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

That was a great intro. Thank you. Good morning, everyone. My name is Nigel Payne, Chairman of the Mr Price Group. On behalf of our group, our Board, our management team, welcome. Thank you for joining us. We have just over 200 attendees in-person and online. Most of our major shareholders, most of the larger institutional investors, 15 significant international investors. So in total, that covers just over 2/3 of our total share capital. Also all 9 sell-side analysts, all the major financial media. And then I'm just going to click through to -- some of the faces that you know well, Mark and Praneel, Mr Price Group CEO and CFO, you've spoken to them before. They'll be up here in a moment. And then welcome to South Africa. Thanks for being able to join us, the CEO and the CFO of NKD,, Alexander Schmokel and Nils Bolender. Nils, I think, is going to be running Comrades next year in Mr Price Colors. Also just thanks to Investec for hosting us. And just as a practicality, given the number of people online and international, et cetera, we're going to go start to finish, no stops. So bathrooms are out there, and you'll see them directly across, but we aren't planning on having a break. So pleased that at last we've got to the 17th of March. It's been tough for you, it's been tough for us not being able to tell the story until we completed all of our regulatory requirements. Notwithstanding our market-leading reputation for transparency, we just had to comply with the CAT 2, the JSE CAT 2, and the transaction confidentiality clauses until we had dealt with all of the regulatory approvals. Per our recent SENS, all of the European and SA Reserve Bank regulatory approvals have been done. And then the application by Benguela to the TRP to overturn the JSE's categorization of this as a CAT 2 and our compliance with that. The TRP finalized that early last week and dismissed Benguela's application with costs. So where we are now? The acquisition is final. It will be completed 2 weeks today, the 31st of March. So what that means is also in terms of our confidentiality agreements at the start of doing due diligence, which was also a significant constraint on what we're able to share, we're now beyond that. The sellers are comfortable for Alexander and Nils to be with us and for us to share the content we can share today. In terms of the 31st of March closing, and Praneel will talk more to this, 31 March is actually day 1 of our new financial year or day 2 of our new financial year based on the retail calendar. So when we put out our Mr Price 31 March 2026 year-end results, the balance sheet won't include all of the NKD assets, et cetera. We will pick those up into reporting beyond that. Just in terms of what we can report. It is still a CAT 2. So JSE Listings Requirements, we can't report detailed projections for the next 2 years. No earnings guidelines for 2026 or 2027. We're also not yet to give an update on current Mr Price trading. The info that we are able to share is based on NKD management's 5-year business plans and forecasts. Those were subject -- particularly the underlying commercial assumptions were subject to detailed due diligence by Mr Price and our professional advisers as part of the process. So we're actually also comfortable with what's in there. They are based on NKD is a December year-end. So the years are December, December, December. Obviously, those will change in due course to match our March year-end. The numbers haven't been audited. The baseline, the most recent audited is December 2024 to the extent that that's relevant because things change, capital structures, that kind of thing. The 2025 December year-end audit is in process. It's the responsibility of the outgoing Board of Directors, if I can call it that, and that will be finalized in due course, a few weeks or a few months from now. So the numbers based on the 5-year business plans, we're comfortable with them. It uses management accounting policies, so not linked directly to IFRS. We'll do some IFRS true-ups in due course post closing and obviously, in our future reporting. All of the information is constant currency. So there's no switch through into rand. So what you're seeing is the various underlying European currencies. And then the last slide in our pack -- and we've got some detailed annexes. The last slide sets out obvious disclaimers and limitations in relation to the data. We don't yet open -- we don't yet own that company. So the exciting part: Growth has been a key focus of the Mr Price Board for the last 6 or 7 years, our Board, our senior executive. Different types of growth, organic growth. Mr Price has got a great track record of building new concepts. Over the last number of years, Mr Price Home, Mr Price Sports, more recently, Mr Price Kids. We grow them, we scale them. One of the things of a jar of secret sauce in Mr Price that drives our retail metrics and our overall financial performance is how to get something to scale and then really grow it properly, and that's where the real value happened. So organic growth, including new concepts. And then starting about 6 years ago, a process to look at acquisitive growth. We did an enormous amount of homework. Many, many Board meetings, strategy sessions, a lot of work by management and experts, lots of learnings from successes and failures of others doing acquisitions, not only retailers but others and detailed list of dos and don'ts. During that time, we walked away from many, many possible acquisitions, including a number that turned out to be bad, also including a number that turned out to be good but weren't appropriate for us. Either they were too big and too expensive or they weren't an appropriate [ strategic ]. I've got to say one thing I'm really, really proud of our Board and our management. We're very good and disciplined at saying no. And there have been lots and lots of nos. The yeses, you know them, Power Fashion, Yuppiechef, Studio 88, and you've seen the results and the contribution that they've made to us. Another positive. Those were funded from Mr Price's free cash flow after our pretty generous dividend payout ratio that we've kept consistently. Also, we are very financially disciplined. There's a limit to how much debt we prepared to have on our balance sheet. We didn't ever exceed those limits. And in the last 40 years, we haven't done a capital raise. So that's funded out of cash flow post dividends. It's a mindset that we like. About 3 years ago -- and we always knew we would get there, but about 3 years ago, we then defined our South African acquisitions runway is probably done. We've got the things we want. We filled in the blocks that where we weren't playing. We're not going to pursue other things here. it's time to start looking internationally. We then revised all of our dos and don'ts to turn them into an international context and started looking where to play. So it's where to play, when to play, how to play, who to play with and how big should the play be, but where to play. We looked at the whole world and narrowed the geographies down, eliminated lots of places that we felt either the growth opportunity wasn't there or the PE multiples were too high or we didn't like the level of competition or there was complexity of various types. And we narrowed the geographies down to 2 places where we thought there really are great opportunities. Priority #1, the one that we are now talking about today, being Central and Eastern Europe. So yes, that's our focus. And our mindset has been do the right deal or don't do a deal. And we're very confident that we are doing the right deal. I also want to thank the Mr Price Board. And in addition, I'll call out our Audit Committee. We decided many years ago, acquisitive growth is so important, and this transaction we're talking about today is probably the largest decision taken by the Mr Price Board maybe in our 40-year history. We didn't ever form an acquisition committee. The entire Board has been involved in everything throughout. And something that I'm quite pleased about as the Chairman, our non-exec remuneration model does not provide for fees for special Board meetings. So I've been able to convene lots and lots and lots of them. No one is ever able to say fees for the sake of meetings. We're not a parastatal. And yes, thanks again for the diligence and the contribution and the value added by our Board members, many of whom have significant international M&A experience. In our due diligence and learnings, yes, we learned from the failures, and there have been a number, including amongst South African retailers, but we also try to learn the lessons from the successes. And there have been a number of international growth programs by South African listed companies that have turned out very, very well, and we've tried to learn from them. Obviously, the biggest one of the lot, Naspers Process, but also Bidcorp, Vukile, Pepco and others, we've done the best to learn from them. So detailed work over a 3-year period that the thing that happened the most in that whole time was still saying no until we found the one that we liked, NKD, in the geography that we liked, the size that we liked, the nature of the business that we liked, Mark, in particular, is going to talk a lot more about that, and then Alexander will expand on that. So if I can say, NKD very closely matched our key criteria and did not cross any of our red lines, any of our no-go zones. We didn't have to pull back on all . We like this so much that we'll put a line through some of our no-gos. So we really do believe NKD is the right fit for the Mr Price Group. And looking at it from an NKD perspective, having been owned -- and Mark can expand as well and Alexander, having been owned for 2 rounds of private equity, now of a retail family, very, very similar mindset, very similar culture, very similar customer base, very similar retail and financial metrics. So this also empowers NKD to reach its full potential as part of a value group very similar to Mr Price. So today's agenda, a significant amount of it, key messages and the investment case from our CEO, Mark Blair. Then Praneel will talk about the financial impacts of the transaction. Alexander is going to tell you a lot more about NKD. Quite a few slides and a lot more information in the appendices, still within the constraints that I mentioned earlier on as to what we are allowed to cover and what we aren't. But yes, pleasingly, we are now outside of the confidentiality constraints agreed at DD time. And Mark might mention it, but also just want to call out the sellers. Buying from private equity is often difficult. The integrity of the sellers in this process, the transparency, yes, it's not often seen when you buy from private equity. Certainly, the things we asked for, we were able to get, and we believe that they were the true version, et cetera, very robust DD as Mark is going to cover. So let's get down to the real stuff, and I'll hand over to Mark. Thank you again all for joining us. Obviously, a bit later on, we'll have Q&A.

