It's not a very good morning in Johannesburg. I don't think we like presenting results unless the sun is shining, but welcome to everybody who's taken the trouble to come and join us at the JSE today, thank you, and also to everybody online.

These are our results for the 30th of June 2026. We've got a pretty normal presentation: key features and results history, I think I'll cover; Justin will talk to you about some of the more detailed group financial numbers; and then we'll go into the performance and prospects, and then take questions.

It's certainly a tale of two halves. The first semester was much stronger; second was much more challenging, certainly from February onwards, steep price increases in energy.

Certainly quarter four of the second semester was particularly challenging from a sales point of view where we saw a market slowdown with respect to anxieties with our wholesale and distribution channel. Revenue only increasing by 1.4%, some leverage, 4.4% at the operating profit level, but strong protection of the margins across the portfolio, and we'll go into some of that in more detail.

Pretty tough semester, particularly the second semester with Cremora, but still a very, very strong results, but a lot more competitive than the prior year. I&J, a good recovery in the fishing business, albeit offset by challenges in the biological asset, which is not cash, but affected I&J's total profitability.

Reasonable performance from the fashion brands portfolio, which was pleasing in a tough system. Then some real benefits coming through from our long and sustained restructuring initiatives across the group.

Headline earnings up 5.3%. Strong, sustained cash generation from AVI, which was pleasing across most of the businesses.

Some capex, not anything large in particular in the year, but important investments across the portfolio to sustain efficiency, innovation, and capabilities in all of the businesses. Final dividend up pretty much in line with the headline earnings performance, and a special dividend of R3, slightly ahead of our normal profile, but the balance sheet strength, I think, meant that it was something we felt we should do, with a dividend yield of just under 10% at the 30th of June closing share price.

Strong capital return sustained in the business. That's somewhat of a trend, obviously the COVID period a bit of a blip, but generally speaking, as Justin will show you, reasonably strong performance across most of the business units, notwithstanding, I guess, the tough last quarter.

Margins are good, capital return good, and obviously strong, sustained cash conversion across all of the businesses that gives you some dimension to the dividend yield, excluding share buybacks over a fairly long period, and of course, returns to shareholders underpinned. I think we've paid out pretty much all of our headline earnings since 2005 in dividends.

Present value of dividends for 22 years, adjusted for inflation, some R41.5 billion, and obviously in the last three years, some R8.3 billion returned to shareholders, I think underpinning the strength of AVI's ability to convert operating profit into cash. Let me give Justin to you, and he'll take you through some of the detail.

Thank you, Simon. I think as we have highlighted, a resilient performance in the context of the difficult environment, with a sustained operating profit growth achieved over several years, and a compound annual growth rate of 11.1% since 2023.

Revenue grew 1.4%. This growth was largely underpinned by selling price increases that were taken across most of our businesses in order to recover the impact of higher input costs.

This was offset by the impact of lower volumes, and I will talk a little bit more detailed to that later on. Our gross profit grew at a slightly lower rate than our top line, with the gross profit margin reducing from 42.7% to 42.4%.

This reduction was primarily a function of lower margin in Entyce, with margins across the rest of our business sustained. Selling and administrative expenses continue to be very well managed, a reduction of 3.2%, well supported by restructuring initiatives implemented across the business, which offset the impacts of inflation, together with the impact of the non-recurrence of some of the once-off restructuring costs that we incurred last year.

Operating profit grew 4.4%, and the operating profit margin benefited from some of these cost-saving initiatives and improved to 22.9%. Net finance costs reduced to R191 million.

This is largely a function of lower interest rates, as well as the reduced average borrowing level across the group for the year, which was well supported by the strong cash generation. No capital items of any significance to talk about.

I think the reduction on last year is primarily a function of the R12.6 million profit that was included in the base as a result of the disposal of the squid fishing business that was conducted by the I&J joint venture. Effective tax rate remains aligned at 27.4%.

Headline earnings grew 6%, with the headline earnings per share growing at a slightly lower 5.3%, largely as a result of the [additional shares?] issued in respect of the group's various share incentive schemes.

