Good morning, everybody. Thank you very much for joining the results presentation for the financial year that ended March 31, 2026. We are going to do a short presentation just to give you a bit of a flavor for the year under review. I will start off with an overview. Fritz Grobbelaar will go through the numbers. I will end up with a bit of an outlook at the end. From a key performance highlights, I think everybody is well aware of the Rhodes transaction. It increased the number of shares in issue from around 128 million shares to 166 million shares.
By the time the dust had settled, we got down to the consolidation, our share price, which was around about ZAR 140 a share when the transaction was announced, had run up to ZAR 172.78 per share as of March 11, 2026, when we received the Competition Commission approval, which meant that the transaction went unconditional on that day. The auditors have decided that that is the day from which we need to do the consolidation of the Rhodes numbers. Fritz Grobbelaar will share the balance sheet with you later on. You will see that as a result of the move in the share price between announcing the deal and closing the transaction, we have had to take on quite a significant amount of additional goodwill, approaching almost ZAR 1 billion.
That has got a big balance sheet impact for us. We will talk about it later. For the year under review, even though we had to consolidate RFG for 21 days in March, it did not have any immaterial impact on our financial performance from an income statement perspective. The change at the EPS level was no impact, and at the HEPS level, it was ZAR 0.03 a share. No real impact from a consolidation perspective. The results that we will be going through is pretty much the Premier standalone performance, excluding the Rhodes transaction, other than the balance sheet consolidation at the end of March. Going forward, for the next financial year, we will continue to have two operating divisions, for segmental reporting purposes.
We will have the Millbake division, and we will have the Groceries division. The only real changes are that RFG will be consolidated into the Groceries division. We will move some for our Companhia Industrial de Matola, our business in Mozambique. We will move that into the Millbake division because of the nature of that business being very closely aligned and being run as one business unit with our milling division. Just in the past, we showed our multi-year results, with the base year prior to COVID, which was 2020. Given that we are now reporting our fourth set of financial results as a listed business, we decided to now focus on our performance since listing. Since we have listed our business, the four sets of annual results that we have announced, our EBITDA has grown by 16% compound growth rate from ZAR 1.5 billion to ZAR 2.7 billion.
Our margin has gone from 10% to 13%. At operating profit level, the CAGR compound growth rate was 23%, growing from ZAR 1 billion to ZAR 2.3 billion. Our earnings per share CAGR over this period was 38%, with headline earnings per share growing compound growth rate of 28% and our ROIC going up from 15% to 28% and return on equity up to 33%. Especially the ROIC and the ROE numbers are on a Premier standalone basis. These ROIC and ROE will reset downwards as we bring the balance sheet of RFG on at year-end without really bringing on much or any of their financial performance for the year from an income statement perspective. Just at a glance, our Millbake division bread market share, according to DataOrbis, which is a reading for market share excluding SPAR, is up to 31% now.
We are continuing to operate with 13 bakeries at year-end. Subsequently year-end, we have closed down Hermanstad, so our number of bakeries has actually declined to 12. As we sit here today, the maize milling and the wheat milling footprint and the beverage plants have all stayed the same over the year. The division accounted for 81% of revenue, and our wheat market share is slightly down from last year to 35%, but our maize market share is up from 14% to 18%. Obviously, these market shares vary from time to time, especially depending on who is driving what promotional activity within the formal retail sector. From a Groceries and International perspective, accounting for 19% of revenue, it is basically our candy and our personal care business. From a candy market share, we are around pretty much 14% around where we were last year.
If you include all our product lines that we do for Woolworths, then that market share goes to around about 20%. On the feminine hygiene side, pretty much static market share over the last year. Not much change in that market space. J ust adding the culinary division now, Premier Culinary has 14 factories across the country and in Eswatini, with 6 sites in the Western Cape, four in Gauteng, one in the Free State, one KwaZulu-Natal, one in the upper Eswatini. Then the very small farming operation in the Western Cape revolving around the Ayrshire milk herd, which we are very far advanced to actually moving to other farmers and we exiting the farming operation itself there, and will all be done before the end of our interim results. Then we continue to have the pineapple farming operation in Eswatini.
