The SPAR Group Ltd (SPP) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to webcast for our full year results, and thank you for joining us. I'm Graham O'Connor, CEO of the SPAR Group; our CFO, Mark Godfrey, is joining me to present the results today. Also joining us today is Brett Botten, the Managing Director of SPAR South Rand and [indiscernible]. It has been an extraordinary year with many challenges, but also many opportunities. The COVID-19 pandemic has caused much disruption and continues to do so. As a business, we feel privileged to be fully operational, serving our communities and making a difference. Next slide. For our presentation today, I will begin with a brief overview. Mark will present our financial results for the period. I will provide an operational update as well as our priorities for the year ahead by market before we take your questions. Next slide. First, the overview. Next slide. As a global brand, SPAR is one of the largest food retailers in the world with operations in 48 countries. SPAR is an aspirational brand that continues to attract independent retailers globally. Wholesale turnover for 2019 was over EUR 37 billion. Based on our turnover for that year, our group contributed roughly 18% towards SPAR's total global wholesale turnover. Next slide. Turning to our group. Here's an overview of our markets. South Africa, Ireland and Switzerland have performed strongly. Poland is new to the group this year and is currently loss-making, although we expect to break even by the end of 2021. And I'm confident of the opportunity we see in this market. Next slide. The group has delivered a strong set of results. Group turnover was impressive, increasing 13.5% to ZAR 124.3 billion. Group operating profit is up 15.6%. Normalized diluted headline earnings per share is up 8.8%. The Board has declared a final dividend of ZAR 6.65 per share, bringing the total gross dividend to ZAR 8.65 per share, an increase of 8.1% year-on-year. Next slide. Reflecting on the year, I feel proud of what we have achieved. We reacted quickly to the outbreak of the virus and had a head start continuance given the shared learnings from fellow SPAR countries, especially in Europe and in China. We were clear about our key priorities the business has put together, and we have learned a great deal over the past few months. We remain focused on maximizing the opportunities that have emerged within our new normal. In terms of our wholesale operations, we are well prepared from a digital readiness point of view and have continued to make improvements to our systems this year, especially given the need for employees to be working remotely. We've seen a shift in consumer behavior. And no doubt, some of this behavior will remain, such as the heightened focus on hygiene and safety. SPAR is well placed within the convenience space. And consumers have supported their local stores, placing their trust in our brand during these uncertain times. Next slide. Our culture as a business has kept us well positioned to deal with this crisis. SPAR has a special culture. Our people have a deep appreciation for our values of entrepreneurship, family and passion. Our people and our retailers are determined and resilient, have all adjusted to new normal. There's been a remarkable collective effort to get the job done and make things happen. A few years ago, we declared SPAR to be a purpose-driven organization. Our purpose is to inspire people to do and be more. Community is at the heart of what we do, and we'll endeavor to remain immersed within our communities. Our retailers have gone above and beyond in supporting the communities they serve. We have led and partnered on many initiatives on this front. To share just one example of our community-driven work, I thought it would be appropriate to share a short video of what was done by Brett Botten and his team at our distribution center in South Rand. Please play the video, Chase. [Presentation]

I would like to extend our thanks to all our people, our suppliers, our retailers and our customers who adapted with us to find new ways of operating during these challenging times. Our thanks especially to all those people working on the frontline and serving our communities. I will now hand over to Mark Godfrey, who will take you through the financial performance of the group. Next slide.

