Pepkor Holdings Limited (PPH) Earnings Call Transcript & Summary

Good day, and welcome to the Pepkor Annual Results Presentation for the financial year ended 30 September 2023. My name is Pieter Erasmus. I'll be doing a quick overview of the results. Then Riaan Hanekom, our CFO, will follow with the financial performance indicators; and Sean Cardinaal, our COO will give a brief update on or more detail update on the business performance. And then finally, I will close with an outlook. And then we'll take some questions. Just briefly, the environment that we are operating in, our customers keep on telling us that disposable income is under pressure. The social grant payment systems South Africa still is disrupted from time-to-time. Unemployment numbers remains high, stubbornly high. There's been some statistics showing a bit of a lower unemployment number, but certainly the environment that we experience or our customers experience is still high unemployment. The high cost of living, driven by food inflation, still very much a problem for our consumers or our customers. In addition to that, load shedding, which is now very much back in the news, is causing some disruptions for our customers' income, the ability of them to earn income while there's extensive load shedding, severely impacted. For us as a business, we lost about 845,000 hours, mostly in our JD and our building businesses, because PEP and Ackermans have got really good backup. We also incurred extensive diesel costs, not as much as the food retailers. We have to do the cold storage, so around about ZAR 140 million for the year, which is a big increase on last year, up to almost 70%. In addition to that, we find that the security environment of which our stores have to operate and our staff have to deal with quite a lot of robberies, the fact that we sell so many cell phones also exposes us a bit more maybe than some of the other of our peers. Infrastructure damage stays -- it's also difficult, it's difficult to get sometimes roads, the deliveries of stores, et cetera. And then recently, being in the news, the port delays. We are, like all other African businesses, reliant on stock flowing into our ports. At the moment, that's a particular difficult time, there's quite a lot of bottlenecks, especially in Durban, and that's disrupting our supply chain. So all of this, as a business, we have to be a bit more nimble. We cannot think about the business quite the same way as we used to, we have to react quite a lot different in some instances, but we remain firmly entrenched in the discounted value market, and we believe that we have the capability to deal with all this. Competition, obviously increasing in the discounted value market, everyone sees our high market shares, it looks attractive, but we certainly are aware of the competition. For the first time, we sort of make comments about Brazil, clearly it's a new market for that we've entered, certainly on a macro basis, Brazil looks better than maybe what I've mentioned before in South Africa, there seems to be a good, much lower unemployment, and certainly after a bit of the political uncertainty earlier after the last elections, things have calmed down, and inflation seems to be on the right trajectory, as well as interest rates. So back to our numbers, just the year in summary, we had a strong second half, our revenue in the end grew 7.7% for the year, it included an additional week, which Riaan will unpack for you, sort of in line with what we guided the market on at half year, we said the second half would be very similar to the first half, and that's why our normalized earnings on almost 7%, that's in line with what we communicated before. We're happy that the second half was much stronger, and that key market share gains that we called out was actually achieved in the second half. Very good working capital management, so that allowed us to have excellent cash flow generated, and because of that, we decided to keep our dividend policy the same, and recommended that dividend be declared, the normal 3x cover. So just some other, maybe interesting numbers before we go into the detailed financials. I spoke about our discount position, PEP stays very much in the discount market, if you look at ZAR 48 being the average price point still in PEP, that if you remember, we sell a lot of handsets, as I said earlier, 7 out of 10 at the bottom there of handsets, prepaid handsets in South Africa sold, just to indicate just how low that price point is. We've been very successful of opening new accounts, A+ accounts, almost 800,000, to help our customers bridge the payments that they need to make in order to buy the clothing and phones that they need. We've allowed interoperability, and Riaan will show you how the books have performed, very, very happy with that initiative. We still remain very high market shares and babies, 2 out of 3 garments in South Africa still coming out of the group, and in kids, 1 out of 2 still being bought from the PEP group in South Africa. All of this culminated to 1.9 billion transactions that we processed for the year, very high activity in the stores still, and hoping to build on that going forward. Some other interesting information which may be non-financial, which sometimes we don't communicate to the market, but we thought we will highlight this year, is we remain very strong in our talent development strategy, over 4,000 learner ships have been completed. We were heavily involved in the early child development programs, over 20,000 kids have been supported through that. And then, yes, our code of conduct in our supply chain has been supported heavily by our suppliers now, up to 94% of them have committed to that. And then on a wider scale, everyone's putting in solar, which is obviously environmentally friendly but also good for business, especially in the current environment, and we've increased about 6 million megawatts for the year, over 8.5 million megawatts installed by now. And we have been included in the FTSE Responsible Investment Index for the last year or 2, so very good progress on these, let's call it non-financial issues. So now for the exciting stuff, Riaan will take you through the year's numbers and explain some of the once-off items, unfortunately, they appear again this year. Thanks. Riaan?

Thank you Pieter, good morning all, as Pieter mentioned, so I'm going to take you through the financial results for this last financial year. To start-off, with just some high-level indicators to give you an overview of the results for the year. As Pieter already mentioned, revenue up by 7.7%, that was held by the additional week, the week 53 that we had in the clothing and general merchandise segment, so that gives us an additional 1.2%, so if you take that out, the increase was 6.5%, taking us to the overall ZAR 87.4 billion for the last financial year. Very pleased to report that we could see a slight increase in our GP margin, up by 20 basis points, I'll unpack that a bit later in a bit more detail. But the essence of that was that, again, as we've seen in the first 6 months, very good performance from our financial services businesses, specifically with the growth in the books and high interest rates assisting us, to counteract the fact that on the retail side, we had a drop of 80 basis points in our retail margin, that was mostly to do with markdowns in Ackermans, but also to a lesser extent, markdowns in PEP to clear out the stock we had during the year that obviously did not sell, very much again in line with what you communicated for the first 6 months. OpEx, still pleased to say that we were able to control our OpEx growth, taking various unknown factors into account, you strip out all anomalies, anomalous, OpEx grew by 6.8%, that includes again, a number of new stores, so very pleased that if you exclude ForEx, depreciation, and also some other ones of items that we could only grow by 6.8%. The one item that obviously is not included in the status cost, and that was the growth in the books was up by 57.3%. So that is also the main reason, although we saw an improvement in gross margin, that our operating profit is down by 8.1%, the growth in the books, the additional increase in data scores, also depreciation, that grew by more than 10%, resulted in that the fact that we dropped the operating profit by 8.1% to 9.5 billion, or on a normalized basis down by 8%. Still pleased to announce that we could deliver HEPS of 149%, slightly better than we initially anticipated, very much in line with what we communicated again early on, second half, very much in line with the first half. So HEPS down by 8.7%, that despite the fact that we had a huge increase in finance costs, because of the higher interest rates, that was offset by the drop in the tax amount payable again in line with what we communicated in the first 6 months. So normalized HEPS down by 6.7%, and I'll unpack that also, but in more detail later on. So if you look at more of the balance sheet indicators, how did we perform? Very strong cash generation during this period, up by 15.9%, cash generated by operation, ZAR 13 billion compared to last year's ZAR 11.1 billion, so really a fantastic