As Simon has highlighted, really a year of two halves. The overall operating profit result well supported by a strong first semester, with the second half challenged by weaker demand, which was exacerbated by rising fuel prices and aggressive competition.

As Simon has also mentioned, we did see some deferral of wholesale orders in the last quarter of the financial year, particularly in the month of June in the run-up to the expected unrest that was planned for the 30th of June. This resulted in lost sales of R91 million across our Entyce and Snackworks businesses.

Entyce had a difficult second semester. This is primarily a function of lower profits in our Cremora business, where we weren't able to repeat last year's performance of an exceptional base.

I&J delivered I guess an improved operating profit performance, well supported by improved fishing profits, which were partly offset by a lower abalone result. Included in this abalone result is an unfavorable biological asset revaluation of R84 million.

I think just to provide some context to the impact that the abalone and Cremora performances had over the business, excluding both of these, operating profit for the group would have been up 10.1% compared to last year. Personal care, another difficult year, but they did manage to achieve a small improvement in operating profit, well supported by cost-saving initiatives, as well as some encouraging demand that we saw for innovation that we launched in the second half.

Then a pleasing result for our footwear and apparel business, I think good demand for our core brands, a strong December peak performance with the non-repeat of prior year supply chain issues, as well as the non-recurrence of Green Cross closure costs that we incurred last year. Overall, operating profit growth achieved across all of our segments with the exception of Entyce.

I think as mentioned, this was largely a function of a reduction of profits in our Cremora business, with growth achieved across the rest of our beverage categories. This negatively impacted our overall margin achievement, but nonetheless, the 30.2% margin remains sound.

Operating profit margin improvements were achieved across the rest of our segments, which supported the overall improvement at the group level to 22.9%. Group revenue, as I've mentioned earlier, largely grew as a result of the impact of price increases taken.

This impact was partly offset by the stronger rand, which negatively impacted on I&J's export revenues. In the context of a very difficult environment, we've had to proactively manage the volume-value relationship throughout the year in order to protect the long-term profitability of our brands.

This is a very important underpin to achieving our overall result. Notwithstanding the lower volumes, it was pleasing to see that volumes in our I&J hake as well as footwear business did improve, as well as some improvement in Cremora volumes, notwithstanding the fact that this did come as a result of lower selling prices.

Gross profit margins continued to be well protected, a marginal decline on last year, but strong cost control, factory efficiencies, and then a continued focus on adopting our disciplined approach towards hedging, all supported the effective management of selling prices throughout the year. As Simon has mentioned, a lot of restructuring initiatives that we implemented in the previous financial year, as well as some in the current financial year.

The slide here in the table really reflects the incremental savings that we have achieved as a result of initiatives that were implemented in 2025. In the current year, R68.3 million incremental benefit delivered as a result of those initiatives, as well as a R42 million benefit from the non-recurrence of those once-off restructuring costs that we incurred last year.

This resulted in an overall benefit of R110 million in the current year. In addition, initiatives implemented in the current year are expected to deliver just short of R40 million of incremental benefits as we move into the next financial year.

I'm not going to go through the bullets in this slide in a lot of detail. Really, they will be covered by Simon as he takes you through the business unit performances, and really the comments here encapsulate the key drivers of the performance.

From a cash flow perspective, cash generated by operations improved 10.6% to R4.4 billion. This improvement was well supported by the higher operating profit, a lower increase in our working capital position relative to that of the prior year, as well as an increase in the add-back of non-cash items that also included the R84 million unfavorable valuation on the biological asset.

As a result, our cash to EBITDA conversion improved to 101.8%. Working capital has continued to be well managed, the working capital to revenue percentage improving to 24.6% over the year.

This reduction was largely a function of the timing of inventory receipts with a higher level of trade payables at the end of our financial year. In addition, we saw a lower increase in our trade receivables, with some of the impact as a result of the deferral of those wholesale orders coming through on the balance sheet.

Capital expenditure reduced from R601 million to R387 million during the year. You'll recall that the prior year base included the acquisition of the second-hand vessel in I&J, and therefore is higher than our normal level of capital investment.

