Full Year 2026 Bidvest Group Ltd Earnings Call

August 31, 2026

Speaker #1: Good day, ladies and gentlemen, and welcome to the Bidvest Annual Results presentation. All attendees will be in listen-only mode. There will be an opportunity to ask questions when prompted.

Operator: Good day, ladies and gentlemen, and welcome to the Bidvest annual results presentation. All attendees will be in a listen-only mode. There will be an opportunity to ask questions when prompted. If you should need assistance during the call, please signal an operator by keying in star and then zero. Please note that this event is being recorded. I will now hand over to the Corporate Affairs Executive, Ilze Roux. Please go ahead, ma'am.

Speaker #1: If you need assistance during the call, please signal an operator by pressing * and then 0. Please note that this event is being recorded.

Speaker #1: I will now hand over to the Corporate Affairs Executive, Ilze Roux. Please go ahead, ma'am.

Speaker #2: Thank you, Judith. Good afternoon, everyone, and good morning to my colleagues to the west of us. My name is Ilze Roux, the Corporate Affairs Executive, and I have the pleasure of welcoming you to the call today.

Ilze Roux: Thank you, Judith. Good afternoon, everyone, and good morning to my colleagues towards the west of us. My name is Ilze Roux, the Corporate Affairs Executive, and I have the pleasure of welcoming you on the call today. Thank you for your interest in Bidvest. I understand it's a busy time for everyone in the market. These results are underpinned by excellent cash generation and show delivery against our communicated priorities. We would love to share them with you today. As is customary, Mpumi Madisa, Group CEO, will make some high-level remarks before Mark Steyn, Group CFO, delves deeper into the numbers. Mpumi Madisa will then follow with a detailed review of each division's performance and close with some outlook and priority comments. There will be an opportunity to ask some questions at the end of the session.

Speaker #2: Thank you for your interest in Bidvest. I understand it's a busy time for everyone in the market. These results are underpinned by excellent cash generation and show delivery against our communicated priorities.

Speaker #2: We would love to share them with you today. As is customary, Kumi Madisa, Group CEO, will make some high-level remarks before Mark Stein, Group CFO, delves deeper into the numbers.

Speaker #2: Kumi will then follow with a detailed review of each division's performance and close with some outlook and priority comments. There will be an opportunity to ask questions at the end of the session.

Speaker #2: But before I hand over to Kumi, the Bidvest Chair, Mr. Bunang Mohale, would like to say a few words. Sorry for messing that up, Chair.

Ilze Roux: But before I hand over to Mpumi Madisa, the Bidvest Chair, Mr. Bonang Mohale, would like to say a few words. Sorry for scuffing that up, Chair.

Bonang Mohale: My phone, because I am standing too close. Good day, colleagues. May I kindly add my appreciation to all of you for joining this results conversation this afternoon. This time of year is always very important and exciting for Bidvest, as we get to share our hard work, our significant efforts, and input over the course of this year. We also take this opportunity to share our future prospects and the many and varied external factors currently at play in the world today. Once again, the team, as always, has delivered a strong performance. It is very pleasing to see that this performance reflects this management team's startling clarity, power, and pathos. Clear delivery against our FY2026 commitments. The simple and clear strategy implemented over recent years is working well and in unison to continue to deliver value.

Speaker #3: My apologies for standing too close. Good day, colleagues, and I would like to add my appreciation to all of you for joining this results conversation this afternoon.

Speaker #3: This time of year is always very important and exciting for Bidvest, as we get to share our hard work and significant efforts and input over the course of this year.

Speaker #3: But we also take this opportunity to share our future prospects, and the many and varied external factors currently at play in the world today.

Speaker #3: Once again, the team has always delivered a strong performance. It is very pleasing to see that this performance reflects this management team's startling clarity, power, and pathos.

Speaker #3: Clear delivery against our FY2026 commitments. The simple and clear strategy implemented over recent years is working well. And, in unison, we will continue to deliver value.

Speaker #3: I remain in awe of how Sisnompumelelo and her leadership team continually demonstrate agility and resilience in repositioning our business for success, especially in response to the most difficult, dynamic, and often confusing world around us today.

Bonang Mohale: I remain in awe on how Sisonke Mpumelelo and her leadership team continually demonstrate agility, resilience in repositioning our business for success, especially in response to the most difficult dynamic and often confusing world around us today, always advancing Bidvest's attractive prospects. I thank every single solitary one of you for making time in your busy schedule to join us for this important conversation. I now hand over to my boss, Sisonke Mpumelelo.

Speaker #3: Always advancing Bidvest's attractive prospects. I thank every single one of you for making time in your busy schedules to join us for this important conversation.

Speaker #3: I now hand over to my boss, Sisnompumelelo.

Speaker #4: Thank you very much, Chair. Thank you to my boss. Good morning and good afternoon, everyone. Thank you very much for joining us today.

Mpumi Madisa: Thank you very much, Chair. Thank you to my boss. Good morning and good afternoon, everyone. Thank you very much for joining us today. Thank you, Ilze, for the introduction. We are proud today to present a solid set of results for the 2026 financial year. Over the past years, we have invested substantially in growth platforms, both locally and internationally. We expanded our international footprint, particularly in hygiene services. We focused on diversifying our automotive portfolio and also amplified our government engagements to secure extended tenure for our terminal operations. This reporting period demonstrates that these investments are now contributing meaningfully to profit growth, margin uplift, and earnings delivery. We delivered ZAR 13 billion trading profit, up 8.4%, and this compares to a relatively flat profit growth in the prior year.

Speaker #4: And thank you, Ilze, for the introduction. We're proud today to present a solid set of results for the 2026 financial year. Over the past years, we've invested substantially in growth platforms, both locally and internationally.

Speaker #4: We expanded our international footprint, particularly in hygiene services. We focused on diversifying our automotive portfolio, and also amplified our government engagements to secure extended tenure for our terminal operations.

Speaker #4: This reporting period demonstrates that these investments are now contributing meaningfully to profit growth, margin uplift, and earnings delivery. We delivered $13 billion in trading profit, up 8.4%, and this compares to a relatively flat profit growth in the prior year.

Speaker #4: Our trading margin reflects a step-up in the quality of earnings, rising to 10% from 9.5%. Headline earnings per share has advanced from a 3.2% contraction last year to a 6% increase in the period.

Mpumi Madisa: Our trading margin reflects a step up in the quality of earnings, rising to 10% from 9.5% in the previous year. Continuing headline earnings per share has advanced from a 3.2% contraction last year to a 6% increase in the period. In line with our dividend policy of 2 to 2.5 times cover, the group declared a final dividend of ZAR 4.83 per share, up 6.6% on the prior year. Moving to the next slide. 12 months ago, we told shareholders our priorities were clear: improving organic growth, strengthening cash generation, reducing leverage, and rebuilding returns. The results demonstrate meaningful delivery against these commitments. I have already referenced the trading profit performance, but what makes this result particularly pleasing is not only the level of growth achieved, but its quality.

Mpumi Madisa: Our trading margin reflects a step up in the quality of earnings, rising to 10% from 9.5% in the previous year. Continuing headline earnings per share has advanced from a 3.2% contraction last year to a 6% increase in the period. In line with our dividend policy of 2x to 2.5x cover, the group declared a final dividend of ZAR 4.83 per share, up 6.6% on the prior year. Moving to the next slide. 12 months ago, we told shareholders our priorities were clear: improving organic growth, strengthening cash generation, reducing leverage, and rebuilding returns. The results demonstrate meaningful delivery against these commitments. I have already referenced the trading profit performance, but what makes this result particularly pleasing is not only the level of growth achieved, but its quality.

Speaker #4: And in line with our dividend policy of 2 to 2.5 times cover, the group declared a final dividend of $483 per share, up 6.6% on the prior year.

Speaker #4: Moving to the next slide, 12 months ago we told shareholders our priorities were clear: improving organic growth, strengthening cash generation, reducing leverage, and rebuilding returns.

Speaker #4: The results demonstrate meaningful delivery against these commitments. I've already referenced the trading profit performance, but what makes this result particularly pleasing is not only the level of growth achieved, but also its quality.

Speaker #4: Growth was broad-based across the portfolio, with every operating division increasing trading profit, demonstrating both the resilience of the Bidvest model and the benefits of our diversified strategy.

Mpumi Madisa: Growth was broad-based across the portfolio, with every operating division increasing trading profit, demonstrating both the resilience of the Bidvest model and the benefits of our diversified strategy. Our most important feature of the result is definitely cash. Cash generated by operations after working capital was strong, increasing 17% to ZAR 17.2 billion. Free cash flow at ZAR 12.5 billion was outstanding, up 27%, and cash conversion improved to 109% from 95% in the prior year. As promised, we used the free cash to pay down debt, reducing our leverage from 2.2 times to 1.9 times. Our gross debt is down ZAR 3.9 billion, and net debt down ZAR 4 billion. The focus on rebuilding returns remains a key priority. ROFE is moving in the right direction, increasing to 38.6%, and ROIC remains unchanged from H1 at 13.4%.

Mpumi Madisa: Growth was broad-based across the portfolio, with every operating division increasing trading profit, demonstrating both the resilience of the Bidvest model and the benefits of our diversified strategy. Our most important feature of the result is definitely cash. Cash generated by operations after working capital was strong, increasing 17% to ZAR 17.2 billion. Free cash flow at ZAR 12.5 billion was outstanding, up 27%, and cash conversion improved to 109% from 95% in the prior year. As promised, we used the free cash to pay down debt, reducing our leverage from 2.2x to 1.9x. Our gross debt is down ZAR 3.9 billion, and net debt down ZAR 4 billion. The focus on rebuilding returns remains a key priority. ROFE is moving in the right direction, increasing to 38.6%, and ROIC remains unchanged from H1 at 13.4%.

Speaker #4: Our most important feature of the result is definitely cash. Cash generated by operations after working capital was strong, increasing 17% to R17.2 billion.

Speaker #4: Free cash flow at $12.5 billion was outstanding, up 27%, and cash conversion improved to 109% from 95% in the prior year. As promised, we used the free cash to pay down debt, reducing our leverage from 2.2 times to 1.9 times.

Speaker #4: Our gross debt is down $3.9 billion, and net debt is down $4 billion. The focus on rebuilding returns remains a key priority. ROFI is moving in the right direction, increasing to 38.6%, and ROIC remains unchanged from half-year, at 13.4%.

Speaker #4: We remain focused on driving our full invested capital return back to the 14% range. Moving to the next slide, there are a number of advancements that we've made as we focus on executing our strategy.

Mpumi Madisa: We remain focused on driving our full invested capital return back to the 14% range. Moving to the next slide. There are a number of advancements that we've made as we focus on executing our strategy. The acquisition of Citron UK and North America was key in advancing our international hygiene strategy. Citron UK has now been fully integrated into phs Group, and the expected synergies have been realized. This integration is a game changer for phs Group. Our North America Citron operations have finalized the sales structure and optimization, and have expanded our branch network into New York in the United States and Winnipeg in Canada. I'm extremely happy to report that we finalized the renewal of our 25-year bulk liquid terminal operator license and lease in the Durban port.

Speaker #4: The acquisition of Citrin UK and North America was key in advancing our international hygiene strategy. Citrin UK has now been fully integrated into PHS, and the expected synergies have been realized.

Speaker #4: This integration is a game changer for PHS. Our North America Citrin operations have finalized the sales structure and optimization, and have expanded our branch network into New York in the United States and Winnipeg in Canada.

Speaker #4: I'm extremely happy to report that we finalized the renewal of our 25-year bulk liquid terminal operator license and lease in the Durban Port. This is a major achievement for the Freight division.

Mpumi Madisa: This is a major achievement for the freight division, setting our annuity bulk liquid operations up for another strong 25-year growth cycle. Two more terminal operator agreements are under negotiation, and we hope to finalize these soon. The disposal process for Bidvest Bank remains underway. Negotiations are active, and as previously communicated, the proceeds will be used to reduce debt. Given the current negotiations, we will refrain from providing too much detail on the bank sale, and so I request that you keep this in mind when it comes to the Q&A. Our people focus remains, and this year, our focus on succession planning was amplified. We made progress in achieving most of our sustainability targets, and for the first time, 10% of the group's energy requirements come from renewable energy sources.

Speaker #4: Setting our annuity bulk liquid operations up for another strong 25-year growth cycle. Two more terminal operator agreements are under negotiation, and we hope to finalize these soon.