result. Cash generated, or cash conversion, 91% for this period, that despite the fact that we had to pay some suppliers earlier because of the extra week and cut off being later, we still were very pleased with the 91% cash conversion rate that we've achieved. Both in the credit books, Pieter touched on it, very much mostly driven by the growth in the tenacity book, up by more than a ZAR 1 billion, so overall investment in our credit books this year was ZAR 3.4 billion, and we opened almost close to 800,000 new A+ accounts. This was counteracted by the fact that we saw a drop in our inventory levels, again across the board, but mostly from PEP and Ackermans, and also from the Flash businesses, so that helped to generate that cash of ZAR 13 billion, and also a slight increase in accounts payable. Very pleased to say that, even with the investment in the books, and the fact that you only see the benefit of the investment in books 2 years after you started growing the books, we could still deliver a return on net asset of 27%, our internal bench is always above the 25%, so a very nice return on the assets that we invested that was obviously helped by the drop in inventory, assisted that number. The number that was already communicated in the sense, when you did the profit update and profits trading statement, the impairment of ZAR 6.6 billion, 2 components to it, as we communicated the Pepkor general merchandise being ZAR 5.9 billion, and then take it down, cash generating unit also an impairment of 700,000 making up to ZAR 6.6 billion. And as Pieter mentioned, very happy to say, with the strong cash generation, when we added back the impairment, we could still declare a dividend of ZAR 0.481 for the year, which is in line with our dividend policy. So, just some of the ones off items, there's quite a few of them, and I'll unpack most of them, again, as the presentation goes on. The first one, very pleased to say, after 3 years of including insurance recoveries and insurance payments from insurance, we've received the final amount this year for the flooding, ZAR 394 million that was included in this year's results, but yes, there was obviously a huge impact already in the '21 financial year, and also in the '22 financial year, we received firstly from the social unrest, ZAR 1.5 million, and then our total amount received from the floods was ZAR 790 million in line with what we communicated earlier. Important to remember, you'll see that on 3 different lines on the income statement, the biggest impact being because of business interruption, ZAR 275 million included in that line and other income. It is important to remember that yes, there was still even in this year, expenses incurred at our DC in Durban, the Fibers Road DC of roughly ZAR 130 million that must be offset against that other income for the year. Within something new that we've communicated previously that we were planning on doing, and this is part of our future strategy that we want to focus a lot more on financial services and insurance. We've made a decision to now change the segments. So all the books, the credit books have now been included in the FinTech segment. We previously only had Capfin, now the Tenacity book, the JD Connect book, and also insurance business, which previously only served the JD business, Abacus. We also have plans that it will service other entities in the group. It's already started with PAXI and on the PEP side. So we've decided to include that now all going forward into the financial services and into the FinTech. Flash was previously there as well. Capfin was also there. So they remain part of it. It means that you've now got pure retail in the other segments, the clothing and general merchandise, furniture, electronics, and also in building materials, there's no financial services. From a book perspective or insurance perspective, we still have other services that we render in stores. But that's under the other income line on the income statement. Revenue drivers, who performed well, who didn't perform, the overall you aware of the 7.7% growth that you communicated earlier on the clothing and general merchandise segment up by 11.1%. That's really mainly driven by Avenida, which has really performed very well during this year. Also wasn't included for the full year. Last year, we also still saw good growth from the Africa business and to a lesser extent from the PEP business. Unfortunately, that was counteracted by underperformance on the Ackermans business, and also the Tekkie Town business. Now on the furniture side, very pleased to say in difficult circumstances, only down by 0.7%. Again, electronics performing or tech section performing better than the home. The trend we've seen the last 2 years, and that also continued, especially in the first half of the year. The building materials segment, basically level business, taking the market into account and some of the performance of competitors, very commendable performance of really being on level with last year. And then on the FinTech, now with the books included, the high interest rates that we saw this year meant that we have a growth there of 5.2%. That despite the fact that we still had a small negative growth of minus 2, or a negative growth of minus 2 in the Flash business this year, but that has come down from the 12% that we presented in the first half. So we did see a positive revenue growth in Flash, the second half of the year. Again, just to break it down, but a bit more detail, if you take the extra week out, as I mentioned earlier, the growth was 6.5%. If you exclude Avenida, on a 53 week basis, the growth was 5.6%, on a 52 basis, 4.3%. And as we communicated in the trading update, second half of the year, much better performance than in the first half of the year with the 8.8%. We are still predominantly a cash business, as we've always communicated, 90% of our sales are still done through some form of cash. Although, we have seen this year credit with the growth in specifically in the Tenacity book and also Avenida in for the full year, the credit has now increased from 8% to 10%. And the growth increase of 35% for the group overall, exclude Avenida, still 27%. So that just shows again, the impact of the consumer being constrained but also the impact of the growth in our A+ card across the businesses. Again, a breakdown of the segments and where does the revenue come from, we still saw an increase in the Clothing and General Merchandise up from -- up to 67% used to be 65%, actually because of the inclusion of Avenida like I communicated previously, and then really the FinTech also up to 11%, but previously that was around about the 10%. So a slight move in the breakdown there because of the change in the segments. Then something in the past, we've always received a lot of questions on how do we make money from CDLO? What is the model? Obviously the margin we make on the sale of handsets, it's much lower than what we make on the sale of normal merchandise. And we've always communicated you've got to include obviously ongoing revenue as well. So we've now with our future strategy to focus a lot more on this area of the business as well, and some initiatives that we've got in place to grow this even more. We've now communicated, we decided to communicate to the market what the amount is, and you'll see for this year, from all 4 the networks together, we received ZAR 1.9 billion in ongoing revenue. It is however important to understand these 2 different sources of how we earn ongoing revenue. First one is in-store, when we sell a SIM card with a handset, that happens in PEP, Ackermans, Speciality, and in the JD Group, when the customer loads money onto the SIM card and they spend that again either via data or airtime, et cetera, we earn a percentage of that spent from the different networks. And that's part of it is ZAR 1.5 billion. The second part of it via Flash Business, which is a distributor of SIM cards to our traders. We also on those SIM cards that they distribute to the traders and then trade on sale to customers. We also earn ongoing revenue on those SIM cards being ZAR 393 million for this year. However, it's important to understand we do share a portion of that ZAR 393 with the trader, obviously to compensate him or her for the fact that they sold the SIM cards via their Spaza shop or their shop. We then move on to the breakdown, as we said, now the new FinTech division, where does the revenue come from? Overall growth already explained up by ZAR 5.2 billion to ZAR 10 billion. Flash in the past used to make 80% of the segment and Capfin 20%. That you'll see has now changed to 67%. As I mentioned, Flash for the year still down by 2%. But for the second 6 months, we've seen a nice growth in revenue for Flash and then very nice growth on revenue for Tenacity specifically because of the increase in interest rates and the growth in the books. Similarly on the Capfin and Connect side and Abacus, we've also seen a good growth in number of policies and gross return premiums, which obviously assist in that business to grow it on an annual basis. And we do anticipate to see even further growth on that as we start selling more policies