Reunert Limited (RLO) Earnings Call Transcript & Summary

Okay. Good morning, everybody. Can everybody hear me? I don't know. If maybe just the chaps in charge can just confirm that you can hear me okay.

Yes, we can. Thank you.

Good morning, ladies and gentlemen, and a very warm welcome to all of you who are here today. As fate would have it, we had a check this morning to make sure everything was working. So about quarter past 8, everything was smooth and then, of course, between quarter past 8 and 9:00, Murphy arrived, and we had the normal challenges that came with it. So our apologies for a slightly late start. But I'm sure that the proceeds of the day, and we've got a bit of time at the end that we can still make sure we've got all of the requirements in and we meet everything that we intended to do during the course of today. But a warm welcome to our investors, to our shareholders. We've got a little bit of press here and our banking partners. It really is a great pleasure to have you all at the Electrical Engineering Capital Markets Day. We've had a couple of Capital Markets Days over the last year. We've only had 1 per year. So we haven't had 1 for the Electrical Engineering businesses in their entirety. So there's a lot of interest around it in the market, and I trust that we're going to have a good day today. I mean we welcome you to that. Just to start out, an apology from me for not being there in person. Unfortunately, we had a close family bereavement on Friday. And as some of you or many of you may appreciate that does cause quite a bit of complexity and there's a lot of moving parts on my side. So great disappointment personally not to be there. I've spent many years in the facilities we're about to see and have a great passion for cable and circuit breakers. But I have no doubt that the management teams and the Reunert teams will ensure that it's a productive day. I will be here throughout, but only virtually and not in person, and apologies for that. Before any further, ado, I'd just like to hand over to the Managing Director of African Cables, Luis Corte, who will be giving us some health and safety information before we kick off. Luis, can I ask you to take us through that, please?

Thank you, Alan. Good morning, again, ladies and gentlemen. Welcome to CBI African Cables in the warm [indiscernible]. A few things that we have to observe, please, we have, first of all, emergency events. In case of a very remote emergency event, we should -- if we're in this venue, we should go outside where all the banners are. While we are in the tour, your guide will lead you to the assembly points that are demarcated exactly there, but it's in a very, very remote event. The gents and the ladies that are just on the right, and obviously, coffee and tea is served. When we go into the factory, we will appreciate very much to restrain the use of cell phones for cameras, especially. There is a strict policy that the operators cannot be using cell phones while they're on their duties, Therefore, as a respect to them, we should not be able -- we should not be using our cell phones. In case of you having a need to answer the cellphone, please just tell your guide. We have specific places where authorized, there are yellow squares on the floor, there are specific places where you can answer the phone. Within the tour, we have a route that is demarcated between yellow lines. Please maintain yourself within those 2 lines. If you have a question for your guide, please just raise your hand, he will stop or she will stop, and she -- and they will be able to explain any of your queries maybe. That's all, Alan. Thank you.

Thank you, Luis. Onto the next slide from an agenda point of view, ladies and gents. What we're going to be doing, you're obviously all down at African Cables, where I will give us a quick overview on Reunert and a couple of opening comments before handing over to the cable, the power cables team. And you'll have the combination of both our Reunert side that you will see in person today, but also our Zambian site, Zamefa, who -- we will give you a video of and you'll get a sense of what they also have up in Zambia. We may be driving across to Elandsfontein, where we'll be taking you through our circuit breaker factory and our business where we're going to make something very similar to what you're going to have this morning later on this afternoon. If we could move just on to the next slide, I'd like to just quickly introduce the team that you're going to be seeing today. Everybody knows who I am. The -- we have, from a Reunert point of view today, Mark Kathan, our Chief Financial Officer. I'm just going to ask each of the people I'd like to introduce, you just make yourself visible, you just stand up or pop your hand up. But Mark Kathan the Group CFO, is with us; as is Mohini Moodley, the HR and Sustainability Director, so both of the other Reunert Executive Directors are in the room today. And in the eventuality that we do lose connectivity in its entirety, Mark will then lead the rest of the engagements and take over from me in that regard. In terms of the line leadership, in our Electrical Engineering segment, which includes the power cables and the circuit breaker businesses as well as our renewable and energy businesses, Deon de Kock, who's the segment CEO for Electrical Engineering and Renewable Energy. You've already met Luis Corte or seen Luis Corte, but Luis is the Managing Director at African Cables on [indiscernible] site. So welcome to him. Kangwa Bwalya, who's also with us is our Managing Director of our Zambian facility called Zamefa. He's come down and joined us. So we'd be very pleased to have you with us, Kangwa, and welcome. And then [indiscernible], who I don't think is in the room, but he will then lead this afternoon's entirety when you get there with Charl Osborne, who is the Managing Director at our low-voltage company in Elandsfontein. Just very quickly on Reunert, and I'm not going to spend too much time here. There's a couple of other areas that I have to talk around. But I'd like to just add on to what I'd call it -- let's call it a couple of Reunert housekeeping matters. I'm going to just give a quick overview on Reunert. Then as we go in, management will then lead the rest of the presentation. So it will be an entire management-led presentation for the rest. If there are any important questions, if you have, please just pop up your hand and you're welcome to ask it during the presentation itself. But we have a relatively tight schedule, and we have about 45 minutes or so at the end of the day once we get to Elandsfontein, where we've got an entire Q&A session that we intend to have here. So if possible, try and hold your questions to then so that we can get through that. But if there's an important question that you'd like to ask, just pop up your hand and do that. When we get to the Q&A at the end of the day, I will chair that Q&A. So I'll take the questions, I'll direct it to the management member that's best positioned to answer that and then management will respond to those questions. Next point just around the factories piece. Luis is very polite, I'm going to be a little bit harder on it. Please follow instructions. These are live