Vivo Energy plc

Welcome, everyone. Very warm welcome to our first half results presentation. And thank you for making time on what I'm sure is a very busy week back from holidays to work, and maybe more importantly for some of us, the first week back to school as well. So good luck with that. So the plan for today is we have an hour together, and we'll spend probably about half an hour or so talking you through the results presentation which is designed to really complement the annual report that we released um there's as you will note obviously within that there are some um stump periods and so we will try and uh sort of um make that a little bit clearer for you in the presentation and then uh after that we'll have some time for q a as as the um uh a facility to do that. So any time between now and then, feel free to submit those questions, and we'll try and cover those as we go through. So today you'll be hearing from me, Nimit Shah, and then my colleague Issam Sadiq as well. So Issam, most of you know very well, and he needs no introduction, but I'll take the first half, he'll cover the second half, and then we'll try and wrap it up after that. before we get into it maybe a quick personal introduction so the last time you spoke you would have we spoke you would have heard from from jay glitcher um jay's still very much around and as he will have explained at the time was there within you know in an interim capacity um and so he stays with us as a as a member of the board and also as an investment director within beetle our shareholder so we have you know full access to him and he will be continuing to stay involved with actually a better appreciation of the nuances of Vivo as we go. On my side, I joined Vivo in May of this year and Quick background-wise, I grew up in Kenya. I studied in the UK and the US, and the first part of my career was investment banking and strategy consulting across the globe. But more recently, and more to the relevance of this role, I spent the last 15 years at Helios, which is an Africa-focused private equity firm. And at the end, I was a partner within the investment team. While at Helios, one of the deals I was frankly most heavily involved with was our investment in Devo. So I had the benefit of involvement all the way through from the beginning when we had the initial discussions with Shell and came up with the initial carve out all the way through to building the team and ultimately, you know, the various recaps, refinancings, IPO and the, you know, at the very end, as far as he was concerned, our exit from the business in 2020. So I knew the business very well and joined in May, as I said, and very, very excited to join on a full time basis. This is not a sabbatical or interim position of any sort. And the reason I've chosen to join in a full time permanent capacity is I'm really convinced that the next phase of growth within the company's journey is at least as exciting as the last. And I think it comes with the additional benefit of a really strong platform that we've developed over the course of our time and actually, frankly, from before that. So really excited about the potential for this business. And thanks again for being part of that journey with us as we go through it. So that's my way of introduction. And maybe if we go to the next slide, please. So this is our standard disclaimer. I won't spend any material time on this, but we'll assume that that's read and taken as given. We go to the next slide. So this is, you know, some of the graphics here may be familiar to you from the last time we had this conversation, but really the big update for us today is that on the 21st of May, as we talk about here, we completed the transaction where we acquired NGEN's business, which is really primarily South Africa, but across a number of other businesses in Africa as well. And this won't be news to you because I know the team talked to you about the transaction on the last call when it was really fresh in terms of the approvals and so on. So very pleased to announce that we're now through that process. And I think there's a lot here on this page, but thing I would really stress is that we've now gone from sort of theory to reality, and we've spent the last few months heavily engaged with the team on the ground there. And really, I would say, actually, we're even more convinced about the very significant complementarity of this acquisition in terms of the cross learning. We have a single platform that we created with the massive additional operating leverage that comes with it. And as you probably well aware is really the secret to success of Viva overall is leadership positions and operating leverage across that growth has been grown. And then finally, access to a talented, large, skilled pool of human talent. And that goes both ways, both in terms of the South African resources that we talked about here, but also the ability of of our staff base to you know to help. cross pollinate across both of those businesses, and so you know we we think this adds both scale and also a fair bit of clarity into what we're doing and South Africa, while in the end will be. another piece of our puzzle in terms of geography will be a very important one because there's pretty significant scale there to help anchor many of the things we're doing. So that's sort of the headline. Next slide, please. What does it all look like when you put it together? So if you look at this map, this represents the combined business. It also includes, I should add, in this kind of orangey color, Loubs export markets. But as time has passed, we've done a pretty good job of planting a number of flags in a number of places. But much, much more importantly, the business now has very significant scale and presence. So we're in 28 markets, excluding the Loubs export markets, but 28 African markets. We have 4,000 service stations and with our 6,000 colleagues, we're selling 20 billion liters of fuel and have very significant 2 billion liters worth of product storage capacity as well. And all of that adding up to about a billion dollars of EBITDA across the business, including South Africa. really significant scale business spread across a huge part of Africa. So scale is valuable in the context of the operating leverage point I talked about in terms of cross learnings, but also in creating some sustainability across our business in terms of growth, right? So if there are different kind of headwinds and tailwinds across our portfolio, we're better able to sustain them as this business continues to grow. So that's on the size side of things. You'll see some very small logos here in EnGen and Shell. But in addition to all of this, we've got what is certainly not small, which is leadership positions through those two brands across our business. So maybe we'll go to the next slide, please. What we've tried to do here is admittedly quite crude, but trying to put that scale into some sort of context. And if you look at sales, which is one metric, you know, you could argue that you can use other metrics as well. But if you look at sales of Vivo and the roughly $20 billion, about $19 million of sales that Vivo has, if we were still listed on the JSC, we would be number seven in terms of sales on the JSC. And if we were still listed on the FTSE, we would be well within the top 30 within the FTSE, so around about number 26 within the FTSE. So that speaks to the scale and breadth of our business. We're very conscious that that comes with a fair bit of responsibility as well. And we can talk about what that means in terms of community, in terms of our own kind of risk