The SPAR Group Ltd

Good day and thank you for joining us as we present SPA's annual results for the financial year ended September 2025. This year was defined by deliberate focus. We concentrated on strengthening our core, simplifying our portfolio and building the foundations for future growth. We made tough decisions, navigated uncertainty and most importantly, we remained committed to our independent retailers. who, through their resilience, grow our brands in the communities they serve. I'll start with a brief overview of the year and our strategic progress. Megan and I will then take you through the operational performance across Spa, Build It and Spa Health, followed by Reza with a financial review. I'll return towards the end to discuss our strategy, our outlook and the roadmap we are executing against. This financial year required disciplined execution. We were operating in a context of shifting consumer behavior, margin pressure, and the aftermath of legacy issues. We responded by focusing relentlessly on what we know best, distribution excellence, retailer enablement, and local partnerships. You will see that the performance is modest, but the direction of travel is unmistakably positive. We serve more than 2,000 entrepreneurs across Southern Africa, Ireland, and Sri Lanka. We are not a chain. We serve a network of independent entrepreneurs tied to their communities, and our role as a group is to empower them to succeed. The value of our independent retailers is that they can adapt faster, they localize, and they protect their customers. Our portfolio is balanced across premium value and emerging retail channels. That balance matters in a world where affordability and convenience are defining consumer choices. Where markets are volatile, when affordability shifts, and when formats change and capital costs increase, the model that survives is the model that's closest to the consumer. Across our charities, trading conditions were mixed. Inflation, consumer strain, and format disruption continued. In Southern Africa, macroeconomic conditions have shown some improvement. Food inflation eased to 4.5% in September, down from 5.1% in June, primarily due to lower fuel prices and greater energy stability. These positive shifts have also helped reduce logistics and distribution costs. Meanwhile, consumer behavior is evolving, with a noticeable move towards value-driven purchasing and an increased preference for online grocery platforms. Ireland's macroeconomic outlook remains positive, with GDP growth projected at 9%. The environment is stable, characterized by a low unemployment rate of 4.5%, and a 25 basis point interest rate cut implemented in June 2025. Nevertheless, consumer confidence is subdued, reflecting ongoing cost of living pressures. In Sri Lanka, reform and IMF support stabilize the macro environment. With GDP improving and consumer confidence returning, this is an early stage market with strong growth potential that requires disciplined capital and local partnership. These are not headwinds to shy away from. These are the realities we are actively responding to. with new formats, digital models, and private label growth. Our story in 2025 is simple. We went back to our core. Distribution excellence that empowers independent retail. We simplified the group through strategic disposals. We reduced debt and removed distractions. Despite tough trading conditions, momentum across our brands improved, supported by clear execution. We delivered growth in adjacencies, proving our ecosystem can expand without losing focus. Our partnerships with independent retailers remain our greatest asset, and everything we do is designed to help them win in their communities. Through distributed cost and capital management, we strengthen the balance sheet. And this translated into strong free cash flow, reflecting the work and capital improvements we put in place. This is the foundation we take into 2026. Focused, disciplined and positioned for the future. Group turnover increased 1.6% to R132.4 billion. Operating profit improved by 2.3% to nearly R2.8 billion. And importantly, cash generation strengthened materially up 13.4% to nearly R5.5 billion. Group leverage reduced to 1.74 times, a material step forward. HEPs declined, reflecting higher financing costs and a higher effective tax rate. We made the decision to address impairments proactively and transparently. The group's balance sheet has been cleaned. Our non-financial indicators reinforced the same story. Retailer loyalty has started to recover, digital adoption accelerated, and our commitment to job creation and social impact increased. We added jobs through our Rural Hub model, and we increased our CSI investment. We were pleased to have been recognized in the year, a testament to our partnerships, execution, and the trust our customers place in us. The Advantage Group recognized Buildit as the number one retailer in hardware and DIY, as well as brands as the leading private label player in the country. In Ireland, BWG Food Service was named National Food Service Supplier of the Year. Southern Africa turned a corner in the second half of the year. Wholesale revenue grew 2.3% year-on-year. Grocery and liquor growth was modest but