Thank you, Graham. Good afternoon, ladies and gentlemen. And I think in keeping with my previous themes of greeting in the most recent acquisition and seeing I've already greeted you in Polish, let's go back to our roots in [indiscernible]. So the financial overview, the salient features on the slide that should be in front of you right now should be really a celebration of the performance. But once again, I'll find myself this year having to spend time unpacking these numbers for accounting interventions. And fundamentally, the quite significant impact of IFRS 16, which, unfortunately, we're required to do to really show you the true performance of the business. But before we get there, let's deal with the salient features on the slide. As Graham alluded to, our turnover grew 13.5% to ZAR 124.3 billion. Operating profit was up 15.6% to ZAR 3.4 billion, yet the profit after tax declined by 9.6% to ZAR 1.9 billion. And fundamentally, between operating profit and profit before tax, we find not only the first signs of the IFRS 16 reclassifications or reallocations, but also some of the fair value accounting adjustments to our financial liabilities, all of which I will unpack as we go forward. Our headline earnings per share increased by 0.5%. And has already been alluded to, if we normalize that and we're not trying to introduce any new accounting concepts, but fundamentally, what we are just trying to do is recognize the financial liability accounting treatment. So our normalized headline earnings per share grew by 8.6% and the diluted normalized headline earnings by some 8.8%, far more representative of the true performance of our group. As Graham alluded to, a dividend per share was confirmed by our Board, maintaining the historical dividend cover of 1.45x cover, and that grew by some 8.1%. And lastly, on the salient features, the group's net asset value grew by some 5.7%, which does appear a little low compared to some of the other previous indicators. But again, and it appears that this is going to be my default statement for the day, IFRS 16's recognition of the financial liabilities definitely impacted on that number as did the net asset value of Poland, which was negative for the period. If we can turn the slide, please. So what we are attempting to do on the next slide is just to give you a sense of some of the big impacts that have largely eroded what should have been some very impressive numbers. And when I say should have been, obviously, we've had to recognize the fair value adjustment in the valuation of the financial liabilities both in our Irish business to the settlement of the minorities as well as in our Swiss business. So what we've -- what I've attempted to do on this slide is basically starting with the headline earnings, which grew by 0.5%, we add back the some ZAR 253 million worth of accounting adjustments in the valuation of those financial liabilities and then you arrive at a normalized headline earning of some 8.6%. Just to give you a sense of the Polish impact and not for a second trying to blame the Polish business on the performance because they really did perform largely in line with what they were expected or forecast to do. But the net Polish effect or at least that portion attributable to ordinary shareholders, some ZAR 327 million, if we were to add that back, normalized headline earnings, excluding Poland, ZAR 2.7 billion, and that number growing by some 21.7%, that is an absolutely incredible performance for the core business over the year, all things considered. We've shared with you below just the number of diluted average weighted shares so that you can also understand the mechanics. And as I've shown before, the cent valuation of both normalized and headline earnings, excluding Poland, at some plus 8.8% and plus 21.9%. If we can please turn the slide. Unfortunately, as I intimated already, there is a bit of an accounting presentation to start with. And really just to wade through the effects of IFRS 16, and I'm sure that most of you, fund managers and analysts, are struggling with this on all of the results that you are seeing in 2020 as most issuers have now obviously started adopting. But on the left-hand side, those would be the key numbers appearing on our income statement that you would recognize, as we've reported. I've attempted to basically deconstruct IFRS 16 for you. So the, call it, second from the right column or a pre-IFRS 16 number, then allows you to make a far more comparable analysis to the 2019 numbers, which we did report. So effectively, that middle column headed IFRS 16, you can see the net effect of all the reclassifications or reallocations under the new standard, our net operating expenses actually reduced by some ZAR 79 million as a consequence of which operating profit increases. However, sitting in our interest income and interest expense, we now have the interest element related to that new standard. And the net effect of those 2 adjustments is a negative ZAR 227 million cost. And flowing all the way to the bottom, profit before tax then becomes negatively impacted by some ZAR 147.5 million. And there's obviously a tax reversal. So the net effect of IFRS 16 on our reported numbers is a reduction in profit of some ZAR 115.3 million for the period. Obviously, had we looked at the deconstructed numbers, you would have still seen a negative net profit of ZAR 2.071 million versus the prior year's ZAR 2.163 million. But then I'll refer you back up to that line that is described as other nonoperating items because in that ZAR 278 million is the fair value adjustments to the financial liabilities. And if you do a notional adjustment for that, you will see that the group did report a strong profit after tax growth. At the bottom in the notes or the footnotes, we've just added for your information the actual depreciation, the actual net finance cost and the rental expense, which would basically be the -- very simplistically, the journal entry for the restatement of the IFRS 16 standard. If we can turn to the next slide, please, Chase. Again, what we've attempted to do is -- and this slide is really one that I've inserted because to be very blunt, this is the recognition of our finance team's ability because on the right-hand side, back in 2019 at the same presentation, we presented to you what we expected the impact of IFRS 16 would be on the group consolidated results, that column headed estimated at September '19. At that stage, we didn't have very much insight into the Polish business, which we were still in the final throes of concluding the deal on, so we basically projected to you an exclusive Poland set of numbers. So to be fair to the team, we've taken the as-reported numbers. I've taken the liberty of just notionally adjusting for Poland to get a 2020 set of numbers, excluding Poland. And as you can see, running from top to bottom, we were fairly, fairly accurate in estimating what the impact was going to be on depreciation, on profit before tax and interest. And in fact, right down at the bottom, our headline earning effect would have been some ZAR 7 million versus ZAR 9.5 million. And in fact, in cents, we were out by roughly ZAR 0.01. So I think to be fair to the finance teams of our group, most significantly here at central office, we really held this exercise together for some 18 months, a very, very fine reflection on how well they were able to project the impact of IFRS 16. So well done team. If we can turn the slide, please. And for the first time after 5 slides, let's really talk about the performance. We had to wade through that, but I'm sure that most of you, for your own analyses or models, needed to understand that. But let's talk about the low performance of the business. So what we've provided is a regional segment or the metrics of our business by now the 4 geographies that we trade. We've deconstructed or segmentally deconstructed our income statement by region so that you can get a sense of how the business has performed. So the revenue of ZAR 124.3 billion, ZAR 78.6 billion of that revenue generated in Southern Africa; Ireland contributing just under ZAR 30 billion; the Swiss growing an incredibly strong performance to just under ZAR 14 billion; and Poland, despite some real challenges, contributing just over ZAR 2 billion. We provide for you the gross profit analysis by geography. The group at 11.9%; the previous year, some 10.7%. And we will talk through some of the drivers of that. Operating expenses, ZAR 13.9 billion. And again, showing you how those expenses are allocated between our various geographies. And just to make the highlighted note that those expenses are after adjusted intergroup activity or intergroup charges, not that there's much intergroup activity, but there are certain fees charged between the divisions. ZAR 2.074 billion attributable to ordinary shareholders is the earnings. South Africa generated ZAR 1.5 billion. Our Irish team generated just over ZAR 600 million. Switzerland, just under ZAR 250 million. And at the end of the day, as Graham alluded to, the Polish business at some negative ZAR 327 million. And that's after the minority adjustment to that number. So the effective attributable to ordinary shareholder loss arising out of Poland, ZAR 327 million. And at the bottom of that schedule, really, again, just for your information and guidance, how the earnings per share per segment and headline earnings per share per segment has been determined. I just need to point out that included in the Irish and the Swiss columns are, in fact, the accounting treatment of the financial liabilities as both of those countries now recognize that financial liability. So to be fair to both of those regions, the profits that we are reflecting here are somewhat understated. And in fact, in the Irish case, that financial liability actually has reduced what we are reflecting on the schedule by some ZAR 188 million and in the case of the Swiss by some ZAR 21 million. So to Leo and your team, we're not trying to shortchange you. Your profit was definitely stronger than this before the accounting treatment. If we can turn over to the next slide, the slide headed turnover. I made a note to self when I put the presentation together that this is the one that I need to set the clock on because really, if we are going to consider 2020, this slide could probably a whole -- be a whole day's point of discussion because fundamentally, there were so many very, very unusual, very unexpected changes that were the result of the pandemic. So many of the businesses have reacted to those, and we could really spend a great deal of time talking through how these numbers have been underpinned and what the influences were. But let's dive straight into South Africa. Our core grocery business, and this is the wholesale grocery business in South Africa, ZAR 62.8 billion worth of sales, growing by some 9.2%. At interim, that figure was 9.7%. So it did slow somewhat over the latter half of the period. Our liquor business. And as we have touched on both at the interim results and also on the pre-close update in South Africa, as a result of the