facilities. They are fully operating at the moment. We have strict health and safety procedures. It's really important to us, the safety of our employees and our guests are particularly important to us, and we have a suite of, call it, procedures and rules or behaviors that are really important. So please follow the instructions that you're given. And I think it's out of respect for the management that we have today and the rest of our employees that we do follow those quite strictly, please. The next point of order is please do not ask any price-sensitive or financial questions of the management teams. We've guided them that they must not answer any of those. So it's not us being rude, but please. You are all well versed at what you can or cannot ask for, and you've had plenty of engagements with myself and Mark, so you also know the manner in which we answer these. So please don't try and put the management under any pressure to answer any more complicated questions than what you would normally post in market when you've been instructed not to do so. So it's not them being rude, it's guidance from myself. If management are unsure about the question, we have also asked them, just bring it back and we'll answer it in the group session. So if there's anything that does come up that they're unsure about, again, it's not that they've been guided against bringing it back and we'll make sure that it's answered, but done so if there's any uncertainty around it. So that's kind of the just the little bit of housekeeping around that. From an objective of the day, there's sort of 4 objectives that I'd like you to leave today with. The first of it, you're going to meet firsthand highly capable management teams. And I think you're going to get a very good sense of just how high quality these management teams are, how well they understand their business, how experienced they are and how passionate they are about the businesses that they run. And I think you're going to see firsthand one of the -- you can have all of the assets if you could -- if you want, you can have the strategy that you want, but ultimately, it's the people that lead these organizations. And I have absolutely no doubt, but we'd like you to get a sense of just how good these individuals are, just how capable that they are, and I trust that you'll leave today being very aware of just how good the people are that manage these businesses. The second objective that I would like you to leave with is to understand the businesses themselves in the facilities. These are all kind of capital-intensive in terms of the assets that have been invested into. They've got great capabilities, great volume capabilities. And I'd really like you to get sort of under the hood and get a handle on just what is contained in these factories and how capable they are to operate in the markets that we do operate in. Thirdly, I'd like you to leave being on the clear strategies that these businesses have to be successful and sustainable and importantly, to have a good handle on the fact that they are successfully executing those strategies and doing so in a very positive manner. And finally, it is just to be clear about the growth opportunities that these businesses and the markets within which they operate. And the presentations have been set up effectively to try and take you through that and to give you a handle around that. But if you, again, have any questions around that and you want to dig into that, but that's what we like for each of you to be aware of, the management and how good and capable they are. The businesses and the assets that we have here, the strategies that they're following have either been successful and the growth opportunities that are available to these organizations in the markets that they operate in. So hopefully, that's what you will be able to leave at the end of the day in terms of that, and we look forward to sharing that with you over the next or the course of the day. Related stuff, just at the end of last year, market cap around about ZAR 15 billion, revenue, lots of 15s and that around about ZAR 15 billion and an operating profit of around ZAR 1.5 billion. Those are the numbers at the end of last year. Obviously, the market cap has come under a little bit of pressure during the course of this year, but the revenue and operating profits still hold true. And importantly, generating attributable gains of around about ZAR 1 billion And on a regular and almost steady state basis, generating free cash flows in excess of ZAR 1 billion per year. I don't want to spend too much time other here than just to express and to give an indication of the diversity of the business, 75,000 customers, 6,500 employees, a global operation with more than 1/3 of our revenue now being generated outside of South Africa and that being a really important part of where we're taking the organization itself. And just go on to the next slide. The business itself is split across 3 segments, as you're all aware. We have our defense businesses in Applied Electronics under Trevor Raman; our ICT business is under Graeme Eddey, and where we are today with Deon, our Power Cables and Circuit Breaker businesses. On to the next slide, and this will be my final slide before I hand over to our presenters for the day. But where this investment case has got 3 pillars and an underpin that we set out for our shareholders. And the first of those is that we have high-quality assets that are distributed and exposed to slightly diversified segment but really well positioned within those in Defense, in our Applied Electronics, in ICT and where we are today in Electrical Engineering and what you're going to go through today. And it really settles around why we believe those are strong and such a good pillar is that they all have well-established and defendable position, the markets within which we operate are growing and have strong underpins to them. And whilst you're going to see a very big and impressive asset base, relatively speaking, they are relatively capital light in what we need to invest into that to keep those world-class assets, but to keep them in shape. There are relatively moderate capital investments that need to go into those to those capital requirements there. And then we have a long and proven track record of earnings growth. And what you're going to see today in our Electrical Engineering business, if we just go through those. In our Power Cables business between Zamefa and African Cables, we have the largest power cable market in south of the equator. We are the largest operators to into that. And we're going to show you most of that today. And in Circuit Breakers, we are comfortably the largest local and have a large market share by quite some margin in that Southern African market space. So you're going to see 2 very strong brands, 2 very strong operations and in each of their own markets are leaders in those markets. Secondly, in Reunert, we have 3 very clear strategies for growth. The first of those is into our renewable energy business, which continues to grow very positively. We have nearly now 100 megawatts under our ownership, which is the core part of that strategy and together with our trading business is well positioned to continue to