Speaker #4: The disposal process for Bidvest Bank remains underway. Negotiations are active, and, as previously communicated, the proceeds will be used to reduce debt. Given the current negotiations, we will refrain from providing too much detail on the bank sale, and so I request that you keep this in mind when it comes to the Q&A.

Speaker #4: Our people focus remains, and this year our focus on succession planning was amplified. We made progress in achieving most of our sustainability targets, and, for the first time, 10% of the Group's energy requirements come from renewable energy sources.

Speaker #4: Another key highlight this year is the rollout of our medical insurance benefit through Gaiolo Health to just under 14,000 employees and their beneficiaries. Through this health benefit, we're bringing more employees into the private healthcare system in South Africa and changing people's lives.

Mpumi Madisa: Another key highlight this year is the rollout of our medical insurance benefit through Kaelo Health to just under 14,000 employees and their beneficiaries. Through this health benefit, we're bringing more employees into the private healthcare system in South Africa and changing people's lives. Lastly, technology deployment and innovation also ramped up in the year with a number of AI-driven initiatives implemented across the group. Given the nature of our operations, a seamless integration of technology and AI into our labor-intensive portfolios is key. At this point, I'd like to hand over to Mark for the financial overview.

Speaker #4: Lastly, technology deployment and innovation also ramped up during the year, with a number of AI-driven initiatives implemented across the Group. Given the nature of our operations, seamless integration of technology and AI into our labor-intensive portfolios is key.

Speaker #4: At this point, I'd like to hand over to Mark for the financial overview.

Mark Steyn: Thank you, Mpoe. Good morning. Good afternoon, everyone. This has been a year of delivery. We set specific objectives which saw M&A austerity coupled with targeted de-leveraging and improved organic returns. It is pleasing to see these all come through. The standout clearly are the cash metrics, which exceeded expectations. This creates further capacity and flexibility going into FY27. While we came out of the H1 with a lot of positive momentum as a business, as South Africa, and more broadly, events worldwide have certainly shifted. The H2 has proved to be a more difficult business environment. And yet despite that, the group outperformed. Trading profit growth moved from 6.9% at half year to 8.4% for the year. This is a 9.9% growth for the H2, and this was done while releasing working capital and materially strengthening the balance sheet.

Mark Steyn: Thank you, Mpumi. Good morning. Good afternoon, everyone. This has been a year of delivery. We set specific objectives which saw M&A austerity coupled with targeted de-leveraging and improved organic returns. It is pleasing to see these all come through. The standout clearly are the cash metrics, which exceeded expectations. This creates further capacity and flexibility going into FY 2027. While we came out of the H1 with a lot of positive momentum as a business, as South Africa, and more broadly, events worldwide have certainly shifted. The H2 has proved to be a more difficult business environment. And yet despite that, the group outperformed. Trading profit growth moved from 6.9% at half year to 8.4% for the year. This is a 9.9% growth for the H2, and this was done while releasing working capital and materially strengthening the balance sheet.

Speaker #2: Thank you, Pomi, and good morning, good afternoon, everyone. This has been a year of delivery. We set specific objectives, which saw M&A austerity, coupled with targeted deleveraging and improved organic returns.

Speaker #2: It's pleasing to see these all come through. The standout clearly is the cash metrics, which exceeded capacity and flexibility going into FY27. While we came out of the first half with a lot of positive momentum as a business, South Africa and, more broadly, events worldwide have certainly shifted.

Speaker #2: The second half has proved to be a more difficult business environment. And yet, despite that, the Group outperformed. Trading profit growth moved from 6.9% at half-year to 8.4% for the year.

Speaker #2: This is a 9.9% growth for the second half. And this was done while releasing working capital and materially strengthening the balance sheet. From an earnings perspective, top-line growth was harder to come by in the second half, but gross margins were improved, expense control was strong, and trading margins improved by 50 bucks.

Mark Steyn: From an earnings perspective, top-line growth was harder to come by in the H2, but gross margins were improved, expense control was strong, and trading margins improved by 50 basis points. Specifically, on the cash generation, the H2 release was particularly good. Overall cash conversion was 109%, and pre-cash flow is up 27% to ZAR 12.5 billion, which is exceptional. Strategically, it has been a good year too, and as promised, much work has been done on our funding structures. This is evidenced in our net debt reducing by ZAR 4 billion, the debt maturity profile extending, and our average debt cost holding. This was particularly pleasing given the transition from the old Eurobond to the new one and the step-up in borrowing costs that this brought. We have also reduced our net debt to EBITDA to 1.9 times. Now targeting lower still in FY27.

Speaker #2: Specifically on the cash generation, the second half release was particularly good. Overall cash conversion was 109%, and free cash flow is up 27% to R12.5 billion, which is exceptional.

Speaker #2: Strategically, it has been a good year too. And, as promised, much work has been done on our funding structures. This is evidenced in our net debt reducing by R4 billion, the debt maturity profile extending, and our average debt cost holding.

Speaker #2: This was particularly pleasing, given the transition from the old Eurobond to the new one and the step-up in borrowing costs that this brought.

Speaker #2: We've also reduced our net debt to EBITDA to 1.9 times, and our target for the low is still in FY27. There were no acquisitions completed in the second half.

Mark Steyn: There were no acquisitions completed in the H2. As Mpumi mentioned, the disposal of Bidvest Bank continues. There is a new process which has commenced and is progressing. an SPA has been signed for Bidvest Life, which has been concluded, and we await the final SARB regulatory approval. These two entities continue to be disclosed as discontinued operations. There are two subsequent events to highlight, the first being the sale of 13.25% of Adcock Ingram, together with a portion of our investment in Associate, which was completed just after year-end and brought in proceeds of ZAR 1.8 billion. These will be used to repay a portion of our old Eurobond, and we retain a 51% majority control in Adcock. The second is that we have added an additional £20 million working capital facility in the UK. With this as a backdrop, let us have a look at the more detailed results.

Speaker #2: As Pomi mentioned, the disposal of Bidvest Bank continues. There's a new process, which has commenced and is progressing. An SBA has been signed for Bidvest Life, which has been concluded, and we await the final SOB regulatory approval.

Speaker #2: These two entities continue to be disclosed as continued operations. There are two subsequent events to highlight, the first being the sale of 13.25% of Adcock Ingram, together with a portion of our investment in an associate, which was completed just after year-end and brought in proceeds of R1.8 billion.

Mark Steyn: There are two subsequent events to highlight, the first being the sale of 13.25% of Adcock Ingram, together with a portion of our investment in Associate, which was completed just after year-end and brought in proceeds of ZAR 1.8 billion. These will be used to repay a portion of our old Eurobond, and we retain a 51% majority control in Adcock. The second is that we have added an additional £20 million working capital facility in the UK. With this as a backdrop, let us have a look at the more detailed results.

Speaker #2: These will be used to repay a portion of our old Eurobond, and we retain a 51% majority control in Adcock. The second is that we've added an additional £20 million working capital facility in the UK.

Speaker #2: With this as a backdrop, let's have a look at the more detailed results. From a revenue perspective, revenue is up 2.9% to R130.3 billion, supported by a pleasing improvement in organic growth of 1.5%, after a contraction last year.

Mark Steyn: From a revenue perspective, revenue up 2.9% to ZAR 130.3 billion, supported by a pleasing improvement in the organic growth of 1.5% with a contraction last year. The improved revenue was led by growth in automotive, underpinned by higher retail volumes, and in Commercial Products with a strong turnaround in the electrical cluster, improved renewable energy sales, and continued plumbing growth. Acquisitions contributed 1.4%, mainly in the Services International and Services South Africa divisions. We will unpack the divisional results, though, later in a bit more detail. In terms of our gross profit, gross profit up 5.2%, the 61 basis points improvement in the margin to 28.3%. Margins were well managed across the divisions, but strongly up in freight due to higher terminal volumes and lower C&F revenues. Services International margins benefited from a stronger hygiene contribution. And the automotive margin was under pressure, but this is industry-wide.

Speaker #2: The improved revenue was led by growth in Automotive, underpinned by higher retail volumes, and in Commercial Products, with a strong turnaround in the Electrical cluster, improved renewable energy sales, and continued Plumblink growth.

Speaker #2: Acquisitions contributed 1.4%, mainly in the Services International and Services South Africa divisions. We'll unpack the divisional results later, though, in a bit more detail.

Speaker #2: In terms of our gross profit, gross profit was up 5.2%. The 61 basis points improvement in the margin to 28.3%. Margins were well managed across the divisions, but strongly up in Freight due to higher terminal volumes and lower CNF revenues.

Speaker #2: Service international margins benefited from a stronger hygiene contribution, and the automotive margin was under pressure, but this is industry-wide. Our expense performance was very pleasing.

Mark Steyn: Our expense performance was very pleasing. Operating expenses up 3.8%, with an organic expense increase of just 2.9%. In certain of the Services businesses, wage inflation continues to exceed CPI, which is impacting margins. A number of the businesses, though, did benefit from completed restructuring processes in the H1. Our overall expense ratio remains similar to last year at 18.7%, and the expense performance has been very pleasing. In terms of trading profit, as Mpoe mentioned, trading profit up 8.4% to ZAR 13.1 billion, with organic growth at 5%. The turnaround in the organic growth is very, very pleasing. Commercial Products produced an excellent result. Freight and Adcock were very pleasing, closing with very strong Q4 results. Services South Africa was impressive, supported by an expanded TIC business and inbound travel through the lounges. Branded Products and Automotive did well, given the constrained consumer environment and margin pressures.

Speaker #2: Operating expenses are up 3.8%, with an organic expense increase of just 2.9%. In certain of the Services businesses, wage inflation continues to exceed CPI, which is impacting margins.

Speaker #2: A number of the businesses, though, did benefit from completed restructuring processes in the first half. Our overall expense ratio remains similar to last year, at 18.7%.

Speaker #2: And the overall expense performance has been very pleasing. In terms of trading profit, as Pomi mentioned, trading profit is up 8.4% to R13.1 billion, with organic growth at 5%.

Speaker #2: The turnaround in the organic growth is very, very pleasing. Commercial Products produced excellent results. Freight and Adcock were very pleasing, closing with very strong quarter four results.

Speaker #2: Services SA was impressive, supported by an expanded TIC business and inbound travel through the lounges. Branded Products and Automotive did well, given the constrained consumer environment and margin pressures.

Speaker #2: And Services International was also pleasing, with strong Hygiene results offsetting a weaker FM contribution and forex translation impacts. Our overall effective tax rate, at 25.4%, is broadly representative of our geographic mix.

Mark Steyn: Services International was also pleasing, with strong hygiene results offsetting a weaker FM contribution and Forex translation impacts. Our overall effective tax rate at 25.4% is broadly representative of our geographic mix. The growth in the tax expense is due to the prior year release of prescribed taxes of about ZAR 215 million. Our acquisition costs are significantly down due to the lower M&A activity, and those costs that were incurred primarily relate to the Adcock delisting and the Aquatico acquisition. Our HEPS is up 6% on a continuing basis, which is a very pleasing turnaround. Group EPS is up 1.3%, impacted by impairments in Bidvest Bank and Associate Investments. Moving now to our cash generation. Cash flow for the year has been exceptional. The underlying cash generated by operations before working capital is up 7.2% to ZAR 17 billion.

Speaker #2: And the growth in the tax expense is due to the prior year release of prescribed taxes of about R215 million. Our acquisition costs are significantly down due to the lower M&A activity, and those costs that were incurred primarily relate to the Adcock delisting and the Aquatico acquisition.

Speaker #2: Our HEPS is up 6% on a continuing basis, which is a very pleasing turnaround. Our group EPS is up 1.3%, impacted by impairments in Bidvest Bank and associate investments.

Speaker #2: Moving now to our cash generation. Cash flow for the year has been exceptional. The underlying cash generated by operations, before working capital, is up 7.2% to R17 billion.

Speaker #2: We have released $0.2 billion in working capital, which is $1.4 billion better than the outflow in the prior year. In terms of the mix, inventory has come down nicely, particularly in commercial products and branded products.