Good morning, everybody, and welcome from me as well. Yes, certainly, the things that Nigel was talking about in terms of the process that Mr Price had been through strategically over the last couple of years. I think it was a very, very important foundation for us. We're not going to go through that again. We're very happy to take questions on it. At the back of the deck, there's -- there are appendices that talk you through it again, but we did present that at December, so no real need to do that again. And then the second part that we're not repeating is a lot of the detail around why the market that we chose. Just refer to the slides that reinforces all the key things that we considered. But guys, the great news is that there's been quite a lot of noise over the last couple of months. Firstly, I'm just as excited about NKD as the day that we announced it in December. And hopefully, after we've all had a chance to tell the story and you've heard from the German management team, you're going to leave the room and leave the presentation with quite a good and positive view on the company and its prospects. I had read somewhere before this presentation that obviously, Mr Price is going to put a lot of spin on this. They have to. But I think certainly, the people and the faces I'm seeing in the room and some of the names -- many of the names that I've seen that have dialed in, you know Mr Price, and you know how our Board works, and you know how Praneel and myself work, and we're certainly not going to put spin on it. We haven't got a reputation for doing that. But what we will guarantee you and provide is a very clear view of the company and a very clear view of why we think the company has got great potential. And hopefully, that rubs off for you as well. The speculation that did transpire in December, I feel that we're going to put to bed some of the really big comments that were made. And my view is that at the time, it was completely overplayed. But we do appreciate that there wasn't a lot of information. But those are the big questions that we're going to be asking -- answering today. The key thing that we should never forget as well is that when we did announce the transaction, the numbers that were available were December 2023 numbers. And we said, don't forget that if -- that once we bring it into our world, the first year that it's going to be incorporated into Mr Price Group is going to be the 2027 financial year. So don't lose sight of '23 set of results to a 2027 set of financial results when you're going to see it in our world and obviously, a lot can transpire in that period. My final sort of introductory comment is, guys, don't forget everything here that we're talking about, we are making voluntary disclosures. We don't have to say all these things. And just relative to the other acquisitions we've made, we're going a lot further than we've gone with our previous acquisitions. So great for transparency, but I think the circumstances in this case does warrant it. The first thing that Nigel was talking about was introducing growth beyond our core market. And this is not an admission that we don't like the South African market anymore. It's by far the bulk of our business, as you know. There's a lot of things that are probably green shoots at this point. Sometimes wars get in the way and soften some of these green shoots temporarily, but we're still long-term positive on South Africa, and we're still going to carry on investing and doing everything that we've done to make sure that we keep our position in South Africa and our consistent performance level that we have enjoyed in the last couple of years. So diversifying -- as Nigel was saying, diversifying our earnings growth was a key consideration for us. But very importantly, didn't want to go and acquire a small asset that really didn't give us a platform, and that is the benefit of acquiring something with scale. But very, very key, preserving SA leadership to focus on SA and having a highly capable management team in Germany focusing on Germany, and the reporting lines between the 2 companies, Alexander is going to report to me, Nils reports to Alexander, but he'll have a dotted line to Praneel. That is it. There's no other tentacles coming into the business from either side. But of course, there are synergies, and I'll talk a little bit about that later. Very importantly, and I think you've got a sense of it when Nigel was talking, and you'll get a further sense as we talk through things. Does this thing look familiar? Because you start playing out the narrative and there's so many things that are similar to the Mr Price journey over the years. The great thing is, we both know value retailing and having a private-label dominant cash-focused businesses, as Nigel said, that's what's put in the position that we've been able to make these acquisitions. So you'll understand the NKD business a lot better shortly, but it's not a high street, high-rental model. It's a low-cost value retailer. And you know your business on those grounds, we know ours. That's why the fit -- it fits like a glove. Also, the European market, whilst I say, there's a slide deck on it a little bit later as an appendix. I just wanted to reinforce the absolute size of the European market. And yes, there is competition, but we'd be foolish to think that there isn't competition in South Africa at the value end. So if you look at the total retail sales market -- retail sales in the markets that NKD operates, so it's not including any potential other market that it may extend to, retail sales are $1.8 trillion. Relative to South Africa, which is $109 billion, that's a factor of almost 17x the market. So it does give you an appreciation of the numbers at play here. And of course, there's potential for growth beyond as well. The path to earnings accretion is obviously a very key consideration for us. And some people when they saw the December '23 numbers, that might have led to raising some questions. But we firmly believe that the past history and the past performance is not reflective of the future potential of this business. I'm not just saying that as a bunch of words, I'm going to take you through some things that led up to the '24 period, and Alexander is going to overlay some of his own thoughts on that, and I think you'll get a much better sense why I'm saying that. The great thing is -- and this is based on obviously all assumptions that we've got now. And by the way, what Nigel didn't say is any forecast that we've got and the long-term projection when I get to the vision and that kind of stuff, these are all numbers that were relevant and signed off at the time that we actually announced the transaction. But obviously, things change. We'll have to see does the interest rate trajectory carry on, what impact does the war have. But guys, it is going to be temporary. But as we stand right now, we're anticipating earnings accretion in year 2, which I think will land very well, and that's one of the biggest messages that we've got for you. And I think we'll probably remove quite a bit of the speculation. The great thing is that when we came in and we started looking at this business, we had the same line of sight to view some of the historical stuff, some of the more recent information, but we certainly didn't want to come in and have a turnaround. The business plan is working, what management have put in place, and I'll come into when Nils and Alexander were appointed shortly, but what they've put in place is working, and it's an extension of that. It's not coming in and having to change everything and that -- if we had to do that in a foreign market, we would have stepped away quite early in the process. The other thing is that the increased performance going forward isn't dependent on financial engineering. Of course, we've got debt, and I think there's opportunities to reduce that cost of debt, as we'll explain just now. And it doesn't depend on synergies. It doesn't mean that there's not going to be. We've got a whole list of things that we're ready to talk to NKD about, but they're not factored into any of our projections. The thing that we've been known for many years now is our capital discipline. We certainly aim to extend that track record. And it is based, as Nigel said, on strong cash generation, a healthy balance sheet and metrics which, over the period that Mr Price evolved, became really excellent metrics. And I firmly believe that those are the things that are going to play out in NKD as well. Nigel did mention that the dividend policy is expected to remain unchanged. And there you can see what we're expecting in terms of potential debt levels and the range between 1.5 to 1.7x EBITDA. As we said, the cash-generative businesses, there's a chance -- a strong likelihood that they're going to be below that in the long term, but we'll have to then see what other investment that we want to make. I did talk about other potential geographies. So we'll have to see what comes out of that. But there's a lot of headroom between the cash generation, the forecast cash balances, debt-to-EBITDA ratios and our debt covenants. Item #6, the first point is making sure that we retain key management. That's absolutely top of our agenda now that we're about to pass the date soon that the business becomes a Mr Price Group asset. And very importantly, we're not trying to run that business from South Africa. Yes, there's going to be lots to discuss, lots will go through. We're bouncing ideas off each other. But it's not like some of our earlier forays, going back a number of years, where we had operations in foreign territories that we're trying to run off the side of our people's day jobs and of our South African desks. So my role, Praneel's role will be to have strategic oversight, obviously, sign off on capital allocation, but it's really around driving growth and that's profitability and it's the improvement of metrics. I just wanted to draw a comparison at this point as well because when we announced the Studio 88 transaction a number of years ago, there were some skeptics in that process as well. And it was around maybe commonly -- or a view in some that it was already a mature business. And it's a branded business, what does Mr Price know about brands. But I can tell you that -- and obviously, the scale of that asset was a lot larger than some of the other ones that we've done. But the Studio 88 acquisition has worked out brilliantly for our group. Year after year, they've performed. And when Nigel was talking about culture and like-mindedness, this is playing out in NKD too. It's also critical just to evaluate things that when you do acquire a larger company with scale, you actually buy a certain level of expertise that you don't get in smaller businesses. And some of the smaller businesses that we acquired, in fact, we had to change whole management teams over time. I'm very confident this isn't the case in NKD. So a lot of learnings from Studio 88, but I think I'm feeling very comfortable where we are with those learnings relative to the NKD transaction. I can certainly look back on the other acquisitions we've made, and we have disclosed the level of profitability that they brought to the group. I'm equally confident that NKD is going to deliver the same kind of end result. So if we go then through to the NKD investment case -- I won't read this all out. We've updated the store numbers to the end of December '25. So you can see there, 2,178 stores. The Apparel and Homeware splits roughly the same as Mr Price. The online contribution, roughly the same as Mr Price. But you can read those points there. But for me, the absolutely key thing is a comprehensive range of high-quality everyday items for the entire family at compelling price points. Where we heard that before? That's the Mr Price business, too. Key thing in this business, Alexander will take you through it in a minute, is that the difference to Mr Price is that Mr Price is a lot more fashion forward, slightly younger customer, but I'll leave it to Alexander. Okay. This is the extended management team, some really, really good skills. And we haven't put a date to it yet. We'll have to speak to the NKD management team, Alexander, Nils, and we'll have to see what an opportune time is to have a road show that we can actually go and show you the operations. Visit the head office, meet the management team, meet -- go on the tour of the adjacent distribution center, go in store visits, and I think that will give you another further level of insight into the business. Okay. Looking at the key investment highlights, and I'll touch on these at a very high level. Obviously, a material entry into resilient European value and apparel and homeware markets, and I did talk about the size of the market. But when you look at the value segment, it accounts for 22% of the total addressable market, which is about EUR 500 billion. And it's expected to grow -- and these aren't our forecasts, expected to grow at twice the pace of the overall retail sales in the next 5 years. The business itself is established for 60 years, whilst there might have been wobbles in the sort of COVID, post-COVID year, Alexander will tell you what the long-term performance has been like and reasons why the businesses -- any business, I guess, could falter in terms of performance. I guess there's a question, is it strategy? Is it what's happening in operations? And I guess, at the end of the day, who's leading that business and what decisions were made. Great, clearly differentiated private-label business, very clear positioning. So whilst there is competition in the market, there's little nuances as to exactly how these businesses play in a slightly different space, and we'll take you through that in a minute as well. Cash sales I've mentioned, appropriate omnichannel, I've mentioned. It's very easy to go build platforms and invest a lot of money online, but we'll also take you through some of the online considerations, especially relative to the likes of Shein and Alexander will take you through that. But what we really did like about this business is the extensive runway that it does present in terms of growth. I think one of the people -- analysts or investors wrote in December was that of the white spaces the business had identified, that we were going to open these in the next 5 years. That's not the case, okay? There are 1,900 white spaces identified, but I'll take you through some store numbers certainly for the next 5 years, relative to that number of white spaces. Okay. So the other thing, is looking at the supply chain, and Alexander will go into that as well. It is fully integrated in terms of the in-house logistics network, and they've got some really, really good long-standing supplier relationships that are -- and these suppliers are highly CSR compliant as you'd expect from a European retailer. So key relationships is absolutely important. And Alexander will take you through that, but also with those suppliers, what level of quality we've actually got in the merchandise supply, which is also a differentiator to the market. The data-driven culture, it is a standout that when we started talking to the business, the skills that they've actually got in the business. I think we can, Mr Price Group, can learn from some of those. And I think it's -- I don't think we'll do justice to it today. If we do get this roadshow and get you attending there, it will be a great time to showcase all the data science capabilities that are informing decisions. You can see there that a tool that aided site selection had a massive uplift in ROIC since its introduction. And the good news is that those tools aren't in all markets yet. So further benefit to come. So quite happy that there's an overall multilayered growth strategy. There's a long-term plan. We're not buying this business for this year or next year. We've got a long -- long-term view. And absolutely key is that despite what happens to the top line, the bottom line is going to grow at a faster rate, and that's also how we run our business. I said I was going to talk about some of the history. Now when you -- if you start off in 2019, which is when TDR actually, that's the private equity seller, acquired the business. It wasn't soon after that, that COVID hit, and we all know how COVID impacted retailers around the world. So whether it was Phase 1 or Phase 2 of COVID, that extended into 2020 and 2021. And the period after that, the next 2 years, inflation went through the roof. And particularly in the big country like Germany, I think it was something like 35-year highs in terms of the inflation rate, 8.6% in 2022 and in 2023, 5.9%. Guys, we have to look at that inflation rate relative to the ECB inflation rate target of around 2%. So when inflation is, let's just call it, roughly 3.5x, the targeted inflation rate, just translate to what that would mean in South Africa, relative to South African inflation rate. That would mean that inflation would probably be in the double digits, and we all know how that would decimate retail locally. So a very high inflation environment. GDP growth was slower, and we can see that the inflation tapered off in 2024, pretty stable in 2025, and GDP started to uptick slightly. So that was probably an unfortunate set of events that happened. It was a global phenomenon. But certainly -- and it doesn't mean that good things weren't happening in that business after TDR acquired it. It's just that you couldn't see many of them taking hold because of the devastation of COVID and inflation. The great thing is, and this is the thing that excited us the most is that the most significant impact in this business started in 2023 and 2022 when the current executive team were appointed. Very clear on what they had to do, very clear on their priorities. And we can also be skeptical and look back and look at all these wonderful things they're doing. But the question that we have to ask ourselves, are these initiatives making a difference. Are they gaining traction? And based on that, does this create a positive trajectory going forward? And I guess that's why we're here today. Alexander, I think it's probably a good time because me giving a sort of high-level economic overview of what happened in the markets and impacted performance, I think it's probably worthwhile if Alexander explains it himself to you and also gives you a much longer view of the history of the company.