and mitigation standards around that. But we feel very confident about our ability to fulfill the you know, that that potential that that scale brings the top of this chart. I'll spend a second on it. We're obviously a private company, as are many other very large companies in our market. But again, very crude and and probably excludes many important companies. But again, to give you a sense of scale, according to Jeune Afrique, they did a listing of sort of a survey of large companies in Africa. And if you take that particular snapshot, then we will be the third largest company within Africa. And again, the numbers can be higher or lower, but the key for us is that we have a very large, very scale platform from which to grow. So we go to the next slide, please. What this chart tries to do is, in a very simplified format, explain how we're structured today. So I think the key message from this slide for me is sort of simplicity and clarity. So Vivo continues to be owned by VTOL, so no change there. It continues to be governed by a board, and we'll talk in a second about who's on that board and how they help us run our business. I think it's been hugely, even in the short time I've been With the company, I found it to be extremely valuable as a discussion forum and as a governance forum as well. But that board is then at the governance level. The business is run by Vivo Energy's Exco. And that Exco is responsible for and accountable for the entire portfolio. So NGEN, while you're on that triangle, you will have seen where it was, but it's it falls into vivo energy and it's, this is really important for us because then we get the real benefit of the scale and the cross learnings and the operating leverage that we talked about. And so that's really, I would say the key message here is, you know, you're talking to the right people basically, and the business will maintain its combination of really centralized in the sense of results and thinking there and the operating unit centricity. So at the end of the day, we want to do is empower our geographies to be able to deliver and to do that in a way that gives them full responsibility. So that's on the operating structure. Next slide, please. Maybe drilling into that governance structure and the board. As I said, we have the benefit of a board that has the time, attention and capability to really help us as we as we develop, develop and we keep that conversation extremely thorough to be able to continue to do that. But if you look at the board, there's really, I would say probably three groups on this board. So the first group is the two executives, so the CEO and CFO, Stan and myself, Stan, you will obviously know from these prior sort of discussions that Stan is a really sort of an industry veteran. And I would say veteran in both senses. One, he understands the industry, the oil industry and the downstream industry in particular extremely well. But equally importantly and equally thoroughly, he has a very strong appreciation for Africa. He spent a lot of time living on the continent and has a strong interest in it. So I think that I found to be a found him to be a great person to work alongside and work side by side. And I think that's been, it's going to be a very important factor in our success going forward, I would expect. So that's on the executive side. The second group of that three that I talked about is VTOL directors. And so that's Chris Bake, Jay Gleacher, and Matt Stacey. And here what I'd say is I think what they're able to offer is very, very good value-added input into what we're trying to do. So Chris is a senior member of the board at VTOL and is able to help us put pieces together as we go through that and hugely experienced and has really seen everything that we need to see to be able to help us navigate. Jay, you know from prior discussions, he resumes his position at VTOL and as a board member and is extremely helpful in helping us helping us in that capacity. And Matt is a head of middle distillates at VTOL. And again, a huge supporter of what we're doing and very helpful as we think through many dynamics, including supply. So that's the second group. The third group is really represented by Selim. And Selim is the former CEO of Petro-Afisi, which is a very large Turkish downstream business. And He knows everything there is to know, frankly, about our industry and is able to help us navigate that. Obviously, very much in the case of commercial decisions and strategy, but equally importantly in how we protect risk and how we manage that. So, for example, he chairs our audit committee and is heavily involved in helping us ensure that we maintain a very strong kind of clean bill of health as we go about that business. So that's our board. And as I say, I think we have a strong governance framework. And we've tried to be as diligent as we can be in maintaining that and not letting any of those standards slip at all. And we feel very proud of what we're doing there. So let's go to the next page, please. So the other side of governance, and I alluded to this earlier in terms of our responsibility in the markets that we sit in is, of course, our commitment to sustainability. And you will have heard perhaps in the past a little bit about the way we at Bevo look at sustainability. And I think the first thing to state is, before we get into the details, is kind of where this comes from, right? And I think we're conscious that there's a bit of a market requirement for this. But for us, the first thing we're trying to solve for is, How do we add value within the communities in which we operate? And then secondarily, how we can then start to market that. And that's pretty intrinsic to what we do. We think it matters to our employees. We think it matters to us, matters to our stakeholders, and ultimately makes us better at doing our day job. And so it's not a side hustle for us in any sense. Having said that, the lens with which we look at this is, people, planet, and partnerships. And there's a lot going on in each of those. On the people side, it's really investing in our people. On the planet side, it's minimizing impact on the planet. And finally, on partnerships, it's really supporting partnerships, often within our local communities. Maybe to bring some of this to life, I'll point to two or three specific things that we've done in this last half to talk to that. I think the first one is on health and safety. So HSEQ, where we've had an excellent first half results and we've achieved goal zero yet again, which means total recordable case frequency, lost time injury frequency, spills, and life-saving rule violation scorecards have all recorded a zero, which is fantastic and a good outcome for us. We're obviously very conscious about making sure that that data is clear and not just left to people's interpretation at all. That gets monitored very carefully and we will maintain that, but also continue to maintain the rigor of that reporting. A second one maybe to point to is on the clean cooking side. As many of us know, within Africa, you have the dual challenges of continuing to develop and using energy to do that. and trying to minimize the impact of that on the areas in which they live, often being at the front line of some of these climate change issues, for example. And so in May, we announced that as a combination of Vivo and VTOL, our intention to invest $550 million by 2030 in the infrastructure needed for cleaner cooking solutions in Africa. And again, that is, as I mentioned earlier, is not a sort of sideshow for us, but really intrinsic to how we run our business. And we think actually