participate along the renewable energy growth in South Africa. Secondly, under Digital Integration, we have our ICT, and we continue to invest into that. And then finally, our international activities particularly, which plays out very much in the cluster or the segment that you're in today. In Zamefa, we have close to around about ZAR 2 billion worth of revenue that is outside of South Africa and continues to grow very strongly into Central Africa. And in the Circuit Breakers, you're going to see later in that company, 2/3 of what they manufacture are exported and sold to international markets. And then together with Defense, we now have around about ZAR 5 billion worth of our revenue that comes from international operations. And that's growing at around about 20% per annum, and we continue to invest into those 3 key areas that are existing and our core businesses. And then finally, we have a very strong balance sheet. We are largely ungeared at the moment, we remain ungeared. I mentioned a little bit earlier, the strength of the cash flows that we generate on an ongoing basis. And broadly speaking, if you look over the period, we're able to convert EBITDA to free cash flow at around about 65%. And that enables us to invest into those strategic activities into our core businesses to make sure that our assets are fully maintained and can grow organically, and we can continue to pay healthy dividends to our shareholders to make sure they have good value. And all of those 3 pillars are underpinned by a very strong set of governance and risk management environment. We have a values-driven culture that exhibits and underpins our ethical stance and our ethical values that we set into this organization and we continue to do all of this in a sustainable and long-term value creation for our shareholders. So ladies and gentlemen, that's all for me for now. Thank you for joining us today. Sit back and enjoy the presentations with our management from both the Cable businesses this morning and our Circuit Breakers this afternoon. And I will be, like I say, here and throughout and look forward to engaging with you on the Q&A later in the day. Thank you very much, and over to the first presenter.

Good morning, everyone. I've got the honor to give you an review of the Electrical Engineering segment before we go into the BU presentations. So Electrical Engineering is the segment in Reunert that produces power cables and circuit breakers, and we employ about 2,500 people in our facilities for power cable manufacturing and circuit breakers. For power cables. We've got this facility here today in Vereeniging, which we will visit. And we also have a manufacturing facility in Zambia, which is called Zamefa. For circuit breakers, this afternoon, we will visit the facility in Elandsfontein, and we also have a factory in Lesotho. In addition to that, CBI Low Voltage also have subsidiaries in the U.S.A., Australia and its own employees, which are co-located with our Applied Electronics colleagues in India and dealers and distributors in Europe. For the group, we represent about 52% of the revenue, and it's been consistent from 2023 to '24. And on the operating profit front, we represent about 43% of the total operating profit for the group, and that is up from 38% in 2023. So the Electrical Engineering segment is a significant contributor and remains to be a significant contributor, not only to the top line, but also to the operating profit. If we look at the 3 business units, in Electrical Engineering, it's called CBI-Electric. And then we've got African Cables, the facility here, which is managed by Luis Corte and his team. We've got Zamefa managed by Kangwa Bwalya and his team. And then Circuit Breakers managed by Charl Osborne, which we'll visit this afternoon. African Cables is a leading supplier of energy infrastructure in Sub-Sahara Africa since 1935. It designs, manufacture, installs, maintain electric power cables and they employ just over 700 people. And I'm also proud to communicate to you that we are a Level 1 BEE contributor. And you will see a lot of [indiscernible] and wisdom here and the team, many Luis, but they have accumulated expertise of more than 237 years, as Alan said in his introduction, you'll see throughout the organization. What they produce are low, medium and high voltage power cables as well as overhead conductors and specialized cables for the renewable energy market, the industrial market and also the mining market. In addition to that, they also produce copper rod, the same as Zamefa, and copper rod is a raw material as an input to many electrical engineering applications. In Zamefa, Zamefa is the largest copper beneficiation facility in Zambia, and it's also listed on the Lusaka Securities Exchange. They are a vertically integrated organization and they convert copper cathode into electrical components. And they have about 340 people and also extensive experience in the management team. They're exceeding 130 years of cumulative experience producing copper rod, as I said, that's a raw material input for various electrical applications. And then low-voltage cable as well as overhead conductor and general insulated wires and control cables. Lastly, the circuit breakers in Elandsfontein, which we will visit this afternoon, is a leading South African manufacturer and supplier of electrical protection control and automation devices. It's focused on the low voltage market. They have been established -- sorry, I neglected to say, but you can read it there, Zamefa was established in 1968 and Low Voltage was established in 1949. So they provide circuit protection, automation and control systems. They employ 1,400 people and also got, like I said, 137 years of experience, and the products that they produce, circuit breakers, traditional electromechanical components and then smart energy solutions. Some highlights of our performance over the past years, you will see there that we are very proud to communicate to you that we've managed to grow the business steadily with a CAGR of just over 11% over the past 4 years. bringing us to annual revenue of about ZAR 7.7 billion per annum. And the good thing there is that the teams managed to unlock a lot of value and deliver the operating leverage there, what you'll see the profit before, interest and tax growing by CAGR of 21%. One of the key strategic initiatives are internationalization and to grow our revenue base with the export business and the international business while maintaining the base of the local business, and that has grown significantly to about 38%, where we were last year, and it was up 7 points from the 31% in the previous financial year. We value our people and we value a safe working environment, and we pride ourselves in the LTIFR track record. And as you can see on the screen, for all 3 facilities over the 3-year period, we had a very good track record bar 2023 in low voltage, where we had 3 LTIs -- 4 LTIs. And I'm also happy to report to you that those LTIs did not have any loss of limbs or permanent disability. With that being said then, very experienced team delivering a strong, steady and consistent financial performance. And happy to hand over to Luis Corte, who is the Managing Director of African Cables.