Thank you very much, Mark. First of all, welcome, and thank you for the opportunity to speak to you. My name is Alexander Schmokel. I'm now about 40 years retail, all the 40 years brick-and-mortar retail, never the online and the whole time in the discount business. So people are saying he only knows cheap, maybe yes, but he cannot. And that's the point, who I am? And I started in NKD in the beginning of 2017. When we look at the history of NKD, then Mark has now showed a period from 2019 until yet. And maybe it makes sense to take a little further back and looking back to the beginnings. So the company is very old. It's founded in 1962. So it's over 60 years and was the first European apparel discounter. It was -- there was only a food discounter and never apparel. So NKD was the first in Europe who has done the business. Over the years, it grew up, and it was always earned a lot of money and had a very good development over the years until a point at about 2009, where the old owner hired a management, and this management made a lot of wrong decisions. So they made too fast expansion. They spent money for private jets and everything, which was not really useful for the customer. And at least they have stored really big amounts of money in the company. This led us to the point that the management is gone into jail and the owner said, "Okay, I don't want to run the business further on, and I will sell it." He was fed up of the situation. And though he sold in these times, in 2013, the company, to private equity, and sold it to OpCapita. For me, it's -- I had now 2 rounds in private equity, and I have to say 2 completely different rounds because even private equity, is not everybody's dream. So in the first round with OpCapita, it was very clear. OpCapita is PE owner who's buying cheap companies, restructuring the companies and then selling the companies. And this was the point where they hired the new management, and I'm part of the new management, to restructure the company. And so we did it. We closed down the stores which didn't work. We built up a sourcing organization, a very good buying team, a management team at least. And then in 2019, the company was again completely profitable. And at this point, OpCapita sold the company to TDR. TDR, a completely different kind of private equity. They would never touch a company which has to be restructured. They only buy companies which are already restructured. And they are thinking about growth. So in the beginning, and it was the first trial for them to go into the retail market because the investments have not been before in retail. And so this was a trial for them. And we sat together and said, "Okay, how can be the win-win situation?" And we said, "Okay, we can teach you how retail is working." And on the other side, they have been completely professional in data science. And they said, "Okay, we'll send you a data science team to build up your own data science team." And we have taken the opportunity and have built something up, which has not been existing in retail at this point of time. So all our decisions from this point on have been driven by data knowledge and by data science. So we've been able to get the buying -- knowing exactly what we have to buy, knowing what is the best prices we can get, knowing what quantities we bought, knowing where we have to open our stores, and all this is driven by data science. And this gave us a big potential, which you even see in the financial numbers, which developed until this time. So we have a gross profit margin, which is best of class, I think even when we don't talk about numbers today. And so it's completely positive. And so we are gun together with TDR all the way. As Mark said, we had really the bad luck of COVID because exactly in this time when we developed a lot of new things and good things, we have been hit by COVID. And even after COVID, we had 1 or 2 black swan years, with supply chain disruptions, container prices, Suez Canal, war in Ukraine and so on. So it has been tough years. And in these years, you could not see the success which we made with all the things we have implemented. And now since 2020 -- end of 2023, beginning 2024, it's the first time where you have a regular business again. And now we are seeing very clear the impact of all the things which we have done and really can get in the harvest, which we have worked for several years together with TDR. And so it was very clear for TDR, private equity, typical time, normally 5 years to hold a company. In this case, it was a little bit longer because of COVID, but it was clear that now when everything is working well, it's the right time to sell the company. And so we started to look in the market and did an exit and have been completely involved by the owner to do the exit and had a lot of discussions, and then we learned Mr Price. And it was unbelievable for me, frankly speaking, because we said, "Oh, no, it's the same. So it's really the same size of the stores. The apparel they sell are very similar. Even the behavior and the kindness of the people very close to this." And we said, "Okay, it's a really big fit at least." And so we pushed to get it done. And we are very happy. And Mark said it already, TDR was a really good owner. It was really for private equity, it was very good. And they always have been partner and not owner only. So we have been really a good partnership with them. And for this reason, we could develop it. But we are happy now to become part of Mr Price because it's a completely different thing. Being in such a family or working for private equity, it's completely different. So I think we will get a lot of possibilities now which we could not have with private equity. And this is the reason why we are very happy to become part of the company.

Thanks, Alexander. I think that was very well said. So I think life with a retail partner is going to be great for you guys. And of course, what we're going to be focused on is just changing that line of sight from the EBITDA level to profit after tax level. We know where private equity line of sight is, and I think there's some good things we can do below that line. So yes, thanks for sharing that, Alexander. Moving on to our vision for NKD. First of all, by 2030 -- and this is the time frame that we're going to be speaking to today. It's the plan to 2030, is by 2030, it will be EUR 1 billion sales business, delivering a double-digit operating margin. It's going to be underpinned by continued focus on like-for-like growth in core markets, which I'll chat about. Accelerated store openings and decelerated store closures. I'll also give you some insight into that. Focused expansion in Germany, Poland and Italy. Those are the 3 biggest markets when you look at store numbers going forward. The good news is that if for some reason, any of those markets don't work out, there's enough opportunities to make up for the deficit in store numbers. So the top line should still be achievable. So great position to be in. But of course, we want to do justice to those high potential markets. And then despite what Alexander was saying about the great job done on GP margin, we believe there's still some space to grow the GP margin and further efficiencies, including data science across markets, but also some efficiencies with Mr Price, which just to repeat, hasn't been baked into our forecast at this stage, all these targets. Then just to bring that a little bit closer in terms of actual numbers. So I did talk about sales going from EUR 712 million to EUR 1 billion. That's a compound growth rate of 6.5%. Gross margin edging from its level of around 62% to 62% to 64% range and the compound growth for EBIT over the period in the range of 15% to 20% compounded per annum. You can see there, the EBIT margin, 8% to 10% range and what we're expecting in terms of store numbers as well. And that's obviously a net store number gain of 600-odd. But in that, of course, is higher openings and closures. Then looking at cash and capital management. First of all, under debt management, is obviously to manage and reduce the level of debt as we can. And within that, also, there's a really good opportunity to manage the cost of debt, which hasn't been factored in either. I'm not going to go into detail at this stage, but it's something that the guys are really focused on. Then looking at -- because there's also a comment in December, and I'm just sharing anecdotes that I've heard with you that this business is going to need another cash injection soon. It's absolute nonsense. This business is highly cash generative. It can fund capital expenditure of EUR 25 million per annum, and it's got free cash flow thereafter of about EUR 40 million per annum. So certainly, in terms of its own and current growth projections, it can fund those easily out of what it has at its disposal and more. So very comfortable with the cash generation there. If I can just go into a little bit more detail around the sales growth, so 6.5% top line, probably doesn't sound that robust to a lot of people that are present here today, but it is in a different market, and let's not lose sight of that. But let's start breaking down that 6.5%. And obviously, it starts with like-for-like sales. I think the business has done a pretty good job on making sure that like-for-like sales growth is ahead of inflation, and we're targeting on average 3% like-for-likes. And you can see there what would support that, including economic factors in country. And I think Germany, in particular, the biggest market is poised for a new phase of growth now as well, given the investment plans. Space growth is averaging. So on top of the like-for-like space growth is 3% to 4% per annum. But as I said, that it is a net. New space will average around 7% per annum and accelerate in that period. So although it's an average of 7%, it will go faster in the later years, and that's due to Italy and Poland. But as I said, if Poland, for example, doesn't work because it's still a test territory and we're not -- and we're confident that it will work, we can easily make up the store numbers elsewhere. The 1,900 white spaces, as I said, aren't planned to be open in the next 5 years. And I think from your point of view, the fact that 40% of the new store openings are going to be in the main market that the business knows extremely well, delivers really good returns. It's a pretty safe bet and the geo-tool is to identify the right spaces is really well bedded down in Germany. So looking good there. The store closures, Alexander can go into those a bit later as well. They are higher initially. They do come down over the period, and that talks to certain challenges within the portfolio currently. But although store closures affect the top line, they detract from revenue. These are initially loss-making stores that have a positive impact on profitability. So quite happy to give up the top line to get that store base closer to where we want it to be. Looking at gross margin, just moving on a page. This is where you can see and let's just start off by looking at that graph on the bottom right. And that's the GP margin trajectory and the increase that we've seen in the last 3 or 4 years. As we said, that it was post-COVID. Alexander spoke to that. And there, you can see all the things that have driven it. Average selling price increases, 26%. The average basket size improved by 32% over the period, and the markdowns, and this is at retail, improved by 3%. So all in all, added EUR 100 million to gross profit over the period. Looking at its operating margin, and this is no different from the Mr Price Group. We're looking for positive operating leverage, lean cost structures, which they do have, but it's got to be -- it's lean in comparison to European competitors and the European market. Continual focus on efficiency, and that will come with further data science, and it will also come with our collaboration with the company. So when you get 2 management teams and you get a retailer now having a life with a retail partner, I think some really powerful things are possible. I've listed a whole bunch of things there. These are things that aren't factored into any business case that we've actually developed and therefore, weren't factored into any acquisition price. But of course, the first one starts, well, we're taking over a business that is cash flush. It's got a significant amount of cash on its balance sheet already. And I just mentioned the extent to which it generates cash by, I'd say, intense focus on working capital management, and I think they've done a really good job at that. So with that level of cash, there could be an appetite, and we've got to land. We've got to work together. We've got to get comfortable in our own styles and pace. And then we've got to see is there an appetite to roll out some of these new space potentials more aggressively. But of course, what we want to do is make sure that we're keeping the model tight as we do this. So we're not about to expand at all cost. We've got to do it knowing that whatever store that we're investing in, we're getting the return on operating assets. They're delivering the returns and that we don't weaken the model. But certainly, what we could do is look at accelerating rollouts. And whilst management right now has a view on other potential markets they're not in already and the reasons that they're confident of those, we're not focused on those at the moment. We -- it could become a focus. But I think in the markets that we've got, with the opportunities that we've identified already, there's enough to keep us busy, and there's enough there to keep that 2030 vision intact without going further beyond. Of course, if opportunity arises, that a market is now extremely attractive for us, we will take that view at that time. But it's -- and it's nice having that kind of opportunity up your sleeve, so to speak. What we haven't done, and this is one of the reasons also for acquiring a platform in country, we haven't factored in any potential addition of any of the Mr Price Group brands into any of those markets. It's not a huge priority. But over time, we'll evaluate them and think quite carefully about that. And that is obviously a very different approach to a European management team assessing our brands for suitability in those markets and not the way that we did it many years ago by opening markets and trying to run them from South Africa when we really didn't have a lot of good insight into the consumer and what drove consumer behavior and tastes. Then I've spoken a bit about treasury management, FX, the cost of debt management, where there's some opportunities. And yes, I think there's a whole lot of potential synergies. The list goes way, way beyond this, but combined buying power, has got to be a massive one. NKD has got a buying house in the East. We're going to evaluate that for suitability for us. And of course, adding volumes to our existing buying power can also be one of the things that opens up margins quite nicely. Also key, we've got really, really strong strategic relationships with the carriers, that's the vessels, vessel owners. And of course, then bringing that into our fold and then assessing -- or accessing the shipping rates that we get, will add further potential. Data science I've spoken about. And then it's the sharing of everything that a modern retailer does. Whilst I've heard many, many times over the last couple of weeks that whilst NKD is very strong in certain parts, in other parts, it reminds us quite strongly of Mr Price a number of years ago. So the theater of retail, what goes into retail, merchandising, all those things, that's where I said there's no reporting relationship from Mr Price people in or vice versa, except at exec management, there will be an exploration of ideas and sharing of information and opening doors to encourage conversations, all with the potential of making sure that we do justice to the opportunity at hand, but that we don't lose sight of why people employed in their day jobs first. So I'll manage that process very carefully. All right. That's it from me. I'm going to hand over -- I will come back later, but I'm going to hand over to Praneel, who's going to take you through the transaction impact.

