Dis-Chem Pharmacies Limited (DCP) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the financial results for the 6 months ended August 2024. I'll start off with a review of the period. I've broken this down into 2 slides, a slide that talks about the 8 strategic growth drivers. Just to recap, the intention of the strategic growth drivers was to prioritize directionally the focus areas of the business. Each of these strategic drivers intends to deliver long-term shareholder value. Just a recap on each of them: property, which is ultimately our ability to deploy space and increase our network; total income, which is the number that we ultimately measure costs against the maintenance of the total income and the incremental improvement; cost control, which is something that the group is focused on and will continue to focus on; working capital management, which the group has highlighted as an opportunity; the wholesale market share expansion, as we think about the market going forward, there will always be an independent part of the market that we intend servicing; our integrated health ecosystem play, which allows us to build an integrated health ecosystem to ensure that we're delivering a lower cost and increased access of health care; our view on digital and how digital plays into our augmented network; and then, ultimately, how we bolster all of these 8 strategic pillars -- or these 7 strategic pillars with an analytic functions that -- an analytics function that enables them. If we move on to highlights, we intend and I intend going through the progress on each of the pillars. All of these will be unpacked further out between myself with Julia or Chris as we run through the presentation. From a property perspective, we've spent the last 6 months on securing resource availability. Previously, we were relatively reactive in terms of how we chase property, meaning that we waited for opportunities. We are very much proactive. And analytically, we are testing certain markets from a size perspective, and we've had to obviously invest in resources to secure that. Currently, the pipeline is at 107,000 square meters. If you recall, we committed to 137,000 square meters over a 3-year period. And that pipeline, if it's broken down into geographies is over-indexed into underrepresented areas, which further gives credibility to the analytical exercise that we run in identifying areas. If we look at total income, total income growth of 10.4% was ahead of revenue growth, which suggests an incremental improvement, which has yielded total income at 50.7%. We will always look to incrementally improve and maintain this total income line, which again is fundamentally important as we measure cost control against it. Cost control, for me personally, this was the highlight of this financial set of results. There's been a big focus on cost management and the centralization of cost decision-making. We deployed Framework 1.0, resulting in positive operating leverage across both the retail and wholesale business. Operating profit, as a result of good cost management, increased by 17.5%. Like-for-like retail payroll cost growth was contained at 0.7%. And Julia will explain in a bit more detail, but conceptually, what that means is we've redeployed heads into new space. And in doing that, which was the intention of Framework 1.0, in doing that, we've maintained positive leverage in the majority of our store base. And what we have in addition to that is the -- or the consequence of that is the reduction per square meter in the invested amount of resource cost, which means that it does shorten the breakeven of our new space and you don't only see the benefit in maturing space. From a working capital perspective, the net working capital position has improved. We now have F&R coverage at 89%, enabling what is fundamentally important in centralized stock management. And I will talk to the improvement of that and kind of our new medium-term target in terms of extracting 10% improvement out of the stock day number as we go down through the presentation. We continue to outperform in wholesale. External wholesale revenue grew at 26.6%. CAGR growth in this area and this business unit has been north of 25% for the last 4 years. And we continue to take market share in what is fundamentally a shrinking market if you think about corporate pharmacy consolidation. Revenue from TLCs, which is our differentiated franchise store model, increased by 21.8%, which was a function of both increased compliance and new stores. And revenue from our independent customer base, which is probably the highlight of the wholesale performance, increased by 30.3%, which Chris will unpack later. From an integrated health care ecosystem perspective, as you know, we believe that the integrated health care ecosystem is relatively disruptive in its nature. The Dis-Chem health policy acquisition momentum was improved and retained. So we continue to see the market that we identified buying into the product and price point that we sell. And we are seeing the benefits of utilizing retail benefits like extra engage policyholders across the ecosystem. And I'll talk to bidirectional integration, which is effectively value add in both the retail and insurance business as we go through the -- as we go down through the presentation. From a digital perspective, I think we've established a position. We want to understand and we want to be digital health care leaders. And we also want to ensure that what we represent in our stores, we're able to render digitally. So as we think about our network longer term, we want to be able -- we want anyone to be able to access digital health care through our platform, which would be web- and app-based in the same way that they would if they were in our stores. I think importantly, and certainly, as we think about the transition from what was traditional retail pharmacy to an integrated health ecosystem, analytics very much sits at the center of this. Our continued investment in analytics function becomes an important element to unlock some of the opportunities that we see across each of those 8 pillars. And I'll talk a little bit about analytics later in the outlook in terms of how it's playing out into new business units like integrated health and how it's augmenting existing business units, which fundamentally were replicating old retail practices. I'm now going to hand over to Julia to take us through the financial results.

