asking the guy who's setting the targets. Let's pitch this to Grant. Grant, you can have a -- well, I mean -- but simple, I mean, we're trying to get 400 -- I mean another 400 in 5 to 7 years. So there's your number.

That's the answer.

That's effective.

It's owned by Lumika. It's our share of that will be 50%.

If I could just add to that as well, what is -- what needs to be taken into account is that doesn't currently include battery financing, which is a new thing that we are doing now as well. So that might influence that as well. So the battery financing over a longer-term period ultimately, it's to us building the capital base that will deliver sustainable returns over the period. So I wouldn't look too much at the 485, it is giving that capital in earning money from that capital. You happy. Perfect.

I have a question for BlueNova. So we -- yesterday, actually, the past 2 days, we were at the conference with the REITs and one of the -- they're talking about the energy mix, so between for load shedding using solar and supplementing that with batteries or generators. But most of them are saying that, well, while those batteries generators rather expensive, diesel [indiscernible], the batteries rather, they're not optimal. They don't last long. How are you solving for that. So for them, they're saying, yes, the generators are better, but batteries are not optimal.

Yes. It's a very complex thing when you look at load shedding at a rate scenario because if it's a sunny day and there's load shedding during the day, then a fairly small battery inverter system, which can be a grid-forming element, together with PV, you cannot beat that, okay? I mean we're talking here about ZAR 2.5 per kilowatt hour during load shedding. And starting up, the DG is going to cost you close to [ $10 ]. But then once you start saying to yourself, but wait a second, these durations are longer. They happen at night. And now you start oversizing and getting to very large-scale, large format battery systems, which don't really are not suited at the level and then it might actually make sense to start going to other routes. So it depends on when the load shedding takes place to come to an answer on that, it is quite complex. But in terms of life cycles, just to give you an idea, the battery systems, the capacity diminishes over time. And we offer battery systems that you can do 2 discharges per day, that is 2 load shedding cycles per day. You can do that for 12 years and only lose 20% capacity. And that's a very, very nice number. If you calculate that back about the effective Rand per kilowatt hour cycle, but the important thing is you have to do that. The moment you stop doing it, the moment you stop cycling the battery, your ROI diminishes because you are not getting value for money.

I think the important part is that if it's only used for load shedding, the economics are not ideal. But once you bring those other elements in that BlueNova has highlighted, the arbitrage and otherwise, where you can cycle it every day, the economics increasingly makes sense. But if you're using it only for load shedding, the battery still would probably still be a relatively pricey alternative. Any other questions? Okay. Sure.

[indiscernible]

The question is wheeling not affected by load shedding.

So there's load shedding on 2 different sides. One is on the generator side and where the generator could be cut off and then the other one could be on the customer side, the customer gets loadshed. So typically generators in high-yield areas, we have multiple generators feeding in saying the crew or the free state at the major substation collection points. Eskom typically doesn't load shed those supply lines. I myself am on a generator line, I never get load shed because Eskom won't shut down their generators. So there's much more of a lower risk on the generator side. Now on the customer side, the customer is not giving those electrons directly, what they're getting and what we're selling to them are credits on their bill and those credits are reconciled monthly. So at the end of the month, as long as we've put all that energy into the grid and at the end of the month, as they've used that total amount of energy at the grid and they will receive their full credits. So that's quite different from, for example, a rooftop solar. If you're not using at that point, you lose it. Okay, wheeling, you've got a month to make up that volume and to use that volume. So the effects of load shedding are very much mitigated due to that reconciliation effect. Not month-to-month. So we typically undersupply our customers a little bit, so to make allowance for some load shedding. So as long as we're fitting within that on a monthly basis, they're all good.

But load shedding itself wouldn't be a mechanism to avoid -- sorry, wheeling isn't a mechanism to avoid load shedding.

Except with the new changes [indiscernible].

Except for that. It's time get back Trevor now and making bold statements that I'm corrected on. Any final questions? Yes, sure.

Given that the [indiscernible] funding on your recent and stand-alone, I mean, would they be saleable at a point in time to the external party just thinking about as that the return to [indiscernible] earlier than waiting the small duration of the contract?

Yes. So the question is the -- with the SPVs or the Blue assets being ring-fenced and in a stand-alone vehicle, would we consider selling them before the term of the contract. Certainly, we would. I think when one looks at and certainly one of our -- the way in which we're building a diversified set of assets, the opportunity to sell those on and perhaps to accelerate the return, I think, is real. We've already seen it in the first round of REIT projects. And I think there is a demand, not only locally but globally for assets of this nature that would deliver the type of returns and the type of diversified returns that we are talking about here. So that's certainly part of our thinking. And I think if the time was right and the returns were right, we would certainly consider it. Any other questions? There's 1 more question just from Zimple. It's a defense question, which I think we may have missed earlier. She was just asking about, why is the radar order receipt different or the method of closing of sale and the manner in which order book flows into revenue different to the rest of the defense business, and it's really around the time you heard Harold in order to get a large radar, you'll engage sort of 6 months, it's 12 months in order to close a sale, and it could take you as long as 18 months to actually build the unit itself there. highly complex units. They can be very large. They can be very complicated whereas most of the other products that we have within the defense environment, from order to sale and receipt of cash is very much shorter than that. So it's just the build cycle and the -- [indiscernible] we're just showing you that we do have some back up here, see how it kicks on in a second.

