Vivo Energy plc

Good morning to everybody. Thank you for coming. I see that there are representatives from all partners, be it the banks, the lawyers, the accounting firms, I think. No? Yes? Maybe? No? Shareholders, the most important. I counted rapidly. There's over 73% representation, so it's nice to have. And thank you for coming. So this is our first result presentation. since Vivo Energy, now PLC, listed on the London Stock Exchange, so it's exciting to be here with you. Some of the faces are recognizable, some are new, but we are the same, Johan and myself. Maybe we've gone a bit more gray since we've listed. We're wearing now serious spectacles instead of the blue ones I used to wear. But anyway, we are proud to be here, and we are happy to be here to announce also our 2018 results. I would like, therefore, also to welcome other participants through the net or through the web stream or conference call facilities who are invisible to us, but who are very present. So welcome to you as well. No notes. Sorry. Next. You lost me. Okay, so for those who don't know me, I'm Christian Chamas, and Johan is sitting there on my right with the red spectacles. That's Johan, the CFO of the group. We haven't changed, and we will continue driving your company. Next, please. We will go through... I guess four important points. I will do the introduction and the business update. Johan will spend some time on the financials and bring you upstream and talk about the performance. And then I will conclude in point number three through a summary and an outlook for tomorrow. And finally, we will end with a Q&A session. which will be open to the floor, and then we'll move to the web, and then we'll move to the conference calling. So if that is okay with you, we will start the presentations. Please. As a reminder, for those who haven't been around or participated and who are less familiar with our business, well, we operate in three segments. We are one of Africa's largest retailers. Retail is the core of our business. We highlighted it at IPO in our prospectus. That remains our core business, and it generates nearly 60% of our adjusted EBITDA. So it is important. And in the markets, we distribute gasoline and gas oils across 1,800 Shell-branded fuel stations. That is how we do it. But we also have now a strong growing non-fuel activity, which is our convenience and our food offerings and other offerings. And that is growing very nicely across all our countries. That is therefore the core. In the commercial segment, which also represents a quarter of our adjusted EBITDA, we offer a full range of services to our clients, be it industrial, mining, transport, construction, across the board, marine, LPG, you name it. That is where we bring our lubricants, our services, our know-how, our products, aditivated and otherwise, to the commercial segment. And that is also done through $5,000. I mean, it's a big client base across our country. And finally, in the middle, between these two, because it feeds into the two, you will see the lubricants activity. That is an important activity. It is a special activity. And as you can see from the figures, it contributes nicely to our bottom line. Without going into detail, because Johan will go into that detail, we have strong results across all the segments in the first half of 2018. You can see an increase of about 4% of the total volumes to 4.6 billion litres, and an adjusted EBITDA of about $204 million, which is an increase of about 8% year-on-year. So a good, strong performance for this first half after our first listing of early May. Next. If I could highlight a few operational points. Yes, we are growing very fast. We are highly growth-driven. We continue doing it. Our markets are growth-driven. All of them, the 15 we currently operate in, there is growth everywhere. And we seize those opportunities like we... indicated in our prospectus. We carry on doing that. How? By investing in new retail activities, in new retail outlets. We had promised to deliver about 80. We're on track, 80 for the year. So we're on track as today. We've also promised to open 100 new food and convenience retail outlets through the year. We are on track, and that will bring more growth when all these are open. So it is on track to bring that growth. What is important also to highlight, and you see it somewhere there, we had an innovative partnership with Kentucky Fried Chicken in Botswana, which has worked. This is a JV, where we took over quite a few of their outlets. I think we mentioned it also in the prospectus. That has worked very well, and Kentucky Fried Chicken is satisfied with that, and we have reproduced the same model in Cote d'Ivoire, and where we actually opened the first Kentucky Fried Chicken in the country through that joint venture. So it is something which is very profitable for us and it brings value across the whole chain. So that is something that has contributed immensely to our business and it actually has impact, has grown by about 22% compared to the previous period. So that's nice to have and it continues to grow. The commercial volume has grown, and you see it in the figures earlier on, because we have seized the opportunities of contracts through aviation and even marine. Well, that was there. We took it, and we took it also with good terms and conditions, because I think you seem to remember that we walk away when it's not nice, but we take it when it's good. So this year we took it. Finally, and not the least, we did a lot of work for the IPO. And that took a lot of our time since sometime October last year or November. And in May, we saw the successful IPO of our company in London. It was the largest IPO in London in over a decade, so it's nice to talk about it. It was successful, the largest on the longest London stock exchange for the year at the time of listing. And it's also the first dual listing between Johannesburg and London so in nearly 20 years so again another positive result we have also welcomed during that same period a new board right of non-executive directors and new chairman in the person of John Daly and that and we have put in place and we continue because it's a permanent exercise new governance we follow the new regulations that are published every week and we adapt our organization to meet them, because that's the only way, is that we follow governance, which is where we live and where we abide by. Importantly, and the final two points, and I'll talk about them a bit more in detail, the first one being the EVO, the Engine Deal. Well, that is progressing. Quite a few of the hurdles are behind us, there is only one remaining, and we are striving to get it on board when I can't promise a date. It is difficult to promise a date in these complications, but it will happen. Finally, one of the strong foundations of our group is health and safety. We continue having fantastic results. We've had no recordable incidents in the first half. So for the track record is still intact and we continue making sure that that happens day after day because it is fundamental. And we don't want to hear it. We don't want to see it because it's not good for the business. It's not good for your reputation. And therefore, we continue building on that strong foundation. If we can continue, please. It is very easy now to continue because I'm handing it over to Johan. Johan, the floor is yours. Thank you.