Thank you, Rui. Good morning, everyone. The group is satisfied with its strong performance during the current 6-month period and specifically with the implementation of our cost management strategy. The main aspects from a statement of comprehensive income perspective is a revenue growth of 9.6% and total income growth of 10.4%. This is ahead of expense growth of 9%, resulting in an operating profit increase of 17.5%, which we will unpack in the subsequent slides. Three other points to note in the statement of comprehensive income is finance costs, tax and noncontrolling interest. Finance costs have increased in the current period with the Longmeadow warehouse acquisition in November 2023. The effective tax rate has remained similar to that of the 2024 financial year-end rate. Noncontrolling interest increased due to strong performance of minority interest stores and oncology. In the statement of financial position, there is an increase in intangible assets due to the pharmacy operating system and other IT technology that is currently being built, which is a key component to our health care strategy. The inventory balance has increased by ZAR 309 million from February 2024 due to new stores that have been opened and buying of promotional items. The high inventory levels, together with the additional trade terms that have been negotiated, has resulted in a higher trade payables balance. Other assets have increased due to the acquisition of the 50% interest in OneSpark for ZAR 156 million. Bank loans from August 2023 have increased due to the purchase of the Longmeadow warehouse for ZAR 502 million in order to sustain our retail growth. The reduction from February 2024 is due to the term repayments in the period. Revenue has been broken down between the wholesale and retail segments. Retail revenue has grown by 7.1% to ZAR 16.7 billion with like-for-like revenue growing by 4.8%. Retail revenue growth was influenced by the higher SEP price in the current period with dispensary revenue increasing by 10.5%. External wholesale revenue growth has been well supported by the growing TLC franchise model at 21.8% and the continuing support of independents at 30.3%. The TLC franchises have grown from 180 at August 2023 to 221. Total income from the group has increased by 10.4% with the total income margin moving from 30.5% in the prior period to 30.7%. Total income margin has been improved due to transactional gross margin growth ahead of sales growth in core categories and continued improvement in back-end terms with trade terms increasing by 9.2% against purchases growth of 7.2%. Wholesale margin increased from 7.9% to 8.4%. Moving on to retail operating expenditure. With the focus on retail cost containment, it is pleasing to see retail expense growth of 7.4% being below total income growth of 8.5%. There has been a 5.9% increase in depreciation, mainly as a result of IFRS 16 depreciation, the rollout of the new point-of-sale technology in the prior year as well as fixtures and fittings for new stores and renovations. Occupancy costs have increased by 29.5%, predominantly due to increases in municipal charges such as electricity and rates and taxes. Employee cost is still the largest expense within the retail segment and has been well controlled through the implementation of the retail framework. Other operating costs increased by 5.9%, mainly due to an increase in IT-related costs, security and courier costs. As discussed in the year-end results, we implemented a new retail framework in the prior year in order to better manage the employment cost line. Since implementing the framework, positive operating leverage has been achieved with like-for-like payroll costs on a 12-month moving average only increasing by 0.7% compared to revenue growth of 5.1%. As new stores have been opened, payroll cost per meter squared in real terms has reduced by 6.3%, thereby shortening the new store breakeven period. This will enable cost to continue to be managed through our property rollout plan. Wholesale has done well in the current period to keep expenditure growth at 13.2%, which is below the growth of total income of 17.5%. Depreciation has increased by 16% as a function of new forklifts and equipment as well as depreciation on buildings. Occupancy costs have increased by 62.5% through high electricity and municipal charges, predominantly relating to the Longmeadow warehouse. Employment cost growth is due to the additional staff in the Longmeadow warehouse. Other operating costs increased by 12.6%, mainly due to motor vehicle expenses, repairs and maintenance costs, insurance and ForEx. This slide indicates the payroll costs across the different warehouse campuses in the current and prior comparable period. The addition of the Longmeadow warehouse has resulted in the Gauteng campus utilized space increasing by 41.5%, which has resulted in an increase in payroll costs, but a net decrease in the payroll cost per meter squared of 25.1%. Cape Town payroll costs increased with the addition of a night shift in the current period