Thanks, Mark, and a very good morning to all of you. It's really good to see so many familiar faces in person and also a very good morning to everyone joining us online on the webcast this morning. I think it's also great for us to be able to share more information with you than we were able to in December and thereafter. You can imagine we were as frustrated with that point in time as you were. So I think today is a great step in the right direction for us to maybe dispel some of the myths that have developed over the last couple of months and close out some of that gap. I'm going to start off by just looking at or recapping on the transaction summary. You guys will remember this from the SENS announcement that we did on the 10th of December. You'll also recall that the mechanism was a locked box mechanism at the 30th of June 2025. And at that stage, we had noted in the SENS that the enterprise value was EUR 500 million. And the purchase consideration was made up of 2 components, one being the equity value or the base purchase price of EUR 415 million and then the shareholder loan of EUR 38.5 million. Those 2 pieces together combined became the purchase consideration, which we noted would escalate at the agreed escalation rate over the period until closing. And as you heard from Nigel a bit earlier, now that the regulatory conditions precedents have closed and the date is the 31st of March 2026, we now get to an anticipated closing purchase consideration of EUR 478 million. We also noted in the SENS at that time that the maximum purchase price was EUR 487 million. And we also noted that it was really important from a risk management strategy perspective that we would hedge the transaction because the transaction of this size and nature obviously required the relevant risk application. We also then wanted to note that the group intends to apply hedge accounting to this transaction. And we also said on the 10th of December that the transaction will be settled in cash in a combination of both cash available at that stage together with the remainder in debt. So I've spent the last 3 to 4 months with all our existing banking relationships. And I must say it's been quite an interesting process. My team and I have spent lots of time interrogating different debt instruments that are available in the market together working with those relationships that we've built on over the years with some of our key bankers to be able to settle on the medium-term capital requirements for the business. And as I note on the slide there that we've arranged term debt facilities of up to ZAR 7 billion for the business. Just spending a few moments to consider the balance sheet. So I just wanted to talk to you a bit about some of the key items on the balance sheet. I think you all would appreciate that the South African balance sheet was very strong. We were ungeared in terms of long-term debt. So where we landed in terms of the debt facilities that we've arranged now, we're very comfortable that there's significant headroom in the covenants, as you can imagine. And Mark mentioned earlier, the group net debt to EBITDA on a pre-IFRS 16 basis, settling in that range of 1.5 to 1.75x. And obviously, lots of opportunity for us through the cash-generative business model to manage debt down quicker if we chose to do so. Also just to note, in SA up to ZAR 7 billion, but also we made a note there about the debt in Germany, ZAR 1.2 billion as at the lockbox date of the 30th of June. And that's something that the German business already from a gearing perspective, we're already incorporating some debt in terms of how their capital structure plays out. I think quite important, and I think Nigel touched on it and so did Mark. So quite a big headline, I think, for everyone to take away today is that from a capital allocation perspective, what you've come to love us for is that dividend payout ratio of 63% of HEPS. That's something that we not anticipate changing in terms of how we manage capital going forward. And you guys know also the second big capital allocation for the SA business has always been into CapEx related to new store rollouts, and that's something that will continue based on the returns that we see coming from the South African returns in terms of the return on operating assets. Quite important also, I think another headline, you've heard this a few times today, but really to hit on that NKD's business model can self-fund the growth that Mark spoke about just now. He mentioned up to 100 net stores per annum over the next 5 years, and all of that has been incorporated in the 5-year forward-looking business plan from a funding perspective for NKD. You'll hear a bit later from Alexander when he speaks about some of the store economics. So he'll talk to you about the maturity -- store maturity and payback periods. And without stealing his thunder, I guess, you'll see that it's very similar to Mr Price perspective in terms of how that capital pays back on the store investments. Another key point, I think you've heard Mark was talking about people making comments around the debt and the ability to fund itself, but the cash at lockbox date on the NKD balance sheet was greater than the long-term debt at that stage, which really gives you comfort about the ability of the business to manage debt and gives us optionality in terms of how that capital structure lands. Cash flow and capital management. So I guess another area that you guys have come to know in the South African management team for in terms of how we run the business is that we're very, very focused on metrics. And one of the key ones is the cash conversion ratio. That's not about to change. We're going to continue obviously focusing on cash conversion. And again, another metric where when we looked at it, we saw NKD's metric and thought this looks very similar to Mr Price Group from a cash conversion perspective. I think the other great thing that we see in the 5-year business plan is the ability of the business also to manage working capital really well. So over the 5-year period, we have seen -- and we've seen the management team already starting to look at ways to reduce the inventory days. Alexander just touched on earlier in terms of some of the disruptions that the business has seen in the past, similar to disruptions we saw here in SA in terms of having to add lead time buffers into inventory procurement processes over the last 24 months when there were challenges. So the business then will also normalize the inventory days and also doing quite a good job in terms of understanding the accounts payable cycle and how increasing those days will help the working capital management for that business. From a treasury management, I'm going to spend a lot of my time in this space going forward, it's going to be one of my key focus areas as has been over the last few months and really the management of the local debt and the international debt will require continuous discipline built into our processes to manage. I think the key thing there is really around managing the cost of debt. So obviously, there's such a big impact on profitability that it really requires us to be very clear in terms of how we allocate managing that those debt facilities. And I think the point that Mark made earlier around looking at Mr. Price, you guys know that our sales range between 88% and 90% for cash. NKD, 100% of their sales are on cash. You can understand how cash generative both these businesses are, which then gives us good optionality in terms of how we manage debt. In terms of the valuation and multiple unwind, so I think from the information that we're sharing today, and you would have seen in the discussion earlier that we're saying this quite a few times because it's been something that's been quite misconstrued and that the past of the business is not reflective of the future. So in terms of some of the information we've seen that was part of the DV process in terms of that 5-year business plan, some of those targets that Mark shared with you a bit earlier, all of those things give us really a lot of comfort around the valuation in terms of the discounted cash flow models that we used, looking at those assumptions and then also looking at other methodologies in terms of how we got to that final valuation. And I think the key headline there is after taking into consideration all of the items that we've been speaking about that we will get to earnings accretion, we anticipate that in year 2. I think the other key thing that drives the discussion is around the execution of the current business plan. So Mark spoke to the fact that the last financials you would have seen was F '23, and it's been a few years on when we start talking about F '27 moving forward. But really, the execution of that 5-year business plan and the 5-year goals that Mark spoke about does drive significant multiple unwind over the period. And then just maybe talking about the NKD's 2025 financial statements. I'm sure it's on all your minds. When will that be released? So we acknowledge the information gap that happened in December when we released the SENS announcing the transaction because all the information you had that was available at that time was the 2023 financials. And then just before Christmas, when NKD released their '24 financials, we did put out a SENS also to direct you to where those financials could be found. The F '25 financials are currently under the audit process. And as Nigel mentioned, those will be approved by the current directors. And what we're anticipating is when we get to June in terms of the MRPG [ ARR ] release, we'll be able to share with you the anticipated -- we'll anticipate to share with you the financials for 2025. I think it's important at that time also, we will share with you some context and color around the performance for 2025. In the SENS in December, we did mention that 2025 was impacted by some transaction-related costs together with some one-off costs. So we'll give you some color on those. And I think at that stage, we said there were some costs there for debt refinancing in relation to the transaction and some hedging derivative valuation costs that are in those numbers. And also mentioned before, I think the key thing is post closing, we'll start working on aligning the financial years. You know that the NKD financial year is December and ours is obviously the March year-end, work on that will start post closing. Great. Thanks so much for your attention. I'm now going to invite Alexander back on to stage. He's going to talk to you about the NKD brand, customer and the competitive positioning. Thanks, Alex.

Okay. So let's talk a little bit about products and market and customers and all these things. So what we are selling, we are selling mainly apparel. So 75% of our product range is apparel. 20% is home and 5% is a little bit others like electronics and such things. So our main customer is -- so we are selling to customers between 30 and 65 years. But our main customer is between 45 and 60 years and about 65% of the goods we are selling are ladies apparel. So we are very strong in the ladies apparel and in the luxury section, followed by about 20% for men's and about 15% for kids. This is the product range and I think very important, as already mentioned, value products. So we are talking about value discount, which means in the discount section, but have quite good quality in our goods. So when we talk about pricing and about product, we always have to think about competitors where we are and where are our competitors. And so when we compare our main competitors in the market, there are 3 other discounters called Kik, Takko and Ernsting's family, then you see very clear that we have a very good price point where we are a price entry point and a very good value for money proposition. This is even proven by a lot of surveys where the people are saying that the quality -- and when we talk about quality, we don't only talk about product quality. We talk about POS, about our staff in the stores, about the cleaners of our stores and all these things. So all this together makes for us the view of quality. So we get quite good rating by our customers in quality, and experience in customers and in value for money. And really, there, we are outperforming most of our competitors. On the next slide, we are talking a little bit about the market. When I talk about the market, let's start on a very high level. When you have the European market, then you will see there are 3 buckets. You have luxury, you have mid-market and you have discount. When you open a European newspaper looking TV, you have day by day, you have a lot of insolvencies in the retail. But you will realize there's not a single insolvency in the luxury and there's not a single insolvency in the discount. So all the insolvencies which happen in the moment are in the mid-market. The people have still enough money to spend for luxury, the rich one. And on the other side, the mid-market is hitted by the economic situation, which we have right now. And this makes a lot of people from the mid-market trading down to the discount. And when you go into the history, in the European history, then you see that always when there was a crisis in the market, a discount was the winner. And even afterwards, he had stable the market shares, he is won in the crisis. So for us in the discount, the actual situation is not bad, even we can get more market shares because of this. When you look at the customers which are coming from the mid-market, they are trading down to the discount. And even when you see the discount, there are several different companies in the discount, which are. In the middle of the slide, you see the key competitors which we have. And this is very clear, Kik, NKD, Ernsting's family, Takko and Pepco. And these are the main player in the discount market. When we talk about these players, every one of these players has his niche. So when you go, for example, to Kik, he is the price leader. He's the cheapest one, but he's really cheap. We don't talk about quality. We talk about really price is the lowest price. On the other side, when you see Takko, for example, he's a fashion leader. He makes fast fashion for younger people in the discount. It's a little bit like Mr. Price from the product range, so more higher fashion risk than us and a little bit younger customer. Ernsting's family is specialized on kids and is very strong in kids and where we are not so strong. So every one of these players has his niche where he can operate perfect and has a good market. When the people are coming from the mid-market down and trading down, and if they would go to kick they would really realize now I'm poor, and they don't want it. So they still want to have buying in a nice shop with a good value for money. And though we are a little bit at the upper level of the discount. And though we are getting a lot of people in from the mid-market, which is coming to us and where we can gain market shares. Even on the left side of this slide, you see a little bit the average price point, where you see Kik is lower than us, as mentioned. And on the other side, Takko is a little bit higher. And for comparison, we said, okay, let's have a look on H&M, for example, then you see where we are located from the price level. When you go to the next slide, then I think a lot of people talking about Shein at the moment and Temu and how does it affect the market and how can it be? Then first of all, I think the customer in -- the European customer who's buying in Shein is the younger customer who is a strong fashion orientated. When you see on the left side, the gross purchasing of Shein customers to the market, and you see that it's very low for NKD because we have a different age structure of customer than the Shein customer and a different fashion style. There are other guys in the market who are much more heated with Shein than NKD. So for us, it's really not a big issue. When we come to the next slide, then we have to explain it a little bit. So when you see the market shares in 2019 of the brands and when you see it in 2024, then you see very clearly that the winner in the market shares in this slide is Shein. This is because this is not only a look at brick-and-mortar. This is including online business. And the online business increase in Europe was only driven by Shein. The other player has been stable and most of the additional came by Shein. And here, you see very clearly that Shein has gained market share. So we have exactly the same market shares as before. So we have not lost market share because of Shein and other players in the market have lost the market shares. So when you talk now this graph without online, then you would very clearly see that we have gained a lot of market shares when you see the brick-and-mortar business. But here, it's including online. On the other side, on the right side, you see a little bit about the brand recognization and that we are very well accepted by the customer and that NKD is a brand which is well known by the customer. We have a high NPS score and everything, the customer rating is fine. On the next slide, you see it on another way. This is all awards which we have won in the last years. And even you see that a lot of these awards are won in 8 years or 9 years in a row where we always have been by customers getting the proof that we are well accepted by the customer. When we come to the next slide, it's for me personally, it's one of the very important point. Let's talk a little bit about quality and compliance and ESG. Some minutes ago, I said already, I'm now in the business for about 40 years. And from these 40 years, I have spent most of the time in the buying and building up buying and sourcing. And for me, personally, it was always very important waking up in the morning, looking in the mirror and knowing very clearly, I don't earn my money on child labor, all these things and have always fighted for very good compliance and ESG. For this reason, the first thing which I have done when I entered the company have built up really a sourcing platform and a very good sourcing and our ESG team. So Mark already mentioned, we have our own offices in Far East, where we make our purchasing -- our purchasing offices. And part of these offices are a quality department and CSR department. So we don't produce in any factories which we don't know well. We are not the one who are jumping from one factory to the other factory because of [ ZAR 0.02 ] lower price or something. We have all long-term relationships with factories. And we don't have the small factories. We have more the bigger one, which are 100% compliant and have their own spinning, dying, water plants and everything. So we have it under control. As we are a big player in the market there, we are able to have own people in the factories who have 7 days a week controlling the factory, and we know exactly what happens. So a lot of things which are coming up in Germany where competitors have problem to make with new rules, with new laws, [indiscernible] and all these thing is for us well known because we have already implemented it years ago. So on one side, we really can sleep well because of the compliance side. And on the other side, we have a quality, which is 100% acceptable. And for the value we have, we have a very good quality. All factories are completely audited by in-house, and we have additional third parties. We check our in-house. And so everything is doubly secured, and we are completely fine with this. When we talk about sourcing, then I think it's very important. What are the countries where we are buying and where we are sourcing. So first of all, we have 3 main countries where we are working. This is -- the biggest country is Bangladesh, where we get over 40% of our apparels from Bangladesh. It's followed by China. And the third big country is Myanmar. These are our main countries where we are working. And -- on the other side, we have -- for all these countries, we have backup countries. This means we have countries where we have factories which are audited and where orders are running, not in a very big volume, but where we are working together. And we have always the possibility to shift orders from one country to another country. So we always have a backup for countries if something happen. And then for example, we can take orders from Bangladesh to India or can take you from China to Vietnam or to Cambodia. And so we have always backup countries. The same with suppliers. With all product ranges, we always have backup suppliers and never only standing on one leg. It's a well-done sourcing point. And for this reason, we get the best prices because we know the market. We know exactly what is happening in what country right now, and we get the best prices, best quality and a good margin. We have completely -- we have a structured supply chain. This means we get all 98% of our goods we are getting by 40-foot containers from Far East. We don't fly goods. We try to save the money and have for this reason, even a good carbon brand. And we all get it by containers from Asia to our central warehouse, which we have one central DC, which is located in Germany, where our main office is located. And from there, we make the distribution to all our stores. Part of it, we do by own trucks and own part of with third party. So this is a little bit about the sourcing. Now we come a little bit to the store KPIs. We are located in 7 countries with about 2,178. I think already right now, we have 2,200 stores in these 7 countries, and we are able to increase the numbers in the existing countries. When we look about a store, then a typical store from us has about 300 square meters. This is typical. So it's not really big. It's a small format location and with very strong store economics. I think one of the point is the stores are maturing very fast. So we come at the highest level at the store turnover within the first 3 years. So we need maximum 3 years to get the mature store. The second point is that we have a CapEx payback, which is normally below 2.4 years. This means we have low investment and very quickly getting back the money. And we have different sizes and different location trips. I think this we will see on the next slide, which produce the cash for us. Where are our stores? So we have different kinds. So one example is we can operate at places where you have a low footfall. This means we have -- with our small stores with very low costing, we need not too high turnover to operate it in a very good EBITDA base. And for this reason, we can go at locations where competitors can't go because when they have too high cost, and they are not able to survive with the footfall. But we cannot only do this, we can do even the other things. So we are even in shopping malls, in retail parks, in main shopping streets. And in all these formats, we are working well. And we get a margin between 20% in the main shopping street and the lowest is 16% in the shopping malls because we have a little bit higher rents. But in this product range, all our stores are working. Yes, this was the end of my part, and I hope that I could show you that the business model of NKD is a very resilient business model, which we can scale up. And I think you see the fit to Mr. Price. Thank you...

