Pepkor Holdings Limited (PPH) Earnings Call Transcript & Summary

Good morning, everybody. [Foreign Language] Ladies and gentlemen, it gives me great pleasure to welcome all of you to the 2024 Pepkor Capital markets event. I'd like to extend a warm welcome particularly to our guests from the investment community, both in the room with us this morning as well as those that are joining us online. I'd also like to extend a warm welcome to members of the Pepkor Board, led by our Chair, Ms. Wendy Luhabe, and I would also like to extend the warm welcome to my colleagues, Pepkor executives that are in the room with us this morning. My name is Kennedy Nzimande, and I am the proud CEO of Shoe City. Shoe City, I have to add is one of the most exciting businesses within the Pepkor Holdings table and some often referred to me as the Shoe Dog. For the next 2 days, ladies and gentlemen, I'm going to be facilitating proceedings. I have to let you in on a little secret. I was approached by Ian a couple of months ago, saying, "Kennedy, would you come and be a program director for our event?" I said, "Ian, nobody, I'm busy. I'm very busy. I've got shoes to sell, I am sorry, I don't have time." The reality is Ian was actually pushing me into a bit of an uncomfortable zone for myself. And he attempted. He dropped names like Pieter Erasmus. He dropped names like Sean Cardinaal said. He tried -- I've also spoken to Riaan. None of that actually worked until I got home that same afternoon and mentioned this to my wife. That name method. She said to me, "it's a no-brainer. You've got to do this. You're going to be amazing." I quickly phoned Ian, I said, "Ian, I mean, I have to tell you that standing here this morning, I am really excited to be here, and I'll talk shortly about the program we have in store for you. But we've got a really, really exciting program over the next day in the half. And just looking at our theme resilience and reinventing for the future. You have to agree that South Africa has gifted us with a lot and one of those gifts that we have from here is the gift of resilience and reinvention. Hence, we have a common saying that says A boer maak a plan. The reality is everybody is going to maak a plan. As individuals, as businesses, we have to maak a plan. Over the 100-odd years that Pepkor has been around, we have constantly had to be resilient and constantly reinvent ourselves. If you think just over the last 3 or 4 years, some of the challenges, some of the [indiscernible] that have been thrown at us, we have had looting, we've had floods. You remember day zero, we had locked down, right? And most recently, we were chatting earlier at the back about the port congestion that we have in Devon. So as a business, you absolutely have to reinvent and be resilient to thrive and survive. So in terms of the agenda, ladies and gentlemen, first of all, you all have this [indiscernible] and there's a QR code on the back of this. And there's lots of information that is in that app that you will find most useful. Including the presentations that you're going to see today and tomorrow. Just understand that we load the presentations as we go. So it's not in advanced in. But after every section, you will have access to them. Could we have a look at the agenda, as I believe. So just in terms of agenda, I will not take you through each and every item line by line. Safe to say that at a high level, I am shortly going to introduce our Chair, Ms. Wendy Luhabe, to give us an opening address. That will be followed by a short video which then transitions us to a section where we're going to talk about the group, right? There we're going to have Pieter, Sean and Riaan, and we will then have a Q&A session. We've allocated about 15 minutes for the Q&A session. That takes us through to the comfort break. We then come back and we start delving into the core businesses, the core retail businesses. And what I will suggest and recommend to my speakers is so that I don't keep coming up here to introduce. We recommend that the last speaker introduces the next speaker, if that's okay. I will then come back with the Q&A to tell you how that's going to run and who is going to be facilitating that. So that is by way of this morning. We will then go through to the lunch break. After the lunch break, we'll continue with the core traditional businesses, traditional retail businesses. And then in the afternoon, we'll talk about the nuts and bolts, right? We'll talk about what keeps this group together. The stuff that is -- that you don't often see our properties capabilities, logistics as well as some of our sourcing capabilities. So as you can see, it's a packed agenda. There is a lot of information that you're going to share with you. And I asked -- Ian really asked me to be Program Director. I said, Ian, this Pepkor Capital Market's Day, what do we hope to achieve? What is the agenda? What's in it for me? What's in it for the audience? And Ian said, look, ultimately, what we want to achieve is we want to share as much information, particularly with the investment community as possible. Information about the group, information about the different businesses and in the process expose the investment community to our leadership team. So we'll have the opportunity to engage on a Q&A basis as well as network with the leadership team because information is power. Once you are empowered with this information, you should be in a position to make the right decisions, the right investment decisions. And we all know what those right investment decisions are, don't read. So that is why we're here. And just one or two things on logistics. Cell phones, let's keep those on flight mode or off, please. And as for the bathrooms, that's really my job, right, to say where the bathrooms are and say when we have lunch. So I cannot miss the opportunity. As we step out of the room to your left, the bathrooms to the left is the ladies, to the right is the gents. I hope I got that right. Anything else, Ian, have I left anything out? Ian is smiling, so Ian must be happy. With that then, ladies and gentlemen, it is my honor and privilege to take this opportunity to welcome to the stage our Chair, Ms. Wendy Luhabe.

Ladies and gentlemen, good morning. We are absolutely honored to have such an excellent turnout this morning. I was very surprised when I arrived. I'd also like to just add to Kennedy's welcome and welcome both our local and international investors who are here in person and those who are joining us online. The purpose of these 2 days -- you want me to bring it closer -- the purpose of these 2 days -- are we recorded. Good. Okay. The purpose of these 2 days, as Kennedy has already taken you through is to share insights with respect to our performance and strategy given the current consumer and macroeconomic challenges of low wage growth, high interest rates and increasing levels of unemployment. Our approach to engagement with investors is to be appropriately transparent and consistent in our efforts to convey the Pepkor investment case and strategy. For many decades, the Pepkor Group and its diverse brands have woven themselves into the tapestry of South African Society making a positive difference in the lives of customers who have limited financial means. Pepkor's provision of access to essential goods and services has established a vibrant legacy of making the unaffordable affordable. Serving on the board of this esteemed group is a unique privilege for me. I generally believe that Pepkor has become a pioneer in providing customer propositions that change lives for communities with limited household income. This, in essence, is Pepkor's most valuable competitive advantage. Pepkor has demonstrated remarkable resilience amidst a demanding and challenging operational landscape since its listing on the JSE. Recent years have posed significant challenges for businesses in South Africa, as you are well aware, marked by economic slowdown, power outages, disruptions in port operations and consumers facing substantial financial strength. Unforeseen events that Kennedy mentioned like the COVID-19 pandemic, the social unrest in 2021 and the 2022 flags in [ Casalunatao ] have heightened these challenges, contributing to performance fluctuations and complicating the task of investors to value companies. The group's diversified portfolio, combined with a highly cash-generative business model, and a disciplined focus on real disciplines and costs ensured Pepkor maintains a positive performance throughout these challenges. The performance of our Avenida business in Brazil has positively contributed to our international diversification strategy. And this was a decision we took during COVID. Pepkor's impact goes beyond financial success, our vision and framework of building better business guides our sustainability efforts which are underpinned by affordable living, inclusive growth and minimizing our environmental impact on operations. Group initiatives like supporting 20,500 children in early childhood development centers, digitizing cash in the informal market through our FLASH business, and distributing social relief of distressed government grants to 600,000 beneficiaries in the informal market demonstrates our commitment to social impact. User unemployment is a significant concern in South Africa. Pepkor invested in 4,100 lender ships during 2023 surpassing the number provided by any other retailer in South Africa, and enabling prospects for young individuals to create a better future for themselves. The group is dedicated to economic growth and inclusion and has made significant improvement in this regard over the past 6 years resulting in our Level 7 broad-based BEE score being maintained. Customer affordability is enabled and underpinned by the group's low operating cost model, focusing on maximizing efficiencies and resource utilization. Energy security is a key focus on the climate front, and the group will this year expand its solar capacity from 6 to 8.5 megawatts to support our operations while reducing the impact on our environment. Solid governance and effective leadership are foundational to our success with Pepkor. In October 2022, our leadership team welcomed back two former employees with extensive knowledge and experience in the retail sector. Pieter Erasmus assumed the role of CEO; and Sean Cardinaal became our COO. Under their leadership, value creation initiatives and strategic growth has been prioritized. And we've done this to broaden resilience and to drive reinvention, which is the theme of the next 1.5 days. Much of this will be shared during this conference by our leadership team. And of course, you'll be pleased to know that there's now alignment of interest between our CEO and all the shareholders, which has been strengthened. In November 2023, Nunu Ntshingila was appointed as an independent nonexecutive director, Nunu's wealth of experience in marketing and creative innovation as valuable expertise to our Board. As we look ahead to the upcoming Annual General Meeting in March this year, Independent non-executive directors will constitute 75% of the Board, making a significant commitment to independence and governance. Theodore De Klerk will step down from the Board at the AGM and this will leave us with the proud 50% of our board being female after the AGM, reflecting our dedication to gender diversity and inclusivity. To conclude, our ambition is to streamline our portfolio of businesses as our strategic oversight of our assets continues to improve. In order to enhance the group's return on capital to optimize shareholder returns and to maintain a flexible capital structure that enables us to fund strategic growth. We appreciate the support and overwhelming confidence from our investors. Pepkor's legacy of sustained performance combined with a determined and dynamic leadership team as well as dedicated employees positions us to become and to continue to make a remarkable difference in the lives of millions of Southern Africa and -- in Southern Africa and beyond. Notwithstanding the recent disruptions in the retail sector by new entrants like Shein and others. Again, allow me to thank you for joining us at our Resilience and Reinvention Conference. I have no doubt that you will be inspired by how we are building better business, and our plans to remain competitive in a changing economic landscape to enjoy the conference.

Thank you very much to Wendy Luhabe, our Chair. I made a lot of notes as you were going through here, Madam chair, but I've made the decision that I'm not going to even try to paraphrase what you did this morning because you kept at it so well. So thank you very much for that. With that, ladies and gentlemen, what we're going to do next in is we're going to play a short video on the Pepkor Group and straight after the video, we will have come up to the stage our fearless leader, Mr. Pieter Erasmus; and Pieter is then followed by Sean Cardinaal as well as Riaan. After that section, we'll have a brief -- is it 15 minutes Q&A, which will be facilitated again by Pieter. That takes us through to the morning comfort break. With that, we're going to play the video, and Mr. Pieter Erasmus, will be up next. [Presentation]

Good morning, and welcome. Welcome to some familiar faces, some not so familiar faces. Thanks, Kennedy. I haven't been called fearless, I've been called clueless by some people in this room, I think that I won't alter against him. Wendy, thank you for your message and for the Board to also attend. I think the Board sometimes also want to know what's really going on. So we're trying this for the first time. So, Ian and his team has put a fantastic proposition together. I found that when we do the results presentations, it's a bit difficult to explain ongoing revenue and FLASH and like-for-likes and all the metrics. And hard for you as an investor community, sometimes to make sense of all of that. So that's sort of based on the feedback that we got, we thought let's take longer time, and thanks for your time to explain how we ultimately solve customer problems profitably because we can dream about share prices and value, but if we don't solve a value proposition for a customer and make that a good quality customer with repeating value, we won't create that value. So hopefully, what we'll go through in the next day or two, is explaining almost sometimes at a granular level, how do we actually make money from a customer, whether it's when they use a phone, obviously, when they buy something, why do they come back? What is our moat? That's sort of one of the reasons. And then secondly, also to see a bit of depth of team. It looks like a new trend, people who retire who come back and become CEOs now in South Africa, and then there's a cap raise after that. So we're not asking for that, but the pool is empty, it looks like. So both Sean and I, it's actually been a good journey for us being out learning new things are mostly in the international markets, being on the Primark and the Shein forefront and me sort of relaxing in the informal market to bring back those perspectives, work with our teams, again, to invigorate some of that thinking. It's great to go international again. We sort of go through some of our slides and you'll recognize Pepkor was a real international business a couple of years ago. That was the history. It's sort of all those black dots, Believe it or not, we even made money in Australia. Australia is usually a CEO's exit plan. The -- but we actually made some money there in New Zealand out there. China, obviously, they're big blob. We were massive in Eastern Europe, now still part of the greater Steinhoff group initially, we bought Poundland, strong in Africa, clearly went in Brazil in those days. But yes, we built the international competence. So when we do go to countries now, you'll see some of those brands that's been around for hundreds of years. Some of them are actually quite happy to skip over quickly but yes, what we have now is certainly in South Africa, the dominant business. Pep Africa -- Pep and Acumens are still the biggest businesses, as you know, but it's great that we have other opportunities in other parts of the world. The reason why we're putting this is again, Sean and myself and some of the other guys that you hear talk, Riaan, been around this journey. And then we've also brought in some new blood to invigorate our thinking, get a bit more different thinking. We got people from the food sector, which will talk to Adrian at Ackermans and bringing sort of new perspectives to us in the group. But all in all, as I said earlier, our whole business is centered around making a proposition worth well for the customer. It used to be heavily in goods and now it's goods and services. So ultimately, customers have accounts with us when that account can go from retail credit, which is sort of standard. We're only 10% actually on credit at the moment, embedded than that could be an insurance product because we have an insurance license and a little bit more about that later. But if it doesn't make sense for the customer to use that product, we just don't do it. So we are guided by solving our customer's product problem and also some of the services problem. And sometimes they are in the informal market, sometimes they are in the clouds, and sometimes they are in our stores. So the retail world has moved on. Pepkor has been a big enabler of that because we sell 1 million phones a month, and we'll sort of expect unpack that for you tomorrow. And of course, there's a massive penetration of smartphones and the ability of the customer to download Shein apps and TikTok stuff is different. And we're onboarding what our strategy will be around that. And hopefully, you guys will see that. So our operating model is just sort of a bit of stats. We are a scale business. So mostly, we build the scale stuff at the back end with what the customer can't see. And that's what this afternoon will be about. There are 1.9 billion times a year, customers actually want our product. That's why we do 1.9 billion transactions. About 500 million of them are in store, rest outside of the store. A lot of them are when our stores are closed after 6 at night. So we still have a massive store footprint, and we do the difficult stuff in a store, onboarding a customer, recurring a customer, [indiscernible] customer, doing credit access. So -- and that's where the customer relates to a brand, whether that's Pep, Ackermans, or JD, that's where a trusted brand, and that's where these sort of long-standing relationship with the brands are very useful. Obviously, we are -- we've got this informal base, if I can call it the informal traders. I don't really have a basis of device, but we interact with those customers daily and they load value onto those devices from us and then they on sell it to their customers. And we work with our suppliers, whether it is the telcos or the electricity suppliers as well as you can work with them to get those products down to our customers. So it brings the proposition for end user down by actually being able to transact. They don't need a taxi to go to ATM to do something else, they can actually transact near their homes. Then just from a market share point of view, when you have a big market shares, you've got a target on your back. Lots of people like coming to our world, but they're going to have to face up to our efficiencies and scale, et cetera. And I suppose the way that South Africa is going. Everyone wants to sell things a bit cheaper because the customers just can't afford the more expensive stuff. But yes, we're still two out of three baby products in South Africa. I talk about South Africa now because Brazil is sort of a new venture wise, so I haven't put that on this slide. And then yes, 7 out of 10 handsets. So we are of the biggest provider of cell phones in South Africa. A lot of people sometimes don't appreciate that. We lose a lot of funds. There's still a lot of funds. We have a lot of owned robberies, but ultimately, we serve a big customer need for that. So -- it's a great capacity that we've built there. So this is just a structure. It's a bit of noise in the structure, but at the left is what we call traditional retail, sort of the stores, 90% of the operating profit is in the traditional Pep Ackerman's, now Avenida. Then we have the furniture and electronic business, which has been in the group for a while. I would say we -- they were sort of isolated, Pieter will talk to you about it because I think they weren't sure whether they should stay or go but like the song that I grew up with. Those of you old enough, should I stay or should I go? But the furniture appliance is something that we can leverage from a capability into our business. We've got excellent execution capability, especially on delivery to home, very good credit capability, great team and I've got brands that overlap with us. So now we're working hard and Pieter will share his plans here for you. Then the building company, more a B2B business, very stuck in the SA economy. As you know Pepkor tried to sell it a few years ago, and they didn't work because of the COMP/CON which is nowadays a big risk. COMP/CON is something that's almost unpredictable because of the different rules. It's not just about competition rules, but also other rules that sometimes harder to model. But anyway, we have that. And again, like all our businesses, we look at how much value we can extract. And then the financial services, really, if you take the 2 in the middle away, are much closer connected to the clothing and merchandise business because it's credit and it's insurance. And it's embedded products on the accounts that the customers have and the accounts can reach from just a credit account, but the credit plus a cellphone or OGR, ongoing revenue or insurance or a money transfer. And we'll -- John will show you tomorrow, we've got sort of 29 million customers known to us as a group of which 20 million has got consent and how we're putting that together, making sure that we service them not just in the stores, but also outside of the stores as part of the strategy will explain. And then lastly, FLASH, which will have its own section, how we deal with the informal market? Unlike other retailers, this is sort of unique to Pepkor. Maybe it's because I've been sitting there for the last 5 years. It's really part of the SA economy, which is actually very good news. Really resilient small business people really growing their businesses quite substantially. This is a big growth area for us. as technology enables the informal market to transact and trade and these shopkeepers are actually very successful. So unlike any other retailer, we are the only retailers who've got these 160-odd thousand devices, to relationships out there that we interact with and constantly looking to how our customers are dealing with those traders as well. So your operating environment, I think Wendy spoke about it a little bit, it is what it is in South Africa. At the moment, we have ships that don't sail. So our supply chains are a bit longer. We bring in 20,000 containers a year at the moment, there's about 500, 600 missing but the reality is we're just going to have to lengthen our lead times because it will be more inconsistency. I don't think it will disappear. But on the short term, these things are painful, especially where the team sort of make good momentum, good stride, I think specifically about Ackermans, and then most tells us the one ship is just not sailing a day before selling there's 500 containers on it. So we -- there's a lot of scrambling to Mauritius and then we get there, then there's a [indiscernible] 3 and then can't find our stock there. I don't know where it is at the moment. Hopefully, it's not in the Suez Canal somewhere in that corridor where the guys warn you. So yes, but that's -- again, we have good processes, good way to solve it. It's something, we all like the rest of the country going off the grid as much as we can. You heard a bit of that in the DC on the video. I mean the floods that DC is fortunately closed and it's now on the value of 999 deals. It used to be the value of 1,000 deals, but we took one yield away there, as you could see. So -- but COVID, all dealt with, actually, Pepkor came out of it quite well. But it's sort of not things for us for ourselves and the team that we haven't seen before in different guises. It feels a little bit earlier than last time we were around, but ultimately, we just have to be better than the others, and there's opportunities for us even in this environment that we will work on. And of course, I spoke a little bit about the competition that's changed because of the Capitec's coming into insurance, the telcos wanting to push their own wallets. Somebody like Shop Rite, that's a formidable competitor with lots of customers on the extra savings. So the whole competitor set is coming from different directions. It's not just the additional retail with bunch of shops that you -- when they open next year, you put everything on discount for 3 weeks and then you hammer them but things have changed. But we have been -- got good processes. The competition is good. And the rules are the same for everyone. Shein is a little bit unknown to us. We'll talk about it a little bit less in our market, so AI company, bringing product in and not paying all the duties, but it's not just not paying all the duties that makes it work. And we do extensive studies on that and the impact on our business and on the market, actually, we're sometimes with some of the other retailers. That's the only time we actually allowed to talk to them. And -- but we're very aware that the world is changing, and we're looking at different things. You don't pick up Shein in the retaliation committee numbers because it's not reported. So actually, you've got to work out where the sales have actually dropped or not. But the team's are on it. They download the apps. They look at what's going on. They know what the trends are that it's only one fabric and all of those stuff, so -- so we're very deliberate. It's a bit of an advantage when you come back, like Sean and myself, we can just blame all the guys in front of us not really. But you have a bit of before my time stuff that you always play -- so we put in a very deliberate value creation process. And we look at things that can really move the dial. We don't have 20 years to build the business anymore. As Wendy said, my -- we are all aligned, but it's sort of more a 3- or 4-year plan. And we won't do it for that reason, but things just changed so much quicker now than it did 10, 15 years ago. So we look at things that can really move the dial. We take out things that we can then see whether we actually can execute on it. And then we allocate capital to the things that can move the dial. So it's a very deliberate process. It's documented, it's project managed, it's agreed with the teams and we used to call it the value creation process, but now Sean sometimes call it -- you just keep trading water process because we haven't put some of these initiatives in the -- because of the market dynamics sometimes, it would have gone backwards. So sort of we get out of the small stuff that's not going to move the dial with deals and Nigeria. And then the things that really we think is going to significantly have an impact is clearly Avenida and the team will take you through it purely because of the market size and the direction of travel. We're not calling a win yet, but as most things go, new business plus being offshore far from your area, you're always happy to things go better than planned. And then in the FinTech space, we have a real opportunity to unlock value because of things that we do already, but we sometimes do for other people almost on an agency basis, and then that's much less profitable. So in the insurance world and some of the of the [indiscernible] world and [indiscernible] that we can do a lot better, that's from a business case, very profitable. And I don't have to worry about the port. We're not selling insurance, so there's some benefits of having that. And just back to the investment case. I mean, we're not here to tell people to buy Pepkor or not. We try to give you the best information, the flow of questions so that you can make an informed decision about whether this is the type of strategy that you -- first of all, understand, and that you can put some of your pensioners or clients' money into. And those are some of the -- clearly, it's a scale business. It is still a growth business, I believe. And hopefully, what we will demonstrate in the next day or two is explaining that business case a lot better than we do during the results presentation. So that's my story for now. I'll be sort of taking questions a bit later if they're not too difficult. Otherwise, I like most things at Pepkor now just as Sean, and I do the fresh air stuff and he does the real stuff. And Sean will come up into his presentation, we'll have a Q&A and then sort of at the end of the day, I'll sort of try and see whether we've covered everything that you guys wanted to know. So thank you for your attendance. Sean?