From a CIM perspective, pretty much a similar footprint as we had last year. Just at a glance, the dots have gotten a lot more. I think the big thing for us now is that we now operate 44 manufacturing sites across the combined business with another 28 distribution operations or depots. Covering pretty much national footprint, especially where the people are located within the country. Focus on use of capital allocation within our business, especially with the RFG acquisition, we have significant opportunity for investment in that business unit. We are quite well advanced in terms of identifying various investment projects that are being scoped at the moment. As we progress with those, we will share them with the market.
Needless to say that a similar style of investment, of consolidation of operations is available to us across the footprint to drive scale and improve the profitability of the business going forward. In total, Premier has invested ZAR 2.9 billion now in the last four years since listing, and we certainly see more opportunity to continue on that investment track going forward. From a capital structure perspective, as debt has got more expensive with the war in the Middle East, we continue to focus on driving down our debt. We have inherited some debt with the RFG acquisition, and we are in the process of extinguishing that debt with the cash flows and to further drive a reduction in our interest cost for the year.
We certainly think that we will be in a position to pretty much get down to the 0.5x leverage ratio going forward, which I think is a level that we feel comfortable with. It provides enough capital available to us should further opportunities arise organically or from an acquisition perspective. We have initiated a share repurchase program. We are not allowed to do general buybacks during a closed period. We acquired 1.8 million shares in March for a consideration of ZAR 322 million. As we have more free cash available, having satisfied the first two items on this list, we will look to further buy back shares and especially looking towards extinguishing the dilutive effect of the A and A1 share conversion that will happen next year. Lastly, our dividend payouts, because we've got a fixed ratio of 30%.
At listing, we guided that we will pay out 30%-60% of diluted headline earnings per share. As our profitability has grown, the dividend payouts that used to be just over ZAR 200 million has now moved closer to the ZAR 600 million level, even though we've maintained the same payout ratio. For the foreseeable future, I think we're quite comfortable around the 30% going forward until we decide that there's something different we need to do. Just from a this year perspective, you will know that we did a special interim dividend just to align the dividend payout time frames between RFG and Premier so that none of the shareholders were not treated equally. Our final dividend that we declare is ZAR 1.82 per share that will get paid in July this year, which will bring our full year dividend to ZAR 3.41.
From a Millbake perspective, it was another strong performance for our business. Our bread business has continued to perform extremely well, running highly efficiently with the Aeroton bakery coming on stream. That has allowed us to shut down the Hermanstad or Old Pretoria bakery. We also had the benefit of lower white maize prices in particular, that has normalized trading within our maize business and seen some volume pickup during this year as a result of that. Our focus remains on tight cost management and efficiencies for the next year as well. I think the big thing for us that we monitor quite closely as well is the continued brand power scores within our bread business.
It's something we get evaluated once a year. We are very proud of the fact that we've managed to really step change the strength of our bread brands in the minds of the consumers over the past four years. Our Groceries and International, our HPC business is continuing to focus heavily on getting the cost efficiencies through from the investments that we've made around our automation in packing on our pads line, the new liners line that we brought in from China with automated packing line, and the semi-automation around the packing of the various sanitary products into boxes. Also our tampon manufacturing, where we've continued to bring machines that we own, but that was located in Taiwan, across to our factory in Durban, relocating those machines and driving up the throughput of our factory.
We're up to eight Rudly tampon manufacturing machines in our facility. I think we're starting to see the first starts of that best cost manufacturing and lowest price point on our product line starting to come through. From a U.K. perspective, we continue to see a decline in the tampon product segment. We've done quite big inroads into growing ancillary ranges within the feminine hygiene product ranges. The other product lines are slightly less profitable than the core tampon product segment. Even though we've shown good volume stabilization, we did see a little bit of a decline in the profitability of the U.K. business in the last year. We're confident that we've got a lot of initiatives underway and we certainly have seen a good start to the year in that business, to the new financial year.
From a sugar confection perspective, we're really proud of the massive achievement that the business has gone through to onboard all of the Woolworths chocolatine lines in particular. We had to onboard 151 new products, many of which we'd never made before, and get those through onto the Woolworths shelves. To the end of last calendar year, we've launched the Woolworths licorice lines following the investment in the new licorice manufacturing facility. That business is really seeing good positive growth in profitability coming through as a result of the onboarding of all of that product lines. Focus for us there going forward really is around putting a little bit more emphasis on our own brands after we've really had to focus hard on driving the Woolworths business. From a Mozambican perspective, the country remains extremely challenging.