done right and invested it correctly can be a very high return on investment opportunity for us as well. So really sort of a win-win opportunity. And then the third highlight from this page, related to this page rather, from our business is with regard to South Africa. So as part of the engine transaction, we've committed to very significant investment in South Africa and with a specific focus on significant additional investment into solar projects in the country. Again, we have the benefit of a market that has both scale and in many ways is globally quite advanced on the solar in terms of kind of solar development. And we intend to be a big part of that as we grow. And so each of these initiatives has many levels to it. And, you know, obviously very happy to To engage with you if you'd like offline or otherwise on what else we're doing and we're doing huge amounts of things across each of these areas, but wanted to point out just a couple of. Okay, so we can go to the next slide and turn to results, please, so I don't want to steal too much of some Sunday he'll he'll go through the detail of the results in a second and talk you through that but. Maybe a little bit the punch line to all of this is is expressed here is we've had a very strong strong first half results across our business. And it talks here about economic recovery. That's clearly a big part of it. But I think an equally big part of it is our continued commitment to investing in our business and doing so in obviously high return on investment projects, but that deliver growth and allow us to do that in a secular cross cycle way. Now, to help interpret that, and you'll notice in the annual report that there's a stub period for NGIN, NGIN here representing just this last transaction with NGIN and not prior NGIN countries, which are already there. But in order to allow us to really kind of interpret these results, the green bars here strip out the effect of NGIN for that stub period, the May through end of June period. And if you look at those results, which therefore are kind of standalone, then you see that volume grew by 13% versus the same half last year, so H123 versus H124. And adjusted EBITDA grew by 51% over that same period of time. And so we're very, very proud of those results. And I think this gives us a strong basis for kind of basically could run up in inertia going into the next wave, which will include engine. And again, to give you some context, the other number we've shown here is the one in blue, which is had we completed that transaction at the beginning of the year rather than May, what would the numbers have looked like on a pro forma basis, including the business that we now own? And you see here that it's about 10 billion liters of fuel and over $500 million of EBITDA, $508 billion of EBITDA. And so again, huge step up in terms of our business. And while we don't have that data here, the engine business itself is also growing. So it's not like we're taking on something that's not growing. But that's the hugely powerful performance and, as I say, a really strong inertia as we get into the next phase of our growth. So if we go to the next page, please. I think what this slide tries to do is we talked to you in the past about our strategic focus areas, and those remain broadly unchanged. Obviously, we're continuing to evolve new business models on the solar and new mobility side. But again, retail continues to be a big focus, non-fuel retail as part of that is key as well, and commercial fuel and LPG being big growth areas alongside retail. So that focus continues. What you see on the right-hand side here is something that we're very excited about, which is that the NGEN transaction really enhances and complements what we're trying to do on each of these. And so I'll talk through those. I won't go through every single point here, but to give you some context for that. So on the retail fuel side, 1,300 additional service stations to what we have, and with the market-leading NGEN brand. So NGEN is a strong brand in its market. Shell is a strong brand in its markets. lucky to have both of those. We have the additional benefit of owning the engine brand and the potential that that brings as that evolves. So that's one. On the non-fuel side, well, for a start, Engen doesn't call it non-fuel because it's such a well-established business for them with high penetration, 800 convenience retail and quick service restaurant outlets. And so a really interesting portfolio from which we will learn a lot within the Vivo business and where we can also apply some of our learnings elsewhere. It's a pretty big boost to the retail business overall. On the commercial fuel side and lubricant side, again, very significant additional scale, which we can use to optimize it and grow our business. And then LPG and solar, These are markets that are quite well established and where, again, we have massive growth to come from the business that we've just acquired. So I think across the board, it's complementary to what we're trying to do rather than just a nice acquisition to which we can run independently. It's really the opposite of that. Next page, please. So this is really the last slide in my section. After that, I will turn to Issam. We'll talk you through, as I said, the results in detail. But before I hand over to him, one thing I wanted to state, and I think this chart tries to illustrate that, is that while there's a lot of newness, a lot of new, exciting growth, evolution of our business, and so on, I think what's equally important and very encouraging for us is that the fundamental tenants to our business continue to be the same. And frankly, they're the same as the ones when we first started kind of setting up the business the way we did. And they revolve around these six blue boxes that you see here. On the people side, it's always been this sort of dual effect of very strong, entrepreneurial, performance-driven, OU-centric teams supported by a central function that's not over-specced, but really just helps them do their job. That's one. On the leadership side, it's leading brands and leading market positions across all of our markets. That's really how we want to continue to operate. And by the way, EnGen is the market leader in its market in South Africa and fits extremely well within that context. In terms of growth, we're all conscious of the growth potential within Africa. Clearly, none of these growth lines are always upward sloping and sort of linear. But we think actually investing cross cycle in a secular way in Africa has yielded very strong dividends for us and will continue to do that. From a systems and controls perspective, this we take extremely seriously and has really helped us continue to expand our business in a way that is really scalable. And whether it's the SAP rollout that we've embarked upon, the internal audit, the external audit, the HS, the CQ performance that we just talked about, these are really critical to helping us continue to build our business. heavy investment we made there will continue and certainly personally for me will be a big focus as we as we continue to build the business and then finally governance which really reinforces and supports that both at the exco level uh and at the board level and so these these tenants you will uh you can kind of hold us accountable for these but will remain unchanged as we grow and continue to develop our business, because that's the basis upon which we believe we'll succeed. So with that, let me hand it over to Yusuf to talk a little bit about the results, and then we'll take some questions after that.