Thanks, good morning, everybody. Yes, I have a bit of a history with a group that's probably now longer than I'd like to admit. It started back in 2003. And when I joined the South African business, I hold a few different roles in the clothing factory here in Cape Town and then within Pep and in Ackermans. And then as Pieter mentioned, I moved across the European and U.K. business, which was then Pepkor Europe, when we were all part one one big happy family and worked with Andy after the acquisition of Poundland. I left that business at the end of 2021, came back to the Pepkor South Africa business initially working with Rodrigo in Avenida putting the value creation plan together and getting the integration stuff done and then got the call from Pieter around about September of '22 and rejoined the group, and it's been an exciting and interesting time since I got back. So what I'm going to try and do is, firstly, just lay out a little bit of our strategic framework at a fairly high level. It's going to be boringly repetitive of a lot of the stuff that Pieter said. Hopefully, you take encouragement in that, that we are all aligned rather than it's just one boring story retold in different ways. So I'll take you through the strategic framework. I'll explain to you at a high level what the various growth initiatives are and how we think about growth in the business and then how we use some of the enablers that Pieter mentioned to drive that growth. So if you think about what Pieter spoke about, there's one common theme that came through, and that's just about customer needs. And fundamentally, our entire strategy in this group is built around customer needs. And we've got an extensive reach of stores of informal trader networks where we are in contact with customers all the time. We have an absolute plethora of data that we have access to in terms of how customers behave and within each individual retail and FinTech business, we've got access to market share information, customer research that helps us understand exactly what are the needs that our customers have. And those are often needs for physical products, they need for virtual products. They have emotional needs, they have economic needs. And so the whole cycle starts with do we understand what our customer needs are? The next question we ask ourselves is simply do we have the ability to execute on that need? Can we meet that need? And as Pieter mentioned, we're not a Section 21 company. We're not a non-profit organization. In the meeting of that customer need and executing on, can we actually create revenue for the business? Can we make money out of meeting that customer need? And that is literally as simple as our strategic framework is. And that's a constant cycle that goes on through the business, and it happens at every single level of the business. So at a group level, when we are thinking about what, how and when to allocate capital within an individual business unit, how they're going to unlock value right down to a department level. So you'll have a group of buyers sitting in Pep, trying to understand what are the customers' needs when it comes to back-to-school? Do we have the ability to execute on that? And can we make money out of that? So it really does flow through the entire organization. And that constant cycle basically results in the fact that we have a number of channels through which we reach and serve our customers. We have a number of customer segments that we cater to, and we clearly have a wide number of product categories and financial services categories that we operate through. And ultimately, our aspiration is to profitably serve and cater to as many customer needs as possible. And that strategic framework is all underpinned by kind of 3 core enablers. One is our scale. Secondly, is the use of technology and data. And finally, it's about our people. So let me unpack each one of those components in a bit more detail, and let's start with the customer. So what do we know? Our customers' needs are extensive, and we know they are continually evolving. So we have to be up to date and up to speed with how consumers are evolving and what -- how their needs are changing, and [indiscernible] will tell you about things like living labs, where we have real insight into what our customer needs are. The second thing we know is that our customer needs are generally for themselves, for their families or for their homes. And if you think about the structure of our group, those are the fundamental needs that we cater to. And they're kind of broken in, as I said earlier, into 4 areas. The first is the need for physical products and services. So the need to buy clothing for my family, they need to physically send a parcel from one part of the country to another. Then they have a series of virtual needs. Those virtual needs can be virtual products, buying airtime, buying data or the need for virtual services, the ability to send money from one part of the country to another, for example. They then have emotional needs. They need to feel connected. They need to feel protected or safe against unexpected events that happen in their lives. And then they have economic needs, which in our market generally means they need to save money. The need for access to discounts and the need for access to value. So once we understand those needs, like we said, do we have the ability to execute on that? And in our world, that's about the 3 Cs. First, do we have the capability to execute on it? Do we have the existing retail assets or FinTech assets? Do we have the technology? Do we have the people to be able to execute on that need? And if we don't, can we build it ourselves or can we acquire that capability? Secondly, it's about do we have the capacity. Now as a discount value business, we live in a world of limited resources. And so we have to be very deliberate, as Pieter said, about allocating resource and energy to those areas of the business or those initiatives where we know we'll get a decent return on investment and a decent return on effort. And finally, do we have the capital? And I think as Riaan will demonstrate from a balance sheet perspective, access to capital is not the issue. And as Pieter mentioned, it's really about the process we go through, which is very deliberate about where do we allocate capital and where do we reallocate capital. And he mentioned some of the minor businesses that we exited over the last 12 months. So that's the execution component. And then when it comes to monetization, and Pieter mentioned this, a lot of the monetization is related to the sale of physical products, but because of the wide variety of financial services and FinTech products our income or the revenue that we generate can take many forms. It can take a form of premiums, interest income and ongoing revenue. And I think, again, as Pieter mentioned, it's important to remember, some of that revenue is single transaction type revenue. You sell a physical product for cash, you make the gross margin on that. But there are a number of revenue streams, which are annuity income type revenue streams. And if you think about something like cellular ongoing revenue, that annuity can last 10 to 15 years of ongoing revenue that comes from that customer. In terms of the channels, clearly, the store traditional retail channel is the one we are most dominant in 6,000 stores, 40,000 colleagues in stores, 1 million transactions a day, that is fundamentally where most of our activity happens. But again, as Pieter mentioned, in the informal market via FLASH, we have access to 160,000 traders. And if you look at last year, there was more than ZAR 40 billion worth of throughput that went through that FLASH business. So again, as Pieter said, and we're going to belabor this a lot. This is a really, really unique part of this group. We are the only group that has direct access versus by an asset that we own into 160,000 traders and millions and millions of customers in the fastest-growing sector of the economy. And then from a digital channel perspective at the moment, our digital strategy, our digital channels are primarily driven by each individual retail brand and the sense behind that, that's where the dominant customer relationship lies. But as Pieter mentioned, John will share tomorrow some exciting plans to bring all of that together into a singular channel. Then in terms of segments, we use the SI classification in the South African business. Pepkor is clearly known for trading in the lower elements of the CM, so CM12 6, and that's where brands like Pep and Ackermans and Russells and Hi-Fi Corp, for example, are known to be. But we do have brands that stretch into some of the higher ACM groups. So think about brands like Rochester, like refinery like SPCC and the other specialty brands. The other thing to remember is when you refer back to what Peter was saying about babies and kids wear, when you've got market shares north of 50%, it clearly tells you that even in a business like PEP and Ackermans, you'll stretch in those categories into is into higher SCM groups. So we've got customers from all SCM groups shopping in a lot of our stores. And that's just evidence of a worldwide phenomenon, which is everybody loves value and everybody loves a bargain. And that's not just about people who have less. It applies equally to people who have a little bit more. And then in terms of the categories, we think about the 3 core categories as apparel, footwear and accessories, home, tech and other related categories and then the fintech space. And clearly, in each one, we've got dominant presence in some categories, and then we have accelerating presence in others. Apparel, footwear and accessories, clearly baby school, footwear and kidswear is where we are dominant, but we're accelerating in the area of adult were, and I'll expand on that a little bit later, particularly through the specialty business. In Home and tech, when it comes to furniture, appliances, electronics, the JD business, Peter will elaborate on that with some very well-known brands there that we are dominant in. And then in mainstream cellular, as Peter mentioned, 7 out of 10 prepaid handsets going through the Pepkor network, predominantly Pepcom, PEP and Ackerman Connect. But we are accelerating our presence in premium Cellular through Peter's business in Incredible Connection and incredible cellular. We're accelerating our presence in office, that's home office and small B2B type business within incredible connection. We're accelerating in a home deck. And interesting enough, we're accelerating in FMCG in the PEP business in categories which are actually quite synergistic with the general merchandise and hard goods that we sell. So things like household cleaning, personal care, impulse confectionary at the till point, for example, and Baby. And Stefan will talk a little bit about that. And then in the FinTech space, clearly, we are dominant in the sale of value-added services. So when it comes to data, airtime, bill payments and the like, we're dominant accelerating in areas like credit lending and insurance. So when it comes to the enablers, as I said, it's really about scaled tech and people. And when you think about scale and the legacy of Pepkor,, 6,000 stores, 100 years of history has meant that we've really built some iconic brands in the mind of a customer. So PEP, Ackermans, Russells, incredible connection, all of those brands have real resonance Tekkie Town, all have real resonance in a customer's mind, and that has come with the legacy and scale of Pepkor. That's enabled us to build the market shares that we spoke about, not only in Kidswear, but in home categories in cellular, for example. So we've been able to build significant significant market share. And that retail network of 5,600 shops, 36 distribution centers, massive massive distribution network. On top of which 20,000 import containers, 1 billion units that go through our network every year, 2 million square meters of properties within our retail network. Just gives you such scale that not only is it a moat that makes it very hard for anyone else to emulate it, but it also gives us the absolute base to drive our cost of doing business down as low as possible, which protects our positioning to our customer and equally importantly, make sure that we provide an acceptable return. On the people side, 50,000 colleagues out there all as obsessed about our customers as we are. But each individual operating company has a very strong customer-focused purpose-driven culture that they drive very hard with very strong values-based leadership in each one of those businesses, and I'm sure you'll hear that theme come through. And then as Pieter said, a real depth of IP and skills, both homegrown and brought in from the outside. And then on the data and technology side. At the moment, we have what is essentially a homegrown IT architecture. That architecture is designed to cater for the very wide range of products and services that we offer a customer at [ Tipoint ]. We use AI and machine learning in areas such as properties and you'll see that later, and we're starting to use it in areas like markdown management. For example, we use 3D design in our specialty businesses in the high fashion formats like refinery, for example, 3D design enables you to develop a really bespoke product, but most importantly, it enables you to shorten your critical path, which is really important in that world of fast fashion. And as Pieter mentioned, we have 30 million customers on our database, 20 million of those with marketing permission. So from an enablement perspective, real good base to build from. So hopefully, what that does is it gives you a picture of what the strategic framework looks like. It gives you a feel for how we've thought about our business in terms of those different components. And as Pieter said, we kind of divide our business up into 4 core areas: traditional retail, the financial services cellular space, informal. And in the digital world, all of that centered around the customer and all underpinned by the ability to leverage and drive efficiency. But I know you didn't come here for lectures on strategic frameworks and history lessons about Pepkor. You came here to hear about growth. And so what I'm going to try and do is explain to you some of the key levers of growth that we have. The point I think to make is that Pepkor. growth has been at the forefront of Pepkor since day 1. We wouldn't have the scale that we have if we didn't have a high growth agenda. And again, if you'll forgive me before I get to the detail, I just want to tell you about how we think about growth. So what is it that we're trying to do with growth? And it's simply about wallets. Firstly, how do we access more wallets, which simply means how do we get more customers, which is really about footprint and geographical expansion. The second component is how do we gain a greater share of our existing customers' wallets, and that's about category expansion. And thirdly, how do we actually grow the size of our customers' wallets. And that's really about our retail credit businesses. So we think forced and foremost about those. And in terms of how we think about organically, can we do that through existing assets? Can we look at M&A, for example? And I know that Pepkor doesn't really have a history of being highly acquisitory. We've generally liked organic growth and preferred it. But I think we know that in the current environment and with the urgency with which one needs to show growth, that M&A has got to be a real part of our strategy. And if you think about the Avenida business, we didn't go to Brazil and try and to launch PEP or try and launch Ackermans. We went to Brazil. We acquired a business that gave us an incredibly good base from which to grow quickly. And Maris will talk a little bit more about that. So let's unpack some of the detail. In traditional retail, clearly, the growth strategy is all dependent on the level of penetration we have in that specific category or in that geography. So when it comes to babies and kids wear, the starting point has got to be fiercely defending our current market dominance in businesses like PEP and Ackermans, and I think of this -- if I had a rand or a pound for every time I get asked about the Ackermans turnaround, I probably wouldn't be standing here. So [ Adrian and Stacy ] will give you a lot more in-depth insight into the turnaround within the Ackermans business, and clearly, that is a fundamental part of our traditional retail growth strategy, getting the Ackermans business back to being the amazing business that it was. But it's not just a defensive business in babies were and kidswear. We think in the higher SCM groups, there's opportunity for us to grow share. And so we have a specific initiative around refinery. We will be launching Kidswear in refinery towards the end of this year, and we think that there's scope for us to take share in those upper ACM groups. When it comes to adult wear, I think if you had a pound for every time, Pepkor's about adult where you probably wouldn't be sitting here either. The reality is, as we've said before, combined men's and women's, it's a ZAR 75 billion market in this country, and we have to have that as a cornerstone of our growth plan in traditional apparel retail. Our growth in adult were will come from 2 lines in the water. The one is the existing specialty brands and specifically refinery. And Corne will talk a little bit about this. We've been quite cautious in the rollout of refinery, but we believe that we can be far more aggressive in the number of stores that we open because the proposition is well and truly cemented with the customer. And to a lesser extent, SPCC M code provide the same opportunity. But one of the core parts of growing adult wear and specifically womenswear lies in the Ackermans women's format. And there, there has been a change in strategy, working with Adrian and the team. We've determined very clearly that the right way to grow womenswear for a customer who shops in Ackermans is inside the big box of Ackermans. That's the right place to execute on that. A stand-alone format, you lose all of the cross shop and the trading densities that we saw coming out of those 60 stores just weren't commercial. So we're taking that format. We are rebranding it. We are repositioning it at a slightly higher SCM group, and we will be executing that towards the latter part of this calendar year. And once we are comfortable that, that proposition resonates with the customer will start to accelerate the opening of that format. In terms of home deck, that's primarily about Stefan's business, and he'll talk about the expansion of Pep Home as well as some category extension plays in some of Peter's furniture business, particularly Russells and Brad lows. Then when it comes to new categories and segments. Clearly, there are a number of customer needs that we don't serve as a group right now. Some of those needs are in high-growth areas or high-value segments of the market. So if you think about beauty, health and fitness, even something like food, the reality is we don't serve those customers in those areas. So we are constantly looking at those categories and trying to determine whether using existing brands and stretching those, launching new brands or potentially from an M&A perspective, is there opportunity to branch into new needs that we aren't servicing at the moment. And then finally, around new geographies. Primarily, that's about Avenida and growing that business at speed. But the reality is the gestation period on launching an international business is long. And so we're already starting to think about International 2.0 and where those other opportunities are. Our bias will generally be to look at emerging markets because that's where I think we've had immense success in Eastern Europe in the sort of previous life, and we've got immense success in Brazil right now. The bias will be there, but we'll keep an open mind, but we are actively starting to work on that. So that's the traditional retail. When it comes to financial services, 4 core areas, starting with credit -- and Corne will expand on this tomorrow, but we've been on quite a journey in retail credit in -- particularly in the clothing and footwear businesses. It started as a small partnership with a bank to run a book in Ackermans, that then developed in us building our own capabilities in our own assets to manage that book ourselves, and you now have a business in Tenacity that opened 70,000 accounts a month, where we have more than 30% of all retail credit accounts in South Africa and more than 40% of first-time retail credit accounts. And so the focus there is really about continuing to drive credit interoperability across our brands. and to continue to acquire more customers on to the base. And we believe that by the end of this financial year, we'll have 3 million customers on our credit base. From a lending perspective, that's the Capfin business, we have generally significantly over 300,000 loan accounts at any one time. The focus there is not to exponentially grow the number of loans. The focus is to shift from a shorter-term 6-month product into a 12- and 24-month product. It has lower risk. It is a more profitable product for us, but more importantly, it's a better product for our customer. It's more affordable for them. From an insurance perspective, again, Corne will tell you how we are using the Abacus business that was primarily an asset that JD owned. We brought that into the center, and we are leveraging the use of that license across the board. And if you think about Pepkor, we're actually quite uniquely positioned because of the following. Firstly, we've got a number of products and services that are highly complementary to having an insurance offer overlaid on top of them. Secondly, we've got 30 million customers on our database. That's 30 million potential insurance leads. Thirdly, we got 5,000 or 6,000 shops, 160,000 traders a bunch of call centers. So we have a distribution channel that we can reach those customers directly. And finally, through our credit business, we have the ability to collect the premium really cheaply. So if you combine all 4 of those things, there's no reason, as Peter said, while we can't build a formidable insurance business based on embedded insurance on top of existing products and services that can be a significant contributor to the group's profit. And then finally, from a Cellular perspective, as Peter said, we spent a lot of time unpacking Cellular for you, explaining how the different revenue streams work depending on whether you sell a handset on its own, if you sell a SIM card on its own, if you sell a handset and a SIM card combined, how do those different revenue streams work? And Corne will explain to you that our strategy is primarily around acquisition of customers on to our base retention of the existing customers on our base and reducing churn and finally driving up the spend of those customers on our base. And he'll talk to you about some of the tools that we've got like FoneYam and like +MORE. So that's on the financial services piece. On the informal market, yes, I'm going to belabor the point again, this is a really unique opportunity for Pepkor. And as Peter said, Flash has primarily been a B2B business but as more and more customers are transitioning to that specific segment of the market looking for convenience and cost, in products and services, it's starting to have more of a presence on a B2C side. And we're going to spend a lot of time tomorrow unpacking the entire value chain in the informal market for you. We've got an external speaker to come and talk to that and also talk about who the players are and the size of the prize there. But one of the kind of common themes you'll hear coming through from Flash is firstly about reach. So how do we grow that trader base? How do we add more high-quality traders to that 160,000 trader base that we have. And if we do that, that primarily drives revenue streams such as merchant acquiring, the ongoing sale of more value-added services supplier payments and remittances. The second component, which is about expanding our VARs. Now a lot of the traditional VARs like data and airtime is migrating into the digital channel. But one of the core products within Flash is something called 1Voucher. And what 1Voucher is simply enables a customer to digitize physical cash into a form of a voucher and they can then use that voucher as a tender type to procure services and products. And clearly, the trick is the bigger you can make the suite of products that, that customer can use 1Voucher for the more attractive 1Voucher becomes for them. So there's a lot of work and Corne and Paul will explain that tomorrow. And then the second part of it is, how do we add additional value-added services. And one of the primary ones there relates to social grants. So now through the Flash network, a customer is able to access their social grant through an informal trader. And if you think there are probably circa 20 million people a month, you are getting social grants, that represents a massive revenue stream for Flash. And since we launched that late last year, we've done about 600,000 SaaS of payouts already. And then the final piece you'll hear is about a single ecosystem. And that's fundamentally about how do we take the Flash platform and how do we stretch that platform to cover the entire value chain and therefore, monetize each part of that value chain; whether it's money coming in to the value chain, whether it's the movement of product and payment between players across the value chain, whether it's a sale or value-added services, whether it's the provision of tools and financing and lending to those traders, how do you build an end-to-end platform that enables that market and that you can then monetize each one of those components. And then finally, on the digital piece, I think if we aspire to be truly omnichannel, we have to switch from that fragmented approach that I spoke about earlier, where each brand runs its own digital channel or digital strategy into 1 that's far more all group encompassing that encompasses all customers and all brands within the group. The strategy here, firstly, around e-commerce. There we'll let the brands continue driving e-commerce on a direct basis with those customers. But what we are doing in the back end, and that's what Ralph will talk about is looking at whether we can leverage [ dark stores, ] for example, and consolidate it all within one [ dark store ] whether we can consolidate the outbound last mile fulfillment into one network, and therefore, drive some efficiencies. And the second thing we'll look at is look at migrating all of the individual e-commerce propositions onto a singular platform. So that if our customers tell us at a point, a marketplace covering all of Pepkor's brands would be of value to them, then we are in a position to do that. From a +MORE perspective, John will elaborate, but as I said, that will become our primary digital channel to our customers. So it will be the way that we interact with our customers and the way our other customers interact with us as a gateway. And more importantly, it will be a single repository of all of the data related to our customers across every transaction across every brand. So that will give us immense power from a data perspective. And then lastly, once we've got those in play, trying to develop what is truly a unique omnichannel proposition in the South African retail market that has physical stores that has the informal market and that has the digital channel. From an enablement perspective, our focus is clearly here on trying to underpin all of those growth initiatives. Within the scale side, clearly, sourcing is a big part of that, and there is a section a little bit later today, we'll expand on it. But ultimately, from a sourcing perspective, we have direct sourcing capability, 19% of what we buy comes through our sourcing office in China. About 35% of the categories that they operate in, we buy through them. So that's got to be a massive opportunity for us to leverage that as we grow in Brazil as we grow new formats and new categories. And I'll expand on that a little bit later. And then from a distribution perspective, again, Ralph will talk about how we are using scale there, and there are a number of projects in place. But the way to think about our distribution, particularly from an import perspective, and more than 65% of the product that we physical product we buy is imported. The way to think about it is we've got a bunch of products that are often very similar that are either manufactured in the same factory in the East or in factories that are closely located with each other. They are then driven to a port that's often the same port in China shipped to the same port in South Africa, put on a truck sent to a DC that's often next to each other. And then from the DC sent to a bunch of stores that are all in the same place. And as Ralph will explain to you, we've been very, very good through Pepkor logistics of maximizing that last piece. So from the distribution center to the stores, through PKL, we consolidate deliveries, there's 1 truck that goes with a number of different brands on it. But everything left of that, there's got to be opportunity for us to consolidate and leverage that and Ralph will expand on that a little bit more. And then from a cost of doing business perspective, that's just part of our DNA. We'll continue to look to drive cost of doing business down. From a people perspective, as Peter said, hopefully, you'll see the depth of talent that we have over the next 2 days as you see some of the faces behind the normal 3 musketeers or the 3 clowns that you normally see. I'm hoping you walk away saying we've got depth of talent, because it's on you to mess that one up. But generally speaking, we've got a really broad mix of skill sets, as you'll see, and we are very, very deliberate about talent management. About how we identify talent, how we move talent through the business and how we develop them. And as a data point, in our top 100 leaders in the business is an average tenure of 12 years service. So there really is a deep bench with lots of IP. And then finally, on the data tech side, we've restructured our IT and our data functions under a singular CIO. And really, what we're looking to do there is to try and create far more of a homogenous IT architecture, where we are able to be much more flexible between brands and move products across brands. Because again, if we want to be truly omnichannel, we have to have a systems platform that enables that. We're looking to use data and AI far wider in our business than purely properties and markdowns. So a lot of work being done on how do we use data, machine learning and AI to find new and better ways of serving our customers and to find new and better ways of making smarter and quicker decisions. So to conclude, hopefully, what I've done is built on what Pieter spoke to you about giving you a feel for how our strategic framework works and how we think about strategy in our business, given you a feel for what those core growth initiatives are and what the key enablers are that sit underneath it, and that will all be unpacked over the next few days. But most importantly, I really hope you walk away seeing that whilst we divide our business up from a focus perspective into traditional retail, informal market, Fintech, et cetera, that those business units are highly interdependent on each other that the revenue streams are across all of those and that not one of them could exist without the presence of the other. With that, I'll hand you over to Riaan, who will give you the exciting stuff like the numbers.