The business continues to be profitable. We certainly are not seeing the performance out of that operation that we think is possible. We'll just keep on watching developments around the gas field developments, in particular in Mozambique as the investments there ramp up, especially with renewed focus as an alternative supply vis-à-vis the Middle East. From an ESG perspective, this is part of the way that we run our business. It's not something we do on the side. We've always believed that you need to earn the right to operate in the communities where we sell our products. People have a choice of product, and it's only the extent to which you put back into the communities that communities should allow any company to sell their product into those communities.
Across the various businesses, we've got massive product donations accounting for 29 million meals that we have served in the last year. We have done a significant amount of work, especially in the Eastern Cape rural areas, around water supply for the communities, where we have sunk boreholes and put up tanks and pumping facilities to supply water to communities that did not have any running water. We run various large water trucks to distribute the water to the various areas. We have been involved with Bread for Bricks, where we have delivered four homes during the past year to people that have been waiting for decades to have their own home.
All our accreditations are continuing to drive very hard. ISO 17025 is a very proud one in particular, because we are the only company in South Africa, other than the grain laboratories, that have this certification. Our commitment to investing in our people from a training perspective, et cetera, has continued during the past year. Over to Fritz Grobbelaar for the financial performance.
Thanks. Good morning, everyone. Thanks for joining us. It is a great privilege presenting such a great set of results. Another proviso, just remember some of these numbers. The income statement has got a few days of the RFG numbers in. It is because the deal was unconditional on the 11th of March. So we are sitting on 21 days of the income statement and cash flow, but at year-end, we have got the full balance sheet on. If we look at the revenue, the Premier Group delivered a great set of results, recording ZAR 21.2 billion of revenue, which represents a 7% increase year-on-year. The continuous focus on increasing our operational efficiencies as well as our cost containment culture, coupled with improving of the logistics platform, culminated in an EBITDA of ZAR 2.8 billion. This is an 18% increase year-on-year.
Our EBITDA margin has also seen an uptick by 130 basis points from 11.8% to 13.1%. With the depreciation and amortization declining slightly by 3% year-on-year, we have seen our operating profit record ZAR 2.4 billion for the year. This represents 23% year-on-year increase. The margin in this instance has increased by 150 basis points all the way up to 11.1%. Our continuous focus to chip away at debt, as Kobus mentioned before, has reduced our interest for the year by 28%, and the impact of that is that our net profit for the year is ZAR 1.6 billion, which is 29% up year-on-year, and the margin has also expanded year by 130 basis points all the way up to 7.4%. In March, we guided the market with the voluntary trading update that we expect earnings per share to be up by between 20% and 30%.
The actual for the year, this is including RFG for the few days, earnings per share sitting at ZAR 11.92, which is 27% up year-over-year. Headline earnings up 28%, which is ZAR 12.04. We are also declaring a final cash dividend of ZAR 1.82, which is 30% of dilutive EPS. That brings the total dividend that's going to be paid for this year to ZAR 3.41. The increase in EBITDA, as well as our disciplined working capital for the year, has culminated in cash generations from operation of ZAR 3.3 billion. That's 40% up year-over-year. We've also managed to buy back ZAR 322 million of shares in March.
As Kobus previously alluded, that was 1.8 million shares for that period, we'll use that for our A and A1 dilutive shares for the next year. We continue to chip away at debt. We paid another ZAR 429 million voluntary debt during the year, which was a portion of the RFG debt as well as a portion of our long-term debt. This slide is quite key for me because it's got the Premier standalone numbers in what it would have been if the RFG integration wasn't in at that stage for the few days. Premier standalone, ZAR 11.92. Post RFG, also ZAR 11.92. EPS, ZAR 12.04 versus ZAR 12.01. Group leverage ratio was 0.5 on the Premier standalone business. That's increased to 0.8.
Again, like Kobus alluded, we'll chip away at that in the next year, making sure that that is reduced back down to the 0.5, which has always been our aim. The ROIC heavily impacted from 27.7% down to 17.6%, and very similar with ROE of 32.5% down to 19.6%. We report in Millbake and Groceries and International. Millbake has always been our biggest division, that will decrease with RFG for the next year being included in Groceries. The Millbake division for this year has seen 5% revenue growth, of which all is contributed to volume. That's all the way up to ZAR 17.3 billion of revenue. The EBITDA has also increased by compound growth for the last few years, all the way up by 18% to ZAR 2.7 billion for the year.