restriction on the sale of alcohol, our liquor business came under extreme pressure. The sales for the period down some 15.8%. At interim, we were still positive, plus 3.9%. And there were some issues at interim. As we explained, we've moved certain business out of our warehouses and on to direct supply. So that caused the half year number to be slightly down. But obviously, the loss of our ability to retail in alcohol for bulk of the second 6 months saw that number go exceptionally negative. By comparison, at the same presentation a year ago, we were recognizing the sale of liquor growing by some 17.6%. So over a period of 2 years, a reversal of nearly 32% in the performance of this quite significant retail category. So if we combine the SPAR and TOPS business, and again, these are wholesale numbers, we would see an effective 6.2% increase. At H1, that number was 9%. And again, you can get a sense of the erosion of that combined business as a result of the decline or the lack of liquor activity in the second 6 months. Build it had an incredibly strong finish to the year, defied a lot of the expectations. At half year, we were down just on 2.4% negative. And in fact, we finished up at 0.9% negative. And that's taking into account that Build it lost nearly 5 weeks of trade in the first phase of the lockdown back in March, April. So I'll give you a sense of how strongly they finished and a really strong management of a very, very difficult sector at the moment by Rob Lister and his team. So the South African business growing by some 5.5% to just over ZAR 77 billion. Our pharmaceutical wholesale operation growing by some 3.6%, perhaps a little surprising in the expectation that you would have had of higher pharmaceutical sales. Bear in mind that this is a business that does a great deal of specialized script work. And as a result of how the medical industry and the medical profession, particularly the hospitals, adapted and more importantly put a lot of procedural work on hold, that was slow, but their volumes were also impacted by the pandemic. And I'm sure those of you that follow the pharmaceutical retailers would have seen very similar trends as well. The new acquisition, SPAR Encore, this is the private-label sourcing business that we purchased in -- with the effect of March this year. ZAR 280 million worth of turnover might raise some eyebrows because we previously guided that this was a multi-billion rand business. What we reflected on here is, this is purely the incremental sales of Encore for the 7 months since the acquisition. Their gross sales during that 7-month period was some ZAR 2.58 billion, obviously ZAR 2.3 billion of that is sales into SPAR. So we are purely reflecting the incremental number at this line. So the total Southern African business growing by 5.8%. Our Irish business, sterling performance, 20.4% growth, a really phenomenal number, ZAR 29.9 billion worth of sales at half year. We spoke about the risks in this business because of the decline in the hospitality sector, the license trade, the pubs were closed. We've been unfortunately not able to be over in Ireland, but just the prospect of Ireland without an open pub is something that we struggled to get our heads around. So it really has been decimated, and we really are very, very aware of how well this business has performed. What has been a reversal, there's been the increase in alcohol and tobacco retail sales as the Irish consumers move to the retail outlets for their purchases, obviously, as the pubs are closed. But 20.4%, a very strong performance across all of the retail brands within that business. Just by way of some of the outliers, the EUROSPAR business grew their sales by 11.5%; the SPAR business, over 6%. In fact, a milestone achievement for SPAR in Ireland actually achieving EUR 0.5 billion of sales; and the other brands, Londis, 9.6%; Mace, 7.5%, all underpinning exactly what we've seen in a lot of the other geographies, the consumer shopping local, shopping in the neighborhood and really driving the retail business that gave BWG Foods a total growth of 3.4%. But not to discount for a second the acquisitions that the Irish team have made over the last year, particularly the recent acquisition that was concluded towards the latter half of 2019 of Heaney Meats, which, albeit focused into the hospitality sector, was still a very strong acquisition, driving that 2.2% as well as the retail expansion that took place through the acquisition of some retail stores in the U.K. that added of that 2.2%, 1.5% of that. At this point in time, there was normally -- or at least in the past, there would have normally been a poignant silence as we then look to Switzerland and quickly try to internalize the negative sales performance. A year ago, that number was down 0.1%, and we were very -- in fact, it was down 1.5%. The bigger issue was we were more enthused about the fact that wholesale had actually grown by 0.5%. And we spoke to the corporate retail stores that we were disinvesting and selling back into the hands of independents. Well, at this point in time, we actually need, I guess, anything but a minute silence because the Swiss have generated an incredible result, plus 31.7%. Yes, there is an FX contribution to that. The currency probably eroded some 20% of that number. But in real terms, the Swiss business growing by 11.6%, and it really has been a phenomenal performance by that region. A lot of the plans, a lot of the strategy work that Rob and his team have put in place over the last 2 years coming together very strongly, some of the new acquisitions out in the West, all contributing to that number. And really a phenomenal performance, all things considered, in a region that has also been heavily decimated as a result of the pandemic, closures of businesses and borders. And then as we intimated, the new Polish business, ZAR 2.1 billion worth of retail sales; and adding to the 13.5%, some 1.9%. So effectively, the group would have been at 11.6%. Poland took us to 13.5% in its first year of contribution. As I said, we could probably spend most of the afternoon. I'm already starting to get kicked under the table, so I'm going to ask you to turn the slide. And just to illustrate the regional turnovers just to give you a sense of the fact that this is no longer a South African business, albeit the red portion of that circle clearly shows you that we are dominantly a South African-based business with still the far majority of our sales being generated in this country, 63.2% of our sales coming out of the South African business, albeit down 4.6% from where we were a year ago. And as you can see on the chart above, the Swiss business gaining some 2.5%, in fact, 1.5%; and the Irish business contributing a further 1.4% of that; Poland coming through as well starting to show growth in that. So I guess as we look to the circle graph or the pie graph at the bottom, looking forward into 2021 and beyond, we probably are going to continue seeing the slice belonging to South Africa slowly contract towards the 50% mark, but it's going to take a little while. If we can turn the slide, please, and let's discuss some of the gross margins. Again, we've set these out for you by business region. And the most important point that I would like to make is a cautionary. I know that at face value, the fact that the gross margin has increased by some 124 basis points might really get a lot of blood boiling in the sense of, firstly, are you profiteering? No. I can assure you we haven't. I can assure you that the increase in the gross margin of this business is fundamentally and almost effectively across all of the regions the consequence of a change in sales mix, and we will talk to some of the specifics. But more importantly, and the reason I just urge you to take this increase, and particularly the gross margin performance in 2020, with extreme caution is that, that sales mix will slowly unwind as categories like liquor and alcohol start effectively going through the business once again. So I would just caution any of you to look at that gross margin as a new normal. In fact, if anything, it would be an extremely -- it would be fundamental and extraordinary performance, and I think you really look to -- or you need to look back towards 2019 to get your true sense of guidance. Southern Africa, the improvement was largely the consequence of the reduced liquor, cigarettes and building material sales. All 3 of those categories traded gross margins in our wholesale operation at less than circa 9%. So effectively, as you remove those low-value or low-margin items out, the balance of the margin enhances. This base is largely consistent or flatlined. In fact, Encore, as I intimated earlier, the turnover is incremental. The gross margin is real. So as you -- that isn't a mathematical area that, in fact, is correct. And it gives you a sense of that impact by the so-called reverse engineered acquisition and the enhancement that, that has on the South African overall gross margin, in fact, driving it up to over 9.9%. So of that 102 basis points for Southern Africa, we will definitely hold on to probably in the region of 45 to 50 basis points as the Encore business going forward continues to enhance the margin. In Ireland, once again, a margin effect because the Irish business saw the reduction in foodservice as well as the change in cigarettes and alcohol moving to low-margin categories and that there was somewhat of an offset with the new businesses, Heaney Meats and some of the retail stores. So again, just a cautionary, that is not reflective of a new margin outlook or outlier for the Irish. Obviously, as foodservice comes back into play in the months ahead, that will definitely enhance the margin. But by the same token, we will expect to see a reduction in cigarettes and alcohol offsetting that and again, looking back towards that low 13 percentile range. Switzerland, very much a new sense of what that business looks like. Ironically, in fact, the Swiss number in the prior period of 17.55% is perhaps a little on the lower side because that was the year that they actually had some marketing challenges, particularly in H1, you might recall from your notes. So I would be guiding on Switzerland that the number will decline, but not necessarily anywhere back by a full 90 basis points. I think the Swiss business will hold on to at least half of that going forward. And Rob, I guess I'm making commitments on your behalf. And the Polish business, 22%, that is largely the retail impact. The core wholesale business trades very much at similar margin range as to the South African business, between 9% and 9.5%. And I would expect the Polish business to see a reduction or a slow in that number as it starts reflecting the true wholesale operations in time to come. So just to conclude, again, just to flag the cautionary that I wish to raise, please do not look to 11.9% as the new normal gross margin outlook for the business as we move forward. If we can move forward the slide, please. We've set out some information on the expense growth at a group level, some 27.2%, it does appear