via that channel going forward. Gross profit margin, as I communicated earlier, very pleased to say we had a 20 basis points increase, mainly driven as I already committed a high interest rate, additional credit granting, the bigger books. And also from Flash, we've also seen improvement in their GP, meant that that counteracted the impact of the 80 basis points we'll down on the retail GP because of the markdowns process and predominantly Ackermans with lesser extent to PEP. So very good news to see that up to 35.5% and we do anticipate that it will be roughly at that level in the new financial year as well. From other income perspective, very much impacted by the insurance payment, as I mentioned earlier. So that obviously dropped this year with the final payment on the floods being made of ZAR 275 million. So they exclude that. There's still a growth of 1.3% in other income. Main growth coming from bull payments, so that's any type of payments we do in stores, DStv, normal municipality payments, et cetera. That's where we get 30% growth. The rest really from marketing rebates and other insurance products we sell in our stores. Cost of doing business, something that we're obviously very passionate about and we've got huge focus continuously on how we can bring our cost of doing business down and create bigger efficiency. Unfortunately, this year with top line growing at a higher rate than our cost base overall, or a lower base of our cost base, we have seen an increase of cost of doing business up to 26%. And as I mentioned earlier, the overall up by 8.7% of OpEx numbers excluding debtors cost and depreciation. If you normalize that and exclude the impact of Avenida as the 6.8% that I showed you earlier, and Avenida did make quite a big impact because it wasn't in the full year last year, but also the second half of the year with the real strengthening against the rent, that expense number increased. But on a salary cost line, very happy to say with even additional stores opened, the sales or salary growth was still 6.4%, so just above inflation. And similarly, on a rental basis, pre-IFRS 16, we still saw 6.1% again with more than 300 stores grossed that we opened during the year. Yes, we did also close some stores, but still a very good result taking the circumstance to count. And this is our 2 biggest cost drivers to still be at a growth of around 6%. I have to commend all the teams on their performance. So the one item we've obviously had lots of discussion in the past and had a huge impact on the numbers is the lease modification because of the change to IFRS 16. IFRS 16 being implemented, we have in the past always communicated this number should come down over time, and we have definitely seen a big drop in normal lease modification down from the ZAR 767 million to the ZAR 391 million this year. Yes, there is the 1 rough item on the PEP Hammarsdale DC, or Fibers Road DC, where we're moving to the PEP Hammarsdale of ZAR 392 million. But as I said earlier, that's a once-off item. It won't repeat. The ZAR 391 million is the normalized number for this year, and we do anticipate that will come down even further in the next years. Again, to confirm, that's mainly driven by store optimization, where we close unprofitable stores into the better rental agreements, or we still saw this year drop of 2% on lease renewals, which is still above our expectation that we originally had at the beginning of the year. So if we look then, how does this all come together in operating profit? If you take all of that into account, as I said earlier, down by 8.1%. Yes, there is the once-off items this year and last year. Last year was the Steinhoff or IBEX resettlement, which meant income of ZAR 439 million, which you have to add back. And this year is the DC lease modification of ZAR 392 million, that you have to add back. So if you exclude those 2, it's at 8% drop in operating profit. Where is the biggest impact? Really from the Clothing and General Merchandise segment, and that's really mainly driven by the Ackermans performance, as we've communicated earlier in the year with the huge markdowns they've had to process. They were significantly down on last year, and also in the Tekkie Town business. That was offset slightly by the very good performance of Avenida, and also extensive cost-cutting from a corporate center perspective. Furniture segment still did, under circumstances, very well, well done to manage the gross profit and contain the expenses. The fact that, there was no growth on the top line, negative growth to be only down 3.3%. It's really a phenomenal performance, taking the market into account and a performance in home side. Similarly, on the building company side, to show a profit growth of 1.3 with no top line growth, again, confirms how well they've managed their expenses. Yes, there was a once-off insurance payment in there as well, but they still did very well compared to most of their peers in the market. FinTech, still good performance, mainly driven again by Flash, which had above 20% profit growth. Yes, it was offset by a drop in profit from Capfin, and also by a small negative growth from Tenacity, but that's mainly to do with the growth in the book and the provisions that you obviously have to increase when you grow your books. That takes you to the ZAR 9.1 billion profit, normalized profit for the year. Just from a segmental perspective, we used to generate 85% of the profits from the Clothing and General Merchandise. That dropped to 79%, again, mainly due to the performance of Ackermans, and then obviously the FinTech improving to 10%, reduced to be 9% of profits from that segment. Then the item that obviously resulted in us doing a trading statement, the impairment. As we communicated in the sense that we did at that stage, this was in the Pepkor General Merchandise cash-generating unit, mostly driven by an increase in the WACC rate because of higher interest rate volatility in the market, et cetera, et cetera, which took the WACC rate up from 14.4% to 15.7%, resulting in the ZAR 5.9 billion impairment. If we had kept the WACC rate the same as the 14.4% for last year, there would not have been an impairment, but because of that jump to 15.7%, we had to do an impairment, take it down, a mixture of both underperformance, but also due to the increase in the WACC rate, there was an overall impairment, so take it down, of ZAR 703 million for the year. Just quickly on the finance cost, I mentioned this earlier, higher interest rate during the year, our average debt for the year was very much on the same level as last year, so from a bank finance cost perspective, increase from the ZAR 0.8 billion to ZAR 1.4, so ZAR 500 million of that was purely due to the higher interest rate or the increase in the repo rate. From an IFRS 16 component, you'll see they're very much at the same level the last 3 years, and no real increase because of, again, the changes to better rental agreements, closure of unprofitable stores, et cetera, et cetera. On the books, quite a big impact this year, especially on the Tenacity book or the A+ card, with us now opening accounts in PEP and in Ackermans having interoperability between all the Clothing and General Merchandise businesses. We saw a big jump of ZAR 1.1 billion gross in that book, now sitting at ZAR 4.5 billion, still very pleased to say non-performing loans, very much under control at 13%, and only a very slight increase in the provision level. We already increased the provision in the previous financial year because we knew we were going to grow that book in anticipation of a potential higher non-performing loan. Just to -- just to, a bit further around that, we've also dropped our approval rates on Tenacity, and we're also allocating smaller balances, so very prudent credit granting hence the reason why we're very comfortable with the non-performing loans and the provision level there. Connect, very small growth in the Connect. Yes, we've seen a slight deterioration in non-performing loans. We've also seen that we've got 2 products on the JD side, the Connect side, the 24 month or the 36 months, so the average used to be 27 months, it's now moved to 29 months, again confirming the customers under pressure, they want to pay smaller amounts and hence they're going for longer periods to pay that off. Capfin, we did see a slight increase in non-performing loans in Capfin, that's why we sort of pulled back on the growth in Capfin in the second half of the year. We saw an increase in write-offs also in Capfin for this period, hence the reason that the provision is slightly up from 17% to 18%. As I communicated after the 6 month results, we do anticipate a small increase, but we're very much comfortable, we've got the non-performing loans more in line with what we would like to see going forward. And then Avenida, well managed, 42% of sales in Avenida is done on the book, so the guys there have done really well to manage non-performing loans, we have quite a few new stores opening and dropping the provision right down to 21%. So, if you just look at the 2 components, where did that increase of 57.3% in debt discounts come from? From a bad debt components