With our focus on increasing our operational efficiencies, we've seen our EBITDA margin expanding from 11.6% all the way up to 15.5%. Compound growth on operating profit has increased by 22% over this period. Groceries, again, like I said, that's a smaller division at this stage. For the year, we've seen revenue growth of 13.5% all the way up close to ZAR 4 billion of revenue. EBITDA margin has increased significantly by 30% from ZAR 233 million to ZAR 302 million. If we just touch on the divisions there, HPC struggled a bit during the year in their own formal retail markets. They had to go and develop new markets, which helped with that. The candy business has done very well. It's bedded down all the Woolies products, as well as the licorice line, made sure all of the stock is on time and in full on shelves.
EBITDA margin has increased from 6.7% last year all the way up to 7.7%. We expect it next year with RFG or culinary being included in this, that the EBITDA margin would see an uptick as well. The next slide is the headline earnings waterfall. It consolidates between EBITDA and headline earnings with the three key items sitting in here. Depreciation and amortization, 3% down year-over-year, all the way down to ZAR 430 million. Net finance cost, a reduction of 28%. That's a result of continuing to chip away at our debt. That's sitting at ZAR 221 million. The taxes increased by 38% as a result of the increase in the earnings. Okay, cash flow. Cash flow from operations, we've already spoken about it, the ZAR 3.3 billion that's generated. With that, we paid ZAR 222 million of finance cost, ZAR 520 million of tax, ZAR 570 million of dividends.
That dividend is the 25-year dividend, plus the special interim dividend that was paid in January this year. We've also spent ZAR 1,022,762 on CapEx. Of that, ZAR 762 million is for expansionary CapEx. The rest is for maintenance CapEx. We'll touch on the CapEx slide a bit later on. We've already spoken about the debt that was repaid, the ZAR 322 million of shares that was repaid. That then leaves us with a closing balance of ZAR 673 million. Our cash flow conversion for this year is sitting at 92%. That's above the average of 76% for the last four years. Okay, capital expenditure. Spoken about the numbers, ZAR 1,022,762 of CapEx.
It was spent ZAR 762 million towards expansionary CapEx. That was to conclude the Aeroton B akery, as well as a few other Millbake projects, as well as bedding down the packaging solution in HVC and the liners line bedding that down. The percentage to revenue has increased from 3.7% on the previous year all the way up to 4.8% for this year. The last slide, the debt breakdown. We've spoken about the gearing. In 2021, we were sitting at 1.9x geared. That's reduced all the way down to 0.5x pre the RFG acquisition. Post RFG acquisition, it's up to 0.8x percent.
During the year as well, we've returned ZAR 893 million cash flow to shareholders, which consists of share repurchases of ZAR 322 million and dividends of ZAR 571 million. We're sitting at this stage with ZAR 1.5 billion of RCF facility that's available to be drawn if and when we need that in the future.
Right. I'll conclude with the outlook. Couple of points. We've spoken about the onboarding of RFG. As we sit here today, we have made significant progress with the incorporation of that business into the Premier world. Our teams are working together, our sales are integrated, our HR policies have been rolled out to a large extent. Our various training and people agenda items are underway. We're busy with climate creation workshops for Stronger Together to make sure that the people culturally integrate well with the rest of Premier. We are rolling out INVOCOM, which is our methodology for how we run meetings within our manufacturing facilities in particular.
We also have got scorecards within the culinary division to the head of department level within all the factories for this year so that people know what the key performance items are by area that they need to focus on in order to contribute to our performance. We've obviously managed to get rid of a fair amount of cost around the resignation of the RFG board, together with the savings on listing costs, et cetera. Those savings has already been effective from the 1st of April. We've integrated our insurance programs and managed to save quite a bit of money on our combined insurance program. On July 1st, our merchandising service providers will be merged onto the Premier platform. The whole of the combined business will be on Pack & Stack from July 1st.