Thanks, Alexander. And I think that was your last slide. They also just showed another similarity to Mr. Price, and that was a model that can go to many, many stored locations, country towns into super regional shopping centers. Okay. So I'm going to start bringing it together, and then we can go into Q&A a bit later as well. So looking into the future, NKD is a platform for the growth of the Mr Price Group. They are looking forward to life with a retail partner that knows value retailing and can partner with them in their journey and talk the same language and grow the business together. It's going to be run on the following principles. Obviously, as a group, we run our group with a lot of discipline, but there is going to be local autonomy for decision-making, obviously. When it comes to investment, strategic moves, we're going to be very closely working with the team. We need to both operate of centralized scale. The bigger the company gets, the more that you can actually leverage that scale, and we both need to protect our core businesses at all cost. So us having this great asset offshore, all the advantages that it brings us, we cannot let go our site and our performance on the SA market. Just in how we're going to run the business, all the group structures are in place, and that's to obviously make sure that we've got proper governance over our capital, our strategy development function is strong. And as we're just talking now about operational oversight as well. Our present executive and management structures are really aligned for this era of greater complexity, having 2 separate geographies. And as I said, we do have dedicated regional leadership and certainly, from our point of view, a team that's engaged and committed. We're going to be operating the business with clearly defined KPIs, performance measures. And as I said, we'll explore metrics as synergies where it makes sense, where there's substantial benefit and obviously, where it doesn't impact local agility. We're not going to run after a whole bunch of things that at the end of the day, don't move the needle and therefore, just absorb capacity. If we then move on and we can just share a slide or 2 on our view of the Mr Price Group going forward and how NKD is aligned to that view. First item is delivering scale opportunities through new growth vehicles and consistent delivery to stakeholders. That's nothing new for us. It's things that we've been doing for a number of years, and Nigel spoke about the organic growth that we've had and the acquisitive growth, but also just making sure that we try and deliver consistent business performance as well. So NKD slots nicely in that. Becoming a multi-geography retailer, providing differentiated private label fashion value merchandise. NKD fits that like a glove. Cash base, I think we've spoken a lot about that, value focused and a similar product set as we have. And obviously, the scale business, providing a great platform, I did open up by talking about that extensively. Strong cash generation supported by high cash sale components speaks for itself. I've spoken about an appropriate omnichannel experience. It is a bricks-and-mortar retail, but it obviously then has the added flexibility for clients or customers to shop online where they want to, but we can see that at the end of the day, its online contributions are roughly the same as ours. And the good thing is that in terms of the online, they also have a click and collect ratio, which is also quite similar to around 60-odd percent. Then to go into operational excellence, something we've been focused on for many years through digital and tech modernization and an agile and fit-for-purpose supply chain. Alexander has spoken at length about that. And certainly, you can see the pride that comes through when you talk about the relationships with suppliers and the quality of the merchandise relative to the price and therefore, the competitive position in the market is really strong. management team with a demonstrated track record of delivering growth and shareholder returns. This team in the current position hasn't been in for long. But what we've seen through initiatives, delivery, we've been very impressed by and certainly going to new markets. The business has proved the ability to do that in terms of the geographies that you see that they're presently focused on. So then a final comment for me and to leave you with a few key takeaways. Looking at markets, the South African markets, we believe -- the South African business, should I say, is really well positioned to take advantage of any upturn in the SA economy. Whilst there's still a lot of hope that things are turning, as I said, we have to find out how the war affects things. And with all the green shoots that are in place, I think as a business, we're really well positioned. But so we are too in the value segment in Europe, and we believe that is a multi-decade growth platform for the business. NKD itself, we said it is now time to realize its full potential under a retail partner who have long-term investment horizons aren't then focused on the next exit and then getting in round 2, a PE partner getting to know the business, then a couple of years later, starting to plan for the exits. We can take a really long-term view on this. And very importantly, and I think 2 of the biggest points that will come out of today's presentation, it can self-fund its growth. It's cash flush, it's cash generative, and we're anticipating accretion in year 2. I think those are probably the biggest statements. And then in terms of the leadership teams, committed, experienced performance-driven, strategic oversight by the Mr Price Group executive team and obviously, all local leadership structures expected to remain in place. So at the end of the day, I'm comfortable with the debt levels that we've got. I'm comfortable with the multiple unwind that we've got and the path [indiscernible] I'm comfortable that it's a cash-generative business. And yes, I think -- but nothing would have got to this point if there wasn't an alignment of culture and philosophy and integrity that I've seen from this management team, and it's backed up by what they've actually achieved in the last couple of years. So that's the presentation from me. I think my colleagues are going to join me up here, and we're going to go into Q&A. Thank you.

Morning everybody and thanks to those that have joined online and given questions online. We'll just start by some questions in the room first. There is a roaming mic. We can just start there and come across to you each after that.

[indiscernible] Capital. I'm really struggling with this guidance on second year earnings accretion. And can you just unpack how I should think about -- so you've spoken about the debt you've taken out at [indiscernible]. So can you give us an exposure [indiscernible] should we assume [indiscernible] across some sort of margin in terms of the first year? Second question is around will you disclose NKD separately in your financials going forward just to -- so we can actually track the progress there? And then maybe this is too early to ask, but in terms of how you think about your debt, I noticed at the December presentation, you spoke about the comfortable level of 1 to 1.5x and now you're talking about 1.5 to 1.75x. So maybe I'm reading too much into it, but I'm just trying to think about the year dilution. So if you can help me think the initial impact and I guess the path to year 2 accretion to the group.

Yes. Look, I think in terms of the -- we're not going to peel the onion with the cost of capital and things like that. We've obviously looked at all the assumptions leading to accretion in year 2. So we're obviously comfortable at that level. The question regarding the separate disclosures. First of all, you are aware that the financial statements are freely available. So that will be in all its glory. And certainly, in terms of our own previous acquisitions, it's something that you would never have seen before. On top of that, we've got a requirement to obviously consider geographical segments in our segment report and Mr Price Group financials. But as Praneel was talking a little bit earlier, when you see the financial statements, you can't take them at face value because of all these sort of extraneous items that have come in and particularly in the last couple of years and will continue into 2025 relating to the transaction, debt refinancing, all those kind of things. So what Praneel was talking about is when the financials do come out, and we try to make them available to you probably 6 months ahead of when they would normally come out, that we do so in a way and that we package it so that there's a narrative and you can actually understand what sort of went behind that performance. Yes. you want to add anything, Praneel?

Yes. Look, I think the important thing also from a -- you were talking about cost of debt. Obviously, we moved to ZARONIA now. So the JIBAR concept -- construct is no longer something we can talk about. But what we do anticipate in June when we do release our ARR, and Mark mentioned now that we will give some color on NKD's 2025 performance, at that stage and also going into the November half year-end results, we'll be able to give you more medium-term kind of views on how we see the business's metrics developing over time. So I think it's quite important that I think you even mentioned it that it might be a bit too early now to expect it. But certainly, by the time we get to November, our H1 reporting, we would have had NKD consolidated for the first 6 months of the year. And like we did the last time when we had acquisitions in SA also, we developed the medium-term guidance to say this is where -- this is how we see the business from a range perspective across various metrics, and we'll do the same at that stage to give you a view. And historically, as we've improved and got into those target ranges, we then reset them on an annual basis. So that's something that you can look forward to coming out in June and then in November again.

Ya'eesh Patel From SBG. Just the first one, your 6.5% CAGR that you disclosed on top line with a 3% like-for-like, how should we think about the regional growth? So what the market is expected to grow at in order to give you that 3% like-for-like number?