rather startling to start with. If you exclude Poland from that, that number becomes 18.3%, probably a lot more in line with what expectation would have been. But let's just unpack it very quickly from the top. The South African business, plus 11%. Included in that were quite significant increases in our employment costs. Fundamentally, we had to restructure our wholesale operations. We changed our shift structures to protect our staff. We changed the way we were operating, all of which resulted in additional cost, but cost that was critically important to us because fundamentally, the health and safety of our staff was paramount. Also included in that was an increase in IT computer-related costs, a lot of increases relating to remote working, ensuring that people have access to networks and systems. And in fact, our IT costs, together with some of the initial investments in the expansion of our IT network, growing by some 22%. The corporate retail stores, the few that we acquired in South Africa also had some impact. We saw increases in electricity and water or rather utility bills. But in fact, albeit that, at a group, South African level increased by some 18% to 20%. Our distribution center electricity cost actually declined by 3%. And fundamentally, we've spoken to in the past about the investments that we've made in the solar paneling on all of the distribution center facilities. We still have a few to go, but we've basically finished the bigger DCs where we can really get the true paybacks, and we're starting to really reap the benefits there. And our advertising cost, unlike certain other retailers that cut back on advertising and basically stopped their whole promotional activity, we continued throughout the period. In fact, we probably made some of the most innovative efforts during this pandemic, some of which were tongue in cheek, some of which were just to keep spirits up, but our advertising spend increased by some 6%, very, very well managed. And I think the last number I just want to put out there is our security costs. Obviously, with the risks increasing, that number increased by double digits, some 15%. Its basis number rose by 6% driven by an increase in delivery costs. The Irish number, that obviously is in rands. If we strip out the translation effect, that increased by a mere 3.6%. On that -- that's on the back of a 6.3% increase in sales. So an exceptionally well-managed expense control. In fact, one of the things that we've recognized in our Irish management team, almost from the first engagements we've had, is how well they manage the operations of the business in reaction to the external factors, what the business face. And to Leo and the team, when the pandemic struck, they were exceptionally quick to react to it, to curve costs, to put costs on hold, to manage their staff safety and, as you can well see, exceptionally and very tightly controlled. The Swiss business against the sales increase of 11.6%, showing an increasing cost of 4.6%. And fundamentally, for us, this really just illustrates the point we've always tried to make. The Swiss business was always about volume. Fundamentally, as they got their volumes up, they had a core base in place. The core structures were in place. It was all going to convert to profit, and this really just illustrates that very clearly. And the Polish business, in its first year of acquisition, over ZAR 1 billion worth of cost. The bulk of that is people, as you would expect of a business of that nature. There were some professional and legal costs as a result of the process of business rescue or legal sanitation, as referred to, which is now being wrapped up; and the rest relating to warehousing and distribution. If we can turn the slide, please. Simply because of the -- on the face of the income statement, there's now some startling numbers, at least in the comparison to the previous year. Under finance income and finance cost, as you can see, we've tried to just break it down and give you a sense of now what the drivers are. And it jumps out at you straight away, the fundamental impact or the reallocation of the finance costs implicit in the lease receivables. Bear in mind that in South Africa, we have entered into retail head leases and then lease the same premises to an independent SPAR retailer on a back-to-back arrangement. So we do not recognize the conventional right-of-use asset, but we recognize a receivable with a matched payable. So in our instance, we have this income, which we now recognize on the lease debtor, which, obviously, in the prior period doesn't exist. And as you can see, the rest of the numbers are actually quite comparable. The outlier in the income is purely the IFRS 16 income. And then under the finance cost, we recognize the fact again that there is a finance lease receivable expense. And if you strip that out, as you can see, the rest of the numbers, very comparable. So just to illustrate what that driver is in more detail. If we can turn the slide, please. We've also provided in the pack a reconciliation of the effective tax rate. In fact, for the South African business, it basically is a decimal point, but there obviously are some quite significant components to that. The most -- well, in fact, probably just to draw attention to two. Third from the top, the fair value, ForEx and finance cost adjustments arising from the financial liabilities, we've spoken to this figure of some ZAR 250 million, which is the accounting treatment to revalue that financial liability, which we put through every 6 months, that has no tax benefits whatsoever. So basically, it's a permanent tax adjustment. Hence, that number is added back. And then second from the bottom, the effect in our European geographies, all of them have tax -- effective tax rates of between 12.5% and 19%. So there is a significant benefit as a result of the foreign European tax rates compared to the South African corporate rate of 28%. The guidance that I would make at this stage is if you were looking for a normalized outlook for the South -- for the group into the next year or 2, assuming that we now work out the financial liabilities, those will all be settled within the next 6 to 12 months, you should effectively be able to look to an effective tax rate of at least 2.5% to 2.7% lower than the 27.5%. So I would be guiding somewhere between 24.5% and 25%. But if we can turn the slide. This is really set out more for information, I'm not going to try and go through a lot of detail. But really, what we've done with this slide is just to give you a comparative sense of H1 versus H2. The left-hand side of the slide talks to turnover, the right-hand side of the slide talks to operating profit. And as you can see, the first half and the second half, the little gray box down in the bottom left-hand corner, first half, South Africa, the Irish business, both growing at just over 7%. The Swiss business had already started experiencing some of the lockdown impacts and was actually in double digits, 13.8%. But you can see how both the European business has accelerated into the second half as their wholesale businesses reacted to the state of lockdown. Ironically, the South African business reversed, and that was fundamentally the loss of those major categories, liquor, cigarettes, Build it. And in fact, there was a slight offset. In fact, there's a fairly significant offset by groceries. But to the same extent, literally halving the growth, Ireland growing by some 32%. And that's off the back of quite a significant part of that business being constrained in the foodservice space. And Switzerland by nearly 50%. So an exceptionally strong finish to the half by those -- both of those businesses. From the profitability point of view, again, you can have a good look at how those numbers grow. But ironically, the Swiss business is probably the most significant outlier. Again, to illustrate the point. When they've got the volumes, they've got this infrastructure in place. Really the profitability is just enhanced dramatically and an exceptionally strong first and second half by the Swiss business altogether. The Irish second half, again, up some 67%, a really tremendous performance. If we can turn the slide, I'm going to just very quickly illustrate this. We've included this in the past. So just to get a sense of how the currency has moved, we've split the currency graph at roughly half year at 31st of March. We spoke at interim about how leading up to our half year, the currency, particularly the rand, had taken a hammering against most of the global currencies because of the downgrade. And obviously, just being one of the emerging market currencies going into the pandemic, most of which were starting to be negatively impacted. But then as you can see, in previous years, we've normally seen a reversal in the second half, but that has not unfortunately taken place. So the currency has held its own quite substantially for the second half and finished up almost where we were at March. The average rates. And again, for illustration, down at the bottom of the graph are the numbers that have actually been used in the determination of the translation. In the case of the euro, a year ago, the average rate, some 16.1%, that declined or weakened by 13.2%. And in fact, by comparison, the Swiss declined by 17.9%. If we can just turn to the next slide, which really just gives you a segmental balance sheet view of the business. And what I've done on this slide is it's a similar format to previous years, but it is starting to grow. It is quite significant that we obviously needed to add the right-of-use assets and also the finance lease receivable quite substantially just because of the share value. So collectively, those 2 accounting treatments recognizing the IFRS 16 standard have added some ZAR 11.3 billion worth of assets to our balance sheet. And then down included in our long-term liabilities is a corresponding liability. In fact, what I've elected to do is on the slide that follows, I will summarize the entire IFRS 16 picture. But more importantly, I've also included at the bottom of the table, included in the long-term liabilities, just so that you have a sense of the regional debt allocations of the business by geography, we, the group, as of the end of September, had ZAR 6.7 billion worth of debt. That's in ZAR terms. And by geography, you can get a sense of how that debt is positioned. And then we finish it up just to give you a sense of the net asset value per geography. If we can turn the slide, please. As I intimated, it was only appropriate that we give you a better snapshot view of the IFRS 16 adoption on the group's balance sheet and also by segment. So what we've set out for you here is the creation of the right-of-use asset, being the capitalization of those leased assets, which are used by our organization, ZAR 6.6 billion across the geographies. I've also explained that in the South African business, we also have a head and sublease arrangement on a lot of the corporate retail stores. Those are retail stores that we don't run but in fact, we hold the lease on behalf of an