up from ZAR 1 billion to ZAR 1.2 billion, and almost ZAR 200 million of that is bad debt write-offs in the Capfin book, hence the reason, as I said, why we slowed down and we do the write-off a lot earlier in Capfin and in other books, so we know very quickly if it's a bad performing customer or not. On the provision side, up from ZAR 95 million to ZAR 475 million, that's mostly driven by the increase in the Tenacity book, and in fact, according to IFRS 9, you have to load the provision up front and only see the benefit in 2 years' time, that has resulted in a 400% increase, but also, as you saw, a slight increase in the Capfin provision and the JD or Connect book provision. Just to illustrate that a bit better, if you look at the right-hand side, you'll see the credit book growth was overall, the books grew by 22%, but the provision grew by 24%, again, indicating you have to up front load the provision with the growth of a new book like Tenacity and only see the benefit of that bigger book in 2 years' time. Inventory levels, mentioned that earlier, very pleased to say, we've back to normalized inventory level, markdowns taken in PEP and Ackermans, very much comfortable with the level that we had dropped in the flash, airtime stock holding as well, so that's also assisted. Basically, all our businesses are at a normalized level, the only exception probably being Tekkie Town, it's a slightly higher, so very much comfortable taking the new stores into account, the fact that we're still down on last year, well-managed by the teams and means we set up for the new financial year to grow the business even further. That all resulted in cash generation, you'll see the investment of ZAR 3.3 billion in the credit books across all the books, but from a net working capital taken into account, we opened additional stores, the fact that our inventory is down has really helped us, and that's where the majority of the cash generation came from during the year, ending up with the ZAR 13 billion that I mentioned earlier, and if you take off the fact that we had to pay ZAR 1.4 billion creditors before cut-off because of the extra week, if you eliminate that and work on a normalized basis like last year, our cash conversion rate was actually 101% versus the 91%, so phenomenal result for this period. This also plays out then in your net debt level, so very much after the first 6 months, we had a higher net debt level, the cash generation and the inventory level's coming down, our net debt is down to 7.6%, net debt to EBITDA at 0.8%, which is very much in line with our target range of 0.5x to 1x net debt to EBITDA, so at a very comfortable level, again, if you take that ZAR 1.4 billion out to normalize it compared to last year, the net debt would have been 6.2%, which is a 0.7x net debt to EBITDA, that's a comfortable level for us taking high interest rate into account and give us the flexibility to still invest in further growth or new opportunities that comes along. Just on a net debt or a repayment profile, we did raise bonds again this year of 1.2 to replace the current ZAR 800 million that we had to repay at the end of March and that was again done at more favorable rates than what we previously had in place. So from an overall perspective, the one key KPI I mentioned earlier that we do look at is from a returns perspective, the cash that we invest, what return do we get on that, and that's why we look at return on net assets, can't really look at return on equity because of the ZAR 50 billion goodwill and intangible that we carry on the balance sheet, so we always want to achieve, as I said, a minimum of 25%, so very pleased to say we still, even with the investment in the book, achieving a 27% return on net asset. So to conclude, capital allocation, we did invest 2.7% of revenue this year in CapEx, mostly again around opening and refurbishment of stores, also the investment in the PEP, Hammarsdale DC from a fit-out perspective, we do anticipate that going up to 2.9% with a new Ackermans DC or a relocation of the Ackermans DC in Cape Town happening as a fit-out for that and then quite a substantial investment again in new stores and refurbishment, the further investment in our IT system. We have made the decision because of the faster rollout of stores in Avenida, we want to move from where traditionally we were planning on doing 20 to 30 stores a year to 50 stores a year, over a 3 year period, we will invest another ZAR 1 billion in Avenida to accelerate the growth in that business because of the good results we've already seen. Continuously looking at mergers and acquisitions opportunities as we communicated previously, specifically around the CFH side, but also the FinTech, any opportunity comes along that we feel will be complementary to the business, we do investigate and we're planning investing in it. From a share purchase perspective, we have again, just to confirm, we buy back shares in the market to make sure that shareholders don't dilute because of the share option scheme and we are slightly ahead of the number of shares that we have to buy back, so we're not actively in the market at the moment, but that will be an ongoing basis. And to conclude, this all comes together in the payment of the dividend, we decided to stick to the 3x earnings cover that we had last year and for the last couple of years, that result is a ZAR 0.481 dividend that will be declared and paid in January compared to the ZAR 0.55 that was paid last year, so it's down by 13%, but still very pleased on the circumstances to be able to declare and pay a dividend. So on that note, I'll hand over to Sean to take you through the high level business unit performance. Thank you very much.

Thanks, Riaan, thanks, Pieter. I'll now give you a little bit more granularity across the different business units. There will be a little bit of overlap in terms of some of the numbers you hear, so apologies for that, but hopefully you get a clearer understanding of the individual business unit. I think as both Riaan and Pieter said, it certainly was a disappointing year, but definitely a year of 2 halves, and you'll see that in the second H2 performance. We definitely saw signs of improvement in the big business units towards the latter part of the year, which is encouraging, and we made good progress in the various value creation plans that we introduced into the business over the last 12 months. So again, to reiterate, as Pieter said, we restructured our business into sort of 4 core segments, and we did that to enable the correct resourcing and focus on these areas. So traditional retail being the bricks and mortar stores at the center of it, financial services, telco, and the informal market as part of the FinTech segment, efficiencies, leverage, and central business units sitting next to that, and finally the customer unit as the fourth component. And we've aligned our internal structures, we've set our KPIs up, we've aligned our plans in line with the structure. So it is run on a divisional basis, but I think as Riaan pointed out, there are a larger number of interdependencies between these units, particularly between financial services and traditional retail. So if we move into traditional retail, and one of the things you might notice is the numbers might differ slightly to Riaan, that's because I'm reporting on a 52-week basis on 52, and I'm talking to you purely about retail sales, not total revenue. So the headline level across the retail segments, total sales growth of 6.4%, that materialized in a like-for-like of 0.7%, and as you can see, strong H2 at 3.9%, offsetting the negative 2.2% that we saw in H1. The CGM segment, total sales growth of 9.1%. If you exclude Avenida, that comes to 6.2%. Like for likes marginally positive at 1.5%. Again, very strong H2 at 5.7%, which offset the negative 2.1% that we saw earlier in the year. The furniture appliances and electronics, which is essentially the JD Group, unfortunately, top line decline of 2.1%, with like-for-likes, sorry, 1.2%, with a decline in like-for-likes of negative 2.1%. Again, a stronger H2, with about a flat like-for-like, but H1 really the problem at 3.7% negative like-for-like. And finally, building materials, which is essentially the building company, top line sales growth of 0.1%, so essentially flat top line revenue, like-for-likes at minus 0.8%, and a consistent performance during the year. But I'll unpack that in a bit more detail. If we move to PEP, clearly the biggest unit, very pleasing top line sales growth of 8.2%. The PEP home division particularly strong at nearly 22% top line growth, like-for-likes at 4.5%, underpinned by a very strong 9% growth in H2. And that was essentially driven both by an increase in the number of transactions, as well as increasing the sales per customer. That sales performance meant that we saw some very pleasing movements in market share. So on a 12 month moving average basis, we saw increases in market share in home, in baby, and in menswear. And on a 6 month moving average basis, we've actually seen growth in all categories within PEP. So baby, kids wear both younger and older, men's, ladies, and home wear. And that really came about not