Yes. What we're not doing at this point in time is break it down per country. So we did debate whether we should do that or not. I think that let's leave it at a regional performance for now. Once we get into the reporting cycles, we'll see if we want to then break it down per country. It's -- guys, it's no different from how we run the current business. We don't report on Namibia and Botswana and countries like that either. But I think the assurances that you guys can take is if you look at the performance and the size and the bulk of Germany and Austria, 2 very profitable regions and their growth prospects going forward in terms of the number of stores that should give a lot of satisfaction. The other countries are smaller. They don't offer near the scale. The returns are a bit lower. But as we build scale in those markets, it will improve, but it's not critical to the overall sort of assessment of the opportunity right now.

Maybe to frame it slightly differently, does it require market share gains at overall NKD Group level?

Yes. I think Alexander said that there wasn't one metric that can -- that spans all the markets that we're in that we can actually gain market share. But obviously, gaining market share is something that we would seek to do.

And then just one on -- I think the speculation in the market just with regards to keyman risk and the lock-ins. Are you able to clarify are there any lock-in for the current management team because it seems like a lot of hinges on the current management team and the strategy that they have implemented...

Yes. And I think I spoke about that in December that it is a priority. It's a really frustrating process when the business isn't yours and we can't step on toes. So the lock-in of the -- and it's not just Alexander, it goes beyond that into the team that you've seen in one of the pages here and in fact, beyond that as well. That is a top priority. So we're working on it. We've actually -- we're quite well advanced on it. So we've got -- and we've got a Board meeting coming up at the end of this month. So it's something that we're looking to close out quite quickly.

Yes. If I can add to that on behalf of the Board, it's already a significant item for our Remuneration Committee. The 2 things, the lock-in of the key people at that level and then how the metrics of the Mr Price Group now, including NKD in line with our existing remuneration model, how those metrics then apply to our key executives. Obviously, there going to be upside or downside is the group as a whole.

Darren Cohn from Absa. Just 2 that I'm actually looking at is if you look at your CapEx relative to depreciation, if you look at it for NKD and obviously, depreciation as a proxy for maintenance [indiscernible] has been substantially below depreciation since FY '14 for most of the years. So that's my first question. Just to understand did it give you some comfort that you haven't been a typical private equity [indiscernible] money investment that you have to catch up. So that's point one. And then point two is just that your trading densities per store, if you adjust for size are 37% that of Pepco. So please if you can maybe flesh that out and explain why that is the case.

Alexander, do you want to talk about the investment cycle with the private equity business?

Maybe to put it in 2 separate things. So the first point which was the CapEx and the renovation spending and everything. So we have a completely stable age of our stores over the years, which is, I think, in a very good shape. And the CapEx we need for a new store is very low. And the amount is very low. And for this reason, we have the CapEx for the new openings. We have the CapEx for a lot of renovations, which we have, and we have some closures. And all this together makes us that the age of our stores is not increasing over the years, even it's decreasing right now. There is not a lack of renovations or something existing. This is very clear. And the second question was...

The trading density versus Pepco? .

The trading density...

So actually just one follow-up question. You mentioned the cost to open the store, if you wouldn't mind. To open a Pepco store is about EUR 100,000. So just to understand what it takes for your stores. And then on the trading density, your trading densities per store, if you adjust for size are only 37% of Pepco. So if you could maybe explain the dynamics around that.

First of all, our investment for the stores is lower than the number you just quoted. It's on average EUR 60,000 for shop. And I think it's also a good thing is when we decide even to close stores, we can reutilize part of the interiors and move it to different stores. So there's a lot of flexibility in it, and it's not really a high investment case.

Marang from NorthStar Asset Management. I just have a question on the EBIT margin guidance. I mean, going from that 4% to 8% to 10% level. I just want to understand what sort of cost growth do you sort of bake into on a like-for-like basis, firstly? And then from a store closure perspective, I mean, I think you mentioned there's about 30% of the stores that are underperforming that you're targeting on closing. But how much of that margin uplift is coming from the store closures. And yes, I just wanted to understand that 4% margin currently, is that a normalized base that you're working off? Or is there still some normalization that we should expect?

Yes. Look, I think it's going to be very difficult to give you any more insight into those numbers. What we haven't done at this point is taken you through all the lines of the income statement. We try to keep the messaging quite strategic in terms of the opportunities. But I think you're going to go through -- have to go through the cycle with us in terms of reporting periods to start looking at what all the individual line item drivers are. So I'm not going to sit here and guess or give you ranges or specific numbers. But obviously, the same rigor that we've applied to comp growth and space growth, we've then applied down the chain, and that's what's led to the EBIT margin guidance that we've given. So I think we'll have to just wait for due course for us to -- in fact -- and at this point, we haven't even decided whilst you've got -- as I said, you've got access to the financial statements, we haven't made a decision as to what we're going to disclose in the Mr Price Group integrated report. So that will be quite evident probably by November, I would say.

We're just going to move to some online questions. And there have been some repeat questions from what's asked in the room. So we will pass those ones. Just to start with one around lessons that you can draw from your experience with acquisitions done to date and their management teams and how those relationships evolve in the initial acquisition.

Yes. Well, we've done -- well, it will be 4 now. And I think that's what I was referring to when I was talking about the real lessons learned. And in fact, probably the best case study that we've got is the Studio 88 transaction, sizable transaction, scale and with scale comes a particular thought process style, level of maturity in the business and obviously, underlying skills. And that's because scaled businesses have got the financial wherewithal to invest in people and processes. Power Fashion was smaller than that and then Yuppiechef was smaller than that, too. So I think the model for us was Studio 88. Management staying on and evaluating management. Power Fashion, for example, the seller was never staying on. That was part of the transaction rationale. But one of the key learnings for us in Power Fashion was when you've got a very entrepreneurial founder, he carries obviously a big voice in the business, it's his business. He's got a certain style and thought process and he makes all the decisions. Now you extract that from the business. And it's quite interesting to see, can the management team step up? Do they start being a little bit lost because the founder used to make the decisions and obviously, things became quite self-evident there. So in Power Fashion, over time, we ended up, in fact, changing the whole management team. That itself wasn't a bad experience. It meant that we were able to put people that were coming through the pipeline in the Mr Price Group who knew Mr. Price well, the way we ran our business and the things that we held important and we put them into Power Fashion. So I think that was a real learning. In fact, it was buying a business of scale and taking over the management as part of that created that continuity.

Great. Thanks. We're going to stick with a few more online. Quite a few have come through as you've been speaking. There's a view that the German value apparel markets in Germany may be mature. The business plans for NKD suggests that management has a different view. Is that a fair assessment and your thoughts? We'll start with Alexander.

Apparel market in Germany.

I think the apparel market in Germany is developing. As I said, we have really a shift from the mid-market to the discount market, and this is positive for us. And so we have a development. And even we outperform the market because we see it over the past years that NKD is growing faster than the market is growing, and this is a part even because we are a discounter and getting the market shares of mid-market.

Also just another factor in Germany is that it is expected because of the investment phase that they're going through, I think it's EUR 500 billion that they're going to be investing. It is forecast to have the highest growth in the G7 over the next 5 to 10 years. That will trickle down into the economy and into retail.

Okay. A number of different questions. I noted that Stephen from 361 as well as regards to the store payback period or breakeven points for the stores.

The payback is about 2.5 years approximately and even lower. And though it's very quick that they are back.

Thanks. Praneel, just moving to a couple of questions to talk to the deal transaction, one-off costs just in terms of the time period where they'll be incurred each financial period.

Thanks, Matt. I think we mentioned this also in the presentation in December when Mark spoke to the market about the transaction itself. At that stage, we said, obviously, those transaction costs that were incurred in the buildup, obviously, to the transaction or the expense, obviously, in F '26 -- or F '26 financial year. Obviously, a lot of that due diligence work had already concluded, obviously, by the time we got to the announcement. So all of those transaction costs, Matt, we do anticipate to be expensed in F '26.

Great. Maybe just a question for Alexander from Paul from Nedbank. What proportion of goods are private label products in the business?

It's about 95% approximately.

Okay. Very clear. We're going to get back to some questions in the room, starting over here.

Thank you to the team and for the presentation. [indiscernible] from Omega Capital. Just a follow-up question on the lock-ins. I'm just wondering if you're able to elaborate on the incentive structure and the framework for the NKD management team in terms of whether it will be from MRP Group level or NKD level, or whether you anticipate it to be dilutive in terms of the equity.

Yes. I think both Mark and I can answer that. The NKD management team will be based on their numbers. The only area where there will be overlap is key group executives, basically Mark and Praneel, perhaps Antoinette, our Head of Strategy, but not beyond that. And those metrics and those costs are not very different to what is already in the existing business running, and we won't be carrying those costs at group level. Those will be NKD expenses.

Question on the other side of the room?

Yes. Michael Jacks from Bank of America. Poland seems to form quite a meaningful contribution to your growth target. The competitive landscape there has intensified quite significantly over the last 4 to 5 years. You've seen incumbents like LPP, I think, focusing their sort of white space opportunities outside of Poland. So with that in mind, just curious in terms of the quality of the white space opportunities you're seeing in Poland and why you think your stores could get to EBITDA breakeven at [indiscernible] pace.

I think Poland is a very good country for us. Although first of all, we have started with test stores in Poland, which are working well. So this means this makes us confident that it's the right country for us. The second point is that our competitors, which are there are performing good, which again shows that the market is good. And all numbers which we know from the market, for example, the money that people have to spend is even higher than Italy, where we are working very well. So in general, the economics of Poland are completely right for us to go there. The second point was the question to the white spaces. And the white spaces we are getting by our geo tool. It's a data science tool, which exactly shows us at what space you have -- what economics and if it makes sense to build up the space, and it can predict a predictive turnover for a store. So we know very good if it makes sense to open their store or not. And -- this is the way we are doing. And 100% in the beginning, we are concentrating on 2 places where we go to get awareness in the country. And later on, we will spread up over the whole country. But it's always the way we are doing expansion. For example, when we started in Italy, we came via Austria in North Italy and then are going down to the south and not starting in all points at the same time. So we are starting in the main cities and later on, we are going into the countryside. And we are positive that it will be a big country for us.

And just one follow-up, if I may.

Maybe just to add to that. I think what's really impressive in the business is like Mr Price, they have a really good track record of testing, learning, tweaking the model. And what we've seen in the last couple of years, as Alex mentioned, they already have stores that they've been testing different formats in the Polish space. So the testing and learning, they've refined the model and refined the model. And the data science tool, the geolocation tool that the team is talking about also learns through data science. It gets better. There's more inputs into the data science. I think at one point, we said there's almost 300 inputs into the data science tool to be able to give you a location that will perform well. So it's the coming together of the testing of the different formats together with the geoscience tool that's giving us some confidence in terms of how Poland will grow over the next 5 years.

One quick follow-up. Just in terms of the portability of the business model and product assortment going from West Europe to Eastern Europe or Central and Eastern Europe, we've seen Pepco, for instance, struggle to go east to west. So just curious to understand the nuances between the customer and the adjustments that you might need to make to the assortment to be successful there?

The assortment is not the problem at all because we've learned that the assortment exactly the same thing. So we don't have to change something in the assortment. The only point where you maybe have a thing is the price that you have a different pricing in different countries. But this is already sorted out by tests, and we know that it works like it is right now. And the problem of others which have not been successful in Europe or in the northern part of Europe, I think was more a question of cost and not a question of assortment.

[indiscernible] Capital. Nigel, maybe a question for you. Given the size of this transaction, shareholders don't get to vote on it. And therefore, shareholders rely heavily on the Board for oversight in this transaction. So maybe if you could just give us a bit of background from the Board's point of view, what metrics did you look at to make sure that this transaction is value accretive. We haven't heard in the presentation anything about returns and the potential dilution of the returns in the business that is world-class. So maybe just a little bit how did the Board think about evaluating this transaction? And then just from your point of view, in 3 to 5 years from now, what would success be from a Board point of view to see that this transaction is value accretive?