Thanks, Sean. Yes, truly exciting stuff that just going to come up now. So I've got to warn you, before we go into a lot of it, you would have seen already a video this morning. You're going to see a lot of videos in some of the other presentations over the next day or 2. But this presentation has been also sent to the viewers. There's no videos in it. There's only cold odd fact. So if you can please stay focused follow me through this. So what am I going to try and do, whatever I'm going to explain? I've got, I think, 40, 45 minutes to explain it you to take you through the Pepkor financial model, you would have heard Sean and Pieter talked about the operating model. This is the financial model. I'm going to take it right from the top from revenue break down each of the different components down to earnings, and I'm going to focus on some of the balance sheet indicators, cash flow indicators as well to give you an indication of how we think about it, how do we see it, how do we change it? And how do we see the way forward. I'm going to spend especially quite a bit of time on the books. Because those are obviously the questions we've had a lot of in the last year or so and the growth in the book, so how do we see it? I'm also going to spend quite a bit of time on the cellular side, because that's also obviously something that we first time we disclosed ongoing revenue last year. Got a lot of questions on how big is it really in the group? How does it work? Corne is going to break it to a lot more detail tomorrow, but I'm going to show you the numbers and what do we actually make from cellular and how does it work and how does it all come together? So theme of the conference, obviously, resilient. You heard already Kennedy and Wendy talked about some of the events and some of the issues we've had and the challenges we've had over the last couple of years. Obviously, since listings definitely not been a quiet period, we listed in 2017. 2018 we obviously had all the challenge around the sign of implosion that we had to get through. We also, from an operational perspective, had huge deflation. Now we got to put it straightly. Deflation is a retailer's biggest enemy. We don't really want to do more units. We love inflation. We love a little bit of inflation because it helps keeping your costs under control from a distribution. And from a store environment. So generally, we prefer inflation environment with people tell you, you've got to grow units. We don't really like it because it's got an impact on your costs. Once you've got scale, it's a different story when you haven't got scale, but once you've got scale, you don't really want to grow units at a very high rate because it comes with a lot of additional costs. 2019 obviously was more a year of consolidation, and we also started building some of the books, the Capfin and JD book that was part of getting those assets and we also acquired the Abacus business, which you'll hear about quite a bit over the next day or soon, so to bring that into group COVID, we all know about, struggle. 2021, everybody said it's impossible for us at the end of 2020 we're not going to get back to the same levels of profitability we had in 2019 and even with the social unrest happening towards the end of 2021. We exceeded that. We had the social unrest in 2021. We had the floods in 2022. So lots of challenges and we at least overall profitability. You can see there was still growth overall. How we look at growth, with that's all said are going to unpack it. Group revenue. We always want to see a minimum of 10% to double-digit growth. Same with operating profit at least 10% plus and similarly to EPS or earnings. We want to also see a 10% plus cash flow actually to a 15%. That's our model. That's how we see it, obviously, COVID through a bit of a span in the works on some of that. And as I said, we had some other challenges. But that's how we look at it and that's how we see it playing out. So as I said, I'm going to try and unpack the financial model for Pepkor, different components. We're going to start with each of these items going to mention, I'm going to unpack in a bit more detail. But you start off with revenue. Revenue, we always want to see 10% plus as I said, a combination of normal growth every year from a like-for-like perspective. Space growth, which we'll show you and Leon Lambrechts will also talk about that later on how we see space growth and why do we think there's still space growth for the next couple of years. But then also now lately, we also see a strong driver in the group from a financial services perspective, with the FinTech side. So that will assist us to even grow the business faster than even the 10% that we've earmarked in the past. Gross profit we are religious about keeping our gross profit, especially our inflow gross profit the same. We don't change it year in, year out. I'll show that. The only variable we usually have is markdowns and discounts. Yes, we've had a change in the last 2 years around financial services, again, becoming a bigger part, which has an impact on the GP and it will however play probably even bigger impact on GP going forward, but that's the effect of the basic model. Other income, we see that's where we use the scale and the footprint. So we use the 6,000 stores around other service that we have. So that's bill payments, money transfers, cross border money remittance, that's PAXI to a certain exchange and so they can go on and on. So we utilize that asset that we've got with our footprint and we're able to sell more and more services to our customers and make the life more convenient to them. Cost of doing business fanatical about cost of doing business. You'll hear still but that quite a bit from various of the speakers. Yes, 2 of the big components is employment costs or employee costs, property costs, which we focus on a lot, I'll show you some of the growth figures. With growth figures we've had there and how we look at it going forward. But we continuously focus as part of our DNA. Sean also mentioned it, we want to be value and discount retailer, you've got to be fanatical about cost to keep your costs low. FinTech strategy, I said we see that as a growth driver not only on the books or on the handset rental and on interoperability, but also in insurance, you'll hear quite a bit about that. That's going to give you that additional boost in our profit in on our bottom line. Might always play out that much in top line. And as I said, double-digit hedge growth, if not higher, when that all comes together. Cash conversion, we're known for and has already commented this morning for very good cash generation business. We see a minimum 70%. We actually want to see closer to 80%. That's how we look at it. consistently, we've been able to achieve that over the last couple of years, and we don't see any reason why that should change. From a gearing perspective, we started a couple of years ago with fairly high gearing 2x net debt to EBITDA. We now want to maintain it between 0.5 and 1x. We feel that gives us the flexibility where new opportunities comes along. We don't have to come to you, the investors ask for capital. We go to our debt investors. We can fund it from our existing resources, like we did with Avenida, like we see now of the books that we want to grow. We don't have to get external funding. We can utilize the cash that we generate in the business to grow that business. And then capital allocation, Sean spoke about it, critical for us, where do we get the best return. That's the view. Obviously, we still feel we are a growth business. We're passionate about growth, as we said. So first and foremost, we will invest in growth initiatives and utilize the funds that we've got Obviously, if we're seeing there isn't enough growth initiatives and the net debt comes down, we will review our position on dividend payments and share buyback. But at the moment, that's not our focus. We rather want to grow and get the business scale quickly as possible as we can and look at new opportunities. And then obviously, last but not least, we got to give you healthy returns. Our WACC is sitting at 14%, 15% but we always want to get a return on net assets of 25% and above. And I'll show you historically, we've always -- or most of the time, we've been able to achieve it. So if we look at the different components, we start with revenue. As I said, we want to always get to a 10% revenue growth. Yes, there's been some challenges around COVID, where we dropped below that number. Yes, we have challenges in 2021 and '22 because of the social unrest, where we didn't have the sales we wanted. We fortunately had the insurance to cater for it to protect our bottom line. And we also had a drop in Flash revenue in '21 and '22 at least still '23, which impacted that number. But if you exclude those, we were consistently still close to the 10% revenue growth over the last couple of years, and we want to see that growing even faster, as I mentioned, going forward. So just on that. So how do we look at it? We look at still normal like-for-like. We always want to see at least inflation. So you're talking about 5%, 6%. Space growth, we want to get between 3% and 4%. And -- that gives you to about 9%, close to 10%. And then as I said, financial services, we now see will give us an additional boost to give us at least another 1% or 2% above that so we can get to above the double-digit growth. So how has that played out last year? So obviously, on the general merchandise, clothing and general merchandise from a PEP and the specialty perspective, we look fairly close to it, Ackermans, we do know the challenges around it. So already spoke about, [ Adrian ] is going to unpack what we've done. But in normal circumstances between those 3 businesses, we would expect at least a 9%, 10% growth between them. Africa, you would have known we scaled back quite a bit over the last couple of years. We first closed Zimbabwe we closed Uganda. And we also, at the end of last year, we sold Nigeria. So we're only focusing now on fewer countries that's becoming a smaller and smaller part of our business. Currently, we're still happy that we can still sweat existing assets, but we're not planning on growing Africa, their 2% will probably get smaller. And then we've acquired Avenida as you know, 2 years ago, currently sitting at 4% of revenue of the total group. We do anxiously anticipate to see a significant growth on Avenida's side. And as soon as that percentage gets above 5%, closer to 10%, we'll obviously disclose that also in a lot more detail separately to you. Building company JD Property segment that's most under pressure when it comes to disposable income. That's why you've seen lower growth, specifically on the building side. We haven't invested as much in growth over the last couple of years because the challenges that we've seen there, but we do look at it differently going forward, and Pieter will share some of the initiatives on the JD side, how we think we can increase that growth rate going forward. So if you look at the point I mentioned earlier, how do we look at space growth. So obviously, through the COVID period, we pulled back on a number of stores, that number decreased. But generally, as I said, we look at 3% to 4%. You'll see their looking at PEP and Ackermans, that sort of the average between the 2 of them. That's what we've achieved over the last, call it, 6, 7 years. We constantly look at we want to open a minimum of 300 stores every year. Yes, there's been challenges when we sold John Craig. So obviously, that cut back quite a bit. And last year, we looked at the overall portfolio base that we decided to close deals, sell Nigeria, as I mentioned, and also in Brazil, we closed the Giovana stores. So that had an impact on our space growth, but we feel we're now more optimally geared got the right stores and portfolio close to expand even further. Yes, PEP and Ackermans will always contribute about 170 to 200 stores of the 300 stores in Avenida. You'll hear from Maurice and [indiscernible] we're aiming for at least 50 stores every year and then a little bit of the rest it's with specialty. But we do feel, and that's a question we get a lot, is there still enough growth available. So you'll hear Leon Lambrechts unpack for you, where do we think the growth, why are we still comfortable there's enough pipeline for the next couple of years that we can still maintain that 3% to 4% space growth in our portfolio from a store or organic growth perspective. So that was purely on sales back to revenue. Spoke about the growth on the traditional retail segment. It's close to ZAR 80 billion in total. On the FinTech side, you see that's where we expect the growth to come from. Yes, we have insisted the last year with the increasing interest rates and the fact that we've opened a lot more accounts on the Tenacity side, but also we do see there's quite a bit of growth going forward on the Abacus side, and I'll talk later about it. And Corne will talk about the launch of our new product, FoneYam, where we see also quite a bit of growth. Yes, as I mentioned, Flash had a negative growth over the last 2 years, but that was because of the change in product. You would have seen in the trading update. We've now hit our base. That's turned around and we're now seeing significant positive revenue growth on the Flash side as well. So the FinTech number should therefore also increase going forward. So just on the question and Sean mentioned it on credit growth, how do we see it? We are still, from a credit contribution, the lowest in the market, Yes, we have grown at the last year to 10%, mostly driven by the interoperability that we've launched in the clothing retail businesses, PEP, Ackermans speciality. So that's gone up to 10%. That's the main reason for it. Yes, there's been Avenida added to it as well. But generally, we are still very low. We do anticipate that number to grow even further, 2 reasons. We are still going to open accounts on the Tenacity side, part of interoperability. It's not only about giving more credit and helping our customers through this difficult period. But it's also having that account with a customer. And you'll hear John talk about it as well to what is important for us that we need to be able to talk to the customer, get information on the customer, offer other products to the customers. So that's why the count is critical. And yes, we are going to -- we're in the process of we started launching the FoneYam product, which is a cellular handset financing model, and we think there's huge potential on that side to grow it even further. So how does it look per retail entity? What's the split at the moment? PEP, 2 years ago, they effectively had no credit in their stores. They were just a cash retailer. We introduced in probability, they're really sitting at 4%. Stefan will talk about it. We further growth on that side. Ackermans sitting at 18 historically it used to be as high, above 20%, going down again, but we started to see growth. Specialty 2 years ago, we're still at 9%. The fact that we've launched interoperability, they're now up to 11%. We think there's further opportunity. Avenida varies between 42% and 45% of their sales and credit. Maurice will talk about it. But generally, compared to most other retailers, we are still low. Some of the other retailers in Brazil runs at above 50%. So we're still fairly conservative in credit our granting. But as part of our model in Brazil, and also the bigger your adults wear component normally the bigger your credit component is. And that's part of our challenge, increasing our adult wear component in the South African environment as well. On the JD side, furniture, 20% of the sales are done on credit, not much movement. For those who can remember years ago, that number was sitting at 50-60, we brought it down first to 30, now to 20. Very conservative in our credit granting. It's purely for us on JD to facilitate the sale and make the money on the product, not always on the book. And on the tech side, [ only for ] a retail greater product, and I will unpack each of these products in a bit more detail. So cellular question and everybody has been asking last year, when we first introduced and showed you what do we actually make from ongoing revenue. So you'll see the number, OGR, that's the number I showed you last year with the year-end results. Last year, we made ZAR 1.9 billion from OGR, but we basically have 3 income streams in cellular. It's either the sales of handset and accessories. You'll see that's ZAR 9.9 billion we made in our PEP, Ackermans, Dunns and tech stores that we generate on an annual basis. That's what go -- and that number obviously would have seen increasing as we sell more smartphones, then we do the sales of Sims and airtime and data also predominantly through our stores, but also a big component of that goes through the Flash, the trader business. where they sell it through the 160 traders or we do an aggregation business there as well. So there, we make a very small margin on that. And then as I said, OGR, is effectively, when we sell is either in 1 of our stores or in the Flash trader when a customer uses that SIM after that, we earn a percentage from the networks on every time that they use that SIM. So that's the revenue. The gross profit that we make is the ZAR 4 billion. That's a number I think we just quoted a couple of times that we all know. So just very quickly, how was that ZAR 4 billion made up, ZAR 1.9 billion is ongoing revenue. ZAR 1.4 billion is GP from handset and accessories and the rest is effectively the commission we make from airtime sales, data sales, et cetera. That's how we get to the ZAR 4 billion. then you've got to extract all the expenses. So what is the expenses we incur in this environment? It's obviously store expenses. We have about separate PEP sales stores, Ackermans, Connect stores. We also have central teams that through the buying and planning. We also have a distribution business called [indiscernible] because it's higher value items. We distributed by that, and some of it's directly to the stores via the network. But then the biggest expense, we've seen the increase in it. Pieter talked about it earlier. At the moment, we're seeing a sharp increase in robberies, theft, shrinkage, and that's because we're just selling higher end value phones. And that means there's a lot more theft and robbery in our stores. And there's part of what Corne will talk about is actually an initiative, where we lock the phones, we want to see that number go down. In future because if you lock the phone, the customer can't do or the person that steals can't do anything with it, and we've already started seeing success. So we do anticipate that expense number going down. And some of the initiatives, you'll talk around that Corne will talk about ongoing revenue on the FoneYam, how do we keep the SIM, how do we make sure [ they spend ] more will increase the ongoing revenue number. So bottom line, we make ZAR 1.9 billion in profit. Out of a total ZAR 10 billion of operating profit, we made ZAR 1.9 billion, which is about 10% EBIT. If you split that between traditional retail, so that's what happens in the stores, what happens in PEP, Ackermans, Dunns and in the tech side on JD that sits in traditional retail. So that's a GP again on -- we only sell handsets, obviously, in traditional retail. We don't do it in the FinTech side. We don't do in the Flash. So that's the money that we make from then. And obviously, bottom line, we make ZAR 1.5 billion, which is about 10.6%. Now historically, for those of you who've been around a couple of years, I've always told you, we make the same money from an operating profit perspective than what we make on closing because of the ongoing revenue, it's actually slightly low in the moment. That's because of that impact of the higher insurance theft, et cetera, that we have to pay. but we're hoping we can reverse that trend. So the percentage we make on cellular will again be higher than what we make on CFH. On the FinTech side, that's on -- that's 2 components in there. So that's purely, as I said, the SIMs and the airtime we sell through the 160 traders, but there's also an aggregation business. In Flash, where we buy airtime from the networks and we sell -- and sell it to banks, other retailers, et cetera. So there, we also make a profit component of about ZAR 450 million a year. So this is the number I showed you last year. That's the ongoing revenue, [ ZAR 1.9 billion ] split between what we make in Flash. So that's purely a SIM. On the airtime business where traditional retail is a handset accessories. We sell the SIM with the handset. We make sure when we sell higher-end phones, they spend more on data. So we get more ongoing revenue on that. They've got to utilize that SIM that they buy from us in their phone, and that's how we make the money. And that's why we see it's very important that we can sell phones and handsets to them and finance it for them and make sure that they keep their SIM in that phone that we [ made sure ], which Corne will talk about in a lot more detail. Okay, gross profit margin, as I said to you, we don't -- PEP and Ackermans, we're religious are not changing our inflow margin. It's been consistent for the last 10, 15 years. If there is a weakening of the rand or a strengthening of the rand, there's an increase in container cost or there's a decrease in container cost. If it is a decrease and the rand strengthened, we pass the benefit on to the customer amenity. So we drop our sales prices. If there's an increase, a portion of that, we'll pass on to the customer. The rest, we look at how we can change the product mix or reengineer the product, but we are religious about our inflow GP. The only change you have in GP is around markdowns. And as you would have seen last year on the retail side. Obviously, with Ackermans' underperformance, clearing out the stock, we had a significant increase in markdowns which we hope was once off. We do anticipate that will recover. And the second impact we had last year as explained to you is, we saw the increase in interest rates. And with the growth in the books, that benefited in us in the GP going down. So as I communicated to you at the end of last year with interest rates not going down, I do you anticipate that trend to continue in this year. So it will be slightly higher, as I said previously. So how does this all play out operating company? So PEP, obviously, have got -- because it's in a discount space, we want to offer the lowest possible product at the lowest possible price to our customers. So the GP in PEP is at the lowest. Ackermans, historically, was always higher and should be higher. Last year was obviously anomaly with the amount of markdowns we processed in Ackermans to clear the stock that didn't sell. But historically, Ackermans will be a couple of percentage higher on GP than PEP because of the additional value that we built into the product, et cetera, and the cost that goes with it. On the specialty side, that's even higher because, again, you've got higher markdowns normally because there's a higher fashion component in specialty and your rental space is usually higher in specialty, where you have rest, so you have to build that in Africa, because of the volatility in African countries, we have a much very-higher GP, because you've got a gate for the volatility in exchange rates. Avenida we started [indiscernible], they have got a higher GP than what we have, time that will come slightly down, but that is because of the infrastructure and the central costs, they used to historically have that they have to have a higher GP to make that profitable. And then on the JD Group and the building company, it's obviously a faster moving, very competitive, if you run at a lower GP your operating profit in line with that closer to a fast new FMCG business or food business. If you run at a lower GP but also a lower operating margin. And as I said earlier, on the FinTech side, on the books, obviously, all the interest and fees you make out of it, that's all GP. There's no other thing that includes in the GP. And then on Flash, we've always told you Flash runs at very thin margins. You basically just get commissions. A portion of that commission which will get passed on there to trader. So we have to do massive volumes, which we make, and that's what we do in that space to make sure that you're still profitable. As I said, other income, this is where we leverage the footprint, bill payments, insurance payments, we get commission, where we sell insurance of third parties. We still have normal money transfer portion of the PAXI fees also ends up in this. So it's really where we utilize our scale and our footprint to make sure we make money on it. Yes, we had the insurance claims, which are showing a different color. You've got to strip that out. Otherwise, you'll see it's fairly consistent. But we do think this space for even more growth on this number going forward, and I shared the breakdown already with you last year. As I said, cost of doing business, we are fanatical about it. We've got to be the lowest in the market, especially PEP and Ackermans. That's why we can bring the lowest cost product to our customer. That's one of our key advantages. I mean, some of our competitors in the past tried to move into the space. They just couldn't operate at this low cost of doing business, and that's how we keep them out. So there's continuously initiatives on how can we cut costs, how we can do things better. An example of that is they told us this room can take only 50 people. But you can see we're packed in 100 people in here. It's called operations safe park. The local guys can tell the international guys what that mean. But we continuously look at how we can improve and how do we look at cost, generally, it's inflation, 1% or 2% renew with these initiatives and new stores. But there is continuous I said, efficiency initiative. You'll hear Ralph talk about them in the supply chain, it's all the other areas, some of the presenters. That's how we get it back again to below 7%. So we've got a gap between revenue and expense growth. What are the 2 big components, I told you salary, always look at how we can improve the salary cost in stores, the labor model. So are we going to become more efficient or just above inflation is the growth. And then the other one is rental cost, where we have seen last couple of years significant reductions in rental on renewal. That trend is sort of still continue is not as significant, but we still see a slight reduction on renewals, when we renew our rentals. We specialize in short-term rental agreements. And David Smith, I just put this slide in just for you, for nobody else. Everybody else is going to look at it. because we all know, for those of you who know, David, don't understand IFRS 16. So I have to spoon feed it to him every year. So I decided I'll put this in again for him. So David, yes, the number 391. And yes, the number should still go down as we see things stabilize. We don't close as many stores. We don't relocate as many stores, and it's a lot more consistent on PEP and Ackermans. But yes, that number is still going down. And we do very short rental periods. As I said, we do 3 plus 3 or 5 plus 5, and that's part of the reason why we don't always exercise those options and why we have these huge lease modifications, which most other retailers in the market don't know. So David will have another discussion this evening after glasses of wine. He'll explain it to you in a bit more detail again. But I'll get there 1 day to convince you. Okay. So that all comes together in operating profit margin. So obviously, we've got pre-IFRS 16 and post-IFRS 16. Post-IFRS 16 or pre-IFRS 16, our target was always a 10% of operating margin. Post IFRS 16 is closer to 11.5%, 12% if you would have seen there. Last year, we obviously did not meet that target for 2 reasons. Firstly, the underperformance of Ackermans, where we had to obviously process a lot of markdowns, as I've already showed. The second reason is we started building the books. And when you build books, you obviously have got a lot of provision upfront, which means you only get the benefit really in year 2 and 3. So that impacted and in the last slide, you'll see that we've done asset replacement because of the floods and the social unrest, we had a lot of assets that we had to bring in new, replaced motor insurance, and that started the depreciation. Normally, we would not have done in our normal replacement cycle. So our depreciation also went up slightly, and you'll see the impact of that still this year. So that impacted that number. So if you look at the different components of that, how has the broken down per operating company, historically, PEP historically has always run between a 15% to 17% operating company. For those who've been around, I've told you that since we did the original IPOs, you can't tell you, I didn't tell you this before. And Ackermans was at that same level usually also around the 15% to 18%. Now again, unfortunately, because of the performance last year, we'll see that drop to below that, but we do target that for Ackermans needs to run at that same percentage of above 15% OP. Specialty, we've got various challenges in there because you've got still new underscaled businesses, you've got more established business. And Tekkie Town still runs at a 15% but Kennedy sorry for that ShoeCity, unfortunately, is much lower, same with Dunn. So you've got to have that scale. But Kennedy told me, give me a year and he'll sort it out, so watch the space. But yes, we can start off with new business it comes. But our target is always a minimum of a 10% OP for a closing business. And then obviously, PEP Africa runs it lot -- as I said, because we've got to build in a portion of additional factor to speak for the currency and the volatility in the currencies. You never know, where it's going to end up. Last year it worked in our favor. So it's looking good. And in Avenida as we communicated to you on acquisition, it's not yet at scale. It's still a 5%. Our store profitability is exactly in line with what we get in a paper and Ackermans, but we need to scale in the volume, and we probably need to get closer to 500 stores before that will also be above the 10% operating profit, if not higher. And I know the guys are working very hard on it. So 12.3% for clothing and general merchandise in total, as you would have seen in the past, JD and the building company, obviously, as I said, lower GPs more competitive. JDs, as we said earlier, run very efficiently and continuously still looking at new products. Pieter will talk about it on the building company, a bit more challenges around it and not a lot of scope around it. On the book side, always, and I'm going to unpack that a bit more. I always said, we not really don't want to make profit on Tenacity, on Connect. You want to make the profit on the -- on the retail side, so as long as I make a profit, I'm happy, I just don't want to make a loss, but it's not about chasing EBIT. You want to make the EBIT on the clothing side, not on the book side. Capfin, obviously, a different model. It's a stand-alone product doesn't enable sales in our stores. So there, you'll see we run at above 25% EBIT, and we get a very good return on that book, which I'll show to you. Abacus. We do think there's more potential. Currently, we allocate quite a bit of those fees to the retail companies, which in the future will review that model. Also in future, we'll actually show you how much we allocate and so, if you can see the total picture of what we actually make out of insurance in Abacus, and we do see huge potential there. But overall, the 14.2% on those components. And obviously, we think there's upside in that. Flash, those of you who've also been around, I've always said, we only target a 5% EBIT on Flash. It has gone up slightly last year, but that's because of the underperformance of the top line. So the top line drop of a GP and expenses still the same. So to say we're actually in efficiencies. That's why the EBIT went up to 6.7%. We are not chasing EBIT there at the moment. It will probably remain at level and maybe improve a little bit, which brings you to 9.2%. And then overall, the 10.4% that you would have seen last year. As we've said earlier, we want to get back to the 12% and probably even -- but that's going to be 2-year journey, so it's not going to happen in 1 year because we are going to continue to install the [indiscernible] the book, and that's all going to mean a provision. I'm going to take upfront on those books. So finance cost. Last couple of years, obviously, with the drop in interest rates, finance costs was much lower. Last year, with the increasing interest rate, we've seen they aren't gone up, although our net debt stayed at the same level. We still anticipate that to go up very slightly this year because interest rates, I don't think is going to come down quickly. But the question we always get, what is our average cost there, it is 9.5. And our average spread is under the 38 points above JIBAR. We do continuously look at part of the refunding and the bonds that we raised to bring that down and we're very successful in doing that. And also very important to note, all this funding is rand-based. Unlike some other retailers historically, that dollar-based debt, we don't carry that risk of currency all based in rand. So I don't have that exposure of currency movement. Effective tax rate, Sean [ Holmes ] is not here anymore, but just I'll put this in for him. So yes, historically, we have seen we ran above the 28%. That was because of withholding taxes charges between fees between South Africa and African countries. We've really looked at the way. We've obviously also closed quite a few of the Africa countries. It also helped. So that brought in a lot of efficiency. There was also a lot of ineffective structures in the group. So we looked at how do we optimize the different structures, and we've cleaned out a lot of those entities that was in productive that you would have seen in 2020, to it dropped to 26%. Last year, we had the settlement [ SARS ], that's why it dropped so we released some of that provision. Some of that will also still flow into the new year. So it's not going to get back immediately to 27%, as I guided you at the end of last year. But the year after that, it will probably be back to the 27%, which is obviously corporate rate over time. The bigger Avenida gets, that number will probably grow again because Brazil's effective tax rate is higher than 27%. So just keep that in the back of your mind in 3 years' time. So another question we get a lot, what was actually the normalized EPS for last year. So I just wanted to clarify it. We think there's only 2 items you've got to add back for last year. The one was a nonrecurring DC lease modification of $392 million. Second one was we had a 53rd week last year, so there was a benefit of that. I don't add back any of the insurance because I feel that was just replacing sale. David and tax rate I mentioned, there will still be a bit of benefit in this year. The things I do for you, David. Inventory levels. So obviously, last year, we had a reduction in inventory levels. We did a lot of markdowns. We cleared a lot of the stock out. We also closed some of those business that I mentioned like deals and Nigeria. So that assists us. What is our view on [ Nigeria ]? We're still going to open the 300 stores that I mentioned, so that number will go up. We are also because of the challenges you've already heard around the container cost. We have made a conscious decision that we will extend our lead time, so that will mean we'll have more buffer stock in the system. We are fortunate that we can do that because, remember, a big component of stock is replenishment nonseasonal unlike the seasonal retailers have got a higher fashion component, they will probably struggle with that. But we can't do that. We've got the luxury of doing it. So hopefully, that will play out. This was just a reminder. This is a slide I showed you last time of the different books. So that's still the same. I'm going to pack each one of them. How do we make money? Obviously, now we're in the process of adding another book, which is a FoneYam book, which I'll talk about now, and Corne will talk a lot more about that. But this is generally where the books were. If you look at the different books, again, Tenacity, remember, as I said, that's a sales enabler. I'm not -- don't want to make money out of it. We've got 2.1 million active accounts. That's the interest rate that I charge that I've always told you in the past between 20% and 24%. That's governed by the NCA. So obviously, when repo rate goes up, as I said interest rates go up. And if it goes down, it goes down and the average loan size we gave us ZAR 2,600 at the moment. We have the Connect business broke and there we got 2 types of loans there. They've obviously got a furnish or installment sale agreement, which is on the furniture with either 24 or a 36-month product. Average loan is now 29 months. It used to be 27, but we have seen here some challenges for customers. They've gone through a longer loan. And then interest rates, again, governed by the NCA and average loan size of 17,000 on the furniture side and 14.5% on the revolving credit on the tech side. Avenida, they've got more than 1 product, but in essence, it is a 12-month revolving. They've also got an interest fee component on 1 of the products. That's where we'll see the interest rates varies based on the period of the -- of the account. And if there's an interest-free component that's included or not. So there's 1.9 million active accounts and the average loan that's granted is 2.4%. The average loan value outstanding is obviously a lot less than that. That's why the value is a lot low, if any of you are interested. And then handset rental, like I said, that's our new product. It's a rental product. So it is not a finance charge or a rent component. It's a margin component, but it does resemble very much your normal interest rates that we would charge. That's depending [ 2,000 points ] basing on the phone value, which varies between doing about over ZAR 2,000 to up to ZAR 3,000. And up to date, we've already got 100,000 handset rentals in place. And as I mentioned, Capfin, that's a stand alone business. We expect a return on equity of above 20%, and we do achieve that. Three different products, Sean mentioned about it. 6 months, we entered in a good customer, we moved to 6 and to 12 months. And again, interest based on NCA rates, but you do charge a much higher interest rates on the 6 months because you've got a much higher risk. That's why bringing the customer. If it's a good customer, you keep them. It's not a good customer, you write it obviously charge a higher interest rates on the 6 months before we move on to 12. And that's our average values outstanding for the different products. We grant a higher value. So on the 6 months it will normally be ZAR 7,000, ZAR 8,000, but that's the average. And again, remember, it's not a sales enabler. None of these money that they get from these loans really get spent in a PEP Ackermans store. So just to confirm, that gives you an indication of the revenue growth, again, nonperforming loans, fairly consistent. And also, I don't like moving the provisions up and down like some of my peers do. I try and keep it consistent, rather build in a bit more in line with the trend, but we've been very good at maintaining that nonperforming loans. Connect, at a bit slightly higher 2 years ago, but they've really done a lot of work to bring it under control, a very conservative set on the credit granting. So we feel really comfortable. Avenida, done a fantastic job to also manage that and bring it in line really with what we expect in South Africa. Similarly, you'll see it's very similar now to what we see on Tenacity. And then on Capfin, that's the revenue. As I said, operating profit above 25, the stand-alone product and nonperforming loans. Also, we had a slight increase in the end of last year. That's been brought under the control again. So provisions fairly conservative. Interoperability, that was the question. As I said earlier, it was not only to give more credit facility to customers also to open an account. So we've got more information on the customer. How do they spend? Where do they spend? So we can utilize it in other areas. That's sort of the current trend on the percentage being spent in the different areas. We do see that not increasing. As I said earlier, we are very conservative when it comes to granting loans, that approval process percentages have come down. Our average loan value of also where 2 years ago, it was still ZAR 3,200, now ZAR 2,600. And if you want to compare that -- somebody else asked a question, you compared with some of our peers, I remember they quote about a 20% approval rate. Difference between their approval rate and our approval rates we take this after it's being through our scoring criteria. They take it off, they've activated the cards, all documentation has been received. Capital allocation, how do we look at it? We still spend the majority on growing our stores, looking at new formats because we know we get a very good return on that about 30% ROR. We continuously invest in our distribution network. Ammerstol DC being an example. And as Sean mentioned, we will look at international expansion. Marius will talk about the $1 billion that we've invested, and I remember we mentioned last year in Avenida to grow that business faster. Just easier to invest from South Africa interest rates better here and continue to look at organic growth and M&A. As Louren also mentioned on the FinTech side. Credit interoperability, we will invest in those books. We will invest in insurance book. FoneYam, also, we do anticipate that book going to be ZAR 1.5 billion in 3 years' time. So we are going to invest in that from a capital perspective and then digital tunnels in informal market. So last year, we ended at ZAR 3.4 billion at credit books, it's going to be probably even higher in this year, as I said. From a share repurchase and a dividend policy that's still stays exactly our philosophy the same. We think we're rather invest in the growth. As long as we can see growth, we'd rather allocate capital to that before we change our share buyback philosophy or the dividend policy. So another question I always get a lot, what is my working capital investment on an annual basis? I've broken it down between normal working capital investment in books and also split between Capfin and normal. So last year, obviously, we had a big investment in books. We had a lower investment in the normal working out because of the inventory that we pulled back and the store closures. If you break that down even further, how do we look at it historically. So remember me historically, I've always guided that investment in working capital as a percentage of revenue is around 3.5% to 4%. And you'll see it will probably be higher than that in the year because of the investment in the books. CapEx allocation. In the past I've always guided to you, it will be around about 2.5%. You'll see on average, it is always or has really been 2.5%. Last year was slightly higher because of the fit out of the Hammarsdale DC, if you take out the insurance amounts that we received, and we would have seen it slightly high in the new year because we are commissioning a new DC for Ackermans as well as we need to fit out. So that's why the percentage next year is 2.9%. Historically, it's around 2.5%, 2.7% that we will invest. How is that broken down? Majority still goes into stores. As I said, store refurbishment on new stores, big component of IT, big component into DC's supply chain, the hubs that we have. Ralph will talk about that tomorrow. And then is 17%, which is around investment in some of the new projects that we've got like +MORE digital, which John will talk about and rollout of WiFi, et cetera, to our stores to enable that. Key point is 76% is spend on expansion at 33% is on maintenance. And historically, it's always been that way. Strong cash generation, I said, always above 70%, we actually target 80%. Last year was a very good year, to then close to 90%. And that's because of that inventory, like I said, was an exceptional year for us that we really pulled back on that and some of the other closures. So that obviously all results in a low level of debt. We see that debt being maintained at that level. We do see that additional cash, I'm going to generate, I'm going to invest in the books. So generally, it will remain depending if interest rates goes up and down. And that's our spread of debt repayment. As I said earlier, we continuously look at repayment or reinvesting in bonds to repay our current debt, we usually get at a better interest rate, same with refinancing of the banks. That's why we're doing on the 4th of March, another bond race to replace the ZAR 1.4 billion that's payable in May, and we are hoping to get that again a better margin and better interest rates than what we've currently got. So last but not least, this all comes together on what is the return we get on net assets. For those of you who know the reason why it's difficult for us to get return on equity because I've got a small little ZAR 50 billion goodwill and intangible amount on my balance sheet, which I'm trying my best the last couple of years to get rid of. If you would have noticed, I'm chipping away at it every 2 years, but the auditors don't want me to chip away a bit more. I'm still sitting with 50%. Look, that's why we look at return on net assets. And you'll see the average is 27%, has come down slightly because investment books will probably come down slightly again this year because of the further investment books because of the upfront provision. But we do see long term, there's no reason why it should not go back again to above that 25%, if not higher. That's my story. So hopefully, this would have given you a bit of insight. Hopefully, this helped. David, you've already updated your model. I understand Ian said I'm real allowed to ask you what your latest view is on EPS now, but I see consensus is about 146. So I'll leave it up to you to decide if that's positive or negative. But yes, hopefully, that helped a bit to guide you a bit more. But also a lower operating margin. And as I said earlier, on the fintech side, on the books, obviously, all the interest and fees you make out of it, that's all GP. There's no other thing that includes in the GP. And then on flash, with all this to your Flash runs at very thin margins. You basically just get commissions. A portion of that commission to be passed on the trader. So you have to do massive volumes to make, and that's what we do in that space to make sure that you're still profitable. As I said, other income, this is where we leverage the footprint, bold payments, insurance payments, we get commission where we sell insurance to third parties. We still have normal money transfer portion of the PAXI fees also ends up in this. So it's really where we utilize our scale and our footprint to make sure we make money on it. Yes, we had the insurance claims, which are shown a different color. You've got to strip that out. Otherwise, you'll see it's fairly consistent. But we do think this space for even more growth on this number going forward, and I shared the breakdown already with you last year. As I said, cost of doing business, we are fanatical about it. We've got to be the lowest in the market, especially PEP and Ackermans. That's why we can bring the lowest cost product to our customer. That's one of our key advantages. I mean, some of our competitors in the past tried to move into the space. They just couldn't operate at this low cost of doing business, and that's how we keep them out. So there's continuously initiatives on how can we cut costs, how we can do things better. An example of that is they told us this room can take only 50 people but you can see we're packed in 100 people in here, schooled operations stayed f***. The local guys can tell the international guys what that mean but we continuously look at how we can improve and how do we look at cost, generally it's inflation, 1% or 2% new initiatives and new stores. But there is continuous, I said, efficiency initiatives. You'll hear Ralph talk about them in supply chain, it's all the other areas, some of the presenters. That's how we get it back again to below 7%. So we've got a gap between revenue and expense growth. What are the 2 big components, I told you salary. Always look at how we can improve the salary cost in stores, the labor model so we can become more efficient. So just above inflation is the growth and then the other one is rental cost where we have seen last couple of years, significant reductions in rental and renewal. That trend is sort of still continue is not as significant, but we still see a slight reduction on renewals when we renew our rentals. We specialize in short-term rental agreements. And David Smith, I just put this slide in just for you, for nobody else. Everybody else is going to look at it. Because we all know for those of you who know, David, don't understand IFRS 16. So I have to spoon feed it to him every year. So I decided I'll put this in again for him. So David, yes, the number is ZAR 391 million. And yes, the number should still go down as we see things stabilize. We don't close as many stores. We don't relocate as many stores, and it's a lot more consistent on PEP and Ackermans. But yes, that number is still going down. And we do very short rental periods. As I said, we do 3 plus 3 or 5 plus 5, and that's part of the reason why we don't always exercise those options and why we have these huge lease modifications, which most other retailers in the market don't know. So David, we'll have another discussion this evening after glasses of wine. I'll explain it to you in a bit more detail again. But I'll get there 1 day to convince you. Okay. So that all comes together an operating profit margin. So obviously, we've got pre-IFRS 16 and post-IFRS 16. Post-IFRS 16 -- or pre-IFRS 16, our target is always a 10% op-margin. Post-IFRS 16 is closer to 11.5% to 12%, as you would have seen there. Last year, we obviously did not meet that target for 2 reasons. Firstly, the underperformance of Ackermans where we had to obviously process a lot of markdowns, as I've already showed. The second reason is we started building the books and when you build books, you obviously have got a lot of provision upfront, which means you only get the benefit really in year 2 and 3. So that impacted the last slide, you'll see the asset replacement because of -- because of the floods and the social unrest, we had a lot of assets that we had to bring in new, replaced motor insurance, and that started [ depreciation ]. Normally, we would not have done in our normal replacement cycle. So our depreciation also went up slightly, and you'll see the impact of that still this year. So that impacted that number. So if you look at the different components of that, how's that broken down per operating company, PEP historically, we've always run between a 15% to 17% operating company. For those who've been around, I've told you that since we did the original IPOs, you can't tell you, I didn't tell you this before. And Ackermans was at that same level, usually also around the 15% to 18%. Now again, unfortunately, because of the performance last year will see that drop to below that, but we do target that for Ackermans to run at that same percentage of above 15% OP. Specialty, we've got various challenge in there because you've got still new underscaled businesses, you've got more established business, a Tekkie Town runs at a 15%, but Kennedy sorry for that shoeCity, unfortunately, is much lower. Same with Dunns. So you've got to have that scale. But Kennedy told me, give me a year and he'll sort it out, so watch the space. But yes, we can start off with new business as it comes. But our target is always a minimum 15% OP for a closing business. And then obviously, PEP Africa runs a lot is I said, because we've got to build in a portion of additional factor to speak for the currency and the volatility in the currencies, you never know when it's going to end up. Last year worked in our favor. So it's looking good. And then Avenida, as we communicated to you on acquisition, it's not yet at scale. It's still a 5%. Our store profitability is exactly in line with what we get in the PEP and Ackermans, but we need to scale in the volume, and we probably need to get closer to 500 stores before that will also be above the 10% operating profit, if not higher. And I know the guys are working very hard on it. So 12.3% for clothing and general merchandise in total, as you would have seen in the past. JD and the Building Company, obviously, as I said, lower GPs, more competitive. JD's, as we said earlier, run very efficiently and continuously still looking at new products. Pieter will talk about it on the building company, a bit more challenges around it and not a lot of scope around that. On the book side, always, and I'm going to unpack that a bit more. We said, we not really don't want to make profit on tenacity on Connect. You want to make the profit on the retail side. So as long as I make a profit, I'm happy. I just don't want to make a loss but it's not about chasing EBIT. You want to make the EBIT on the clothing side, not on the book side. Capfin, obviously, a different model. It's a stand-alone product, doesn't enable sales in our stores. So there you'll see we run at above 25% EBIT, and we get a very good return on that book, which I'll show to you. Abacus. We do think there's more potential. Currently, we allocate quite a bit of those fees to the retail companies which in the future will review that model. Also in the future, we'll actually show you how much we allocate to them. So you can see the total picture of what we actually make out of insurance in Abacus, and we do see huge potential there. But overall, the 14.2% on those components, and obviously, we're seeing there's upside in that. Flash. Those of you who've also been around. I've always said we only target a 5% EBIT on Flash. Flash has gone up slightly last year, but that's because of the underperformance of the top line. So the top line drop, the GP and expenses will stay the same. We're actually on efficiencies. That's why the EBIT went up to 6.7%. We are not chasing EBIT there at the moment. It will probably remain at that level and maybe improve a little bit which brings you to 9.2% and then overall, the 10.4% that you would have seen last year. As we've said earlier, we want to get back to the 12% and probably even -- but that's going to be 2-year journey. It's not going to happen in 1 year because we are going to continue to install the world of books, and that's all going to mean a provision. I'm going to take upfront on those books. So finance cost. Last couple of years, obviously, with the drop in interest rates, finance cost was much lower. Last year, with the increasing interest rates, we've seen that gone up, although our net debt stayed at the same level. We still anticipate that to go up very slightly this year because interest rates, I don't think is going to come down quickly. But the question we always get, what is our average cost? There it is, 9.5% and our average spread is 138 points above JIBAR. We do continuously look at part of the refunding and the bonds that we raised to bring that down, and we fairly successful in doing that and also a very important note, all this funding is Rand-based. Unlike some other retailers historically, that dollar-based debt, we don't carry that risk of currency, all based in Rand. So I don't have that exposure of currency movement. Effective tax rate, Sean [ Holmes ] is not here anymore, but just I'll put this in for him. So yes, historically, we have seen we ran above the 28%. That was because of withholding taxes charges between fees between South Africa and African countries. We've really looked at the way. We've obviously also closed quite a few of the African countries. It also helped. So that brought in a lot of efficiency. There was also a lot of ineffective structures in the group. So we looked at how do we optimize the different structures, and we've cleaned out a lot of those entities that was in productive that you would have seen in 2022, it dropped to 26%. Last year, we had the settlement SARS that's why it dropped. We released some of that provision. Some of that will also still flow into the new year. So it's not going to get back immediately to 27%, as I guided you at the end of last year. But the year after that, it will probably be back to the 27%, which is obviously corporate rate over time, the bigger Avenida gets, that number will probably grow again because Brazil's effective tax rate is higher than 27%. So just keep that in the back of your mind in 3 years' time. So another question we get a lot, what was actually the normalized EPS for last year. So I just wanted to clarify it. We think there's only 2 items you've got to add back for last year. The one was that nonrecurring DC lease modification of ZAR 392 million. The second one was we had a 53rd week last year, so there was a benefit of that. I don't add back any of the insurance because I feel that we're just replacing sale, David. And the tax rate, I mentioned there will still be a bit of benefit in this year. The things I do for you, David. Inventory levels. So obviously, last year, we had a reduction in inventory levels. We did a lot of markdowns. We cleared a lot of the stock out. We also closed some of those businesses that I mentioned like deals and Nigeria. So that assists us. What is our view on Nigeria? We're still going to open the 300 stores that I mentioned, so that number will go up. We are also -- because of the challenges you've already heard around the container cost, we have made a conscious decision that we will extend our lead time, so that will mean we'll have more buffer stock in the system. We are fortunate that we can do that because remember, a big component of our stock is replenishment nonseasonal unlike the seasonal retailers have got a higher fashion component, they will probably struggle with that. But we can do that. We've got the luxury of doing it. So hopefully, that will play out. This was just a reminder. This is a slide I showed you the last time of the different books. So that's still the same. I'm going to pack each 1 of them, how do we make money? Obviously, now we're in the process of adding another book, which is a FoneYam book, which I'll talk about now, and I will talk a lot more about that. But this is generally where the books were. If you look at the different books, again, internationally, remember, as I said, that's a sales enabler. I'm not -- don't want to make money out of it. We've got 2.1 million active accounts. That's the interest rate that I charge of all we told you in the box between 20% and 24%. That's governed by the NCA so obviously, when repo rate goes up, as I said, interest rates go up and if it goes down, it goes down and the average loan size we gave us ZAR 2,600 at the moment. We have the Connect business, and I've got 2 types of loans there. They've obviously got a furniture or installment sale agreement, which is on the furniture with either 24 or a 56-month product. Average loan is now 29 months. It used to be 27, but we have seen some challenges for customers. So we've gone through a longer loan. And then interest rates, again, governed by the NCA and average loan size of ZAR 17,000 on the furniture side and ZAR 14,500 on the revolving credit on the tech side. Avenida. They've got more than 1 product, but in SENS, it is a 12-month revolving. They've also got an interest fee component on one of the products. That's where we'll see the interest rates varies based on the period of the account and if there's an interest-free component that included or not. So there's 1.9 million active accounts and the average loan, it's granted is ZAR 2,400. The average loan value outstanding is obviously a lot less than that. That's why the value is a lot low if any of you are interested. And then handset rental, like I said, that's our new product. It's a rental product. So it is not a finance charge or a rent component. It's a margin component, but it does resemble very much your normal interest rates that we would charge. That's depending -- the ZAR 2,400, it's basing on the phone value, which varies between about over ZAR 2,000 to ZAR 3,000. And up to date, we've already got 100,000 handset rentals in place. And as I mentioned, Capfin, that's a stone alone business, we expect a return on equity of above 20%, and we do achieve that. Three different products, Sean mentioned about it. 6 months, we entered in a good customer, we moved to 6 into 12 months. And again, interest based on NCA rates, but you do charge a much higher interest rates on the 6 months because you've got a much higher risk. That's why bringing the customer, it's a good customer to keep them. It's not a good customer, you write that. Obviously charge high interest rates on the 6 months before we move on to 12 and that's our average values outstanding for the different products. We grant a higher value. So on the 6 months it will normally be ZAR 7,000, ZAR 8,000, but that's the average. And again, remember, it's not a sales enabler, none of these money that they get from these loans really get spent in a PEP Akerman store. So just to confirm, that gives you an indication of the revenue growth again, nonperforming loans, fairly consistent. And also, I don't like moving the provisions up and down like some of might peers do. I try and keep it consistent, rather build in a bit more in line with the trend, but we've been very good at maintaining that nonperforming lines. Connect at a bit slightly higher 2 years ago, but they've really done a lot of work to bring it under control, a very conservative set on the credit granting. So we feeling comfortable. Avenida, done a fantastic job to also manage that and bring it in line really with what we expect in South Africa. Similarly, you'll see it's very similar now to what we see on Tenacity. And then on Capfin, that's the revenue. As I said, operating profit above 25%, the stand-alone product and nonperforming loans. Also, we had a slight increase end of last year that's been brought under the control again, provisions fairly conservative. Interoperability, that was the question. As I said earlier, it was not only to give more credit facility to our customers, also to open an account. So we've got more information on the customer. How do they spend? Where do they spend, so we can utilize it in other areas. That's sort of the current trend on the percentage being spent in the different areas. We do see that not increasing. As I said earlier, we are very conservative when it comes to granting loans, that approval process, incentives have come down. Our average loan value of also where 2 years ago, there were still ZAR 3,200, now ZAR 2,600. And if you want to compare that somebody else, a question, you compared with some of our peers, [indiscernible] about a 20% approval rate. Difference between their approval rate and our approval rate is -- we take this after it's been through our scoring criteria. They take it off, they've activated the cards to all documentation has been received. Capital allocation, how do we look at it? We still spend the majority on growing our stores, looking at new formats because we know we get a very good return on that about 30% [indiscernible]. We continuously invest in our distribution network. [ Hammarsdale ] DC being an example. And as Sean mentioned, we will look at international expansion. Maris will talk about the ZAR 1 billion that we've invested, and I already mentioned last year in Avenida to grow that business faster. It's just easier to invest from South Africa interest rates and continue to look at organic growth and in M&A. As I've also mentioned, on the fintech side, credit interoperability, we will invest in those books. We will invest in insurance book. FoneYam also, we do anticipate that book can be ZAR 1.5 billion in 3 years' time. So we are going to invest in that from a capital perspective and then digital tunnels in informal market. So last year, we ended ZAR 3.4 billion in credit books, it's going to be probably even higher in this year, as I said, from a share repurchase and a dividend policy that still stays exactly our philosophy the same. We think we'd rather invest in the growth. As long as we can see growth, we'd rather allocate capital to that before we change our share buyback philosophy or the dividend policy. So another question I always get a lot, what is my working capital investment on an annual basis. I've broken it down between normal working capital investment in books and also split between Capfin and normal. So last year, obviously, we had a big investment in books. We had a low investment in the normal working out because of the inventory that we pulled back and the store closures. If you break that down even further, how do we look at it historically. So remember historically, I've always guided that investment in working capital as a percentage of revenue is around 3.5% to 4%. You'll see it will probably be higher than that in the year because of the investment in the books. CapEx allocation. As I've always guided to you, it will be around about 2.5%. You'll see on average, it is always or has really been 2.5%. Last year was slightly higher because of the fit-out of the Hammarsdale DC. If you take out the insurance amounts that we received and we would have seen it slightly higher the new year because we are commissioning a new DC for Akermans, as well that we need to fit out. So that's why the percentage next year is 2.9%. Historically, it's around 2.5%, 2.7% that we will invest. How is that broken down? Majority still goes into stores, as I said, store refurbishment or new stores, big component of IT, big component into DC's supply chain, the hubs that we have. Ralph will talk about that tomorrow. And then the 17%, which is around investment in some of the new projects that we've got like plus more digital, which John will talk about and rollout of WiFi, et cetera, to our stores to enable that. Key point is 76% spend on expansion and 33% is on maintenance. And historically, it's always been that way. Strong cash generation, as I said, always above 70%, we actually target 80%. Last year was a very good year. Something close to 90%, and that's because of that inventory, like I said, was an exceptional year for us that we really pulled back on that and some of the other closures. So that obviously all results in a low level of debt. We see that debt being maintained at that level. We do see that additional cash I'm going to generate, I'm going to invest in the books. So generally, it will remain depending if interest rates goes up and down. And that's our spread of debt repayment. As I said earlier, we continuously look at repayment or reinvesting in bonds to repay our current debt. We usually get at a better interest rate, same with refinancing of the banks. That's why we're doing on the 4th of March, another bond race to replace the ZAR 1.4 billion that's payable in May, and we are hoping to get that again at better margin or better interest rates than what we've currently got. So last but not least, this all comes together on what is the return we get on net assets. For those of you who know the reason why it's difficult for us to look at return on equity because I've got a small little ZAR 50 billion goodwill and intangible amount on our balance sheet, which I'm trying my best the last couple of years to get rid of. You would have noticed I'm chipping away at it every 2 years but the auditors don't want be to chip away a bit more. I'm still sitting with ZAR 50 billion. We look at return on net assets. And you'll see the average is 27%, come down slightly because investment books will probably come down slightly again this year because of the further investment books because of the upfront provision, but we do see long term, there's no reason why it should not go back again to above that 25%, if not higher. That's my story. So hopefully, this would have given you a bit of insight. Hopefully, this helped. David, you've already updated your model, I understand. Ian said I'm allowed to ask you what your latest view is on HEPS now, but I see consensus about [ 146 ]. So I'll leave it up to you to decide if that's positive or negative. But yes, hopefully, that helped a bit to guide you a bit more. I understand I have to call up Pieter and Sean now for questions.

Thank you, Riaan. So there's a question slot. It doesn't mean you have to ask questions. Yes. I mean, I listened to this, and I wish it would be more simple, but it's not. So we just have to explain it better. Sometimes in our minds, it's quite clear but it's not sort of necessarily easy message to get out because you've got this retail and you've got omnichannels and you have different strategies playing out, but hopefully, it's clear enough. But yes, if there's any questions, I'm happy to pass the difficult ones on to Sean and Riaan and easy ones, fresh air ones, I can answer. So Ian -- there is a mic in the room because of the online people that they can hear as well so.

