Mr Price Group Limited (MRP) Earnings Call Transcript & Summary

Well, good morning, everybody, and welcome to Mr Price Group's half year results. This is the 6 months to the end of September or the 1st of October 2022. Just in terms of structure of the presentation, I'm going to be spending a little bit of time on the backdrop, looking at sector performance and just really what's affecting retail trade, share some highlights with you. Mark is then going to dive deeper into the performance, the detailed performance. And then I think I'm going to share a very critical messaging that we've got to leave you with the value creation and the long-term outlook of the company. So those of you that have already dialed into competitors' and other retailers' presentations, I think none of this will come as a surprise to you. And whether you're looking at global macro issues or matters impacting SA in particular, is obviously a long shopping list on both of those lists. So on the global side, slowing global growth, recessionary fears, interest rates increasing and of course, the threats of war. And some of those do knock over and impact South Africa and other territories. And of course, we're a business that's got 93% of our revenues in South Africa, the rest in other African countries, and none internationally. But certainly, locally, we're not immune to those international shocks. Commodity prices have been slowing. The rand has weakened considerably. CPI is outside of the target range. And we've certainly seen a rising interest rates environment. And then probably everything overshading all that, the extreme load shedding that we've had in South Africa, and that's electricity load shedding. So a very challenging consumer environment. And then you look on the right-hand side there, that really does bring it home to what's happened to the consumer and these are all things that are competing for rands and disposable income. Food inflation up almost 12%. Fuel price, which, of course, is going to knock on to many other things, up 40%. We've had a 200 basis point increase in interest rates. But for me, one of the standouts is, when you look at nominal HCE growth, it is positive at 7.8% growth, but it is outstripping the nominal wage growth of 5.2%. So people are spending more than their earning. And I think that's us talking to the accessing of credit and debt, and we'll speak quite a lot about what our appetite for that is. But just within the nominal HCE growth, one of the standouts there, too, is just really the shifts in spending. Durables has actually shrunk by 1.4%, and nondurables is up 11%, and that's what makes it 7.8%. In that environment, whether it's macro, local or just things affecting our consumer, consumer confidence takes a big dip and the resultant impact of that is less spending. These are the group highlights. Revenue is up 6.5% to ZAR 13.3 billion for the half. EBITDA up 9.2%. Profit after tax, 13.3%. And we had a nice increase in our operating margin by 80 basis points to 14.7%, and our diluted HEPS was up almost 11%. Pleasingly, we've maintained our dividend payout ratio of 63%. And as a result, our dividends per share is up 10.6%. Then just to clarify, these results include Yuppiechef and Power Fashion for the full period, but obviously excludes Studio 88, which will be included from the first trading day of the new half, the half that we presently in. So now I just want to go into a little bit more detail about the factors that have impacted performance. We did speak on our trading update that we gave in July that we had transitioned to a new Oracle ERP, which had created some challenges. And we had also said in that release that April and May trade had been particularly impacted. And there are certain things that our merchants couldn't do, and we couldn't action as a business. There are two pretty material things in particular. Those have been fixed. But there's no doubt that in the environment of the whole ERP transition, there was a lot of merchant distraction. So when you look at the remaining items, and I said on the right-hand side, the responses will -- this is -- it's a once-off impact. I suppose you can look at once-off in 2 different ways. Once off these things are done every 15 years or so. And also, once-off in the event that those -- there's few things that we couldn't do to stimulate trade and to react to trade in April and May, they are a once-off. So we've had obviously a whole bunch of advisers that have been helping us through this. They do steer us to a 12- to 18-month settling down period. And we do believe that we're ahead of that curve by somewhere. And what we've done is we had -- all the remaining items or the go-live challenges would bucket into 2 things, 2 different segments. The one was the hypercare phase that we had identified. Those are the material things that we had to address quite urgently. And then there's a whole bunch of other things that we just called optimization that weren't necessarily errors, but there were things that were just made users' lives easier. So access to information being more simple and quicker and those will do -- take the due course and get actioned. But where we're sitting right now, the issues that we had identified in hypercare, so those are the big important issues. As of today, we've closed off 95% of those, and there are 2 items remaining. So hopefully, those will be put to bed before we break up and go on holiday. Load shedding, I guess this has been spoken to at length by competitors. We think that we have lost about 80,000 trading hours, which is a material number. And especially in that month of September, 44% of available trading hours were lost in that month. Of course, it's very difficult to ascertain what trade comes back after power comes back on. But it's safe to say that, particularly for our customer base, that -- as I said a little bit earlier, there are lots of things competing for their wallets. And don't forget that if load shedding is on and a large proportion of our client base doesn't have their own transport, that disrupts the day and it's obviously very costly to get to the retail outlets relative to what I just said about the fuel price. The good news is that by year-end, we expect to have power or some form of backup in 70% of our stores, which would be a big jump from where we actually were at the end of September. The weak consumer environment is obviously as I'm discussing, a significant issue. So from view, we have to find a way to navigate through it, put our best foot forward in terms of trade and reacting to the short-term circumstances. But obviously, we think long-term, and it's thinking long-term and the planning and the execution of our strategy is absolutely key. And we've got to keep an eye on that at the same time. We did speak about social grants, the whole disruption payments, nonpayments, late payments. We expect that to normalize as we go forward. And I think something is often forgotten is any performance should be compared to your base. And the Mr Price Group posted growth of 37.8% in the base, which was ahead of the market and therefore, would affect our growth rates to some degree. Yes, obviously, those bases will normalize as we go into H2. Just looking at some other highlights, and we'll go into a lot more detail in the presentation itself. We opened 78 new stores and revamped 27. There's going to be a lot more activity coming up in the second half. But if you look at the trading period before the hard lockdown -- the COVID-19 induced hard lockdown, up until today, we also made some lose sight that the group has gained 91 basis points of market share over that period. We're delighted that our acquisitions have been accretive since the date of acquisition. Power Fashion is performing strongly. It's had a very nice comeback as we said and we thought it would. In fact, has gained market share in every month of the half. And in that division, we've expanded stores to 232, and we'll give you a sense shortly as to where we think that can go and what our media target is. Yuppiechef is progressing nicely too. I'm delighted and it's the real -- one of the real reasons that we bought it was not only from the e-commerce side, but it's the omnichannel. And I'll talk a little bit about the new flagship concept store that we've got in Mainland and how that's going and the width of the offer that we've actually brought in there, and that's the skills that the Mr Price Group brought to that team. So a really positive story there, too. As you would have heard, and I was alluding to a little bit earlier, we concluded the acquisition of Studio 88, and that brings almost 800 stores into this table, and they really had standout performance in the year to September. As I said, we acquired them officially from October, but I'm going to talk a little bit about how that affected valuation and how our thinking around the price that we set there. We launched Mr Price Baby. So hopefully, in this presentation, you're going to get a strong sense that the growth vectors that we've got and what our strategy is. It's not all about acquisitions, definitely not. It's about space growth, new departments, organic concepts and there's a really healthy balance in that. But Mr Price Baby, and I will share some information, is a great example of that organic growth idea. And of course, with a business that's got a lot on its plate in an environment that's as volatile as it is, we've had to think long and hard about our people structures and our leadership structures and really what puts us in the best position to execute our strategy. And we're almost at the end of the process there, and I'll share some information with you. As I said, we landed the ERP. And we know that that's disrupted trade. But I think we've also got to give credit to the technology team that landed the ERP. This had been a 10-year journey for us. We've had stops and starts, changing vendors. I think we've been through -- we had 3 CIOs involved in the process. But it's troublesome as it's been. The complexity of these things can't be emphasized enough and full credit to the team that actually did get us to this position. There's obviously the impact on H1 as we've described. But with the complexity and the distraction from the merchant teams and other users, we can't say that we're completely out of any noise relating to ERP. So we'll have to just unpack and trade through the next season and see how that -- whether that is the case or not. But certainly, from our perspective, the big issues are done and dusted, and it's looking positive for the long term. And just to show you that it's not all about profits and growth and all those kind of things, we want to do those things. We want to achieve growth, but it's all about doing it responsibly. And we're delighted that we're only fashion-value retailer on the FTSE Responsible Investment Top 30 Index. So it's not all about profits. It's making sure to be good citizens, which is very important to us, and we will share some information with you. Okay. This slide is just getting back to market share. And there's no doubt that we left quite a bit on the table. So that did create an appetite or an opportunity, should I say, for competitors to come in, and we're laser-focused on making sure that we actually win that market share back. But if you just look at the trends, and this is -- the table is the Apparel segment. And that's actually looking at market share gains over those periods that you can see in those graphs right up until Q4 FY '22, which is the pre go-live on ERP, very strong gains in the Apparel segment. So actually, Apparels have been gaining market share every quarter in the last 2 years leading up to the ERP change. When we went live, obviously, some of the things could -- didn't manifest themselves immediately. And we're off to a real fly in the first 2 weeks, we're up 26% in sales; and the last 3 weeks, down 3%. But overall, we lost 20 basis points of market share in H1, that's in rand. But in units, we actually gained market share. So we've actually got a higher contribution of people's wardrobes. And then just to, I guess, in a way, highlight the impact of ERP, Power Fashion wasn't included in that ERP change, and they've actually gained market share in every month in H1, as I said a little bit earlier. So just in carrying on for a second on the Apparel performance. As I said, I did say earlier that don't forget the base. The Apparel bases were up 42% in the prior period, okay? So 8.5% performance on that with all the challenges that I've actually explained, I think, is a decent performance, but it's still recognizing that we left a lot on the table. But you can see there the operating profit growth in that segment, a very, very healthy 22.8%. And in fact, all our divisions in Apparel segment achieved double-digit operating profit growth. Home is a sector that we really found that going tough. I suppose there are ongoing trends of consumer spending, obviously being tight. Consumer spending being diverted back into holidays and experience and things like that. But the disappointing for us is that in this environment, we would have expected to gain market share and we didn't. So what you see there is RSOI down 1.6%. That was buoyed by Yuppiechef. And if you strip out Yuppiechef, then Sheet Street and Mr Price Home were down about 5% and 6%, respectively. What we've seen in this segment, in particular, is a lot of competitor activity on a couple of fronts. First of all, I think because you can -- when you look back on the performance of the sector over the last 2 years as people were working from home, I think the sector shot the lights out. So that gave some an opportunity to invest in store rollouts. And I'm not talking only the listed competitors here. I'm also talking a lot of the independents, many of whom aren't in the RLC, they're outside of the RLC, they're not included, but they have been growing quite strongly. And of course, our business, and in particular, Mr Price Home has got a much wider assortment than a lot of our competitors. So there's a lot more attacks on it. But we've got -- we've definitely got plans to make sure that, that market share comes back. And just to point out that in that sector, we've still got a dominant market share of over 30% -- well over 30%. So like I said with Apparel, homeware also don't forget that base, that 27%. And then lastly, in Financial Services, healthy RSOI, up 13%, and operating profit growth of 7%. Okay. That's a bit of the background. Mark is going to take us through a lot more of the detail now.