We foresee quite a nice savings in terms of merchandising coming through from the consolidation of those operations. From a procurement and logistics perspective, procurement is underway and we've already harmonized a lot of the procurement, especially where there's overlaps in procurement of the same products between the businesses and starting to come through with the savings there. On October 1st, the bulk of the long life part of the RFG business will be consolidated onto the Premier platform to integrate logistical operations from, as I say, from October 1st. The integration of the various group services is underway. We will start to push our Premier's ERP system, Dynamics Great Plains, into the RFG business. That will probably take us 12- 18 months to fully integrate all 14 manufacturing sites onto our computer systems as well.
We have seen the substantial increases in fuel prices. Premier has taken pretty much across the board price increases of right about 5%, most of it effective from April 1st and some of it effective the 1st of May. We have already done what we needed to do in terms of starting to protect our margins from the erosion of the cost pushes that's come through. Unfortunately, the inflationary effect is not limited to fuel prices, but it immediately hit all packaging materials as well. We were forced to actually just push those costs through into our pricing. From a soft commodity perspective, wheat, rice, maize, the world is awash in commodities at the moment.
There is the super El Niño that's been forecast to start during our summer season, and we have taken some steps to make sure that we have secured all the necessary grain that we need and protect ourselves should pricing start to run away. From a SARB perspective, we are really at a point where it's difficult to see how the wage increase expectations are going to meet the SARB's 3% requirement. We certainly are not able to settle wages down at that level. I don't think that anybody in business in South Africa will be able to do that. We will keep on watching what the SARB does around the 3% inflation target.
We said, given the cost of capital expectations, I think now with the potential of the war ending since the weekend, one can always have a look at how that goes. We certainly have indicated that we'll continue to reduce our debt down to the 0.5x level and get the benefit in our EPS from lower interest cost. The Aeroton Bakery, the second line was commissioned in March, the first one January. We are still working on getting maximum throughput and efficiencies. It takes us up to 12-18 months from when we commission a new line until we have it running optimally. That process is underway within our Aeroton Bakery. From a international business within culinary, that's the Tulbagh facility that does the food canning for export and the pots and burettes into the international market.
The prior year's marketing season was a very turbulent time when South Africa was slapped with a 30% import duty into the U.S. in particular. That has settled down into the 10%-12.5% flat rate environment, where the differential in the import duty into America, in particular between us and Europe is also no longer that significant. We do foresee that, in general, we think that the international business could do slightly better in the next marketing season than the prior year. From a sugar confection and personal care perspective, it's all about driving the efficiencies through the new machines that we've put into those facilities and really getting the benefit of manufacturing all of those products at the lowest cost that we can possibly get to.
From a CIM business, we have made good strides in terms of leveraging our capabilities within Mozambique into a wider SADC market. We produce pasta there that we now distribute throughout SADC. We have got five biscuit lines there that are making very good quality products, and that have also started to make a number of SKUs for Woolworths in South Africa. We will continue to drive a broader SADC market for the Mozambican business as we look towards a potential normalization of that economy down the line, if the gas developments can steady the ship. In conclusion, I think it's a long runway for growth. Since listing our track record on earnings, growth has been very strong, and we certainly, as a management team, are committed to drive that exact same performance over the coming years.
We've shown, I think, the market that irrespective of volatile input costs, grain prices, KZN riots, international wars, name it, that we've managed to find ways to keep on driving non-cyclical earnings growth over time. We've certainly, in our perspective, done our part to invest and make sure that the CapEx that we put in continues to drive a higher return on invested capital as we utilize the platform that we've got to put high yielding projects and capital investment on top of that, and get the benefit of the scale that we can operate at. We certainly, from our perspective, feel that with the RFG acquisition in particular, it's given us a lot longer runway in order to continue to invest and drive a higher return on the capital that we have invested in the business. From a balance sheet perspective, we remain strong.
We're conservative on the use of debt. I think that it gives us financial flexibility to go after opportunities if more were to arise in the future. Our free cash flow generation has been very strong. In the last year in particular, I think our cash generation has benefited from the savings and working capital from the reduction in grain prices. That has helped us. Yes, I think from our perspective, we feel optimistic around our ability to continue to drive the performance of the business into the future. That's it from my side and from our side.
There's a whole bunch of appendix slides that gives more information, that is uploaded on our website, and available to all the shareholders. We also will upload the recording of this presentation, if anybody wants to view that afterwards. We will now open the floor for any questions from any of the shareholders.