improved materially through H2, growing 2.9% compared to the 1.1% in H1. Buildit delivered a solid performance and Spa Health outperformed, demonstrating the resilience of essential categories. Megan will unpack these a little later. Retail sales in grocery and liquor grew 2.1%, with like-for-like growth of 2.2%. Those actions were slightly down, but baskets grew 3%, showing the consumer is more intentional in value-seeking. In liquor, retail revenue increased 3.8%, and we maintained a healthy gross profit mix. The shift in category mix, particularly into low-alcoholic drinks, helped defend volume while protecting pricing power. In Omnichannel, our approach is very deliberate. SPA and TopsterU is now active in 636 sites and UberEats at over 300 sites. The UberEats integration created immediate convenience revenue without adding complexity to store operations, and it is working. Total order volumes are up 136% year-on-year, demonstrating real consumer adoption, not promotional slacks. We also integrated SPAR Mobile fully into SPAR Rewards. That has unlocked a powerful data ecosystem with 11.4 million loyal members, up 33% year-on-year. This scale gives retailers the ability to personalize offers, target baskets, and defend share in price-sensitive communities. And finally, Flex continues to gain traction. Over 1,400 stores are actively using the platform, or investing in Omnichannel. These are platforms that support independent retailers and protect our market share. The dual-platform strategy that we've adopted is starting to pay dividends, and e-commerce numbers are beginning to become far more meaningful. The introduction of SPA and TOPS on Uber Eats has driven positive incremental growth without eroding the 2U business in any way. It's important that we allow the customer to choose not only the digital channel they shop in, but also to make sure that we differentiate clearly between 2U and Uber Eats. The focus on spa and tops on the 2U app will be differentiated mainly by enabling the personalization of your store. On the app, this will start with unique landing pages, category callouts, and larger store unique ranges, evolving and becoming shaped by you as our retailer and the nuances of your community. This really brings to life the concept of My Spa, and offers us a unique unique value proposition versus purely speed and price we offer on-demand deliveries within 60 minutes scheduled delivery as well as click and collect options uber eats is a pure convenience play and aligns nicely with spa's original value proposition of convenience with six and a half million active users the focus is largely on immediate demand We're aligning the branding and design principles on the Uber Eats app with what consumers see on Spark U. The intention is to offer a smaller range of between 2,000 and 3,000 SKUs with delivery times between 15 and 45 minutes. spa mobile spa rewards and flex are not simply apps they are digital infrastructure they deepen engagement they create new revenue streams and build data assets that help retailers make smarter decisions flex usage continues to scale as more stores take up usage to manage digital orders, stock accuracy, and customer engagement. Since its launch in March 25, SPAR Mobile has reached over 700,000 subscribers and integrated with SPAR's retail system, linking mobile services to point of sale, loyalty apps, and promotions to trigger instant discount. and data rewards at checkout. Managed by 85 Group and powered by MTN, subscriber verification and reward fulfillment are supported by real-time reporting. To date, over 7.5 million passwords have included data-linked purchases, and the platform is continuing to grow through eSIM readiness, new bundles, and broader coverage. A critical part of our turnaround is format discipline. Gourmet is designed for higher frequency, premium convenience shopping. It drives differentiated in-store experiences. Fresh bakery, deli food to go, coffee, cafe culture. It attracts discretionary spend that is less elastic to price. SaveMore sits at the other end of the spectrum and offers affordable, simplified, capital-like retail with fast stock down and strong cash generation in lower and middle income catchments. Both formats expand the addressable market and retain retailers at risk of migrating to value-only competitors. Shopper attention today isn't one at the top. It's one through railroads. Our only at spa offerings like food stall, chicken chicken, pie and grill and B&T create reasons to enter the stall. Not just reasons to pay. We've made payments seamless with digital vouchers and gift cards, now active in 1,300 stores, catching spend before a shopper even walks in. Through Guest CX, we're standardizing the in-store experience across more than 1,000 retailers that protects the brand and converts visits into repeat behavior. Coffee continues to be a powerful footfall catalyst. whether through Vida eCafe or our own B&T solution. And Frozen for You gives us premium convenience, available in-store and on spot to you, meeting shoppers where they are and how they shop. Vida e and Frozen for You are two proudly South African brands, and we pride ourselves in partnering with local quality brands and local entrepreneurs.