Good morning, everyone. Thanks for joining us. I'm going to start off with our group income statement. Like Mark said, unfortunately, the top line didn't meet our expectations for the reasons Mark said, I'm not going to elaborate on that further. But I think what is good in these conditions is how does the business contain itself when it is under pressure and things aren't going its way -- the way it's like to or the way it planned. And you can see that our gross profit grew 7.5% ahead of retail sales and other income with expenses growing at 5.9%, which created the profit leverage of 13%, and profit attributed to shareholders growing 13.3% for the period. So how did we get there? Geography-wise, South Africa grew 6.3%, with the rest of Africa growing 2.4%. It's in line with our stated strategy to be focused on the SA market at 93%, and concentration in the SA geography. Our Bricks grew at 5.8%, with our online growing at 11.2%. And online grows a contribution of the 3%. And so we're seeing good reads in our online business, and it's one of our strengths, and we will continue to invest in there, and I'll show you that a little bit later. From a tender type perspective, this is some of the story that's playing out in the market. You can see our cash and we're dominant in cash, 84.9% cash business, grew 5.2%, and with credit growing 11.5%. Units were up 1.7% at 122 million units, and we're able to keep inflation at 3.8% when CPI was growing at 7.5% up to September. From a space growth perspective, we grew 78 stores over the period. We launched 6 new concepts, including Baby and more cellular concepts, more cellular store rollout. We only closed 8 stores. And I think this is a very important point for investors to understand is that the hurdle rates to get into Mr Price store and the feasibilities are robust and rigorous. And you can see over the period to have to close 8 stores, I'll show a testimony to that. And space growth grew 5.7% over the period. What is really pleasing is, since our acquisitions where we took over the Power and Yuppiechef acquisitions, our store base has grown 34% in those 2 businesses. What we are noticing is that there is a move back to flagship stores. As you recall, in the COVID times, the rural stores were -- and we've got a very diversified store location strategy, which is -- plays into our portfolio theory on location. And our flagship stores, which are very material stores to the group, nonetheless, started to really show signs of customer traffic coming back and the performance in the flagship stores, in particular, has been strong over the period. When you'd embark on a store expansion drive, like we want to responsibly, one of the key lessons is to try and reduce your CapEx per square meter. And we're doing that actively in order to support returns as we go into smaller locations with smaller formats, and we're seeing some really good traction there as well. Gross profit over the period was at 40.3% for the group, up from the 39.7% in the prior period, 60 basis points. We had the inventory write-off, if you know, in the looting in the base and that's mainly affected merchandise GP, which was up at 41.2%. But I think the major -- as Mark alluded to, the impact of the ERP was predominantly felt as a result of not being able to process markdowns for a significant period in the beginning, and also the timing of stock flows into our DCs were also impacted. When you're a retail business that is fast retail, you need that nimbleness, you need that versatility in your arsenal and that's our traditional strengths and that did impact merchant performance and therefore, some of our stock performance because we have to take deeper markdowns later in the season, which is not our model. Telecoms segment grew to -- margin grew to 19.8%, and that's as a result of the mix change -- positive mix change. And the segment continues to show amazing opportunity for us. Power Fashion, as you know, is 1 of our acquisitions. It's a slightly lower margin business just based on the construct of how we -- how that business is put together, and it grew extremely strongly, as I showed you in that location -- previous location tab. And it increased its contribution to the group and its margin expanded 330 basis points, which is in line with our strategy to continue to look for those opportunities within that business model to grow it and to be able to expand it. Through this whole period, gross margins obviously had a lot of external factors against it within the cost price or input prices. Hedging strategy is to date have been 8%, created an 8% shield against the average spot over the period. Our shipping costs that we contracted are materially below the average spot rates over the period, and I'll take you through some of that on the next slide. And our logistics cost, which is really our intermodal logistic costs in and around the country, and was flat on last year, which helped reduce -- and that was a fuel carriage and which helped to reduce our fuel surcharge, which, as you know and how fuel prices have increased. And again, I'll take you through that on the next slide. So input costs. Key to retail is input costs, as you would know. And the ZAR has -- against the dollar has depreciated 13.2% for the half. It worsened up to the end of October to 25.3%. Consensus view around the rand is that it's oversold. And so we expect that it will come back positively in FY '24. Over the period, oil and cotton, which are key component input costs into the -- into our garments, were up 34.3% and 54.3%, respectively. And shipping rates, which is the graph on your bottom left-hand side, you can see the red line is the Mr Price line. You'll see that we -- and the blue line is the SCFi Africa Index, is that we're materially below that index, and we have been for some time. So it just goes to show our buying power and our bulk and both volume helps us in that regard. We've also contracted very favorable rates up until June 2023, which also will assist in dampening inflation -- cost inflation. Overhead expenses. As many of you know, and we're fanatical about making sure we have responsible cost growth and that our business model needs to respond in terms depending what the times prevail. And this is a case in point. Overhead expenses were up 5.9%, which is, as I said, was below sales and GP growth. And this was also based primarily, you'll see our employment costs, which is -- makes up 40% of this basket of total expenses. They were only up 0.6%. And that's our variable rem philosophy where our associates have brought into a pay-for-performance mentality. So in tough times, that gives us that cushion to be able to pull back when we're not meeting our own internal targets, and that helped us through the period. Occupancy costs were up 12.5%. Remember, these occupancy costs don't include rent. And they were driven primarily due to higher turnover rentals as the flagship stores start to kick in. As I mentioned a little bit earlier, we had space -- new space growth of 6.3%, and as everyone knows, the utility costs, the electricity, water rates has gone up, and we managed to get it at 9.8%. When you think we took off -- when you take off space growth, that's a really good performance. Other operating costs were impacted by the increase in bad debt, and I'll take you through some slides going later on around the performance of our book, the performance of the credit market and what we're seeing from our perspective. So that -- relative to last year, that creates a bit of negativity in that growth rate. But we still see -- and particularly in our new structure as part of the key drivers for the new structure is really the cost engineering opportunities. They do exist within our business. And we just feel that we need the right structure and the synergies across our business. And that should -- there is a lot of potential in there. What I am excited about is that we were able to keep total expense as a percentage of RSOI are down by 10 basis points to 27.7%. And all of that helped to contain these expenses. Total expenses, if you exclude Yuppie, remember, Yuppie is only in the base for 2 months. And obviously, in the full period this year, would have been 4.4%. The balance sheet remains healthy and robust. I think there's 2 call outs predominantly around inventory. There's quite a prevailing narrative amongst the retailers but just globally around inventory levels. We were no different, albeit that some of ours was influenced by strategic calls that we made as well as -- and that was predominantly around festive trade and mitigating some supply chain disruptions. But excluding goods on the water, our inventory was up 25.5%. We had a slower September, which did place a bit of drag on our inventory carry. But -- and we had new space growth of 6.3%, which obviously does naturally buoy your inventory levels. We had higher input inflation as a result of the rand albeit despite our really good hedging strategies, and that obviously has a natural rise on inventory. And H2, which you obviously build up your inventory prior to your store openings, we have got 115 stores openings. 