Mark Steyn: We have released ZAR 0.2 billion in working capital, which is ZAR 1.4 billion than the outflow in the prior year. In terms of the mix, inventory has come down nicely, particularly in Commercial Products and Branded Products. Debtors growth is aligned to our revenue, and creditors growth reflects a more normalized inventory cycle. Our cash generation after working capital is up 16.9% to ZAR 17.2 billion. Our cash conversion, as Mpumi mentioned earlier, is at 109%, nicely up from 95% last year. The bulk of our cash generated has been applied to debt repayment and normal CapEx, with limited M&A investment in the year. In terms of our cash generation graph, you can see the H2 reflects the seasonal cash inflow, which is consistent with our normal working capital cycle. It is pleasing, though, to reach a neutral cash working capital position for the year.

Speaker #2: Debt growth is aligned to our revenue, and credit growth reflects a more normalized inventory cycle. Our cash generation after working capital is up 16.9% to R17.2 billion.

Speaker #2: And our cash conversion, as Pomi mentioned earlier, is at 109%, nicely up from 95% last year. The bulk of our cash generated has been applied to debt repayment and normal capex, with limited M&A investment in the year.

Speaker #2: In terms of our cash generation graph, you can see the second half reflects the seasonal cash inflow, which is consistent with our normal working capital cycle.

Speaker #2: It is pleasing, though, to reach a neutral cash working capital position for the year. This is something we've been targeting for quite a while.

Mark Steyn: This is something we've been targeting for quite a while. Operating cash generation remains very strong. Moving now to the next slide and our balance sheet. Our debt reduction program, which we signaled last year, is progressing nicely. Our free cash flow is up to ZAR 12.4 billion, which is exceptional. This has enabled us to reduce our overall leverage ratio by 0.3 times to 1.9 times. Our operational leverage was better than expected, particularly in Q4. Our net debt has been reduced by ZAR 4 billion. We anticipate being able to further reduce our gearing in FY27 with the capital proceeds from the Adcock and Bidvest Bank monetizations. We will settle the remaining old Eurobond of $186 million, about ZAR 3 billion, in September this year from ZAR 2 billion in available cash and ZAR 1 billion from our RCF funding line.

Speaker #2: Our operating cash generation remains very strong. Moving now to the next slide and our balance sheet: Our debt reduction program, which we signaled last year, is progressing nicely.

Speaker #2: Our free cash flow is up to R12.4 billion, which is exceptional. This has enabled us to reduce our overall leverage ratio by 0.3 times to 1.9 times.

Speaker #2: Our operational leverage was better than expected, particularly in Q4. Our net debt has been reduced by R4 billion. We anticipate being able to further reduce our gearing in FY27 with the capital proceeds from the Adcock and Bidvest Bank monetizations.

Speaker #2: We will settle the remaining old Eurobond of $186 million, about R3 billion, in September this year, from R2 billion in available cash and R1 billion from our RCF funding line.

Speaker #2: Our current available funding for the group is €545 million offshore and R10 billion domestically. On the right, you can see the impact of the slowing M&A on the reduction of our net debt, as well as the related net debt/EBITDA ratio.

Mark Steyn: Our current available funding for the group is EUR 545 million offshore and 10 billion rand domestically. On the right, you can see the impact of the slowing M&A on the reduction of our net debt, as well as the related net debt EBITDA ratio. If we turn now to the work we have done on our debt maturity and our interest costs. A lot of work has gone into both the debt maturity and cost mix. We materially shifted out the overall maturity profile with the addition of the longer-dated seven-year Eurobond, together with new five- and seven-year domestic bonds, and these were all added at tighter spreads. We have repaid more expensive debt, mainly the older preference shares of 2.1 billion, to improve the debt cost mix. Our weighted average cost of debt has stabilized at 6.3%, which is just 10 bps higher than the 6.2% from last year.

Speaker #2: If we turn now to the work we've done on our debt maturity and our interest costs—a lot of work has gone into both the debt maturity and cost mix.

Speaker #2: We materially shifted out the overall maturity profile with the addition of longer dated with addition of the longer dated seven-year Eurobond, together with new five and seven-year domestic bonds.

Mark Steyn: We materially shifted out the overall maturity profile with the addition of the longer-dated seven-year Eurobond, together with new five- and seven-year domestic bonds, and these were all added at tighter spreads. We have repaid more expensive debt, mainly the older preference shares of 2.1 billion, to improve the debt cost mix. Our weighted average cost of debt has stabilized at 6.3%, which is just 10 bps higher than the 6.2% from last year.

Speaker #2: And these were all added at tighter spreads. We've repaid more expensive debt, mainly the older preference shares of $2.1 billion, to improve the debt cost mix.

Speaker #2: Our weighted average cost of debt has stabilized at 6.3%, which is just 10 basis points higher than the 6.2% from last year. This is very pleasing, given that the new Eurobond interest rate of 6.2% is materially higher than the 3.625% of the outgoing Eurobond.

Mark Steyn: This is very pleasing given that the new Eurobond interest rate of 6.2% is materially higher than the 3.625% of the outgoing Eurobond. Our expectation for the FY26 year was that we would end it at 6.7%. We remain overweight on variable rate debt at 60%. Our overall interest cost, if we exclude the impact of IFRS 16 and the hedge accounting adjustments, is up just 4.3%. Our net debt to EBITDA at 1.9 times remains comfortably within our covenant of three times, and obviously we are targeting to reduce this further into FY27. Our EBITDA interest cover at 6.1 times is comfortably in excess of the covenant of three and a half times. We continue to add new and cheaper funding sources into the mix.

Speaker #2: Our expectation for the FY26 year was that we would end at 6.7%. We remain overweight on variable rate debt at 60%. Our overall interest cost, if we exclude the impact of IFRS 16 and the hedge accounting adjustments, is up just 4.3%.

Speaker #2: Our net debt to EBITDA, at 1.9 times, remains comfortably within our covenant of three times. And, obviously, we're targeting to reduce this further into FY27.

Speaker #2: Our EBITDA interest cover at 6.1 times is comfortably in excess of the covenant of 3.5 times. And we continue to add new and cheaper funding sources into the mix.

Speaker #2: If we now move to look at returns, we remain very cognizant of return levels and managing these over time in alignment with our M&A and capex investments.

Mark Steyn: If we now move to look at returns, we remain very cognizant of return levels and managing these over time in alignment with our M&A and CapEx investments. This year, the focus has been on driving organic trading profit growth. This will continue into FY27. We have clear plans for the previously completed M&A and CapEx to drive up the returns over the medium term with specific targets per business. We track this actively with more work to do in the coming year. The graph alongside shows how we have maintained ROFE returns through the buildup of capital investments over 2023 to 2025, with ROFE now growing into 2026. As previously communicated, we are not targeting any material M&A in 2027. Our objective continues to be building and growing businesses for long-term value.

Speaker #2: This year, the focus has been on driving organic trading profit growth, and this will continue into FY27. We have clear plans for the previously completed M&A and capex to drive up the returns over the medium term, with specific targets per business.

Speaker #2: And we track this actively, with more work to do in the coming year. The graph alongside shows how we've maintained returns through the buildup of capital investments over 2023 to 2025, with growth now continuing into 2026.

Speaker #2: As previously communicated, we're not targeting any material M&A in 2027. Our objective continues to be building and growing businesses for long-term value. We have return metrics that are appropriate for each business acquired or capex completed, with a glide path to meet these targets, which we set at inception.

Mark Steyn: We have return metrics which are appropriate for each business acquired or CapEx completed, with a glide path to meet these targets which we set at inception. We balance these growth objectives with appropriately aligned sustainability targets so that the growth is multidimensional. Moving lastly now to our capital recycling. The disposal process of our financial services division is making steady progress. We have signed the SPA for Bidvest Life and have received Competition Commission go-ahead. We are now waiting for the final SARB regulatory approval. The disposal of Bidvest Bank continues with the new process underway. From an operational perspective, Bidvest Bank experienced some top-line pressure with slower capital deployment, lower non-interest revenue, and further ECL impairments. Expense management, though, was good. The deposit book remains stable and all regulatory ratios are healthy. Bidvest Life delivered a good outcome.

Speaker #2: We balance these growth objectives with appropriately aligned sustainability targets so that the growth is multidimensional. Moving lastly now to our capital recycling: the disposal process of our financial services division is making steady progress.

Speaker #2: We have signed the SBA for Bidvest Life and have received ComCom go-ahead. We are now waiting for the final SOB regulatory approval. The disposal of Bidvest Bank continues, with the new process underway.

Speaker #2: From an operational perspective, Bidvest Bank experienced some top-line pressure with slower capital deployment, lower non-interest revenue, and further ECL impairments. Expense management, though, was good.

Speaker #2: The deposit book remained stable and all regulatory ratios are healthy. Bidvest Life delivered a good outcome. These two entities have been separately disclosed as discontinued operations, as per IFRS 5.

Mark Steyn: These two entities have been separately disclosed as discontinued operations as per IFRS 5. In terms of the standard, depreciation and amortization continue to be suspended as part of this disclosure, and this has been adjusted for in our normalized headline earnings. We have also impaired the net asset value of Bidvest Bank to reflect the FY 2025 closing position. As always, a few final concluding thoughts. The world we saw six months ago is much changed, with volatility the order of the day, geographically, politically, and financially. Bidvest's decentralized operating model gives us flexibility to adapt to these shifts and appropriately reposition as required. A stronger balance sheet with lower leverage and more funding capacity creates headroom both for growth as well as resilience. We will continue to focus on utilizing free cash flow to further deleverage, and efficient margin management remains core to our DNA. Thank you.

Speaker #2: In terms of the standard depreciation and amortization, these continue to be suspended as part of this disclosure, and this has been adjusted for in our normalized headline earnings.

Speaker #2: We have also adjusted the net asset value of the bank to reflect the FY2025 closing position. As always, a few final concluding thoughts.

Speaker #2: The world we saw six months ago has changed significantly, with volatility now the order of the day—geographically, politically, and financially. Bidvest's decentralized operating model gives us the flexibility to adapt to these shifts and appropriately reposition as required.

Mark Steyn: Bidvest's decentralized operating model gives us flexibility to adapt to these shifts and appropriately reposition as required. A stronger balance sheet with lower leverage and more funding capacity creates headroom both for growth as well as resilience. We will continue to focus on utilizing free cash flow to further deleverage, and efficient margin management remains core to our DNA. Thank you.

Speaker #2: A stronger balance sheet with lower leverage and more funding capacity creates headroom both for growth as well as resilience. We'll continue to focus on utilizing free cash flow to further deleverage, and efficient margin management remains core to our DNA.

Speaker #2: Thank you.

Speaker #1: Thank you very much, Mark. And so now we move to the divisional review, starting with Services International. Revenue at R44 billion is up 2%, supported by hygiene pool growth, rental asset expansion, improved price recoveries, and the four-year integration of Citrine.

Mpumi Madisa: Thank you very much, Mark. Now we move to the divisional review. Starting with Services International. Revenue at ZAR 44 billion is up 2%, supported by hygiene pool growth, rental asset expansion, improved price recoveries, and the full-year integration of Citron. Top line and margin pressure, though, did come through the facilities management portfolio, and this did moderate revenue growth somewhat. The growth margin expansion in the division is due to a change in mix as the higher margin hygiene operations growth profit contribution increased year-on-year. Cost control was excellent, with expenses increasing only 1% excluding acquisitions. The division delivered ZAR 4.4 billion trading profit, up 4.3%, and the positive mix impact referenced earlier resulted in a trading margin expansion from 9.8% in the prior year to 10% in the period. ROFE at 146% is an excellent return, and 100% cash conversion is outstanding.

Speaker #1: Top line and margin pressure, though, did come through the facilities management portfolio, and this did moderate revenue growth somewhat. The gross margin expansion in the division is due to a change in mix, as the higher-margin hygiene operations' gross profit contribution increased year on year.

Speaker #1: Cost control was excellent, with expenses increasing only 1%, excluding acquisitions. The division delivered R4.4 billion in trading profit, up 4.3%, and the positive mix impact referenced earlier resulted in a trading margin expansion from 9.8% in the prior year to 10% in the period.

Speaker #1: A return of roughly 146% is excellent, and 100% cash conversion is outstanding. Turning to operations, our hygiene businesses sustained their momentum from the half year, delivering exceptional profit growth.