due to the higher volumes through the warehouse. KZN payroll costs have been well managed and remain consistent to the prior period. Operating profit for the group improved by 17.5% from the prior period with operating margin improving from 4.9% to 5.3%, which is a function of the delta between total income and total expenditure in the period. EPS and headline earnings per share for the period is ZAR 0.674 and ZAR 0.677 per share, which is an increase of 15.6% and 16.3%, respectively. We now move to the working capital in the statement of financial position. Debtor days has been well managed and, despite the increase in the wholesale debtors book, has reduced by 1 day to 26 days. Increased inventory held within the group at the end of the period due to the additional stores as well as buy-ins of promotional items. This has resulted in inventory days increasing marginally from 88.1 days at February 2024 to 88.6 days. Creditors days have increased from 93.2 days to 96.2 days, resulting in overall net working capital days improvement of 3 days when compared to February 2024. When looking over the 6-month period, the rolling stock days have improved from 88 days to 86 days. F&R has been rolled out across the group to enable centralization of orders and facilitate the reduction of inventory days going forward. Inventory days is a strategic focus for the group, and we plan to have a 10% improvement over the medium term. The waterfall graph depicts our cash movement in the current period with an increase of ZAR 123 million since February '24. Cash inflows have come from normal trading and working capital movements. And cash payments have been made for taxation, finance costs, dividends declared as well as for lease payments, CapEx and loan repayments. Included in investing activities is also the ZAR 156 million related to the 50% acquisition of OneSpark. Expansion CapEx is mainly driven through the opening of our new stores and investment in technology as well as additional assets acquired for the Longmeadow warehouse. Maintenance CapEx to turnover has remained at 0.7%. I now hand over to Rui to take you through the retail trading performance.

Thank you, Julia. I'll now take us through some of the highlights of the retail trading performance. If we look at the evolution of our core category market share, you will notice that we saw an extended market share gains in dispensary, where we maintain our leadership position in South Africa's largest pharmacy retailer by dispensary market share. This was predominantly fueled by extended market share gains in the scheduled space from 3 to 6. As I've said previously, the ability to capture the script is fundamentally the differentiator between retail pharmacy and certain food grocers, which ultimately are competitors of ourselves. So script ownership and certainly winning the script is fundamental to the longevity of the brand and the business case. And if you think about the importance of script ownership and winning the script in an integrated ecosystem, the ability to then understand the risk associated with our patients and customers, the dispensary market share gains remains fundamental to the success -- the longer-term success of the brand and the business strategy. We did see market share compression in other core categories. This is fundamentally as a result of the timing of our new space rollout. It's well known that South African retail is seeing many, many doors being added. And as I described in the property strategy previously and as I will explain in terms of the pipeline that we've invested in, the importance -- there is a huge amount of importance in ensuring that you roll out economically viable space. And what we've seen as a function of the 7 stores added is slight market share compression across all of our core categories. We don't see any impact to trading density level, but we do anticipate the recovery of that as we roll out additional space, which I will talk through later in the back end of the year and certainly into FY '26, which is differentiated to what we've done this year. One point to note is in the baby care space. If we read Baby City into it, baby care is actually at 15.2% market share. If we continue on core category performance, and this talks to one of the strategic growth drivers that Julia mentioned and I touched on in my highlights, just the importance of maintaining the total income margin number. Two components to total income: the one is terms and the ability to leverage and extract value out of trade terms as we increase our scale from vendors; more importantly, the management of gross margin or transactional gross margin, which is what this slide depicts. I think importantly, if you look at the column on the far left, that is a percentage change in transactional gross margin against the percentage change in revenue. In each of our core categories, we see transactional gross margin growing ahead of revenue as we look at utilizing analytically led initiatives to extract additional margin without sacrificing volumes across