63% of those will be before Christmas. We anticipate the growth rates in inventory levels to normalize by year-end, and that's -- we don't expect to be in the low or very low-single digit -- double digits. Cash deployment. Cash on the balance sheet at the period end were ZAR 3.3 billion. Payments of Studio 88 was ZAR 3.6 billion, and that was on the 4th of October, like Mark said. So those cash reserves from a capital allocation perspective have been deployed. But knowing that we obviously generate cash and being quite a highly cash-generative business model, there are obviously inflows of cash. Our target cash flow conversion ratio is greater than 80% by year-end, and I'm going to take you through a working capital slide after I just show you the cash flow, and I can tell you where some of our cash is being absorbed. Obviously, the most notable being inventory. I'll also take you through trade and other receivables as a separate slide. So this is the cash flow, it's just the basic waterfall. You can see we started in March at ZAR 4.6 billion and closed on ZAR 3.3 billion. We generated ZAR 2.6 billion of cash before working capital changes. Our working capital absorbed ZAR 1 billion worth of working capital or cash flow. Our dividend was at ZAR 1.374 billion, when we maintained our dividend payout ratio in the prior year second half. And we continue to invest in stores where PP&E was up ZAR 296 million invested. And intangibles of ZAR 39 million, intangibles for people not familiar with the term, is your software and related assets. So I just want to -- there's quite a lot of commentary about working capital management in the market at the moment. I thought that let me put a slide in to just give you my thoughts around it and why, what's making us feel that whilst on the face of it, it looks potentially something that was not our ideal. This is where I think it was absorbed by and I think it was absorbed by. So stock management was impacted by the ERP, like Mark explained, and the slowest September, but it's mostly contained in our nonseasonal lines, which contain lower risk. We've also got elevated GIT, which is your goods in transit, which is our FOB because risks and rewards of ownership have transferred, and to minimize the risk of the festive season trade inputs, and that absorbed ZAR 452 million of working capital. The strategy around stock turn in order to bring it back, which is the right-hand side, is your actions targeting -- I'm enacting my target is to create neutral absorption of cash flow year-on-year. And that will be achieved by forward merchandise plans to normalize by year-end, like I spoke to you around the growth in inventory by year-end. Our goods in transit balance is expected to reduce by 30% by year-end. And our stock turn target, which is really the thing that is most indicative of how the performance of your stock is. We're hoping that will be over 4.8% by year-end on the core business, excluding obviously, goods in transit because you don't have an opportunity to sell that. As I mentioned earlier, credit sales grew 11.5% and trade receivables absorbed as a result ZAR 664 million, primarily due to new account growth and robust credit sales. What is our response? And we've got enhanced collection strategies to reduce debtors days and the book status target is to be greater than 75% current to ensure that our roll rates, which is basically how clients or customers roll between stages in their payment profile. And I think our status profile, if you add Status 0 and Status 1 is well over 85%. So we obviously -- I'll take you through our appetite for credit and where the status of our credit book is, and we're fortunate that we don't have an aggressive view on credit. And therefore, whilst trade receivables have grown ZAR 664 million and absorb that cash, the status of the book is actually in a fairly healthy place, considering the environment and it's well provided for, and I'll take you through that later. From an inflow perspective, we have ZAR 530 million positive swing from creditors -- trade creditors. And we've got an ongoing supply chain finance program with our creditors, which has also unlocked ZAR 600 million to date, which obviously has helped the ZAR 530 million come through. What are we targeting in the short-term over the next 24 months? We've got a further ZAR 1 billion target to unlock in working capital with our -- through our suppliers and our supply chain and that should positively come through in the next 24 months. So getting back on to credit, where do we feel things are there, as Mark said, when you look at nominal wage growth and just wage inflation and just the basket of goods is moving, you can see there's a definite appetite for credit in the market. Our hypothesis and is backed up by economists that we consult with have said that out of COVID, people had savings. Those savings have dried up. Credit -- people are accessing credit, that's starting to dry up. And I explained to you where TransUnion see the credit market. And we're seeing a tremendous for not a heavily pushed on credit. Our new applications received are 45% up. We've tightened our scorecard by -- to 27.1%, which is a 640 basis point tightening, which has only let 17.7% of those new accounts through, which is quite a drop off. And the client applicants, what we do as part of our strategy is to actually move them into our recently introduced lay-bye program that you would know. So yes, this demand for credit at the store level is rising. New account growth is robust, and I think that's coming through a lot of the results that have come through recently. Our One Store Card facility, which is basically an internal initiative, and it really revolves around our existing base of customers who weren't able to cross shop, that's given us ZAR 242 million worth of additional credit, which is to an existing base that we know well. So it's safer. Credit growth performance, as an industry, as I alluded to, and this is some work from TransUnion SA Consumer Credit Index. The most recent stuff, TransUnion SA Consumer Credit Index fell to 49, and they make a comment in their report that this is one of the biggest falls in a quarter on record. New credit defaults and arrears are rising. It's up 1% in this quarter, and debt serviceability risk is forecast to increase. So how does our credit book compare? This is Principa, who's also an external third party and their reports on July 22, 2022, said our good to bad ratio, which is basically good accounts are less than 1 month in arrears is 8.4%, and the market is at 3.9%. So we're almost 2.5x better quality book than the market. And looked at it differently as a percentage of 4-plus cycle balances, which is 4 months on book. Our balance is 3.9%, where the market's at 12.6%. Mr Price holds a healthy premium obviously, as a result, and our scorecard highly responsive in this credit environment in particular. Trade receivables, since March, is only up 2.6%, which should be positive for you guys. Obviously, September on September is 16.8%. New bad debt -- sorry, net bad debt to book was 7.2% for the period, and our impairment provisions at 7.9%, which is adequately provided. The drivers for the retail book and outside of what I've just spoken to you around and the desire for credit is the interest rates obviously growing 200 basis points in the half. And yes, we're just seeing that the new account growth and the active accounts have grown 7.5%. Book performance the roll rates between stages are actually starting to show signs of -- early signs of deterioration. Despite our collection recovery targets being met, we're seeing an increasingly challenging to collect and therefore, our strategy into the second half is actually to not rely heavily on credits. We believe that it's -- that's not the strategy going into the second half as the environment tightened. So yes, that's our approach in the second half. From a capital allocation perspective, H1, we've allocated ZAR 336 million to date and forecast for the second half, including Studio 88 in this case, was ZAR 934 million, bringing the total allocation of capital of ZAR 1.3 billion for the period forecast. And it's predominantly in our stores, if you look at new stores, expansions and revamps, they make up well over 65% of our allocation, and there's a strong allocation to technology. As you can see, that 15.8% as we replatform our businesses and add new technologies into our businesses, which should make us smarter retailers or will make a smarter retailer. What is very important in capital allocation is the way we allocate capital is rigorous and our ROCE continue to far exceed our group weighted average cost of capital. So there's significant daylight between our WACC and the desired returns that we ask for. I think just to drive on the point, this is a piece of work that RMB Morgan Stanley did on the retailers. And you can see that our return on invested capital is at 49.7% over the last 5 years. And if you look at it on a dimension, we add the HEPS growth because there's a lot of talk in the market is that you're buying growth and your HEPS growth with these lower-margin businesses, and the way you're going about it, will you maintain your discipline and your fiscal discipline around your metrics? And my next slide should help you speak to where our heads are at on that. And you'll see that we continue to be in the top right there and ahead of all our peers. I think this is a key slide for all our engagement with the market so far is that how do we model Mr Price? How do we look into the future? And this is a piece of work that is obviously external Bloomberg, to the competitors and the Mr Price Group for FY '22. And you'll see that how our ratios compared to the balance of our peers. And still very healthy ratios, and we don't expect to try and to deteriorate those. Stewardship of these market-leading metrics is an imperative for us and is built into our management incentive schemes. We've put some medium-term targets on the right-hand side. This excludes Studio 88 at this point. But you can see that we have got no desire despite having Power and Yuppie in the base to drop these standards. From a financial outlook perspective, which is key, I think, how are we feeling? The consumer discretionary retail is forecast, I think Investec put out a note, it's expected to be very tough in the second half. Merchandise calls, therefore, what is our response. In this type of environment, our merchandise calls have been tailored appropriately but we've also got a very agile supply chain, which we've spoken to you before, and that is ready to respond that the consumer shows resilience. Our retail credit growth, we don't believe that we want to lean into that too hard into the second half. And these conditions should support a cash-centric retailer like ourselves. H2 targets. New stores will be 165 new stores, including Studio 88's 115 for the core group. Weighted average space will grow at 6%. And input inflation, we expect to be at 9.1% with some various mix strategies that will bring that down just above -- to bring it down quite a bit. The GP margin and the medium-term guidance remains intact, and our cash conversion target, as I said, we want to target over 80% by the year-end. But this is a challenging environment. And it requires cautious approach, which I've spoken to the business around expense management and operating costs. And I know that's probably going to be a question that's going to come up later. But we've got to balance the short-term with the long-term. We know that we've been investing for structural changes in our business, and we feel that, that's appropriate going into the future. And yes, so I'll hand it back over to Mark, and he'll take you through the strategy.