independent retailer. So in fact, what you will see is ZAR 4.713 billion worth of receivable leases with a corresponding ZAR 11.2 billion worth of lease payables. The lease payable number includes both the right-of-use asset and the right-of-use receivable, that's the offset. We've set out the current portions of both. So just to give you some sense of the adoption and for those of you that want to try and relook at your own balance sheet models, hopefully, this will give you an ability to try and unpack some of that and give you a better sense thereof. If we can turn the slide. We've also normally just provided you with a sense of the group's financial liabilities. And just to repeat, these are the liabilities recognizing the minority interest. So we've set out the movement for the Irish business. And in fact, as you will see at the bottom of that analysis, the entire amount that is due and payable in the final settlement to the buyout of the Irish minorities, the first tranche of which took place in March of this year. The second tranche, second and final tranche will take place early in 2021. So that is now all reflected as a current or short-term obligation. If we turn the slide again, please. We do the same exercise for the Swiss business. And again, that is also due and payable in the first quarter of the '21 calendar year. We will buy back the 40% minority interest in SPAR Switzerland from our shareholder partners in the first quarter of the year. And that figure also shown as a short-term obligation. And then the last -- and if you would turn the slide, the last financial liability is the small amount to the buyout of the pharmaceutical business here in South Africa of just under ZAR 50 million and that still has a couple of years to run. And then that little subtotal right at the bottom should probably for completeness read total group financial liabilities of some ZAR 2.15 billion as at the end of September, and that would be both current and short term. So if we can turn the slide. We've set out for you on the next slide the group's cash flow. I'm going to just point out a couple of probably the most salient features. The group's cash flow from operating activities of ZAR 5.7 billion compared to the preceding years, ZAR 3.8 billion, does appear at face value to be quite dramatic in the sense of the increase. The one thing I just need to caution is, unfortunately, the infamous IFRS 16 does also impact this as well because now what is happening is what would have previously been rental expenses flowing through operating activities, now the same or approximately the same accounting adjustments are now on the face of the cash flow. So where you had previously roughly ZAR 1.1 million -- sorry, ZAR 1.1 billion worth of rental expense in the comparative ZAR 3.8 billion cash flow from operating activities, now what is happening is you have got approximately ZAR 1.1 billion worth of cash flows on the face of the income statement, which is enhancing the starting point and, in fact, included in the line interest paid. And third from the bottom, net lease payments, there is approximately ZAR 1 billion on the face. So if you were to do roughly a ZAR 1 billion to ZAR 1.2 billion adjustment, the starting point would have been probably more comparable at ZAR 4.5 billion versus ZAR 3.8 billion. Needless to say, that has still been an exceptionally strong cash flow, but not as dramatic as what the standard has required in the statement of the IFRS 16 disclosures. Working capital was very, very strong, particularly the managed trade payables figure, which is more normalized compared to where it was a year ago. So a very, very strong contribution from working capital. And just as an overall comment, our working capital was an extreme focus during the latter half of the pandemic as we were obviously very cautious about our cash positioning across the group. Interest paid, as I've intimated, the ZAR 340 million includes a large portion of interest attributable to the IFRS 16 standard, which is why the comparative of a mere ZAR 28 million is so dramatic in adjustment. Taxation of ZAR 860 million, dividends paid of ZAR 1.4 billion, again, that's largely impacted by the timing. Capital expenditure and acquisitions, we will touch on, on the slide to come. Share repurchases is basically just the small treasury share business that we've done largely to deal with some of the options that still exist. And then the settlement of the financial liability. I touched on the buyback arrangements for the first tranche of minorities. We did raise some ZAR 660 million worth of borrowings. Part of that was for purposes of the settlement on the line above. The balance of that was to start funding the operations in our Polish business, and that did allow the group to finish with a net positive cash position or net positive cash movement of ZAR 520 million. If we can turn the slide, please. We've just illustrated it on the slide that follows in a more graphical sense. I'm not going to labor you through all of this again. I think we've covered it on the slide that we've just finished. And again, to the point that I was making on the top right-hand comment about cash generated, just to highlight there for you the comment about the IFRS 16 point around the allocation or the positioning of those outflows on the face of the cash flow. We give some details here about the business acquisition, the ZAR 682 million, including the Irish business, Heaney Meats, that was purchased for ZAR 240 million, some retail stores both in Ireland and in South Africa and the SPAR Encore business that was finalized in March of this year. If we can turn the slide, please. As I intimated, we have set out for you in the papers some detail on the capital expenditure. It's largely just allocated between investment and expansion operations. As you will see, some ZAR 1.3 billion spent on CapEx across the group. And we, on the bottom allocation, have just also done that same analysis for you by geography to give you a sense of what the spend was. The most significant, down in Poland, the ZAR 324 million that was largely spent on retail stores and the distribution center business as we kitted out the third distribution center to really set us up for taking on board the SPAR retailers. And then in the case of the Swiss business, that is being impacted by, again, some store equipment as we finalized some of the corporate stores before unselling them. There's not really much on this that I want to cover. So if we can -- not much more anyway. So for information, if we can turn the slide. What we have previously provided because of this normalized HEPS that we effectively from the beginning have wanted to ensure that shareholders get their fair value from our profitability and the fact that accounting treatment required us to book entries relating to the valuation of financial liabilities, we have since this was first implemented always adjusted the reported headline earnings by adding back or adjusting the accounting for those financial liabilities. So we continue to share the calculation of the normalized headline earnings growing by some 8.6%. So again, just for information. And we set out for you in slightly more detail the actual number of weighted and diluted weighted shares that have been used in the model. I think the most important slide, if we can then just turn once again to the slide titled reconciliation of dividend. And basically, we've just set out for you how the Board have seen to declare the dividend. So having adjusted for those accounting entries, having arrived at an adjusted headline earnings of ZAR 2.4 billion, having recognized the shares ranking for dividend, the group effectively arrived at an adjusted headline earnings per share based on the ranking shares and the group and the Board yesterday having considered not just the performance of the business over the last year, but obviously its cash flows and cash availability, have agreed to implement and hold -- or rather not so much implement, have agreed to hold the historical dividend cover of ZAR 1.45 constant. That meant that the final dividend, as Graham announced earlier, of ZAR 6.65, in fact, is an increase of nearly 29% on the previous year's final dividend because we did take a conservative view at the interim and reduced the interim dividend. And we've now released that and effectively allowed the full cover to flow through. So the dividend of ZAR 8.65 has been declared, and the details of that declaration are also set out in the note. If we can turn the slide. Again, we've also just provided for information, and I guess this is the management's broadly set out brag sheet. The net asset value per share, its performance since 2015, which really recognizes the year post the acquisition of the Irish business 2016, recognized the acquisition of the Swiss business. And on the left-hand side, the net asset value per share literally doubling over the last 6 years from, as you can see, back in 2015, ZAR 19.22 per share all the way up to ZAR 41.02 in the 2020 year, and that after taking some pain with some IFRS 16 liabilities. On the right-hand side, the Manhattan of our headline earnings per share. Probably from 2018, that starts becoming far more consistent. There were some disruptions in 2016 relating to some of the accounting, particularly onboarding of the Swiss business. But from 2018, you can see the almost consistent growth trend in that number of almost ZAR 1 per year across the 3 years, growing from just over ZAR 10.63 to just under ZAR 13 in 2020. And if we can then just close to the last slide and really, just to recap on the salient features. This is just a repeat of my opening side. Revenue from the sale of merchandise growing by 13.5% to ZAR 124 billion; operating profit up 15.6% to ZAR 3.4 billion; normalized headline earnings per share growing by 8.6%, recognizing the accounting treatments that were implemented during the year, taking that number to ZAR 12.67 per share; a dividend of ZAR 8.65 declared, maintaining the cover at ZAR 1.45; and the net asset value, as we've just shown on the previous slide, growing by 5.7%. And at this point, I'm going to conclude the financial sector of this presentation. I'm going to hand it back to Graham. And all I would like to do, if you would just give me one last second, is just to thank the finance teams around the group, particularly my team at central office, who've put in tremendous hours over the last couple of weeks, ensuring that we were able to post this today. It hasn't been easy working remotely around the group. It's not been easy trying to prepare results when you have to socially distance. It hasn't been easy trying to implement the consolidation of the new foreign business and ensure that they've been comfortable understanding our standards. And it hasn't been easy implementing new standard with the significance of IFRS 16 this year. So to all of the teams, both in central office, our team in Ireland, our team in Switzerland, our new team in Poland, my thanks to all of you for all of your efforts and contribution. Thank you very much.