Thank you, Deon. Let's start a little bit on our roots, where we started. African Cable was raised in 1935. To give you an idea, the only company in Africa that had the same basket of products is in Egypt, and they were started in 1938. Locally, our biggest competitor, Aberdare Cables was founded in 1946. So we have a long track record of providing electrical cables into this market and the region. In 1979, we were the first ones in Sub-Saharan Africa to put a high-voltage cable line that you will see a tower outside there, which followed realizing the need of the technical expertise to install the cables. We founded power installations. Power installations does the design, provides the coaching to the municipalities or Eskom, goes into the field, installs the cable, commission it, test it and if necessary, we give the maintenance to the municipalities. So we have contracts in 14 municipalities around the country where we have crews that they have -- if there's an electrical fault, we have to be within 2 hours to troubleshoot the fault, and if the municipality requires, we will be doing the repair. In 2006, African Cable was joined into the Reunert's Group. And it was the same year when it was launched an initiative to have one same face for the Electrical segment, and we call it CBI-electric. In 2014, we saw the need to grow our range of products. While we had 132 kV capability, the size of the conductors were reduced to 1,000 square millimeters. Today, we have the capability to make this scale, which is 2,500 square millimeter. None of our competitors are able to make it here, not in Africa. And we do it in aluminum and on copper, depending on the needs of a customer. In 2016, we managed to have the BBBEE grade level 1, which requires for us to participate in all the state-owned enterprises and the municipalities, which we have maintained up to date. Continuing with our modernization, we change a machine to do the aluminum sheet, which is a requirement in HV cable, and we have installed new machinery that you will be able to see operating today. This is the start-up. This is a picture from 1936, where the builds were already done there. And in 1979, we were reaching the tower first, the first tower that even in Africa was done for high-voltage cable. This is today. More than 130,000 square meters, 72,000 on the roof and 22 buildings. We are just on the left lower side, which is what we are here today, but we will challenge everyone that we have to do a tour in less than 40 minutes. Probably, we know that everybody is very fit here. This is a very small representation of what we have in the network. We are providing a product from the beginning to the end. The beginning, let's assume that where we have #1 is Koeberg. Koeberg generates with nuclear -- generates from nuclear power into electricity. They come out from the reactors with 400 kilovolts, which we participated those days to install. Thereafter, go to transformers, and this is a cable that comes out from the transformers into the grid. The grid will go to the towers, right, where we said 132 kilovolts. And today is one of the most common topics in the market, the TDP, the Transmission Development Plan. So the transmission goes from the transformer up into the towers and go to other substations where we reduced the voltage. The voltage is transformed from 765, 500, 400 kilovolts into 33 kilovolts. We go to distribution. Distribution is what we see on the streets, either aerial or underground with 33 kV or it goes lower to 11 kV. This unit, I mean, where we are sitting here, we have a supply from Eskom of 22 kV, but other industries, they use 11 kV. When we go close to the house, that 11 kV goes to 230 volts, and that's what we receive either at home or at a shopping mall; and today, dramatically the data centers. We will speak on the data center a little bit here. Our range of products, you can see and you have some time, there are some examples here of what we have. Again, from the connectivity, from the generating power to the house. What we see on the left lower side is the ACSR, is aluminum conductor steel reinforce. That's typically we see between towers, most likely on the size of the highways. And that's what the transmission development plan will be based on. Very briefly, the generation power of South Africa, 80% is on the north with coal-fired generating plants and 80% of the consumption is also there, 20% of that comes to the South. So because of the aging of the generating units and the need to go to a low carbon energy supply, the new renewable energy is mostly done on the Western Cape, the Eastern Cape. And therefore, now we have the dilemma that there is a lot of power on the southeast, southwest, and it has to go to the north. So there are 3 corridors in Eskom network that it is the central corridor, which is the existing one, where around the transmission lines, there's already so many facilities that is difficult to grow. The most difficult thing to grow the transmission lines is the right of way, the services. So I want to put a new line here, but then it happens to be that there is a farmer or there is, in some cases, informal settlement, and they say, "I'm sorry. I'm not going to sell my land. You need to find something else." So that's a big element. So that's one, the first is part of TDP 2025 to 2029 is to retrofit and make that corridor efficient. The second is to go on the south corridor and the northern corridor, where there are new things. So to give you an idea, out of the 14,000 kilometers that are discussed in TDP, 6,000 are done in the first 5 years and 8,000 are done in the second year. The first 5,000 are using conductors, transmission lines are required for each phase 3 or 4 conductors. So we're talking about probably 12,000 kilometers conductors that were required. The second part, which is the biggest, and they will use 765 kilovolts mostly, requires 6 conductors per line. So that, we're talking about 26,000 kilometers of conductor. We can tell you that we can supply that thing in the first phase 100%. The second phase, we can be more than 70% in terms of conductor, right? Besides the distribution grid, we also have the municipalities. The municipalities are dependent. I mean, the biggest revenue on the municipality is electricity and what -- that's the part and the infrastructure, unfortunately, is on decay. So there is a lot of needs to have retrofit and maintenance new lines in the municipalities, which is where we serve mostly. Rural electrification in South Africa, where I mean South Africa has 87% of electrification rate compared to Sub-Saharan Africa, only 47%. So while there is a high electrification is in the urban areas. We need to go to the rural areas, and that's something that we also provide