Mpumi Madisa: Turning to the operations, our hygiene businesses sustained their momentum from H1, delivering exceptional profit growth. In constant currency, our hygiene businesses across Singapore, South Africa, and the UK all grew profitability. Citron UK, as I said earlier, has been successfully integrated into phs Group, and the synergies that we had expected to realize have come through. Our Citron North America operations increased their sales capacity in Canada and the US, and two additional branches have been opened. Notwithstanding this additional growth investment in branch and sales capacity, Citron delivered in line with business plan and on budget. Our hygiene operations profit now account for 54% of the division's trading profit. Our facilities management operations contracted slightly due to lost business, contracts restructures, and lower ad hoc revenue. The South African cleaning business maintained its H1 momentum, delivering a standout double-digit profit result.

Speaker #1: In constant currency, our hygiene businesses across Singapore, South Africa, and the UK all grew profitability. Citrin UK, as I said earlier, has been successfully integrated into PHS, and the synergies that we’d expected to realize have come through.

Speaker #1: Our Citrin North America operations increased their sales capacity in Canada and the US, and two additional branches have been opened. Notwithstanding this additional growth investment in branch and sales capacity, Citrin delivered in line with the business plan and on budget.

Speaker #1: Our hygiene operations' profit now accounts for 54% of the division's trading profit. Our facilities management operations contracted slightly, due to lost business, contract restructures, and lower ad hoc revenue.

Speaker #1: The South African cleaning business maintained its half-year momentum, delivering a standout double-digit profit result. I'd like to congratulate the Services International team for their commendable performance.

Mpumi Madisa: I would like to congratulate the Services International team for a commendable performance. Moving to Freight. Revenue at ZAR 9 billion was up 2%, driven by annual rate increases, improved capacity utilization, and higher bulk grain and mineral volumes. This growth was countered by lower international logistics volumes, customer down-trading, and lower commodity volumes in Namibia. The growth margin expanded due to positive mix, reduced lower margin disbursements in clearing and forwarding, and improved efficiencies, whilst high activity levels in the terminal operations drove up expenses. Freight delivered an exceptional turnaround from prior year, lifting trading profits to ZAR 2.3 billion, up 10.3%, and expanding the trading margin to 25.3%. ROFE improved to 42.4% as profit growth outpaced the increase in funds employed. 94% cash conversion in this division was excellent.

Speaker #1: Moving to Freight, revenue at $9 billion was up 2%, driven by annual rate increases, improved capacity utilization, and higher bulk grain and mineral volumes.

Speaker #1: This growth was countered by lower international logistics volumes, customer down-trading, and lower commodity volumes in Namibia. The gross margin expanded due to a positive mix, reduced lower-margin disbursements and clearing and forwarding, and improved efficiencies, whilst higher activity levels in the terminal operations drove up expenses.

Speaker #1: Freight delivered an exceptional turnaround from the prior year, lifting trading profits to R2.3 billion, up 10.3%, and expanding the trading margin to 25.3%. ROFE improved to 42.4%, as profit growth outpaced the increase in funds employed.

Speaker #1: And 94% cash conversion in this division was excellent. Turning to the operations, bulk grain volumes increased 15% due to higher maize, rice, and wheat handled, resulting in a phenomenal profit increase in this terminal operation.

Mpumi Madisa: Turning to the operations, bulk grain volumes increased 15% due to higher maize, rice, and wheat handled, resulting in a phenomenal profit increase in this terminal operation. The bulk liquid terminal delivered a solid performance driven by annual rate escalations, higher tank rental, and a 10% volume increase. The bulk mineral terminal delivered an excellent profit result off the back of a 6% volume increase, annual rate escalations, and more cargo moving on rail. The multipurpose terminal delivered an outstanding result as volumes increased 29%, driven primarily by increased exports of chrome, manganese, and iron ore. The container operation delivered a significant turnaround in profitability as solar and steel volumes increased. Additional cargo was also handled and rental income also improved. The South African clearing and forwarding operation delivered a much improved H2 performance.

Speaker #1: The bulk liquid terminal delivered a solid performance, driven by annual rate escalations, higher tank rental, and a 10% volume increase. The bulk mineral terminal delivered an excellent profit result, off the back of a 6% volume increase, annual rate escalations, and more cargo moving on rail.

Speaker #1: The multipurpose terminal delivered an outstanding result, as volumes increased by 29%, driven primarily by increased exports of chrome, manganese, and iron ore. The container operation delivered a significant turnaround in profitability, as solar and steel volumes increased. Additional cargo was also handled, and rental income improved.

Speaker #1: The South African clearing and forwarding operation delivered a much-improved second-half performance. Disruptions in logistics caused by Red Sea diversions fueled volatility, and higher costs were partially offset by the strong performance in overland logistics, which is supported by new customers, efficiency improvements, and fleet growth.

Mpumi Madisa: Disruptions in logistics caused by Red Sea diversions, fuel volatility, and higher costs were partially offset by the strong performance in overland logistics, which was supported by new customers, efficiency improvements, and fleet growth. Tough trading conditions in our Mozambique and Namibia operations persisted. In Namibia, lower volume, increased competition, port bottlenecks, limited transport capacity, and softer oil and gas activity impacted profitability. On the other hand, Mozambique delivered a significantly improved result but remains constrained by lower volumes. A ZAR 2.5 billion CapEx has been approved, and at a high level, the split of this CapEx is as follows. ZAR 1.6 billion has been approved for a second LPG terminal in Richards Bay, and this is the biggest capital allocation.

Speaker #1: Tough trading conditions in our Mozambique and Namibia operations persisted. In Namibia, lower volumes, increased competition, port bottlenecks, limited transport capacity, and softer oil and gas activity impacted profitability.

Speaker #1: On the other hand, Mozambique delivered a significantly improved result, but remains constrained by lower volumes. A R2.5 billion capex has been approved, and at a high level, the split of this capex is as follows.

Speaker #1: R1.6 billion has been approved for a second LPG terminal in Richards Bay, and this is the biggest capital allocation. The balance of the capex has been allocated to expanding our grain capacity in Durban Port, adding additional bulk liquid tank capacity in Durban Port, and also increasing warehouse capacity in Namibia.

Mpumi Madisa: The balance of the CapEx has been allocated to expanding our grain capacity in Durban Port, adding additional bulk liquid tank capacity in Durban Port, and also increasing warehouse capacity in Namibia. As is customary, we will advise once construction has started, and then closer to commissioning, we will provide further information related to returns, payback period, et cetera. Overall, I would like to congratulate the Freight team for an excellent result. Moving to Services South Africa. Revenue at ZAR 13.6 billion is up 7.5%, driven by new contract wins, improved recurring income, and strong growth from our newly formed Testing, Inspection, and Compliance cluster. This was further boosted by the acquisition of Aquatico that came into the numbers for nine months. The growth margin was stable as margin pressure in security and travel services was offset by margin expansion in the TIC and hospitality clusters.

Speaker #1: As is customary, we'll advise once construction has started, and then, closer to commissioning, we'll provide further information related to returns, payback periods, etc. Overall, I'd like to congratulate the Freight team for an excellent result.

Speaker #1: Moving to Services South Africa, revenue at R13.6 billion is up 7.5%, driven by new contract wins, improved recurring income, and strong growth from our newly formed Testing, Inspection, and Compliance cluster.

Speaker #1: This was further boosted by the acquisition of Aquatico that came into the numbers for nine months. The gross margin was stable, as margin pressure in security and travel services was offset by margin expansion in the TIC and hospitality clusters.

Speaker #1: Operating expenses increased 5.8%, due to investment in factory capacity, the inclusion of expenses from acquisitions, and a material increase in fuel costs as a result of the war in the Middle East.

Mpumi Madisa: Operating expenses increased 5.8% due to investment in factory capacity, inclusion of expenses from acquisitions, and material increase in fuel costs as a result of the war in the Middle East. Trading profit at ZAR 1.6 billion was excellent, increasing 8.3%, and the trading margin increased slightly to 11.5%. ROFE at 101% is slightly down on prior year due to increased factory CapEx and the inclusion of Aquatico. Cash conversion at 96% was excellent. Turning to the operations, the hospitality and catering cluster delivered phenomenal growth, driven by a record performance from the lounges as passenger volumes increased and the restructuring in catering also improved profitability. The security cluster was slightly down due to pricing pressures, loss of high-margin work, higher fuel costs, and wage under recovery. Outside of this contraction, excellent performances were reported by the cargo, warehouse management, tracking, and payment technology businesses.

Speaker #1: Trading profit at R1.6 billion was excellent, increasing 8.3%, and the trading margin increased slightly to 11.5%. ROFE at 101% is slightly down on the prior year, due to increased factory capex and the inclusion of Aquatico.

Speaker #1: Cash conversion at 96% was excellent. Turning to the operations, the Hospitality and Catering cluster delivered phenomenal growth, driven by a record performance from the lounges as passenger volumes increased, and the restructuring in Catering also improved profitability.

Speaker #1: The security cluster was slightly down due to pricing pressures, loss of high-margin work, higher fuel costs, and wage under-recovery. Outside of this contraction, excellent performances were reported by the cargo, warehouse management, tracking, and payment technology businesses.

Speaker #1: The travel cluster struggled as corporate volumes continued to decline, and the fourth quarter was further impacted by lower inbound volumes and lower rebate income due to travel anxiety created by the war in the Middle East.

Mpumi Madisa: The travel cluster struggled as corporate volumes continued to decline, and the Q4 was further impacted by lower inbound volumes and lower rebate income due to travel anxiety created by the war in the Middle East. The allied cluster improved from H1 due to strong recurring revenue in the water business and contractual sales in the indoor and outdoor plants businesses. Operational and margin challenges in the laundry and amenities businesses did taper performance in this cluster. Lastly, our TIC services cluster delivered a standout profit result driven by solid revenue growth, record samples processed, and the inclusion of Aquatico. I would like to congratulate the Services South Africa team for an excellent result. Moving to Branded Products. Revenue at ZAR 13 billion was relatively flat, reflecting subdued demand across several markets. The growth margin improved due to positive product mix, production efficiencies, and favorable pricing.

Speaker #1: The Allied cluster improved from half-year, due to strong recurring revenue in the water business and contractual sales in the indoor and outdoor plants businesses.

Speaker #1: Operational and margin challenges in the Laundry and Amenities businesses did taper performance in this cluster. And lastly, our TIC Services cluster delivered a standout profit result, driven by solid revenue growth, record samples processed, and the inclusion of Aquatico.

Speaker #1: I'd like to congratulate the Services South Africa team for an excellent result. Moving to Branded Products, revenue at R13 billion was relatively flat, reflecting subdued demand across several markets.

Speaker #1: The gross margin improved due to a positive product mix, production efficiencies, and favorable pricing. Similarly, operating expenses were exceptionally well managed, declining 1.9%, reflecting strong cost discipline, restructure benefits, and operational efficiencies.

Mpumi Madisa: Similarly, operating expenses were exceptionally well managed, declining 1.9%, reflecting strong cost discipline, restructure benefits, and operational efficiencies. This margin and expense management translated into a trading profit increase of 5.4% to ZAR 1.2 billion and a trading margin expansion from 8.6% to 9.2%. ROFE in this division continues to increase and is now at 38%, and cash conversion was excellent at 105%. Turning to the operations, the data print and packaging cluster led, with solid performances from the print and packaging businesses driven by acquisition synergies, resilient demand, pricing discipline, factory efficiencies, and tight cost management. The Office Product cluster also delivered a good result driven by a record performance from the furniture business, higher profitability in office automation, and a resilient performance from the stationery business. Lastly, the Consumer Products cluster delivered a mixed result.

Speaker #1: This margin and expense management translated into a trading profit increase of 5.4% to R1.2 billion, and a trading margin expansion from 8.6% to 9.2%.

Speaker #1: Roughly, this division continues to increase and is now at 38%, and cash conversion was excellent at 105%. Turning to operations, the data, prints, and packaging cluster led with solid performances from the prints and packaging businesses, driven by acquisition synergies, resilient demand, pricing discipline, factory efficiencies, and tight cost management.

Speaker #1: The Office Products cluster also delivered a good result, driven by record performance from the furniture business, higher profitability in office automation, and a resilient performance from the stationery business.

Speaker #1: And then lastly, the Consumer Products cluster delivered a mixed result. Revenue was impacted by lower TV and satellite accessory sales, price deflation, and lower retail demand, as international travel volumes came under pressure in the second half of the year.