Thank you, Mark. We can move on to the operational updates. Going to the next slide. Looking at operations in South Africa, our retailers were strict to implement our recommended COVID-19 protocols. This year, we hosted virtual members meetings for the first time. While we have felt the lack of physical connection, the virtual platform has created some advantages. And I suspect that we'll embrace the best of both going forward. It's a testimony to the resilience of our supply chain and our agility as a business as we managed to maintain such performance rates of over 80% during the peak crisis times. Such level of service was made possible by collaborating with our suppliers and are pleased to report that SPAR has been rated #1 in this year's Advantage Supplier survey as best food retailer to work with. We have launched SPAR Online to support retailers who are in need of assistance in the online space. However, the reality is that many of our retailers already have a multichannel offer in place that are differentiated from the competition by the personalized experience they are already offering our customers, whether it be through online, WhatsApp, e-mail or over the phone ordering. During the initial lock phase, we extended financial support to our retailers, which has assisted our stores and recovering well as the economy has opened up again. Next slide. We opened 65 net new stores, the majority of which were opened in the first half. We've seen some good momentum in our SaveMor, pharmacy and SPAR and SPAR Express, TOPS, Build it. We successfully forged ahead with our plans [ for upgrades ]. 310 stores were refurbished, including 167 SPAR stores. I think the before and after images on this slide provide a sense of just how powerful this upgrade can be in driving new business to our stores. Our priority remains to work closely with our retailers in launching stores that are relevant to the communities they serve. Next slide. Looking at our core business, wholesale turnover was up 9.2% against retail turnover growth of 8.5%, displaying our retailers' continued support of the group's voluntary trading model. Next slide. During the lockdown, with only essential services being permitted to operate, many of the usual advertising mediums were not possible and we noticed a significant slow -- slowdown in competitive advertising during this time. As a brand deeply rooted in our communities, our marketing team have revisited our pipeline of campaigns to support retailers. We made that campaigns, Here for You, to assist cashed-up consumers. We adjusted the tone of all our campaigns to one of empathy and understanding. The message has been we're Here for You. SPAR TEXT ME! in social media platforms continues to be well utilized as a key platform to communicate with consumers to drive value and instant savings. Our private-label business continues to grow strongly. House brand sales increased 12.1% to ZAR 15 billion. This contributes 23.9% of our wholesale turnover. During the pandemic, out of stocks and reduced ranges presented an opportunity for a new audience to try our SPAR private-label price. Our strategy, as good as the best for less, is simple but effective. And consumers see SPAR products as good quality and value for money. Next slide. Our liquor business has been severely impacted by the restrictions on trading due to the ban on liquor and restricted trading hours. Our retailers lost more than 30% of the trading days for the year. Our TOPS marketing team demonstrated their creativity and increased the activity on social media to stay in touch with our consumers, just driving incredible consumer interaction and wins for the brand through lockdown. I'm pleased to report the TOPS at SPAR won the series awards again this year. And [indiscernible] as number one liquor store. Next slide. Given that this is not an essential service, our Build it business was severely impacted during the initial lockdown phase and was restricted from trading for 5 weeks. We extended financial support to all our Build it retailers during this period. Surprisingly, growth has been much stronger than expected post the lockdown, with this business experiencing a growing trend in home improvement and [ disposals ] . The Build it store upgrades have progressed well with 65 upgrades to the new branding completed during the period, which will continue to drive growth for this business. Next slide. Moving on to our European business. Irish business performed strongly, and the results there are exceptional. Our Cash % Carry foodservice business has been severely impacted. However, neighborhood retail stores and EUROSPAR have built consumer confidence during uncertain times and have benefited from being ideally located while possessing credible ranges at fair value. With licensed liquor trade closed, our stores have performed strongly in both the liquor and cigarette categories. Given the decline in the hospitality industry, our Irish business is well positioned in the retail convenience sector to compensate for the setbacks to our foodservice business. Next slide. Our Swiss business had an exceptional performance. There's been a noticeable shift in consumer behavior brought on by the closure of borders during initial hard lockdown. Volumes remained at high levels through to mid-summer. Even with the reopening of the borders in June, we continue to see volume growth by our expectations. The business delivered sales growth of 11.6% in local currency as consumers have chosen trusted community-based stores and convenience over large supermarkets. With the support of local restaurants during the summer months, our TopCC Cash & Carry business has seen good volume growth. The integration of PAM and Edelweiss stores is progressing well. Due just to its operational excellence, this business has managed to cope with unprecedented levels of demand almost overnight. It is fair to say that they've learned a great deal from operating in this market for the past 4 years, which is why they have been able to maximize this opportunity. In ZAR terms, [indiscernible] for this business is up more than 30% and operating profit is up by more than 300%. It is one thing to have good setup. It's another thing to convert that to profit. And most importantly, convert to property cash, truly an extraordinary performance of our Swiss business. Our next slide. Moving on to our Polish business, we shared this slide with you back in May. I think it's a good reminder of the opportunity we see in this market. SPAR is well positioned in the supermarket and convenience space, differentiating our offering, world-class fresh departments. The early emphasis is to be part of the local community, supporting the community that choose SPAR as their shopping destination trips. There are thousands of traditional trade independents, which make up over 30% of the market. And herein, lies the opportunity for SPAR. Next slide. Operationally, alongside being down our wholesale and logistics capabilities, we're driving the SPAR culture while embracing local customs and traditions. We have completed the onboarding of their existing SPAR retailers. We are focused in driving retailer profitability and loyalty. To do this, we have strengthened the team with a few key appointments made during the second half, including Wayne Hodson as MD to support [ Thomas Siler ], the CEO; and Tomasz Waligórski as our commercial executive. We've made progress with the conversion of around 32 Piotr i Pawel stores and the sale of corporate stores, independent retails and have redone the SPAR website, sports stores with our online offering. We still expect to breakeven towards the end of 2021. However, we're reducing our sales guidance to EUR 200 million for the financial year 2021. This adjustment to our forecast is pandemic-driven due to the setbacks we've experienced in our first year in Poland. We've accomplished a great deal under the circumstances. We have established a solid base. We are well geared for the opportunity. Next slide. It's been a while since we updated you on our joint venture business in Sri Lanka. The team has done an excellent job over the past few years. We have 6 stores, all profitable, with 5 more in the pipeline. Our objective is to establish the SPAR brand and to grow independent retail in this market. We continue to see an exciting opportunity in Sri Lanka. Next slide. Looking ahead. Next slide. The European businesses have seen the impact of second wave of lockdowns. Contingency plans are essential to ensure the robustness of our supply chains. In South Africa, we are focused on driving retailer profitability. Organic growth through in-store concepts, retail excellence and most importantly, upgrades. In Ireland, we are focused on the integration of Corrib Foods and Heaney Meats to drive the wholesale opportunity for these businesses, given the setbacks now presented to the industry. We continue to integrate the corporate store development in Southwest England. We're also involved in ensuring successful succession planning for our Irish business. In Switzerland, we will build on the momentum gained from new business and maximize on this opportunity going forward. We will drive retailer profitability, and we'll look to restructure our DC model to service the southwest as well as a new group of independent retailers who have joined us. In Poland, our number one priority is to achieve breakeven for bed down operations, focused on building culture and driving retailer profit and loyalty. We also see opportunities to develop our private label within this market and are making good progress in this area. Our next slide. In closing, our vision as a business is to be the first fresh brand in the community we serve. And it's pleasing to see that more consumers have chosen us for their local convenience and trusted SPAR stores during this time. We're now happy to take questions. We can open it up to Q&A. Thank you.