Thanks, Mark. First of all, with regard to our vision, I think, has been well documented in the past. We've spoken to you at length about it, it's to be the most valuable retailer in Africa. And that is definitely a long-term vision. No date has been set to it, but what it is, is a call out to ensure that we're focusing on the things that make the difference and things that can scale. Of course, we can't be that if it's all about growth, and we start diluting everything that we built over the last 30 years. So what Mark is speaking about and all that discipline and all that focus on metrics is an integral part of whether we can attain our vision or not. Going to the strategy, and we've identified the 6 strategic pillars that you should be familiar with. I'm not going to talk in detail to each of them. There's some information that you can read on your own, but I'll certainly pull out the highlights of each. So looking at stakeholder engagement, and it's one of the pillars I'm absolutely delighted on the progress that we've made here over the last couple of years. One of the key things for us is, well, how do our stakeholder groups relate to us? What they think of us? And are we actually acting in the spirit of partnership that we do have? And by those groups, I'm talking about investors, landlords, our own associates and suppliers, and one of the things that we did this year is set out through a questionnaire, a program is to gauge the response to a whole myriad of inputs. And the reason that I'm delighted is the outputs of those questionnaires were so favorable in our regard and still room for improvement. But quite importantly, for 1 or 2 of the stakeholder groups, we ask them to measure us relative to our peers. And I'm happy to say that we're definitely on the right side of where we need to be. Look at growth, the objective is to be the top performer in TSRs in the retail sector. And when we're looking out at the growth framework, one of the important messages that we need to deliver as well is that -- and I'm talking about our existing businesses at the moment. Comp growth comes first, okay? So we have to get improved comp growth out of our businesses. And if you get comp growth in the top line and you're handling your margins responsibly, then you can cover the overheads and the investments that you need to make as a business. So that's definitely the first point of call. You can see there that we've broken it down into items that are receiving group attention and group focus. They'd all see the things that are the divisional responsibilities. So a couple of things that in terms of our overall strategy, we're now in the logical phase and how we transition with our strategy in addition to some of the investment options we're looking at, which I'll come to is our thoughts around e-com platform, omnichannel, and then everything around the customer, CRM, loyalty, the customer journey, et cetera. So that will be led from the group. But it will be aided by some of the organizational design structures that we've put in place that we'll talk to. But certainly, the divisional focus then is comp sales and comp profit growth. And to deliver that, I think we've got a history of introducing new categories, new departments consistently over the years. But obviously, in this environment, we need to make sure that the basket is getting bigger, the shopper's basket. And then all our internal decisions are making sure that the product is in the right place and the right store is obviously critically important. As you've got a lot more competitive activity, and when you just look at putting the customer first in everything that we do and just relate how we are feeling about some of our in-store environments, they're not at the level that they need to be, and I'm not talking about the flagships. I'm talking about the thick middle and we're certainly spending a lot more money on those. And I'm equally delighted that where we spend revamp money, all divisions barring 1, which is a small division, the new stores are performing ahead of feasibility. So it's not like we're throwing CapEx into it and not getting the return. The revamps are working. So that's comp growth. And then there's non-comp growth, which I was alluding to. Obviously, in real estate opportunities Mark was talking about, looking after the next couple of years, we can -- we're focusing on opening up about 250 stores a year. That's across all the brands, including Studio 88. It might be a bit higher, might be a bit less, and it really depends on the availability of the space that we do need. But certainly, there's an appetite for us to enhanced space growth. And as we said, our space growth is working for us. So it's the new stores are performing and the revamps are performing. Those are critical elements there. We can think about extending our credit offering. So it's not departing for anything -- from anything that Mark said about our conservative appetite in a worsening credit environment. But obviously, the likes of Yuppiechef with them, the affluent customer that is attracted to that offering, there's obvious credit opportunity there. We have formed an investment committee. Of course, we've always been through a process of making sure that we're evaluating new opportunities carefully. But we've actually widened and structured it properly and more comprehensively that will give us even added impact into the investment choices that we're making. In noncomp growth on the divisional focus is obviously how new stores are performing. And then looking at category extensions, new departments, examples of some drafts, for example, into extended sizing and the rest. So we dealt with comp growth, non-comp growth. And of course, there's a focus on efficiencies and retail insights, and retail insights on REIT talk about what we get from our data. So we've got a future fit project that is looking at identifying opportunities for efficiency. When Mark was going through this cost growth and I guess, just reflecting on our interaction with investors over many years now, we're not a business that has lazy costs lying around. We've been very tight on it in the past, had a really frugal mindset. So as a result, if you talk about where is our self-help in the overhead story, it's through process reengineering and some of that will also come through technology, as you can see there. But also unlock through the organizational design, which I'll talk through in a minute. So transforming the business from a very solid sort of mentality, in a trading divisions to a more sectoral view, and that will certainly unlock things where we can start looking across the business instead of down and some narrow channels. So any self-help story is certainly in that area. What we're also doing is we've got quite detailed processes that we look at when we either informing strategies. Strategy, I mean, the long-term business strategies or even the short-term merchandise strategies. But in the redesign of Mark's role in particular, we want to go even deeper into that, even deeper insights into what's driving the economy, what's driving consumer spending, what demographics in the market is behaving in which way. And I think that in the medium- to long-term will really drive even further benefit. So that was the existing business. We can now looking at new businesses. And as I said, all this is done within the framework that Mark just painted, making sure that capital gets put in the right place. But we're under no lesions what we'd call a tough comp environment, but we've got ideas and plans. We have to prove our ability to execute either organic concepts that we're starting or businesses that we've acquired, and we have to realize the benefits that we -- in fact, the reason that we bought -- that we bought those businesses in the first place. So just to give you a little bit more insight into what drives our behavior and our thoughts. When we're looking at acquisitions, first thoughts is what is the level of earnings accretion? It doesn't mean that we wouldn't accept something that's not earnings accretive. It would have to have a very good reason that it wasn't, and we'd have to be assured that we can get to accretion in what I call the short to medium term. But we don't have an appetite for fixes and slow burns. It's just not us. Part of when you look at an acquisition, is it new products? Or does it give access to a new customer segment that we haven't been targeting? And I think there's some real upside that I'm going to share with you in a minute in that regard. Certainly, we approach things with an intention to keep management, our management team intact. But last laugh, the things do change. But what we've got to make sure is that before we scale, we've got a management team in here that we can actually scale it with, and I'm very happy with the way that things have progressed there. I'll talk about integration. A lot of people are asking, what are you integrating? What are you not? What are your plans? I'll share something with you. And quite key for us as well that when going to an acquisition, we don't want to be going in with the whole shopping list of things. That will, I guess, challenge the whole process of regulatory approval. So if it's borderline, if we think it probably wouldn't get through because we do certain things ourselves already, is a regulator unlikely to allow it? We obviously stay away from that. So that was acquisitions, and then I think then equally exciting part of our opportunities are the organic concepts. And some of the things that we look at there is, first of all, when you look at what we've executed over the last couple of years, the teams in the Mr Price Group, it's a definite skill that they possess. We've got the internal skills, we've got the ability to launch new concepts, new departments and get it off the ground quickly. And I think we've displayed that ability many times over. So I guess a real skill is in our ability to launch new unique concepts and in-demand concepts. And there, again, we're only really looking at things that can scale. In the org design, I'm going to touch on our strategic function is going to be expanding, what we call the Tomorrow Team. And that's really making sure that any new organic concept, there's a bigger tie in with the strategy team that gets it to the point where we can set it free. So it's -- if you've been very intricately involved in the design and the build of it, is that you see through it -- you see it through to its first phase of establishing this business, putting the team in. And then when that team is in place, you'll see in the org design, it will shift over to its new reporting line. Something that we have to just continue to judge. It's a bit like our saying in acquisitions, how earnings accretive is it and how quickly is exactly what that looks like from an organic concept as well. The thing with organic concepts in this why of the business case has got to be really stress tested is it's often loss-making in the first period, either a year or 2, but we need to get past that hurdle quite quickly and get it on its trajectory for growth. That, I guess, informs how many you can do simultaneously. So we have to think very carefully and the organic concept that you are choosing has got to be the right one and therefore, in the right order. This is the matrix of our companies now. You've seen this before. But just to maybe not speak to the graph so much, but just the focus here is on the top of that page. Comp growth and execution in existing divisions is the first priority. The further integration of our 2 recent acquisitions, Power Fashion and Yuppiechef, I'll share some details with you, that's key. But I'm very happy with the way that those 2 businesses are going. And then, of course, what we're referring to earlier, onboarding Studio 88 and getting things off the ground there, too. And then what I was just speaking about, testing new organic concepts. So I look at that investment matrix. I can see it filling up quite nicely. I think it doesn't mean that in any of those sectors, there aren't other opportunities, and I'm going to give you a sort of a cheeky sense of how things are sitting in a minute or two. But certainly, and what we're talking about here is the product classification on this page. It's not the income of the customer that we're talking about. It's a very important distinction. Here, we're talking about organic concepts and a test, Mr Price Baby launched in August in 14 stores. Don't forget, we did have some baby product in our existing stores, but this is now a much more expanded assortment. And we had 2 purposeful stand-alone stores to test this in that mix of 14 stores. So we're testing in 3 different formats, a stand-alone store, in a kids store and in the mothership Mr Price store, and it's very important that we get all the reads that we need from those models so we can make the right investment decision. Overall, happy with the way it's trending. We're getting some good sales reads. There is a high