Mpumi Madisa: Revenue was impacted by lower TV and satellite accessory sales, price deflation, and lower retail demand as international travel volumes came under pressure in the H2 of the year. This was countered by a solid performance from Office and Leisure due to the inclusion of LK Products and disciplined margin and expense management. Well done to the Branded Products team for a solid set of results. Moving to Commercial Products. Revenue at ZAR 18.3 billion is up 8.2%, reflecting resilience in a very challenging trading environment. Growth was led by the trade cluster, benefiting from smart meter sales, improved renewable sales, and continued branch expansion. The gross margin increased slightly to 27.4% due to a favorable product mix and active margin management across the businesses. Operating expenses increased 4.9%, which is below revenue growth, and this increase is notwithstanding additional costs incurred related to the opening of new branches.

Speaker #1: This was countered by a solid performance from Office and Leisure, due to the inclusion of LK products, and disciplined margin and expense management. Well done to the Branded Products team for a solid set of results.

Speaker #1: Moving to Commercial Products, revenue at R18.3 billion is up 8.2%, reflecting resilience in a very challenging trading environment. Growth was led by the Trade Cluster, benefiting from smart meter sales, improved renewable sales, and continued branch expansion.

Speaker #1: The gross margin increased slightly to 27.4%, due to a favorable product mix and active margin management across the businesses. Operating expenses increased 4.9%, which is below revenue growth, and this increase is notwithstanding additional costs incurred related to the opening of new branches.

Speaker #1: Strong operating leverage resulted in an impressive 27% increase in trading profit to R1.2 billion, and the trading margin also improved from 5.5% to 6.4%.

Mpumi Madisa: Strong operating leverage resulted in an impressive 27% increase in trading profit to ZAR 1.2 billion, and the trading margin also improved from 5.5% to 6.4%. ROFE at 22% is up from prior year's 16%, and cash conversion at 144% is spectacular. Turning to the operations, the trade cluster made a material contribution to profit growth as Plumbing delivered a record result, driving its branch network from 50 at point of acquisition to 166 in the period. The turnaround in electrical was driven by the large smart meter order, stabilization of renewable sales, and the rollout of additional and revamped Voltex branches. Pressure was still felt across the packaging, catering, warehousing, and DIY and tools businesses due to softer volumes, margin compression, and manufacturing efficiencies. The Workwear, Leisure, and the general industrial businesses delivered excellent results as volumes remained robust in certain markets.

Speaker #1: Roughly at 22% is up from the prior year's 16%, and cash conversion at 144% is spectacular. Turning to the operations, the trade cluster made a material contribution to profit growth, as Plumlinks delivered a record result, driving its branch network from 50 at the point of acquisition to 166 in the period.

Speaker #1: The turnaround in Electrical was driven by the large smart meter order, stabilization of renewable sales, and the rollout of additional and revamped Baltics branches.

Speaker #1: Pressure was, though, felt across the packaging, catering, warehousing, and DIY tools businesses due to softer volumes, margin compression, and manufacturing inefficiencies. The workwear, leisure, and general industrial businesses delivered excellent results, as volumes remained robust in certain markets.

Speaker #1: Overall, market share growth was a key focus this year for the division, with the opening of eight new Baltics stores, ten new plumbing stores, and 42 new King Pie outlets.

Mpumi Madisa: Overall, market share growth was a key focus this year for the division, with the opening of 8 new Voltex stores, 10 new Plumbing stores, and 42 new King Pie outlets. I would like to congratulate the Commercial Products division for a stellar set of results. Moving to automotive. Revenue at ZAR 28.7 billion is up 5.5%, supported by a 12% increase in new vehicle volumes. This excess supply of new vehicles did, however, contribute to considerable discounting and substitution, resulting in reduced demand for used vehicles. Fleet sales were materially up on prior year, and our secondhand motor retail business produced excellent top-line growth. The gross margin declined primarily due to a decline in both new and used vehicle margins. Operating expenses remained tightly controlled at a marginal increase of 0.4%. Restructures in the prior year, cost-saving initiatives, and lower variable costs all contributed to the cost containment.

Speaker #1: I'd like to congratulate the Commercial Products division for a stellar set of results. Moving to Automotive, revenue at $28.7 billion is up five and a half percent, supported by a 12% increase in new vehicle volumes.

Speaker #1: This excess supply of new vehicles did, however, contribute to considerable discounting and substitution, resulting in reduced demand for used vehicles. Fleet sales were materially up on the prior year, and our secondhand motor retail business produced excellent top-line growth.

Speaker #1: The gross margin declined primarily due to a decrease in both new and used vehicle margins. Operating expenses remained tightly controlled, with only a marginal increase of 0.4%.

Speaker #1: Restructures in the prior year, cost-saving initiatives, and lower variable costs all contributed to the cost containment. Trading profit grew 7% to R966 million, boosted by the proceeds from a long-outstanding insurance claim.

Mpumi Madisa: Trading profit grew 7% to ZAR 966 million, boosted by the proceeds from a long-outstanding insurance claim. The trading margin remained broadly stable at 3.4%. The division's ROFE of 23.7% is slightly down on prior year due to elevated inventory and receivables. However, cash conversion at 98% was excellent. Turning to the operations in the franchise motor retail cluster, the increase in new vehicle volumes was partially offset by the decline in used vehicle volumes. Our traditional OEM brands grew ahead of the market, whilst our multi-franchise strategy continued to gain momentum with Chinese brand growth materially ahead of the market. On the downside, pricing pressure resulted in a 0.8% gross margin contraction across both new and used vehicles. Our non-franchise motor retail cluster continues to gain momentum with material revenue and gross profit growth achieved in the period.

Speaker #1: And the trading margin remained broadly stable at 3.4%. The division's ROFE, at 23.7%, is slightly down on the prior year due to elevated inventory and receivables.

Speaker #1: However, cash conversion at 98% was excellent. Turning to the operations and the franchise motor retail cluster, the increase in new vehicle volumes was partially offset by the decline in used vehicle volumes.

Speaker #1: Our traditional OEM brands grew ahead of the market, while our multi-franchise strategy continued to gain momentum, with Chinese brand growth materially ahead of the market.

Speaker #1: On the downside, pricing pressure resulted in a 0.8% gross margin contraction across both new and used vehicles. Our non-franchise motor retail cluster continues to gain momentum, with material revenue and gross profit growth achieved in the period.

Speaker #1: The plan communicated at half year of having all our branches nationally operating at full capacity was achieved. However, this investment in operational capacity impacted the bottom line.

Mpumi Madisa: The plan communicated at H1 of having all our branches nationally operating at full capacity was achieved. However, this investment in operational capacity impacted the bottom line. Whilst the secondhand retail operations improved profit performance from last year, our business plan was not met. With full capacity and infrastructure now in place, we are confident that our profit ambitions will be realized in the coming year. Lastly, in the allied services portfolio, our vehicle inspection and bodybuilding businesses delivered acceptable results despite significantly higher fuel costs that reduced CapEx spend and demand for services across large fleets. Our short-term insurance business delivered a standout record performance, and the investment portfolio was also ahead of the prior year. I would like to congratulate the auto team for a robust result in a very challenging operating environment.

Speaker #1: Whilst the secondhand retail operations improved profit performance from last year, our business plan wasn't met. With full capacity and infrastructure now in place, we're confident that our profit ambitions will be realized in the coming year.

Speaker #1: And lastly, in the Allied Services portfolio, our vehicle inspection and bodybuilding businesses delivered acceptable results, despite significantly higher fuel costs that reduced capex and demand for services across large fleets.

Speaker #1: Our short-term insurance business delivered a standout, record performance, and the investment portfolio was also ahead of the prior year. I'd like to congratulate the auto team for a robust result in a very challenging operating environment.

Speaker #1: And the last operations being Adcock Ingram, revenue at just under R10 billion is down 0.5%, driven by an average price realization of 1.8%, a 1.47% SCP increase, and volume growth of 0.9%.

Mpumi Madisa: The last operations being Adcock Ingram, revenue at just under ZAR 10 billion is down 0.5%, driven by an average price realization of 1.8%, a 1.47% SEP increase, and volume growth of 0.9%. Repatriation of certain portfolios moderated growth. The gross margin improvement was due to stronger factory recoveries, a favorable portfolio mix, and exits of lower-margin products. Expenses were exceptionally well managed, increasing only 1.2%. Flat revenue growth and outstanding margin and expense management resulted in an impressive ZAR 1.3 billion trading profit, up 9.4%, with all divisions reporting profit growth. I would also like to welcome our newly appointed CEO of Adcock Ingram. Rhulani brings more than 25 years of pharmaceutical and healthcare experience across South Africa, sub-Saharan Africa, and international markets, including the UK. He joins Adcock from Pfizer, where he served as Sub-Saharan Africa Cluster Lead and South Africa Country Manager.

Speaker #1: Repatriation of certain portfolios moderated growth. The gross margin improvement was due to stronger factory recoveries, a favorable portfolio mix, and the exit of lower margin products.

Speaker #1: Expenses were exceptionally well managed, increasing only 1.2%. Flat revenue growth and outstanding margin and expense management resulted in an impressive R1.3 billion trading profit, up 9.4%, with all divisions reporting profit growth.

Speaker #1: I would also like to welcome our newly appointed CEO of Adcock Ingram. Rulani brings more than 25 years of pharmaceutical and healthcare experience across South Africa, Sub-Saharan Africa, and international markets, including the UK.

Speaker #1: He joins Adcock from Pfizer, where he served as Sub-Saharan Africa Cluster Lead and South Africa Country Manager. I am delighted to welcome Rulani to Adcock and the Board of the Bidvest family, and wish him every success in this new role.

Mpumi Madisa: I'm delighted to welcome Rhulani to Adcock and the broader Bidvest family and wish him every success in this new role. I'd like to congratulate the Adcock team for a solid set of results. Moving to our hygiene services, we remain focused on building a leading international hygiene services business. Our 2026 financial performance amidst global geopolitics and macro volatility demonstrates that structural drivers such as urbanization and growing health and wellness awareness remain intact and will continue to support future growth. Our full-year trading profit is up 18% in constant currency, whilst profit margins have accelerated above the industry norm of around 15% to 18.7%. Our washroom sites serviced have increased from 6.5 million sites in 2024 to 7.5 million in 2026, and our client base is in the thousands with extremely limited customer concentration.

Speaker #1: I'd like to congratulate the Adcock team for a solid set of results. Moving to our hygiene services, we remain focused on building a leading international hygiene services business.

Speaker #1: Our 2026 financial performance, amidst global geopolitics and macro volatility, demonstrates that structural drivers such as urbanization and growing health and wellness awareness remain intact.

Speaker #1: And we'll continue to support future profit, which is up 18% in constant currency, while profit margins have accelerated above the industry norm of around 15% to 18.7%.

Speaker #1: Our washroom site serviced have increased from 6 and a half million sites in 2024 to 7 and a half million. In 2026, and our client base is in the thousands with extremely limited customer concentration.

Speaker #1: We're really proud of the size of the global hygiene portfolio, scaled up in just six years, with a strong future growth path. Moving to the closing slide, 2026 was a year of restoring momentum, and 2027 will be a year of compounding achievements of the current year.

Mpumi Madisa: We're really proud of the size of the global hygiene portfolio, scaled up in just 6 years with a strong future growth path. Moving to the closing slide, 2026 was the year of restoring momentum, and 2027 will be a year of compounding achievements of the current year. We enter our second phase of capital discipline, and our commitments remain: improve organic growth, strengthen cash generation, deleverage, and rebuild returns. All divisions will focus on delivering the best organic growth possible. Our international operations have cycled through contract restructures and contract losses. New business wins awarded in the second half of the year will be mobilized, and the strong momentum in the hygiene operations is expected to continue. Our Southern African operations will benefit from structural growth from hospitality and tourism demand and improved TIC and water volumes.

Speaker #1: We enter our second phase of capital discipline, and our commitments remain: improve organic growth, strengthen cash generation, deleverage, and rebuild returns. All divisions will focus on delivering the best organic growth possible.

Speaker #1: Our international operations have cycled through contract restructures and contract losses. New business wins awarded in the second half of the year will be mobilized, and the strong momentum in the hygiene operations is expected to continue.

Speaker #1: Our Southern African operations will benefit from structural growth in hospitality and tourism demand, as well as improved TIC and water volumes. We expect increased bulk grain and mineral volumes, though the current El Niño does introduce some uncertainty.