Net debt reduced from R2.2 billion to R1.7 billion. This includes our lease liabilities.

Excluding lease liabilities, our cash debt has reduced to just over R1.1 billion during the year, with our net debt to capital employed reducing to the lower levels of our target range of 22.1% and net debt to EBITDA improving to 0.4. In line with our approach to effectively manage capital and return excess capital to shareholders, the board has approved a special dividend of R3 per share.

This is expected to return our debt levels back to the higher end of our debt to capital employed range of 30%. Return on capital employed improved nicely to 35.7%.

It remains an important metric for us and was well supported by the improvement in operating profit. From a capital expenditure perspective, the slide here really just provides some detail around the more significant areas of investment throughout the year.

We've continued to invest appropriately across all parts of our business, where you can see the highest areas of spend relating to some of our biscuit line upgrades, which also include some support for innovation. Municipal infrastructure remains a risk and a challenge in this environment.

We've spent R13 million in the current year on water and water backup and treatment capability. This is in addition to the R169 million that we've spent to date to address water and electricity backup, and we expect to spend more on these areas as we move into the next financial year.

From a dividend perspective, a final dividend of R4.18 declared, taking our total full-year dividend to R6.63. This is a 5.9% increase on last year, which aligns with the increase in earnings and also our normal dividend cover ratio of 1.15 times cover.

In addition, a special dividend, as mentioned, has been approved of R3 per share, which takes our total dividend yield to 9.6% based on the 30 June share price of just over R100 per share. I'll now hand you back to Simon.

He'll take you through the business unit performances. Thank you.

Thanks, Justin. We'll start with Entyce: coffee, creamer, and tea business.

As you can see from the slide, we have a very strong financial performance from this portfolio. As Justin has alluded, obviously the one category which saw some price pressure was creamer, and we adjusted pricing.

It has been a pretty tough and significantly challenging trading period where we have to constantly manage both volume and value, which I think the teams did very effectively. We have no shortage of competition in these categories.

I think the important part of what we do is to offer consumers premium brands in all of these categories, but we also show up in many affordable formats as well. Coffee in particular, you will have seen robusta and arabica prices have traded higher for a fairly significant period of time, which has obviously forced us to lift selling prices.

It has affected consumption in some parts of the system, which we'll show you when we cover off the volume-value slides for each of the categories. The out-of-home coffee business, Ciro, performed pretty well in most of its categories, notwithstanding ongoing competition and challenges in that sector as well.

The Cremora profit, as we've said, declined from an exceptional prior-year base. I think we highlighted that last year that we didn't anticipate that the Cremora profitability would be sustained.

There was a shift in the control of our major competitor through that period, and certainly the competitive environment has shifted, and certainly also given the last quarter's sales. This is a category that's particularly important with respect to wholesale distribution, and Justin talked about some of the base not repeating itself in that last quarter.

This shows you each of the core categories in Entyce, volume and value. You can see yourself, obviously the coffee increases of over 12% in order to deal with some of the cost pressures that we've had in the category from both arabica and robusta.

Then the creamer, we managed to hold on to most of the volume, but obviously at a slightly lower selling price, which on balance still underpins an exceptional return in this category for the creamer category. Those are the market shares.

Now keep in mind that these are market shares that don't include some of the informal channels that are important to many of our categories, but nonetheless, these are the ones that are read reasonably accurately. On balance, no material share, and as Justin has said, the important part of managing this portfolio is to try and manage our volume and our value effectively for the long run, not for the short run.

You can see the impact of cost pressures materially through obviously in the coffee category, quite significant. Keep in mind these are net of hedging, these are obviously the gross costs net of hedging.

The only one that was benign in the period was black tea. The Snackworks business, pretty strong performance and pleasing, underpinned through innovation in this particular business.

Also had to lift selling prices to manage cost pressures. We cover that in the same sort of slide.

Very pleasing performance in Choice Assorted, seasonal biscuit that's very important to the portfolio. Good innovation.

We working hard to find, I guess, useful price points in the system. For those of you who are here today, you'll see some of that in the bags that are at the back when you leave.