Thanks, Nimit. Good afternoon, everyone. So now we're going to cover the financial performance of the group and the context in which this performance was achieved. So next slide, please. So the macroeconomic improvement we've seen in H2-23 continued throughout H1-24. And because of the successful and opportunistic investments we made during the challenging times in 22 and the first half of 23, we're now reaping the benefits through higher volumes in both retail and commercial sectors. Also, improved FX markets and US dollar liquidity helped stabilize fuel supply chain and ensured adequate supply of our markets. Commercial aviation and marine segments continued their strong recovery on the back of the rebound we've seen in tourism and international trade. And finally, we had lower volatility in fuel price during the first half of this year. which reduced the impact on historical costs and therefore resulted in more stable IFRS gross margin. Next slide, please. Here we can see the main P&L indicators showing a significant improvement year-on-year on a like-for-like basis, i.e. excluding the P&L impact of the recent engine transactions. that was completed on May 21st, which means 40 days before the close of H1-24. So again, volumes were up 13% year-on-year, gross cash profit up 26%, and more importantly, EBITDA, adjusted for special items, was at 237 million, or 51% better than the same period last year. On a pro forma basis, and again, meaning that if we had completed the engine transaction on January 1, then the consolidated EBITDA for the first half of this year would have been $508 million. And net profit adjusted also for special items for the first six months would have been $203 million. Next slide, please. So this slide shows the gross cash unit margin. And obviously, as we presented in previous calls, we continue to track that. This is a key indicator for us. And as you can see on this graph, the gross cash unit margin remains strong at $71 per 1,000 liters of revenue, excluding the impact of the 40 days contribution from recent engine transaction. If we include those 40 days of trading impact, The unit margin drops to $69 per cube. But again, this is IFRS gross unit margin, so there is some stock impact in there. And you will see in the segmental performance that on a performant basis, the gross cash unit margin contribution from the engine business is much, much stronger. Next slide, please. So here. In terms of segmental performance retail commercial and lubricant volume progress positively year on year is significant uptake in commercial and that was helped by the aviation and marine businesses as as we discussed previously. As to the gross cash profit. Like for like progression was even stronger. with retail up by 26% year-on-year, commercial plus 20%, and lubricants plus 43%. On a pro forma basis, the gross cash margin of the retail and commercial segment is more than double that of the vivo standard loan. Next slide, please. So this slide shows our capital structure, and I would like to give you some updates on that. So regarding the balance sheet, the total consolidated net debt for H124, including IFRS 16 lease liabilities, increased from 1.1 billion in H123 to 2.1 billion in Edge 124. However, debt cover and interest cover both adjusted for IFRS 16 leases and on a pro forma basis did significantly improve to reach 1.2 times and 7.0 times respectively. Other main updates on our capital structure So we repaid the $400 million term loan with proceeds from a new subordinated shareholder loan, resulting in some savings in interest charge. We exercised the first extension of the $300 million RCF, and that was done in June. So the new maturity of the RCF now is June 27. but we intend to exercise the second extension option in june next year so that we extend the maturity date further to 2028. uh on the rating moodings changed our rating outlook to ba our rating to ba1 with a stable outlook there was no change to the other to the other rating finally important to note that we remain committed to our prudent financial policy with strong governance around capital allocation and credit risk management. We're also focusing on deleveraging and achieving, in the short term, full investment-grade rating. Now I will hand over to Nimet to wrap up. Nimet, over to you.