Mpumi Madisa: We expect increased bulk grain and mineral volumes, though the current El Niño does introduce some uncertainty. The uptick in infrastructure spend, ongoing demand for office products, and a turnaround in our secondhand motor retail business will drive growth in the trading operation. A step up in what is an already outstanding cash position will be supported by continued disciplined working capital management, no material M&A, and cost discipline. Free cash will again be used to pay down debt, advancing our ambition of ending the year with our net debt to EBITDA closer to 1.5x. We've got a range of about 1.5x to 1.8x that we're working towards, but we're hoping to end closer to the lower part of that range. Rebuilding our returns requires a step up in organic growth, especially of recently acquired businesses.

Speaker #1: The uptick in infrastructure spend, ongoing demand for office products, and a turnaround in our secondhand motor retail business will drive growth in the trading operations.

Speaker #1: A step up in what is an already outstanding cash position will be supported by continued disciplined working capital management, no material M&A, and cost discipline.

Speaker #1: Free cash will again be used to pay down debt, advancing our ambition of ending the year with our net debt to EBITDA closer to one and a half times.

Speaker #1: We've got a range of about 1.5 times to 1.8 times that we're working towards, but we're hoping to end closer to the lower part of that range.

Speaker #1: Rebuilding our returns requires a step up in organic growth, especially from recently acquired businesses. To further support returns, our large businesses need to deliver ahead of business plan and budget.

Mpumi Madisa: To further support returns, our large businesses need to deliver ahead of business plan and budget. Our teams are responding with innovation, operational focus, and renewed energy. Initiatives in technology, data, AI, sustainability, wellness, skills development, and customer-led solutions are already helping us improve resilience, enhance productivity, create social value, and open new commercial pathways. Our 2026 result is a team effort, with all divisions contributing to improved profitability and earnings. I'd like to extend a big thank you to the executive team for their exceptional leadership as we navigated through a period of unpredictability, escalating global tensions, and weak macroeconomic conditions across multiple territories. The year was tough, and our teams, comprising 130,000 employees across 14 countries in 750 plus branch locations, all rose to the occasion.

Speaker #1: Our teams are responding with innovation, operational focus, and renewed energy. Initiatives in technology, data, AI, sustainability, wellness, skills development, and customer-led solutions are already helping us improve resilience and enhance productivity, create social value, and open new commercial pathways.

Speaker #1: Our 2026 results are a team effort, with all divisions contributing to improved profitability and earnings. I'd like to extend a big thank you to the executive team for their exceptional leadership as we navigated through a period of unpredictability.

Speaker #1: Escalating global tensions and weak macroeconomic conditions across multiple territories. The year was tough, and our teams—comprising 130,000 employees across 14 countries and more than 750 branch locations—all rose to the occasion.

Speaker #1: On behalf of myself, Mark, and Jill, I extend a big thank you to our teams all over the world, who have once again demonstrated the resilience of the Bidvest portfolio and their ability to find growth opportunities amidst changing conditions.

Mpumi Madisa: From myself, Mark, and Jill, I extend a big thank you to our teams all over the world who have again demonstrated the resilience of the Bidvest portfolio and their ability to find growth opportunities amidst changing conditions. To our shareholders, thank you for your continued support. The group has restored earnings momentum, demonstrated the cash generative quality of the portfolio, and taken decisive action to sharpen capital allocation. Our focus remains firmly on execution and on delivering sustainable long-term value for all stakeholders. Thank you very much.

Speaker #1: To our shareholders, thank you for your continued support. The Group has restored earnings momentum, demonstrated the cash-generative quality of the portfolio, and taken decisive action to sharpen capital allocation. Our focus remains firmly on execution and on delivering sustainable, long-term value for all stakeholders.

Speaker #1: Thank you very much. Thank you for those comments and the very clear outlook and prospects statement for the way forward. Judith, maybe you can just repeat the instructions on how to put questions in the queue before we start with the Q&A session.

Ilze Roux: Thank you, Mpumi, for those comments and the very clear outlook and prospect statement for the way forward. Judith, maybe you can just repeat instructions on how to put questions in the queue before we start with the Q&A session.

Speaker #3: Thank you, ma'am. Ladies and gentlemen, for the benefit of the parties who have joined via the webcast, you're welcome to pose your written questions in the question box provided on your screen.

Operator: Thank you, ma'am. Ladies and gentlemen, for the benefit of the parties who have joined via the webcast, you are welcome to pose your written questions in the question box provided on your screen. For the benefit of the parties who have joined via the telephone lines, if you would like to ask a question, please key in star and then 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may key in star and then 2 should you wish to leave the question queue. Just a reminder, if you would like to ask a question, you are welcome to key in star and then 1.

Speaker #3: For the benefit of the parties who have joined via the telephone lines, if you'd like to ask a question, please key in star, then one on your telephone keypad.

Speaker #3: A confirmation will indicate that your line is in the question queue. You may key in star, then two, should you wish to leave the question queue.

Speaker #3: Just a reminder, if you'd like to ask a question, you're welcome to key in star, and then one.

Speaker #1: Thank you, Judith. While investors go through those motions, maybe, as I can see here on the webcast, there are a few questions around Bidvest Bank.

Ilze Roux: Thank you, Judith. While investors work through those motions, maybe what I can see here on the webcast, there are a few questions around Bidvest Bank. Mpumi, you did make a comment at the start of your remarks. Questions around timing, NAV, and all those types of things. Maybe you just want to reiterate that point.

Speaker #1: For me, you did make a comment at the start of your remarks questions around timing, NAV, and all those types of things. Maybe you just want to reiterate that point.

Mpumi Madisa: Okay. Thanks, Ilze. So because we are busy with negotiations, we do need to be careful about what we say. So everything really related to the bank becomes quite sensitive. What we will do is that once we have got SPAs signed, regulatory approval through, and we have made what we believe to be material progress and call it the finishing line is in sight, we will issue a SENS announcement. We will give you full view of the nature of the transaction, and we will also provide a full breakdown in terms of the accounting treatment that you should expect. So we will make that commitment. It will come out through a SENS at the appropriate time so that you really do not have to guess around nature of transaction, accounting treatment, et cetera. So we will do that at the right time.

Speaker #2: Okay, thanks, Ilze. Yeah, so because we're busy with negotiations, we do need to be careful about what we say. So, everything really related to the bank becomes quite sensitive.

Speaker #2: What we will do is that, once we have got SPAs signed, regulatory approvals through, and we've made what we believe to be material progress—and the, call it, the finishing line is in sight—we will issue a sales announcement.

Speaker #2: We'll give you a full view of the nature of the transaction, and we'll also provide a full breakdown in terms of the accounting treatment that you should expect.

Speaker #2: So, we'll make that commitment. It'll come out through a SENS at the appropriate time, so that you really don't have to guess around the nature of the transaction, accounting treatments, etc.

Speaker #2: So we'll do that at the right time.

Speaker #1: Thank you. Thank you from me. So that deals with those questions related to discontinued operations, as they were posed. Mark, maybe one for you.

Ilze Roux: Thank you. Thank you, Mpumi. So that deals with those questions related to discontinued operations as they were posed. Mark, maybe one for you. One investor just wanted to clarify whether the normalized HEPS was adjusted for the associate loan write-off. If not, what the growth might have been if one did exclude that abnormal event.

Speaker #1: One investor just wanted to clarify whether the normalized HEPS was adjusted for the associate loan write-off. If not, what would the growth have been if one did exclude that abnormal event?

Speaker #4: You can work it out if you hide my prank. But so, was it adjusted or not? Okay. I'll have to do the maths on it quickly and we'll come back to them now.

Mark Steyn: You can work it out. It would be hard for Frank. So was it adjusted for? No, it was not. I will have to quickly do the maths on it, and we will come back to them now. Okay.

Speaker #4: Okay.

Speaker #2: Okay.

Ilze Roux: Okay. Thank you, Mark. To be clear, we did not adjust for that write-off.

Speaker #1: Thank you, Mark. So, to be clear, we did not adjust for that write-off in the normalized headline earnings in the associate line.

Mark Steyn: No

Ilze Roux: in the normalized headline earnings.

Mark Steyn: You can actually see it.

Ilze Roux: It is in the associate line.

Speaker #4: Yeah, you can actually see that non-adjustment on page 10 of the announcement.

Mark Steyn: You can actually see that non-adjustment on page 10 of the announcement.

Speaker #1: All right. For me, maybe one for you that relates to Services International. I'm combining two investor questions here—it's around synergy extraction in Services International.

Ilze Roux: All right. Mpumi, maybe one for you that relates to Services International, and I am combining two investor questions here. It is around synergy extraction in Services International. It talks about what the underlying constant currency growth rates were in that division, and whether there were any specific countries that, in constant currency, went backwards. What do you feel about the momentum of the new business wins that have been flagged in some of these areas that has been under pressure?

Speaker #1: It talks about what the underlying constant currency growth rates were in that division, and whether there were any specific countries that, in constant currency, went backwards.

Speaker #1: And what do you feel about the momentum of the new business wins that have been flagged in some of these areas that have been under pressure?

Speaker #2: Okay. That's specifically hygiene.

Mpumi Madisa: Okay. That is specifically hygiene.

Speaker #1: That is Hygiene and that's Services International, or All In Services International. So suppose the organic is around the Citroen acquisition, inorganic, and then constant currency in a division that's largely offshore.

Ilze Roux: That is hygiene and that is Services International, all in Services International. I suppose organic is around the Citron acquisition in organic and then constant currency in a division that is largely offshore.

Speaker #2: Yeah. So, let me start with the hygiene operations first. All the hygiene operations in constant currency grew profitably.

Mpumi Madisa: Well, let me start with the hygiene operations first. All the hygiene operations in constant currency grew profitability. Our hygiene business in Australia is very, very small, so it is not really even worth a comment. It really gets lost in the rounding. The Australia comment will be more on FM. Outside of that, hygiene operations very strong. phs Group particularly strong because of the integration of Citron. We had communicated that that would be a lift and shift. We did exactly that. We closed all the branch infrastructure. We took out all the costs that we did not need. It really was like a gross to net benefit into phs Group. phs Group’s performance at a profit level in pound was very strong.

Speaker #1: Our hygiene business in Australia is very, very small, so it's not really even worth a comment. It really gets lost in the rounding. So, the Australia comment will be more on FM.

Speaker #1: So outside of that, hygiene operations are very strong. PHS is particularly strong because of the integration of Citroen. We had communicated that that would be a lift and shift.

Speaker #1: We did exactly that. We closed all the branch infrastructure. We took out all the costs that we didn't need. And really, it was like a growth to net benefit into PHS.

Speaker #1: And so, PHS's performance at a profit level in pounds was very strong. From a Citroen perspective, as I indicated, we're very comfortable with the profit performance.

Mpumi Madisa: From a Citron perspective, as I indicated, we are very comfortable with the profit performance they delivered in line with budget, notwithstanding the fact that there was quite a significant upstep in working capital deployment as they opened up two more branches and also took additional costs as we increased that sales infrastructure. So very happy with the organic growth that we delivered across. The South African business was excellent, just as by the way. SA also delivered a very strong hygiene performance. Then from a facilities management perspective, we had indicated that we were impacted by contract losses and contract restructures. Those were in our South African FM business, in Noonan, and in Australia. That overall kind of tapered the overall FM performance, and they were slightly down. On a go-forward basis, we are comfortable that that is now in the base.

Speaker #1: They delivered in line with budget, notwithstanding the fact that there was quite a significant upstep in working capital deployment as they opened up two more branches.

Speaker #1: And also took on additional costs as we increased that sales infrastructure. So very happy with the organic growth that we delivered across the South African business—it was excellent.

Speaker #1: Sorry, just by the way, they've also delivered a very strong hygiene performance. And then from a facilities management perspective, we had indicated that we were impacted by contract losses and contract restructures.

Speaker #1: Those were in our South African FM business, in Noonan, and in Australia. That overall kind of tapered the overall FM performance, and they were slightly down.

Speaker #1: On a go-forward basis, we're comfortable that that's now in the base. We don't have any more contract restructures that we are anticipating going into the new financial year.

Mpumi Madisa: We do not have any more contract restructures that we are anticipating going into the new financial year. We mobilized, or actually, new contracts rather were awarded in the latter end of FY26. Those will be mobilized in the first half of FY27, and I think you will see a nice contribution coming through in the second half of the year.

Speaker #1: We mobilized—or actually, new contracts were awarded in the latter end of FY26. Those will be mobilized in the first half of FY27.