That's very, very materially an underpin to some of the volumes that are more challenged in some of the higher price points across this portfolio. Also benefiting, as all of the categories have, from the ongoing management of administrative costs, but also improvements in the process environment.

The snacks profitability, more challenging. Lots of competition has entered into the portfolio, lots of regional competition, lots of low prices.

There is sustained promotional activity in this category. We have to try and manage that as effectively as we can.

We've had some good innovation to help us do that in the portfolio. We've been able to sustain our gross margins, and certainly obviously the importance of managing the cost base in this particular part of our portfolio given the competitive intensity remains important and costs are well managed.

You can see again here, obviously volume declines, there's some mix effect in that, but improvements in selling price was obviously to ameliorate some of the costs. No material change in market shares in this system, also a growing portfolio of opportunities for us in our informal system and also cross-border.

Quite a significant amount of cost pressure net of hedging in this portfolio as well. I&J, as Justin has said, material improvement obviously in the fishing business off a very weak base, notwithstanding that very significant energy on-costs from February onwards, fortunately well-hedged, and we were able to push only in the latter part of the second semester selling prices of our materially important European frozen-at-sea fillet product and the broader portfolio of I&J's exported products.

Obviously exchange rate wasn't helpful, but the selling prices certainly have given some momentum to the underpin and the recovery of I&J's fishing profitability. Catch rates marginally lower, bifurcation between the freezer and the wet vessel strategy, with wet vessel catch rates improving, but freezer vessel catch rates slightly lower, but we did benefit from obviously the additional freezer vessel in the mix.

Abalone remains a challenge with obviously R85 million being expensed, non-cash obviously, but through the income statement. We'll talk a little bit about that later, but some optimistic improvements in selling prices in the early part of this financial year.

Certainly, we were not cash negative unlike many other players in the industry. We're still at least able to run this business through this difficult period on a break-even basis.

You can see this substantial mix both of abalone and forex, and catch rates for that matter, but with price and obviously the volume gains from the Umhloti, producing some I guess bottom-line benefits in the financial year. That's a breakout of the long history of I&J's profitability.

It's pleasing to see obviously the blue bar back to R396 million, and hopefully, that's something we can build on if we continue to see improvement. Performance, as you can see, we are trending catch rates still below the long-term mean.

It's kind of stabilized, but one hopes that we'll see some progress in the year ahead. That breaks out the volume and value here.

As Justin said, we've had good volume growth underpinned by selling price increases as well, which, I guess, drove that improvement in the operating profit. Indigo Brands, we've been restructuring Indigo to deal with the long-term loss of the Coty business, but also the systemic competitiveness of the deodorant category, which from a category perspective has lost a fair amount of volumes.

It was our main business category. We've been able to do quite a lot of range rationalization.

We're trying to build a medium-term platform for this business. Strong underpin in the early efforts of innovation.

We still got some quite big projects coming in the year ahead, but I think on balance, a pretty stable performance from Indigo underpinned by the restructuring and some of the efficiency initiatives that have been under play in that business. That gives you some sense of the volume and value breakout.

Market shares, kind of stable in male, a little bit down in female, but this again is also the formal read, not the informal read, which is an area where we are building, I guess, a better presence. Footwear and apparel, as Justin has said, pleasing performance on balance, strong December season, which is always important to the Spitz business in particular.

The one thing we did benefit from in the prior year, we did have some supply chain issues in some of our key brands, which were not repeated this year. We have seen in the clothing part of the portfolio long and sustained deep discounting by big-box retailers, which certainly made it tougher for Kurt Geiger, but the footwear performance was pleasing, and of course, the financial year right at the end was the last of the Green Cross retail.

The Green Cross business continues in wholesale, but not in any retail format, and that breaks out volume and value. On balance, I think a pretty reasonable performance for the footwear portfolio.

AVI International, an important underpin to the grocery business and the personal care business, sustained growth in this portfolio, but not without its challenges in the financial year. Many of these economies, Botswana in particular, which is important to us, struggling economically with the decline in diamond prices.