Thanks very much, Nisam. If we go to the next slide, please. Look, I think the, so I think that that sort of last message on kind of capital structure is obviously important. I think the message I wanted to leave you with at the end is that while we're entering this new and exciting phase in our growth, it's underpinned by some very strong foundations from the previous phases of our evolution. So I was thinking a little bit about what might be a good way to to show it, and frankly, Isam and I were discussing this a little bit, and I think it may be helpful to think about our business a little bit in phases and effectively picking up additional tools for our toolkit as we've gone. So I think the first phase, actually the longest phase, was when the business was under shell ownership. And over many decades, in some cases actually for our business, nearly close to 100 years. And the effect of that first phase was that we were able to have really the best locations and a brand that's really ingrained in the customer's minds as a mark of quality. So often cities kind of grew up around that. And so we were lucky in that we got to benefit from that when we acquired the business. So that was phase one. Phase two was the first phase of our carve out. We were able during that phase to create agile growth focused and locally empowered teams. So we talked a lot about that, but this is a phase of very significant growth. Really this phase construct will then map onto what we've got here. But phase two, as I say, was this carve out from Shell and the growth that we were able to benefit from as we built the business. Phase three was as a listed company where we further bolstered our strong governance standards. We were able to maintain phase one, which was strong brands, strong leadership positions, and strong locations. We were able to maintain phase two, which was growth, and we were able to bolster our strong governance standards and our ability to build on that. And then phase four is where I think we are now. And I think it's where we get to bring all of that together with a very large company with excellent growth prospects in a continent with very rich pickings, but with the best-in-class global standards and practices that support and protect us as we grow. So that's really what this page is trying to say, is that we're a product of our many upbringings, and together we have a business with significantly enhanced scale and engine adding to that in a complementary way, trying for future growth with those strong governance and processes that I talked about, and with a very well-capitalized balance sheet, which is where Isam had left off this presentation. So with that, we'd like to thank you once again for joining us in this session and welcome any questions you might have and to go through those. And as usual, very open to any discussions you want to have either in this forum or later to help clarify anything that requires clarification. Thank you.