Speaker #1: And I think you'll see a nice contribution coming through in the second half of the year. That's right. And then just the synergies around Citroen North America, whether those or not.

Ilze Roux: That is right. Then just the synergies around Citron North America.

Mpumi Madisa: Okay

Ilze Roux: Whether those are materialized yet or not.

Speaker #2: Yeah, so the main synergies that we've spoken about were from a procurement perspective. In terms of the buying across, or of Citroen, I guess, for some of their products across the rest of the hygiene network that we have.

Mpumi Madisa: Yeah. The main synergies that we've spoken about were from a procurement perspective, in terms of the buying of Citron, I guess. So some of their products across the rest of the hygiene network that we have. We started rolling out only one product line, if I recall from Alan Fayman. I think it is only one product line at the moment that we started rolling out. We still have quite a bit to do in terms of their procurement basket. I would probably say that in FY26, the procurement synergy is limited only because we're still rolling through their existing stock. As soon as we roll through the existing stock, we've pulled through one product line, and then in FY27, as we roll out of the existing stock, they'll start going into the more price-optimized buying that we have across the spares and consumables.

Speaker #2: We started rolling out only one product line. If I recall from Alan Feynman, I think it is only one product line at the moment that we started rolling out.

Speaker #2: We still have quite a bit to do in terms of their procurement basket. So I would probably say that in FY26, the procurement synergy is limited.

Speaker #2: Only because we're still rolling through their existing stock. So as soon as we roll through the existing stock—we've pulled through one product line—and then, in FY27, as we roll out of the existing stock, they'll start going into the kind of more price-optimized buying that we have across dispensers and consumables.

Speaker #1: Thank you for that. Mark, let's go back to you.

Ilze Roux: Thank you, Mpumi. Mark, let's go back to you.

Speaker #4: Yes, thank you. Just to revert on the impact of that associate investor impairment—if we'd adjusted for it and normalized headline earnings on a continuing basis, it would have gone from 5.9% to plus 8.7%.

Mark Steyn: Yes. Thank you. Just to revert on the impact of that associated impairment, and if we'd adjusted for it and normalized headline earnings on a continuing basis, would've gone from 5.9% to +8.7%, so the impact is +2.8%.

Speaker #4: So, the impact is plus 2.8%.

Speaker #1: Thank you for that clarity, Mark. Then there is the feature—the question around Transnet as looking more and more towards the private sector for partnerships and concessions. Do you see opportunities in import rail for Bidvest with Transnet?

Ilze Roux: Thank you for that clarity, Mark. There is, let's see here, the question around Transnet are looking more and more towards the private sector for partnerships and concessions. Do you see opportunities in port and rail for Bidvest with Transnet?

Speaker #2: Yeah. So, I mean, I think the fact that we are bold enough to deploy R2.5 billion capex already—we are moving forward with building a second LPG terminal.

Mpumi Madisa: Yeah. I think the fact that we are bold enough to deploy ZAR 2.5 billion CapEx already, we are moving forward with building a second LPG terminal. We have got CapEx approved already for additional capacity in our grain and bulk liquid operations in Durban Port, already signals the fact that we are confident in the rail reforms. We are very close to Transnet, so we also have a sense of what is to come. From a rail perspective, you will recall that 11 private sector operators were awarded concessions. My understanding is that six of those operators will come on stream in 2027, early 2027. That is as of the latest, coming out of Transnet. That is going to be great. We obviously do not participate on the rail side. Ours is port terminals. We handle the product on and off the ship, and really that is where we are at.

Speaker #2: We have got capex approved already for additional capacity in our grain and bulk liquid operations in Durban Port. This already signals the fact that we're confident in the rail reforms, and we're very close to Transnet.

Speaker #2: So, we also have a sense of what is to come. From a rail perspective, you'll recall that 11 private sector operators were awarded concessions. My operators will come on stream in early 2027.

Mpumi Madisa: From a rail perspective, you will recall that 11 private sector operators were awarded concessions. My understanding is that six of those operators will come on stream in 2027, early 2027. That is as of the latest, coming out of Transnet. That is going to be great. We obviously do not participate on the rail side. Ours is port terminals. We handle the product on and off the ship, and really that is where we are at.

Speaker #2: So that's as of the latest coming out of Transnet. So that's going to be great. We obviously don't participate on the rail side.

Speaker #2: Ours is port terminals. We handle the product on and off the ship, and really that's where we're at. So, the big opportunity for us is the extension of our leases, which we're securing.

Mpumi Madisa: The big opportunity for us is the extension of our leases, which we are securing with two more that we are still negotiating. Obviously being able to secure new leases. We have secured one new lease, and there are a number of tenders out at the moment. You can already see the activity that is there from a Transnet perspective. The bulk mineral tender that is out in Richards Bay, they are looking for private sector participation there, and it is very clear in the terms and conditions. There are others also in Cape Town. I would concur with a view that the appetite from Transnet to bring in more private sector is definitely strong. In terms of where we are at, we are really confident in further progress being made, with regards to rail reform and more cargo moving on rail over time.

Speaker #2: With two more that we're still negotiating, and obviously being able to secure new leases. We have secured one new lease, and there are a number of tenders out at the moment. So, you can already see the activity that is there from a Transnet perspective.

Speaker #2: The bulk mineral tender that is out in Richards Bay—they're looking for private sector participation there, and it's very clear in the terms and conditions.

Speaker #2: There are others also in Cape Town. So, I mean, I would concur with the view that the appetite from Transnet to bring in more private sector is definitely strong.

Speaker #2: And in terms of where we're at, we're really confident that further progress will be made with regard to rail reform, and more cargo will move on rail over time.

Speaker #1: Thank you. For me, there's another batch of questions that I'm going to put together. It's specifically around the automotive division.

Ilze Roux: Thank you, Mpumi. There is another sort of batch of questions that I am going to put together. It is around specifically towards the Automotive division. Question about whether we can quantify the insurance claims payouts impacting the results, and also noting that WeBuyCars moved away from Dekra in terms of its testing results and whether this has had a major impact on Dekra and how the business is doing in general.

Speaker #1: Question about whether we can quantify the insurance claim payout impact in the results. And then also noting that We Buy Cars moved away from Decra in terms of its testing results, and whether this has had a major impact on Decra and how the business is doing in general.

Speaker #2: Okay, I'll talk to Decra, and then Mark will talk to the insurance piece. So, when we acquired Decra, we, through the due diligence process, were very explicit in ensuring that BuyCars was made in a way that Bidvest, I guess, is the acquirer on the other side, and that was communicated.

Mpumi Madisa: Okay. I will talk to Dekra and then Mark will talk to the insurance piece. When we acquired Dekra, through the due diligence process, we were very explicit in ensuring that WeBuyCars has made a way that Bidvest, I guess, is the acquirer on the other side, and that was communicated, and whether WeBuyCars would stay on as a customer. Through the DD, WeBuyCars had indicated to us already that they would be starting their own vehicle testing service. We accounted for that in the valuation. The valuation for the revenue portion of Dekra was taken down materially. In fact, we only paid one time because our expectation was that we would only retain that contract for a year.

Speaker #2: And whether WeBuyCars would stay on as a customer. Through the DD, WeBuyCars had indicated to us already that they would be starting their own vehicle testing service.

Speaker #2: And so we accounted for that in the valuation. So the valuation for the revenue portion of Decra was taken down materially. In fact, we only paid one times, because our expectation was that we would only retain that contract for a year.

Speaker #2: We ended up retaining it for closer to two years, so we got a little bit more earnings out of it. But we accounted for it in the valuation, and we were expecting it to exit in the period that it did.

Mpumi Madisa: We ended up retaining it for closer to two years, so got a little bit more earnings out of it, but we accounted for it in the valuation, and we were expecting it to exit in the period that it did.

Speaker #1: Thank you. Thank you from me for that. I suppose there are many that we, as shareholders, are on the line. So that's where that comment comes from.

Ilze Roux: Thank you. Thank you, Mpumi, for that. I suppose there's many WeBuyCars shareholders on the line, so that's where that comment comes through.

Speaker #4: The increase on the insurance claim was R149 million.

Mark Steyn: The increase on the insurance claim was ZAR 149 million.

Speaker #1: Thank you. Thank you, Mark, for that. And then can we go to—see, we have a question around the gearing, so the net debt to EBITDA target towards the 1.5 times.

Ilze Roux: Thank you. Thank you, Mark, for that. Can we go to, we have a question around the gearing. The net debt to EBITDA target towards the 1.5 times, does that include proceeds from the sale of Bidvest Bank to get there?

Speaker #1: Does that include proceeds from the sale of Bidvest Bank to get there?

Speaker #4: It does not include proceeds from the bank, nor does it include proceeds from the Adcock sale of shares that took place just after year-end.

Mark Steyn: It does not include proceeds from Bidvest Bank, nor does it include proceeds from the Adcock sale of shares that took place just after year-end. Both of those are items we would look to use to improve the net debt EBITDA into FY27.

Speaker #4: So, both of those are items we would look to use to improve the net EBITDA into FY27.

Speaker #1: Thank you very much for that. And then, maybe a few more financially oriented questions. Apart from the 2026 Eurobond, can you speak of any upcoming material maturities and refinancing requirements?

Ilze Roux: Thank you very much for that. Then maybe a few more financial orientated questions. Apart from that 2026 Eurobond, can you speak of any upcoming material maturities and refinancing requirements?

Speaker #4: So, there's only two to mention. The first, I did talk about in the presentation, which was the last piece of the euro bond—the old euro bond—$186 million.

Mark Steyn: There is only two to mention. The first I did talk about in the presentation, which was the last piece of the Eurobond, the old Eurobond, $186 million. That matures late September now, and will be repaid through existing facilities. We have $2 billion in cash of the $3 billion required, and the extra $1 billion will come out of the RCF facility. There is nothing else material in the maturities. Next year, the offshore RCF term comes up, and we will then look to renew that for a further period. That would be, I think, the fourth renewal of that particular facility. Everything else is just normal run-of-the-mill. We will go to market potentially on domestic bonds. There is about over three bonds in the current year, about ZAR 2 billion, but we can deal with those through normal cash generation.

Speaker #4: That matures late September now. And it will be repaid through existing facilities. We have $2 billion in cash of the $3 billion required, and the extra $1 billion will come out of the RCF facility.

Speaker #4: There's nothing else material in the maturities. Next year, the offshore RCF term comes up, and we will then look to renew that for a further period.

Speaker #4: That would be, I think, the fourth renewal of that particular facility. Everything else is just normal, run-of-the-mill. We'll go to market, potentially, on domestic bonds.

Speaker #4: There are about three bonds maturing in the current year, totaling around $2 billion. But we can deal with those through normal cash generation.

Speaker #1: Thank you, Mark. And maybe just a link to that—clearly, our previous sister company announced some share buybacks, and the investors are now just asking what our view is on share buybacks.

Ilze Roux: Thank you, Mark, and maybe just linked to that. Clearly, our previous sister company announced some share buybacks, and the investors are now just asking what our view is on share buybacks, and the very strong cash generation of Bidvest. What is your view toward that?

Speaker #1: And the very strong cash generation of Bidvest—what's your view on it?

Speaker #4: 100%. And it's not going to change significantly from our previous view. So, I mean, we have very clearly committed ourselves to, number one, we're going to deleverage.

Mark Steyn: 100%, and it is not going to change significantly from our previous view. We have very clearly committed ourselves to, number one, we are going to deleverage. There are a number of very important reasons why we want to do that, to create capacity for future growth. Specifically, in that growth piece, we have talked about the investment opportunities that sit within freight. They are substantial. They extend over probably a five to seven-year window. So in as much as we are paying debt down, we are building up capacity, one, for the investment in that CapEx line, but two, in time to obviously to recommence our normal M&A process. At this point in time, no intention to rebuy equity.

Speaker #4: And there are a number of very important reasons why we want to do that—to create capacity for future growth. And specifically, in that growth piece, we have talked about the investment opportunities that sit within freight.

Speaker #4: They are substantial. They extend over probably a five- to seven-year window. And so, inasmuch as we are paying debt down, we're building up capacity—one for the investment in that capex line.

Speaker #4: But two, in time, to obviously recommence our normal M&A process. So, at this point in time, no intention to rebuy equity.

Speaker #1: Thank you very much, Mark. For me, and then a question maybe for you on commercial products. What is the view about the potential that, with the rise of data centers, is common for municipalities to clamp down on meters?