just because of the maintenance of the BPL, or Best Price Leadership position of 96%, but a real focus by the team on the execution of the product at the price point. So a lot of investment in fabrics, a lot of investment in product styling, and the handwriting behind the garments, and the footwear really drove that performance. Sales clearly enabled by the credit mix that Riaan alluded to. So the mix up from 1% last year to 4% this year. And that was underpinned by not only the interoperability of the Ackermans Quad, but also the opening of just over 310,000 accounts in the PEP business over the course of the last 12 months. In terms of stores, 96 stores opened across the PEP home, PEP sell, and PEP core format. But as Riaan alluded to, the big decision there was the exit of the deals format. You'll remember the deals format was a discount variety business, which essentially sold a mixture of FMCG and general merchandise. Unfortunately, the underlying metrics at a store EBITDA level for this particular format weren't workable. The format relies on a high degree of disposable income from the customer and the ability to build a basket. And unfortunately, in the current macro environment and with the situation a PEP customer finds themselves in, that wasn't workable, and the team made the decision to exit that business. In terms of cellular, PEP maintains its market dominance. Nearly 8 million cell phones sold during the course of last year. About a 50-50 split as normal between smartphones and feature phones. We did see a slight move towards feature phones in the PEP business, and that was predominantly because we saw very high inflation on smartphone handsets, in excess of 20% RSP inflation driven by currency weakening during the year. And finally, from a financial services PEP perspective, one of the things the PEP team continue to do is looking for ways to optimize the 2,600 store footprint that they have and finding ways of solving customers' problems through there, and PAXI is a very good example of this. So the PAXI parcel delivery business, nearly 5 million units or parcels through the network last year, which represented a growth of around 18%. As well as Riaan alluded to, one of the highlights last year was the commissioning of the new PEP distribution center in Hammarsdale, KwaZulu-Natal. This 150,000 square meter facility forms part of a greater PEP core campus in Hammarsdale, which houses an Ackermans and a Speciality DC as well. That 150,000 square meters will add about 45% more storage capacity, and that capacity is enabled further by some state-of-the-art picking technology, which means a reduction of about 50% in throughput and processing time at pick point, and that will enable further growth within the PEP business and obviously reduce cost to serve from a distribution perspective. The other thing which we're very happy to report on is that the WMS system Manhattan was successfully implemented and no hiccups experienced there, which is very pleasing from the team's perspective. So we're currently running at about 2.5 million units a week. Full capacity is at 16 million, so the ramp up will continue over the next few months, but we certainly are very pleased with the progress there. As you would expect with an investment of this sort, high focus on sustainability and efficiency, and so this facility is fully edge compliant and edge certified, and is self-sufficient both from an energy perspective and from a water perspective thanks to investments in solar and water harvesting tanks. So a very nice milestone in the PEP journey. Moving on to Ackermans, we did manage to get some growth out of the business, so just on 0.7% top-line sales growth, unfortunately, like-for-like, still negative at 5.1% negative, but again, if you view that against the 8.3% negative, like for like in H1, marginally negative 1.1% negative, like for like in H2, offset that performance, and at least show that there is some trajectory change in the Ackermans business. That improvement came about by virtue of some of the short-term, immediate actions that the teams took. That was in terms of correcting price points, unbundling some of the packs, and making changes to some of the marketing campaigns. But the real change in the Ackermans trajectory will come with the execution of the product proposition and given new teams and the product lead times that's probably only likely to take full effect in winter '24. I think the other thing to bear in mind when you look at the Ackermans sales numbers, 16% of the spend on the Ackermans card was in a PEP store so there's no question that the interoperability decision whilst good for the group did affect the top line of Ackermans and that will be felt until such time as the PEP book gets to the same level as the Ackermans book. So there is some context to the underlying performance of Ackermans. Encouragingly, we saw some gains in market share, particularly in school where younger girls and lingerie, and we're more recently seeing younger boys gain market share, however the real focus of the team is how to extend that market share gain into the critical areas of boys wear and womenswear. Credit mix was up 1% to 18%, underpinned by sales growth on credit of 13%, despite the interoperability challenge that I mentioned, and that was to do with about 460,000 odd new accounts that were opened under the A+ card, as well as the fact that there was a cross shop of about 25% of the PEP card into Ackermans, but bear in mind the PEP card is of a much smaller base, but over time Ackermans will start to benefit from that. As you would expect with the challenging top line in sales, a significant increase in markdowns, and markdowns were up 80% year-on-year, as the team acted to clear slow-moving stock and make sure that they managed the stock age profile correctly, and at a headline level stock was down just under 6% year-on-year, so at least the positive outcome from the year is a relatively clean stock position, certainly from a summer and a winter perspective. Store wise, 84 stores opened across the 3 formats, being the Ackermans Core Business Connect and Ackermans Women's. What is worth noting is that we did cease the rollout of Ackermans Women's stores, so there's around 57 stores in existence now. We want to give the team the correct opportunity to really build a compelling womenswear proposition that can sit alongside and complement the Ackermans Women's business inside of the core Ackermans store, and so we've frozen the store rollout to give the team the opportunity to build that proposition, to judge the metrics and the underlying commercials of the business, and once we see that's in good shape, we'll accelerate the rollout again. From a cell phone perspective, whilst not at the scale of the PEP business, still very commendable 2.5 million cell phone handsets sold during the course of the year, much higher mix of smartphones and PEP, up at nearly 80%. And again, we saw high levels of inflation on smartphone handsets, and what was very encouraging within Ackermans was a nearly 80% growth in cellular accessories, and a smartphone handset being one that is very complementary to the accessories business and the ability to upsell the customer into other products. And finally, towards the latter part of the financial year, the Ackermans business launched the new Cube range. Cube is an internal brand focused particularly at the teens market, between 10 and 16 years old. There's a really unique handwriting about it, a very unique interpretation of license and character merchandise, and brings together outerwear, footwear, and accessories into a complete capsule offer, and really the early indications that we've seen have been very positive. Moving on to Speciality, just a reminder that Speciality division houses 3 types of business. Mature businesses, which would be Tekkie Town, Shoe City, and Dunn's. Our growing business, which is refinery, and then some of the new brands that we've launched being CODE and S.P.C.C. At a headline level, very positive at 8.7% total sales growth, reasonable like-for-likes at 4.5%, and a very strong H2 at 7.1%. If we talk about the individual business units themselves, as you will have seen from the impairment that was done, Tekkie Town had a challenging performance with a like-for-like of negative 1.1%. Predominant problem in Tekkie Town is a very competitive branded footwear market, and very negative growth in the canvas category across the entire market. So the core underlying business of branded footwear under pressure, however the team did a great job in terms of offsetting that with the introduction of clothing throughout the business. Both the Umbro brands, the CODE brand in 100 shops, and the launch of Airwalk more recently, all offsetting some of that core business challenge. Dunn's, very, very promising performance, 10.6% like-for-like in Dunn's, and growth in womenswear, menswear, and footwear market share. So very, very good performance from the team there. Refinery, 12% like-for-like, so that business just consistently performs for us. We opened 22 stores, so that gets us to about 118 stores in total, with more than 30 basis points of market