And our first question comes from Alexander from GSAM. He asks, hi gentlemen, thank you very much for the update. Nimit, welcome to the company and all the best in your role. Can you please touch on part of engine acquisition financed via bridge loan? I believe initially you were planning to put some debt on engine level. Has it changed or is it something you'll be looking into when refinancing the bridge? Then he asks, any additional colour you may share regarding bridge refinancing? And maybe more broadly, how do you see capital funding structure looking going forward?

Yeah. Hi, Alex. This is Issam. Maybe I'll take the question on the financing. And yes, I, you know, we had to raise some financing as part of the engine acquisition funding and by a bridge and that bridge facility is going to be refinanced, is in the process of being refinanced indeed. Obviously, I think I want to stress the point that there was a significant equity infusion that came with this transaction, which, as you can see on the interim report, a significant amount of cash that we received from our shareholders. So, you know, again, that reflects the way we fund our acquisitions. You know, compared to the acquisition we did in 2019, where probably, you know, two-thirds was was that, whereas for this acquisition, again, we are here demonstrating that we look at funding those acquisitions in a conservative way and making sure that our balance sheet and our equity position is sufficiently strong to support this type of acquisition. In terms of the way and the amount and the quantum of the refinancing, I think it would be probably the amount that we need to refinance would be lower than the bridge facility that we had to raise. And in terms of timing, this is imminent. So it is going to happen in the next few weeks.

Great. Thank you. We're going to take the next question from Dimitri. Dimitri, thanks you guys for the presentation. His first question you have already answered, so I'll go straight on to the second question. Are there any earnouts slash contingent payments as part of the engine transaction? Is there a minimum amount of capex committed to invest in South Africa? And then he asked, what are the plans regarding shareholder loans? 560 million in total. Is it expected to roll over?

But maybe I can start and then we can go through this. I think, so I think the first part on the sort of contingent earn out sort of piece, the answer is, the simple answer is no. I think the transaction is relatively clean. And, you know, the idea is, you know, we... We also had the benefit, if you like, of an extended, not relatively, in absolute terms, extended period of time between signing and closing. And so, as you all know, that helps you sort of flush out some of these things anyway. So I think that's that part we feel kind of okay about. In terms of minimum CapEx commitment, we have an overall commitment in the sense that we want to grow the business in South Africa. I think we'll continue to do that in a responsible way. as we go through it. As I mentioned at the outset, we would like to invest across the board, including in solar within South Africa. And I think that business has plenty of cash flow capability to do that. So there's certainly not going to be any over expenditure within the South African business. I think that's what I would say beyond kind of a commitment. We are committed to continuing to maintain the status quo as far as employees and so on is concerned, but that's really the commitment. And as far as shareholder loans, maybe I'll turn it to Issam. He answered it partly, but he made it. Yes.

So for the shareholder loan, this is composed of two loans, one at 160 that we raised last year to repay the outstanding amount or the drawdown that we had on the RCA. And the second one is $400 million that actually happened this year in order to repay the terminal. So is it expected to be rolled over? We already rolled over the $160 million tranche for another year. And there is a great amount of flexibility there, obviously. We're looking at this also opportunistically because it comes with some savings. If you look at our, you know, group debt today, the real debt that we have is only the $350 million bond with the $560 million shareholder loan that is subordinated to other creditors. So we could refinance some of it at some point in the future, yes. But in the context of the strong EBITDA that we generate and the cash flow that we generate, I think we expect that some of that overall indebtedness, including the shareholder loan, will go down over time as we're going to use the free cash flow that we generate to bring that balance down.