each of our core categories. That resulted in an overall result of 7.1% change in retail revenue and a 9.8% change in transactional gross margin, which was further enhanced by additional trade terms, which gets us to the total income number of just over 10% growth for the year. If we move over to the property expansion strategy, as I've described earlier, this is fundamentally important to network growth. I think property expansion influences all of the other strategic growth drivers and really is at the forefront of our ambitions to deliver health care holistically and increase access and reduce cost. A reminder of the strategy that have got us to the 137,000 square meters, there were 3 tactics that we deployed into that strategy. The first one was to replicate Gauteng market share. What we had done at the time is we had looked at Gauteng as a market in isolation to the rest of the country. Gauteng was a market where we have the same amount or the equivalent number of retail square meters against our competitor, and we understood the market share dynamics between ourselves and them. In Gauteng, we had significantly higher both pharmacy and core category market share when we matched retail square meters. And the idea was to replicate that into other markets where we were underrepresented as a brand. That gave us 65,000 square meters of space to roll out. In addition to that, as I've described in the market share slide, when doing -- describing a slight market share compression, the maintenance of market share is also fundamentally important within the property strategy and you have to deploy property, which is economically viable to ensure that we maintain our market share as more doors come into the retail environment. And then the third tactic was simply to ensure that we take advantage of the consolidating pharma industry and continuing to grow our share, which was a slightly smaller tactic by square meters than the other 2. One of the important things is that as we've developed this pipeline, we've obviously, as I said in the highlights, we've taken some time to invest in resources to unlock the ability to develop property at this scale. This year, we opened 7 stores, and I'll talk a little bit about the number of square meters that we've added. But certainly, the space rollout will be weighted towards the back end of FY '25, '26 and into '27. If we look at the progress, if you look at the table, if we look at the progress that we've made and the pipeline that we've confirmed as a function of reimagining how we think about property, you can see on the left-hand side, that denotes the years. So from FY '25 to FY '27 was the period that we spoke about. We've extended this into FY '28 and '29 as, obviously, in addition to the 137,000 square meters, there exists opportunities beyond that. But up until FY '27, some important numbers to note. 107,000 square meters have already been secured. Of those 107,000 square meters, we have deployed 9,000 square meters in the first half of this financial year. Subsequent to the financial year, we've also opened another 4,500 square meters. And there's confirmation that prior to the end of FY '25, another 8,700 square meters will be deployed, getting our annual total in FY '25 to 22,387 square meters. If you look at FY '26, you look at the different statuses, we've confirmed space of 25,372. And in the pipeline, which is either at an office stage or at various stages within the property process, 24,000 square meters in the pipeline, which, by implication, means that we will deliver 50,000 -- or close to 50,000 square meters without any additional work that's being done into FY '26. And the same principle is true in FY '27. Obviously, from a conversion perspective, if you think about what happens, pipeline gets confirmed. So when -- as we deploy into FY '26, there will be ongoing confirmation of the pipeline into FY '27, '28 and '29, and that is how the status evolution will work in property. An important thing here is the property continually keeps growing and converting our pipeline so that we can deliver on the 137,000 square meters, and we continue to deliver on property. As I said, property is fundamentally important to unlock some of the other growth drivers, specifically in the integrated health ecosystem as we get more customers and enable ourselves to potentially sell health-related financial services to them. As we've gone through the analytical exercise of understanding certainly proactively if we understand property, this just gives us a view of the localized progress of our property strategy in terms of the areas in which we will deploy into. You can see in the table, the top table, the 137,000 square meters or 137,900 square meters reconciled to the table above, which was split between confirmed and pipeline. This now splits all of that space across each of the provinces. And the highlighted areas are areas where we've over-indexed the square meters that we've confirmed in the pipeline against actual space that exists in those geographies today. So as