Yes. Paul Steegers, Nedbank. A quick question on M&A. I think in the presentation, you mentioned potentially more acquisitions. I'm interested if it is in South Africa, which sectors would you be looking to acquire? And also internationally, you said potentially which EM, emerging countries, which you've been potentially looking at?

Thanks, Paul. I mean, we have what I call opportunistic strategy. So in South Africa, clearly, from a market share point of view, we always aspire to maybe increase our market share in the adult wear. As Sean said, there's a ZAR 70 billion market, and we have single-digit market share. But we will always go through a process to say, okay, as Sean explained, do we have the capability, can we absorb something like that? And does it move the Dow ? There's a whole bunch of different competitors now, which is sort of online like Shein, et cetera, which you also now have to consider when you want to go in that particular market, and we need to understand those risks. So yes, I mean, good businesses are not necessarily for sale, and not so good ones of compounds for sales. So we will -- I mean, there's a lot of bankers in the room here. They bring you decks and then we read them and then we discuss them. So we're open. We don't close the door to those decks coming in. So I would say it's opportunistic, but then we'll put it through a filter or a DD process and end up, and it's mostly in areas where we think we can add value. And if it doesn't pass that test, that it's big enough, that the price is big enough, that it can add value and that we've got the capability to absorb it and extract that value. That -- and you have to go through that process before you can answer that. So sometimes we burn calories on things that don't land, but that's fine. Internationally, yes, I mean we sort of started into South America now. So we're learning about that. Our biggest constraint is human capacity, not so much capital, so it's a decision are we onboard and integrate these businesses. And as Sean said, we're not -- we don't have a great track record of buying things. I mean Pepkor was 14 stores. So it ultimately was like a bit of a startup. Avenida was a better one sort of because there was an established business with good controls and a good customer proposition. But it makes sense to -- we're doing the sort of desktop studies in emerging markets at the moment in the same hemisphere as where we are because we don't have that big machine. That's what's now the sourcing office that's sitting in the PEPKOR business, which does $1.5 billion. That was a real enabler for actually going across north and south. But who knows, as we build the capability, we might be able to travel North and South. Africa is not a big thing for us where we can get with by truck, it's easier. But we have to deal with another port that's also clogged like in Nigeria or sort of East Africa, that's a different dynamic. So we sort of full up on the southern tip Australia, I'll leave for my successor. It's nice going to Australia, but it's hard. So we were successful there. So I'm not -- I'm not saying I'm taking it off, but I'll leave it to other people. Yes, so we can never say no to anything. We will pass the test is it in our space. But as Sean said, especially on big market share gaps in South Africa is where we will look. But yes, as I said, people selling businesses that usually is a good reason. We're not buying [ Boxer ] yet. I mean, I don't know, we haven't run it through out. Maybe we'll look at things like that in a different category. But yes, we -- like Sean says, sometimes there's categories like beauty, et cetera, that we can look at if we've got some capability.

Pieter, it's Sean Holmes. I'm not going to ask a question on tax rate so I'll let you'll. There was a really interesting slide in Riaan's presentation, where you guys have unpacked some of the margins component within the cellular stack. Can you maybe just help us think about how those revenue streams and the cellular business over time will grow? And how should we think about the potential of that business?

We're going to unpack that in detail tomorrow to see exactly where does the margin come from, et cetera. But at a higher level, we have 70% market share on prepaid phones. It's a demand. We actually can't meet at the moment. We see the networks wanting to move customers to 3G to 4G, 5G, which means that the customer is taking up a smartphone. We see that customers struggling to afford a smartphone. That's why we've introduced the -- so at the moment, to be fair, it's one of the areas that we actually can't supply demand for at the moment. We have owned efficiencies in the systems with our canvas at in our store base, which we're fixing. So at the moment, we're throwing inefficient cost of it. So it's quite hard to say where we'll go, except to say we'll go as fast as the customers are taking it, and we think we have a good dominant position in order to execute on that. And as I said, there's a margin on the phone and then there's potential insurance on the phone. There's potentially a sim with the insurance on the phone, which then potentially earns an annuity income. And we've got that very sort of broken down tomorrow in a detailed session. But generally, the demand is a bit more, I think, than we can supply, which is not always true in retail.

2 things. Your interest charge at 9.5% suggest that your debt is are a lot higher than ZAR 7 billion, suggests like ZAR 14 billion, if I'm not reading it wrong, right? ZAR 1.3 billion in interest charge. I don't know...

So net is what obviously I showed. Gross is about ZAR 11.5 billion, ZAR 12 billion.

Okay. But probably the more important bit is around the sales line when you said the 10% target. 3 to 4 space growth seems quite aggressive when you are so mature. I know you mentioned there's a bit of an unpacking of where you think the opportunity is. Maybe we can spend some time on that? And then the like-for-like of 5% to 6% should that be nice. That's not really happening in this macro. Is there a reason why think it ticks up?

Again, I think the property 1 is quite interesting because we'll actually explain the process and the pipeline and the metric that drives it in quite a bit of detail in this afternoon session or was it I think tomorrow session will give you an update. So it will give you a sense when we do say so many stores, how we got to the answer like what's got addresses and what now and per brand, et cetera. So I think it's okay, the like-for-like, I mean, if the boat don't land and macros to. But again, some of it's inflation, some of its basket size. In the PEP presentation, you'll see what their plans are. In Akerman's presentation, you'll see what they plans are. So those are the big sort of drivers that you've got to really look. I'll not want to cop out, but I want to give them something to say. I hope that's what they got to in the presentation. So maybe they've changed it.

[ Garcia ] from Aveo Capital. Just a question on the informal market. You stressed in the strategy presentation around the opportunity in the informal market. So I mean, we understand somewhat about how Flash -- how you can increase the mix there. But if I look at the total business, like how big can you get there because 90% of the business is traditional retail, and that's where the profits are generated. And you did say you focus on what can move the needle. Having spent time in informal markets, what else can the business do and it being the only retailer that has a proper asset in that space, can you elaborate a little bit more?

Yes. Again, I mean, not going to steal a thunder. It's on the program specifically, but it's essentially a B2B business at the moment because the shopkeepers have got devices that either you increase the products on that device that they then sell to their customers, where we think there's significant advantages making those devices or those stores accessible to serve our retail customers because they are the same customers transacting whether they can pay a [ laybuy ] or whether they can do a cash back or at that [indiscernible] is something that we think we can facilitate. How to model that from a profitability point of view is hard for us. Again, it's a bit -- we know there's a lot of activity. The market is growing. We have a capability there and we see demand for some of these products that we want to accelerate that process. We'll give a bit more detail on it. But as I said, I'm happy that we have the 160,000 devices and addresses and people contracting out there selling products that source from us and we think that the customer doesn't really recognize at the moment that, that's part of the PEPKOR footprint, and we want to try and see if we can work out with a customer to either get a benefit or a convenience or solve some of their problems by transacting some of the transactions that we offer 1 of the 1.9 billion transactions, recognizing that, that's a benefit of the transacting in that informal market. The cash back is sort of the obvious one. Can you draw cash? But like the SASSA one is the obvious one, one voucher sort of obvious one. But I would say we need, I would say, that work was not managed like that sort of the informal market was kept separate as from an overall overarching customer management point of view. And yes, we'll unpack that a bit tomorrow. We think the opportunity is big. But how big, we'll see. At the moment, it's traveling at least in the right direction. And as I said there's no ships stack in the harbor. So you actually in an area where you can control your own destiny a little bit better in a market that's growing. And as I said, we will have some even outside people unpack that and just see what the opportunity is since check that for you guys as investors tomorrow.

I just had a question with regards to data. I think data is becoming more and more important in retail. And obviously, given the group's skew towards cash sales, how do you effectively build up a profile on your consumer, obviously, given the lacking loyalty program. So I mean, we've seen with the likes of some of your food retail peers, loyalty program and how they mine it effectively allows them to close gaps in their ecosystem. So how does PEPKOR sort of look to solve that?

Got the presentation for you. John is sitting behind you, can't wait to answer you. But yes, it's exactly that we -- traditionally low credit penetration, where you sort of know your customers' data. We do know about the 20 million customers with consent, but there's 29 million customers known, 20 million and but you need the right software and the right structure. So -- and that is launching and I'll leave it to John to tell you what sort of in weeks rather than months so and how we do it and how we're planning to roll that out. But you're right, that's a good opportunity for us. What a weakness if we don't do it. Good. Tea? Mark can I call tea, Kennedy or do you want to come call tea?

No, I think you're enjoying it.

Okay. All right. Apparently there's tea now. How long? 15 minutes. Okay, we'll see you back in 15 minutes. [Break]

And so I think that we've all settled now, hopefully. We're a little bit warmer, a little bit more comfortable. Let's keep it serious, but let's keep it a little bit light and engaging, okay? That's really important. And when you hear jokes, particularly from me, make the effort. Like that, like that, well done. Thank you. And so just a big thank you for the morning session with [indiscernible] on time. So I thank you to Wendy and the 3 musketeers. As we transition now, we are going to talk about, first of all, and we're going to talk about PEP. So we're going to have Stefan and Shaz come up to the stage in a minute. And they will then introduce Adrian and Stacey to talk to us about the Akerman's business and that transitions to Daniel and Daniel, you've got as much time as you need to talk about PEPKOR Specialty. Remember to mention [ sushi ] that. Without any further ado, ladies and gentlemen, I welcome Stefan on to the stage.

Good morning. Good morning, ladies and gentlemen. I am Stefan Voges. I've been with the business for more than 20 years. And for my since, I started my career in the factories, then in buying and planning and supply chain and here I am today talking to you about the PEP growth opportunities and my co-presenter here today is Shahzaadee Abass. Now she's been -- all career, she's been buying product and building ranges in the discount and value space in South Africa, a lot of knowledge, and she joined the PEP business 18 months ago. So we are really glad to have her. The program today, I want to talk about 4 main things. I'm going to do a very quick overview of what PEP is all about. I'm going to talk about our positioning and spend the most of the time this morning to talk to you about the growth opportunities that we have and our enablers that are underpinning our business to make this a success. And I want to close off the conversation today talking about the PEP customer. Okay. So just quickly into our overview of PEP. This is the look and feel of our main brands currently as you know the business, PEP, PEP Home and PEP Cell. We've evolved, if you want to call it, our look and feel. This is our latest store concepts. And you'll see these concepts in the main, let's call it, regional shopping centers. Now I know that there is a virtual store visit in on the app. So please go and have a look at what the stores look like. But these are our main brands. What are we all about? We are 59 years old. We are the biggest single brand retailer in South Africa. It's got 2,590 plus locations. It's now just over 2,600 stores. And we have 18,000 employees. We call ourselves Dynamos. Our culture in the business is called Sikhula KunYe, it means growing together. And we sell nearly 700 million units annually through 310 million transactions throughout our network. Our corporate social investment as -- so Wendy also alluded to is about helping young students, Grade 4 and 5 learners transition from mother-tongue education into English. And we also just recently launched a program within the Netball space, helping young girls to grow the skills and to grow their self-confidence. We call it PEP Mini NETBALL, and we launched that last year. Our market positioning is all about we make it possible for everyone to look and feel good. And we do that by making the unaffordable, affordable. We live by what we call BPL, Best Price Leadership and our average gap relative to the market is 25%. That means we are on average 25% cheaper than our competitors. 95% of our products that we sell is either cheaper or equal in the market. And this is for us such an important measure. We measure this every month. Now this is -- this 25% price gap, if you want to call it that, that has a range between 22% and 27% over the last 10 years. But it's not only a relative price positioning that's important for us. We make sure that iconic price points like ZAR 19.99, ZAR 29, ZAR 49, ZAR 99.99 are very important in our business. And our Shaz and the team building ranges, we make sure that there are a lot of volume behind these price points because 50% of our customers rely on government financial assistance. So the absolute price point strategy is also very important to us. Just a little bit of information around how easily our brand stretches into higher SEMS, in particular, PEP Home and PEP Cell. Just a few, let's call it, departments where we own more than 20% of the value market share in babies, in kids sleepwear, underwear and accessories. In school wear, in particular, we have more than 50% of the market share. So definitely not only, let's call it, the SASSA grant customer that is coming into our stores to buy school wear. In home, more than 20% market share. And in cellular, I'll talk to you a little bit later about that. We really put out about the fact that we've grown our market share with 53 basis points over the last 12 months rolling, so really performing well, and we're building on that. So I'm going to jump into the growth drivers with you and I want to talk to you about 4 specific areas, if you will. The core business, clothing, footwear and home and initiatives within that space. We're talking about new opportunities or opportunities that are really giving us a lot of growth and how are we going to build on that. The section, how we're leveraging our footprint and the last piece about the 4 main enablers within our business that is underpinning our strategy for success. So then as we jump into our core business, clothing, footwear and home, this is where I'm going to hand you over to the Head of Merchandise that is buying all of this that is making this happen. So I'm handing you over to Shaz.

Thank you, Stefan. So price remains our top priority, and we acknowledge that price has become a baseline expectation for our customer. We, therefore, understand that in this very, very competitive landscape, we need to add more to our offer to attract the customer and keep the customer. So we have looked at our complete product package from a price perspective, which sits at the center and the heart of what we do. But we've also looked at elements of product like functionality, fabrication, fit, fashionability and ultimately, how our customers feel when they experience our product experience our stores. And this star that you see on the screen basically encompasses everything that we look at from a buying perspective. We aim to surprise and delight our customers, ensure that we're giving them trend-relevant product, very, very good fit and improved fabrications. One of our initiatives that we've moved forward with is on fit, and we have decided to work and invest in 3D technology to better the proportions of the garments that we offer our customers and ensure that it is right for the South African body shape. So on the lady side, you'll notice that it's become a little bit more feminine, curvier, a fuller chest, more pronounced hips. But overall, this has actually created a rating saving in the fabrication that we use. Fabric contributes to between 50% and 60% of the total garment cost. So to hone in on the fabric utilization is a very important aspect for us to get improvements on cost. The second big initiative that we have focused on is our sourcing strategy. We have ensured that we look at our business holistically and look at how we can leverage our volume for scale advantage. The first step that we took was on Fabric consolidation. We run millions and millions and millions of meters of fabric every year. And the first step we said was how do we consolidate the bases we use, again, to leverage scale and make sure that we're giving our customer the best fabric at the price that we give them. What this has done for us is allowed us to actually elevate our fabric quality, something that our customers through research has told us and we have been able to do this without increasing cost. And this is because we now negotiate our raw materials directly with the mills. This allows us to have a full view on our value chain, and it allows us to have more consistency across fabrications that traditionally were difficult to remain consistent. Our second big sourcing initiative was around regional and local procurement. This has been a big, big focus for us over the last 12 months. And we have managed to bring a lot of this product back to South Africa, close to around 25%. What this has helped is it's allowed us to have more flexibility, agility, and we are able to react to trade on a more ongoing basis. So we have weekly trade meetings. Whatever is working, we can turn back on, whatever is not working, we can turn off. It's also, in more recent times, assisted with the challenges we've experienced with shipping delays and port congestion, having our fabric care way in advance and having the production done way in advance has assisted in alleviating those issues. We have also partnered strategically with local suppliers, and we have looked at key volume lines that we can place with them way upfront in the season because it doesn't have that element of fashionability, so things like school wear, baby basics and core seasonal lines are areas that we've invested with local supply and we have managed to get a benefit of exclusivity, more visibility and again, value chain control. And then the last initiative on sourcing is working very closely with our Shanghai Sourcing Office. We do predominantly apparel through that office. And we've seen now that there are huge opportunities to start working with them on our home products as well as our footwear products. And this has given us huge excitement because the things that we've been seeing out of them has really been great. Our customers through research have also said to us that they don't just expect and want more from the product offer. They do expect and want more from the store experience. And through this research and through the learnings, we have taken steps to enhance the product and the store experience that our customer wants. The 3 areas that we focused on is Baby, Kids and the navigational signage across the entire store to help customers navigate it with ease. So in baby, what we've done is we've opened up the space. We've created dedicated fixtures where we can make impactful statements on our core offer, and we've ensured that the adjacencies are correct. So when the mom comes into shop, everything that she needs to shop for a baby is all in one area. On the kids side, we have used character as a means to create excitement within the department, and we have created a bit of a sense of playfulness so that when kids walk in, they actually want to be in our store, and they feel excited about the product that we have on offer. Lastly, we have decided to strategically focus on building and growing our character business. Character is all the rage at the moment. And although we have a substantial market in key categories, we do believe there's still huge growth to be made in this area. So we are going to endeavor to make this more accessible and more affordable. And the way that we can do this is by partnering with license holders, we have direct-to-retail contracts where we are able to go direct to manufacturers. And we also have a very strong sourcing capability, as I've just mentioned.

Thank you, Shahz. So ladies and gentlemen, that is really the, let's call it, the main initiatives within Clothing, footwear and I'll touch on the home opportunities now. The home business is really something that has grown from strength to strength over the last couple of years. We've recently celebrated the 400th stand-alone home store and this business is really built around absolute value. Now I'm standing around many [indiscernible] and ladies tell me Stefan, you will not believe what I bought in PEP home yesterday. And then my feedback to them is, I absolutely believe you. So this is a great value proposition. We improved our market share with 100 basis points per year over the last 4 years in the home categories. And what do I mean by -- it is based on value. We have more than 20% market share in value, but we have nearly 60% market share in the units in these categories that we sell into the market. So fantastic market there. And it is all about our sourcing capability, our relationships with our supplier that we can get access to these fantastic products that delight our customers on an ongoing basis. We will open 45 new PEP home stores every year for the next 3 years. For this year, we've already approved 40. So we are definitely finding enough locations to open this fantastic brand and back to Shahz, on new products because products are very sexy in this space, and we have to keep on buying this stuff that our customers are looking for.

So through COVID, we capitalized on fitness and home office furnishing. And those capsules did really well for us. We were able to offer it to our customers at exceptional value. We know that, that is now a dying category and the product life cycle is on the decline. So we have exited out of those categories, and we are filling that space with whatever is new and trending. So at the moment, novelty stationery is quite a big deal. Storage and home improvements are quite a big deal. And then gifting is very important for us. So coming through Christmas, Valentine's Day, we've seen a huge kind of buy into eventing and people really want to be relevant. So those are the categories that we keep focusing on. We have to keep on top of what's trending and ensure that we are giving the wanted product at the correct time to our customer.

Okay. So as we then go into our cellular strategy, so I just a disclaimer. I will be teeing up a few of my colleagues as I'm taking you through a few of these initiatives. So we sell 8 million handsets in the year. 50% of that are smartphones and 50% of that, of course, the [indiscernible] feature phones. But the real upside for us here is the growth in smartphones. That is the upside for us to grow our market share. And this is -- we're growing our private label, our own style of phones, particularly the upside for us in market share really is the entry-level smart and the medium-level smartphones. The higher tier smartphones is what we leave for the, let's call it, the other brands. This is where we want to focus. So we're really doing a lot of work to develop our own private label smartphones called Stylo. I'm sure all of you have one. It's a fantastic product. But this is where we have access, and we source that directly from the factories we have fantastic sourcing capability is here. In fact, we are working with the local networks. To develop, they're telling us, listen, we think we should work on these type of features on these devices. We source that. And as we then merchandise that in our stores, we pair it with an MTN or a Vodacom SIM card, and that is how we take it to market. So that is how we are taking control of the, let's call it, the supply chain of this product. And we're using the device rental capability. This product here that is -- I think this is a fantastic product. It goes beyond product and price for our customer. It actually makes it affordable for them to buy a smartphone for our customers and everybody wants to be digitally connected. And we sell it through a network of canvases in our stores. Every canvasser in each -- we don't have canvassers in every store yet. But as the canvassers are actually going into our network, we sell 3 smartphones per canvasser per day. So that gives you an idea how fantastic this product is. It's also increasing the average value of smartphones we're selling from about ZAR 1,000 of an entry-level smart now with this capability to more than ZAR 2,000 on average price of a smartphone. We have more than -- or nearly 2 million unique visits to our website every day. We're adding a buy button to our website. That means we are actually starting with the e-commerce play here, digital. We're launching that in March, and we're really looking forward to some great traction there. And the related products within our cellular business, the accessories also performing exceptionally well. Now Eskom is assisting us here. So stuff like power banks and those related products, we cannot keep up. And these audio devices, the Bluetooth audio devices are also performing fairly well. It feels as if I'm talking a lot to what Riaan and Sean had spoken about, but more ways to pay for PEP. We're going to open 500,000 new accounts this financial year. The per basket is double that or the credit basket is double that of a cash basket. The number that Riaan showed you was 4.1% contribution to sales. For our current year-to-date, it's 7.2%. So it's really something that our customers are buying into, and we will continue to do this responsibly, of course, there's interoperability available in our business. 70% of the OTB gets spent in the PEP. 17 of that OTB on our accounts that we opened, we spent in Ackermans, 11% in Tekkie Town and then there's 2% less than everybody else is fighting for currently. So that is pretty much where our focus is on more ways to pay in PEP and really getting good traction about that. Then I want to touch on just the digital opportunity that we have. Of course, we are opening more digital channels, but we're also adding technology, and this is where I'm teeing up another colleague of mine, John is going to talk to you about the Plus more rewards program, that we are doing on a group-wide basis with technology like Salesforce and knowing our customers better, asking them to identify themselves as they purchase products in our network will definitely serve us well to improve our digital relationship, but also to add on more value to our customers going forward. So ladies and gentlemen, that takes care of, let's call it, the 2 first sections. The clothing, footwear and home and the initiatives that we are building on for growth. But I also wanted to spend a few moments with you how we are leveraging our footprint. We will open 110 new stores for the next 3 years, 45 PEP homes, 40 PEP stores and 25 PEP cell stores. And there is always a long list of opportunities available to us for opening new stores. And Leon Lambrechts will also talk to you later on this afternoon. He heads up the Pepkor Properties division on how much science and data we have available to help us to identify these locations. But as always, the question is how many stores can PEP still open? So my question back to you is as long as urbanization takes place in PEP or in South Africa, we will open new trading notes, but we also have a fantastic advantage. Our cost of doing business is low and our breakeven sales is low enough. So some cannibalization is acceptable for us, new stores can open and older stores will remain profitable. We currently have only 3 unprofitable stores in our total network. So as we are leveraging our footprint, we are building an FMCG business now close to ZAR 3 billion worth of revenue, it is related products. We're selling a lot of baby clothing. It makes sense for us to sell FMCG related products like nappies and baby wipes and palm cream and all of those types of things. We have developed private label here that's called Cuddlesome. It is the third biggest nappy brand in South Africa currently. The Cuddlesome Baby wipes is the #1 white brand in South Africa. We have a confectionary range called [indiscernible], makes sense, right? And then -- so personal care, we are developing lab tissue old products and the extension of household cleaning and related products make sense as an extension of our PEP home, kitchen and bathroom offering. So this is an area where -- we have -- we are building private label brands. It is, of course, profit enhancing because it's -- there's about 10%, let's call it, richer GPs in this space for us from a private label perspective. And this business has grown double digits for the last 5 years within the PEP network. So really working well within our network. PAXI is a great success story, also how we're leveraging our brand, how we're leveraging our footprint, and it is true. A town in South Africa is not a town if there's not a PEP stores in it. And this is the ability that you can send the parcel from any PEP store to any PEP store and our network then services that. So also leveraging that it's growing fantastically well. Of course, we are adding technology and portals to this to make the transaction more seamless more efficient in-store so that it takes less time. We are enabling small-to-medium enterprises to help them also to distribute their products. And here, it says the footprint is 2,800 stores, now we only have 2,600. So there are some Shoe City stores, Kennedy. That is part of our network here and some Tekkie Town stores that are also part of the PAXI network. Okay. So ladies and gentlemen, I think that early then [Audio Gap] you can play tonight to -- Okay, here we go. So that kind of concludes the package the PAXI piece. And I want to end off just to talk to you about 4 main pillars, let's call it, enablers in our business that underpins our strategy that are the real capabilities of our business and they are simply our sourcing capability. We sell nearly 700 million units every year. So we have to have the capability to buy a hell of a lot of product. And we do that by the capabilities we have, Shahz actually started the sourcing capability within PEP as she took over. That has really given us access to raw material mills, we have long-standing relationships with suppliers. Some of these relationships more than 30 years. So we can buy a lot of product, and we have the technology also to assist the suppliers to produce these products to the specifications that we want them to do. The second one is we now need to then distribute all of this product to our stores. So we have a fantastic capability around supply chain. We have 4 distribution centers, 2 in Joburg, 1 brand spanking new one in [ Ames ] Valley in Durba and 1 in Cape Town. And this is really also helping us to get the stock very cost effectively, efficiently from wherever it comes from, whether it's local or imported to 2,600 locations in our network. We have 18,000 dynamos in our business. We have a culture of growing together. We have values like honesty, passion and the resourcefulness, but our culture is about performance. It's about working together. And we have both a retail engine that can implement something that you cannot believe. At the center, we will decide this is what we're going to do, and it will happen very quickly in 2,600 locations. It is a fantastic, fantastic retail engine. We have grown also in our capabilities to be quite agile through COVID, through riots, through flooding, through port delays. We're dealing with Eskom every single day. So we are rolling with the punches in South Africa. And lastly, we are obsessed about cost of doing business. we know that operating as cost effective every day enables our positioning of everyday low prices. So ladies and gentlemen, I'm going to end my remarks with you today, but I do want to invite you to look at customer video with me. And you will agree with me that as we are creating value for you, the investors and our shareholders, we first have to make sure that we create value for our customers. So please let's look at this video together. [Presentation]

Ladies and gentlemen, thank you so much for your attention. I will now hand you over to the Green team, the Ackermans team led by Adrian Naude. Thank you so much.

Good afternoon, ladies and gentlemen. This is not for me. This is for Stacey who is going to show you some product. I'm Adrian Naude, CEO of Ackermans, pleasure to be with you. Ackermans obviously is an important part of the investment case for Pepkor. One, because it's been well reported and shared that it didn't go so well. So clearly, you want to hear that it's going to go better, but B is because we're a big retailer in our own rights, so we've got our own growth prospects, which I want to share with you. So just let's just jump into who Ackermans is and what we are. So first of all, we're big, over 1,000 stores. Now that does include just over 50 stand-alone women's stores and just over 50 Connect stores, but that leaves us with a whole bunch of what we would call full Ackerman stores. I've shown you -- I've lost Mike I think. I've shown you 10 years of turnover growth on the ride. I think that comes to a CAGR of about 14%. So you can see it's a growing retailer. A lot of that through space growth and a lot of that for like-for-like growth at the same time. That leaves us in a market leadership position. There's 2 little icons in the middle. I believe I'm not allowed to share exact numbers with you, but certainly comfortably more than 1 in 3 babies in South Africa is wearing Ackermans right now. So we've got a very strong market leadership in baby. And comfortably more than 1 in 4 kids as we're in a Ackerman's right now. So we've got strong market leadership in kids clothing. Just on the bottom left there, you can see that we are much more of an apparel business than, say, our blue cousins, right? So Cellular is very important for us, very profitable for us, as is value-added services, which you can see that 83% of the business is still traditional clothing, right? And then on the right here, I just showed you what a traditional gross profit in Ackermans would look like. So that's a genuine 10-year average to show you what it was last year, to show you that how much upside there is to just recover that. I was going to show that as a net profit slide. Riaan said I can't share net profit. And then he had a slide full of [indiscernible] and he did share with you what our net profit is. So you can work it out. We're about 10%, normally, we're about 15%. So it's a very profitable company. So what is the market positioning of Ackermans? Well, we're a value retailer, right? So there's nothing complicated about that. It means that our job is to offer value-for-money items. So our main customers are moms, obviously, you would expect that given that our huge market leading positions in babies and kids wear, but all women, but moms who are looking for good quality items for their kids and for themselves at very familiar prices. That's our market positioning. It actually fits -- and I don't think this is by design. I certainly have -- I've only been in the group 9 months, but I don't think it's by design, but it truly does fit very nicely with our blue cousins. Their market positioning is best price leadership, right? Ours is to be the #1 value retailer, and we can stand side by side. We are fiercely competitive. Obviously, everything we do and that is to the benefit of the customers and the shareholders because our fierce competitiveness does drive our performance. Obviously, I arranged that the load shedding happened in Stefan's, because we are competitive, right? So what does that mean? It means those 4 things are important to us. So one is value for money. So which means that we need quality items. So really high-quality product, that is fashionable. We're not trying to be fast fashion. We're not trying to be ZARA [indiscernible] but we are absolutely trying our best to give you clothes that you want to wear. And wide assortment. So we are known for a wide assortment in kids clothing, a wide assortment in babies clothing. How we rank at the moment? independent research over multiple years, actually chose Ackermans team pretty well here. So we rank #1 in value for money, #1 in fashionability and #1 in assortment and #2 in quality. That's in kids clothing. Let me just clarify that, not in women's clothing, and that's behind Woolworths. So just a slide on me because I know there is some curiosity about if any of my skills and experience translate from supermarkets to apparel, so I thought I'd share with you that there are obviously some key differences, right? So top left, key differences. One is supply chain. There's a bit of a recency bias in this because I hate the supply chain, and I really missed my old one. If you needed some Nescafe coffee, you just ordered some, right? Now of course, we are 60% imported, right? 40% local. And even the local product, the local clothing product is reliant on fabric, which is largely imported. So you can see that this is a value chain, which is very dependent on imports. What does that mean? It means that, again, when you're having problems like we're having today? And I know Pieter touched on it, but just to share with you how that actually plays out in our stores, we would, as of this morning, have 580 containers on the water somewhere in the world. and about 480 of those containers are likely to be at least 12 days late. Why? Because Durban's between 16 and 19 days late, it's taking them 5 days to offload a ship. Cape Town ran through the whole of November, December and January late. They've finally caught up. But unfortunately, we -- our biggest shipping line or company is Maersk. Maersk decided to rather go via Port Louis, which is Mauritius, very sensible thing to do because if you can put your stuff on a smaller ship, then you can access all 3 of Cape Town docks and not just the main one. Problem is there's been 3 cyclones in Mauritius and they're running 6 days late. So the supply chain and shipping is a pain. That's obviously one key difference. But the other key difference is 2 seasons, right? So clearly, there were no seasons in my old business. Now everything is about seasons. And what it means is there's one half of the business, the stores and the DCs are busy operating now, right? So we're about to start winter now, winter started last week really. Whereas the other part of the business, the buying team and you're going to meet Stacey, that was during summer. That's where they're working. They're working in the summer ahead and sometimes even in the winter ahead. That's the one thing about seasons. The other thing about seasons is you only as good as your current season, not last season. So no one cares how well summer finished. Everyone cares know how well winter's going, right? So you just put a reset and you start again, which is obviously quite a change for me in the predictability of supermarket retailing. Just some other changes really is buying. This is about the biggest difference. Buying in the supermarket business is clearly just about curating an assortment of branded items that all the other supermarkets also sell and your skill needs to be put in a better range together and negotiating better prices and promotions. Buying means a different thing in a clothing retailer, everything that you can combine and Ackermans has been made from scratch to our design, and that's not just a creative thing. Clearly, that is a creative things. You've got creative people, trained people, designers, but it's also a technical thing, right? Everything from master fits to fabrics to the technical part of trading garments. So buying means a different thing in Ackermans as is planning because it's joined at the hip by planning function, which is a big difference. And obviously, that brings you into the whole world of fashion and design and trends. But having said all that, there's a hell of a lot that's the same, what makes a good store makes a good store. It doesn't matter what retail. Retail is a people business, no matter whether it's food or clothing. Marketing plays the same role across both sectors, the reliance that we have on good systems and good finance is the same. Cost control is probably about the biggest one. So coming from supermarkets where margins are thin. There's a lot of emphasis on cost control, coming to a value retailer and a value group like Pepkor, cost control is even more relentless, right? So we work incredibly hard all the time, in every decision we make, to be able to offer the customer the price that they can afford, and that means relentless cost control. All comes down to the customer though. So that is the biggest similarity. And to put it in just 2 simple terms, we've got to understand the customers' needs and then we've got to be pretty clear on what we're trying to do, which needs are we trying to fulfill. So there you go, 9 months in. I'm a clothing retailer now. And just to give you some early -- or not that early -- just feedback on Ackermans, it's a damn good company. It's a strong company. They've got really good people. It's profitable. So even last year, when it had its really bad year, and made the press all the time. It did make its 10%. I think it's [indiscernible] up over 50%. We've got almost no loss-making stores. So there's a commerciality about Ackermans and about the long-term muscle memory in this company that they know exactly how to make money. When we do cell phones, we do it profitably. When we do value-added services, we do it profitably. When we do insurance, we do it profitably. So it's a great company. There's very deep skills, as you would expect, because you can't just be the market leader in baby because there's a lot of technical skills behind being good at baby, which translate over many, many years into customer trust. It's all about safety and fabric and the technical skills of making good baby products. And just some early progress. I have made some key people changes in Ackermans. One is in buying, you're going to meet our next, one is in marketing, she's at the back there, the name [indiscernible], you can look for at the break and say hello. I have worked differently. I think supermarkets has a different cadence, right? So we now meet weekly to talk about trade, and we meet weekly to talk about the business. And I think, obviously, we've -- I've been busy, [indiscernible] been busy. But I think the thing I want to share with this community is that we're becoming very clear in Ackermans is about where the growth is coming from. That's what we've been busy with. So just some of our quarter one performance, as you can see some progress. Our sales performance in quarter 1 and this was reported in our trade update. It is muted. You can see 4.1% or 1.9% like-for-like because nothing is write home about. So we're not pleased about that, but that is off a negative like-for-like before. And even in that, there's pockets of performance, even that muted quarter 1, we gained market share across all girls both younger girls and other girls and in women's footwear and in school wear. But 2 is we had a strong finish to the season. So remember this business doesn't work in quarters, it works in seasons, right? Well, seasons don't work in quarters either. So the season of summer really ends in January. And you can see we had a really strong finish to summer. So our like-for-like in December was over 9%. Our like-for-like in January was 8.7%. I can tell you for a fact that, that 9% in December gained market share, and I just had a peak of January and that 8.7% gained market share, right? So we've had a strong finish to the season. Our full price sales for that quarter 1 were 94%, you can see that's a whole 680 bps higher than it was a year ago. Our cash conversion is very high. So you heard Riaan talk about how important that is in a cash generative retailer like Pepkor, where Ackermans is e tracking cash out at 95% in the quarter 1. And then I just wanted to share with you some performance numbers from Cube. So -- there's a little bit of a back story to this. I don't have time to tell you the long one. The short one is as you go from baby to a huge market share to women who only have sort of 7% or 8% market share in women. So clearly, the older our customer gets the less our market share is. And so our older kids, we don't have a strong market-leading position there and perhaps the more fashionable retailers like Mr. Price might do well with 15-year old. So the team a couple of years ago made a plan, launched a new range called Cube and in the comparable older kid sizes smashed it. So they did really well. Okay. So just to on to growth drivers. I'm just going to touch on 6. Now there's clearly a lot. When you're talking about growth about Ackermans, and I'm not too sure about the investment horizon that you're thinking about. But clearly, the first few years of our next are dominated by our own recovery, which does [indiscernible] growth, right? So this will look like some recovery, some longer-term growth. But it's about product improvement, about new stores and targeted store size increase. It's about our online story. It's about our Connect store rollout. I'm going to talk to you about better marketing, and I'll touch briefly on the stand-alone women's stores. But I do want to be clear that certainly, the recovery in the next couple of years is a product-led recovery, right? And so to talk to you -- to just kind of spend a few minutes in front of you just talking about products I'd like to introduce you to my Chief Executive of Buying, Stacey-Anne Scholtz, who, I think, took over the role in August, Welcome, Stacey.