I'll now hand over to Megan, who will take us through pharmacy and build it.

Morning everyone, and thanks, Ang. Buildit continued to grow in line with the market, with retail sales growing at 4.3% and on a life-for-life basis at 6%. The business has benefited from a strong performance at retail and the continued supply of microloans to consumers by finance houses, assisted most notably by Capitec. We ended the year with loyalty at 67.8%, slightly down from 68.4% in the prior year. Our loyalty results reflect the combined effects of retailer stock efficiencies in freeing up cash flow intense competition in the wholesale market and cross-border forex complexities impacting builded stores in neighbouring countries. Subsequent to year end, we have exited Mozambique with a retailer who operated the brand. We will be looking at alternatives and how we reposition the brand in Mozambique, as well as ensure supply into the territory. We saw the launch of Buildit Rewards in September, which is a fully funded retailer customer rewards program and is based on retailers opting in. Currently, we have 87 stores signed up. We have finalized the first phase of development for the Buildit2U mobile application. The public launch will follow once we have achieved critical mass in retail store onboarding, with rollout expected in the first quarter of 2026. We have also been focused on costs and profit optimisation. This has resulted in us reviewing our imports warehouse, which is largely for our house brands and accounts for 7% of our revenue. This has historically been a loss leader. As a result, we have streamlined our lines and cut back from 3,700 SKUs to 1,500 SKUs. Ultimately, we are looking at more cost-effective measures to serve our retailers, while still maintaining the build-it-house brand sea of red in stores, and will be effecting changes in how we do this. Lastly, from a strategic perspective, we have reviewed our strategic model both from a wholesaler and retailer perspective. It is key for our retailers to make sustainable margins and profits and that we grow our market share and store footprint. Historically, our business has been heavily weighted towards wet and building materials. We are now gradually repositioning retail to increase the contribution from categories 3 and 4, which is general hardware, finishes, plumbing, electrical and decorative items, which carry higher gross profit margins. This does not mean we will reduce focus on our wet trade. On the contrary, our ambition is to maintain and grow wet trade volumes while simultaneously strengthening our category 3 and 4 contributions at retail. Moving on to Spire Health. Our Spire Health business continued to make good progress with the wholesaler growth at 8.6% and script-wise continuing to go from strength to strength and growing at 20%. Our loyalty was at 60%. an improvement from the prior year where loyalty was at 55%. Key to unlocking our loyalty and growth outside of pharmacies and into the hospital networks is ensuring we have a national footprint. We have made good progress with the recent conclusion of our tier call in the Western Cape, which will allow us to reduce our cost to serve and enable us to grow our footprint and loyalty in the region. We are on track to establish a distribution center in KZN in H2 of the 2026 calendar year, and then also have a solution for the center of the country via Bloemfontein. Our business has been built on the pharmacy and script part of the business, and we have seen chronic scripts at more than 25% in our pharmacies. We are looking at the development of the front of store and how we position ourselves in the wellness space. We have big ambitions for our health business and believe we bring a differentiation to the market for independent pharmacists and customers who want to have a connection to their pharmacist. Moving on to the fun bit. Core to what we do is build brands and support independent retail. From concept to launch, we created Pet Story within nine months, and it's a store with a difference. The ethos of the brand is warm and fun and encouraging pet owners to bring their pets into stores. We saw a gap in the market where independent retailers don't have the power of a single brand behind them, nor the purchasing power to ensure they can compete with the corporate chains. We have created PetStory as a franchise brand And with the purchase of Petmasters and the launch of a few franchise stores, we have 12 stores currently operating. We have seen significant interest and take up for PetStory and have a very healthy pipeline, especially amongst our retailers. Thank you and back to Ange.