Mozambique still battling with currency and liquidity issues, but a reasonable performance, and Zambia obviously benefiting from the strength of the kwacha underpinned by copper exports. That just breaks out, I guess, the percentage of margin and percentage of business for International against the grocery and personal care portfolio, on balance, a pretty strong performance from International.

I'll talk about prospects. I think we all know that South Africa continues to struggle with real income per capita, and we've had a continued decline in GDP per capita for 16 or 17 years.

I think we're sitting at about $6,000 per capita if we try and convert it into hard currency. I think we peaked at around $8,500 per capita.

It certainly continues to be a thin environment. The key thing for us is to keep managing the business for the medium term.

I don't think AVI anticipates an easy financial year under current circumstances, but one can never be certain. It is a volatile world, but I don't think AVI's ever been fitter and more resilient and more able to deliver, I guess, financial recovery or improvements in our financial performance if the broader macro environment continues to, I guess, improve.

We have restructured national brands into two distinct operating divisions under their own leadership. There's a lot I could say about that, but I won't bore you, save to say that the focus is to provide the very best and most effective, resilient, focused on innovation, focused on efficiency, focused on the opportunities that are important in those categories.

I think in South Africa today, if you wish to be successful, you really have to have the sharpest and the most focused business unit philosophy, and that's what we've tried to do here. We do recognize that competition is a reality.

It's the great lifeblood of capitalism, and so we salute competition, but certainly it may put some margin pressure into some of our categories. Our commodities are pretty well hedged.

The commodity environment in general reasonably benign aside from energy, and of course our hedges, I think, put us in a pretty strong position in most of our categories, our input costs. We're not anticipating in this financial year, on the basis of what we see, lots of pressure that will force us to put pricing into the system, which is something that we haven't had for some time.

Cost management in the factory and process environment, something that we're focusing on. Not all of the margin that you see here will have been delivered because of price.

A lot of it's been driven because of the improvements that we make in our process environments, the efficiencies in robotics and in other technical investments that we continue to make to drive the cost of serving our consumers as low as we practically can. I can't overemphasize the importance of innovation in our forward focus across AVI.

Fuel prices and exchange rates and catch rates are not things that we have an overbearing ability to manage. I think we're reasonably well hedged, at least for H1, and certainly any improvement in catch rates off I guess catch rates that sustainably below the mean will be a big lever.

There's a lot of leverage in I&J if catch rates continue to recover. We are also continuing to look into I&J as to how we do what we do more effectively and simplifying the business model just like we have in other parts of AVI, and we'll expect to see some benefits coming from that.

As I said earlier, some improvement in abalone selling prices. I think the biological asset reval I think must take the value of the biological stock to the lowest level that we've seen in I&J.

We do know that we have the most efficient and cost-effective farm in the system in SA, and certainly if we see improvements in pricing, you can expect leverage in the abalone business. This is an intensely competitive retail environment.

I don't know how many of you are retail analysts here, but if you look at footfall in shopping centers, we continue to see lots of constraints across this system. It's intensely competitive.

Fortunately, we do a very unique thing in Spitz. We're very focused on premium and we are underpinned by brands, which means that we have unique relationships with consumers, and we think that gives us some competitive advantage, notwithstanding the constraints that consumers have in disposable income.

We're going to continue focusing on the basics as are set out in the slide. We continue to look at new brands.

We think there's something that we can add to our portfolio. We did add one last year, and so far so good.

We are going online in Spitz from October, which is an unusual decision for us because our customer base has traditionally been very committed to in-store purchasing presence, and it'll be interesting to see how that performs for us. As Justin said, last year wasn't a significant capital year with no major capexes, but there is a fair amount this year going into innovation, underpinning efficiencies, and obviously sustaining the capital-intensive assets in I&J, but nothing overwhelming.

We will certainly continue to deploy capital to pursue any opportunity that we see to improve our ability to both innovate and to manage our cost base. The thing that I know is fundamental to our business is the ongoing simplification of our business model.

We know increasingly we compete against nimble, small operators, whether they are in the biscuit business or whether they are in the snacking portfolio. It's absolutely essential that AVI replicates that mindset, that our management and our leadership, our conviction around what consumers need and can afford is replicated.