But to invest in key resources there, which are the engineering side and the technical side of the skill. So I wouldn't say we are busy with the scaling this year, we've basically scaled these businesses, and we're busy with that. And I think for next year, this should largely stabilize.

Then another question from Itumeleng was what's our take on Eskom's transmission capability and the reliability thereof, is there a risk that more CapEx will be needed to upgrade the light to absorb all the renewable estimated to come online in 2025. So our sense is that the transmission capability is nowhere near sufficient to take on all of the renewable generation that's going to come on board. If you just take the numbers that are being bandied around and bandied is a wrong choice of word, that are being planned over the next 20 years. The -- first of all, where they're going to be generated. And second of all, the scale of them, the current transmission grid is nowhere near big enough in order to take account for that. So I would argue that there would be a significant investment still required in the transmission grid in order to take account for the change of our existing generation mix, which is primarily coal based up in Mpumalanga to the more renewable that we're going to see sort of 20 years from where we are now. Just while we were sitting here though, just if I take that forward, I don't see that as a risk per se. I think it's an enormous opportunity. Certainly for Reunert in terms of how we play out, and I'll give you our view on it. Firstly, pleasingly, whilst we were sitting here, Eskom has announced that they expect the completion of the spin out of the transmission grid to be done by November. Now they've been talking about this November date for a little while. They've updated it today they indicated that they expect that to be completed by November. Now that, in my view, is the trigger for investment into the transmission grid. What I don't think there'll be any further investment going into that grid until that point. What's critical again from me in that they're only going to put [indiscernible] debt on to that. into that company. And I think that's quite an important element, given they're not going to overgear it. I think that's a fairly critical next step to it and it makes it economically viable and the follow-up of CapEx to go into that or debt funding to go into that, I think, is much more achievable. Second point, I think availability of CapEx for that or funding for that, I think, is enormous. The world knows that we can't bring on the renewables without the strengthening of that grid. So I think DFI funding, low interest funding going into that grid, I think that's where the funding will come. So I think it will be cheap funding that will go into that, and I think we'll go in quite quickly. We have also -- which is interesting, which I've given that last week at the [indiscernible] conference was we've had our first sniff of an Eskom bid also indicating to come out around November time. So that may well be the precursor aligned to that around the new rollout of investment into the grid. Now in our world, it doesn't play out in the renewable energy cluster per se. Those cables end up in our electrical engineering business. So those flow into our cables business. So it's a particularly interesting and a good demand driver for that cables business over the longer term. My expectation of when it will flow. It's probably -- even if the bid comes out in November, they've got to close the bid. They've got to get the land. They've got to appoint the contractors to build it. We're kind of halfway down the process of build before the cable starts to get drawn off. So I wouldn't think it's a next year number, maybe the sort of the year thereafter, we'll start to see some effect in there. But if you look over a 5-year period, it's a strong demand driver for the cables business.

Just to make an add on point to the transmission constraints concerned. I think in the segmental market that we're playing within that megawatt range, we aren't as much at the mercy of those Eskom group constraints as the 100 meg plus wind and solar plants are. So those are -- can be severely impacted by good constraints, and there's far more opportunities open up for us under the distribution network as well as the transmission network. So we can we can feed into different pockets of the grid where there might not necessarily be the same constraint. So it certainly opens up more opportunities for us to service those customers that can't go and procure 100 megawatts worth of power from suppliers.

Yes. Thanks, Rob. That's a good point. Folks, that's it for the day. Thank you very much. I'm glad that we sort of went through a couple of cycles, it got warm. The aircon worked very well. It got cold, and now it's warm enough again, I think, a walk around the factory and some fresh air will do us all good. But that brings it to the end. Like I said, the intention really was to try and give you a deep dive into our growth areas, give you exposure to the management and at a much lower level into the actual businesses that underpin that, and I trust that you've been able to get that out of here. For those of you who've got secret questions that we didn't get to, you're welcome to drop us a note, send us e-mail. We'll come back to those and always we're willing and able to engage with shareholders on any questions that you may have. But thank you for your interest. Thank you for your support. We are now off to BlueNova. Everybody should have had the address or will have the address on your invite. We're under our own power to get there. And the intention is it should take us how long, James? 15 minutes. So roughly, roughly, we'll try and kick off the walk around at about 4:30. Okay. Good. Thank you, everybody.