an example, the Eastern Cape, today, we have 11,428 square meters on the ground. We anticipate over the next 3 years or over the next 5 years, weighted towards the next 3 years, to deploy another 11,720 square meters, which is effectively doubling our retail penetration in a market where we're previously underrepresented. You can look at the Eastern Cape and reconcile it to the table on the bottom, which we showed historically. That table just gives you a reference of how under-penetrated we were. And so this came in relation to the largest -- in relation to our largest competitor. Our largest competitor had 3.2x more space than we did. And this plays very much into the Replicate Gauteng property strategy. The same can be said about KZN and the Western Cape. If you look at the additional square meters launching into KZN, an additional 80% square meters, so 29,000 on 37,000; and into the Western Cape, 30,000 on 46,000, an additional 66%. Essentially and principally, what that supports is that we are looking for space in the right areas, in the areas where we're underrepresented. And this reduces the risk of colocation and trading density impact. One important point is just to highlight that in the table at the bottom, Gauteng was at neutrality. And this was very much Replicate Gauteng's market share, so it was at neutrality. But if you think about the other tactics in terms of growing and maintaining our share in each of those markets, we will deploy space into Gauteng to hold our share and increase our share ever so slightly. And you can see that Gauteng comes with another 44,000 square meters, which is actually 29% more over the pipeline period that we've disclosed in the previous slide. If we think about the integrated health ecosystem, I mean there's a lot of investment that we've made over the last 3 years, certainly, to deploy both Dis-Chem Health and Dis-Chem Life as a portfolio of products that you can view through a health lens, whose intention is both to increase access and reduce costs and take benefit from the retail asset stack, which contains our dispensary, our clinics and our front shop. I think what we've done differently this year is instead of unpacking certain elements of this, we've tried to denote how we see the integrated health care ecosystem in a video, which I'd like to share with you now and then we'll come back to the presentation. [Presentation]

As you can see from the video, the video gives some context and enlightens the market on the relationship between our retail asset stack, which is our pharmacies and our data ecosystem and, obviously, the financial services that we've brought to market. I think even though financial services, certainly Dis-Chem Health and the soon-to-be-launched Dis-Chem Life is relatively small from a contribution perspective, it most certainly is core as we think about the evolution of product benefit and design to influence and to generate traffic in the retail assets and then utilizing some of our retail assets to influence and manage some of the margin metrics within the insurance part of our business. As I think about bidirectional benefits or bidirectional integration, this is really the interplay on the relationship between the retail asset stack that we have, which are our pharmacies and our clinics as described in the video, and the financial services part of our business, which I described earlier as being Dis-Chem Health and Dis-Chem Life. It is important that each of those respective asset stacks yield value for the reciprocal asset stack. So what I try and do with this slide or what I intend doing with this slide is to show some of the benefits of bidirectional integration and some of the wins that we're starting to see and how that ultimately plays out into the mandate of the ecosystem, which is to increase access and reduce cost to private health care. So if you look at some of the benefits that the financial services part of the business has received from the retail assets, let's first start with summarizing the performance of the medical insurance business. If you look at the graph on the -- or the table on the bottom right-hand side, that shows the evolution of our policyholder base, split between corporate and retail. The corporate book has grown 18% year-on-year from August '23 to August '24. And the retail book, which is Dis-Chem branded, has grown by 120% from August '23 and August '24. That is very much a market that we are educating and building as we're selling into. And we're starting to see the benefits and certainly appreciating the price points that we're putting down in the market and the need for this type of product in the market. Continuing with the financial services benefits from retail. What we also see is 64% lower policy acquisition costs compared to the market. That's a function of us utilizing lead generation ability from our retail assets as opposed to having to source those leads in the open market. So in a way, it's another way of commercializing our database, whose benefit sits in the financial services