apparel contribution in that business. But very pleasingly, and maybe you've had a chance to look at some of the product as we look at before this presentation, our private label offer, not only in clothing, but in other products, is actually working very well. Very happy with that. Okay. So I think the takeaway point from Baby there is it's in test phase. It's only been about 2 months since launch. We're not ready to call it yet. There are some tweaks that we're doing to the model. Early signs are good, but we will wait until the end of the financial year to make that call, and it's how it's performing, and equally important, what returns it gives us as a business. And there's just a few more visuals that you can see relative to the product. And in the top left there, that Bundle + Joy is our internal private label. Okay. Moving on then to Power Fashion. For Power, the heading there says, proving its store base investment case. I think it's important that we don't see an online opportunity for this business at the moment, but the store rollout opportunity is massive. So in this business, it's all about scaling and gaining market share. I think we've got an excellent team in place there now, and it's a business that I've certainly got a lot of faith in. We talked a little bit earlier about market share gains. As I said, 11 out of 12 months in the last year, that was on the clothing and the other items. And in power cell -- Cellular side, we've gained market share, too. So we opened 58 stores. We think we've got an appetite from this from the current sort of level of store infrastructure to more than double it. Our initial target is 500, but I think when we get to that, it will go way beyond that. But if you just look at the H1 metrics there, when you look at sales growth, our density, the improvement in GP and op margin, that's all part of the story that we said the last time we met. Last year was obviously a very difficult year for this business with the social unrest and everything that had meant, and the very heavy reliance or, in terms of the store footprint, being heavily weighted to case then where those things took place. Great story here that as you leverage and you get that scale in terms of number of stores, you don't grow your internal -- your head office cost base and your infrastructure to the same extent, and you get great leverage. Likewise, Yuppiechef, yes, it's proven its omnichannel investment case. So I think that's a really important differentiation from Power Fashion. And yes, I think things are going very nicely. We've got a very clear strategy of what we're trying to do and tap into the higher-income consumer segment. But in this business, it's all about omnichannel. We think it's got a really great platform. We can do more on it with new brands and merchandise categories. We can certainly look at them, and in the medium term, that's our target to get to 70 stores from the current 10. But I wouldn't be put off by that relatively low store number. As we approach it, we'll take a view on it and see what kind of returns we're getting, but it's more about the omnichannel experience. So online is a big part of that. Then, of course, it's got a wholesale division that's operating very nicely and is growing nicely, too. I think we said at the time that when we acquired this business in that we didn't acquire for what it was. We had some ideas or plans and to take it elsewhere. One of those ideas was the introduction of a softs offer. So it's scatter cushion, sheeting, bedding, curtaining, all that kind of stuff. And we definitely didn't had skills in that area, where Yuppiechef was a kitchenware-based business. I'm delighted that as we sort of progressed with store rollout, that we've been able to translate that softs offer into its latest store, and I'll show you some pictures now. But that's exactly why we bought this business, to take our skills, plant it in a high-performing business with an excellent skill set of their own and together to take the business to a new place. Don't forget there's a great opportunity with not only us talking different merchandise categories, but to then to push our private label assortment, and there you can see Thread Office, Sagenwolf and Humble & Mash all showing new growth, and I think a really great opportunity there. Looking at the first half, I'd say, definitely, they're performing in terms of our expectations. The stores are performing well, and we are planning on opening another 4 stores in the second half. But I said a little bit earlier that I'm going to show you the new flagship concept. This is the Menlyn Mall in Pretoria, that's a 700 square meter store. So a lot bigger than any other store that we've got. It's only been open for a week or two, but performing very strongly. In fact, performing 20% higher than the feasibility study reflected. But as I said, try and get there, if you can. It's a good example of kitchen coming together with a softs offer, so it's, in fact, a Yuppiechef home store. Not only is that store performing. The store that we just opened recently before that was a store in Ballito. Much smaller store, it's a kitchen-focused store. That's actually operating 10% above feasibility, which is equally good. So delighted that the Yuppiechef and Power on the right trajectories. The businesses I said I'm excited about and I don't lose any sleep about. The acquisition that we made and can we execute and deliver the goods there? I'm very confident. That brings us to Studio 88. So we have gone into a lot more detail with some of the information that we provided earlier. We'll repeat that just for the sake of refreshing your memory in a minute. But just to reinforce that we acquired South Africa's largest independent retailer of branded leisure, lifestyle and sporting apparel and footwear. The last year, I'd say a little bit earlier, that shut the lights out, that actually shows you the sales performance and the profit performance for their year up to the 30th of September, just gone. And at this stage, these are unaudited, but it gives you a sense of scale and performance, EBITDA increasing by 25%. So of course, we effectively -- well, we approached the business, and we sort of agreed term some time ago. But when we agree terms, it was largely informed by how they were trading up until last December. And because of the weighting of how profits fall in this business, that had really informed what price we were prepared to pay. But at the time, we had to say, well, the purchase price is, as Mark said, ZAR 3.6 billion. And on the historical, the prior year figures, it actually translates to EBITDA multiple of 7.5. Of course, when we came to acquire it and we took control, as we said, in October, the September year that we already had a good read on at the time when we made the purchase, then we effectively reduced that EBITDA multiple from a historic 7.5 to 6.3. So for a business of this quality and its growth prospects, I think was an excellent price, and we'd pay that again gladly. I'm not going to go through this whole thing. It just gives you a sense of it's not all 1 brand. There are a lot of brands in this table. You can see them on the right-hand side there. Specialty isn't a brand. It's made up of a myriad of smaller ones, but you can get a good sense of scale here. And therefore, it's not -- you look at a group of 800 stores and say, well, where to from here? But there's lots of brands that make that up. And if you look at the positioning between the customer types, it also gives you a sense that they're not reliant on 1 customer. We have spoken to you about this before, so I'm not going to talk about it. But it's obviously a very aspirational customer. It doesn't mean that it's a high income customer. It's very important, as I said earlier. But yes, I think this business thrives in the relationships that it's got to the brands. They've got exclusive licensing agreements. And very importantly to what Mark has talked about, it's all cash. There's no credit in this business. So that, when you look at enhancing the metrics that we've got that Mark was talking about, cash flows certainly enhanced our aspirations on our cash flow and our balance sheet management. Okay. I was delighted to welcome the team last month. They're an excellent team with a long track record. And just don't forget that we acquired 70%, and it's a phased buyout of the rest over the next 3 years or so. So that was dealing with the acquisitions. And then a lot of people say, well, what -- how are you thinking about integration? It does talk to what kind of company we are in our org design that we're building. So I'll just tie it all up for you. But when we acquire companies, in fact, we don't put in any kind of efficiency through savings because they're integrated businesses. If they come, we obviously do identify what they might be, but we don't model them. We like the business to stand on its own 2 feet and to generate the returns relative to the price that are on their own basis. So we acquire businesses with a light touch integration mindset. It's very important that as you bring new businesses in that you don't think you know everything about the business. You've got a management team there that's performed well over the long term, and we've got to learn from them as much as they've got to learn from us. So a big part of it is just letting the team settled, getting to know what it's like being part of a public company, developing relationships, and then the opportunity start coming out. That way, it minimizes distraction. It lets guys focus on performance in the early days. But certainly, what we do focus on is looking at people, our culture, and obviously, the financial reporting side of stuff. And I think we've done a good job on that. Looking at some of the successes. So in Power, certainly, what they've been able to benefit from in the short term, the supply chain and sourcing expertise. And that, I think, will have a really positive impact on them further in the future. And of course, the group scale and our infrastructure has enabled them to grow at the pace that they have, which they will have struggled without being part of us. On the Yuppiechef side of things, also from the merchandise side, I was talking about this wide assortment. For example, a softs offer, where we had the skills, transferred merchants to Cape Town to be part of their team, that's the kind of skill that we can bring there. And we've actually unlocked some really nice but I suppose initial savings in logistics and enable their real estate to take a more aggressive stance with what was really a small team. So overall, very happy, and that slow integration but very considered, just doesn't deal with the hard facts, but also deals with cultural elements and people elements is an approach that is well developed in our thinking and will certainly be our approach going forward as well. I'm looking at -- sorry, I must apologize, these stats are a few years old and they haven't been updated by AAMPS. But the thing that I want to draw your attention to is there's a lot of activity in the value end. The consumer is under pressure there. We've got our own plans to make sure that we still gain market share and do all the right things. But when you look at our choice to stay invested in South Africa and knowing the consumer is a part of the market that we just haven't been focused on at all. And I think when we announced the acquired businesses, one of the concerns, and that's why we gave the guidance that we did on margins and how that impact metrics over the longer term, but I guess there's a concern that will -- like if you're investing in sort of Power Fashion, it's this price value segment might have great prospects for growth, but what does that mean in terms of some of the metrics? Is it going to dilute your metrics that we're so focused on? So answer was no. Or if it is going to dilute them, we still have the runway to make sure that, that diluted effect was minimized and improved over time. But on the flip side, as you go into a new -- on the graph on the left, if you just look at that LSM 9 and 10, and this is how much retail -- how much expenditure takes place by those consumers. We've never tackled that part of the market. We've got some ideas and concepts and potential investment areas that we think could work well there. But as soon as you go into that, it's generally at enhanced margins, enhanced metrics and the like. So you get this nice balance between deep value investing and some of the metrics that might come out of our approach to looking at a more affluent high income customer. So I think that's a very important consideration for us. And we're tending to think about the whole market and where can we invest the best return to the best opportunities in that market, and the high income consumer is definitely part of that. And of course, once you do that, the freshness that you bring into a sector is always appealing for a consumer. You don't have to adjust your glasses or rub your eyes. That's