Thank you, Adrian. Good afternoon, everybody. My name is Stacey-Anne Scholtz. And as you've heard, the new Chief Executive of Buying for Ackermans. I've been in this role a little over 6 months now and have started in August -- mid-August of last year. However, I've got more than 15 years of experience in the retail industry and I've worked in various retailers across SA. So to name a few, I've worked with the Clicks Group. I've worked for the [indiscernible] at Edcon. I've worked for [indiscernible], I've also worked [indiscernible]. Now obviously, recently, I've joined the Pepkor group, and I'm very excited to be here. I'm happy to be a part of the Ackermans family and I'm quite excited about what we're going to do with the product side of things. All right, enough about me. I'm yet to talk about product. Okay. So as everybody was talking in the room, I was listening, we're talking about a turnaround strategy of Ackermans right? And a lot of that is going to be changed through the -- through product -- so we've got a lot of work to do on product. We are very mindful of that. So I can't take you through all of the focuses today, but I'm going to take you to 3 main ones. I see the screen is off here in the front. Can we get that on? So the 3 main focuses I'd like to talk to is quality, and this is the improvement of quality in our business. The increase in market leadership in baby as well as the relaunch of our women's wave business. Otherwise, I'll have to look back all the time. So our product strategy is directly in line with that of the business. Our goal is to be our customers' first choice for a great assortment, of quality products at unbelievable value. Emphasis here on value. It's important to note we are a value retailer. So we will make sure that our customer will always receive value. That's a given. However, there will be focuses on quality, you'll hear me talk a lot about that in the depth and product improvements as well. So better quality. What does this mean for us? So quality will become one of those topics, which is a direct intentional dedication to the improvement of product in every area of the business. Whether we talk baby, we talk kids, we talk old kids, we talk women. Quality will become a key focus for us. We are very clear when we went wrong as a business when it comes to product. We've made a few mistakes when we talk about product handwriting. We've made a couple of mistakes about design, and we've maybe being wasted a little bit in quality. All of this easily fixable. You will start to see this improvement as quickly as we can in winter, but most of the turnaround will happen in summer. So how do we envision quality to look better? There's no bit of way to talk to product other than having a little product. So this is why I have this in front of me. We are going to start with fabrication, product is all about fabric. You heard Shahz talk about the contribution of having the right fabrics in your business and what that does. So we will make sure we invest in better fabrications, having more cotton products in our ranges. Now we talk about cotton and I have conversations even with Adrian and I'm saying, no, we don't want open-end cotton. We don't want carded cotton. We want our cotton to be cold. So a lot of attention into the actual fabrication that we choose, we want our printing to be more durable that will last wash after wash. And I'll give you an illustration of what I mean when I talk about printing. So in front of me, I've got a beautiful little baby romp up. It's got a rotary print and it's got more than 2 colors in it. If you feel this product, it's soft to the touch. It's got a placement print on top. It's sort of what we call a flex assortment. When I pull it, no cracking. So these are the things that become really important when we improve the product. Again, this is one of these or actually products that you get to see from our summer ranges that we're working on how beautiful. I've got a little baby dress in front of me. See the colors of the print. Our product will take color absolutely beautiful from a depth point of view. We will have printing that will encompass things like glitter filing. We will also have -- I mean if you just look at this whilst we've got a print with foil, we've also got 3D details. Again, no cracking in the print. We want our products to last wash after wash. A big focus for us is the improvement of Denim. Now fashionability in any retail low sales, a pedal, you're judged on your genes. So a lot of focus will happen. With how we improve our overall denim. So I've brought again 2 little garments just for space to show you. We've got -- I've got [indiscernible] again in front of me. This is our younger boys' skinny stretch jean. Now I know you're all not a lot of product people, but you don't have to have correct skills to tell the difference between better denim. This is what we currently have, same price. This is what you will receive. You see the authenticity in the product, better switch, better wash, softer for our kids, very embroidery [indiscernible] that we use in just the washing of the genes will be better and they will look more authentic. Again, we will also spend similar to PEP, a lot of focus around the improvement on fits. Fits in a clothing business is everything. When you make a dress for women, where you cut that dress is important, shape is important. So a lot of emphasis on improving the fits and then lastly, on this slide, I want to talk about manufacturing. It's not only okay, to improve the overall quality of the garment. It's important that we partner with the right vendors. We want to work with factories who understand the standards that we've set. I don't want to see any loose threads in my garment. Manufacturing needs to be clear on that. So that will also be a very, very clear focus-wise us going forward. In front of me, again, I will show you 2 beautiful garments, not even as good you' find the [indiscernible]. See, how beautiful are these. These will also allow us to improve our fabrication, soft, soft handles, enable warmth and also chair business. So I'm very excited, and I hope you guys will start to see that product in our stores. Next, better baby. So why do I use the term better baby? I mean, Adrian spoke to you about how big we are in baby. We are the market leaders in baby. We have a lot of moms in our stores. However, there's just fall so much work to be done. We've got to fix our handwriting again, and we're going to spend a lot of time on that. Some of the changes Adrian made in his team, I have made a few changes in mine as well. There will be a lot of focus on design. We will design all our graphics every single one. And we will make sure that the handwriting is correct. At Ackermans, we understand your moments. We understand their needs, and therefore, we do not compromise on offering them quality products for their babies at prices that they can afford. We also want to give them a wide assortment, ensuring they get value for money with comfort and safety being key. And then in very important single baby is the graphics have to be absolutely adorable. So why do more moms choose Ackermans. I mean we sit back and we think about Ackermans has a very, very strong history with baby. So are you going to use product to illustrate some of the things we do at Ackerman's to take care of our little one. So again, in front of me, I have what we call a sleep suit. It's made with 100% cotton, so it's breathable. It's brushed so that it's warm. And then we do beautiful little features on top of that. We've got what we call little mittens for their hands. We don't see this on every government sorry, I've got my screen there. So what we've got is the little mittens, these fold over, and they keep baby's hands warm. Another key feature about that is babies nails are starting to grow, and they tend to scratch the face. So this just gives mom that extra comfort to know that when she covers the hands, baby is not going to scratch the pace. Another exciting feature we've got on this garment is what we call the Zipper garage set piece of fabric. As the zipper comes up and down and you're busy, when you pull that thing to fast, it gets parked in its low garage there. This way, you can [indiscernible] the baby skin. Zippers are fully lined at the back, again, no harmfulness on our babies. And then another little feature, which you -- I'm not sure you would have noticed, but we've got 2 ways zippers. So what this is -- this is good for mama. This is also really great for dad because you know those legs are going every way while you try change the nappi. You can zip from the top and from the bottom simultaneously, just really allows even comfort. These are some of the things that we do that make our product really special at Ackerman's. I'm going to use garment here and another little government here. And another little cute one, you see we want baby to look like a little bear. But at the same time, we don't want any fluff in the babies face that will irritate them and in their mouth. So we align them with single jersey, no irritation on baby skin. We have little [indiscernible] for their hands, [indiscernible] fabric but with great recovery. Rubberized printing on the outsoles. What is the point of this? Now you've got these little ones, they're starting to learn to crawl and they want to lift in styles up and walk. These prevent them from slipping and folding. So they might seem like a simple feature, but they add great value to our customers. We've also got what we use as poppers when we don't have zippers, and these poppers are all made with ferrous free and nickel free. No harmful chemicals. Everything we do is to make sure we take care of our babies. And then I'm going to share with you an ad, which will sort of just encompass some of the stuff that I've spoken to you. It's a new ad and it has hit market and I'm just going to let you watch it. [Presentation]

Okay, last but certainly not least. This is something I'm incredibly excited about and this is the relaunch of our Ackermans Woman's business. So we spoke about the Ackermans stand-alone stores becoming a new proposition that doesn't mean Ackermans is not going to be in the business of womenswear, we are going to think about womenswear differently. As of Spring/Summer '24, the range that my team is currently working on, we plan to relaunch and reimagine the womenswear business for Ackermans. If you go into our stores this winter this season, you already see a vast improvement, not only in the quality of products, but in the handwriting and the shift in the womenswear business, but the real launch will really only happen in Summer '24. Now Ackermans is a brand that's truly South African strong and South African heritage. We are greatly positioned to be able to service this customer. So our goal here really is we want to create a beautiful range of commercial fashion for the women of South Africa. And we want to do that value that they can afford. We want our ranges to be aspirational, products that they would love to wear at value that makes the most sense. We will take care of color. We will take care of the fashion, making sure that the ranges we have on par with international trends, but commercial for the South African market, and we will take care of the design. I'm very excited at the launch of this new range. And I'm going to share with you a little ad soon. But before I do that, I just want to mention that I think Ackermans Woman is going to become a very strong contender in the womenswear market, and I can't wait for products to its stores. So the ad that I'm going to share with you now is really, really heart of the place. This one hasn't even been released yet. But it does illustrate, some of the things that I speak about when we talk about the elevation of womenswear in our lives. And so if you can watch it, I hope you enjoy it, and thank you very much. [Presentation]

Thank you, Stacey. Thank you. As I said, the Head of Buying is the biggest role in a clothing retailer, and Stacey is our quarterback. The -- there are a couple of things to land though. One is that we are a value retailer. And the value retailing is a little bit like Quebec [indiscernible] Formula One. If you're not improving, you're going backwards. In value retail, if you're not improving your value, you're going backwards. So we need to improve our value in Ackermans. How do we do that? We hold that price. The price is cool, right? So if we're talking about, say, one of these baby grows and ours is ZAR 99 and maybe Stefan's team their one is ZAR 89 and we're okay with that, right, because we used to know our roles there. But that ZAR 99 is the best in the market against JET and Mr. Price and pick an back clothing and everybody else, but we want us to be better. Once we have to invest in quality and we've got to invest in design, and none of those investments will come at the cost to that price position in nor will they come at the cost of margin. So how do they come? Just better buying, better buying because it's a thing about -- So I've lost this, that think about buying in an apparel business, one of those things that I've had to learn is it's not a creation for creation sake. So you're not making 100 items and you put one on a runway, so it wins awards. Our buyers are commercial. They're able to make 100,000 pieces of something that: a, is commercial means it will sell; b, that it's amazing. So the customers who want and see we'll make money from it. So it's the -- this product-led recovery of Ackermans isn't a 1-day game. It works in seasons. So I made a change to [indiscernible]. Then Stacey made her changes to [indiscernible]. She's got a new baby team in place. She's got a new women's team in place. They then need seasons before you see their work playing out. So some of the other growth drivers, I want to talk about new stores. We're going to open lots of stores, right? So this is just Ackermans stores. This is excluding Connect stores and excluding Women's stores. And you can see that our pipeline is getting back to what it used to be tailed off during the COVID year. Not only the -- and as I said, as Stephane was saying about profitable stores, same with Ackermans. So we've got very, very few nonprofitable stores. And when we open a store, I think our breakeven is so much lower. I think it's 70% or 60% of the target that we set for that store, that there's just so much flexibility and leeway. So we're comfortable to open stores, and we're comfortable to close them if we need to. But that's our new store pipeline. But then I've included a block at the bottom there, which is actually quite important to us is that over the years from say 2010 to 2020 when Ackerman was really opened a lot of stores. It opened a lot of smaller stores. And so our average stores size went down in that time from about 800 square meters to about 500 square meters. There are so many of those small stores we have that have got great trading density, brilliant locations, too small and therefore, we can't fit everything in. So maybe we don't have sleepwear in there or we don't have a full womenswear range in there. So it's a big part of our plan to go to the stores that have got the trading densities to sustain it. Get our elbows out, get those stores bigger where we can, and that's going to add a meaningful amount of square meters to our range. So that goes hand-in-hand with our new stores. Talk about online for a second. Like we tiny in online. We've only been in it for 2 years. And actually, we were only doing Click & Collect and Click & Collect, while it's valuable, is more of an availability tool than actual online commerce for a customer. So we actually only launched home delivery in October, that's how new we are in what I would call proper online. So we know we've got a long way to go. Some of our competitors get 4% of their turnover from online, 5% of their turnover from online, we tiny. But in the 5 months since we launched it, it's already close to 50% of our business or 40% of our business, let me not exaggerate of the online business. Its average basket size is more than double, all Click & Collect order. We already make more margin on that order than the delivery cost whether -- than the delivery costs. And in fact, we were profitable in quarter 1. So we might be tiny, but I think there's a lot of bigger e-commerce players that can't say that. So -- but we have just huge upside to our online business. We've changed platform now. We're about to change platform this year to make us more flexible, quicker, lower cost of doing business. So we're going to put a big emphasis on online. We also use online to reach customers that wouldn't necessarily walk into an Ackermans. So for example, that cube sort of young adult range that I spoke about that we launched or like a youth range, now we've got our own Qube website. So that customer doesn't have to come into the Ackermans or even go on Ackermans online. They go to Cube online. Connect. Connect is -- if you go into a mall and you see it's a fiercely contested space and included in our own group, you'll have a [indiscernible] and you'll have a [indiscernible] and you'll have a Mister price cell and your Connect. That's our one, right? I'm comfortably confident it's the best. It's a service model. It does very well. We opened about 50 of them. We then pushed as a business to make sure, that they were a good idea that they were profitable, that they were sustainable that they were viable, they are. We've now asked the property team to go get us more. So we'll open -- you can see we're aiming to have double in a couple of years' time, but that's no ceiling. I think the ceiling on that is more like 400. Oh, I'm sorry. And just some facts on Connect there. If I can go back to that one for a second is -- you can see that 20% of our phones sold on private label. So Stefan told you about his style, we've got Premier. We also sell Motorola, which is exclusive to us -- to the group that is not just Ackermans, but 9 out of 10 phones sold in these Connect stores are smartphones, right? So they do really, really important work for us. Marketing. Why I have included marketing as a growth driver, where: a, that disclaimer, I said in the beginning about part of our growth is recovery, but I've included it because I have a very strong conviction about just how much better and just how much more important a role marketing can play. We're not Nike, right? The shoe docks, it's not like that's a marketing company. We're an apparel company. But more and more these days, marketing stands in hand with apparel in an apparel business. So that's why I said there were 2 key changes. I brought Bonanatorius. You can say lot one of the breaks is at the back there. And what we're looking for in marketing is digital first. As we strong digitally in these channels which have engaging content, content creators, social media, TikTok, all that stuff. We need to broaden our audience. So while we have a very broad church in Ackermans, I mean, it must be -- if 1 in 3 babies are wearing Ackermans' cloths, but we market quite narrowly from a media point of view. So we're looking for her to change that. And then customer first. So there's big opportunities in customers, is one of the differences to old retail, new retail. So Ackermans from a world where 80% of our customer was visible. But actually, surprisingly enough, at Ackermans, if you take the 18% credit customer and then another 18% lay by customer didn't know about that in the old world, lay by customers, they give you their money upfront, right? I don't they come and fetch their stuff later. So we've got quite a lot of known customers. And in fact, when -- John is going to tell you about what we're going to do, but are we going to communicate the 5 million known Ackermans customers in a month's time. And then just one quick note on stand-alone women, the Ackermans team, a couple of -- well, a few years ago, I think maybe 4 or 5 years ago, I was curious to know how their women's proposition would exist in a stand-alone store. So away from the babies and the kids, and in an environment which is more tailored to women spending time in there. And it was successful and these stores have worked, but they were always the same proposition, and we've come to a conclusion that, that's not the smartest way to do. So there's a team in Ackermans at the moment that's completely ring-fenced working on a brand-new proposition. They will launch that later this year. And in fact, this business will move across to our next speaker, which is Daniel, he is a Pepkor specialty. So it's actually those stores are going to move out of Ackermans. But for now, we're building that new proposition. And then just a couple of slides on enabling future growth. We've got this big DC. That's our main DC in KZN. It opened in 2018, as you can see, but what I wanted to share with you is that we add into it. So we always had this little DC in Capetown, which were decommissioning and we built in a new one called Hagley. It's just down the road from our office. If you're on -- for those of you who know Capetown, get off the R300 onto the Stellenbosch Arterial, head towards Stellenbosch about a kilometer down that road. Second row what you'll see a big DC on the right. We're going to open that. It's going to start operating later this year. As you can see. And what it does for us is a lot of things. It's -- because the old Capetown DC was little, so didn't really do the job. Now we've got proper redundancy. So we're not exposed to one point of failure, which obviously becomes crucial in things like civil unrest. But b, is we've got proper Capetown scale now, which means that we can route goods via Capetown or Durbin as we see fit, and we've got a flexible shipping process. So that gives you port flexibility. And it gives us -- these 2 DCs combined we think, give us about 12 years of comfortable capacity. And even then each of them have expansion capability. Right. So just to leave you with one last little ad, it's 30 seconds long. It's a new jacket ad. I just want to share with you how we are showing up in the market, where this one is not on TV yet, but it's going to be on TV soon. So -- and with that, when the ad gets finished, you're going to have Daniel Du Toit in front of you. He's the Head of Pepkor Specialty. Thank you from me.

Good afternoon, ladies and gentlemen. It's my privilege to be talking about our Specialty division today. On a personal note, after having been part of this group for 9 years, I can honestly say, and I do think I speak for many of my colleagues, it is a privilege to be part of a group that firstly, anchors itself in our customers and their needs and aims to create value for those customers. That makes for meaningful work and the reason to be excited about what we do. And secondly, a group that continues to see some really exciting growth prospects in a market that for many seem depressed and difficult. It's fantastic part of this group, and I think that's a big reason why we are able to attract great talent to our teams. So I'll be talking about specialty. The specialty division in a nutshell comprises all those clothing and apparel brands in Southern Africa, not called Pepkor Ackermans. What I'd like to show you today is a brief overview of our division. Why is this not advancing? Someone maybe help me here. It's advancing in front of me. Okay. We'll give it a second. All right. I'm going to go to the next one. Here we go. All right. So I'm going to start giving you a quick overview of this division. I'll touch on some of the brands. Obviously, having 6 different brands in the business. I'm not going to have time, especially also since I'm between you and lunch to get into much detail on any of the specific brands. Rather, I'm going to zoom out a little bit and talk in more general terms about where we see the opportunities in the markets we serve, and how we go about driving growth for this division. I think Sean did a really good job earlier today to paint the picture and give a compelling reason for us to grow in the adult wear market in South Africa. And hopefully, by the end of this, you'll get a sense for how we approach that and how we think about that. My other objective is also to show you that specialty is not just a collection of 6 different brands today, but it really is an integrated division that includes the infrastructure, the tool set, the technology and the process that can enable those brands, whether those are our existing established brands or our growing brands or some of our nascent young brands to grow quickly and to quickly leverage the synergy that we offer in the group, not just within specialty, but in the broader Pepkor group and enable their growth in their respective markets. So let start with a quick divisional overview. As I've mentioned, 6 different brands. I'll touch on them on the next slide, a mixture of established businesses growing as well as nascent brands, primarily positioned in the value segment, although not exclusively, and I'll point that out as we go. But generally lower-priced mid fashionability. And then as I've mentioned, we've got this thing that we call the chassis, I think of it as the shared infrastructure, the shared tool set and the shared environment where we can enable every brand that's part of the division. And then although we operate primarily in South Africa, we also have a presence in the BLNE countries. Let's look at a little more detail at this division and how it's structured. I'll start from the top and run down. So there's a divisional leadership. I have a central Exco that help me set strategy. Oversee the different parts of our business, and we also oversee the shared services as part of the Specialty division, look at capital allocation within in the division and governance across the different brands. The essence of the division, of course, all these different brand teams, and we've got a CEO running each one of our businesses with their brand management team. That brand management team, first and foremost, is the custodian of the value proposition to the customer. So they look at brand strategy, they look at marketing, they look at the design of the bespoke product set, planning and buying, et cetera, and as well as their store operations. So the way that they bring the brand to the customer across the different channels. Then we've got the shared services within specialty, there's finance, IT, HR, et cetera, sourcing. We have a single supply chain with a big facility in Hammersdale, where we service all the different brands. We even tackle e-commerce as a shared service on a shared platform. And there's some other disciplines as well where we provide a shared nondifferentiated service across all the different brands. Worth noting that Specialty also leverages as much as we can, the shared services that's on offer from the rest of the Pepkor group. And then lastly, the technology platform running at the bottom of the screen there is obviously the way we enable our different brands through technology and data. Looking at some of the individual brands. Let's start with Tekkie Town, branded sportswear, sneakers, apparel and accessories. It's an established business with a national footprint of more than 400 stores. It has had a challenging journey, especially since 2018. As you know, there was a management walk out at that. And a lot of energy and effort has gone into stabilizing that business, bringing in a new management team, top to bottom and making sure that the business is on good footing. We also used the time over the past few years to introduce a scalable and a robust technology platform. So with the Tekkie Town at the moment, we really are in a position to proactively drive an agenda of optimization going forward. So what we're looking with Tekkie Town is to expand our category mix, product mix, for instance, the introduction of apparel. The Tekkie Town stand here is to my left. And you can see some of the ranges we have there. We are also looking to expand the contribution of our own exclusively licensed brands. So think of that as almost a private label inside of a Tekkie Town, which obviously brings with it better margins for us. And so to the extent that we can get more sales contribution from the likes of Airwalk and Umbro and CODE that obviously helps the business and helps us going forward. And then lastly, there is still some ways to go to fully integrate the Tekkie Town business, especially in terms of its technology infrastructure to the specialty chassis. So we see a lot of upside in specialty -- in Tekkie Town as we execute on this agenda. And we -- while the business is still very profitable, we see more synergy and more leverage out of the rest of Pepkor that will obviously aid the business going forward. Next, refinery, very exciting business for us. It's taken a few years, taken the old JJ's business and developed a new proposition with a bespoke range of contemporary casual wear, men's and ladies clothing, footwear and accessories. Currently has 126 stores. It's really, at this point, what I would say is a proven recipe. The customer value proposition is really resonating with the market. And we will be on an aggressive store opening drive over the next few years. So in the current year, we'll be looking to open around 40 stores for this business, and we'll continue on that pace over the next couple of years as we still see quite a bit of runway for the refinery business. We are also as Sean has mentioned earlier, looking at ways to stretch this brand and see where we can take it to some adjacent categories, one we've identified and that will go out to market as a kids range later this year, and we're very excited about the prospects there. S.P.C.C., Sargent Pepper Clothing Company. Some of you may have seen the installation as you come into the floor on the right. I saw Louis depri spent quite a bit of time there. I'm not sure if he quite identifies with that outfit. It's maybe not quite the target market for us. It's definitely positioned in a higher SCM position, more fashionable kind of a premium range for us. And this has been a great story for Specialty. We purchased this business into the division a couple of years ago as an online-only business and subsequently embarked on a strategy of starting to open stores. After 1 or 2 store openings, our physical footprint was already a bigger business than the online business. Today, we've got 13 stores, all very profitable with fantastic margins. And we also have a healthy wholesale component to this business. So this is a kind of a slightly different retailer. We've got multiple channels each contributing healthily to the bottom line. And we see that there's still a good runway for us to continue to open some more stores. Not -- maybe not quite as aggressive as refinery or not necessarily with the same total runway, but definitely still a good ways to go to continue to drive across all 3 channels of the S.P.C.C. business. CODE, another one of the nascent brands, also a very exciting opportunity for us here. Brought this business into Specialty, again, 2 or 3 years ago out of a -- in a distressed state out of a state of liquidation. Taken the stores, closed a few stores. What we have today is 36 stores. It's men's casual wear. So I think jeans, T-shirts, et cetera. And it's a really promising model for us. Especially over the last 2 seasons, we've seen some great traction in the market with a revised value proposition that's really leveraging what we have to offer in the Specialty division in terms of developing and designing bespoke product that's tailored for this particular market. The store contributions are rapidly improving. That, of course, for us is a way to measure the potential of a retail business before it reaches scale. So if we just look at a per store EBITDA, so to speak, what we're seeing is some really good results out of CODE. So what we will be doing in the next few months is to continue to develop and validate this model, and then we've got the opportunity here to accelerate store openings as we gain in confidence in terms of the potential of this brand. All right. So now I'm going to zoom out and talk in slightly more general terms about where we see the opportunities for the division as a whole. And while I talk out this, keep in mind that I'm not just referring to the existing 6 brands, but also opportunities where we can either start something new or we're looking -- we are looking at acquisitions, as was mentioned before. But here's roughly how we see sort of the market and some of the opportunities for our division. The first one, obviously, is to gain in market share. We are still a small player in the adult wear market in South Africa. I didn't quite call out all the scale metrics upfront in one of the earlier slides. So despite us having 900 stores, it's still a relatively small business in the context of the South African adult wear market. And we believe that we've proven with our existing value propositions and also where we see opportunity that we can claw into market share in this market. So we'll do that obviously through opening more stores where we believe there's more runway for store openings and then also as I'll talk to later on looking at some acquisition opportunities. Next opportunity for us is to expand into adjacencies. So what we have today is we've got, let's call it, the engine or the chassis that can help us take something on, leverage the scale and the low cost of doing business of the division, and then rapidly drive a compelling value proposition into the market. So here, we can look at adjacent market segments that we're currently not serving, or complementary product categories where we can leverage existing brands and add to the category mix. But both obviously allowing us to leverage the scale and the capability we already have in the division. Two other opportunities for us. We have the benefit of being part of a large group, where most of the customers we see in our stores in some way or another. We also see elsewhere in Pepkor, given that we are serving the majority of the South African population across the different brands of the Pepkor group. And this is where something like the customer program that John will be talking about tomorrow comes in and where it's really important for us because we have the ability to leverage that customer information to build a profile about that customer and to identify those opportunities where the Specialty value propositions make sense for customers. And in the tests and campaigns we've run to date, we've seen some really good uptake presenting our value proposition to the known Pepkor customers. Lastly, also credit Specialty at the moment, as you've seen from one of the Rian slides is running at about 11%. And we think there's upside to drive that further, and see some bigger credit uptake. So we are opening our own store accounts, but we also have the benefit of the interoperability of the Ackermans and the Pepkors in our stores. So we've seen some good growth in our credit business over the past year or 2. All right. So generally, how do we think about driving growth? Again, this is pretty basic stuff, no rocket science here. Our strategy is to build a portfolio of compelling brands, each, of course, underpinned by a compelling value proposition for the customer. That value proposition is driven by on-trend products that are bespoke and designed and -- or curated for a specific target segment and it brings value in terms of low cost of doing business and quality price balance that plays into that value segment for us. I've called out 3 capabilities that I think are unique and compelling in the Specialty division. I've shown those at the bottom there, product design. So we have a strong design capability. We design bespoke product. We are 3D enabled. We own our own IP, and we've built a process around bringing a trend into our business, translating that to a specific target segment and building a product range and a value proposition that is really compelling for the customer. And I encourage you, just as Stacey did here for the Ackermans product, go check out the refinery product, go checkout S.P.C.C., Tekkie Town and you'll see what I'm talking about. We're very proud of that product. Technology and data, I'm not going to belabor this, but obviously underpins a lot of what we do. We are a technology-enabled business. And then, of course, the scale of the group and the division, the ability to put together even subscale businesses into a larger business where we can leverage the scale of the business and the low cost of doing business that benefits everyone in the division. All right. Lastly, I'm just going to touch briefly on 4 different growth avenues. Again, this is pretty basic stuff. We can grow by selling in more locations. So obviously, that's opening more stores. we can extend our range in terms of different categories. In other words, sell more products, market segments, sell to more customers and lastly, sell in different ways in different channels. So there, I'll talk about e-commerce and wholesale. So taking the first one, in terms of stores. I already mentioned with refinery. Our agenda is aggressive store openings in the next couple of years and we're seeing great traction. We've already -- for the current financial year, running up to September with all but kind of signed off on our 40 stores. So we are very confident that we will meet that target this year, and we'll continue the momentum into the new year. For our nascent brand, specifically S.P.C.C. and CODE, we'll continue to incrementally open more stores, and we've got the option to accelerate especially with CODE as we see the success and we validate that proposition. Our established brands, Tekkie Town, Shoe City and Dunns all of them, we believe, have additional runway to open more stores, and we'll continue to incrementally open stores. And I've given a bit of a view, again, not necessarily a ceiling, but a bit of a view in terms of our planning horizon for a runway for each of the brands, the existing brands in the business today, Tekkie Town, Shoe City and Dunns, the 3 established businesses. And then Refinery, as you can see there, 240-plus S.P.C.C., we think around about 60 and CODE, 150-plus, I think that, again, could be more as we progress down this path. So that takes the total store footprint from its current 900 to 1,300 plus, which, again, I think is reason to be excited about the opportunities for us ahead. Next growth avenue, different categories. Again, the key here is to leverage the strength we had in the -- already have in the division by just then targeting additional categories. This is no different than the model that was followed into PEP cell, into PEP Home, Ackermans into Ackermans Connect. So this is sort of a discipline and a growth avenue that is known to us as a group. We're also looking at potential acquisitions in this space. So either stretch an existing brand, for example, the Refinery brand into kids, but then also potential acquisitions where we can move into different and new adjacencies like beauty cosmetics. We've already started to introduce that, for instance, in Dunns, to some extent in Refinery as well. We're looking at homeware, sports and fitness and other branded goods. So quite a lot of opportunity if you kind of are willing to throw the net a little wider here and look critically at how you can leverage what you have already today. Third growth avenue, market segments. This is kind of serving and targeting new customers. Again, the principle here is to leverage what we have and the strength to now serve new customers. Again, looking at acquisitions, not necessarily limited to the existing lower-priced, mid fashionability space. That's one of the benefits we have from something like S.P.C.C. where we really put to test our capability to also services like a different customer and a higher ACM So we are open to looking at opportunities in that space as well. And then in terms of the women's stand-alone brand, which Adrian briefly mentioned at the tail end of the Ackermans presentation. So the plan here is to develop a new proposition for a different customer, whereas initially the stand-alone women's business in Ackermans or women's store in Ackermans was targeting the Ackermans customer. We'll be targeting a different customer with a very specific bespoke well-defined range. And in a category that we believe or a set of categories that has real potential for us. We are quite far along in terms of planning, this value proposition. We've started the project to bring this business into Specialty. So what we'll do is we'll redesign and reposition the current offering. It will be rebranded. So we'll take the existing footprint. Those will all become new stores with a new brand. And our launch is currently planned within the next 12 months. And importantly, we will build this business and bring it into the Specialty division, 100% built upon the way that we structure our businesses and upon the way that our division provides support and services to these businesses. So we think we can, from day 1, fully leverage what we have in Specialty. Okay. The last one, I see my time is up, different channels. So we'll continue to drive the wholesale channel. We've seen some good growth in S.P.C.C. there, and we'll also be looking for opportunities for some of our other brands. We have recently had good success even in distributing some of the specialty brands across the Pepkor footprint. We've introduced CODE and Tekkie Town. So it's already in 150 Tekkie Town stores. That helps us a lot in terms of getting the brand out there, and we've seen some really good results there. We've also very recently introduced Refinery as well as CODE in PEP Africa, and we've seen some very encouraging early take-up of those propositions. And then lastly, e-commerce obviously is important for us in our type of customer. And we have enabled all our different brands now with e-commerce and we've seen some really strong growth in the e-commerce channel, although it is still a small contributor for us as well. So in conclusion then, we believe Specialty is ready and poised for accelerated growth in the market that we play. We have a chassis and a divisional infrastructure that can really enable us to accelerate here. It delivers superior value. We do have confidence in our ability and our capability and the talent to be able to outperform our competitors and our intent is absolutely to accelerate and capitalize on the opportunities that we see. So with that, I think we are -- I'm not sure if we're taking lunch, Ian, or are we going to Q&A?