Thank you, Christian. So moving on to page seven, as you can see from the first half, we deliver strong growth across all financial KPIs while also maintaining a very stable balance sheet with low leverage. Both volumes and margins were healthy. A 4% increase in volume resulted in a gross cash profit increase of 7%, adjusted EBITDA of 8%, and adjusted net income of 11%. Adjusted EBITDA of the first half excludes about $27 million of specials or one-offs, about 90% of which are related to the IPO expenses as well as the EVO expenses. It's also worth noting that our tax rate, hatched down another 100 basis points from 38 to 37%. Of the back of these results, we're also very pleased to announce our first dividend in line with the guidance of about $8 million, which is approximately one US cents per share. Moving on to page eight, where we look at the key performance drivers by segments. You can see the overall adjusted EBITDA up 8% to $204 million. You can see volume up 4% to $4.6 billion, as Christian mentioned. We also saw healthy margins. We saw a 3% increase in our overall group margin to $74 per thousand liters. Growth in both retail margins by 2 percent, commercial, as Christian mentioned, 8 percent, quite driven by both aviation but general commercial margins, and slightly offset by decline in lubricants margins by 8 percent, which is driven by the fact that we've not been able to fully reflect the increase of base oils in our pricing of lubricants. Overall retail contributed $121 million in adjusted EBITDA, a 9% year-on-year increase. Commercial contributed $58 million, which is a 5% year-on-year increase. Despite the lower margins in lubricants, Adjusted EBITDA was up 10% year-on-year to $25 million, which is mostly explained by the contribution of the equity pickup in the SVL joint venture, which was purchased last year for the amount of $6 million. Moving on to retail margins, you can see that our performance this year continued to demonstrate that our retail margins are decoupled from oil prices. As we talked about it quite a lot during the roadshow and the IPO process, higher oil prices don't reflect in lower margins. We were able to keep our margins constant at $78 per 1,000 liters. This also excludes the impact of non-fuel retail, where gross margin, as Christian mentioned, of the non-fuel retail increased to 11 million, which is a 22% increase year on year. It's important also to highlight that our portfolio diversification underpins the resilience of our earnings. Nearly 70% of our earnings are pegged to either the euro and the dollar, and you can see that all segments have a meaningful contribution to the bottom line. Moving on to the commercial segment on page 10. You can see that the split between what we call core commercial on one hand and aviation and marine remained in line with the 2017 numbers both for volume and cash gross margin. The volume of the growth of 2% was driven by additional aviation as well as additional bunkering both in spot sales in marine in the countries where we operate those businesses. Volume in the core commercial business was more or less flat, actually slight decline of 1%. As mentioned, overall unit margins up 8% to $47 per 1,000 liters. Core commercial units margin increased by 6%, while aviation and marine unit margins improved 33% to $31 per 1,000 liters. So very healthy results. Finally, moving on to the next page in lubricants. Again, the split between retail and B2C on one hand and commercial and export on the other hand remained in line with 2017 numbers. The volume growth of 3% was driven by effective marketing campaigns and tactical initiatives on retail and B2C, such as Lubez as well as oil specialists who operate on the sites across the portfolio. Overall unit margin decreased 8%, as I said, as a result of increase in base oils. But in response to that, and we're focusing very hard on this in terms of active price management to make sure we reflect those increases, as well as optimizing the sales mix of the different grades within lubricants. Moving on to the cash flow, you can see that on an operating free cash flow during the first half, after taxes, we actually had a negative outflow of $3 million. And there's actually three main drivers behind that. The first one, as mentioned, are the special items. of $27 million, of which 24 are related to Enjin and especially the IPO. There's also a timing difference in the receipt of other government receivables, which we account for in other assets. And this actually unfortunately offsets more than the positive impact of our working capital. So when you look at the pure working capital, that was still negative at about $33 million. However, the receivables compensated that. Having said that, FOR THOSE OTHER RECEIVABLES, WE RECEIVED $40 MILLION ALREADY IN THE MONTH OF JULY TO COMPENSATE FOR THAT. AND THEN THE FINAL ELEMENT IS AN INCREASE IN CAPEX OF $21 MILLION, WHICH IS DRIVEN BY TWO FACTORS. ONE IS AN ACCELERATED RETAIL EXPANSION, SO WE'RE ACTUALLY BEEN BUILDING MORE SITES EARLIER IN THE YEAR, AS WELL AS ABOUT $12 MILLION RELATED TO IT COSTS, WHICH ARE MOSTLY DRIVEN BY OUR NEW SAP IMPLEMENTATION PROGRAM that is happening as we speak. So if you adjust for those three factors, cash flow actually on a year-on-year basis would be higher than last year. And in spite of the negative cash flow, we continue to fund all our growth and CapEx self-funded. So it remains a cash-generating business, and we're very proud of that. Moving on to the balance sheet, as you can see, Balance sheet is strong, leverage is low with ample liquidity available. We repaid $42 million of our term loan since December and also since the IPO. Our leverage, which includes $122 million of long-term lease liabilities, remains more or less flat at adjusted EBITDA for the last 12 months versus net debt in just that one time, which is in line with, again, with what we showed at the IPO. and well within the target of one and a half times leverage. Then finally, final slide on the finance. During the first half of our performance, our performance was in line with the guidance we gave at IPO, and at this stage, with the information available today, our guidance for the full year remains unchanged. Now I'll hand it back to Christian, provide a summary as well as the outlook.