been blanked out intentionally. But this is -- just to give you a sense of the things that we are discussing internally, these could be new concepts, they could be acquisition ideas, category extensions, anything like that. But it just gives you a sense that whether it's price value, fashion value or aspirational value or the niche segments, there's a lot on our plate that we're currently thinking about. Of course, there's various degrees of advancements in some of these ideas. But I think part of the investment committee and my job and Mark's job is to make sure that we steer these ideas, we execute them -- or first of all, we go through the proper business case and that we then allocate capital and we execute according to our plans. But it doesn't mean that we're going to open 20 odd things. That's not what we're trying to portray here. Just to give you a sense of scale, to give you a sense of opportunities that we -- if you focus on a market and you know the market well, the opportunities present themselves. We have to go through a very thorough process to make sure that we actually then refine this list from what they are, but this is the list that we've, in fact, even discussed at this point with our main Board in our recent strategy session last month. Brand promise. I think I'm going to leave that for you to read on your own. But there's a lot of -- yes, I think we've progressed quite nicely in these areas, but I did say there's more to come. CRM, customer journey, of course, I was talking about our revamps and making sure that we do a better job there. But overall, quite happy with how that whole brand promise equation is going. And it's evidenced by Net Promoter Scores increasing. We've got the highest brand equity in the apparel and the homeware segments, and we are voted the most valuable fashion apparel retail in South Africa by Kantar. A couple of other accolades, just the coolest clothing store in South Africa, that's Mr Price. And if you then look at the coolest clothing brand in South Africa, we ranked 3 there after international heavy weights of Nike and Adidas. So it's not all about Mr Price, there's some accolades we've got from other divisions. Miladys, the best ladies clothing boutique; Mr Price Home, the best kitchenware store; and Sheet Street was voted the best linen store. I'm getting on to people now. And certainly, when I look back on the last couple of years, I think this is where we made real progress. Just in terms of the way that we relate to each other, the way we relate to our stakeholders and our internal culture is very strong. I'm very happy to say that. But I guess there's still a lot more work to do when we think of our ambitions and what has to still happen. We need people to get us there. So the first thing that we've been working on is to make sure that we've got a skills evaluation process, which helps inform succession planning. And I'm not talking about myself or Mark, although, of course, we'd be in that discussion. And there's -- both of us have got no date set for our departure. But certainly, the kind of company that we're trying to build, not at this level, it's amongst all our executives, our managing directors, our merchandise heads, our operational head, and the list goes on, is to make sure that whenever anybody departs, there's a succession plan that's developed. So there's no panic. It's by design, and that it gives us runway to develop people so that the whole transition at any one of those points become seamless. It's a very big part of what I want to leave behind and build an organization that's inherently healthy and still built on this promote from within concept. So that really any time someone senior steps out, there's a -- I guess, there's more than 1 candidate that's able to perform, and it's a very healthy position to be in. So that's the first thing, the succession planning. The second thing is this whole operational organizational design framework. And as I said a little bit earlier, just to make sure that we've got capacity and we've got the focus to focus on our strategy and to execute our strategy. So we've been through a whole very collaborative process with our senior people. We've had outside consultants as well. First thing that we did is to say, what is the kind of operating principles that we want to base the business on? How do we want to make decisions internally? How do we run the business? We've done that. That, in turn, informs the org structure, and we've now developed the organizational design and we're going through the process of putting names through that process. So at a very advanced stage. But there's 2 slides I want to share with you. The first is just looking at the operating model. A lot of questions on what is this group that Mr Price is trying to build? Are you an investment holding company or you're a fully integrated company? And the answer -- the quick answer to both those questions is no, we are neither, okay? So investment holding company, we're not sitting at the center, allocating capital. Never see those people. They just got to generate the returns, but they're not -- that's not our style at all. But at the same time, we're not an integrated company, which is in the far end or the far right, because it's not integration at all costs. I think I explained a little bit earlier, the kind of things that lead us to integration considerations. So we're neither of those extremes, and I'll just leave it through to read that middle part. But a strategic orientation, a bit of operational orientation, but we are involved in setting the strategy of the divisions, reviewing performance, et cetera, et cetera. Okay. The other thing that I then wanted to leave you with was with a retail environment where there's a lot going on, with a company that's got bold ambitions and a lot going on internally. Having 17 direct reports in the case of myself isn't the answer to execute those plans. So part of that org design process that I was talking about is this isn't the new redesigned organizational structure. Starting with the group director strategy. The red ones are positions that are in place at the moment. There's some text under there as to exactly what the nature of the change is. I spoke a little bit earlier about the Strategy and Growth Director. Two new positions that are putting in place is our 2 senior executives to look after. On the one side, the apparel divisions, and on the other side, the homeware divisions. And that's where I said, these 2 people would collaborate a lot together. At the end of the day, they could be sharing same brands, for example, the Red-Cap brand. But that's what I'm looking forward to now looking across sector and across business rather than just in all the channels that we've got. And there, you can see what the operational focus would be. Of course, they focus on the strategy of their sector, the operational performance of their sector, brand health and all the customer, the things that we've spoken about. And I'd be intricately involved in all of big decisions that would take place there. The other new role is the group's Strategic Enablement Director. With the complexity of where retail is going, and certainly, the integration, considerations we have to make or should be making at some point, new businesses coming in and how they translate and affect our infrastructure, those are all key to our future success. So we're looking to group that into that role. So 3 new roles at that level, but quite key in terms of that overall structure was that other executives in the group would report to those, that next level down, and then my direct reports then shrinks by approximately half. Okay. I think we've spoken about the ERP. Mark's spoken about the ERP. I just want to leave you with a point that it's obviously a team under a lot of stress, there's a lot going on, but it's a necessary process to go through. And if you just look at where we are and where we want to get to, and it's not saying that we're not doing innovation work and RPA in those, we are. It's just that the whole weighting of where we're applying those things, we've got a desire to change that. So you can't really get there and we can't achieve our growth ambitions and our vision if your infrastructure isn't sound and in place, and that's what we -- is our first priority. As we land these things and we develop that infrastructure, well then, that whole weighting starts shifting to -- in favor of innovation, which is the place that you want to get. So I think it's under great leadership. There's -- we've got a clear direction, we have to just unfortunately go through a bit of bumpy times. As I said, every 15 years or so. But we're definitely on the right pathway. And then getting on to sustainability. We actually released our first sustainability report in June this year. We've got an ESG engagement day planned for February, many of which you -- of you will get invitations to. Looking forward to that. And got some nice recognition from Investec Securities as 1 of 4 ESG leaders, and there's some other things that we'll take you through on the next page. But I think the real call out here is it doesn't mean you can't be a good corporate citizen and do the right things and have the right focus just because you are a value retailer. It's quite amazing what you can do as a value retailer. And in a lot of these fronts, we're actually leading. Just then to look at one of those highlights. We said 80 million units sourced in SA in FY '22. If you look at the Southern African region, we're probably around 45% to 50% sourced from those areas. South Africa itself, it's around the 40% mark. So very heavily invested in South Africa, and I'll just reiterate what our strategy is. And it's not vertical integration. We've got excellent relationship with our suppliers, we've got an agile resourcing strategy, and it works for us. I think, yes, there's a lot of challenges in South Africa that we discussed a lot earlier in this presentation. I just don't want to add the complexity of trying to run factories and worrying about breakeven levels and quantities and all those kind of things in an environment where I can let the experts do that, and we can concentrate on making sure that we run this business properly. And it's all the execution things that we spoke about. But pleasingly, we did onboard 40 new local suppliers this year, and 20% of our units contain sustainable materials. And then just on the same score, just look at some independent recognition. On the MSCI, and this is exactly what I was saying about it shows you what we can do as a value retailer, and you can see the score and where they placed us in the leadership category alongside Woolworths there. And on the right-hand side, Sustainalytics, which measures the degree by which a company's economic value is at risk driven by ESG factors. And there, we're in the low category, as you can see. Just move on to closing comments now. Yes, it has been a tough H1 trading period with a lot of distraction as we discussed. I think H2 is going to be equally as tough. There's nothing out there that's signaling that the retail is about to pick up. All the indicators are in the red. And we've got to do the best job that we can in that environment. But I think, for us, it's hopefully going to be a lot less about the ERP, and I mean, the thing that we didn't really touch on at all was the floods and all that stuff that we've debated in terms of the first half performance. But for me, the outlook is really around the consumer financial health and competitor dynamics in an environment that is what it is. So it's going to be -- I think it's going to be a tough 6 months. It's likely going to be a tough 6 months beyond that, too. But I think we've got the added benefit of navigating through some of the internal turmoil that we've discussed. And of course, in the second half, we're going to be -- we're going to have a material impact from the inclusion of Studio 88 in our second half performing -- performance. I think what's really keen for us is -- or key for us is that we have to get that financial -- or the fiscal discipline right, we're doing many things right. I suppose in a very volatile situation, maybe 1 or 2 things aren't where we'd like it to be, but it's top of our agenda. That thinking is going to permeate through to the long term in everything that we do. So I'm remaining excited. You might think, well, that's strange given a picture that you just painted, but I think it really talks to who we are as a business, our ability or our focus on making sure that we win, and that we harden ourselves when we don't perform, but at the same time, we celebrate successes and we keep an eye on opportunities, of which I just painted the picture, they are abundant. So I think that's it for me. The next time that we will talk is we're in the quarterly reporting cycle, as we've been for some time, and we'll share the next quarter's trade with you on the 20th of January. Thanks very much. I'm happy to take some questions now.