We continue to do all of the things that we believe are necessary. We don't think that in the end because we're a corporate business, we need to operate with that mindset.

Many of the things that have underpinned the efficiency and the margin across the portfolio are a function of that mindset, and we will continue to do that. When we talk about scalable and relevant innovation for consumers, we accept that consumers basically have limited discretionary income, but we also know that many South Africans are very brand-centric, believe in quality, and so what's important for us is to show up in price points that are accessible to them without diminishing the virtue and value of what we produce.

There's a lot of that that has been done in the last 12 months. It's momentum that is building.

A couple of big ideas that will come to fruition in this financial year, which we're hopeful will provide an underpin to the constraints that we see more generally in the consumer environment. As Justin talked about, we will continue to invest money wherever we can.

We keep looking at opportunities. We were more than willing to acquire assets if we can find them, but it's extremely difficult to find cogent, strong, high-quality brands in South Africa that are not owned by international multinationals that are for sale.

We keep working hard at replicating our leadership regionally, but we now have, I think, a stronger than ever before ambition to internationalize some of our products. One of the things that comes as a byproduct of the restructuring of national brands is our desire to commercialize our field marketing and logistics shared service structure.

We have new leadership joining us. This business unit will over time become a commercial business unit.

We will contemplate selling services to third parties because I think we have best-in-class capability here, and it will also focus fundamentally on internationalizing some of our best brands where we believe across the world there might be markets that would be interested in some of the things that we still do. We're one of the few biscuit makers in the world who still puts butter, eggs, and milk into our products, and this is a unique proposition, which we think we could, I guess, find an audience for in other markets.

I think that's it. Thank you very much for listening, and very happy to take questions.

I have some of my colleagues here as well. We do have a question?

Someone raised their hand?

Yeah. Thank you.

Shaun Chauke from J.P. Morgan.

Just one question, Simon, today. I just want to get your thoughts on how you think about evolving the sales mix channel within the business.

Can we please speak about it and break it down per category in terms of your thinking around retail versus food service versus informal, and so on? To that, as part of your thoughts, what would be the limitations in terms of over-indexing in one channel versus the other?

At what point does the trade-off make sense? Thanks.

Shaun, you always ask such complicated questions. At least it's only one this year.

Every channel matters to us, and every channel serves its own constituency. Of course, it would be wrong to suggest format or price or mix.

That's, I think, the art that we try and get our minds around every day, which is, this is a complicated business with many many categories. How do we optimize that?

We can't decide what our customer base, those who sell to our consumers, will do in terms of investment. Some have gone very hard to do online and done it very successfully.

It's important that we show up for them in the right way so that we can serve that constituency effectively. There are no silver bullets, and there is certainly no formula, and we certainly wouldn't ever set about trying to deliberately index one distribution format over the other.

That's not our job. Our job is to serve each one of those constituencies effectively with products and size formats and pack formats that make the most sense.

That's something that we try and do well every day, and there's certainly more and more work for us to do because, as you see yourselves, when you look at the retail system, it's ever-changing. There are winners and losers in the system, and I think that's self-evident.

It's a challenge for us, but that's what we've got to continue to do. We don't have, unfortunately, a formulaic ability to do that.

We're not in the driving seat. What we are there to do is to serve each one of those channels.

You are going to ask a second question.

No, I just want to follow up on that. Maybe let me ask it this way.

Where in terms of your sales, are you seeing the most growth channel, and where is the margin profile better? I understand that in some markets it may be smaller in terms of the size of the market, but I just kind of want to get a sense of which channel is much more favorable for you guys.

Thanks.

Historically modern retail has been our biggest channel, but for those of you who analyze food businesses and retail food businesses, there has been a significant growth in the informal system. I use that words cautiously because it's fairly formal.

Each one of them has, I guess, a solution for consumers that's different. Neither of them are more or less valuable to us.

They're equally valuable. They're just different.

Sorry.

Hi. Simon, thank you for the results.

It's Sa'ad Chothia from Citi. Just quickly on Q4, you talked about wholesalers' impact from the march in March.