share added during the course of the year. And really our confidence levels in this business have just continued to grow, and so we'll be doubling down on the number of openings in the coming years, and the internal target for the team is around 40 stores next year. Finally, CODE, about flat like-for-like, offer fairly limited store base, but the real growth for this brand coming through the expansion into the Tekkie Town format, and we'll look to expand that footprint over the coming months. PEP Africa, excellent performance from the team in Africa, a top line sales growth of 11.8%, like-for-likes of 9.9%, and as you can see, exceptionally strong H2 at 14.1%. As Riaan mentioned earlier, the decision was taken and executed to leave the Nigerian market, so that's 44 stores that come out of the base, and that was via a sale of the business, and that has all been completed. In line with the continued portfolio rationalization, there were another 10 stores that were closed across the other markets, so we end on about 227 stores in Africa now. Stronger performance from the Zambia, Angola, and Mozambique markets, more challenged in Nigeria and Malawi. Cash repatriation has really become consistent in this business unit now, so the team have really done a great job in bringing cash out of those countries, with the only real challenge being Malawi right now, where there is a shortage of foreign currency. But very pleasing result from the team, and the strategy in Africa remains to optimize the existing footprint, drive the capital returns, drive efficiencies, and broaden the products and the services that we offer to our customers in Africa. And then for the final CGM business, Avenida, excellent results, not only from a sales and profitability perspective, but in terms of the progress that's been made on all of the strategic initiatives that were put in place when we acquired this business. Headline sales growth of 13.6%, like-for-likes of 7.8%, and those like-for-likes should be seen in the context of what was actually quite a challenged Q1, given the disruption of the Football World Cup last year, and the post-Bolsonaro election protests that took place in Q1, as well as the fact that we removed the cellular phone business from all of the stores during the course of this year, and that would have sat in the base. So the like-for-like performance of 7.8%, very, very credible. That sales performance was really underpinned by our KVI strategy, so we took the decision around about 8 months or 9 months ago to introduce 30 key known value items for customers. Those 30 products had an average sales price deflation of 15%. We bought significant volumes in those products, and the net result was about a 30% unit growth on those lines, which meant at a total level a nearly 19% unit growth across the business, and those KVI lines now make up more than 30% of the total units sold in the business. So a very, very good discounting strategy played out in Brazil. We've also managed to leverage a lot of the PEP product, so piggybacking on the PEP's winter range and summer range via our sourcing office in Shanghai. We saw great sell-offs and great results from that PEP product into the Avenida business, and particularly the use of licensed or character merchandise. We saw 250% year-on-year increase in the sale of those products, and the Avenida stores doing in excess of 200 units per store per week, which really measures up to as good as any of the Ackermans or PEP stores in South Africa. Credit mix remains stable at about 42%, and we still see a credit customer with a basket value of about 2.5x the normal cash customer, and NPLs, as Riaan alluded to, fairly stable. The sales line meant that we saw very nice improvements in some of the underlying store efficiencies, so trading densities, sales per FTE, units per FTE. And we also saw a great move forward in terms of store openings. So we had a budget of 10 stores in terms of new store openings. We ended up opening 23 new stores last year with a further 3 conversions. So the team demonstrating the ability to accelerate store openings where required. As Riaan and Pieter alluded to, we took the decision to exit the Giovanna standalone footwear business. This was to make sure that we have a single format, singular focus business expanding in Brazil. And that was 17 stores that were closed and 3 that were converted into Avenida's, and that's all been executed by the end of the financial year. And really all of that put together has given us real confidence in the underlying Avenida business in the Brazil market. And so our aspiration, as Riaan alluded to, is to open 50 stores a year over the next 2 years. So that's the CGM segment. Moving along to the JD Group. As I mentioned, top line sales down 1.2%. That was essentially driven by home, which was at negative 3.2%, and tech at positive 1.5%. Like-for-likes constrained at negative 2.1%, with the biggest impact coming out of home at minus 4.4%. In terms of the categories, the weaker categories were certainly in areas such as television, where the market in general saw massive deflation in this category. The demand for large appliances, given where the customer situation sits right now, and both bedroom and lounge sets being quite challenged. Stronger performances coming out of computing, out of audio, out of cellular, and some really nice progress in terms of the Orion private label that the business launched about a year ago. Credit mix stable at about 11%, but a real increase in lay-buyer sales, and I think that's a good indicator not only of the pressure the consumer is under, but the fact that the JD Group is exceptionally conservative in their granting of credit, and that plays out in the fact that their collections are in excess of 95%. 49 stores opened during the course of the year, and this included the launch of 2 new formats. Firstly, 5 incredible cellular stores, so the incredible cellular standalone store, very different to a Pep sell or an Ackermans Connect, in that it targets premium brand high-end smartphones, a lot of postpaid customers, and a lot of premium accessories. So very different format to the other 2, and the team are very pleased with the results they've seen there. And then the launch of 3 mega incredible connection megastores, which is essentially a combination of a HiFi Corporation and an incredible connection under one roof, and again very pleasing results seen there. And then some experimentation in certain nodes with a consolidation of Bradlows and Russells into a single store execution, where the node is that small and can't sustain both businesses, but that was really just a test. Finally, the building company. I think as the results reported by a number of our peer groups tell you, this is an extremely tough market segment to operate in. Consumer confidence is very low, is limited to no government infrastructure investment, interest rates are impacting the consumer, and load shedding per se has a very real impact on this business. Not only in our ability to run some of our stores which have a cut and edge machinery, but in the actual end customer being the bucky builder or the B2B customer, their ability to produce or work on site is heavily impacted by load shedding, and those hours are not recouped, and that just plays out in terms of a reduced demand for raw materials from this business. So having said all of that, they ended up just flat at a total sales growth level and a negative like for like of 0.8% across the 3 divisions, so GBM or the General Building Materials Division, which houses BUCO and Timbercity, actually a very positive performance of 1.7%, and there they are benefiting from a revised strategy focusing more on a B2C customer, so investing in DIY categories, investing in things like garden centers and opening trade on Sundays, all impacting that performance. The SBM category, which essentially houses the business unit B1, which is an equipment leasing business, actually performed quite well due to the high demand from events, and Tiletoria having a particularly tough H2 given a drop-off in demand from some of the big trade customers. So SBM at minus 1.9% growth, but the real pain being felt in the warehouse or wholesaling division, my apologies, at negative 9% in brands for Africa, and that really is due to a big drop-off not only in our large trade customers, some of whom are actually our competitors, but also in the independent customers that we have. So all-in-all, given the performance of the actual market and that segment, I think the building company doing a great job. Moving on to the FinTech piece, and I think as Pieter and Riaan alluded to, this division was purposely created to give effect to our FinTech strategy, and perhaps just to spend 2 minutes at a very high level talking about how we think about financial services and FinTech. Essentially in our mind we have a large customer base, that customer base has a series of needs. Those needs can be needs related to connectivity, they can be needs related to the need to send a parcel from point A to point B, access to retail credit, access to micro-lending, access to insurance, et cetera. So you have that on the