products for. In the private sectors, we were mentioning the data centers today are the biggest consumers of electrical power, not just in South Africa, it's around the world. To give you an idea, if you go to the R24, you will have on the right side, going to the airport is Teraco Data Center. You'll see a gray building. That consumes far more power than Sandton City. And the reason that is all the servers generate a lot of heat and the biggest consumption of that is cooling. Those data centers uses exactly as outgoing out of Koeberg, 2,500 square meters, which we have supplied and in stock. The markets we serve, I mentioned, municipalities, SOEs are big customers of ours. But also, there has been a transformation in South Africa. The public sector is developing less and the private sector is taking more over. So many of the development of infrastructure now is done by private sector. So distributors and contractors now play a big part of our portfolio. We spoke a little about TDP, we'll speak a little bit -- a little more. And the regional sectors, I mean, we are supplying -- we're the big supplier of copper rod, which is the main material, the main raw material for electrical powers between Zamefa and ourselves due to the demise of Palabora Mining Company, now we are the largest producer of copper rods in Sub-Saharan Africa. Our competitors mentioned over there and tech, but we have the French, Nexans, the Italians, Prysmian and obviously, also our continent colleagues, Elsewedy from Egypt. There's a little bit of the distribution, and I want to see here. Today, we are 55% of the distributors. We supply them. The change of procurement in municipalities has been dramatic for us. Before, we used to have -- the municipality used to say, tender for manufacturers. Today, the municipalities, they say, uh-oh, I want manufacturers and I want other enterprises, most likely contractors, new distributors. So instead of being 3 manufacturers, we were the biggest, we have sometimes 6 or 8 people that are competing for the same tender. Therefore, those companies now go through us depending on their size, or they go through a distributor, a large distributor to buy cable. So the amount to cable is still flowing. However, the channel to the municipalities has changed. The industry, our biggest customers today are renewable energy. We participate in mostly, probably we're talking about 70% of the wind farms and solar farms. Those cables are private here. The mines is a very, very important customer of ours. They are very dependent. The contracts with the mine says that when we have a period of 2 years contract, we must maintain around 10% of possible stock to be used at site. So when they tell you, I need this cable is for this afternoon or for tomorrow. They -- obviously, the mines is such a critical industry that we cannot afford to have downtime. Eskom and municipalities, we can see here it's 11%. 5 years ago, we were around 17%; 10 years ago, it was 60% of our market. So it has been a good effort, very successful to change our model to go exclusively around 5 big customers to now to have 20. We don't believe ourselves to be a product supplier. We are proud to say we give an additional value, added value and a service to the customer. Why? Because we're able to design the system, we're able to produce the cable for the system, install, build the system, test it and manage it for the customer. So that's something that we are very well recognized. One of our biggest customers is City of Cape Town in the area, City Power, very well-run municipalities Stellenbosch. In all those places, we participate. Also, we are participating in those municipalities. They have some problems that are steel, they have a critical situation in terms of their maintenance, but with our assistance and support, they see an added value that just only going and buy a cable from here. We see always that the customer must see us not just only as a big player, they must see us as a partner. So that's exactly why we put in our low power innovation, innovation by partnerships. Our competitive advantage. Well, we are fully integrated. To give you an idea, after PMC is not producing copper rods, the rod coming into South Africa was from Russia and the Middle East. We do use regional copper cathode and we transform it in Zambia, in Zimbabwe and in South Africa. So when there was the big logistical challenges that it was taking many, I mean, many more weeks than usual and there was a scarcity of copper, we were not having that thing because we have a copper mainly from DRC and Zambia, transform it, and we continue our operations without depending on logistics in that regard. Something very important I think we have mentioned, you are very important for us. So we strive ourselves every day to give you consistent results, shareholders. This is a combination, the left with the right, where we see challenges, we see opportunity as well. The first one is the municipalities. The municipalities that we know, the newspapers, they have a funding problem. It has been modified now, the Section 16 where private industry can propose to municipalities or any other state-owned entity, a solution, what we call here, unsolicited bid proposals. So now we are able, if it is below ZAR 2 billion, to tell the municipality instead of finding ZAR 200 million for this project from treasury, we can combine with our associates, the banks here. And we view a solution that maybe now, if you engage with the bank, you have a facility that has to be better by the GTCO and have instead of paying ZAR 200 million upfront, be -- an OpEx with interest and we have the project in ZAR 20 million in 10 years. So that's something that we are working on. We are working with some of the municipalities that are interested. But it's a difficult -- it's a change of mind in type of how the municipalities operate. They always have -- they always see themselves controlling, right, everything. And we are saying here, well, we can help you in that thing, but the management has to move out of the traditional way. The Eskom TDP, so as we said, I mean Eskom, having so long, if you have a budgetary response, we supply a tender. We have 180 days to wait for Eskom to say, it's good so that we'll go ahead. So they are trying to put private industry into that. And that makes the dynamics a little bit different. Eskom is very supportive of localization, which means that they have to buy whatever is produced locally like ourselves. And the private sector will say, well, but I want to be cost efficient. There is no way that anybody in Africa can compete with Chinese aluminum conductor. The Chinese, besides they have in policies that they cannot export aluminum rod, but the conductor, they are discounted VAT. So they've