Cool. If anyone's got a question, you know the drill, please raise your hand. I'll get the ball rolling. Firstly, Kobus, first of all, just to say what an extraordinary set of results. Just a couple of call-outs for me. The 5% volume growth in Millbake, the strong margin expansion in both divisions, and particularly extraordinary cash generation and using that very sensibly to increase the dividend and to buy back some shares. Perhaps maybe a little bit of a lighthearted one. What's going on with Chuckles? Are you now doing the red Chuckles as well? Clearly that's an area of lots of growth and excitement in the business.
Anthony, yes. In terms of the Woolworths chocolate ranges, we do all the chocolates under the Woolworths brand other than the Red Chuckles. The Red Chuckles has always been manufactured by Mondelez or Cadbury. It was not part of the Kiersey buyers stable. I think that we are certainly, in our mind, have R&D processes underway in order to get the right technology in place in order to make sure that we can deliver the same quality going forward. It is something that we will pursue over time to see if we can't make that for Woolworths and complete the whole range. Until we're capable of doing that, you can continue to enjoy Red Chuckles made by Mondelez.
Cool. Okay, just a reminder, anyone wants to ask a question, please raise your hands. I do have one from Nonchu. Let me just read it out. Oh, it's quite a long one. Okay. Given maize deflation, which supported FY 2026 volumes and margins, what level of Millbake EBITDA margins should be considered sustainable in 2027 if grain, fuel, packaging costs rise? Obviously, you've spoken to the 5% price increase already. How much pricing can realistically pass through without damaging volumes? I think you've partly addressed that, but if we can perhaps touch on kind of what's happening in maize. Just checking this morning, I see Iwisa is available, that the 2.5 kg pack is available in some stores at kind of mid-30s plus. Some of your competitors are above 40.
Has that price deflation trend kind of properly run its course? You've already said you've pushed through the price increases, your 5% across the board, in the maize business generally, kind of what's your sense of the volume price dynamic and how that affects margins?
I think that to cut very short answer is that given that maize at the moment is still trading at between ZAR 3,100 and ZAR 3,300 a tonne, which is quite much lower than we've seen for the last few years, we don't anticipate this 2027 financial year to be impacted by higher maize prices much at all. It will only be if there is any impact, we would look to see how we would manage that business into the 2028 financial year, because I think it's only then that we will see any real impact from that. The cost increases on packaging and diesel fuel and all of those other things have more than been compensated for by the around 5% increase in sales prices across the portfolio. We certainly from this year perspective, don't foresee any margin problems or issue or backtracking on our business.
I'm very comfortable with where we are given pricing. I'm very comfortable with the inflation, I'm very comfortable with maize prices in particular. Wheat prices have run up globally, because we have got a import duty on wheat that calculates off the U.S. dollar price in Chicago, the net effect is that as the U.S. dollar prices have gone up, the duty has gone down. From a wheat perspective, there's been very little inflation within the market over the last few months. I certainly don't foresee any margin issues going forward, Anthony, and we will obviously review that as we go into the next financial year if there are any issues. For this year, we will be fine.
Great. I've got a couple more from Nonchu, thanks for that refresher on the wheat tariff impacts because it's always good to kind of understand just the disconnect between what's going on globally and in Safex. Fritz, I think this one is for you. Can you give us a bit more detail on expected synergy benefits from the RFG acquisition?
Anthony, at this stage, we haven't disclosed the exact number. I mean, it's a working document. What I can say it's probably in the excess of ZAR 100 million kind of scenario-
Yeah
-that we're looking at.
It's definitely material, Anthony.
Yeah.
I mean, we're counting them up as we go, but we're certainly very confident that we should be able to at least get over ZAR 100 million.
Yeah. It's not staff-related, retrenchment-related kind of scenarios. It's synergies and then cost saving somewhere else.
Cool. Okay, thank you. Then post RFG, what is your capital allocation hierarchy between de-gearing dividends, buybacks, integration CapEx, and further growth projects?
Look, I think that organic investment remains our core focus. We have got more than enough opportunities that we feel is well above our hurdle rates in order to drive the continued growth in earnings for the business while returning a good return on invested capital. That is our primary objective. I think we're definitely going to spend more in this 2027 year than we spent in the last year in terms of CapEx. There will be further increase in capital investment, especially as we identify opportunities within the culinary division to also drive further economies to scale in that business. If we do another good year of EPS growth, the payout ratio on the dividend will further push up our actual cash utilization or the amount of money that we need to pay out on dividends.