And just as another reminder, if I can remind everyone how to ask a question, if you would like to submit a question, please click on the question icon in the bottom toolbar. There will now be a brief pause to allow more people to submit a question. And our next question comes from Nicholas from Red. They say, Nimit, congratulations on your new role. Nicholas has two questions. The first is, EBITDA and volume for engine is higher than shell, but unit cash margin is lower. Please let us know around the profitability. And then the second question is, what is the capex and growth outlook for the business now? Is latest guidance still valid?

Yeah. Hi, Nicholas. This is Issam. I will respond to that question because when I showed the graph, I showed two gross unit margin, one showing 71, excluding the engine effect, and one, the 69, included it. The 69 is a bit misleading. because it includes only 40 days of trading, and it doesn't give you the true picture. But I would invite you to go to the slide where we show performa numbers and segmental performance. And then it's a simple math, and you will see that actually cross-cash unit margin on a performa basis from the engine business standalone is actually even stronger. So it is very accurate and increases actually So that's for the first part.

So just by way of example on that, if you take retail and you look at the unit margins that Issam had shown, excluding Engen, those margins are $74 per liter. And then including Engen, They are $90 per liter. And so that's for that overall period of time. And so, yeah, again, I appreciate the line is a little bit misleading, just because it takes that number of days. But what we're trying to do there is bridge to to the annual report.

Yes. And if you perform everything and you aggregate everything, so you take the gross cash margin and you divide by the volume, then you get closer to 80, basically, on an aggregated basis. So again, that demonstrates that engine business is really accurate. The CapEx and growth outlook for the business now. In terms of capex spend, if I compare H124 to H123, we are at similar levels. Last year, same period, we were at 71 million spent. And this year, we're around close to 80 million. That's as of H122. So we're at the same level. And probably we're going to have the same lending. Obviously, there are some opportunities that we will need to capture if we have to. and we're also investing on some infrastructure projects. So depending on how this goes, we can land on a number that is probably slightly different from what we had last year, but I think generally we will be in the same range. So yeah, that's on the CapEx, yeah.

We have another question from Nicholas. How will the 1.6 billion current liabilities be refinanced? Can you talk about the moving parts?

The short-term borrowing. Okay, I see. So in the short-term borrowing of 1.6, obviously there is a portion that is related to that bridge financing that we talked about or related to the ancient transaction. So that would be termed out. So without giving precise numbers, this is material amount. So it would be termed out. And so that would become more longer term debt. For the rest, it's actually predominantly working capital facilities that are self-liquidating, meaning we draw down on facilities, we buy fuel, we store it, then we distribute it, we convert it into cash, and then we repay those facilities again and again. So they are self-liquidating, and they will refinance themselves each time we complete the cash conversion cycle. So that will remain as know as it's always been the case yeah and again worth noting that those facilities are you know obviously for working capital but predominantly unsecure so we don't give any security on those facilities yeah um thank you very much and the next question from dimitri from jeffrey

He asks two quick additional questions, if he may. Could you share a high-level contribution by EBITDA of key geographies, pro forma 1.6 billion annualized EBITDA? And then the second question is, what is your dividend strategy going forward? And when do you expect dividend payment to resume?