We hear that obviously the spazas are carrying less stock, they're buying less from the wholesalers. Can you maybe just give us a sense if that's continuing or has it stopped?

Or is there any sort of green shoots to say that stock levels are coming back up, or do you see a further impact?

No, we've seen a recovery in the last two months. July was a bit slow for us.

Some other people I think might have experienced differently because the categories that are important in that system, basically you would replenish some things before you would replenish others. Certainly in August we saw basically a replenishment taking place into that system.

Thank you. We shouldn't see as big an impact of what we saw in Q4 in H1?

No. One hopes not if there's no march.

Okay. Thank you.

Talya Ginsberg from Umthombo Wealth. Thanks for the presentation.

I think, yeah, just one bullet point on it in the outlook slide on the soft commodities, coffee, wheat, et cetera. From what I gather just looking at your report, it seems that there's a lot of hedging and I think they use the word benign.

Given the increase in every soft commodity I could think of, sugar, et cetera, how is that possible?

I don't think all of the soft commodities have increased. We have a very big basket.

In the near term wheat prices are up, but that's probably throttled a little bit by the Ukraine situation in the short term. I think we're hedged for 12 months on wheat, it's certainly going to be benign in that category.

The same is true if we go through our basket and we run a very sophisticated daily hedging philosophy in the group and it's about protecting margins, at least in our situation it's going to be benign for as long as, I guess, hedge prices are within, I guess, the boundaries that we anticipate them to be. There hasn't been a material spike, apart from one or two of our inputs in our core basket.

Okay. It's not too much of an issue.

No. I don't know, Justin, do you want to add to that?

No, I think you're absolutely right, Simon. Obviously the hedging profile has provided us with some protection against what we've been seeing more recently from a commodity cost perspective.

Okay. There's only so much.

What we're dealing with at the moment is not so much basically the price of crude, it's the crack spreads that are nearly 100% on diesel. That is, unfortunately, significant for I&J and actually for all distributors, both road and marine, around the world at the moment.

Europe in particular has got 100% crack spread on diesel.

Can you hear me?

Yep.

Hi. Charles Bowles, Titanium Capital.

Hello, Charles.

Solid results given the circumstances. Done to you and the team.

Just two questions if I may on fishing. Given this 15-year cycle of fishing rights, I suppose the later you get into that 15-year cycle, that uncertainty picks up as to whether they get renewed, et cetera.

If you were going to exit, you'd probably want to exit with a long enough runway to make it attractive to a buyer. Do you have any thoughts on does one take the view that you stay in fishing and deal with the renewal of fishing rights or do you ultimately choose to exit?

Just how you might think about that. Secondly, again on fishing, on the abalone, if I remember correctly, Sea Harvest wrote up their abalone biological on the basis that they changed some channels and their focus.

I'm just trying to understand, it's quite a big difference between the two businesses if you could help us understand that. Thanks, Simon.

Let me deal with abalone first. Look, I have no idea Sea Harvest mixes.

Remember, you sell abalone in three different formats: canned, dry, and fresh. It depends on your selling strategy, and obviously the way this is calculated in AVI, as you can imagine, we always precise and conservative.

Certainly we share the same market, we know what the selling prices are, and certainly our calculations saw us write down the abalone asset. It would be wrong for me to comment on why they wrote theirs up, but certainly there's no difference in the market access that they have and the market access we have.

It would be wrong of me to speculate on I&J from a strategic point of view in an analyst presentation, because of the 15-year rights. I think fundamentally deep-water fishing is a big capital, complicated, integrated business.

Inasmuch as there were 15 rights allocated, it's highly unlikely that a business like I&J wouldn't receive basically its rights again. I'm quite clear on, because it's very, very difficult to participate in any other way than the way that the big fishing companies in South Africa participate in this demersal fishery.

We are fully appraised of the returns in I&J and I think in the end from a shareholder point of view all I could say is that we'll always do the right thing for shareholders, which I think is underpinned by AVI's philosophy. Equally we have the responsibility to run the company effectively for its people and for society at large.

If you can forgive me on not providing any more color, I'll stop there.