Good morning, everybody. Thank you so much for joining today, and thank you for all of the questions. There are a lot of questions. I mean we've all struggled to get through them all in the remaining time. But I have grouped together just the most frequently asked ones. And you are welcome to flood my inbox after this with additional questions. We'll set up some time for some follow-up and we can go through those. So just to start off with inventory, just to give a sense of where the expected full year inventory position is to be by end of financial year? And with that, is the elevated inventory level and its increased risk of markdown, if you can give a sense of stock freshness and just general comments around the current inventory position.

I think Mark did cover quite a lot of that. The goal for the year-end is to have stock levels down to, I think, Mark said, just high single digits, low double digits. So that's certainly the internal plan and the internal focus. Look, I guess that when you not only look at our stock position. So excluding goods and transit, which is still the stuff on the water, we're up 25%. Our competitors are up in the same kind of magnitude. Despite these strategic reasons why we did that, let's also not shy away from the fact that most had quite a lousy September, and therefore, we're carrying more going to October. In a poor environment for a consumer, that's why I said the second half [ article ] will depend on this, on the health of the consumer and competitive action. So it's obviously going to be more promotional, and I think we have to be ready for that. And we also have to make sure that we all have done things right. So we have to manage through the stock that we said. But also, we've taken decisions on pricing architecture and some of those other things that Mark has talked about, maybe some of the stuff that could reduce the impact of the input inflation predominantly around mix. I suppose the good news is that relative to -- and I suppose the distinction between the businesses that performed well during the half, the apparel divisions, their stock growth is higher than the home divisions, who underperformed. So the home divisions have got less stock growth, which is, obviously, we're happy about that. But I can't give an outlook into competitive action. We can only see what our plans are. And yes, I'm not going to share those ahead of the time frame, but we've certainly got plans to navigate as best we can.