We don't intend at this point in time to increase the 30% payout ratio at all. We feel that we've got enough organic growth opportunities and investments that we would prefer to prioritize those. If we have any surplus cash over and above our capital needs and just the 30% dividend payout, we will continue to do general buybacks of our shares over the coming months into the next year. We have around about ZAR 1 billion odd plus worth of dilution coming through from the various LTI schemes that's been running for the last seven years. Of ZAR 322 million of which we've sanitized in March, we would be looking over the next 18 months, in my view, to try and get up to that ZAR 1 billion level from a buyback perspective.
Can I just ask a question of clarification on that dilution? Because your diluted number of shares and issues stepped up quite a lot. That's already-
Yes, it's in there.
-covered in the diluted HEPS?
Yes.
I mean-
Yes
-that's in the base? Okay, cool.
Yes.
All right. I've got a few more questions, and lots of congrats on the chat line, guys. Again, it's not just me that thinks you guys are amazing. Okay, one from Sepelelo. "Well done on an excellent set of results. It seems that Aeroton is more than just a new bakery investment. It has the potential to be a structural margin and cash flow story for the group. Could you provide an update on the initial ramp-up process, whether the operation is tracking in line with your expectations? In addition, how do the Aeroton margins compare with the broader Millbake margin of 13.9%? As the facility reaches optimal utilization and efficiencies are fully realized, what do you believe is a realistic medium-term margin potential for that asset, in particular, for Aeroton?
Look, we've never really, at any of our bakery levels, disclosed the level of detail that's been asked in that question. We would be writing the business case for all of our competitors if we give you all of that information, and they are even more interested in it than anybody else. The reality is that Aeroton only came online in the third week of January with the first line, and the second line hardly contributed in the month of March. We're really sitting with not much of a contribution from the Aeroton facility in the year that we've just reported. We expect Aeroton, with the closing down of the Hermanstad Bakery and with the efficiency that are coming through to add meaningfully to our performance in the next year.
I've always said that we as a management team set out to continue to make investments in our business that continues to drive towards double-digit EBITDA growth, which gives us slightly higher EBIT growth with some interest savings, et cetera. We're trying to move towards the 15%-20% EPS growth. That, I think is what Aeroton, if it meets our expectations, then we certainly should see a continued upward march in our growth trajectory coming with the assistance of that facility. It's also not the only thing that we have going, there's other investments across the business that will also drive through.
I think the efficiencies coming through the personal care business, in the sugar confectionery business, and then some of the initial changes that we've started to make within the culinary division, we will continue to see all of those contributing and helping to get us to the performance growth or growth that we would like to continue to deliver.
Okay, cool. Sepelelo, I hope you're happy with that, clearly that the move is still upward. I've got a few more questions, but just before I get to what's on the chat, what am I looking at in this slide with the appendix? Is that licorice, these green strips?
Yeah. That's the apple cables for Woolworths.
Okay. All right. There we go. Okay, I've got a question from Craig. "Morning, all. Congrats on the great results. You mentioned exiting the Ayrshire farming operations. What's the current assessment of the pineapple farming operations and any intention to exit as yet, or are you guys happy to be farmers?
Look, Anthony, if you want to be in pineapple, you got to grow them yourself. We have got a significant amount of contract growers in Eswatini as well, so it's not as if we're farming all of it ourselves. We have land that we farm to grow pineapples, and we have other areas where we have farmers that are contracted to farm for us and that deliver pineapples to us. We also have similar type of setup, where we get contract-growed grapefruit and other citrus that we also can and process in that facility. The pineapple business has been well-performing. It's been good business for RFG over the years. From our perspective, we have no desire to exit that operation. We will continue to look at opportunities to optimize, drive further efficiency, and get better margin and utilization of capital in that business.
There's no intention to exit it. The Ayrshire dairy herd, we're not exiting the dairy business in particular. We used to run an Ayrshire herd ourselves, and then we had five different farmers that we bought milk in from on a contracted basis. All we've done is we've moved the herd onto those five farmers so that they farm the herd. We don't farm it directly anymore, but we still get the off-take of the milk in order to manufacture all the dairy products for Woolworths as we've always done.
Anthony, we are busy with a strategic review on all of the businesses. It's too early to comment exactly with what we're going to do where.