[indiscernible] So well done, everyone. Thanks very much. So well done to Stephane shares to Adrian, Stacy, and thanks very much, Danny. And just in the interest of time, what we're going to do is we're going to skip Q&A for now, and we will do Q&A together in the afternoon after the 2 other retail presentations. And Sean will kindly facilitate that for us. And so for now, we're really going to go out to lunch. And lunch is just straight out the doors itself inside the structure. And what you -- what would like and ask you to do is after dishing out if you may, please, walk out into the garden because there's quite a few of us, and that just allows for free flow of people. It is exactly quarter past one now, and we shall start again promptly at quarter past two. Thanks very much. We'll see you after lunch. [Break]

Welcome back, everyone. Ian, thank you very much for the lunch. Most appreciate it. Thank you. If we could just settle down, please. And I think, as we said, we are going to deal with the Q&A jointly for this section, okay? But just for logistical reasons, Sean is going to facilitate that for us. And what we will do is that the speakers that you're going to have for this session will remain up here on stage to field the Q&A. And then the rest of the guys can stay wherever they are, and there will be a roving mic in case there's a question that is asked to them. It just makes it a little bit easier. Otherwise, we all cramped up here on stage, and it doesn't give us enough time. So that's really all I'm going to say -- safe to say, It's gives me great pleasure to welcome on to the stage, [indiscernible] they intend will introduce the next speakers. Welcome, James.

Good afternoon, ladies and gentlemen. My name is [indiscernible] I head up the operations in Brazil. Today, I have with me Rodrigo Caselli. Rodrigo is the son of the founder of Avenida and he's been with the business for many, many years. Today, we're going to cover with you the topics that you see on the screen. Rodrigo is going to kick us off with the Brazil overview an opportunity. And then I'm going to talk to you about our strategic framework, our value creation plan, opportunities and the risks. So I'll hand over to Rodrigo to get us going.

Okay. Good afternoon. Thanks for your patience with my Porto English. And it's really difficult to present this time after lunch, and after the showman that we saw here today. But I want to say thanks for the investors to invest in Brazil and Avenida. I say -- I want to say thanks for the Board, for support us. This is a big pleasure to me and my family to be a part -- a partner of this business. And we really believe that we will do a great company in Brazil together with Pepkor. So in a positive way, for me, I will show you a movie from Brazil. It's easy. And then we will see a movie from Avenida Store. And then I hope that you enjoy it. [Presentation]

Okay. And now we will see a... [Presentation]

Nice. So this is some highlights that we brought to you. Brazil is a big country with 5 big regions we can imagine that each region is like a small country inside of Brazil. We have 2.13 trillion in total GDP in '23, 10.4 per capita. Our population size now is 203 million people. 7.7% is the rate of unemployment in Brazil today. The biggest economy in Latin America. The 10th largest apparel footwear market in the world. And we have 5,507 cities. And 6 -- more than 600 with more than 50,000 people. And when we take between 20,000 and 50,000, we will have more than 1,000 cities. So we have there a big opportunity to increase the business. Our population will grow almost 10% over the next years, is the seventh largest in the world and will grow a lot. It is important to say that 85% is in Class C, D and E. So it's our focus for Avenida. And we highlighted these 2 regions because these 2 regions will increase more than the average of the country. And from until '26, we will be the focus in our growth plan. Another point that we brought to you that is the fragment and white space to be filled because the biggest retail chains in Brazil, they just have maximum 40%. We have there a big, big routine for more markets, so we can explore a lot this space. And now I will pass the word to Marius. Thank you so much.

Thank you, Rodrigo. By the way, the music that you heard in those videos that obviously is December. There's also the project name for our acquisition. And for those of you that will be attend dinner tonight Rodrigo has promise to show you a few steps. So let me -- maybe link on to what Rodrigo has just shown you. And maybe just 1 or 2 parallels between South Africa and Brazil to create some context there. If we look at the GDP, we saw USD 2.1 trillion for U.S -- for Brazil. So Africa, USD 405 billion. So we're talking here for the economy that is much, much bigger. If you look at GDP per capita, about USD 10,100, South Africa, 65% of that. Size of the population. So Africa, 60 million, Brazil the official number from the last 203, unofficially, probably closer to 220 million. So a lot bigger. Unemployment, South Africa above 30%, Brazil below 10%. Now that -- there's 2 sides to that coin, right? The one is a lot more people, that's economically active, bring more purchase power. But the flip side of that coin is, lots of jobs available and not that easy to retain the people. And if you look at the sheer size of the country, 8.5 million square meters -- kilometers South Africa, 1.2. So if you just look at it from that perspective, you say to yourself, so he is a huge opportunity, and that begs 2 questions. Firstly, what exactly is the opportunity for Avenida and for Pepkor in this market? And secondly, how are we going to capitalize on this opportunity? And what are our plans to extract value in this market? So I'm going to unpack that for you in roughly the next 30 minutes that they've allocated to me. I'll take you through that. I'm going to give you a little bit of the historical context to understand where we've come from. It's now we recently celebrated our second year anniversary after acquisition. I'm going to share with you what we have achieved in that 2 years, and I'm also going to share with you some of our plans going forward. Let me start here. About 2 or 3 months after we did the takeover [indiscernible] employed as an independent retail consultant. And I said down with the team to talk about values, cultures, mission, vission, dream all of those things. Let me start here. About 2 or 3 months after we did the takeover shown then employed as independent retail consultant. And I sat down with the team to talk about values, culture, mission, vision, dream, all of those things. And although there were strong values that were generally discussed in Avenida, there was nothing that was specifically documented and that everyone worked towards. So we started with this process and at the end of the day, we formulated, what you see, what we refer to as our strategic framework or strategy on a [indiscernible] as many people will call it, but that really drives the behavior in our business and what we focus on. So our purpose is to positively impact all the people connected to that business. And I think that's very important to note. Obviously, we are a customer-centric organization with a lot of focus on our customers, looking at the needs of our customers, but likewise, we also need to look after the interest of our shareholders, suppliers is important stakeholders and our employees. And for us, as a management team, it's important to understand the trade-offs and how we sometimes look at our priorities. Our business model, what you see here, Stefan referred to that earlier today as well. We want to be a true discounter, you need to be able to buy for less, you need to operate for less, you need to sell for less. And I'm going to give you a little bit of an overview of where we are there. This is not the endpoint. This is a journey on which we have made very good progress. Our value creation plan is built on 4 pillars. We are already on the third generation of our value creation plan. I'm going to talk to you about that very shortly. Our dream to become the most loved and accessible fashion retailer in Brazil. Not high fashion, low fashion, basic needs, but to give our customer an affordable quality product. And as you can see there, the A of Avenida overarching all of this, we've got a set of values that is clearly defined. As we referred to PARIS, acronym, Performance, Attitude, Respect, Integrity and Simplicity. So this, what you'll find here, obviously, is the starting point of the culture that we want to drive in the business. And there's currently also a big program in the business to roll this out and everyone understanding exactly where it is that we want to look at there. Now on the value creation plan, before I move on to the next slide, I just want to quickly use the opportunity to create a bit of context here. And I'm going to start with this. [ Rodrigo's ] father started this business in 1978. So that's a long time ago. And the family did an incredible job to build this business up, to make it bigger and bigger. But in any family environment that comes a tipping point, where you need finances in order to grow. Fast track forward, at the time that we did the acquisition 2 years ago this business was owned by private equity at that time. It was owned for 7 years. And private equity was very good for Avenida in many respects. Amongst others, very, very strong corporate governance, very good financial discipline. However, and typical to any private equity model, there are 2 common denominators that you find in that space, right? The first one are highly geared business. The second one, suboptimal working capital environment. And we found that in Avenida as well. I'll come to the third point under that I'll make just now. But from a capitalization point of view, when we did our due diligence, that's already something that we identified. And at the same time that we did the acquisition, there was a capitalization that went into this business in order of ZAR 300 million. That immediately changed the balance sheet here. And if you then look at the working capital environment, I mean, amongst others, at the point that we did this acquisition, there were 36 loans from 28 banks. We've now consolidated. We've got 10 loans from 8 banks, and our vision going forward is to work with 5 or 6 strategic suppliers here. The other important notice well, when you're sitting in an environment like that, not a lot of working capital around. You scrape around to buy from this supplier and that supplier. Inevitably, you end up with a lot of suppliers in your business with a long tail of products. So huge opportunity to consolidate supply and to optimize the products that we have in our business. So that is just some of the lessons that we learned really early in the process. I think also important to note in this link to the availability of capital in the 7 years is that a business was owned by private equity, only 13 stores were open, 13 stores. That's -- let's say, 1 story every 6 months. What's the relevance of that? This was a business in maintenance mode. And when you're sitting with a business in maintenance mode, your mindset is completely different from a growth model. So one of the things that we identified early in the process was exactly that. So as part of our model and our thinking before we did this acquisition, we came up with the first generation of our value creation plan and that first-generation value creation plan included adequately capitalize the business, which we duly did. The second one is to prepare the business for growth, which I will talk about a little bit more. The next one is to look at the actual store growth and putting a proper strategy around that. The next one is to look at some sort of differentiation, price differentiation, we wanted to be a real discount player. And then the next one was to look at our proposition to expand our sourcing capability. So that was the components that already went in before we even did the acquisition, it was part of the plan that we presented of how we can bring value to this business. If we look where we are now, what I'm presenting to you here is already the third generation of our value creation plan. That little bubble that you see in the middle day, it was the second generation, but we've progressed it in order to keep our process dynamic. For us, our value creation plan is something that we live every single day. It's not something that we do once a year and we pack it away in our drawer. And a year from now, we just touched it off when we move on. We really live our value creation. So our value creation plan is built on 4 pillars: The first one is executing a clear value proposition and competitive differentiating strategy. And I'll come back to that now. Then you've got a core business. We need to look at everything that we can do to optimize that performance. And then again, on the growth or the store rollout, I'm going to talk to you in more detail about that shortly. So the first 3 components that we are looking at there, are the key drivers in our business. And that's a roll-up of many other aspects, and I'm only going to cover a few of those with you. And then obviously, if you want to have a growth environment, you also need to have a structure -- infrastructure to support that growth. And also very important here, is to get the balance of the timing of the investment in your infrastructure to get that linked to the growth plans that you have and the pacing of that. So the first point here. If we look at differentiation and proposition, it's one of the benefits of being part of a group like this is that you've got a lot of information available to benchmark. So one of the first things that we did is to look at what is the margin strategy like for this business? What should it be? How does that compare to our sister companies. And when we did this exercise and we took, let's say, gross profit margin and you look at your cost of doing business. We then plotted our sister companies PEP and Ackermans, if their gross margin and cost of doing business was sitting here, Avenida was a level up. So the margin -- gross margin was higher, but the cost of business -- doing business was also higher. And that also had a fundamental impact in terms of the mindset of how this business went about doing business. It was always we need to get price up because we need to cover our costs, which is a completely different mindset from being a value and a discount retailer. So let me talk to you about this now. I mean if you look on the left there, you can again see, [ Rodrigo ] mentioned and it came through in the video as well. 85% of the Brazilian population is sitting in a C,D and E level. It's the lower end of the market. And again, this was one of the synergies when we looked at this acquisition, with our current business model that we have in PEP, less so in Ackermans, but playing in the lower end of the market. So looking at it generically, and on the face of it, where Avenida was positioned; yes, we are playing in that market. If you look on the other side of the coin, if you look at fashion or relative fashion positioning, high fashion, low fashion versus price, we knew more or less it was sitting now fashion, low price, okay? But if you ask yourself, how does this business differentiate itself from its competitors? And there wasn't a clear answer for that. So what we then did is to take our learnings from the margin strategy and where we wanted to take it as a discount retailer, and we started with the first part of our strategy. And that was really critical in terms of getting the positioning of this business right. So in about May, June of '22, which is about 4 months after we take over, we started phasing in what we call known value items or key value items. An idea that, that was, we wanted Avenida to stand for something. When our customers think Avenida, what did I see? We want to be known for the retailer, if I look for this and that item, there's nowhere else I go. I go to Avenida. So the first part of this exercise was initially to phase in the logistics behind us because, firstly, you didn't have the stock and you get -- needed to get the stock in the system and then you needed to get the logistics systems in order to be able to maintain that. So we started phasing this in and from about May till the end of October, we got that right. But then [indiscernible] makes a very, very brave step at that point in time. And if -- yes, I want to take you back for a moment to the traditional model in Avenida. We increased price, we increased price because we need to cover our cost by it. We then decided on this some of these KVIs that we phased in, there were 29 of those. On 9 of 20s -- of those 29, we're going to cut prices between 20% and 40% to be able to be 10% cheaper at least than our competitors. Now that caused a bit of angst, if I can describe it that way. Because of this traditional approach that we know, we put prices up. We can manage, but we can't put the prices down. Anyway, [indiscernible], we got everyone on board, and we got the support and we said, listen, we are announcing this on November [indiscernible]we're going to run this for 4 months. We had a benefit and the luxury of a gross capital behind us, so we could afford to do that. And whilst there was a lot of answer what was going to happen, what if we don't get the volumes, et cetera, we stuck to the plan. I'm going to share with you shortly what the result of that was. And this was really critical in terms of the competitive position for Avenida. And where we're positioning going forward. We'll talk a little bit at the end of the day of the impact of players like Shein [indiscernible], and how this positioning is also going to assist us. So what I show you here is the summary of all of those KVIs for the financial year, October '22 to September '23. On this group of products that was KVIs, the impact in terms of sales quantity year-on-year increase of 95% in volume. Our sales increased 58%. Our cash that we put in the toll went up by 47%. Obviously, our margin came down. Now there was an interim step. We took that first bite at reducing the discounted prices, as I said in November of '22. July of '23, we introduced another 11 of those KVIs. In the meantime, we increased in our KVIs to 30, which now meant that 20 out of 30 KVIs were sitting in this discount category. And then the final phase of that we put in, in September of last year. So this is now fully settled in our business. And again, as I said, built the basis of this being a true discount retailer going forward. The end result of this is that the contribution from this KVI range in volume is about 28% and in value, 17%. It is not our idea to limit the KVIs, but we want to grow the pie as a whole. But we do have a limit that we've set to ourselves. We don't want this to go higher than 30% in volume and 20% of value because we need to have a balance in the business and we need to get margin out of the rest of our pricing point. Also one thing that we started to do is to look at our pricing permit, the positioning of our products relative to the perceived value and how we select the product at which price point. And there's been a lot of focus going into getting the rest of our P1s right, getting our P2 products right and also to P3. And it is important thing note here, and I'll talk a little bit later about that when I talk about Avenida customer. Our customers are poor, very, very poor. In fact, Brazil has got the highest Gini coefficient in the world, if you look at the gap between rich and poor, our customers are really poor. But very, very important, our customers aspire. They want to buy a value product, but they want to be able to -- if they go out for a function, they go to church, they want to be able to find a product, shoe or dress, that looks nicely. And that's something that we work on very hard at getting that architecture right as well. So this was -- I think this was really one of the key achievement that we managed to achieve here. On the right, you can see photos of some of those KVIs. And if you look outside at the product that we have there is also some KVIs that we highlighted. As part of your proposition, I'm just going to highlight 1 or 2 benefits that we've managed to achieve here as well. Pepkor leverage. Stefan spoke about and [ Adrianne ] about the character. On Disney and Marvel, we entered into contracts on the back of what was already in place with Pepkor in the back end of '22, and we first saw those products coming into our stores in March of last year. In November this year, now post '23 -- November '23. we signed a contract with Warner and those products will be in our stores for the first time from April onwards. But just to show you the benefit of what this brought to our business. From March of '23 to September '23, 546,000 units, turnover of about ZAR 17.7 million. In the first quarter -- our first quarter of '24, more units in the first 9 months and the value also exceeded. So this is a huge opportunity that we will also drive going forward. Then there's also a mention, Sean mentioned earlier about our office that we have in Shanghai. And we started looking very early on how we could benefit from that, how we can piggyback on what there is already? And that is simply piggybacking is not curating our own ranges. We simply did was already in existence, we saw what can work in our business. So for winter product, we had 73,000 units that we sold, value ZAR 3.5. In summer, you can see the values there. Again, this is small, this is infant stage, but there's a lot of opportunity for us to leverage going forward as well. On the proposition, to give you an idea of what the product mix looks like at the moment. this business started out predominantly focusing on men. It's always been very strong on men. You can see there at the moment, 22%, 23% coming from men, 20% coming from women, 13% are children. But what is more relevant here. If you look at the demographics in Brazil, the split between women and men 55%-45%. In our business, 69% of our customers are women. 62% of our customers have children. This is a huge opportunity for us in ladies and kids that we can look to explore in the future. Another important part of our proposition and what we bring to our customer is our own in-house credit card, Carto Avenida. And you can see there, there's a graph showing you the share of total sales in the business running on average between 40% and 43%. About 3 million cards in total, 1.9 million of that active. And if we look at last 12 months, about 50% of those customers actually bought something from us. It's also a very relevant here. The average ticket for a product on Avenida Card is 2.4x that of cash and third-party credits. And another point, about 56% of our customers actually come in store to pay their [indiscernible] So there's another opportunity for us to sell. Business performance optimization, yes, I'm going to start with an item that's actually not on the list here. As part of the preparations of the private equity player to exit, they also considered the IPO. And of course, always a fashion statement and excuse the pun is to have online sales. They also initiate the e-commerce part in this business. And about a month after we entered, we decided we're going to close that down. Why? Simply because it distracted the focus in the business. It was not making money and it was not going to make money for a long time. So for the time being, we are out of e-commerce. At a relevant point in time we will we relook at it again. On the business performance optimization, I spoke about the capitalization. We injected the capital, the ZAR 300 million. We reduced the number of banks and the loans, as I indicated to you. And we're also in the early stages, we elected to settle some of the more expensive debts. We managed to, from the time that we took over to where we are now, we managed to bring down the cost of our debt by about 240 basis points on the spread as a result of that consolidation. Giovanna. Giovanna was the stand-alone shoe brand in the business. There was about 20 of those stores when we took over. And we decided to close that. Simply, again, if you look at the returns relative to the core business, it wasn't making the returns. And also the family wasn't -- they actually decided not to grow this business anymore. It was a bit of an emotional decision for the family, it was Giovanna, the sister of [ Rodrigo ], but they supported us nonetheless. But important, yes, 3 of those stores, we converted to Avenida. And in the period that they were operating as Avenida compared to the prior period when they were still operating as Giovanna, we increased the sales by 82%. We closed 17 of the Giovanna stores. Mobile phones, it was initially part of the business. The model in Brazil is completely different from the model of South Africa. It's only a sale of a handset is a commodity. No ongoing revenue, no -- some cards and, nothing of those were in adjustments. So we had a look at this. We paid around the various models. We try to bring a look at [indiscernible] siloed to bring that in to give us a uniqueness. But none of those models work. So in December of '22, we made a call, we closed this business. We did run out in 4 months. And in the process, we managed to release ZAR 30 million back to our working capital. So yes, I just wanted to -- I'm going to go through this very quickly. After 130 stores that we had at the beginning, 110 of those were the Avenida stores. The sales entity -- the entity of sales per square meter, we managed to increase that by 58% from takeover to where we are now. And behind that, we're setting a number of initiatives, looking at -- firstly, putting more stock into their stores, increasing the store density, higher racking, looking at reducing space, but all of that has resulted in this performance in the stores increasing. Store productivity, without going into the detail, that's also one of the things that we had identified early on. The productivity was a little bit lower in our sister company. So there's a lot of focus on that. We've already made huge improvement. On the new store side, we very early on, look at the model that was in race in PEP and Ackermans to open new stores. And we adopted that. We built a model looking at IRRs, NPVs and all of those things. We've got that in place. And that methodology has been running in Avenida probably a month or 2 months after we took over. So all new stores are subject to the same methodology. But we also managed to do, is to reduce the CapEx per square meter from ZAR 3,000 to ZAR 2,300. So that's also a big, big improvement there. If we look at the new stores that we've brought to the table to date, the business case where we're actually operating, our business cases are currently exceeded by 44% in reality, and there's only 2 stores behind business case. And I mentioned to you earlier, our existing store base increased trading density by 34%, even though our new stores are actually outperforming that base by another 13%. The reason for that, smaller stores, focus on street stores. Here there's a picture of what I've told you. Sales density. Again, you can see there the increase in the existing stores and to new stores. And what's also important to note is that when we looked at the stores, at the time of acquisition, the average store size was just over 1,000 square meters. And if we wanted to move into a discount retail, we needed to get our stores a little bit smaller. It's not as small as the PEP stores, but what you can see here is in terms of the mix, firstly, we moved more to street stores and less into more stores. Currently, 70% of our stores are street stores, the profitability there is higher, the returns are better. And you can see that the average size of our stores below 800 square meters increased from 59% of the portfolio to 69%. The average store size that we're opening at the moment is 640 square meters. Let me talk about growth. So we're running out of time, so I'm going to speed up a little bit. So if you look at what I spoke about a little bit earlier about store growth opportunity, 5,500 cities in total. If we focus on the cities that are bigger than 50,000, that's only 10% of the total. And if you then take a very conservative view of density, you can see there that there's very possible for us to open at least 1,500. But having said that, if you think about 60 million South Africa, occur in footwear and [indiscernible] stores, yes Africa 4,900. So this is really very conservative. But it's a long-term play, right? It's a long-term play. Just to give you an indication where we started off with this mindset of maintenance. In our first year, we said we're only going to open 5 stores, which we did. Our initial plan was to open up to 26, was to open 110 stores, where we're sitting today is 188. So our target for September '26 is to get to 300 stores. The reality is, in the next 2.5 years, we're going to double the number of stores that we have in our network. From 1 store every 6 months in the quarter -- in the first quarter of our financial year, we opened 16 stores in 10 weeks. So you can see here, also on the -- one thing that we've done is to have a very clear strategy in terms of our store. It's not random. It's not here, we're all over the place. [ Distally ] very specific corridors along which we will develop. And you can see those are set out there. There will be a lot of focus on growth in the north, northeast. We're looking for the 300 stores, all of those stores in the cities where we're going to look at are already been plot. So our team has got a very, very clear plan of where you need to find these stores. And this is a matter of interest. If you look at the right-hand slide there is how we can, in time, optimize our supply chain by having various options around the supply chain. On the key enablers, I'm going to highlight 1 or 2 here. And the one which I'm going to talk about a little bit is the supply chain, talk about our management team, and then I'll talk about our HR very quickly. When we first started this journey, apart from having capital to grow, our biggest constraint was sitting in our supply chain and particularly in this cross dock facility that we have. So this is not a warehouse. We don't store stock; we move in, we process, we move out. And in the warehouse, it was on hanger. So initially, we identified that we could probably open 70 more stores and then we was stuck with a big problem. So we made some major structural changes. If I get it -- if I look at December '23 versus December '22; December '22, we only had this facility. December '23, we had 5 hubs that supported this facility. We took all of our stuff coming on hangers. We removed 40% of the hanger capacity in the DC, and we just started moving it through in boxes. Now if you look at, again, our quarter for December first quarter, volume that we shipped out of the DC went up 69% against the prior year. Our kilometers traveled only went up by 2%, and Accumes only went up by 15%. So this was a fundamental change to our model because initially, all of the stores, farthest point 3000 kilometers away was serviced by a truck leaving the DC, right? So it's small trucks, going and you need to have to be able to maneuver into specific points. With the hub strategy that we put in place, we started to align all. We started to use big trucks, long interlinks. We brought that up. And now the delivery in the regions from the hub is done of a lot smaller truck. So a huge amount of efficiencies that we've achieved. And our logistics team has really done a great job around here. We are now planning to open a second warehouse in May, in the north of the country to where we will move about 50% of the capacity. And also, we're looking at our imports going forward to put it into 2 separate points. Talking about that, our imports at the moment is about 5% of our total product sales. We're looking to move that up to 10% in this year. Obviously, you need a team to drive this. We've done some key appointments, a very capable core team that wasn't existing, but we brought in some people to expand that capability in capacity. So we brought someone on HR side, someone on the expansion side, and we now have 2 experts from Pepkor side as well, the one on the supply chain and the planning side and another one on merchandise and buying. I'm only going to talk for now about information technology. In our due diligence, we already identified that we needed an investment in a planning and allocation system. And we're currently in the process of phasing that out. And there's a lot more to this, but due to the time, I'm not going to spend time on that. Opportunities and risks. I spoke about babies and kids. I spoke about home hard goods, assortment and the range optimization. There's nothing broken in our business, but there's a huge opportunity to further improve on our product assortment, our product selection and getting the pricing points right. And we can look at further store acceleration as well. Now the one thing, there's lots of opportunity in the result. It's a country of the most complicated tax system in the world. There are 26 federal states and every state has its own input and output VAT. So if you look, for example, at defining a strategy for a warehouse, where in South Africa, you will find the center of gravity and you plan it there. Before you do that in Brazil, you need to look at the tax as well. So very, very complicated. Shein. Shein is already a big player in Brazil. We watch them, what they do. We keep our eyes on them, but we focus on our own strategy. Just to give you some input into that. Brazil is the first country where Shein will be doing manufacturing or contract manufacturing. They've already set up a network of 220 manufacturers in Brazil. They are looking to extend that to 2000 in 2026, they're looking to create 100,000 job opportunities. On that 1 slide where I showed you all the competitors, the biggest retail competitor at the moment, turnover is about ZAR 13 billion. One of the bank's estimate that Shein's turnover at the moment is ZAR 10 billion. So they're already a significant player. But as I say, we keep our eye on them. We watch them closely. I firmly believe that the way that we've positioned this business as a true discount retailer will help us in protecting our own environment. That's it for me. Thank you.

Next, we have Peter Griffith, your uncle in furniture.