Thanks, Graham. Our first question is from [ Simon Stan ] of [ Pearson ] Capital. Can you please elaborate on the guidance for Poland's breakeven by end 2021? Is this at the end of the financial or calendar year? Is this breakeven on an EBIT at PAT level?

As for the calendar year, Simon, by the end of December 2021, we think at both EBIT and PAT level, we'll be at that level.

Next question is from Warren Riley of Bateleur Capital. Comparing full year sales to the 48-week update implied a significant sales acceleration during September. Could you speak to the more recent trends you have seen in the business as well as into October and November?

Warren, one of the biggest impacts on the September was, in fact, there was an extra 2 days in the month. Now I'm not trying to cut that one out too quickly. But basically, we did see a very strong September. We were double digits in South Africa, including that extra 2 days. I'd just remind that 2020 was a leap year, so we had to catch it at some point in time. What we have seen subsequent to that is the South African business is still tracking in the 3 to 4 percentile range, including liquor, which obviously now is -- or as recently as a week ago is going to start flowing back through again. As far as the Irish business goes, they have had a very strong September and October numbers of between 6.5% and 7%. That's in local currency terms. But they are cautioning that in the last 2 weeks, those numbers have continued to slow, obviously, as they've gone into a hard lockdown again. The Swiss business in the month of October continued to report double-digit growth. And they've also just gone back into a hard lockdown. Their number has also slowed slightly in the last 10 days, but still remains on the cusp of double digits. And obviously, the Polish business against the comparison, which excluded the Swiss -- sorry, excluded the SPAR stores, is still exceptionally strong at roughly plus 50% to 60%. So in the month of September, yes, there was a strong surge to the end of the financial period, some of it influenced literally by the number of days in the month. We cut off the month end on the 30th of September. That trend has continued into early October, obviously, as certain categories were unlocked in South Africa. Subsequent to that, there was a lot of excitement that, that would see a pickup. But we are also seeing slowdowns in the other geographies with the lockdowns being reimplemented.