part of the business. And extraRewards, which is a program that was designed, as alluded to in the video, was designed for policyholder, is driving improved policy retention because of the consistent reminder of the value-generation benefit that extraRewards brings when people shop monthly. If you look at the retail side of the business, extraRewards actually overlaps both. So if we start with the retail side of the business, extra performance. So the way that extra works, you have participating brands on extra. The participating brand spend is up 67% with a halo effect on nonparticipating brands up 35%. So inherently, the basket is up on a blended basis, close on 45%. This is driven purely by an increased shopping frequency by 5 visits per year by our policyholder base. So we're really crystallizing our position in the health care spend part of the wallet of our insurance -- of our policyholders. And that's really one of the benefits that retail is now seeing where you've got this differentiated price point and value kind of benefit stack in extra that comes from our policyholder base. Additional integration benefits that are sitting in the retail business is a function of how we think about benefit design in the financial services business. We've seen 120% CAGR growth in the dispensary revenue from policyholders in the last 24 months. So that is foot traffic coming into our stores where people are getting their scripts dispensed to as a function of being on our policies in our retail stores. And we've seen a significant increase in the utilization of virtual doctor consults since the benefit was introduced in 2023, another perfect example of how an integrated health care ecosystem works where you're designing the benefit stack to encourage foot traffic and behavior into your retail part of the business. I'm now going to hand over to Chris to take us through the wholesale trading performance.

Thanks, Rui. Good morning, everyone. Thanks for the opportunity to present. Firstly, I want to thank God for his grace and blessing hand on our business. Without Him, none of this would be possible. As you have heard, the wholesale division once again had a very successful and blessed trading period in the first half of FY 2025. I want to thank and congratulate my whole team on their dedication and continued focus on driving sales, exceeding customer expectations on service and controlling costs. Results like these are only possible through a team that is passionate about excellence, consistency and continuous improvement. Our customer-centric approach forms the basis of everything we do, and we see the efforts being reflected in the numbers that we have shared. This morning, I will take you through some of the details surrounding the top line revenue numbers achieved by CJ Distribution during the first 6 months of the 2025 financial year. I will be focusing on the main business models driving the revenue growth that we are seeing. As mentioned by Julia earlier, wholesale revenue has increased by 10.1% to ZAR 15.1 billion. Our total income has grown from 7.9% to 8.4%, which is great to see. External revenue achieved a growth of 26.6%. This number will be further elaborated on in the following wholesale revenue slide. If we now turn to Slide 29, the wholesale revenue slide. The table illustrates our wholesaler customer growth by channel with corresponding revenue growth. If we turn our focus to the right-hand side of the table, we can see the independent stores analysis. Independent customers grew from 968 to 1,084, which equates to a 12% growth in independent customer store numbers. Revenue from independent customers grew from ZAR 1.2 billion to ZAR 1.6 billion, which equates to a 30.3% growth in revenue from independent customers. Support from independent customers grew from 22.76% to 27.86%. If we then move to the middle portion of the table, you'll see The Local Choice franchise stores analysis. Franchises grew from 180 to 221 stores, which equates to a 22.8% growth in franchisee numbers. Revenue from TLC franchisees grew from ZAR 1 billion to ZAR 1.2 billion, which equates to a 21.8% growth in revenue. Support from TLC franchisees grew from 76% to 80%. If we then move to the left-hand side of the table, you'll see the Dis-Chem store analysis. Dis-Chem store numbers grew from 316 to 327. Revenue growth from ZAR 11.4 billion to ZAR 12.2 billion, which equates to a 6.9% growth in revenue from Dis-Chem stores. Support from Dis-Chem stores grew from 89.23% to 89.76%. Growth in support can partly be attributed to additional vendors warehouse in the new Longmeadow facility. As you can see, we have seen pleasing growth in support across all our customer channels. This gives evidence to the fact that our sales initiatives and high service delivery levels are bearing fruit as existing customers continue to move more of their spend to CJ Distribution. We are also incredibly proud to see the support from TLC customers reach 80%. Support numbers this high are comparable to the Dis-Chem support numbers despite the fact that