Okay. Thanks. Multifaceted question. So again, the starting point, every Board strategy session for the last 6 or 7 years and key agenda item of every Board meeting for the last 6 or 7 years has been about growth and particularly acquisitive growth. Specific to NKD once we started looking at it, the metrics that you would expect return on investment, whichever of the various metrics you use, how long will it take to be profitable? We don't like too much debt on our balance sheet. Are we able to digest that appropriately? Can we hedge as Praneel has already covered, where are we going to access that funding? We want a target that is cash generative. We're not -- so firstly, we don't do fix up for broken businesses. But secondly, we're not going to keep injecting capital in there. It's got to be cash generative. We've covered that, I think, at length today. The payback period, by when is it going to be accretive? So you've heard our view is by year 2, the absolute maximum that we were comfortable within -- in the Central and Eastern Europe context at Board level would have been a third year, but this is better than we might have been prepared to consider. Obviously, growth metrics. Cash generation, a very significant one. We didn't want to go into a retailer that relied sales, a big debtors book and then debtors books go up and down based on the economy. So yes, the metrics that you used to in Mr Price and another significant one. We modeled from the start. We want to be able to maintain safely our dividend payout ratio. It's something we've done for a long period of time. 63% is a pretty high payout ratio, but we don't believe it's reckless. We don't believe it's putting the company at risk and cash generation to fund dividends, return on capital and ultimately growth. I think I might have missed the second part of your question though. What does success look like? Yes. So we've got very detailed business case now on NKD and Mr Price. The metrics that we've spoken about here, management's own business case. We've obviously got our own view in Mr Price is what Mr Price is going to look like. So Mr Price, we drive ourselves by -- we've got a lot of KPIs. We've already modeled those group as a whole now group, including NKD. So firstly, Mr Price has got to be better in 5 years' time as a consequence of having done this transaction than if we hadn't done it. I mean that's an absolutely nonnegotiable in our mind. So Mark mentioned, we're already starting on synergy projects. Those aren't built into the business case. That will add value. But a stronger, more resilient Mr Price Group. And one thing we are very good at is how to scale. And we'll be helping NKD from a distance, not falling all over them or getting in their way, but we'll help them improve some of their metrics so that, yes, Mr Price in 5 years' time is going to look a whole lot better. Just back to shareholders not being able to vote, yes, that's a very -- that was a very important factor for the Board and our -- the extent of our diligence. And I've referenced at the Board, our Audit Committee, our RemCo multiple meetings focused on this because we recognize, firstly, in terms of the CAT 2 classification. Secondly, in terms of our contractual arrangements with the seller within the time lines that allowed us access to the data room to do our DD, One of those things is we can't share the information because we might not be the final buyer. Unfortunately, that meant, yes, we can't bring things to shareholders. That's the definition of a CAT 2. But hold us accountable over the next number of years on the story that you've heard today. And we believe better than that because ultimately, yes, I'm not going to say 1 plus 1 equals 3. The math doesn't quite work like that. But the one that would have been Mr Price by itself in 5 years' time, now the new expanded Mr Price Group has got to be a lot bigger than that original one would have been in 5 years' time.

Thanks, Nigel. There's [indiscernible]

Just let me carry on from that. So out the blocks, growth is more important to me than metrics. So I think we're going to be very focused on making sure the profitability and the returns out of the business are what we're talking about. But recognizing that there's going to be a journey to improve metrics over time. If you go back to where Mr Price started, yes, the metrics that we've actually built up in that business took 40 years to get here. And we've got to be prepared to deliver bottom line performance, but obviously, a journey that then takes under new ownership and a new focus, NKD along with that journey on the metrics, much as we've done with our other acquisitions. Of course, there comes times where you're going to say, I'm not going to push that one. And we've got examples like, for example, Studio 88. We'd like a faster stock turn, but we allowed the guys to carry stock that they wanted to into December, and it absolutely hit the nail on the head because that's why they had a fantastic December. So we could have forced them into a corner with stock turn, but then they wouldn't have delivered the numbers. So it's profitability. First metric. Second, but there isn't a taking a foot off the gas. Everything is very, very carefully considered.

Also to add, 5 years' time, the prospects for the next 5 years after that are going to be so much better as a consequence of this transaction than they would have been without it.

Okay. There's one more from the room, and then we'll move back to some online questions.

We've got one behind you, Matt.

Carry on Daniel...

Thanks for making the time and for the additional insight on the NKD business. That was very helpful. But maybe if I could just move past NKD a little bit because the reality is your business is cash generative. This is a positive free cash flow business according to what you've outlined today. But if you look out a couple of years, you're probably back in a net cash position again. Capital allocation remains a big question. You alluded to the fact that the M&A pipeline in South Africa has diminished. What's your assessment of the M&A pipeline offshore? So if you cast your eye beyond this, what's the likelihood we'll see another [indiscernible] lines?

Mark, maybe I can go first on that. Just in the dos and don'ts at our Board level, we are very clear. We are not trying to have a global footprint and to be all over the place. I did mention we narrowed our geographies starting -- we looked at the whole world. And we narrowed down to two geographies that interest us, priority #1 being Central and Eastern Europe, the one that we're in, and that's a growth platform on a 10- to 20-year basis. So it might expand that might become Southern Europe in 10 years' time or whatever. But we have that geography. We have one other geography. And for the multiyear from here, we don't have an appetite for lots more. So could there be more? There is one other that could be compelling in due course. I'm not putting time lines on it, but we know what we're focused on at the moment. But no, we are not out there hunting across now we want something in Brazil and now we want something in Mexico and now we want something in Thailand. At most, there is one more territory on our radar that we strategically, et cetera, we believe at some stage in the future, if we find the right transaction would make sense. If we don't find the right transaction, we're not going to go there. I [indiscernible]

Yes. No, I've got very little to add there. There is another territory that we've identified that would be highly attractive for us. With the proviso that there's no urgency to do it. But I think with these things, what history has also showed is that you can't always predict when the right business comes along. If that ever happened, if it happens, when it happens, we would look at things very carefully, not just of the asset, are we ready for it? Can we absorb it? Is it too much management distraction? There are too many things happening at once. We're not going to go rushing and land something for the sake of landing it.

Move back to some online questions before closing with the last questions in the room. Just a question from Paul from Nedbank on what percentage of the stores are loss-making and what are the magnitude of the losses?

Yes. I don't think we're going to go into that level of detail. When we're looking at the loss-making stores, certainly for the -- or the store closures planned for the next year, the bulk of those are loss-making, but of course, then that starts tapering down. What we've done is when we've actually then forecast further into closures, it doesn't necessarily mean that they're all loss-making. Closures can be end of the lease, the lease isn't renewed, whether it's from our side or the landlord side and those kind of things. Trading nodes moving much like we do in South Africa. So I think there's -- we've probably got a lot more clarity on closures for the next year or 2. But as it goes down and tapers off, it's what we've actually just factored in at this point is more as a percentage of our portfolio rather than known exits.

Okay. A question relating to GP margin, just the reasons for the GP margin moving even higher into 2024? And why and how do you think it's sustainable? Can you talk about inflation, supply chain and shipping risks from the war? There's a separate question, which I'll follow up with.

Yes. Look, that's -- we're giving long-term guidance here. Iran is not going to last till 2030. And if it does, then I think global business is in trouble. But obviously, in getting to that targeted range from 62% to 64%, management assessed what the drivers of that are. And as I said, even if some of them don't come off. There's actually then opportunities that, as Nigel was saying, we haven't baked into the business case about sourcing jointly and the like. So look, I think where the business has come from and the magnitude of the GP improvement over a number of years that certainly give us a lot of confidence. And a lot of the data science tools haven't been rolled out in other territories that will add further. But the magnitude of the increase from here to what's been delivered is much smaller than what's taken place.

Just a question just for Praneel. Just a quick one on when the transaction actually gets paid for and how you're managing the currency in that payment?

Yes. Thanks for that one. So I think we did mention upfront in the deck that the closing date is anticipated to be the 31st of March 2026. So obviously, we're working quite closely between now and then to make sure all of those closing step happen on time. Pay away is on that date, the 31st of March. And I think Nigel mentioned it earlier that it will fall into our F '27 financial year because F '26 ends on the 28th of March according to the retail calendar. And yes, I think in December, we said we had hedged the transaction. So for that pay away date, the hedge contract continues.

Okay. Just before we go back to some in the room questions, just a question from Damon from M&G regarding the 6.5% EU value segment growth quoted in December. I think just to bring clarity to that to Alexander's point earlier, that did include online and did include the full EU territory. So when considering excluding online and in the market that NKD play in, the market share gains at a bricks and mortar level. So just to bring clarity to that. Some more questions in the room.

Shaun Chauke from JPMorgan. Just one question. Can you please help me clarify unless I'm -- sort of my observation is incorrect. So NKD financials for FY '25, they take about 12 months to be reported. If that's the case, why does it take that long to prepare financials for NKD?

It didn't necessarily take that long. That's the requirement that they have to file their financials within 12 months. And for that reason, we -- it's not our business. It's not our audit close process. But obviously, if we could accelerate that and get the financials out earlier, I think that's what you're all looking for.

It's Delphine Govender from Perpetua. My questions are 2. It's actually for Alexander and Nils. Good to meet you. The first question is, obviously, the Mr Price management have laid out their vision, which I assume is your vision for 2030 for the group. I'm curious to understand whether you had a different vision before you did this transaction or whether there are any elements that were slightly different. I gleaned one of the areas was you were looking to explore potentially different new markets, which is not going to be focused on existing markets. Anything different that you had as a vision for NKD before Mr Price came along?

No. It's very easy. So I think it was amazing when we met at the first time. And at these times, already we had a 5-year business plan, which is a plan which is going to 2030 and we look together. And we really said, okay, it's amazing that the thinking is completely same thing. So we didn't have to change our minds or I think, Mark, it's the same for you that you said, okay, it's exactly like he would have done it for this reason. Really, we could say, okay, we -- the target is to realize our own plan by it. And this makes it very good. The second point is that we have additional possibilities with Mr Price, which we will see in the future. It's too early to say it right now. But if there are upsides possible, let's see. And -- but this is our plan where we 100% are confident that we will reach it, and it's really built up by the management of NKD.

And let me just add a couple of things. So it's -- the numbers you saw with the ZAR 1 billion and development of the EBIT margin. This is our 5-year plan, which we developed. So always -- it's like a budget process. It is ambitious but realistic. And it is all factored in. It's organic growth. So there's no M&A factored in. It's all organic growth. It's the expansion. We are planning in the 5 years in our store network in the existing countries we are currently in. We are operating in 7 European countries. So you can think about upside potentials there, which are not in the numbers which were presented here today, so which is our 5-year plan for the company really going to a ZAR 1 billion-plus entity with double our EBITDA with over 10% EBIT margin.

And then a follow-up is, I understand why you can realize your long-term growth potential better having a retail partner. And I understand why there's such a very tight alignment and fit it appears with Mr Price. But could you share perhaps from your perspective, what exactly do you think Mr Price will bring? Like why Mr Price, I get the alignment, but what specifically do you hope or Mr Price will bring? I know that they're immunizing themselves from not being too involved and I know you can self-fund your growth. But curious to hear your choice of the fit.