Then just leading into a question around GP margins. So the comments made around the GP margin, medium-term target being intact. Can you remind us what the medium-term GP margin target is? And in light of the inventory position, whether that is sustainable into the short term?

I prefer to talk longer term. Short term, as I said, depends on competitor and a whole bunch of things playing out in the second half. We said that our existing businesses, the medium-term target is 42% on GP. The newly acquired businesses, we said, 38% to 40%. That still remains intact. In fact, I think it's important that anything that we're talking about here in terms of performance, nothing is structural. All what we had set as targets, where our thought process were going, those structures remain intact. It just means that you have to navigate around some short-term disruption, but nothing structural in the -- permanent structural change that we're seeing.

There have been a number of comments just around expenses and the strong performance in the first half. Just a question around what drove the strong performance on employment cost growth, and then just your outlook in terms of the more medium term in terms of cost growth, and it's to Mark Stirton.

Thanks for the question. So as you know that we have a pay performance culture, and part of our STI has a high variable component in it. And our objective in our end packages are to pay for that performance, and our base -- our guaranteed pays are below where maybe some of our peers are. So that gives us the outperformance in the good times, but it also allows the business to share in the good times and the bad times with our associates. So that's obviously a big driver into the first half relative to our performance in the last half in that regard. So hopefully, that answers your question, and that's often a material amount. Because that obviously talks about your store incentives, at your head office incentives and the like. Key thing is, obviously, when you -- in a high interest rate environment under IFRS 16, you'll also note that depreciation becomes a lower component, and interest obviously rises. So that's obviously one component. And not to get into the technicalities of that, but that's obviously another element. But I think overall, it's just -- it's enough DNA in our philosophy. And so I think that's what pretty much ran the number that we got to. The second half, like I explained, it's tricky. We're trying to balance the short term with the long term. And we've made some investments into some structural things like Mark spoke about, which will elevate them above these levels here. But in the same level, in the same breadth, we also got plans to reduce budgeted or forecast expenditure that we were planning. And we've made our own internal calls around this. So I mean, whilst I can't give you absolute guidance, I think all you can take comfort in is that it's an DNA, it's in our philosophy.

Great. Just I'll wrap up 2 more questions in the finance section just together. The one was just a comment -- sorry, just a question around were there any insurance recoveries during the first half? And then just a question in light of the activity with the Studio 88 acquisition on the net cash position going forward.

Yes. So on the first half, I know -- or very little, it's immaterial, the amount that was received. We received most of our insurance proceeds from SASRIA last year, and that's relating to the rights. Obviously, there's a separate part of insurance, which is the business interruption cover. We're continuing to negotiate or debate. This is obviously quite a subjective area at times, particularly when you look at a network effect on insurance and [ BR cover ]. And we're hoping to see the last -- our negotiations with the landlord -- sorry, the insurers and adjust this by the end of the year. But again, it's protracted. It has to go through multiple layers all the way into London and reinsurers. So sometimes, these processes always take longer than you would anticipate. But there's definitely -- as you know, last year, we communicated that we had received ZAR 91 million as an initial payment. And we haven't booked that ZAR 91 million, it still sits in the balance sheet. And if that comes through, it hopefully will come through in the second half. The second question was on Studio 88. Studio 88, obviously, with the working capital activities that we're performing that will naturally just bring money back into our cash balances. Studio 88, with the 3.6, we obviously went into short-term debt initially. We've got the facilities in place that buffer that in the short term. And by year-end, we are forecasting positive cash flows.

I think the key thing for Studio 88, and it's probably a better time to talk around year-end when you had a couple -- 6 months under our belt is that although they're going through an investment phase, they've been on it for many years now, but the store rollout will continue. We're expecting them to be self-sufficient from a cash generation point of view, barring any other larger investment that, that division would want to make.

Great. There was just 1 more question that was quite widely asked as well just on the finance section is, how should we think of the current provisions given the weaker consumer outlook? Is there a risk that this would need to be increased going forward?

I don't -- we expect it to -- in our forecast, we will have -- we've got a slightly higher provision that will grow at the end of the year. But it's not a lot. Based on what I can see and on the forecast that we've got in our book, we're going to be within range and within the tolerance. So no, I don't feel that to be.

I think it's worthwhile pointing out that particularly when it comes to the debtors' book, which is a lot less than competitors, our provision is only 7.9% at period end. But that's a result of a very detailed calculation with a lot of assumptions that a lot of it relates to the behavior that we've seen. And yes, it's a really informed number.

Yes. It's part of an ECL that expects a credit loss model that is run through the accounting IFRS 9. So there's not a lot you can do there. And if you can, the management overlays and stuff, which we have put our own in there on top of what the model is saying, that's what the audit is, and that's what we're capable of putting through. So that's what -- it's a forward-looking model. So I think that should give you comfort.

Just 2 more questions coming out of the strategy section, one on an existing business. So how will Mr Price Home continue to differentiate as competition increases in this market segment?

Yes. I think Mr Price Home over the years has really done an exceptional job. I think, certainly in its positioning, I think, as I was saying a little bit earlier, it's got a wide assortment. But the area that I think was lacking was its store environment. So in a business that generally attracts a higher LSM consumer than perhaps some of our another Red-Cap division, it's important that the store environment there really picks up. So in terms of revamps, we're certainly looking at that. It's all the focus on the customer and CRM and all those kind of things that we said. It's focusing on the brand health attributes. It's continually looking for comp growth via new products, new handwritings, shifting the weight of performing versus nonperforming areas of the business. And of course, we're not talking about space growth. Mr Price Home particularly has had decent space growth, and the space growth is working very well. So that's an additional lever.

Great. And then just the last question related to Studio 88. Are there any trends in South Africa with brands choosing to go directly like we've seen internationally with Nike and Adidas? And does it impact your view on the business?

Yes. Look, I think there is a trend. It's a global phenomenon. In fact, it's even been in South Africa for some time. But I think when you go back to the page that we had on Studio 88 and what that business is and what's its location strategy, this is a business that's been built on taking the brands to the people. So yes, it might be in a super-regional mall, but there aren't a lot of those, and that's typically where those international brands would go. So I think that's -- the beauty is the diversified location strategy, and so far, it's worked.

Great. Thank you. That's all the time that we have for today. There are, as I said, a number of questions, all with different nuances. So you are welcome to send us, directly to me, and I will look to get back to you just over the next couple of days. Otherwise, we'll set up some time for some post-results engagement. As always, thanks for joining today. Cheers.

Thank you.

Thanks for joining.