given automatically a 13% advantage versus what we have to import our aluminum coppers from Malaysia, from Malta, Russia, not in this type. So that's important. The steel is made locally, and then we can use it there. The independent transmission projects, right? We know that they are selling projects identified. We have been working with the people involved on that. Presently, we are supplying cable conductor to the TDP plants. TDP, that did not start last year or 2 years ago. TDP is coming from 2010, 2012. So all those projects that have been on the table for X and Y reason have not been developed, they've been developed. I think we see far much more energy in getting this thing implemented, and we are supplying the cable there. So in one of those things, they are a special cable that will use the same towers, but instead of a steel, it has a stress cover on fiber coated with aluminum, which makes it lighter, it uses a special alloy of aluminum that include zirconium. So the existing cable works at 120 degrees, the cable that we call high temperature, low sag will be working at 200 degrees and we will provide more capacity of transmission, that's on average depending on the sizes, because instead of steel, it has [indiscernible]. So now they can take out the old cable, put it, the new one, which is lighter so they don't have to change the towers, but they increase the transmission capacity. So we're working on that thing. You will see there that it's a work in progress, right? It's technology that has been implemented in Europe, United States and Asia, but is new to Africa. The private -- public-private partnerships, very, very interested in participating with them. I think one of the biggest items that the private industry see is governance. We are well recognized to be a very ethical company. So when people from outside comes here and says, well, how are you going to operate, how are you going to deal with the customer, they have confidence that we will do it exactly in ethical manners. This is the last slide. What differentiates us on the market? Why people, when they say, I want CBI, I want African Cables, I want Zamefa, why? The first thing is that they can see a full supply of the electrical product, from the generating unit to the house to the data center or to the shopping mall. They see in us a support, a technical support, where they can cross check their own calculations or the consultant calculations for the municipality. So we have a very good relation with the technical parts of municipalities, Eskom Transnet. We don't depend much on the logistical side outside of Africa. The main product, copper is within our -- and also we supply some of our competitors, right, copper because they see us also as a reliable supply for them as well. Special skills, the management here, we're buying next year that our incentive will be sticks because we have 215 years of combined between 8 executives. We have 80 years in our engineering team. It has 80 years of a specialized design experience. We participate internationally. Every year, our engineers go to France, Holland, Australia, and they are leading international groups of study in cable manufacturing. So we are not consumers of technical knowledge. We are also participants of existing developments around the world. With that, thank you very much. I now leave to my colleague, Kangwa Bwalya.

Thank you. Good morning, everybody. Okay. So the first slide, what I'm attempting to do is to just give you some background about our company, where we're coming from. We are not as old as African because we're just only established in 1968, but in Zambian context, we are fairly, fairly old company. The company was started by the Zambian government in partnership with some of its JV partners from the U.S. and Europe. The actual production only started in 1971 where we became the first manufacturer of cables in Zambia, primarily for the mining industry, but also the telecoms before the cellphone arrived. So it operated as such, as a government on, so to speak, because the government continues a majority shareholder up until 1996 when the company was privatized following the change of government in 1991. The government then went on a very strong drive to privatize industry, and our company was such where Phelps Dodge who were the minority partners became the majority shareholder. Another milestone was 2004. Again, because of that drive to privatize, a lot of industry was being listed on the Stock Exchange. So we became one of those early ones to be listed on Lusaka Securities Exchange in 2004. In the same year, we got certification for the ISO 14001, and what used to be then called the OHSAS 18001, and automation that we were the first company to get that certification in Zambia, what is now called the ISO 45001. So the company going to operate as such. And Phelps Dodge change to General Cable, which was also another American outfit up until 2016 when General Cable exited its markets out of Africa and Asia Pacific, and then Zamefa was acquired -- majority stake acquired by Reunert. It has continued like that. And then obviously, one of the points I want to point out is about the resilience of our business and our company. We survived the privatization. During the privatization, a lot of companies in Zambia collapsed, the ones which were previously government-owned. Country opened up suddenly where there was no competition. You had a bunch of other suppliers coming in mostly through imports, but we were able to sustain our business. Fast forward in the 2000s, COVID came. Again, we were able to sustain our businesses. We were able to keep all our people and stakeholders. Also, we had an issue of VAT refund in the Zambian government, where the VAT was not refunded to a lot of taxpayers, including ourselves. And that had issues, not only for us, but as a country, it still remains a very significant item on the calendar for Zambia. Next slide. In this one, I just want to highlight some of our successes. I think, Deon, in his intro spoke about us being the largest and oldest integrated cable provider in Zambia. We add the biggest value to Zambian copper. As you know, Zambia is a big copper producer. But a lot of that gets exported in the form of either cathode or anodes and sometimes in concentrates, which are low, low, low value-add products from the process, but we are proud to be the largest -- sorry, am I still audible? Okay, cool. Thanks. So we are the largest value-add to Zambian copper. And if you look at the map at the bottom there, we just want to highlight Zambia's location in the continent. We are surrounded by 8 countries. I think in Africa, probably only DRC beats us because they've got 9 countries around them. But the margin is very small. So -- but that gives