Thanks, Maurice. And then you must reset the clock. Maurice has used a bit of my time as well. All right. So as I said, I'm Peter Griffith, I'm going to tell you about the JD Group. We have about 900 stores and we formed the furniture, appliances and Electronics division of Pepkor. We trade through 2 divisions in retail, JD Home and JD Tech. In JD Home, we've got three furniture brands, more or less positioned as a good, better, best. And Sleepmasters covering a wide spectrum of the [ SCM ] spectrum. HiFiCorp focusing on appliances mainly and incredible connection on consumer electronics. Then we've got Connect. This is not Ackermans Connect. They liked our name. But this is our Connect Financial Services, where we provide credit to the people that buy from us. And in Abacus, the group insurance company that you -- that somebody has referred to before and that you will hear about tomorrow. And then we've got 15 DCs across the country that service our stores. and deliver goods to our customers' homes. Right. So rounded up, we do about ZAR 12 billion of revenue across all these categories, ZAR 6 billion from tech and ZAR 5 billion from Home, and ZAR 1 billion from the others like Connect. On the categories as a group, we sell about 35% of our sales mix from furniture categories and 65% from appliances, although in home, that is a lot higher, closer to 80% in furniture. Obviously, we like to grow the furniture component because that's got better margins than the plugged goods. On tender, about 90% of our business is done in cash and lay-by. But once again, in our home business, the credit component is a lot more important at 20%, and we do a similar amount in our lay-by book, which is something that we grew over the last couple of years and that we are very proud of because we don't want to be as credit dependent as the business has been in the past. And then when you look at the channels, we do about 6% in e-commerce. But just over 10% in our Tech division with HiFiCorp and Incredible Connection and growing, and a very important part of their business and a material part of these sales. All of this was about 6,000 people -- 6,400, right. We have a busy market. Some of Pepkor's peer groups like TFG and Mr. Price also have strong furniture offerings. And then we also have Shoprite. We have Lewis, we have Massmart. We have taken a lot as Pure Play. And then we also have some new entrants that are coming like Amazon and the like. We play with our furniture brands more in the credit dependent market, although Sleepmasters crossed over into the cash market. Rochester is pretty there, together with [indiscernible]. So really covering quite a spectrum. On the simplified, SWOT analysis, we have strong categories, as you've seen on the previous slide, and we have strong brands that people know. Our footprint, our DCs, our e-commerce and our omni logistic capabilities are something that we are very proud of and that we have put a lot of investment into also our systems. Our systems create the opportunity for us to scale and it also creates efficiencies, which lead to a lower cost of doing business. On the weaknesses, there are many of our brands that are under indexed in certain area, especially in the Western Cape with some of the brands that started in the northern regions. And then margin maintenance is always difficult in a tough market like we have. Opportunities, we believe we have a strong platform for acquisitive growth, and we will be looking at opportunities in a market that's not growing, consolidation is very helpful, and we can also do portfolio diversification. Threats, the normal, so I'd say, the usual suspects, DDP, durable goods segment, new entrants and the infrastructure, which you all know about. Right our strategy on a page 4 segments, and I'm not going to go through that, but the first part is our strategic intent. The second part, which is more important, are the 5 critical success factors that we have identified, that drives everything that we do in terms of our priority goals as well as the initiatives and we identify those initiatives in terms of our business process value chain, starting with sourcing, supply chain right through to credit and tender and our systems and support. And I'll be spending a bit more time on that now. And then lastly, we have our values, and that drives our culture and our performance management. Right so the first link in our business process value chain. We always put our customers in the center of what we plan and do. On the sourcing side, we are growing our imports. We've always imported. But many of the international electronic suppliers and computer suppliers never had stock or never keep stock in South Africa. They work through distributors. But after COVID, they became more open to direct imports as long as you have the scale. So we started that about 2, 3 quarters ago and we will grow that. It's obviously you got margin growth or margin protection benefits. Then we also have a big focus on our private label program. Sleepmasters is not only a retail store for a specialist bedding outlet. It's also a bedding brand that we sell through our other furniture outlets, and this is already more than 20% of our bidding offering. Then Steel & Rose is the latest or youngest on the block, more for self-assembly furniture and case goods creates an opportunity to also pool and our marketing efforts together. Orion, we used to have Sansui, many of you will know that name or might have a Sansui product. That was a brand and a contract that -- or agreement that we inherited that ran out last year, but that was a brand that we rented. So we paid royalties and then we introduced Orion at this stage in small appliances and TV. In fact, the TV there at the back, best buy that you can get. There, we -- Steve Miller has made the Rochester display is private little lounge. So if you're in the market for a TV, certainly take a look at Orion. Right then on supply chain. We -- this is one of the areas in our business that we spend a lot of money on and a lot of effort. We see this as a key differentiator. We need to have the best systems and automation available in the market as it drives down our costs and create more efficiencies. And we are actually quite proud of what we have achieved over the last few years in supply chain. We move 1 million or more than 1 million cubes throughout the country. In more than 1 million orders that we deliver to our stores or our customers, when they buy from our stores or online. And we are spending a lot of investment and effort into our system and especially on our fine picking and our dark store capabilities for e-commerce. And also a lot of investment going into our data, making sure that we have full integration with all the couriers, including our own, and so that we can allocate our efforts and our spending between the various couriers, as I said, including our own, to optimize spend. Right then somebody asked about data earlier in the day. So on our marketing and our customer engagement, we have introduced a customer data platform into our tech stack. That is now operational. So effectively, as you can see there on the left-hand side, various sources of information that goes into the system, whether that's point of sale, e-commerce, browsing data or whatever, that is then integrated into the customer data platform. It's all stitched together so that you create a single view of the customer and that you can do better audience segmentation and also more and better predictive segmentation, and then you serve that to the customers through various channels, whether it's e-mail or WhatsApp or Facebook or Google, whatever the case might be. And as they interact with you, that goes back into the system, get stitched into his record so that you have richer information on the customer and that you can market better. The whole idea is that we can drive higher sales conversions and more repeat customers. If a new or existing customer wants to speak to us, our customer resolution center is also integrated with the single view of the customer so they can speak to us across a number of channels on our customer engagement platform, whether that's WhatsApp For Business or phone or whatever the case might be. And then that would cover a whole range of area. So this is really a Holy Grail. Maybe if you are in retail, you will be more excited about this than when you're asset manager. But certainly, if you can create a single point of contact where you get a complete view of your customer, then it creates a big a much better shopping experience or user experience for the customer, but it also drives down your cost to serve customers when you don't have good systems cost a lot of money. Right then if we go to the next link, sales and operations, I'm going to quickly run through what we do in all the brands. I can't go through everything that we do. But I think most of you would have seen that we've rebranded incredible connection. We've given it more modern face and brand refresh, and we also introduced 2 new formats, Incredible, which is a large format and Incredible cellular. So this is the rebranded incredible connection. I hope all of you buy from them, if not in store, at least online. Then Incredible cellular stores. These are specialist cellular stores, small, focused on cellular, ideal size of about 100 square meters. And we deal with all the networks, and we have already opened 7 and are very happy with what we have here. This will not compete with what we have in [ Pepsel ] and Ackermans Connect. It actually creates the good, better, best solution for our customers as this is more focused on the postpaid and higher end of the market. Then the large format Incredible. We've opened 3 already. Some of you might have seen the one -- the latest one in Greenstone Mall. This is where we have a deep and extended range of large appliances, small appliances and also all the categories that home automation and other categories that you would find in a normal Incredible connection. This would be mostly targeted at the big cities where you have a lot of feet. Then also, our focus on SMEs in Incredible Connection, we have always sold to small businesses. In fact, we did account, and I think we counted about 18,000 in our database, but we never had a singular strategy to deal with them. So now we are introducing a portal where businesses can register and get a whole host of services and products, rentals, and finance options and the like, we can service that SME market a lot better. HiFi Corp as well as Incredible and in fact, all our brands e-commerce and the growth of e-commerce is a big focus area for us. HiFi Corp used to be in strip malls. About 1.5 years or 2, we started to move into the higher-end malls so that we could better compete in that mass middle market against some of the more traditional players that used to be in those malls. And so this is more of a footprint and a location strategy with HiFi Corp. We moved into places like Mall of Africa, Cresta, Mainland and so forth, and very happy with that strategy, which we will continue to push. In fact, HiFi Corp is also our fastest-growing e-commerce brand as we have a lot of other extended categories that we added and tested, and it's doing very well even like outdoor and some other categories that you wouldn't normally associate with HiFi Corp, and that wouldn't be available in store, but it is available online. Rochester used to be a house of leather. We've really cleaned up the whole value proposition. It's now a store with a very nice urban contemporary furniture offering. It is a chain that is very much [indiscernible] based. So we have a big opportunity in terms of entering under-indexed areas, we have recently opened one in Cape Town and also in Port Elizabeth. So certainly some good opportunities for us to go into under-indexed areas. Sleepmasters, very happy with the performance of this chain, and this will also be the one that we have the most of our store rollouts on. We dominate the middle to lower end of this market already. And we have a big opportunity in growing into that middle to higher end of the market. So once again, a footprint and also indexing strategy where we will go into better end locations like Mainland, et cetera. and where we will arrange those stores accordingly to target that middle to higher end of the market. Then on Bradlows, like Incredible connection also needed a new face. So we also had a brand refresh, as you can see there. We are in the process of rolling out the new brand. And there, you can see what the new Bradlows store looks like. We did some market research and the customers felt that we needed to create a more for, call it, a younger market. A big focus of us here is to keep our leadership in traditional lounge in that mass middle market, but also to move to better trading nodes in many of the towns. Many of you know that some of the towns are falling apart. And many of our customers don't shop in some of those areas in those towns that fall apart. So we need to move to better trading nodes so that we follow our customers. Then Russells is focused on servicing the value conscious shopper, the person who really need to watch his budget, and we will continue to make sure that we have a value prop for that customer. What we are also testing at the moment and trialing together with flash that assisted us is we signed up in the informal segment, some spaza shops as agents for Russells. So all of this is digitally driven with a mobile app, and we -- both a spaza owner and the customer then gets everything based -- well, served to them electronically through the app and messaging. How it works is a person can go into a spaza, they can buy any product there they open a lay-by and they pay their lay-by through the normal channels or at a flash device, any person with a flash device, and then once the lay-by is paid up, we deliver the goods to the customer in the normal course of business as if he bought from a store. So this is still in test phase. We are quite excited about it. And the whole objective is here that we want to grow a second lay-by pipe independent of the stores, we will also have a lay-by. Then the next link in our value chain is credit and tender. One of the big initiatives that we have here to unlock more value is to have a full online credit application process. So most of the places where you apply for credit already have an online offering, but you have to finish the last part with your FICA in-store. Here, the idea is that we have a link to home affairs, OTP and selfie technology so that you can go on line 12 o'clock at night apply for credit, get it approved, shop online and hopefully get it delivered the next day. So this is in live test phase at the moment, and we hope to roll that out within the next few weeks as a live product. Then also, we are growing our revolving credit book. So this is part of program. A lot of people get approved credit for, let's say, ZAR 20,000 or ZAR 15,000, as you've seen earlier, ZAR 17,000 is the average loan size that we approved, but they only buy for ZAR 8,000. So if they have another ZAR 7,000, call it, OTB available, then we would like for them to use it in our stores. So we market their revolving card to them. They can use it online or in-store and across all our brands, and this is growing quite nicely. Another initiative that we have is to move our lay-by pipes management into our credit business because if we can drive another 5% or 10% better conversion on our lay-by pipe it is quite a material number or a big number of sales that we get that way. Lastly, on systems and support. We -- I can spend a week on this. This is a real big focus and passion area of us. We have and are proud of our IT systems. We have a standardized IT system. It's an integrated -- fully integrated IT model. So it's brand agnostic. Whatever happens at the back end is available to all our brands. So obviously, big benefits in terms of speed to market and eliminating duplication and complexity. One of the areas that we are spending a lot of time and have spent over the last 3 years, and we are starting to see very nice benefits is on data analytics. And in simple terms how it work. We get all the data from various sources. It all gets put through our data governance structures to make sure that it is complete and accurate. We make use of AWS and our data architects then structure that data into confirmed views, which is then used by our data engineers and our data scientists. And all of that is then fed back to the customers, or to the business, in terms of dashboards, reports, special reports, but also data sets, which is more important so that they can manipulate the data themselves and models as well as actionable outputs like automatically ordering and a lot of other fancy things that you don't need human intervention for them. Right. So I'm very fortunate. We have a great team at -- management team at JD Group. So that's great. But it is really all the people in our stores that make it happen and we really salute all of them. So in summary, where we are, we have a stable business model, and we have an experienced management team. We have excellent foundational systems and capabilities and infrastructure. And although we have a lot of footprint and category expansion opportunities, some of which I've shared with you today, we also have the ability and the capacity to scale. So we will certainly be looking at some consolidation or acquisition opportunities if they arise. Thank you. And now, apparently, it's going to be Q&A time.

Thanks, Peter. I think for logistical purposes, again, discount retail, I think there's only 2 roving mics. So if we can ask [ Stefan, Maris, Adrian, Peter Doni ], you can sort of gather in one corner here, and then you can share a mic between you. Cool. Thank you. It could be mistaken for [indiscernible]. Any questions? There we go.

It's Nick Webster from HSBC. A couple of things. You mentioned e-commerce quite a few times throughout the presentations. And I think you made a comment that it was profitable. There are big incumbents that don't seem to make money and haven't for a long time and some of your competitors investing a hell of a lot of money in this and coming at significant cost. So just wondering how that is shaping up for you? And I suppose you talked about the marketplace. There's a lot of brands here and putting all that together. Is that where the real investment then would need to come if and when you go down that route?

Yes. Thanks, Nick. I mean the guys can jump in. But I think as we mentioned earlier, we've had a fairly fragmented approach to e-commerce. So each individual brand drives its own e-commerce strategy. In some instances, they've been very successful. The product is really suited to e-commerce. And as Peter alluded to in JD, they brought real capability from a distribution perspective around some of the electronic type products. And some of the other brands, the focus has been more on a click-and-collect solution, particularly in the Ackermans business, that isn't too difficult from a profitability perspective to manage. But essentially, our approach to the e-comm side and particularly transactional e-com is one of where we're letting the customer leaders on how fast they want to go there. Click and collect is always the predominant choice for us just because it is more economical. But the reality is when you've got pure players like Shein and Temu coming down the line, it is something that we have to think about. So I would say, at an overall level, home delivery, now I wouldn't claim that we're profitable in every single product that we offer from there, but it's essentially just part of an omnichannel strategy, and as I said, driven by each one of the individual operating companies. I don't know if anybody wants to jump in. That's a hard no.

And then just secondly, on -- I mean, you gave some useful insights into, again, the port disruptions and things. Is there a risk, do you think? Then I think some winter starts now that we have another problem with winter stock not being here in time and we go through another discounting promotional cycle, certainly at an industry level, and where PEP might sit in that as we go through the next few months?

Yes. Look, I mean, I think in the short term, it is absolutely a risk. As Peter said, we can adjust our lead times going forward to factor in those types of disruptions. But in the short time, the -- there is an impact, fortunately, it's catching us at the beginning of the season rather in the peak period of the season. And particularly, if you look at Stefan's business, which is fundamentally a lot of replenishment type product, the stock covers there are generally quite high, so you'll be less of an effect. In Adrian's business a more pronounced risk or effect. But when you're talking somewhere between 10 to 14 days late, that's not the end of the world. The guys are modeling it all the time. They're looking at alternative ways of getting the product here, particularly when you get someone like me pushing shipments out. So yes, we -- it's definitely having an impact on some of our availability right now, but I wouldn't flag it that it's going to lead to massive overstocks and the need for significant markdowns in the season. And the reality is if it gets -- continues to be bad, the guys can cut back at the end of the season still on product that hasn't shipped.

Just a question on furniture. One of your big competitors obviously did a big acquisition not too long ago in the furniture space, and part of that was to do local sourcing and manufacture. Can you talk a little bit about your sourcing for your Bradlows, Rochester, et cetera, is it all imported? And are you doing anything locally and -- because that potentially, I guess, could have opportunities for working capital, lead times, et cetera?

Yes, that's a good question. We don't have any manufacturing benefits ourselves. You're obviously talking about Tapestry. So they have the 2 factories, the one bidding factory and launch factory. So that will definitely give them in theory, some margin benefit, whatever they make there as long as they have the volumes to keep the factory busy. So our approach is that we deal with our current suppliers and that we work together and make sure that we have a competitive offering. What we also have is, as I showed you there on Sleepmasters, that is our own brand. So it's not a branded product that we buy from suppliers only, and we would typically put that out on, call it, contract. So we make that from various suppliers, which also gives you then a similar benefit because it's not a branded product like a [indiscernible] whatever the case might be that you have to pay them the margin for, we can put it out to contract manufacturing.

[ Valla Marzo ] from Rozendal Partners. Maybe a question to Stefan, I guess, Capitec Connect. Have you felt the impact in the market? Have you -- I mean how have you experienced them? How do you expect to respond to them? Do you expect them to maybe get into handset financing? If they do, how would you react? What's been your take on that so far?

Capitec Connect. So not really something that's on our radar currently. We're really trying to develop our own capability for the rental piece. So from a, let's call it, the vast perspective, airtime and all of that, that have been very successful in. But really, we are focusing on putting a product out there that we can service our customers that we can do the best to service putting our handsets out there.

Maybe just to build on that, I mean, one of the biggest obstacles they've got is distribution of handsets to replicate what between Stefan and Adrian have are physically getting a handset into a customer's hands, very, very difficult for them to execute. And as Stefan said, the disintermediation of a lot of the airtime and data type purchases, you'll hear from John tomorrow that as we develop the +more capabilities, but that's 100% a channel that we want to start getting into so that if it does get into intermediated, it can come through our channel rather than through a Capitec Channel, for example.

Two questions. The first one is on Brazil. So obviously, you've got phenomenal expansion opportunities. Does it need more capital? So you've obviously stuck at ZAR 1 billion in now. How much more capital does it need to grow at the pace that you're thinking of? Doesn't mean you're going to get it.

I was going to say, thank you for the question. In all seriousness. Riaan mentioned this morning the ZAR 1 billion, that ZAR 1 billion, we will see the second and the third tranche still coming into our business. And we believe after that, once we get to a scale of 200 plus, 150 plus, we should be able to be self-sufficient. I think the capital injection, if I may, must also be seen against the backdrop of what has recently happened in listed retail in Brazil, with the banks some defaulted. But there's definitely -- I think we will be self-sufficient after this injection.

And then the more important question is what do you think about IFRS 16? I'm not getting it. So the Amazon threat that's coming in and speaking to Temu, Shein, Amazon, take a lot. When you think about the kind of business that you have, that obviously poses some risks. Can we talk about what it means for your ability to try and hit the revenue number that you're hoping for on the returns?

Yes, absolutely. Shein and Temu, I'm going to deal with under the sourcing piece, if I'm going to ask you to hold on that. But I know Peter and his team have been doing a lot of work on the Amazon threat. So it's probably better positioned to answer.

We don't know what it's going to look like. I suppose a lot of people already buy from Amazon. We have taken a look in our business. We probably have the biggest threat in the electronic space and maybe appliance space. We don't know how it's all going to play out. But you see a lot of these big players in other countries living alongside Amazon. So it is how you structure your value proposition. If you look at America, Best Buy is still a good and a strong business, and they live alongside Amazon. If you look at the U.K., you've got Currys, they live alongside Amazon and also surviving quite well, it seems like. So for us, we have a whole plan along how we will curate our ranges, which maybe makes it a lot easier in an omni environment than in a pure online play. And then obviously, convenience plays a factor as well in omni world as opposed to pure online. And we are also investing heavily, and I believe we do have a very good online offering ourselves. Many of you have bought from, say, Incredible Connection or WiFi before or any of our other brands. Then I think service is another thing that we will play hard on. When you have online business, you can't offer always things walk out -- working, which is one of our offerings that we have in so incredible. Where somebody can bring their old laptop, they buy a new one, we load all the stuff on to the new one with the latest updates, et cetera, et cetera. You can't really do that in a pure online environment and then finance options and the rest. So we will just have to make our value prop stack up.

I think then just to build on that, one of the things Peter often shows us in his business is already someone like Takealot has had a lot of penetration in some of the categories that they sell. And I think what we often think about is Amazon is going to come here and eat the lunch of physical retail. I think the first lunch, they're probably going to eat is Takealot's lunch and then [indiscernible] because there's a number of customers who are transacting online already, and that will be a primary target for someone like Amazon. Are there any questions on the line that you want to pick up?

No, nothing.

Just a follow-up question, I have Avenida, you showed that slide about how you'd invested in price in the first 11 or whatever it was, KPIs and then -- or first 10, et cetera. And you saw how the volumes went up and the value, but the GP came down. So I'm wondering what happens to the operating margin and more importantly, what is your sort of medium-term outlook for the Avenida operating margin? Where would you want it to be and when? And what kind of scale do you need to get it to that sort of hopefully optimal target?

I think, firstly, as I indicated in our presentation, it was really critical to investing this margin in order to position properly as a discount retailer. The change in landscape in volume has done a lot of things for us, which is positive on our business. In the past, if you look at where we were with suppliers, Avenida was traditionally always a bigger because of the unavailability of capital. Recently, we've seen some swings in terms of a little bit of the power changing with the volume coming through. I'll mention you one example. On the fit, I mean, our colleagues spoke about fit of product. We had a situation where on one of our core products. The supplier was simply of the view that he wouldn't manufacture to our specification inconsistent fit, and about 3 months ago, we decided we'll try another supplier for it. And 3 months down the line, after losing the volume, he came back to us. And he said, he's now happy to manufacture to our specification. So I think, firstly, for that, the reason it was important for us to be able to get volume up because that brings a lot of benefits, bringing unit price down of distribution, et cetera, et cetera. I think to counter to that is also, we must bear in mind that we're currently investing in infrastructure. And it is definitely not a linear investment. It's a step investment. But in time to come, we will have to leverage coming through of that investment as well. And once we get to a sufficient scale, we should be able to get our overall margin and the business up. As Riaan indicated, at the store level, our margins are in line with who we're sitting with the rest of the group. What we need to do now is that, as I said earlier as well, our cost of doing business is sitting slightly higher than the rest of the group. We're starting to bring that down. In fact, if we look at our cost of business as a percentage of turnover, we've started to see a reduction in that. So the scale benefit will slowly start to come through. And I think overall, what I can say from the doubling of our stores, our turnover will also double, our profitability will grow more than our turnover, so getting the margin right.

Thank you. I'm getting a red flag and it says time is up. So I think I need to hand you back to Kennedy.

Thank you, Sean. Thanks, everyone. I think we seem to be back on track from a timing point of view. So we're going to take a quick comfort break. We'll make that 15 minutes. Which means and, we have to back at exactly 10 to 4, and then I'll tell you what you're going to do after the comfort break. So we'll see you at 10 to 4 the floor, and we're going to be doing the clapping. [Break]

Welcome back, everyone. And how is it going? How's the energy? How is it feeling? Up, down? Somewhere in between? Sorry?

Great. It's great.

Good, good, good. It's better than my kids. When you say, how are you? I'm fine. Great is a good word. I can take great. I didn't get a chance to thank the previous speakers, and I apologize for that. So Peter, Marias Rodrigo. Thanks very much, gentlemen. That was very good. And thanks for keeping to your allocated times. And Rodrigo made the point that it's actually a little bit daunting speaking in English because you can imagine, speaking in a language that is not your first language. It can be but well done Rodrigo. So I think you can be proud of what you did here this afternoon. Somebody checked with me in terms of timing and when we finish. Apparently, I think an old agenda, probably suggested that we're finishing a little bit earlier. Just to be clear, we are finishing at 1700, at 5:00, all right? And this is really the last part of the day 1 session. We are going to talk about -- I call it the nuts and balls. I'm sure there's a better word for it, but it's all those competencies that we possess that are not always visible to anybody outside of the organization, I don't wanna say, to the naked eye. So with that, we're going to have 3 speakers. I'm going to call in a second, Leon lambrecht. And hopefully, Leon, the voice will carry. Leon is a very good friend. We interact a lot as he identifies and helps us find really good locations. And so as Leon comes up, when Leon is done, he's going to call Ralph will be the next speaker, and then Ralph will call Sean, we'll have Q&A and then Sean will wrap the day up for us. Sounds good? Sounds good? Wonderful. Over to you, Leon.

Is this for me? Thanks, Kennedy. Yes. So my name is Leon. I am the CEO of Pepkor Properties. I'm the guy that gets that question so how many stores can we still open, you've been opening stores for years. So how many can we still do. So I'm very fortunate, and I'm honored to be talking to you guys today in such an esteemed group of people. to tell you what we do, a bit of our thinking around our processes. And yes, and also maybe just to show you how we see the future and the rollout of our stores. So yes, let's jump into it. You guys know this information. So we have over 5,600 stores. How does that rack up against other guys in the market. You know that TFG Africa, they sit at 3,600-odd stores, on 1.4 million squares, Mr Price at 2,800 stores. So yes, we deal with the various group -- a big group of landlords. We have 1,800 landlords, which averages to about 3 stores per landlord. So yes, we deal with the [indiscernible] to some of the bigger guys out there. So, we're not overexposed to any landlord as I believe some of the retailers are, our risk in that regard is quite spread out. But one, what we do, we call it footprint management, that's all the actions that relate into the physical spaces. It's opening new stores. It's relocating existing stores where they need to be relocated. It's enlarging new stores, reducing and sometimes even closing stores, although we're not very good at that. Rental administration, which means making sure the right amount or about reasonable right amount, less is better, gets paid to the landlord. We do -- we manage the leases. Yes, we renew our lease expiry profile sits at about 3 years, just over 3 years, 3.3 years. So we do a fair bit of renewals every year. I think this year, we need to get through about 1,700 renewals. So we're touching 1,700 of our existing store footprint this year. And if you throw the 300-odd stores that we'll be opening on top of that, we need to get through -- we need to do 2,000 new deals this year. So it's 2,000 leases that need to be signed. So that's -- yes, look it out yourselves 8 leases, 8 to 9 leases per day. And then we look at after some other projects as well, like building DCs and the odd office here and there. But it's really the footprint management part of it that I want to tell you guys more about the action part of it. Our structure is what we call a regional structure. We've got 14 property managers in our -- in the various kind of areas. We operate through 9 countries, 3 divisions. And each property manager looks after a certain geographical area. So for all 19 brands, we think that is the better way of doing it. Some other retailers might work per brand. We prefer to work per region. We find that the property manager gets a real intricate knowledge of not only the area but the competition in the area as well as these regional landlords that do operate in areas. Then our property board. That is basically how we -- how decisions are taken. We've got 7 property board cycles per year. And it takes us 8 days to get through all the presentations that we need to get through. On average, we do about 1,200 presentations per cycle. So it's quite a -- so it's quite an involved process. Our property board is chaired by Pepkor Properties, by myself, its team by, normally by the OpCo's, their sales executive and their financial director or MD. It's a joint decision-making process. Turnovers for new stores are determined in agreement with the OpCo. We find it's quite a healthy kind of checks and balances. We are incentivized adding turnover. The OpCos or the sales guys are incentivized on profitability. So it's a healthy tug of war. And it seems to be more than often or not, we get to the right answer. And those decisions are all governed by our mandatory hurdle rates. The hurdle rates, we basically look at 4 main hurdle rates. Our IRR rate, which needs to be above 30%. Our capital payback period has to be less than 3 years. And that mainly relates to the fact that we signed mostly 3-year leases. We like an EBIT margin of a minimum of 10%. We aim to get a higher 12%, but not less than 10%. Breakeven sales has to be a maximum -- can only be a maximum of 70%. Obviously, we look at other sales -- other metrics as well, like rent as a percentage of sales and trading density. We look at even new store -- current new store performance influenced the way we look at opening more new stores. So we're quite agile in that. In that we might adjust our thinking as we go. And then cannibalization is quite -- it's quite a big one for us because you're opening stores, multi-nodes but nodes that are out closer together, they do have an influence on our existing stores. So we take cannibalization quite seriously. We attribute it where we think it's necessary, and then we measure it afterwards. Then I just -- a bit more on the process of our footprint management. It all starts with what we call our target management. So that is where the property manager identifies opportunities. They do a site analysis. They -- and they build a pipeline. I'll talk a bit more like that. Once the deal is negotiated, it will come to the board for a decision with a feasibility with certain media attached to that and with the site analysis done. A Board decision gets made. We either approve, decline or we go back with a counter. Once the store opens, we evaluate store performance. We evaluate stores quite closely for the first 24 months of trading. So we look at it each month. We'll see whether or not it meets its KPIs. And if it doesn't, reasons why it's not meeting it and if it overperforms also, reasons why it's over performing. And then that might obviously -- when a store does overperform, you might need new space and so the circle continues. Then our target management system. Our target management system is what we call a bottom-up approach. And I think that's where it varies a bit from other retailers. The opportunities are really identified on ground level. So our property manager, as he or she moves in the area, they would identify opportunities. They would then build what we call a target list, and I'll show you a bit more. It's quite cool. As he or she travels, and I wanted to explain to you by using an example. We have a store in Walmer -- we have many stores, but we have a store in Walmer in Gqeberha in PE. And -- but we always knew that just opposite the road, there is another node. There is another opportunity for us. So the property manager being on site, it's quite nice. It's on the cell phone. You've got all the existing stores, all data of -- those are all the targeted stores that we plan to open. The yellow stores are all existing stores. So we've got all information. When he or she moves into the area, just opens up the app, the yellow store at the bottom is that existing store, but opposite the street identify another opportunity that's the existing stores. Information, opposite the street, identify an opportunity, go on to the phone, create a target, and on that target, you add store size, you add turnover, take a picture, take a video. Any media gets saved onto this GIS location, instantly and then once as soon as it's submitted, it rolls up into this live target document that gets distributed through the whole group. So at any point in time, Stefan from PEP can ask me Leon, how many PEP stores do we still foresee we can open. And in just a single click of a button, I can say there are so many, 265-odd PEP stores still to be open. That's the turnover. That's the kind of square meters, and that's the time line or the period that we foresee them rolling in. So it's a very powerful tool, and it's like I said, it's both from the bottom up. So it's not one of my financial friends sitting with a spreadsheet thinking sneaking up and then telling us to go and look for so many stores. It's actually us going to the guys saying, listen, this is what we're really seeing out there, and we believe this is what we can open. Once obviously, a store comes to the Board, I'll show you a bit more on the feasibility. When it comes to the Board, we add some media to it. We look at a wide-angle view, look at our existing stores in the area and how they perform. Existing stores performance as things like center layouts, store layouts, and then we do -- we've got quite a nice tool that we can do a site assessment. Not a long process. It takes you about 2 minutes. You just add the drive time or the kilometers. And I'll then give you information, demographic information, distribution, race distribution, age, total expenditure, retail expenditure in that area and it even gives you the retail expenditure per category in that area. These are quite nice tools that we have. And it's -- a lot of the guys go out, they outsource these kind of exercises, but there's a lot of tools available nowadays that you can do it yourself. Existing -- our existing brands trading in the area, other points of interest, other competitors in the area, anchor tenants in the area. So it gives you really some rich information and then it will -- well, it will take that targeted store, the store that you've targeted and it will compare against all your other trading stores, and it will compare it against, I think, either 15 or 17 criteria like demographic information, mobility information and consumption information. And it will give you the turnover of the most liked stores in your entire portfolio. So this is quite a nifty tool for when you're busy negotiating that turnover with the OpCo guys and are trying to lowball you. Then they can say, yes, you got to store that similar kind of criteria and that's a turnover. So that specific store, they did actually lowball us, and we agreed on a ZAR 8 million for that store in PE. We measure that it will cannibalize about 2 million of the store across the street. And that decision was made. You could see that it met all the hurdle rates. And then a year after, after it opened, we were still tracking it, and we saw that the store in fact, overperformed on the turnover we projected. You can see that, that cannibalization was spot on. And because it overperformed, it actually overshot on all of the hurdles. And I'm quite proud to say that this is quite the case for most of the stores that we open. We'd rather be conservative enough. But I mean -- and then rather overperform. Then coupled with this kind of system and approach we have -- we've got quite nice systems and data available for the guys to use. And all the fancy data and the systems are all in support of that bottoms-up approach. So we still believe in walking the streets, we call it getting dust on the shoes, getting a gut feel for a place because that's truly the way that -- the only way that we see we can do it. But to have all this information and all these systems just amplifying your decision, it just enriches the information we have. Like for instance, on the handheld, as another layer, you've got the trade layer, we'll have, for instance, so each property manager can go on their handheld and see vacancies in their area. So we've partnered with a company called PolygonProp. They're used by smaller landlords to advertise their space. So property manager, when moving through PE, who is the property manager can see, okay, there are 5 vacancies posted in PE. He can drive around, check them out, mark it, no, I'm not interested or yes, I'm interested and then engage. So this is quite a nice tool. Yes, at the moment, this is quite -- not so nice, but it's actually got -- at the moment, incidents and robberies and theft is quite a big problem, especially in PEP. So we've got this dashboard where once you click on the trading detail for the store, we can see the number of incidents over the past 3 years and the value of those incidents. So when it comes to renewal negotiations with Mr. landlord. You can say listen, but I've lost ZAR 1 million in the past 3 years, and that will obviously affect the kind of rental deal that you do with the guy. So -- and you can group this together in areas to see where the hotspots are. So it's quite a -- and all of this you can do instantaneously. It's quite a powerful tool. This one is quite nice. PEP approached us, they wanted to trial adult diapers in stores, and they came to us to tell them which stores is more than 1.5 kilometers away from a hospital, a clinic, pharmacy, diaper warehouse, a Diaper Depot, Nappy Warehouse, and just half an hour later, we could give them a list of stores that meet that criteria. So yes, and what good is all these things, if you can't manage it properly, on this tool of ours, we can manage our real-time performance, see how the guys are faring per brand, per property manager, per kind of action, and how that stacks up against the budget. So like I said, this information is available real time. And it's available throughout the group. So it's quite powerful. And I think it's partly because of all this information and the systems we have, we've managed to really be consistent over the years. I think in the past, 7 years, we've managed to open more than 250 stores a year. To add, except for 2020, we're able to add more than ZAR 2 billion of annualized turnover per year. And the last one, I'm quite proud of is for the past 7 years, continuously, we've been able to negotiate rental reversions on renewals. And if you think about it, we sit on a 3-year renewal cycle. So that means for the past 2 renewals on each store on average, we've been able to negotiate lower rentals. So yes, I've been looking forward, so how many stores can we still roll out if you -- so if I just roll up my target system, we sit with more than 2,000 targets that we've already identified that the guys and girls are already working on. And that -- yes, I mean so obviously, our brands are in different stages of development, which means that some brands got more runway than others. But even as someone -- I spoke to someone last week about a brand like PEP. I mean 10 years ago, we weren't even rolling out PEP in shopping centers. Now, we did some last week. I think it's only in Brooklyn Mall and Sandton City and park where we don't have PEP stores. So a brand also develops as it goes on in that and by developing the brand creates almost its own runway. So even -- although the stores are plotted there somewhere, the brand does something differently and then it moves again to -- there's 100 more opportunities. So looking forward, where do we see the growth coming from? Obviously, the new developments are driven by -- it's not nice to say, but the deterioration of the municipal infrastructure. Now the CBDs in the country are no longer the retail hubs or hotspots that they used to be, malls are being built on the periphery, malls are being built closer to where the customers are. And that's also due to the unsafe existing trading environments. And the customers have evolved. If you look at like a Acornhoek or a Freiburg, customers don't want to shop in the plaza environment anymore. They want to shop in an enclosed mall. So what we do, and we opened the second store, we take cannibalization into account. So and we hardly close that old store, because then once -- because you're on such a short expiry profile -- since my time is running out, because it was such a short expiry profile, you negotiate the rentals down again and therefore, creating or giving that old store more life. So we're adding new stores, although we might -- the stores might be eating each other's lunch, they're still adding more stores and more turnover. And obviously, the new brands refers to the OpCo's coming up with new and innovative brands and then acquisitions like our friends in Brazil. And that's my song. Thank you very much. I hope it shed some lights. I hand you over to my clever colleague, Ralph.