one hand, on the other hand we have Pepkor, which has a series of assets and capabilities, and the ability to monetize and commercialize those needs into what are either products that enable sales in our business units, that enable additional revenue streams such as ongoing revenue, or give us access to customer data. Essentially the marriage of those 2 is what brings value to the group, and that plays out through a series of channels. Those channels are either retail formats, the informal channel, or through a digital channel, and that plays out in a series of products, and those products are all housed within our FinTech business unit, whether it's insurance, retail credit, lending, or cellular and the like. So that's how we try and think about FinTech as a whole. If we look at the underlying business units per se, at a CGM credit level sales growth of 39% in the opening of nearly 800,000 new accounts, but as Riaan alluded to, we should bear in mind that credit only makes up 10% of the sales within the total Pepkor Group, and the CGM account base makes up about 13% of all South African clothing retail credit accounts, and even with this aggressive growth, we only made up 26% of the new accounts opened over the period. The account base now sits at about 2.1 million customers across 8 CGM brands, and as Pieter mentioned, the drive towards interoperability across all of those brands continues. As I mentioned earlier, 16% of the spend on the Ackermans card happens inside of PEP, 25% of the PEP card spend happens within Ackermans, and if you look at the Ackermans card spend, about 40% of the spend there that is incremental happens in categories within PEP that Ackermans do not stock. So it is truly incremental in areas like menswear, homewear, and FMCG, for example. In terms of the quality of the book, Riaan already alluded to this, you will see the approval rate down, and that really is given the team's prudent approach to granting credit, and customers in good standing or able to purchase standing at 75%, and I should mention that's based on one payment missed measure rather than 2, so that's quite a strenuous measure. So generally the book in very, very good health. On the cellular side, as I mentioned, customers certainly have a real need around connectivity, and access to a smartphone is probably one of the most pressing needs of all South Africans, particularly if you bear in mind that the network operators within South Africa, it is their intention over time to phase out of 2G and 3G networks. Putting a smartphone in the hand of every South African is a critical need. Pepkor has 6,000 stores, and as Pieter alluded to, 7 out of 10 prepaid handsets, so we are by far the dominant channel, and the best chance of fulfilling that requirement from a customer perspective. The handset rental product enables a very, very low risk credit opportunity to put a handset in the hands of our customers by virtue of the device locking software, where in the event of a customer not paying their instalment, you have the ability to lock the phone. So we have executed this offer not only through our own product, which is Phormium, housed within the Tenacity business, but also in a partnership with a third-party agency provider. We're active in about 300 stores at the moment, and we've done in excess of 120,000 phones through this rental product, with very high levels of approval, very low levels of bad debt, and we see this as a significant opportunity in the future. On the lending side, the Capfin business, as Riaan mentioned, we remain conservative in how we extend credit given the noise in the market. Just over 300,000 loans issued during the course of the year, that's a growth of about 11%. 75% of these being 6-month loans, but as Riaan mentioned, a growth in 24-month loans, and to reiterate, those 24-month loans are granted and offered to customers who originally have had 6-month loans and have demonstrated good payment behavior. So the risk profile on those loans is actually quite low, and we continue to be conservative in our approach to this business. On the insurance side, so again, insurance in Pepkor is executed via 2 channels. One is through our own business called Abacus, and the other is through JV arrangements with some well-known third-party insurance providers. There are a number of Pepkor products, both physical and virtual, that enable the opportunity to embed insurance as part of that offer, and that's really where our focus has been, and if you consider that we have a store network of 6,000 stores, a high degree of brand trust, and importantly, a mechanism in which to collect premiums, this represents a really significant financial services opportunity for us. So as it stands, we have about 700,000 policies that have been written via those 2 channels that I mentioned, primarily the focus being on credit life, single asset insurance, and funeral, and recent new introductions of credit life embedded into Capfin, for example. So this, like the handset rentals, is a significant opportunity. And then finally, from an informal market perspective, I think as everybody knows, the informal market continues to be the channel that grows within South Africa, as customers seek convenience of shopping close to home for both the goods and the services that they need, and the group again is in a significantly unique position here by virtue of its Flash business. So the Flash business saw growth of about 11.6% in total throughput, up to ZAR 37 billion during the year, and that was enabled by growth in the turnover per device, as well as to additional products that were added into the suite of value-added services, and the rollout of some new multifunction devices throughout the market. We did see a drop-off in certain value-added services, so electricity, airtime, and to an extent remittances, but these are offset by areas such as data, the flash one voucher token product, and pay with Flash, so significant growth seen in this channel. The Flash business remains a large channel for the distribution of SIM cards, so nearly 29 million SIM cards distributed during the course of last year, and that actually led to a positive ongoing revenue growth within the flash business unit, despite the fact that at a group level we were negative on OGR. Aggregation continues to grow, 45% growth in aggregation turnover, and that's a function of a wider reach of customers, as well as some additional products that have been added into the aggregation suite, and the one voucher, which I mentioned earlier, significant growth there, thanks to additional products being added into the one voucher itself. Finally, worth noting, flash, by partnership with a third party, has become a vendor that can distribute the SASSA SRD grant, and if you think about 6 million potential beneficiaries of that grant, this represents again a potential for a significant revenue stream going forward. So on that note, I'll hand over to Pieter to give you his view of an outlook of the future. Thank you.

Thank you, Sean. Thank you, Riaan, for all that feedback, detailed feedback. Just one slide remains, which briefly deals with outlook and trading since the financial year is finished. Very relevant now again is load shedding. Generally as a group, we're well protected up to Level 4, so if it goes higher than that, that will obviously impact again our customers, but also our ability to trade. Generally, PEP and Ackermans, of course, have got back up power, and Leso and some of the other brands. One of the other things that's happened is the port congestion. Like other retailers have reported, we've got significant value items stuck on the sea at the moment. Between 1 and 2 weeks late, numbers around about ZAR 700 million. We don't think the impact will be that big on our Christmas trade, bearing in mind we're a more of basics business with a higher component of replenishment. But yes, we think we will have to adjust our planning processes going forward. We don't know how long this will be and take to sort out. Generally, the feedback we're getting is 8 weeks to 12 weeks, but you know, there's obviously no certainty around that. But this is an important quarter for us. We had Black Friday, which is now more Black November. Not sponsored by ESCOM, but November, December, January, obviously a very important trading period for us. So we think we are correctly positioned. We have the right stock in order to trade through this period. But yes, externally, ports and power, is making it a bit difficult, harder to trade. So we're certainly happy that the lower product inflation that we've indicated is actually materializing, sort of mid-single digits product inflation coming through, which makes it a bit easier for our customers to afford our products. And then, yes, we follow methodology of value creation plans. We're going to need more time to explain that to the market. So we have reserved the date towards the end of February next year to take you through more detail of what we are busy with when we have more time. So yes, looking forward to that. And we will now take questions and hopefully we can answer them. And thank you very much for your attendance. Thanks.