If we go to the summary, please. Well, this is, I guess, summarizes the position, the situation, the macro, and I will use the few minutes left to recap a few points. to visit two points that need updates, i.e. Morocco the EVO transaction, and then we will be able to move into the Q&A part of this meeting. As you can see, the macro side, we still have a growth story. The countries are still on that dynamic, and it obviously impacts us because we reap the benefit. The organization we have has proven beyond any doubt that it can deliver before results two projects and of course IPO and tomorrow the SAP project so all that is good and works very well and we're pleased with it and we're happy with our teams and proud of our teams our business standards and operations well they are Top class, we see it through our HSEC standards, we see it through our resilience to things happening, we adapt very quickly, we move and we seize opportunities, so that's a very good culture to have. Our financials, and Johan just talked about it, are above last year's results, so that is satisfactory to have as well. Morocco and Evo, I will talk about it in a few moments, and basically, We remain with a vision which is wanting to be, and well, we already are well on that way, the most respected energy company in Africa, and that with the more growth we have, the more business development we have, that will continue. We will continue reaping these benefits, and we will have that gold-plated reputation. And that is the ultimate vision for our company. If I can move... to the favorite topic since listing, Morocco. The last meetings, it has been a lot of comments, a lot of speculation on the potential re-regulation of the market, et cetera, et cetera, but you have to realize that since the middle of June, nothing new. There were only two meetings between the industry and the government. When I say the government, it is one minister. And basically from that date, nothing new. All that you see or read is through hearsay, speculation, rumors, which is actually quite a favorite sport in quite a few countries. But we as Vivo Energy, we are one of the leading players in Morocco with two others. We therefore have engaged discussions with government in order to see where they want to go, what they want to put in place, and today nothing has really come out. Compared to middle of June, beginning of August, no news story, nothing. The government, is changing. This morning I found out that the Minister of Finance and Commerce has been, Economy and Finance if I'm not mistaken, has been resigned is the word. So there is going to be change. Is there going to be a change of government? I have no idea. It is in the hands of the sovereign and we will see what happens. Things are complex and complicated and we will see. What is clear is that I have to highlight that when we published our prospectus we indicated at that time that Morocco's retail business represented 29% of the group's EBITDA. That, with time, has now moved towards 22%. It is a significantly lower figure. Why? Because our business elsewhere has grown. The more we add, the more you dilute that weight. And therefore, the absolute figure is lower. of any risk. So, and we feel more comfortable that whatever scenario, we will adapt. We have shown resilience. It is our job as managers and executives of this company to have the right plans in order to react to a scenario like this. There is nothing unusual. Twelve out of fifteen of our countries are regulated. We know how to live in regulator. Today, Morocco is a liberalized environment and we will see what happens. So that is the information I wanted to give. So you can tell me nothing new, but because there is nothing new. Okay? And we wait and we will inform the market if anything happens. And we will adapt, believe