us a special place in the continent because out of all those 8, we export directly to 7 of them. The only country we don't export directly to right now is Angola, and that's because of the logistics. I think the Zambia-Angola Board is probably one of the remotest parts of Africa, one can never get to. But there's a little bit of corridor project, which is coming. We hope that open up that place and then we could be represented or export directly to all our 8 neighbors. Next, this just gives you an overview of our product portfolio. Again, we got 4 buckets. Most of them similar to Africa, but obviously, we don't produce the big things that they produce. But when we go to the market, we offer a full portfolio because whatever we cannot manufacture locally in Zambia, we do approach African to manufacture for us. But when we deliver to the customer, we offer the full package. So pretty much similar to what Luis had already explained. Our business model. What are the drivers of growth in our business? Today, we still see a lot of need for electrification in Zambia. And I would argue that excluding South Africa and Egypt, probably the rest of the continent sits in the same space. So we are very much involved in the electrification in Zambia, but also in the region. But we also see a recovery in the mining business, particularly in the DRC, in Zambia itself, but also regionally. I mean the other day we were joking, not too long ago, we never heard of copper in Botswana. But now, Botswana is beginning a big player in that space. So there's a lot of mining activity in the region, including many traditional mining countries are now moving into that place. And we see a lot of opportunity there. There's DRC. South Africa is -- whatever happens in this market affects all of us on the continent. So we are hopeful that when the improvement in the GDFI happens here, there will be spillover effects into other countries, including ourselves. How do we serve our markets? What's our route to the market? Most of our activities are largely direct. If you talk about the Zambian utilities, these are typically through public tenders. But sometimes, they also do very direct bidding, if you're familiar with the way government procures, but most of them are really public. So you just have to fight for that business. But because of our capabilities, our history, we've typically secured most of the business in that space. I already talked about the mining, also direct, but also sometimes through contractors. But there are other customers whom we sell through distributors because we're not a retail sort of house, so to speak. We sell in bulk to our distributors who then cater for the smaller, smaller buyers. But the big buyers, we typically deal with them directly. How do we create value as Zamefa? Again, this goes back to how we've managed to grow and leverage our brand. If you went to Zambia and spoke about Metal Fabricators of Zambia, there are very few people who would connect. But if you said Zamefa, everyone knows what Zamefa is and what it does. But actually, our legal name as a company is Metal Fabricators of Zambia, but very few people use that name because of the brand that we've built over the years. And we differentiate ourselves. We are not like every other player in the market. And over the years, we've built ourselves a very good reputation for quality because we only use very high-grade materials from the mines in Zambia. We do not mix and blend things at our factory. And our customers are aware about that. So when they buy Zamefa, they know they're buying quality. And that gives us an opportunity to even differentiate ourselves, both from a pricing perspective, but also from how we deliver the facilities. Growth trajectory. Again, we're seeing sectors, construction is a growth area, which we are serving currently. The mining, I already spoke about it, the bigger projects that are opening up. In Zambia, our biggest project right now in the mining space is what is being developed by Barrick. Barrick, the only copper mine is under Lumwana, and they've just committed $2 billion to develop what they're calling the Super Pit. Now obviously, in Zambian context, $2 billion is fairly a big amount of money. And this commitment to procure the best if it's available locally, and we fit in that space. So we are hopeful we'll be able to participate in those projects. First Quantum, they just went through a significant project, which we call the S3, again, that was a $1.2 billion contract. We supplied all the cable that we could manufacture for that project and the bigger things we're able to get from Africa. Competitors. In the region, we see South Ocean. We've encountered them quite in a few markets where we operate. Neelkanth Cables is a Zambian company, and also [indiscernible], which Luis already alluded to, is a big player in the region. And then we've got other small and local manufacturers in some of our chosen markets, particularly East Africa. Challenges and opportunities. One of the key challenges we face, I think, as a country, Zambia is around the security of energy supply. Prior to last year's drought, Zambia was roughly 85% dependent on hydro power plants. We've got the Kariba, which we'll share with Zimbabwe. Then we've got a number of power plants on the Kafue River, which is in-country. But then because of the changing weather patterns that has shown some vulnerability in our power supply situation. So right now, there's a lot of activity in the solar space, but it will take time before we ramp up that. So it's a real challenge. And last year's drought up to today, the country is still filling those effects. Then the currency. Our currency is called the kwacha. In 1 month, it can be the best-performing currency, but the following month, it can also be the worst currency. So it's the volatility around that currency. And that makes planning sometimes more difficult. But it's -- we can say that for a number of other developing countries' currencies, but ours is quite significant. Reliance on ZESCO. Yes, ZESCO is an important customer. They have gone through out of changes, a lot of improvements. But still, we want to move some of that reliance by developing other markets like the mining space, which we already spoke about. Commodity prices, yes, these are things we see, Copper, aluminum, they are always on the move. Then of course, politics always plays a significant role in most economies, particularly so in our case where there's still a number of political decisions that influence business. Zambia is due for elections next year. So -- but we think whichever government emerges, we still remain supportive of the private sector. Growth opportunities. We already talked about the mining, domestic demand, we still have