Second question from Warren. Do you view the Irish and Swiss local currency earnings base as defensible in the year ahead? That is, do you foresee growth off of this base?

Well, I think in the Irish scenario, we certainly see a flattening off of that. But I think that we won't go backwards. As far as the Swiss goes, we'll continue to move forward strongly and with the basis we established in 2020.

Third question from Warren. What is your outlook for CapEx in the year ahead versus FY '20 base of ZAR 1.9 billion?

Warren, as you've obviously -- or are suggesting, you are aware of the fact that we are about to embark on quite a significant SAP rollout at a group-wide level. There is a number at this stage of some ZAR 1.5 billion for the expected cost over the next 3 to 5 years. So the CapEx in the immediate short term in South Africa is up by approximately ZAR 500 million. The other 3 geographies' CapEx at this stage is very much in line with 2020. The Polish number is obviously the outlier in the sense that the investment in Poland will be in response to sales growth. At this stage, we have 3 fully operational DC facilities to cope with our requirements. But obviously, in Poland, we've always said that as the sales grow and as the opportunity to grow sales, so we will need to react. But at this point in time, my immediate guidance would be based on the 2020 numbers, approximately ZAR 500 million increase specifically for IT investment.

The next question is from Brian Thomas of Laurium Capital. Mark, what impact, if any, has the new minimum wage in Switzerland is expected to have on the profitability of the Swiss business?

As far as I'm aware, we are ahead of that number and particularly in the wholesale operation. So we don't expect it to have too much of an impact. To be very honest with you, I haven't seen a quantified indication that it will impact us at all. At retail, as you obviously are well aware, the stores that we have in Switzerland are very, very small in the size of staffing structures. So we don't have the big c-store staff structures. There might well be in some of the stores, both corporate and independent retail, an increase in labor build, but not that I'm aware is going to be punitive in anyway.

The Next question is from [ Saheed ] of [ Netbank ]. Can you provide the movement ex liquor GP margin for South Africa?

Sorry, the ex liquor GP?

Yes.

Well, bear in mind that liquid trades at between 6% and 6.5%, and the overall number is coming out now at roughly 9%. So ex liquor is really a basket of all the other categories, [ Saheed ]. I'm a little unclear on how to get more specific than that.

Okay. Next question is from Paul Steegers of Bank of America. How should we think about the operating margin for the South African business in the FY '21 as liquor and Build it sales improve?

Paul, I think the converse to that is tell me when the pandemic breaks and things start normalizing. And I'm not trying to be facetious because that's the biggest challenge that we've had in setting our budget outlook for 2021 as well. It's not just about what sales we don't have. It's how the business and the whole general operations get impacted by COVID. At a very, very global answer, I would say to you that if the operating margin in South Africa in 2019 was ZAR 3.10 billion, as Graham alluded to last year, it was always a focus of ours to drive that number upward regardless of pandemics and sales mixes. So to finish at ZAR 3.3 billion this year, there's obviously a 20 basis point movement, some of which is attributable to the mix change. But conversely, we've also seen expenses increased by 43 basis points, some of which are pandemic induced or pandemic related as well. My broad strokes guidance would be somewhere in between. I think we've achieved our objective of getting that number up towards ZAR 3.2 billion. And pandemic excluded, that's roughly where I would like to see that number.

The next question is from Mokonyane at Investec. How fast will the Polish business trend towards the 9.5% gross margin?

Look, I think the 9.5% gross margin is obviously the wholesale margin. At this point in time, that wholesale margin is nowhere near at the level we need it to be fundamentally because the SPAR retail that we do support in Poland haven't achieved the extent of loyalty or support that we see in the South African business. That obviously will grow over time. So my guidance to you would be, at the moment, it is still heavily impacted by the exposure to the corporate retail stores that we own in Poland, but that will slowly dilute towards 9%. But we're probably looking at somewhere in the region of 2 to 3 years before you get as low as 9%.

So [ Mt Saliman ] from [ St Claire ] has a similar question, but he also asked what is the targeted mix from a retail basis wholesale perspective?

Sorry. Again, the question at the sales level or at a contribution level? Because fundamentally, as we've always alluded to, it's never been our intention to be corporate retailers. In Poland, obviously, based on the fact that there are some 160 independent SPAR stores as our primary customer base, we would look to see the vast bulk of operations in that country being very similar to South Africa incidental corporate stores, but servicing independent retail.

Okay. Next question is from Signal Asset Management. Can you provide some guidance with respect to retail space growth over the next 5 years in Poland, Switzerland and Ireland? Do your DCs have enough capacity to service these stores over the next 5 years?

I think that the retail growth in Ireland will be low. So some 1% per annum-type arrangement. Switzerland is a bit bigger as we had in our presentation with the PAM stores opening and another bunch of stores coming onboard in due course. But we should have capacity in both those areas. And in Poland, we've obviously got some runway, and that we're hoping that the increase in stores will be quite big as far as that goes. We've had our 100 store chains, 50 store chains, approaches already in Poland. And we're telling them just to hold off until such time we get our act together, which we're close to doing. So hopefully that gives you some guidance.

The next question is from Jiten Bechoo from Avior. Well done on results. Two questions. Is the Irish foodservice GP margin approximately 25%?

Could be up to that. Obviously, it depends on the mix of the products within that. And it also would depend on the nature of the contract that we were supplying. So it could be between 20% and 25%.

And then has there been a structural shift in the level of payables for the group, that is, if the higher payables stay sustainable?