the TLC stores are only franchise stores. In summary, the table illustrates the success of our approach to independent customers in the wholesale environment. When a customer joins us, we activate our business processes, which includes sales and marketing initiatives. These drive the buy-in and support. And once the customer sees and experiences the benefits, our goal is to then convert them to a TLC franchise, which has exponential benefits to the franchisee and to the wholesaler in terms of compliance and support. If we now turn to Slide 30, The Local Choice. You should be familiar with the tree concept where the roots depict our inputs and the fruits are the results or outcomes. As can be seen, the group's retail revenue has increased to ZAR 2.216 billion for the first 6 months of the 2025 financial year. This is a 21.8% growth in the group's retail revenue. The TLC customer revenue growth is partly driven by front-shop support and ranging that we as a supply chain offers them. We currently, as of today, have 225 TLC franchise stores. If you now turn to Slide 31, the independent pharmacy model. As mentioned previously, we are extremely pleased with the growth in revenue and support from our independent customer base. This has been an area of increased focus and attention, and it is rewarding to see our hard work and focused commitment bear fruit. If you look to the right of the diagram, you will see the results of our efforts displayed. As you can see, we now service 1,084 independent pharmacy customers. Customer support was at ZAR 1.62 billion over the 6-month period. The most exciting numbers to see is the revenue growth of 30.3% achieved with a 22.4% increase in support, which moved from 23% to 28% from our independent customer base. These numbers were achieved by the core initiatives listed on the left, which we consider imperative to the continued success of the CJ Distribution business model. These are our business processes, marketing initiatives, product range, service levels and a private label range. The gears in the middle represents the operational engine that converts the core initiatives on the left into the results we see on the right. Some interesting stats are that we processed over 332,000 orders on average per month and delivered just under 600,000 parcels on average per month for the 6-month period. Thank you very much for your time, and I will now hand back to Rui for the outlook.

Thank you, Chris. I'm now going to take us through the outlook for the group. You will notice that the outlook is centered around the 8 strategic growth drivers that I previously spoke about in the highlights and obviously the strategy that I delivered previously. The only difference in this slide is the 2 rings or the 2 concentric rings around the 8 strategic pillars. They denote 2 very important strategic projects as we think about the evolution and the potential success of the ecosystem. The first one, the outer ring is brand architecture. I think the task that we are -- that we have undertaken to build out a health integrated ecosystem is quite an audacious one. And importantly, the brand means different things across each of the different business units. We have a very strong brand. There's lots of equity in the brand from a retail pharmacy perspective, and we're seeing that brand play out differently in business units like the financial services space. The brand architecture project is simply a project that is used to simplify and ensure an understanding from both policyholders, customers and patients as to what our brand means and what it stands for within this integrated health ecosystem. Culture, just underneath it. For a long time, I've believed in the importance of our people. People are fundamentally a real, real asset, and they unlock, ultimately, the strategy of leadership. And the culture project was a very inclusive project that we've started. It essentially ensures and gives the best chance of success for the integrated health care ecosystem by incorporating all of our people, including management as well as all of our store staff and our warehouse staff to input on the culture of the group and ensure, through that, to buy into the direction of the health care ecosystem, whose mandate is ultimately to increase access and reduce cost to private health care. If I quickly summarize the outlook for each of the 8 pillars. From a property perspective, as we've said, we had 107,000 square meters over 137,000. We will continue to invest in pipeline creation. We'll continue to grow the 107,000 square meters to potentially over-deliver on the 137,000, and we further invest in team capacity to enable that. If we look at total income, it's been an excellent performance this year. Again, it's very simple, our strategy there is to continue to incrementally increase total income ahead of revenue growth. Also important to be agnostic of the retail rand of revenue that we sell. We had a point in the group where there's very little deviation between the total income delivered by each of the core