a good pipeline, both with the utilities, but also with the mining companies. And Zamefa producers both copper and aluminum products. So because sometimes, depending on the price differential between copper and aluminum, certain customers want to make a switch. If copper becomes too expensive, they want to migrate to aluminum products. Now because of our capability to do both, we can serve the customer depending on what choice they make. Recently, ZESCO, which is a utility company, they made a very bold decision to migrate from aluminum -- sorry, from copper to aluminum. But for them, the main reason was around theft and vandalism. I'm not sure how the situation is in this country, but in Zambia, that's becoming a problem of people stealing copper cables. And they knew where those copper cables lay. And they are doing it for the drop wire, the duplex, which for a layperson wouldn't know if that cable coming from the port to house is copper or aluminum, but they can easily tell, so they would target those. But once they know it's aluminum, they do not touch it because the value differential or the incentive is not there. Potential for growth, we talk about the DRC, but also domestically, we see opportunities in Zambia itself. I think this is my last slide. Again, here, we just like to summarize what differentiates us. Luis already went through some of these. We produce very high-quality oxygen free copper, which we supply in the region, mostly to our fellow manufacturer because that becomes an input into their process. Well-respected brand. We are the supplier of choice in Zambia. People, when they go to a distributor, they will first ask for our product. And then if that particularly distributor does not have any stock, they ask us for the alternative. But typically, we come first. Okay. I think with that, I'll back to move. Thank you very much. [Presentation] A very warm welcome to Zamefa. Zamefa plc is a company with a very rich history and heritage who were founded way back in 1968 by the government of Zambia with its minority partners from the U.S. and Sweden. We make cables to world-class standards. Obviously, over the years, the company has gone through changes. Today, we are listed in the Lusaka Securities Exchange with more than 1,200 shareholders. And Reunert is a principal shareholder who holds 75% stake in the company. Zamefa still remains true to its primary objective of supplying world-class cables to its customers, wherever they may be in our chosen markets. Zamefa is unique because we pride ourselves as the top quality producer. We use only fewer cathode, LME grade material as our primary input in our process. Not so many players have access to that materials. The primary reason why we are based here in Russia is because it gives us access to multiple mines, which produce high-grade copper cathode. It makes the logistics easier, but also makes it logical because we have access to power supplies. At Zamefa, we use 100% Zambian copper produced locally at the copper mines here in the copper belt, that copper zinc converted into copper cathode, which we use here in our factory, A-grade copper. We then melt for those copper cathodes in our furnace at 1,175 degrees Celsius. And there it gets poured and then processed into rod or various diameters. We do a 16-millimeter rod, 12.5 millimeter rod and 8-millimeter rod. That is packaged or we put it into our local wire and cable factory where we produce our local cables here in Zamefa. The first process we do is what we call rod breaking or wire drilling. There we take the rod, which is about approximately an 8-millimeter diameter. We draw it down to a wire size that is suited to the conductor that we are ready to manufacture. Those various wires are then taken to the next process, which is stranding. And there, the wires are wound together. We apply insulation over it. Some of it is building wire, as we say. And that is -- goes straight into packaging. Other ones, we take those cores, and we then lay them together to form a 2-core or 3-core, even a 4-core cable. Every single cable drum is tested to see that it complies to the electrical properties and electrical requirements before it is in-sealed, ready for supply to our customers. We produce to multiple standards, including the British standards, American standard, South African standards and obviously, our own local Zambian standards. Various tricks are done in our laboratory. We have the one of the best equipped laboratories here in Zambia. And in fact, we believe in Africa, where we check the quality of our copper. Domestically, we are a big player, the biggest player, but also we play big time in the region. For example, Zambia is surrounded by 8 countries. We export directly to 7 of those countries, but it also export [indiscernible], particularly in East Africa, where we have a very good customer base. As a company, we are satisfied for 9001 for quality. This means that in everything we do, quality comes first, how we source, how we process and how we serve our customers and other stakeholders. They are important to us. We are also certified for 14001, which is for the environment. We take this responsibility very seriously as you were under our facilities, you see some of our recycling efforts, which we do for the environment, but also to support our local communities. We are equally certified for 45001, which is for the professional health of our people and that's where our people are well-cared for, including an on-site clinic where we attend to our people and their immediate family members. As you know, Luanshya is a slightly isolated place. So we want to be a self-contained as much as cost. The prospects for Zamefa in the future are very good. Take, for example, the electrification levels in this country in Zambia. It remains very low. If you go outside the cities like Lusaka, Ndola and Kitwe, just a few kilometers outside, the levels are extremely low and government is in back on electrification program to bring up those levels. And those would require a lot of cables, and Zamefa will definitely play large in those spaces.

Thank you, everyone. Now we will proceed to the tour. If you don't mind, let me introduce the management team of CBI African Cable. So if we will go outside, they will have their batch. And if you don't mind, just to see who you're going to be the leader with, outside, you will have the reflective vest and earplugs. The earplugs are only necessary within -- when we are inside of the buildings. Please, on the way back, you can leave the vest, but you can take the earplugs that you likely will have to use at low voltage. Thank you. So we could go outside. I think we will have 1 hour, 5 minutes. That's what we will have around for doing some exercise after this session.