me. The other point which is important and I would like to update is EVO, the engine transaction. the nine new countries. You know it is important for us. It brings 300 new sites. It allows us to enter nine new countries where we're not present. It is important. We are working very hard. I can tell you today that out of those nine countries, there is only one remaining where we need to obtain final approvals. That is in progress. Our seller engine is working very hard in order to obtain an outcome, a positive outcome. It is in the hands of government and engine and ourselves. We work a lot of it. Believe me, we are on it every day from Monday to Friday and sometimes Saturday and Sunday. And when it is solved, we will come back to the market and tell you it is solved, we can move on. Today, we are not there yet, but it will come one day. When? I cannot tell you. The less haste we put on the exercise, the better off we are. So that is the engine transaction. And finally, what I would like to highlight is, you know, it does bring value. It does bring value to Vivo because it brings us growth potential. Because you enter new countries, it brings opportunities to grow what you inherit and bring more to the table. We highlighted it in our IPO document. And we will do that in the same way as we've done it in Vivo, by growing the existing business, by adding more, by making more services, more offering, more QSR, more CR. And that is the model. And we will make a success out of it because that is what we are here for. is to ensure that we deliver. And then we will become a major player in 24 countries, 2,100 outlets. It is a good story to have. So we will work very hard for its completion, I assure you. Investment highlights, again, I have to highlight, again, you might say he's repeating the same thing, but yes, the market is still growing. markets we are in, it is still growth. So we are a growth story in a market that is growing. Fundamental not to forget, right? The other important element is the platform. I mean, we are number one or number two. We have leading positions. We are diversified. That is why Morocco's weight drops day after day, because we are diversified. There is more activities. There are more segments. There are more countries. The third important point is that our business model has proven that it works. It is integrated. It is entrepreneurial. And finally, it is performance-driven. People are focused on performance, because at the end of the day, that is how they're recognized and rewarded. So the whole system works, and it continues to work. And the other two important points, and I know I repeat it again, yes, growth. Yes, growth and growth. Organic, inorganic, merger and acquisition. That is the agenda. And we will continue doing it. And finally, we have shown that our financial model is resilient. And we will adapt to a changing environment. And that is our business. We have to adapt because the world is changing. It's not a constant environment. So, in conclusion, if I could move to the final slide. Thank you. Yeah, I know, but there was another one where I summarized the next step. Is that it? Sorry, I had to maybe give instructions on the Q&As. Yeah? Okay, can I? Thank you. So thank you, I'll give you some guidelines for the Q&As. So first of all, we'll open it to all the sitting participants in this room. We'll take the questions from the floor. Once we've exhausted all this, and if time allows, of course, we will open it to the questions from a conference call or the webcast facilities. And before we do that, when you ask a question, please give us your name so that we know who is asking the questions, especially when it comes to the calls or the web call. Thank you. The floor is yours now. I will stop speaking. Maybe I'll sit there. Thank you.