Okay, cool. Got a question from Matt Abba. Congrats on these results. We're going to talk about the dilution issue here, which you've partly addressed already. How many shares would need to be repurchased to offset the A and A1 shares? Do you plan to buy them all back before their conversion? Just in terms of more capital allocation, what level of CapEx should we expect in the next couple of years? Should it be lower due to Aeroton being completed? Perhaps just touch on the RFG CapEx run rates. I think a lot of people might not be aware of some of the details of RFG. Maybe give a sense of what their baseline CapEx is and how that's going to impact Premier's CapEx.
Look, from a share perspective, we're looking at our overall, if you take the fully diluted headline earnings per share, you're looking at a dilution of just over 3% or so in total. In order to actually not have 3% dilution, one would probably need to buy back around about 3 million-4 million shares across the board. I think from our perspective, it's not about trying to match it in particular. I think we just want to continue to sort of massage the impact of that dilution. We're not talking double digit or big numbers. We're talking 3%-4% dilution once those long-term instruments unwind. Just for those that don't know, the A and A1s were issued in 2020. It's been a seven-year LTI scheme that has been running.
It really has been part of how we've driven long-term growth within our organization. From a CapEx perspective on the culinary side, Rhodes has in the past spent around about ZAR 300 million-ZAR 400 million a year in CapEx, with around about ZAR 200 million or half of that being maintenance CapEx and the other half being growth CapEx. From our perspective, I think that we would probably look to step that up a little bit. As I say, it's early days. We start to work on ideas for capital investment to drive performance, and it takes a long time to really consummate the right plans. I always joke with the teams internally to say that it's around about plan 38 that starts to really look like it's something that I want to invest in. We are in that process at the moment.
We are looking at a lot of opportunities. I do think that as we get through and we get the right plans with the right investments, that we will definitely see a step up in the capital investment in that part of the business in order to get those efficiencies through.
Cool. I know we're running short of time, just a couple more. This is Warren from Bateleur asking, "Did Rhodes own the Ayrshire farming operations? That could be quite valuable. Will you look to sell?" Again, Fritz, you did say everything's under review and it's early days. Are there any kind of especially valuable land assets that you'd look to dispose of?
The Ayrshire herd was being farmed on a piece of land adjacent to the processing facilities in Drakenstein there, right next to Allée Bleue and Boschendal and those in that area there. The herd itself is available to see. It's ZAR 15 million or ZAR 17 million worth of cows that sits as biological assets on the balance sheet. That we've effectively now just outsourced the farming of which to the various other suppliers. It's not as if we've sold the herd. We will probably exit the herd over time as we would look for these farmers to acquire those cows from us, it's certainly not a day 1 thing. From a land sale perspective, I have sold very few pieces of land in my 15 years at Premier. I'm not big on selling property.
We do have a lot of the water rights that we have, in terms of the processing of the fruit and the other products at the Drakenstein facility is tied to that land. We can't really, in my view, it wouldn't be prudent for us to divest any of the land, and lose any of the other ancillary benefits that we get from having that available to us. I certainly don't see asset sales as a major area of contribution for value creation in the short term.
Okay. We'll scratch off that ZAR 10 special dividend then.
There you go.
It's not coming. Share prices fall by ZAR 100 if you do special dividends.
Okay, last question. What are some of the execution risks in decommissioning bakeries while ramping up in Aeroton?
We don't really foresee any risk from that perspective. The older bakeries are still being run, they're still being maintained, and they're still available to us. We certainly from our side, we only took down Hermanstad once we had line 2 in Aeroton up and running. We didn't just take it down when line 1 came up. We are conservative when it comes to that. There's more than enough opportunity for efficiencies and cost savings to come through that we don't need to rush the goalie. We'll be prudent and we'll do it in the right timeframe as things develop.
Okay, fantastic. That's us done with questions, thanks for all participating. Thanks to those of you who asked questions. Thanks to my colleague Louise, who put all this together. Thanks to you guys, the Premier Management team. Fantastic set of results, really brilliant. All the best for FY 2027, for the RFG integration, and for all the other exciting projects that you've got. Good luck with the roadshow.
Thank you very much, Anthony. Appreciate it.
All right. Cheers everyone, have a good day.
Cheers. Bye-bye.
Well done, guys. Thank you
Thank you.
Cheers.