Questions that have been posted during the presentation. I'll speak on a couple of the issues. Riaan will follow me and then Pieter will wrap up. Question or a number of questions relating to credit, specifically how are we thinking about credit? Why are we growing our credit book when other retailers seem to be holding back on credit? And what's the sort of an acceptable target or level of credit within the business? I think the first thing to think about is as a discount value retailer, our average price points are obviously lower than a lot of the other credit retailers in the market, which means that we can issue much lower credit limits than other retailers would do. And so it means that there's a portfolio or a population of consumers out there that the other credit retailers don't really pay any attention to. And that represents an opportunity for us. And I think we continue to be conservative. You saw our approval rate down about 400 basis points. So the team is being conservative. And I think the health of the book is shown in the fact that there is a 75% customer and good standing measure on a one-month default basis and 85% customer and good standing on a 2-month payment default basis. In terms of where do we see it ending, the reality is we will continue to cautiously grant credit to our customers, make sure that we adequately provide for any bad debts, but we don't have a specific target in mind when it comes to credit. The next questions were about Black Friday and some granularity on how Black Friday played out for the various retail businesses within the group. I think the first point to note is Black Friday is not a day event anymore. Black Friday is a month-long event, and we've seen that throughout the market across all of the key segments, and really a mixed level of impact in our business. The JD Group, clearly Black Friday or Black November is a significant part of their trading calendar, and the result to date in November shows growth in that business year-on year. So we are very pleased and satisfied with the performance of Black November in JD. In PEP and Ackermans, to a lesser extent, these are EDLP retailers, so we don't invest heavily in this area, but we did have a number of promotions across kids' multi-buys, and particularly character merchandise, and we saw an uplift there. Cell phones and handsets were also promoted during Black November, and we saw very nice increases in volumes coming from that. And within the Speciality division, really it was the refinery and code business that saw uplifts in specific targeted promotions. Then the final question from my side really speaks to Shein and their impact on the competitive environment, both in the South African and the Brazil market, and I'll talk about those separately. I think Shein in South Africa, we have no real visibility of the impact because they don't sit within the population of the RLC. However, all of the social media activity that we see, and the anecdotal information that we pick up in the marketplace, and the reference that our peers make to Shein, there is no question that they are taking money out of the market. Our impression is that they have a bigger impact in fashion retail and particularly adult wear, and most of our retail brands are more focused on kids wear and on non-seasonal or basic items. In terms of customs activity, most of the retailers have been talking about this for some time. Again, we've seen no official position from government or trade and industry or customs on clamping down on the abuse of import duty by these imports. However, anecdotally again across social media, we do pick up from customers that customs are being far more circumspect about these goods coming in. In terms of Brazil, Shein are definitely adopting an aggressive approach there. We hear that they have engaged with government in Brazil and are looking to set up a manufacturing base in the Brazilian market, which will service South America and potentially North America as well. The reality is the cost base is going to be very different for them in that market if they choose to manufacture there versus the Chinese market where most of their product comes from currently. So I don't think it'll be an easy run for them in terms of building a manufacturing base there. In terms of Avenida, that business focuses on core items. It's very aligned to a PEP type of proposition and so it's less impacted than the pure play operators and some of the bigger fashion retailers like [ Hershuelo ], Rena and Marisa. Right, I'll hand over to Riaan.

Thank you, Sean. Yes, so I'm also going to try and cover about 3 or 4 of the questions that that was asked. The first one, the first question was asked around price inflation and basket inflation in the different segments. So firstly from a Clothing and General Merchandise perspective, the inflation or price inflation, basket inflation we had for the last financial year was around about 7%. It was slightly lower on the Ackermans side, slightly higher on the PEP side, but that was the average for the year. We do anticipate, I think as we've communicated previously, that in winter this coming year that will drop to around about the 5% because of the drop in FOB prices and also lower container costs that we currently still see coming down. From a furniture electronics perspective, there the basket inflation was around about the 3.5%, slightly lower on the home side and slightly higher on the electronics side. Second question, and this really leads into then the GP question as well, where we do anticipate the GP percentage for the group to be in the New Year and the reason also again for the drop in the retail side the last year. So again, as we communicated, the drop on the GP side on the retail side, predominantly markdowns on Ackerman's to clear the stock that wasn't selling to a lesser extent in PEP. Yes, we do anticipate in our planning that it should specifically on the Ackermans side be less in the new financial year, but again that's based on performance. We are a bit cautious, current environment, we don't know what's still what's going to happen, that it might not improve back to the full 80 basis points, but yes we do anticipate an improvement. On the financial services, you heard Sean speak, we are planning still on growing the books, so yes we should also get that income again, but we do anticipate towards the latter part of the year interest rates should start to come down, so that will have an impact. Hence the reason why I commented I do see it staying at the same level, but hopefully there's a bit of upside in that. So how does that play out in the EBIT margin? Do we see it back to the 12% which historically always our target? Yes in the medium term, however for next year we still anticipate yes there will be the recovery from Ackermans side which will obviously assist, but with the growth of the books and as we've seen when you grow the books you take the full impact of the higher provisions in the first year and only see the benefit later on, so we're only going to really see the impact of the growth in the books in year 2 and 3, so we do anticipate next year we won't be back to 12% yes, but we will see an improvement on the EBIT margin compared to this last financial year. Then there are also 1 or 2 other questions I see we've received. One is on share buybacks. Do we anticipate to do more share buybacks in the New Year and then just cover the share issues? No, our planning is still our share buybacks predominantly not to dilute shareholders and we will continue just looking at buying back what we've issued in the market because of the share options and then under ZAR 1 billion investment we're going to do in Brazil. Predominantly, that is to accelerate as I said store rollout for the next 3 years. That will cover our plans growing from 20 to 50 stores over the next 3 years, that should more than cover it after that. We feel the business will be self-sufficient, obviously includes working capital that you need for those additional stores and also an investment in increasing the capacity of the supply chain. Those are the questions, I'll then hand over to Pieter.

Thank you, Riaan. Thank you, Sean. I've got 2 or 3 questions to answer and then we'll close off the session. I have a specific call out on Ackermann's because we communicated to the market that that was a miss and we wanted to change the strategy from multi-packs and iconic price points that was a bit high back to what we were used to in Ackermans. Since August, which is our summer season, our sales in summer merchandise has increased substantially, which is in the same trend as what we explained between half 1 and half 2. So, I call out specifically on Ackermans improvement on this season and on the rest of the business following the market and the trend that we've communicated to you guys with the results. Then another question was on ongoing revenue or the so-called OGR. We haven't disclosed this in the past, so questions was why was that going down. So first to explain what ongoing revenue is, every SIM card that we as a group connect, when a customer phones on that card or uses data or another service, we get a commission. We work very closely with the networks to manage those customers and so the revenue earned when the customer uses the phone and when they're actually connected sometimes can be in different periods. It can be a different reporting period. So when we do the Capital Markets Day in February, we will unpack this much more. But just to specifically answer the question about the commission structures, that hasn't changed. These commissions and strategies are all supported by long-term contracts and actually long-term relationships with the various networks. We work very closely with all of them in order to make sure that the customer behavior is understood. We obviously have what we believe is a specific capability and that is the handset. We spoke about the handset rental scheme or initiative that we've launched during the year and that is yielding great success and it's being scaled as we move forward and we think that will actually impact this area of the business significantly. Then the last question before I close is obviously on the ports. It's very relevant at the moment. We did say we've got about ZAR 700 million of stock that's literally on the water and that's 1 to 2 weeks late. We don't know when the issue will be resolved but generally because we have a much lesser seasonal impact in our business, we have got a much larger component of replenishment stock. We're potentially being less affected than other people but I can assure you our teams are working on this daily. We have to find workarounds and as in many other things we have to be flexible in how we get the inventory into our stores and to our customers. People always ask, was that back to school? Is that going to be influenced because that is a big market share for us? If you remember we have our own factory and that raw material has obviously landed months ago and has been converted so we should be okay for back to school. There's maybe some components like shoes et cetera that maybe not come as quick but as I said that's not under our control, but generally, we are working on this problem daily and we don't see a massive impact through the Christmas trade and back to school at the moment. So, I will close with that. Thank you very much for your attendance and all the preparation. Thanks.