categories, which means as we think about ranging into smaller stores, we are not compromised by over-indexed categories, be it pharmacy or beauty or FMCG or health. Cost control. Function centralization unlocks the lower level of in-store management investments. That is very much the principle that we will see play out in Framework 2.0. I think as we go into smaller spaces, we need a lower level of investment in management in those spaces. And as a principle of function centralization, F&R being a good example, that allows us a lower level of resource to manage the store in a smaller space, which means that our breakeven points drop as we think about smaller space. And that is really the point of Framework 2.0 as we think about cost control and the evolution of cost control into the future. Working capital management, I think we've made great strides in the penetration of F&R. It's close on 90% in the group. But one of the things that held us back was, I suppose, the risk that existed by removing manual ordering from the stores. We're now at a point where we can take that away from stores. And as a function of stock management centralization, we will deliver a 10% reduction in day stock cover over an 18-month period, which is half of the 3-year period that we previously mentioned. If we move into the wholesale market share expansion strategy, again, we continue to transition independent pharmacy pipeline into TLC franchises. As Chris explained, the independent pharmacy pipeline is strong and many, many customers. I think they're starting to become a real understanding of the benefits of the TLC franchise, and that conversion metric is something that we look very closely at and has been very successful. It's then intuitively driven both TLC revenue growth. And in doing that, the TLC attractiveness is getting more and more support from an independent pharmacy perspective. And all of that allows us to extend our wholesale market share gains, which we have delivered on, as I said, with a CAGR of north of 25% over the last 4 years. In the integrated health care ecosystem space, very exciting to launch Dis-Chem Life in quarter 1 of 2025. We're also thinking about the evolution of extraRewards. We've seen incredible stats and metrics come out of extraRewards in terms of how policyholders are changing behavior and utilizing our retail asset stack. And we want to augment that as we think about the launch of Dis-Chem Life in quarter 1. That evolution will include behavioral change elements and engagements, as denoted on the slide. From a digital perspective, the replatforming to ensure the consistency between our web and app is well underway. And as we've ultimately said, we want to be able to own the digital health care space. Simply speaking, that means that any of our services that we offer in the physical world, we're able to do digitally and someone can access everything that Dis-Chem offers, be it stock or services from anywhere in the country through this digital platform. Analytics, I can't underplay the importance of analytics or overplay the importance of analytics. It is fundamental to unlocking some of the opportunities that we see across each of the other pillars. The deployment of analytics is actually quite different depending on the business unit. For example, in the integrated health care space, analytics leads any single commercial opportunity. So that business is -- or business unit is very reliant on the analytics function. And the analytics function in traditional business units like retail, for example, needs to be embedded as we continue to do. A few examples of how we're doing that. Firstly, in the property space, as I said, from a proactive perspective, analytics has yielded the ability for us to go and have a view as to whether markets interest us and then to chase down property opportunities on the back of that analytical work. And we've also done some very interesting work on pricing and volume elasticity in the total income line through the analytics hub into the total income pillar. Analytics and the framework also drove Framework 1.0, which was cost control management. And it's just starting to become a more centralized investment that requires people, resources and is ultimately unlocking value in each of the 8 strategic pillars. My last comment is just to say thank you to the team. I think over the last 18 months, the delivery of the strategy, the understanding of the strategy, the unpacking of the strategy into the group has created a huge amount of workload for everyone. There is extreme excitement from myself and the group as to the potential of the strategy and what it potentially does for all South Africans in terms of opening up access to care at a lower price point. And as we're starting to see slightly -- a slight culture change, there's really a belief that we are sitting on something fundamentally differentiated, and we're encouraged to kind of disrupt health care in South Africa. And from our perspective, thank you to my team. I hope you guys have enjoyed the presentation.