I think very important is that it's a strategic investor and not a private equity. So for example, if you have a private equity, you always think in 5-year periods where you have after 3 years to think about the next exit and to prepare it and everything. And you -- all which you do will only be in your mind for this 5 year. When you have another partner, you have completely other thinkings [ patrol ] because you can say investment can even maybe be interesting getting back after 6 years or something like this, which you will never do with a PE owner. And this is a completely different mindset which you have. And I think there are a lot of benefits which we can get because of the growth of the companies. So when you have the shipping costs, when you have the cost for, I don't know, Microsoft licenses or whatever, there are a lot of things which we can do together, which is cheaper than we are doing it for our own. So there are potentials. The second point is I'm 100% sure that there are a lot of things surprise mix better than NKD. And we have to find out what are these things and how can we implement it in NKD. On the other side, I'm 100% sure that some things, for example, data science, we are maybe a little bit further forward than them, and they can take it over to there. So there will always be a win-win situation for both companies. And it makes it very easy when it's very similar. When you have completely different companies and try to get a synergy, it's much more difficult. So for us, it's the first choice.

Just a quick one. Just with regards to the impact of the war, acknowledging that it is going to impact demand globally, how should we think about how it impacts NKD differently, perhaps maybe to South Africa based on the location of the business?

I think for us, it's not a big impact right now. The only thing is the blockage of some shipping routes is not a problem for our supply chain because it's not the way we are going. The only thing which you have maybe is the energy costs, which are increasing right now. But we have realized it even in the past. So when you see back 2 years or 3 years, we had a container shortage where we have paid the 10x cost or 20x cost of containers. And we could transfer it to the customer. So we are able exactly when we have the situation, then we have to talk about the retail prices. And then maybe we will have an increase in retail prices. But for us, it's very good because we see where we have a price elasticity to do it, and we can do it. And it's -- we don't -- we are not afraid for it. And if the people have less money in the pockets, they are forced to go more to the discount. So I'm 100% sure that in crisis discount again will increase market shares.

Okay. And just the last one for me to the CFOs on the stage. What led to the finance costs being so high in region of NKD?

Are you referring to the debt refinancing cost?

Yes. I mean the historic cost and...

Yes. Well, to be clear, so our financing, first of all, I think it's important to understand that before COVID, we hadn't got any external debt. So it's really the debt we currently have on our balance sheet is really only caused during the time of COVID. And it's probably also a really important statement. So even in COVID, we were able to manage this time without laying off any staff. But in this time, we took on the debt and I must say that we were really at the back of -- with our back at the wall. So there wasn't really a lot of opportunities there really for us to look at a lot of banks to get really competitive prices. So that's the reason why we probably had to take the decision to go with the financing we're currently having.

Thanks. Just a question from Darren on the left-hand side, and then we've got a handful here. I'm just conscious of time, so we'll try and just get through these 2 or 3 in the room and then 1 or 2 more online, and then we'll be moving to close.

Just 2 questions. The one is really easy. When you talk about 2030, are you talking about December or March? So that's the first one, that's pretty easy. But the next one, you talk about the -- how cash generative both of the companies are, but you've got a net debt to EBITDA where you say you expect it to range between 1.5 and 1.7x. So maybe you can try and square that -- those 2 because those 2 are quite contradictory. And in doing so, how much of the further ZAR 9.9 billion is going to be in cash in South African debt and in EU debt?

Yes. Maybe I'll just start with the kind of timing of the business plan. So as you have heard, it's a business plan that NKD developed. So that would have been based on their financial year of December. Just talking about the debt a little bit, yes. So we -- like with most of the metrics that we talked to the market about, we created that range in terms of where we felt comfortable from a net debt to EBITDA. So we gave that range of 1.5 to 1.75. Certainly not intending to stay on the upper end of that target or extend the target. So obviously, what we are doing, we're very conscious of -- and I made that point on my slide earlier in terms of managing the cost of debt. So we anticipate obviously working as quickly as the business model is able to generate the cash to be able to then direct that back into repayments and paydowns. So that's something that we will continue to manage quite actively. So treasury management becomes quite an active part of my portfolio now more than it's ever been in the past. I think there was a different kind -- I think we've been criticized in the past maybe of having lazy cash on the balance sheet. But now that we have deployed, I think there's definitely active management of cash. It's not the intention to be on the upper end of that target. But through the generation of cash, obviously, we will be able to pay down sooner to be able to limit that interest cost on the income statement.

Tim from Allan Gray. On Slide 16, that 4% operating margin you quote, is that an IFRS number? Or is that a management accounting or adjusted number for the 2024 year?

Yes. So I think we had a slide upfront that spoke to all the numbers that were disclosed in that deck on a pre-IFRS 16 basis. So it's a management accounts numbers that we have disclosed on that deck. I mean that's how that business plan was built. So that 4% is a pre-IFRS 16 management account number.

Because the reason I ask is in the initial sense you released, you quoted an EBITDA number for 2024, which worked out to about 6.5% EBITDA margin, which was also for 2024 orders number. So I was struggling to reconcile how the EBITDA could be 6.5% but the EBIT margin is 4%.

Yes. The EBITDA that we disclosed in the sense was related to the audited financials at the end of December '24. So obviously, that's after the IFRS interest cost and depreciation costs. So you'll see that's really the difference between the EBIT and the EBITDA is the depreciation charge that goes through.

A couple of questions from my side. I actually want to tack on to this guidance and the EBIT margin questions. Can you just help us understand what that business plan targets look like on an IFRS basis? And then I have a follow-up question after that.

Yes. So maybe just to talk a little bit around that conversion from the management plan into IFRS. I think we also had put a note on the slide that from an IFRS perspective, the biggest obviously standard is IFRS 16 from a numbers perspective that hits that business. That predominantly in the business happened at the end of the year when financials were built. So that's one of the big drivers around that conversion from the management accounts into IFRS. The second one is around the sales disclosure in terms of commission, whereas in the management plan, commission is baked into sales, but you see when you get the financials, there's a commission element that we correct for. And the last one is just around hedging. So IFRS 9 in terms of how the business manages their ForEx. The group -- Mr Price Group applies hedge accounting, but we noted that NKD at this stage does not. So that results in ForEx gains and losses, which you'll see in the income statement sitting not above the line, but in financial expenses and income. So it actually sits below the line in the IFRS standards. So that's quite a key thing for us in terms of the 5-year plan that we look at going forward in terms of that IFRS conversion. And as we noted earlier, when we get to the June numbers and in the November reporting cycle, when we start setting up those medium-term targets, we'll be able to give more clearer guidance in terms of how all of that plays down in terms of the shape of the income statement.

Then I actually have a follow-up question that comment that Mark raised earlier, he said that growth is more important than metrics. And I would just like to understand, Mark, and maybe from the Board side, how would you weight growth return on capital and cash conversion, just in context also to what you've paid for this deal.

How a great in terms of taking all.

Priorities, yes.

Yes. Certainly, return on capital would be the key. Cash generation would definitely come second. Look, at the end of the day, we think we bought a business at an interesting time in its cycle with everything that's been put in place up until this point and the fact that it's not a fix up and it's a continuation of the management plan that they've got. I don't think it's a trade-off of having a choice of 1 of the 3. It's, in fact, all 3. And we're never going to do one at the pure isolation of the other. So good returns, good cash flow generation, just good business performance can happen simultaneously, but we've got a keen eye on all 3 of them. And that's the way we run the SA business as well.

Board and the RemCo response on that. So all of those metrics are relevant in our rem models, obviously. And the time line perspective, yes, long term is very important and strategic is very important. But the time lines in our rem models are the most recent year, obviously, and then the 3- to 5-year perspective. And it's not on our promise for 20 years' time. It's got to be much more measurable.

Okay. Just last 2 online questions. And Nigel, I know you have some closing comments. There were a handful just with regards to what's just been discussed around returns and impact to the group. So I think that those have been answered now. Just the last one, Nigel, around linking executive management remuneration to performance of NKD, what the plans are for that?

Yes. As I mentioned earlier on, thanks, Matt, and for the question. As I mentioned earlier on our metrics, return on capital, et cetera, for our Mr Price Group executive management, those are group metrics. So that includes NKD very significantly. Mark Bowman, our RemCo Chair and I've already had some chats and we'll take it up at our RemCo in 2 weeks' time. Are we going to put very specific for our key group execs? Are we going to put additional specific NKD within our KPIs that we measure for our group execs and the answer almost certainly is yes.

Okay. Thank you, Nigel. You can make your way up for final comments. Just a big thank you for all the questions that have come through both in the room and online. There have been a lot of questions online, and we try to get through as many as we can today, but we will respond on e-mail over the next few days just to come back with clarity on questions that were asked in the room today. Thanks, Nigel.

Thanks, Matt. Yes, again, in terms of questions, information, et cetera, our year-end results, which will then include NKD for the first time and in the future, our half year results, our trading update. So we'll be taking those as opportunities to share more information. Just 3 thoughts in closing. Firstly, something very significant within the Mr Price Group built by our Founders, Stewart Cohen and Laurie Chiappini is how to build a flywheel. And flywheels take time to build Mr Price Home, to build Mr Price Sport. You build it over a period of time. It costs time and effort. Some of them we test and they don't work, we stop them. But once the flywheel gets to a certain size, it then can become quite astonishing in terms of the improvement in its performance metrics, its profitability, its return on capital, its cash generation and even its customer loyalty that has a further ripple effect. Key aspects of building a flywheel, culture, team, people, Alexander, I was so excited to see a picture of you and your NKD executive management a few weeks ago in your Executive Committee meeting wearing Mr Price red caps. Yes. So the culture, the team, the people that underlies the flywheel and then driving growth that drives the key performance metrics that drives the cash generation, the profitability, the return on capital. We're very good at that in Mr Price, and we see the same and with significant potential in NKD. So the flywheel. My second point we've had share price weakness, of course, in the last 3 months, significantly because the information that was available in the public domain painted the picture. Hopefully, the fact that today, we at last are able to share more information, you've got much greater clarity. So there's been share price weakness, us also some other South African retailers for various reasons. But within that time, and I specifically want to thank our top 20 shareholders. I've been tracking you. Most of you are long-term Mr Price shareholders. In total, you haven't just held your shareholding. In fact, some of you have increased it. Thank you for your confidence in us, and we don't take that lightly. In fact, the message we've got is we've got to be even more disciplined and diligent, Board and executive management level, holding ourselves accountable for the trust that you have put in us. And of course, we expect you to also hold us accountable. And then my final thought, I mentioned 6 or 7 years, every Board strategy session, key agenda item of every Board meeting, all the metrics that Antoinette and others in our team have put together, the dos and don'ts of mergers and acquisitions and the reins of stuff, the learnings from successes and failures of others, particularly retailers, but also others. And all of that work -- well, a few weeks ago, I met someone I've known for a number of years, husband and wife, Austrians. He's an entrepreneur in the industrial automation space. They're Austrian. They know NKD, they shop NKD. He also has a business -- a pretty good business in South Africa and a home here. And he's told me repeatedly over the years and his wife, in particular, loves Mr Price Home. They also shop Mr Price Apparel and Mr Price Sport. So we bumped into each other a few weeks after our announcement about NKD, and he came running over. Mr Price, Mr Price, well done. NKD is your little twin. And I predict he said, you didn't put a time line on it, he says, and I predict that one day, the little twin will be bigger than Mr Price. Well, I hope so. In fact, we'll have a Capital Markets Day with less info and more celebration when that happens. But all of the work and the detail that we put into the dos and don'ts over the last many, many years that has resulted in where we are today with our little twin joining the family. It would have been a whole lot easier to just define it as buy a little twin that one day must be bigger than the big twin. So yes, thank you again to Investec for hosting us. Thank you for everyone for your participation, the questions. And as we've all said, we look forward to sharing more information with our year-end results half year and as we go beyond. Also, thanks, Alexander and Nigel for coming out, joining us and being part of the family.