Thank you. Good morning. It's Alex Muse here from JP Morgan. Three questions, two of them on your favorite topics. Firstly, Morocco, thank you for the update. I just wonder, the King gave a speech at his throne day ceremony a few days ago and didn't mention any possibility of price regulation. I wonder if you see that to be significant or not.

I think my first answer is I don't comment on a King's speech. All I read is that he tried to put the emphasis, well, he tried, he did put the emphasis on the social aspect by asking his government to work very hard on the needy. He was thinking of the North because when he made his speech, he was in the North, and basically tell him to work hard on the people that needed help. He also told them to work very hard on education, on health, and supporting the needy. of the country. So he sent a very strong message by saying that the action needs maybe regrouping and a bit more focus, like we do in Vivo Energy. We focus on our action. And yesterday, which was important, is that he resigned. He got the resignation or somebody resigned who was the Minister of Finance and Economy, which is another sign. Now, does that mean the focus is away from our sector? I don't know. I can't comment on that.

Thank you. Secondly, on the EVO transaction, clearly there's a hold-up in DRC with your joint venture partner. Is it possible to exclude the DRC from the transaction or must it be bundled up?

You see, at this stage, we want the whole thing to happen because it's beneficial for both parties. One is a seller, one is a buyer. And DRC being a mining country, it is important to hold it on. So... The objective now is just to make sure that everything comes on board and therefore we're trying to find the best possible solution in order for the 10 countries to come on board. As I said earlier on, nine are fixed and there is one that is in progress or pending solution. So it's not bad, 9 out of 10, I would say.

Not bad at all. Finally, on lubricants, clearly the profits went up, the EBITDA was up nicely, but gross cash unit margin was down a bit with the delay in passing through base oil prices. I just wonder why is there a delay in passing on that cost?

I'll take that if you don't mind. You know we manufacture the lubricants in blending plants across the different countries. You have basically two very big ones and then smaller ones in the West Coast. So a big one in Kenya a big one in Morocco and Tunisia, and then in the east, in the west, sorry, you have other blending. So once you talk of manufacturing, it means that you have lead time for supply, so you end up with probably four months stock of products. So by the time the prices started picking up at the beginning of the year or in March, if I'm not mistaken, while you had stocks from before, So then you replace them with new stocks, which come by batches of four, five months sometimes, holding. So it takes a time to adjust, right? It's not automatic. Usually we consider that it will take us between five and six months to ramp it up to where it should be at replacement cost. And since June, we've seen that happening. You don't see it in the overall picture because it's a weighted average, but we know. that we are doing. And then what we do in periods like this, especially when the prices do that, is that we make sure that we push the high income, high segment products in order to create more value and to recoup more margins and make sure that the lower contributing ones come later. That's what we do. But that's nothing new. It goes up and down. Any other questions, please? Yes. Okay, questions from the web, from the conference calls, from the calls, please.

Thank you. Our first question today comes from the line of Alex Moly of Credit Suisse. Alex, your line is open.

Good morning, gentlemen. I hope you're well.

Yes, thank you.

Quick question on the retail business. It seems to have been a bit of a slowdown in volumes from Q1 to Q2. Is there any reason behind that, or is that just very standard quarterly ebb and flow?