Ilze Roux: Thank you very much, Mark. Mpumi, then a question maybe for you on Commercial Products. What is the view about the potential that the rise of data centers, Eskom and municipality clampdown on meters or electricity usage, and the consequences around smart meters, what does that mean for the division and potentially going forward?

Speaker #1: Or electricity usage and the consequences around smart meters—what does that mean for the division, and potentially going forward?

Speaker #2: Yeah. So, I mean, any construction is revenue-uplifting for commercial products, so an increase in data centers would be absolutely fantastic. We would provide into that kind of built environment.

Mpumi Madisa: Yes. Any construction is revenue uplifting for Commercial Products. So an increase in data centers would be absolutely fantastic. We would provide into that kind of built environment. The clampdown that you referenced from an Eskom perspective is hugely beneficial. The process that Eskom is implementing is they are trying to manage improved revenue collection, right, with the rollout of these new smart meters. We have already benefited in the current year through quite a sizable order that was awarded. There is more orders in the pipeline. We have submitted those tenders. The rollout was quite extensive and over a period of time. We are clearly one of the preferred service providers already for Eskom. So for as long as that activity is ongoing, our operations and our businesses really stand a good chance of securing additional orders.

Speaker #2: And then the clampdown that you referenced from an Eskom perspective is hugely beneficial. I mean, the process that Eskom is implementing is they're trying to manage improved revenue collection, right, with the rollout of these new smart meters.

Speaker #2: We've already benefited in the current year through quite a sizable order that was awarded. There are more orders in the pipeline. We have submitted those tenders.

Speaker #2: The rollout is quite extensive and will occur over a period of time. We are clearly already one of the preferred service providers for ESCOM. So, for as long as that activity is ongoing, our operations and our businesses really stand a good chance of securing additional orders.

Speaker #1: Thank you very much for that. I appreciate it. Mark, just a question from an investor: What do you see as the normalized or future effective tax rate for the group?

Ilze Roux: Thank you very much for that, Mpumi. Appreciate that. Mark, just a question from an investor. What do you see as the normalized or the future effective tax rate for the group?

Speaker #4: I think the normalized rate will be— I did talk about it a little bit in the presentation, that the current rate sort of reflects our geographic mix.

Mark Steyn: I think the normalized rate, and I did talk about it a little bit in the presentation, that the current rate sort of reflects our geographic mix. We are budgeting for similar levels or targeting similar levels in 2027. So a range of, call it 25.5% to 26% would be the expectation.

Speaker #4: We are budgeting for similar levels, or targeting similar levels, in '27. So, a range of, call it, 25.5% to 26% would be the expectation.

Speaker #1: Thank you for that, Mark. For me, then the Adcock question. The question is: please provide some color, to the extent that you can, on the future of the National Renal Care joint venture or associate.

Ilze Roux: Thanks. Mpumi, then an Adcock question. The question is, please provide some color to the extent that you can on the future of the National Renal Care joint venture or associate, and what the plans are on that one. And the diversification, maybe the broader diversification plans within Adcock.

Speaker #1: And what the plans are on that one, and the diversification may be the broader diversification plans within Adcock.

Speaker #2: So, that JV continues to be quite strategic for us. Our plans would be to make sure that we continue to expand the work that we're doing with our partners in that space.

Mpumi Madisa: So that JV continues to be quite strategic for us. Our plans would be to make sure that we continue to expand the work that we're doing with our partners in that space. So no changes anticipated there. In terms of future diversification, a lot of work is underway at the moment with our new shareholders and partners. A big part of their contribution is adding to our pipeline. So we've got a number of new dossiers that the teams are working on in terms of submission to SAHPRA. Most of that is going to be going into our prescription division. So that pipeline activity is underway and all that body of work is work in progress. The other contribution from our shareholders is obviously in terms of our operational requirements or operations generally in our factory environment.

Speaker #2: So, no changes anticipated there. And then, in terms of future diversification, a lot of work is underway at the moment with our new shareholders and partners.

Speaker #2: A big part of their contribution is adding to our pipeline. So, we've got a number of new dossiers that the teams are working on in terms of submission to SOPRA.

Speaker #2: Most of that is going to be going into our prescription division, so that pipeline activity is underway. And all that body of work is work in progress.

Speaker #2: And then the other contribution from our shareholders is obviously in terms of our operational requirements, or operations generally, in our factory environment. They've been exceptionally helpful in terms of just assisting us with kind of raising the bar there.

Mpumi Madisa: They've been exceptionally helpful in terms of just assisting us with kind of raising the bar there. So there's more value that'll come through. I think over time we're going to certainly evolve with our operations being far more efficient, better recoveries coming out of those factories and just really optimizing our production processes.

Speaker #2: So, there's more value that will come through. I think over time, we're going to certainly evolve, with our operations being far more efficient, better recoveries coming out of those factories, and just really optimizing our production processes.

Speaker #1: Thank you for that color for me. And then, I suppose one last question—second last question—is maize volumes. How normal was FY '26 in terms of maize?

Ilze Roux: Thank you for that color, Mpumi. Then I suppose one last question, second last question is maize volumes. How normal was FY26 in terms of maize? You did reference El Niño in outlook for agriculture.

Speaker #1: You did reference El Niño in the outlook for agriculture.

Speaker #4: So it was a significant improvement on '25 with the volumes obviously were very, very low. I think we were I think we were more hopeful that we would have seen greater volumes come through in May and June, which didn't come through.

Mark Steyn: It was a significant improvement on 25, where the volumes obviously were very, very low. I think we were more hopeful that we would've seen greater volumes come through in May and June, which didn't come through. The El Niño impact is having some impact on pricing at the moment. If you think of 26 was materially better than 25, but not quite where we would like to have been. 27 now, even though we have significant carryover stocks from a very, very good crop, we are not seeing the farmers currently exporting because the price parity is not there. We are hopeful that this will potentially pick up a little bit later, and then obviously the impact of El Niño could be material.

Speaker #4: And the El Niño impact is having some impact on pricing at the moment. So if you think of '26, '26 was materially better than '25, but not quite where we would '27 now. Even though we have significant carryover stocks from a very, very good crop, we're not seeing the farmers currently exporting because the price parity is not there.

Speaker #4: We are hopeful that this will potentially pick up a little bit later, and then obviously the impact of El Niño could be material.

Speaker #1: Thank you very much for that, Mark. Judith, can I check that there are no questions on the line?

Ilze Roux: Thank you very much for that, Mark. Judith, can I check that there's no questions on the line?

Speaker #3: Thank you. Okay, I confirm we have no questions from the telephone lines. Thank you.

Operator: Thank you. I can confirm we have no questions from the telephone lines. Thank you.

Speaker #1: All right, thanks, Judith. Then, just coming back to the Services South Africa division, the question is posed: how large was the loss, or how material was the loss, on rebates and travel?

Ilze Roux: Thanks, Judith. Then coming back to the Services South Africa division, the question is posed on how large was the loss or how material was the loss on rebates and travel, and whether that reverses back in 2027.

Speaker #1: And whether that reverses back in 2027.

Mpumi Madisa: Yeah. So I can't give you a sense of quantum because we don't provide detail to that level. But it's gone because your rebate is, you earn the rebate within a cycle. So you've got a 12-month cycle. Within a 12-month cycle, you need to reach certain volume targets. You get to the volume target, you get your rebate. Essentially what happened with the war in the Middle East is that we were on track and then Q4 saw the significant reduction in travel volumes, so we didn't get to the volume and therefore couldn't earn the rebate. It's gone. You don't get to do it again. In the new financial year, you start all over again with a new volume target and new rebates that you can then have.

Speaker #2: Yeah, so I can't give you a sense of quantum because we don't provide detail to that level. But it's gone, because your rebate is—you earn the rebate within a cycle.

Speaker #2: So you've got a 12-month cycle within a 12-month cycle. You need to reach certain volume targets. You get to the volume target, you get your rebate.

Speaker #2: And essentially, what happened with the war in the Middle East is that we were on track, and then Q4 saw the significant reduction in travel volumes.

Speaker #2: And so we didn't get to the volume and therefore couldn't earn the rebate. It's gone; you don't get to do it again. And in the new financial year, you start all over again with a new volume target and new rebates that you can earn.

Speaker #1: All right. And then maybe one last question, and it relates to used car sales volumes. Are you able to provide any more color on used vehicle sales volumes?

Ilze Roux: All right. Then maybe one last question, and it relates to used car sales volumes. Are you able to provide any more color on used vehicle sales volumes?

Speaker #4: They're not as good as they used to be. So let me talk about it more indicatively. If we think historically, we always used to work on a sort of two-to-one ratio.

Mark Steyn: They're not as good as they used to be. So let me talk about it more indicatively. If we think historically, we always used to work on a sort of a 2 to 1 ratio. So for every one new vehicle that we would sell, typically we would sell two used. This ratio now has dropped to the extent that it's about 1.1. So that's the impact of a number of things. It's an impact of, I think, changing mix specifically towards the Chinese vehicles as they've come in. Those price points have shifted, and it's created opportunities there. So what we are seeing is a shift down from historic levels where you would see two used to one new. That's currently 1 to 1.

Speaker #4: So, for every one new vehicle that we would sell, typically we would sell two used. And this ratio now has dropped to the extent that it's about 1.1.

Speaker #4: So that's the impact of a number of things. It's an impact of, I think, changing mix, specifically towards the Chinese vehicles as they've come in.

Speaker #4: Those price points have shifted, and it's created opportunities there. So what we are seeing is a shift down from historic levels, where you would see two used to one new.

Speaker #4: That's currently one-to-one.

Speaker #1: Thank you. Thank you, Mark. Maybe as we take the last question, because we're 10 minutes over, just some clarity on what period the R2.5 billion approved capex will be deployed, and when does one expect contribution from that?

Ilze Roux: Thank you. Thank you, Mark. Maybe as we take the last question, because we are 10 minutes over, just some clarity on what period the ZAR 2.5 billion approved CapEx will be deployed and when does one expect contribution from that?

Speaker #2: Yeah, so the big capex, as I said, is LPG-2, the R1.6 billion. We will definitely start construction in this financial year. Our indicative timeline is the 2029 financial year.

Mpumi Madisa: Yeah. The big CapEx, as I said, is LPG-2, the ZAR 1.6 billion. We will definitely start construction in this financial year. Our indicative timeline is 2029 financial year, so FY 2029. Closer to the end of construction, we will give a tighter timeframe for commissioning, and that is the big one. The rest are smaller. The additional tank, the additional silos, those are smaller. Those could come on stream earlier. The only thing, though, is that with the additional tanks and silos, we still have some Ts and Cs that still need to be locked down. Whereas with the bigger one, we are almost there. But roughly, let us say FY 2029 is the timeline you are looking at.

Speaker #2: So, FY2029, kind of closer to the end of construction, will give a tighter timeframe for commissioning. And that's the big one. The rest are smaller.

Speaker #2: So, the additional tanks and the additional silos, those are smaller. Those could come on stream earlier. The only thing, though, is that with the additional tanks and silos, we still have some T's and C's.

Speaker #2: That's still needs to be locked down, whereas with the bigger one, we're kind of almost there. But roughly, let's say FY2029 is kind of the timeline you're looking at.

Speaker #1: But maybe just to reiterate for me, as you said, as we get closer to the time, we will give absolute visibility around cash flows, profit, and payback period return on those individual projects.

Ilze Roux: But maybe just to reiterate, Mpumi, as you said, closer to the time we will give absolute visibility around cash flows and profits, and payback period return on those individual projects. I think that concludes the call for today. Thank you very much for everyone's participation. We appreciate your time and your interest in Bidvest. Thank you very much.

Speaker #1: So, I think that concludes the call for today. Thank you very much for everyone's participation. We appreciate your time and your interest in Bidvest.

Speaker #1: Thank you very much.

Speaker #2: Thank you.

[Company Representative] (Bidvest): Thank you.

Mpumi Madisa: Thank you.

Speaker #4: Thank you. Thank you.

[Company Representative] (Bidvest): Thank you.

Mark Steyn: Thank you.

Operator: Ladies and gentlemen, that concludes today's event. Thank you for joining us. You may now disconnect your lines.

Browse all earnings call transcripts

Full Year 2026 Bidvest Group Ltd Earnings Call

Request TrialDemo

Bidvest Group

Earnings