Yeah, so I think... we have to be a little bit careful here in terms of kind of disclosure. We have not shared in the past, right? So I think that what I can do is give you some kind of broad brush on the first question on the dividend, but maybe let me cover the dividend policy for a second. Obviously, as a private company, the dividend policy is something that is much more determined by sort of our kind of shareholder and VTOL. I would say the policy for us on dividends is first of all, making sure that we are thoughtful about capital structure, which Issam already talked about. Secondly, providing enough growth capital within a responsible way to continue to grow the business and over time for the business to be self-funding. I think that's really the focus is to make sure that the business is self-funding. Now, our sense is that the business will be more than self-funding actually as we grow because it's quite accretive and cash regenerative. And then when that happens, we'll think through how we optimize the structure. Again, no sense in having significant additional debt if we can kind of do something better. But I think over time, we'll maintain a responsible level of leverage, keep the business self-funding. And if there's cash flow, then we'll think through that from a kind of shareholder perspective. So it's not quite the same as a dividend payout ratio in the public company world. And so I think from a, I guess, from a net holder's perspective, you should rest easy that we're not gonna try and sort of jam through a bunch of dividends when we recognize that actually the business needs to be self-funded. On EBITDA, Look, I think you can do the math a little bit, right, in terms of if you take the 508 of EBITDA including NGIN that we talked about, and you take the numbers excluding NGIN, it gives you the sense, it gives you the number excluding NGIN being the 237, that South Africa is a pretty big piece of what we're doing. And within NGIN, yes, there's more. Then South Africa, DRC is part of it. And then there's Jordan and Esmeralda there as well. But you should assume that South Africa is a big piece of that. So South Africa will continue to be a big piece of our geographic split going forward. Morocco is obviously a very big contributor, as you know, on a go-forward basis as well. But I think, having said all of that, the benefit I've always seen within FIBO is, you have a number of countries that are both meaningful in themselves and also big positions in their own markets, which then contribute sort of the bulk of the rest of the EBITDA. So I appreciate this is not a full answer in terms of the numbers, but I think it's important that we continue to focus on all the geographies, recognizing that South Africa, Morocco, and then various other countries are quite large contributors to that whole thing. So that's probably what we can set the

The next question comes from Vex from HSBC. He asks, how do you reconcile 868 million of total considerations transferred versus 144 million of H1 net income for engine? Does it imply 868 million slash 288 million PE ratio annualizing without seasonality considerations?

Well, I think the, we obviously, the transaction was priced on something quite different from just a sort of a simple PE ratio and was priced before. I think the 868 of total consideration is correct. I think from a multiple perspective, I don't, you know, that kind of maths is obviously, for you guys to do. What I would say is that it was an attractive transaction from a return perspective and from a multiple perspective. So I think trying to do that maths, yeah, I mean, I think that's, I see where you're going with that maths, I suppose. But certainly not how we price the deal, right? Because we price the deal sometime before that. But the consideration is as you have it there.

Brilliant. And then our next question comes from Alexander, again from GSAM. Please talk about working capital dynamics during the quarter. Cash flow bundles it together to a negative 282 million. Maybe you can break it down somewhat, particularly interested in dynamics observed on government receivables line and meaningful contributors there.

Yeah. Hi, Alex. I can talk to that. Yes, we've had negative operating cash flow coming from changing working capital elements. If I can break it down, there is a reduction in payables, about $100 billion or so. And there is a slight increase in inventory and also a slight increase in some of other working capital items. But generally speaking, with respect to government receivables, because I guess there is a particular focus is we have slightly reduced the position from where we were at the end of last year. But we haven't made a lot of progress. We are hopeful that over the second half, we can make a meaningful change. We're still around 260 million, more or less. Our target was to be somewhere between 100 and 150. This has always been our target. Obviously, it doesn't depend on us. The whole various industries or various industry bodies in the relevant market are lobbying to get that resolved as soon as possible. But we are hopeful that we get some meaningful progress before the year end. Biggest contributors remain Kenya. uh and uh senegal uh and there was a slight uptick and we had some positive moments in some markets like mozambique but a slight deterioration in other markets like like gabon um but but overall i i think we're slightly below what we had uh last year yeah uh so yeah uh again this is this is a slight reduction in payables, increase in inventory levels, and also some increase in other current assets.

So thank you, everyone. Thank you, Rachel. Thank you, everyone, for dialing in. I mean, I think not to repeat too much of what we said, but maybe two messages to leave you with. I think one is this combination of pretty significant larger business with gross prospects and our commitment to continuing to manage the business in a responsible way in terms of governance, in terms of standards, in terms of systems and processes we continue to invest in. I think that's message one. And I think message 2 is, um, while we're now a private company, uh, operating on their kind of a private regime, we're very conscious of our. responsibility and interest in continuing in maintaining the relationship with you guys as our bondholders. And so we're keen to continue to maintain that relationship and we'll keep this going. And of course, if you have additional questions or additional thoughts about what else is front of mind for you, we'll be having these half-year calls, but feel free to reach out to either Isam or me and very happy to engage with you outside of that as well. So with that, thank you very much and I wish you a good afternoon. Thank you all.