In the beginning of the year, especially between the two quarters, there is seasonality in our business. It's not linear. Big countries like Morocco, Tunisia, Kenya, et cetera, there is big seasonality between quarters and semesters. So first half, second half, there are big changes. So, yes, that's the explanation. Ebb and flow. Thank you.

Any other questions?

No more? Okay, yes. Rob?

There are questions on the web. We have some questions on the website. A question from from Sandlam Investments. Are you still considering issuing the bond before the end of the year?

Johan? So maybe a bit of clarification on the bond. When we announced the bond, it was not to raise new money. It was a pure refinancing of our term loan, which we actually got last year for the dividend recap as well for the SVL acquisition. So we have an amortizing term loan. for which we pay about 4% fixed. When we looked at the IPO process and a long-term capital structure, we thought it was a good idea to actually have more permanent debt on our balance sheet, and where the bond markets were trading in Q4 and earlier that year, there was an opportunity to refinance that amortizing term loan with relatively cheap bond financing, which we believe was somewhere around 5%. Unfortunately, as we hit the road for the bond, the market took a turn for the worse. And that attractive financing at those terms was no longer available, given that it was a pure refinancing and it was done to put something in place that we thought was good for the long term of the company, we decided to pull the bond. And so we keep an eye on the market. And when the moment is right, we might go back. And we just, as we say, it's an opportunistic refinancing for the benefit of the company. And we keep monitoring the market.

A second webcast call from Elam Ismail from Prudential. Can you provide more color on the operating environment in Morocco? Have you lost volumes because of the consumer activism? And have you been able to pass on all the increase in oil price in terms of price increases to your customers?

MR. Okay. We have grown actually our business in an important way since these April boycott operations. So our market share has increased and our volume has increased also. That's number one. Number two, The prices have been going up and down, but they have shown some stability. I'm talking of the barrel price here, but has shown stability recently. So we've not been forced to adjust too much because it was quite linear for us. So we have shown it was a good positive message as well to the market that the prices can remain stable. over a period of time. And as we don't go into details per country, all we can say is that Morocco today has a good result, but its weight in the overall equation, as I highlighted earlier on, has dropped to 22%. I'm talking about retail here. 22% of the Vivo Energy adjusted EBITDA. So it is a good story in the end.

Another webcast question from Keith McLaughlin. You refer to structurally negative working capital and low leverage. Can you elaborate on this?

Sure. You know, if you look at The core of our business, which is retail, it's a cash and carry business. So on average, our days receivables are about 16 days. Payables are in the mid-50s. Stock days are about 22 days. So we have a structurally negative working capital, especially in retail. Every time we sell a litre of fuel, we have positive working capital coming in, or negative working capital. So we have cash coming in. And that has led us to use that cash to reinvest in the business. So that's just a reminder on the core engine and the cash generation from the retail business. The low leverage is just historically we don't need the debt to invest. The debt we have there that we have on our balance sheet is twofold. As I said, we did a dividend recap in the middle of last year for the amount of $350 million. which was 70 million refinancing, 280 was a dividend. And then at the end of the year, we did another financing for the SVL acquisition for the amount of $160 million. And that's really the only, you know, the reason why we have debt on our balance sheet as, you know, as I said, to fund the business, we don't need any debt. And that's also why our guidance is not to go over one, one and a half times leverage.

A second question from Keith McLaughlin. Can you please unpack why your effective tax rate is so high? Why are you guiding for it to be lower over time?

Yes, so the effective tax rate is a combination of two main elements. It's the element of our corporate income tax, which in Africa the average is around 27% to 28%. Then the other element that will get us to the 37% is the withholding taxes. that we pay both on dividends and on central recharges. It's a cost of doing business in Africa, which will add on average about 7% to 8% to our tax rate. So we continue to stick with our guidance of having our tax rate in the next coming years reach mid-30s, as we can't really change the withholding tax, but that will kind of dilute itself as there's an element that is fixed based on the fixed charges. So that will become smaller. And that really drives the trend toward the 35%. And corporate income taxes is the cost of doing business. So we're a good citizen and pay our taxes.