Thank you, Leon. I have the pleasure to talk about supply chain to you today. You have heard already quite a lot about supply chain coming back in the OpCo presentations. We also have a function, supply chain in the group. So I'm going to give you a holistic view about supply chain. We have built an amazing platform over the past couple of years, which is a perfect springboard for further improving and accelerating the improvements that we are driving. Knowing that you're not all supply chain experts. I tried to bring the message in a relatively easy way. The journey that we are on is very much comparable to Michael Jordan's statement. He says, talent wins games, but teamwork and intelligence wins championships. And we want to win the championship, and we are winning the championships. What do I mean with that? If I refer to teamwork, there are basically 2 things where the focus of the group will be. We are going to work more together as a group. Traditionally, we are organized very brand specific, but we have identified that if we collaborate more as a group together, there is a lot of value to unlock. The other thing in our supply chain is how can we, as functions work better together in order to deliver a better service for our customers. To give you an example on that, our buyers are very happy when their suppliers lower their packaging costs. And that is great because that lowers the cost of your product. But if that creates challenges later on in the supply chain because we can't handle those cartons, then actually, we have to think twice whether that was the best that could happen. And we have to optimize that entire value chain. So that's teamwork. When we talk about intelligence, one of the things that you can refer to is data. We sit on a lot of data. If we just compare the data that we generate on an annual basis in our group, you can compare it to 800 years of nonstop HD quality binge watching on Netflix. Don't try it. So the question is how can we get more intelligent by making use of that data? And that's what I'm coming back to. I think by now you have identified that my accent isn't South Africa. It's something that I can't hide. I'm Dutch. I think I spotted some European colleagues in the room as well. So yes, we wanted a bit of diversity in the group. So I'm that part of diversity that we have. I have 20 years experience in supply chain, I have helped companies all across the world on every continent improving their supply chain. And past year, I joined the Pepkor Group. So our supply chain, our goal of supply chain is to deliver the product when the customer wants to have it at the lowest possible cost. And because of that, we feel that we strongly need to control our supply chain from the moment that the suppliers have the products ready and we have 1,000 suppliers until they arrive in our 6,000 stores or at our 500,000 homes per year. We segment our supply chain in 5 areas. It's the port-to-port shipping. Then we have the port to DC, so how do we bring our goods or containers from the port, for example, in Durban to our warehouses, then we have 36 warehouses in the group. And from there, we put it on transport. How do we transport it to our stores, where we have a dual lag. So we line haul it into hubs, in the hubs, we bundle the goods from different warehouses together, and we do milk runs to our stores. I said I wouldn't get too technical, but a milk run is a technical term for putting multiple stores in one delivery. That is the model that we predominantly use for the clothing business. And then we obviously do a lot of home deliveries in the JD Group, which are directly being served by the warehouses. The scale that we have in our group is just unparalleled. So as these numbers might not tell you a lot, 700,000 square meters of logistics space, according to my knowledge of Rugby that equals to approximately 100 rugby pitches. So that is really a lot. And that is encompassed by the 36 DCs and the 22 hubs. We have installed 3.7 megawatt hour capacity of solar on our logistics properties, and we're going to add 50% to that this year. And we also have a 3 million water harvesting capacity on our Durban facility. So we want to become independent of the grid, but we also strongly want to work on our sustainability road map, of which this is a very good example. Then throughout our own network, we moved to 2.3 million cubes. Again, what is 2.3 million cubes? If you put that on a pallet and we start putting all the pallets in a row in Cape Town, we end up in Kruger Park and it's just one uninterrupted line of pellets with goods. And then actually, we have still pellets left to go halfway back to Joburg. So it's quite a lot of stuff that we move. We do 500,000 store deliveries per year and 600 -- the other way around, 600 (sic) [ 600,000 ] store deliveries per year, 500,000 home deliveries. That more or less equals to every minute one delivery, if we calculated the 24/7, 52, 365. Out of our cell phones, which we sell 12 million in the group, we distribute 6 million through our own high-value network. With the network that we have, we actually started coming up with clever solutions, and I think PAXI is a very good example of that because we distribute 5 million PAXI parcels to other network. So it's the existing infrastructure. It's the trucks that drive to the stores that pick up the PAXI parcels and the deliver it to the stores, where it needs to arrive. So with actually very little additional investment in the infrastructure, we are able to move -- we moved those 5 million parcels, which is a fantastic way of monetizing the infrastructure that we have. And to Stefan's point earlier, so we're not only moving consumer parcels to it but we are also investigating whether we can help other businesses selling through PAXI. In order to get to that scale, we continually invest. We invest for growth but we also invest for efficiencies. So in the past couple of years, we have added 275,000 workable square meters of DC space for our brands. We must make a very big claim here because we add 275,000 square meters of workable space. But if you compare that to the previous situation, we add 40% of space but we add 130% of capacity -- of throughput capacity. So we become very clever in designing of our facilities, how do we optimize that with a little bit of extra room space we can increase the throughput space. And I think we have done that very well. To Adrian's point, we are opening this year the Ackermans DC in Cape Town, which should be good for the next 12 years of business. And I'm very excited that today, our win to Capfin went live, so we received the first boxes. Yes. I'm going to show you a movie about the Hammarsdale side of PEP, which has been opened last year, and it's now ramping up, and it's one of our flagship distribution centers on the Hammarsdale campus. So I'd like to invite you to have a look at it because it's really amazing. [Presentation]

So the site went live in the last quarter of last year, and it's now on its way to fully ramp up to its targeted capacity. The team has done exceptionally well. So next to our investment in the physical infrastructure, we also have done a lot of investment in our digital infrastructure. So it's also a journey that started almost 5 years ago. We started digitizing every step of our supply chain in what we call a digital twin. So we have made connections with all the transporters, all our vehicles, they have a device in it. So we exactly know where every truck is. We also know where every container is, on which ship, on where that ship actually is. So even there are some issues with ocean freight at the moment, which I will touch on in a minute, we know where our stuff is. So if you talk about people that have to manage their business based on spreadsheets, I mean for us, that is history, we have one integrated system where we can actually see everything. The other thing that was very beneficial for us that came out of that digitization journey is that when you start to digitize, you really have to go into the nuts and balls of a business in order to digitize it properly. So in that whole process, you learn a lot about the individual businesses. And what we actually discovered is that although our businesses are very different, there are also a lot of similarities. But again, the performance are sometimes different. So this was an eye-opener for us that there is a lot of opportunity that we can actually learn from each other in order to move to the best practices that we have in the group. So that digital twin is not only helping us to manage our day-to-day business but it was also a catalyst for actually driving structural change. And based on that, we have agreed to establish a central team, which we did now in the last year, that is actually working on our supply chain. And that team has 2 goals. The first goal is to leverage the scale across the group and not only leverage the scale between the clothing brands but also how can we integrate and work more closely together with the JD Group? I mean the JD Group has fantastic capabilities that we can expand into in other areas of our business. And Sean alluded to that earlier, and Peter showed it. For example, the e-commerce capability that JD has, is just best in class. Then the second part of the mission of the team is the center of excellence. So that is basically collecting those best practices, driving those implementations in the group. Because the people in the group, they are often very busy with the day-to-day tasks but this team is just purely focused on improvements. And what we've actually seen is by having that dedication, it accelerates the improvements that we can drive in the group. And we have a number of initiatives that we have across the different segments in the supply chain mapped out in time. So it's a multiyear journey that we are on. All the benefits that we generate, we give back to the brands so that they can help strengthen their value proposition to their own business and to their customers. So I'll give you an example of leveraging scale, and I will give you 2 examples of the best practice that we are deploying. So in terms of scale, how were we organized before? You see that quite a number of logistics activities they were just centered within a specific opco. But in shipping, we have built the capability to negotiate our shipping contracts across the group, at least across the clothing retailers as well as our outbound transport, what we have already centralized a couple of years ago. If you see just the journey that we have done this year, we have moved the dial significantly. So also the JD Group is now benefiting of the shipping rates that we have organized as a group. In terms of operational execution, Ackermans and Specialty, they are already managing their containers operationally together. And we are also now working with the other brands to do that as well because it brings us a lot of benefit. We can get the container feel much higher than what it currently is. The port-to-DC lake, we have negotiated the contract on behalf of the group already this year, that is concluded, and now we're going to execute that service centrally. And with regards to outbound transportation, we are also working with the JD Group to integrate those 2 networks into 1. And there are a couple of pockets of excellence that we are testing as we speak. Within warehousing, it's still separate. We have a centralized high-value warehouse for the group. The Bradian business that distributes 6 million cell phones on our radar is also to look into other opportunities as, for example, e-commerce but that goes beyond 2024. Well, 2 examples of the capabilities that we have rolled out, and I'll keep it short because Marius has explained it already in a very nice way. When we acquired the Avenida business, we had one DC in a country that is 7x as big as South Africa. So we had to travel 3,000 kilometers with a big truck to do store deliveries at the outskirts of the country. We evaluated and we said actually, the concept that we have in South Africa could also work in Brazil. So we started opening a couple of hubs. We saw that it worked. We have planned a few more hubs, and later this year, we are also going to open our second DC. So at the moment, 50% of the stores are being served through the hubs, and we moved away from the garments-on-hanger. Just the fact that we moved from a hanging operation to a box operation saves us 30% of space in our trucks. So we can put 30% more products in our trucks. So in conclusion to that, we're only driving 2% additional kilometers, we can transport 67 more volume of cubes in our trucks, and we can serve 34 additional stores. So it's a great efficiency result. But what is probably even more important that we have now a concept, we have a foundation on which Avenida can realize their growth ambitions, which was before very difficult. We really debottlenecked that supply chain. The second example that I want to give is our outbound transport in South Africa. We have come up with a concept that we can turn around our store deliveries that we can increase the turnaround time of our store deliveries by 25%. So if, let's say, a store was -- if a truck was taking 20 minutes to unload, we can do that now in 75% of the time, which results in 10% shorter trip types. So we can reduce over time. But actually, we have to use that additional time in a more clever way because we have to start doing our route optimization. So we can actually add 2 additional stops per route. So there is a tremendous amount of efficiency that we are rolling out at the moment in outbound transport. And the next step that we are going to do is look to our vehicle composition. Can we work with smaller vehicles or sometimes larger vehicles to do optimized roots? So it's an iterative process. But this is a whole new concept that we have developed, and it will be rolled out before the end of this year. We talked a lot about ocean freight. I mean, it's a perfect storm. We had the South African port congestion, which not became easier by the weather impacts that we had, the Red Sea situation actually makes it a global problem. Fortunately, we have that digital control tower. So we know what we are up for. We got very early warnings. So as early as of November, we started working with our suppliers to extend lead time, and they accommodate that where they can. We are experimenting with alternative options. We have looked into Maputo. We keep an eye on Walvis Bay. We have done the Port Louis option, which unfortunately wasn't a great thing because of the cyclones. But we are trying everything we can and the teams are really on top of their game. As a result of that, our back-to-school inflows and Christmas, I mean, they were perfect. We were not affected. The winter '24 inflows were also hardly affected. We were a little bit held by Chinese New Year. Because of Chinese New Year, we pull a lot of inflows forward, which has helped us basically there. And currently, we are expecting a 2-week inflow delay, which we are trying to compensate as much as we can in the latter part of our supply chain. But it's something that we have to deal with. So in conclusion, I mean, we are firing on all our cylinders in supply chain. We have invested for growth. We are among the lowest cost operators in South Africa in our industry. The fact that we are now really, truly leveraging our scale, is giving us a lot of efficiency opportunities. And as the last but not least, that center of excellence has identified a number of opportunities that actually brings the lowest cost operator. Those costs brings it significantly down, which helps us actually to bring down the total cost of the group. That was my presentation. I'm pleased to hand over to Sean for the last presentation of today.

Thanks, Ralph. Yes, we enter the home stretch. It seems like I've been designated with [indiscernible] portfolio. So I'm going to talk to you about sourcing. I'm going to do the Q&A stuff. And then finally, just wrap up. And really, when it comes to sourcing, I think the first point to make, I'll talk to you about our overall approach across the group from a sourcing perspective. But the decision around sourcing is fundamentally an operating company decision. So we don't try and legislate or regulate anything from the center. Each operating company makes its own decisions about where it sources its product from, which suppliers that it uses because your sourcing is just a direct extension of your proposition. And you heard Stacy and Shaz, particularly talk about how they are moving their proposition on and so sourcing is a fundamental part of that. Just as an overview, though, this is not our own sourcing operation. This is all sourcing through the group. About 37% of the sourcing that we do is local. 63% of that bought internationally, and expand a little bit on that now. On the local sourcing, if you forgive me, it's worth a bit of a history lesson because I think a lot of people look at the problems around shipping right now and they go, why don't you just buy more local? And 20, 30, 35 years ago, which unfortunately, I can't remember, the textile industry and the clothing industry in South Africa was fully vertical. So you could access yarn, you could access any types of fabrics or die printed. So the ability to have a local sourcing setup was very, very prevalent. Unfortunately, a combination cheap imports, highly protectionist regulations from the government around yarn and fabric imports meant that, that vertical pipeline collapsed. So right now, you have access to clothing manufacturing and kind of garment finishing. But when it comes to raw materials outside of cotton knit type products, there's almost no availability in South Africa. So the challenge when you source locally is the fact that your raw materials is still coming from offshore. And so that is all subject to the kind of delays that we've been talking about from a shipping perspective. On the Brazil front, it's worth mentioning there, it's even more protectionist from a sourcing perspective. So less than 10% of what Avenida sources is imported. The balance is all locally sourced within Brazil but Brazil and like South Africa is a fully vertical, both clothing and footwear and textile setup. In terms of our imports, it's primarily focused around the Far East, so China, India, Bangladesh and Pakistan. And then we have our own facility, which I'll talk about later, which is the factory in Cape Town. So just some numbers are open to buy that shared across the business is about ZAR 50 billion at cost, about 800 million-odd units. So significant scale, and you've heard a lot of that going through the PEP and Ackermans business, about 1,000 suppliers, and I won't read through them but you can see at certain categories when you combine all of the businesses together, we are a substantial buyer of specific apparel and footwear categories and therein lies some opportunity clearly to drive those costs down. And then from a PEP clothing perspective, so that's our factory in Cape Town, it's primarily a school wear operation, manufacturing all of the gray longs and the white shirts and the like that go into PEP and Ackermans. And you can see 11 million garments and 1,600 colleagues in that business unit. So from a sourcing capability, I mean, I think Pieter spoke about our business model earlier. That's very simplistic. We sell for less because we buy for less, and we operate for less. Clearly, sourcing is about the buy for less piece. So it's fundamental to our overall business model, particularly in the discount and value space. It gives us real visibility into our value chain. And as time goes on, that becomes more and more important, not just from a compliance perspective, but when you start to have hiccups like COVID back in the day, like port disruptions, visibility of where your product is in the value chain is really important because then you can try and execute some kind of change on what's happening with that. And finally, part of the compliance and ESG piece is really, if you're protecting your reputation as a responsible retailer, you've got to have some kind of visibility in the supply chain. So our sourcing channels that we use, we source indirectly, so through trading houses, wholesalers and agents. The benefit there is you get some market intelligence because very often they are supplying either other players globally or some of your competitors, you get some working capital advantages and you get some product development advantages because generally, they are tooled up to do product design. The downside is you clearly pay a little bit more, but that's a really important channel for us. The second one is direct sourcing. So that's where we go direct to factory. And predominantly on the apparel side, that's going through our PPS office in Shanghai, which I'll talk a little bit about later. And then very much in Pieter's word, on the furniture side, a lot of that is direct sourcing from manufacturers. And clearly, on the branded side, you are sourcing clearly from manufacturers. And then finally, as I said, we've got our own manufacturing. And I think the thing to point out here, and for those of you who have had investment into the PEP, the Pepkor business in Europe, this is fundamentally different. We believe that a hybrid model is the right model. Putting all your eggs in one basket, which is only direct sourcing through your own sourcing office, just takes away a lot of the benefits that you get from some of those indirect sourcing models. So we believe that a hybrid sourcing model is right. We do think we can do more direct and I'll expand on that. But important to remember that we like this model we think it works for our business. Then in terms of PPS, a few key call-outs on the business model itself. So this is our sourcing office in Shanghai. Firstly, as I said before, it competes for business like any other supplier. There is no mandate to any buyer in this business that says you have to buy through PPS. So they have to compete for the business, and that means that they keep their pencils sharp. The second thing is that whilst we want to grow this business, we only want to grow it as an enabler for the growth of the retail businesses. We don't want to just grow this business for the sake of growing it. So $140 million, $150 million at cost, Pieter referenced, the old Pepkor sourcing office when we had the European business and the Australian businesses, and that was $1.5 billion at cost. So a lot of room to grow this. But fundamentally, it only grows if it enables growth within the retailers. Third thing to remember is it is a cost-based model. So it makes no profit or margin itself. It is purely cost-based it recovers its costs from the retailers through a service fee and all of the benefit around price advantage goes either into the retailer's margin or the retailer chooses to pass it on to the customer to protect their price position. And then it really is helpful for us in terms of gaining market intelligence. And I'll talk a little bit about Shein and Temu at the end of this. From a history perspective, we go back initially to Ackermans. So Ackermans was the first business to launch a sourcing office back in, I think, 2010, odd, it was or a little bit before that. And that sourcing office was purely for Ackermans. Interestingly, the Pepkor Europe business jumped on the back of that sourcing office and ended up using it far more than Ackermans did. We then launched a PEP sourcing office in around about 2010, 2011. At that stage, PEP and Ackermans didn't get on as well as Stefan and Adrian. So they told us to take a hike when we wanted to use their sourcing office. And then there was an umpires core that said group sourcing is a way to go. We combined all of those offices, put it together with the Australian businesses. And with the Poundland business and that ended up pre the Steinhoff issues at a $1.5 billion office, and we then separated the South African sourcing out of the Pepkor group office and created our own facility in Shanghai in 2021. So that's some of the history and some of the stats you can see they speak for themselves. So how do we drive growth through the PPS offer specifically? Firstly, you heard lots of conversations, both at a group level and within different business units about category growth. Currently, we don't really source general merchandise through that office. We don't source footwear through that office, and there's not a prevalence of adult wear. You heard that we are attacking all 3 of those categories in a number of groups. So we will build capability in our own sourcing office to directly work with factories and that should have a margin benefit to the various retailers. The PPS office fundamentally focuses on PEP and Ackermans. Again, there's scope to take that capability and extend it into some of the other brands. We spoke specifically or Marius gave you some idea -- examples of where we've used it in Avenida and there's more scope to do it there. And then within the Specialty business in Danie area and even within Peter's area on the JD side, particularly if you start to introduce home deck, and even some of the fabrics that were used in the manufacturing of [indiscernible]. So there's definitely scope to expand it from that perspective. Third-party quality controls. At the moment, we do have some teams in place that work on behalf of Ackermans and PEP, clearly, controlling your quality and needle point is much more efficient than controlling it in a distribution center in Hammarsdale or finding a problem in a store. So we have got teams on the ground there, and we're looking to expand those teams as the business grows and offer that service to more group retailers. And then finally, it's really about digital enablement of the sourcing pipeline, and I'll talk much more about that when I talk about Shein. But essentially, that's about encompassing digital sample approval, digital fit samples, into the overall way of doing business. So in specialty, we do it already. You heard Shaz talk about that something that working on in the PEP business. But if you can do all of that in a digital space, you cut up massive amounts of lead time, you reduce the need for rework on fit samples and approvals and even when you get to lab dips and the like. And then some work around fabric consolidation. So kind of summary, as I said, it's a hybrid model. We believe the hybrid model is best. It's a mixture of local and international. It's there to underpin the growth of the different retailers and this stuff around digitization that we want to do. So that's essentially what we're working on from a sourcing perspective. There were 1 or 2 questions that came up in the sessions and walking around at lunch time around the Shein, Temu thing. So let me try and share with you a little bit of the type of approach that we are trying to take. So the first thing we've done, clearly, in each operating company, it's very much on the radar. So when Shaz and Stacy and her teams look at price competitiveness. They are in the mix, along with the bricks-and-mortar retailers in South Africa. But we've got a task team that is working specifically on understanding the full business model of Shein, the full value chain of Shein. We've engaged with some of the software providers. We've got access to some of their suppliers, and we've got access to their primary distribution partner. And a combination of kind of online engagements and desktop stuff and the team is actually going to China in March to meet with those people. We're trying to unpack what that value chain looks like. And the initial indications, as Pieter mentioned, these are data and analytics companies that happen to sell some stuff. The power is not in the product per se, the power is in the data and analytics. And when you look at the way they run their businesses, it starts with the way they predict trend and the way they are able to very quickly take trend and turn it into physical samples that they can then put on their website. So the technology that they have to continually scrape the web and see what's trending globally rather than our model, which is a buyer gets on a plane and they fly to the Oxford Street and they walk up and down and they buy some samples and then they come back. They've just revolutionized that part. The second part is clearly then the ability to take a concept to stick it online and again, to use AI and machine learning very quickly to see how many customers are liking it, how many are sharing it. And on that basis, you can get a feel for demand very, very quickly. And that demand can then translate into bulk orders into their supplier base. So we've got a much clearer visibility of how they do that. The third element is how they manage their suppliers. So again, a very different approach to the way a traditional retailer would manage their supply. There's much more transparency involved. In many instances, they will go to a factory they will basically book and reserve capacity. They will guarantee that they will pay the fixed costs of that production capacity. And then the orders will flow automatically as those products that, that factory has produced in sample form, generate into orders. The second thing they do is that supplier has absolute visibility of how that product is selling almost live. It's very different to a traditional model. Traditional model, a buyer goes, they buy a bunch of T-shirts for summer and the supplier sits and waits for next summer to see whether the product is sold well and whether they're going to get the order again. And then at the very end of it is clearly their fulfillment model, which is kind of single parcel airfreight into countries like South Africa and, let's call it, duty optimization approach when it comes to those products. So the way we're trying to look at it is, firstly, let's understand their value chain and let's see whether there are elements of that value chain that we can replicate. That stuff around product development. Clearly, you can replicate that from a trend forecasting perspective. The way you work with your suppliers, again, you can replicate that. So we're trying to find elements in the value chain we can replicate. There will be other elements that we can't. We can't ship 788 million units in individual parcels on an air freight basis into South Africa. The second leg of it is we're really trying to think about what is it that we have that they don't have. So everybody is excited about Shein and Temu but there's a few things that happened for a customer. The first thing when you buy online is a Shein or Temu customer, you don't actually know what the final cost of that product is going to be for you. You see the price but you don't see the shipping and you don't see what the duty is, and the duty seems to be a bit of a moving target. So if you look online, a lot of customers saying, I thought I was paying X and then suddenly the logistics guy wants 45% duty, 30% duty, 17% duty, pick a number. So they don't have that. The ability for them to fulfill into peri-urban and rural areas. That's going to be very cost prohibitive for their distribution partner. And that's where we have a real store footprint. And clearly, things like payment types, things like lay buyers, access to credit. So I think we will understand the value chain, replicate where we can, be very clear in how we continue to agitate with the authorities around potentially some of the duty optimization. And then really focus on what strengths do we have that those businesses don't have and formulate a strategy at an individual operating company level. So that's kind of a level how we're trying to approach it. We really don't have our head in the sand. We don't believe it's not going to have an impact on the market. It clearly it already has. So that's the story on sourcing and on Shein. I think we're moving to Q&A. So I need Rolf again in our meet, Leon, please, and then we'll open up to Q&A, and then we'll wrap it up.

A quick question on space in the country. How much more space is being built at the moment? Have you got a sense of that? And what's happening on lease modifications in terms of renewals as the negative days gone? And what's escalation is looking like?

Yes. So on malls being built, I don't have an exact number but it's definitely less than what we used to, and it's smaller, it's more convenience, type malls. In rural areas. So I think gone are the days of the big the Canal Walks and you might have [indiscernible] going up. That's probably one of the last remaining kind of regional kind of setups but it's much smaller than it used to be. And on rentals, we're definitely seeing less of that negative trend. I think we'll be lucky to get to it to 0% increases, we might see that turning into a 1% or 2%. But I think for now, we've definitely turned the tide, the tide has turned on this. Yes. Escalation, yes, the guys were pushing 7% at one stage, but I think we're back down to 6%.

Two questions for me. The first one is the property tool that you showed us, I mean, very impressive. Can that be used in Brazil given that you have a very ambitious store plan?

Yes. No, absolutely. No, it's off the shelf to that we've just customized for ourselves. So you are definitely -- most of the stuff at the city of Cape Town users, if you look at a map that are -- interactive kind of map at the same kind -- the same tool but you just take it and you customize it. So yes definitely can be rolled out there.

And then the second question on e-commerce and supply chain. So if I think about the Pepkor Group, you sell 12 million handsets a year and 50% of that is now smartphone and online penetration increases as you have smartphone penetration in South Africa increase. And I think Pepkor Group, you've got that, you've got PAXI, delivering that. So you've got 2 elements of like an e-commerce set up already and as the retail brands that almost are lagging behind, and that is implementing online as the consumer demand increases. But if I think about even using FLASH to use those vouchers to purchase online, is that a discussion that Pepkor can actually sort of change the landscape in South Africa in terms of e-commerce? Using, I mean, PAXI, you've got the smartphone penetration and you've got FLASH that can actually monetize what we see even a part of the informal market. Is that something that's very far fished? Or is that even a discussion point at this stage?

No, I don't think it's farfetched at all. I mean, if you look at something like PAXI, that's a really good example of us saying, look, we've got some strength here. We've got a store footprint that not a lot of other retailers have. We have a very developed distribution network, and we have a bunch of trucks that are empty coming back to the distribution center. Hey, that represents an opportunity collapse of the post office kind of helps you with in that regard. So you identify the customer need, you go, "hey, I've got the capability to execute on this, and we Can monetize it." So that constant asking questions of, given the different assets that we've got. Are there ways of solving customers' problems differently? That's 100% a live conversation. Where one goes with the informal market. Paul will expand on that tomorrow but if there is no reason why some of the private label products that Stefan spoke about in PEP shouldn't be available to a customer in a spaza shop. But there's a whole lot of distribution complexity to something like that. There's no reason why a tender type like one voucher can't have much wider applicability than it has right now. So that constant, how do we use the assets that we've got to create new and creative solutions for customers. That's always there. And I guess the approach is never one is too far-fetched. If it's an idea, we look at it because it solves a need, can we monetize and can we execute and then we'll put a proper business case together.

So just a quick one. I know system changes tend to be retailers and investors have a topic. And it tends to be encompassed by the word SAP implementation. So is there anything like that happening anywhere in your group? And whether it's in the finance side or whether it's in your warehouse system that we should be aware of?

Well, we've got an advocate for SAP in Peter Griffiths. They went through a very successful SAP implementation and the strength of that business now being on a singular platform across all of those brands is very, very helpful for them. But we have a pragmatic approach to that. If Peter was answering that question, he'd probably say not in my lifetime. And that works for me. But generally speaking, our infrastructure, whilst it's homegrown is actually quite stable. The problem is it's quite disparate. So trying to bring that into a kind of singular platform in our mind doesn't necessarily mean that it's got to be a big bang all bets on certain IT providers to sort of remain nameless. But ultimately, we have to bring ourselves in a more homogenous IT architecture because if we want to scale different businesses, if we want to plug new businesses in, if we want to really create this omnichannel experience, we are going to have to have a more homogenous IT architecture. But there is no plan in front of anybody. There is no proposal in front of anyone for a big IT implementation.

Perfect. And the next one is just considering where freight costs have moved towards? What period do you contractually arrange those freight costs and negotiate those freight costs? Is it on a 12-month basis? And is it 100% of those freight costs? Or is there a portion that obviously is a bit more flexible?

It's generally quite flexible. So sometimes, it's on a 6 monthly basis, sometimes on a 12-monthly basis. What we do learn is that the shipping companies are a little bit mafia like. So if the world changes, your contractual rate doesn't mean a lot, and they will just put surcharges in place. But ultimately, what we're trying to do is contract with 1 or 2 parties and generally trying to have that for normally around about a 6-month basis. In some instances, there's a degree of flex in it, either up or down depending on some key indicators. But yes, it's a fairly dynamic thing on the -- certainly on the shipping front. Anything online, Leon?

No, nothing. People are a bit tired now.

So I mean the one thing I did forget to mention on Shein is if all of our strategies fail, we'll simply put a piece of software and all the handsets we sell that prevents the download of the app. Right, is that -- you're happy? Cool, then let's wrap up. Thanks very much to -- for everybody's attention. today. What I can tell you is at the back of the room, there are screenshots of the share price that have been going around. It doesn't tell a pretty story, quite a -- probably the low point came after Pieter, myself and Riaan presented. I'm putting that down to David downgrading us to a sell once he'd had severe abuse from Riaan at the podium. It then recovered when the operating company is presented. So they're claiming victory on that. Feedback to Ian, lunch was clearly a disaster because it really dropped after that. And then thanks to Peter Griffith and Marius and Rodrigo, they clawed us back. So the central office guys are getting a bit of abuse to not. But yes, hopefully, today has been helpful for you. The way we try to pitch the day in the beginning was certainly windy to give you a little bit of context how the group operates between Pieter and myself, try and give you a little bit of the history of the group and some of the strategic frameworks and how we think about the overall business. And then Riaan really trying to cover that in with some numbers. with a headline story that says we continually want to grow our revenue and sales line. We've always believed in retail. If you don't grow in the sales line, you die. Fairly consistent approach to gross profit always trying to drive cost of doing business down. And clearly, other income streams being a very important part of the play. And then we moved into the operating companies. And hopefully, what you heard from PEP is that we are definitely not at the end of the runway there. There is scope for growth. Some of that's coming through enhancing the proposition even further. Some of it is coming through some of the formats like home. Some of it is coming through some of the new product categories that they're trying to do and how they're using those enablers. So hopefully, you walk out going, okay, maybe PEP isn't out of runway, which I know has been a concern. Then from the green team's perspective, again, hopefully, you've got some confidence that, there is a turnaround plan that there is progress, as Adrian demonstrated to you, there's a real trajectory change there. It is off a soft base, but at least it is a trajectory change. And a lot of that is really geared around the proposition and around product. And I think that's a really important takeaway for both the PEP and the Ackermans business. How much time and energy is being spent on the actual product proposition because you can save your way out of trouble for a year or 2, but if you aren't enhancing your product proposition, you've got a real problem and that not only from a turnaround perspective but in terms of store numbers, particularly in the Connect format, in terms of some of the expansion into the women's category within Ackermans, lots of growth opportunities still on the Ackermans front. From a Specialty perspective, I think from Danie, hopefully, you've got some confidence that the Specialty division really can become a significant contributor to the group. Sometimes, when we speak to the investor community, they kind of -- why do you bother, it's a bunch of small businesses. But I think there are some real safe bets there, something like refinery has got real growth ahead of it and some of the new work being done around women's and adult wear, and the ambition to grow into other categories should give you a sense that there's real growth there. I mean from an Avenida perspective, hopefully, what you see in Marius and Rodrigo's presentation is an understanding of why we've got a degree of confidence in that business, not only in the underlying market conditions but in terms of the real base that the team have built there, and you should have the same confidence in us as we do that we can double that footprint in the next 3 years. And hopefully, some real examples of where we've leveraged Pepkor into that acquisition. And so if there are further acquisitions down the line, again, maybe some evidence of the fact that we don't always talk on since. From a JD perspective, I think, again, from Peter's perspective, hopefully, your takeout is there is still footprint expansion opportunity in a number of the brands there. And there is real capability in distribution e-com and some of the data and analytics that they use that we can leverage and use across the group. And then from a properties perspective, hopefully, that gave you a lot of insight into the science behind how we find stores and again, gave you confidence that where we say we can open further stores even in our mature brands that there's a proper combination of data science, market intelligence and then some real corporate IP and depth of knowledge in all of those teams. And exactly the point, we already used a lot of those the actual underlying metrics and processes in Avenida. We just don't use all of the technology that we have in South Africa. Then from a logistics perspective, again, hopefully, you see those pockets of value that are still there to unlock left of distribution center, and that in terms of distribution capability and distribution center capacity, we have sufficient for the kind of growth plans that we've got. And then from a sourcing perspective, again, hopefully, a bit of insight into our hybrid model, a bit of insight around our plans in China. And then hopefully, some color on Shein and Temu, and the way we're thinking about it, that might give you some confidence. So that's it for the day. Thank you again. Do I hand back to Kennedy?

Yes you do.

Kennedy Knight to bring it home.

Thank you, Sean. I've haven't had that term used in a long time, minister without portfolio. Very good. Thanks very much, Sean. And thanks, everyone, for your attendance as well as your engagement throughout the day. The question that you feel that to the team showed the level of interest and hopefully, as I said this morning, it leads you to making the right decisions. I think we agree that we've had a really good day. I thought the day was great, and we have got more in-store for you tomorrow. All that's left for me to say now is that tomorrow, we're starting promptly at 9:00 in this room. And for now, you've got free times. So you're free to do anything, walk around, have a look at the property, the really gorgeous property. We have got dinner, Ian, has promised us dinner in Rory restaurant -- Morii -- sorry, Morii restaurants, and that is at 6:30 p.m. And also I've been encouraged to ask you all to just wander around and appreciate the beautiful displays that the guys have put so much effort in getting -- in putting together. So that's all that you're going to say, and we need to use the room. So if you don't mind, we'll exit this room now until 9:00 in the morning. But the guys at the back have promised to play as a piece to see everyone out of this room. So I'll hand over to them.