Hi. Mbuso Radebe from Standard Bank.

I just wanted to follow through on the topic you talked about on the water investment. We can see when the forecasters are talking about a potential El Niño with the current summer period not producing enough rain.

You spoke about being hedged on the commodity side, which I think would have impacted in terms of the cost of the commodities. I just want to check the business readiness with the backdrop of the investment you've already made on water.

Should there be a drought period perhaps coming through in the next year or so? Thanks.

Look, fundamentally, what we tried to do in our water strategy is to give us the ability to sustain operations in the most foreseeable way that we can imagine. Some of that means independence from long outages as opposed to permanent shortage of supply, which of course is a risk that might take place.

In the Western Cape we faced that with Day Zero some years ago and we were able to operate on a continuous basis had there being no water. In some parts of our system, we are fully protected from the very worst of circumstances.

In other parts of our system, not quite as protected, but on balance we don't perceive the risks to be as fundamental. It's more disruption risk.

Our Isando factories are pretty well protected for very long outages, particularly coffee and creamer, which is a big water user, and we've invested significantly to ensure that we can do that. We not anticipating any inability to supply should the El Niño effect drive obviously lower water levels in, for example, the Vaal Dam.

Our problem is not so much water in the Vaal Dam, it's water in our taps, and there's infrastructure between the Vaal Dam and our taps that's problematic.

Hi, Simon. Myron from Metal Industries.

Just a question on abalone. You've painted a slightly more optimistic view on abalone if that's fair to say.

I understand South Africa sells a higher premium product so traditional buyers are starting to return to the market. Maybe some color in that.

Thanks.

I think in the end we do proper research as to pricing in mainland China and Hong Kong, which were two traditional markets for us. Prices are stable at restaurant table, demand is still lower.

The one advantage that we've seen is that there has been a slowdown and curtailment of production in South Africa. As you know with pricing, in general it's hard to set pricing unless there is a change in supply.

I think the thing that is giving me a little more confidence is a slightly improved supply situation with some of the producers in South Africa finding it financially impossible to continue, and so there have been farm closures. That's taken a pretty material amount of abalone out of the SA production.

Given, as you said, it's somewhat of a niche species into those markets, it bodes well hopefully for pricing recovery. There are no more questions?

Thank you. One at the back.

Sorry.

Hi, Simon. Murray Moore from All Weather Fund Managers.

The demand side of that abalone equation, what has led to demand still being lower post-COVID for South African abalone?

If you're a keen student of Hong Kong and Chinese politics, there's a very significant pushback against corruption and it did change the nature of how gifting took place. Certainly then tourism in Hong Kong very materially affected by political events in Hong Kong and in China.

It's probably those two things that constrained the level of demand that was historically seen, but nothing else.

Can you hear me? Oh.

There was a lot of noise around online gambling, yeah, a couple of months ago. Just interested in your current views after that and what you're seeing in the market.

I think everybody can get the data. It's a significant, I guess, consumer category.

What else can I call it? People are spending money on online gambling and it's significant, and you can get the data and many other people report it.

For sure, it's affected, I think, the broad basket of consumption in traditional categories. There's only so much money that every consumer has, it is certainly a number that 10 years ago didn't exist and is built to the very significant number it is today.

Someone on this side.

Good afternoon. Lesego from Benguela.

Just a question on strategy. Is there any appetite to enter different product categories?

Yeah.

Yes, there is. We would love to enter into other product categories.

The key challenge is, what are they? Can we start them from scratch?

Do we have brands? I think you'll see some of our brands stretch themselves in the next 12 months into new areas, obviously more fundamentally different.

I guess it depends on whether we can acquire things, and we've looked in the last 12 months at a number of things, chose not to do anything with them. There's lots of ambition, but we're just prudent with shareholders' money.

We have to have high levels of conviction. Acquisitions generally aren't always as accretive as the market always thinks.

It's just been our philosophy is to avoid basically spending money simply to underpin the growth prospects of the company, especially if the risks are high. I think that's it.

Thank you for attending today, and don't forget your goody bags, and there is some lunch. Thank you very much.