A question from Yais Patel at Standard Bank. Indications are that Morocco contributed 22% to group adjusted EBITDA during one half 18. What was the volume contribution from Morocco to the group over the same period?

It's in the notes somewhere. Historically, it's around 20, between 23, 24%. I don't know what it was in the first half. If you bear with me, I can show you which note it is. I don't know if somebody... But this is the total volume in Morocco. I can't...

A million, no? Out of 4.9, out of 5. So it's 24, 25%. Yeah, it's 24, 25%.

So maybe you check it.

I think it was one million liter cube out of the 4.9 we sold. So it's about, you know, 20%. If you go to the segment note, Morocco was actually...

We talk about revenues, not volume. Morocco was $755 million revenue out of $2.6 billion, whatever that number is. We're not in revenue. Anyway, so, note four.

You say note four? Is that what it is? Yes.

Rob? Question from Temi from Renaissance Capital. Do you think the consumer can continue to take all the oil price increase as oil prices continue to rise?

Okay, in 12 out of our 15 countries, prices are regulated by the government. So the price is fixed by government. And we basically, as I think we mentioned and we did mention in the IPO prospectus, we have a fixed margin that is reviewed regularly. So it is the call of the government. And we have gone through periods where the barrel has gone to $140 and dropped as low as $25. So I think what we can say is the consumer is now used to these variations like these commodity prices. Will they adapt? I don't think anybody loves to pay high prices, but when they go down, you also like to have low prices. So that's, I guess, people are used to the variations now. What is quite clear, that in the 12 out of the 15 countries where the prices are regulated by government, there is no more subsidies. Except for one, sorry, Tunisia. except for one, excuse me, Tunisia. So the others are basically market prices. So you have the barrel price and you add taxation and you add costs and whatever, and that is how it is. And basically they change every month or every 15 days, depending on the countries. So this variation and these fluctuations are now part and parcel of the way of life, like in any other part of the world.

Maybe Christian, if you go back to, and we had a slide in the roadshow from year 2000 to 2016, you actually saw the fuel demand growing at a CAGR of 3.5%, and actually there was no one single year where there was a negative growth number. And the reason for that is that the countries in Africa don't have alternatives. They need fuel to transport, and they need fuel to invest in infrastructure. If the oil price is high, they can't say, well, today I will take the underground, because it just does not exist. So from that perspective, we believe that the price elasticity is very low in Africa when it comes to fuel.

Yeah, good point. Any other question? Question from David at Combined Code. Please can you explain why an interim dividend has been approved whilst net debt is increasing?

We have plenty of cash to pay for the dividend. So we have reserves. And as I said, the cash was an element of timing differences, especially in the government receivables. So we are healthy and have plenty of cash and like to stick to our commitment of a 30% payout. And the guidance was actually to pay one-third of an interim dividend and two-thirds at year-end. So we are fully behind that guidance.

A follow-up question on dividend from Tom Robinson. To what extent does the interim dividend represent a deviation from the group's payout policy?

It does not. It's aligned.

A final question on the webcast from Martin at BNP Paribas. Is there a contractual deadline for the completion of the Evo deal?

As I said, the topic is permanently reviewed and renegotiated. And when we get to deadlines between the seller and the buyer, who is Vivo, we obviously make sure that this progresses so that we do not get obstacles that could create a problem. The idea is now that we want to make the deal happen.

A further question on Evo. Can you please elaborate on the number of shares outstanding and how that will change when the Evo transaction is concluded?

So I think the details are in the prospectus. Currently we have about 1.2 billion shares outstanding. I think the issuance that top of my head is about 120 million shares, 124 million shares that would be going to engine. as well as $120 million of cash payment. So the total consideration of $400 million is split 30% cash, 70% shares.

Yeah, this is what is indicated in the prospectus. We're not changing it.

Any other questions? That concludes questions from the webcast, although we do have questions from... Okay, go ahead.

Our next question today comes from the line of Stuart McGuire of Credit Suisse. Stuart, please go ahead.

Thank you. Good morning, gentlemen. I've got three questions, actually. On the growth in retail, can you give us any colour on like for likes compared to what you've built out, given that you said that you're building stations faster in the first half than you would expect it? Second question, on the DRC, can you confirm it's the DRC that's the last country to give you the requirements and the go-ahead? And also, whether your comment on mining means that you're more commercially focused there than you are on retail. And finally, the last question is on lubricants. In a LIFO world, shouldn't that help margin as oil prices increase? I didn't quite follow the answer before. And also, if it's retail, can't you reprice when you need to as opposed to having to wait a number of months? Thank you.

I'll take the first question. So on like-for-like, it's a number we only report annually. So what we can actually say is that it's in line with what we've shown historically. So it's a good mix of what we say, it's pure like-for-like, it's coming from sites open this year as well as sites, you know, the ramp up from last year. So it's in line with what we showed and we're on track there. I'll hand it over to Christian. So the DRC was, yes, the last one.

Yeah, the DRC business brings mining and also commercial and also retail. So it's a nice mixture of the two, or the three, and lubricants, of course. So it's not going to change, but the comment I was making is that DRC is a big mining country, right? So it has massive opportunities, right? So that's why we're interested. And there was another question on DRC? What was it?

Is it the last country to get approval?

Oh, yeah, sorry. Right, sorry. Yes, I mentioned earlier on that we had ten countries, and we have all the authorizations for nine of them. So the remaining one, yes, is DRC. And we're working very hard towards getting a completion on that case. Oh, lubricant. Well, you see, I would love to be able to increase the prices like this without asking anybody's opinion, but unfortunately we have competitors, and they obviously don't have the same supply model. Some of them import before or after, et cetera, so the pricing is not the same. So basically, yes, you can increase your prices, but you obviously have to make sure that you take into account what is happening around you. So as I said earlier on, price increases when there is big, abrupt changes in procurement costs, which basically for us, as we're manufacturers and we import by cargoes, the cycle is about four months stocks for imports. Well, it therefore takes you four months or five months to adjust when there is an abrupt change. and therefore the cycle is different for you compared to the competition. So no, it is not an automatic. You can do it, but then the risk is if the market doesn't follow, you will be hit and you will lose market share, et cetera. So we do it intelligently, i.e. we target the premium products, which we push first in order to recover as much margin as possible, and then slowly, slowly we work down to the lower segments of the products in order to increase the margin. But we do it. It takes six months, as I said. But then once you've done that, the market doesn't like too much fluctuation. So once you've ramped it up, you'll probably keep it constant for a very long time, even when prices go down.

Okay. Thank you very much.

Any other questions? One more?

We do have a follow-up question today from the line of Alex Malloy of Credit Suisse. Alex, please go ahead.

Quick question on unit margins. Can you remind us, is H1 tracking in line with where you expected? And is there anything we should be looking out for in the second half on unit margins?

So you can see H1 is slightly above the guidance because we said we'd be in the low 70s for overall unit margins. We're at 74. I think, you know, for second half, we still stick to our overall guidance of low 72 and also going forward, especially noting that, you know, as you see, the margins in commercial were very strong. In lubricants, they were less strong, although we gave – for lubricants, don't forget, we gave guidance for 550 per 1,000 liters. versus last year, which was 585, I believe. So we did foresee a slight decrease. So in short, we are sticking to our overall guidance for the year and continue to deliver. Thank you.

Any more questions? No? Any more questions from the floor? No? Well, so in conclusion, a very good start to the year. And, well, I would say I've been at the helm for six years. This is the seventh year. Or is it eight? I can't remember now. It is a landmark year for us, you know, IPO and lots of projects and a lot of growth, opportunities, merger and acquisition. It's a fantastic year. We will continue to deliver. It just remains for me to thank you all for coming, be it the ones that are physically here and the others who are on the calls or on the web. Thank you very much for taking the time to listening to me and to answering your questions. Enjoy the summer holiday for the ones who are going on holiday. And see you next time. And I think in the interim we're going on a roadshow as well sometime in September, if I'm not mistaken. So we'll see some of you as well in your different countries. And thank you very much. Bye-bye. Good day.