The SPAR Group Ltd

Good morning and thank you for joining us.

I'm approximately 90 days into the CRO and I'm joined by Megan Parigado. He's also 90 days into her role as Group CFO. So this is our first results presentation to the market as the new executive team of SPAR. I want to be direct with you from the outset. The H1 results are disappointing for us, for our people, for our retailers and for our shareholders. The numbers speak for themselves and there is no dressing that up. And this morning I want to cover three things. What went wrong, why, both in this half and the periods before, what we are doing about it and why we remain fundamentally confident in the SPAR model and its future. I will cover the strategic and operational picture and Megan will walk you through the financial detail. And I will close with our forward-looking focus and investment case for SPAR. Reflecting on an eventful past few years, this slide really provides important context for where we are today. SPAR has navigated a genuinely difficult few years, shaped by post-pandemic headwinds, the operational disruption associated with the SAP implementation in KZN, sustained margin pressure, and a complex international footprint. The international businesses, particularly those we have disposed of, placed significant demands on management, time and focus, funding and stress on the balance sheet and cash flows. And at the same time, the group was also executing a large-scale SAP implementation across its operations. While that backdrop has been challenging, meaningful progress has been made, and that needs to be acknowledged. The balance sheet is materially stronger with near-debt reducing from $9.8 billion at its 2022 peak. The portfolio has substantially been simplified. Poland and Switzerland has been exited. And with the AWG transaction agreed, the European portfolio review is effectively complete. And this is very important. All offshore cross guarantees and exposures removed. The SAP implementation continues to be rolled out across the regions with a focus on finance and the Group is operating from a far more stable platform than it was a few years ago. The focus is now much clearer. We are concentrating our resources on our businesses in South Africa and Ireland. And within South Africa, the priority is firmly on groceries and liquor, restoring retailer profitability, strengthening wholesale and distribution execution, improving service levels and rebuilding margins. In Ireland, it's about growing a solid, mature business. The challenges and opportunities are well understood, the priorities are clear, and the team is focused on delivering a sustainable recovery. Just reflecting on the half, it's been a tough start to the year. Headline earnings per share is down. The SA operating margin is approximately 1%, significantly below the prior year and materially below where we need it to be. There is no getting away from this. In SA, specifically our core grocery and liquor business, growth was below CPI and also internal inflation. at both the wholesale level and the retail level. We experienced margin compression in an attempt to drive sales, and then frankly, we had two self-inflicted missteps, the case in DC underperformance and our Black Friday overinvestment, which I will unpack in a moment. Our cost growth was also too high, driven in part by higher debtors provisioning, a function of the tougher macro, some legacy issues, and more conservative provisioning. And then below the line, we also had some residual non-cash impairments, some of which affected headline earnings per share. So on the stakeholder management side, retailers expressed their frustrations at the lack of growth, the lack of action in addressing long-standing issues, and the issues still causing friction at retail, which I will cover in a bit of detail later. But I also want to be balanced. There have been some good things during the half. Ireland performed well, delivering top-line growth and a 3% operating margin, despite a tougher consumer and competitive environment. And Megan will unpack the Ireland performance in her section in a bit more detail. There were other positives too. Working capital was well managed, although negatively impacted by timing of the March month in close versus at the same time last year. and our funding and liquidity is in place. In ESSA, groceries and liquor loyalty improved over the past six months, albeit marginally, and I'll get to loyalty a little bit later. Builders returned to growth at retail, and our SPAR health adjacency grew by 26%. The balance sheet is clean. We completed substantial write-downs of 5.5 billion, if you recall. We did that last year, and the recent impairments relate mostly to the current period with some legacy items recognised conservatively and also accurately. And I want to emphasise that balance sheet integrity and a prudent stance on risk is important to us. We largely completed the sale of AWG in the UK and we made some very important leadership announcements. Megan stepped into the Group CFO role. Jerome Jacobs took over as groceries and liquor MD and we appointed John Bradshaw into the Group CMO role. Our leadership team is firmly in place with a mix of deep spar, retail and turnaround experience. Okay, so if you look at key drivers for H1, what went wrong in the half? And the two own goals I'm about to cover is indicative of the foundational work that we still need to do. Disciplines, processes and accountability is not where it needs to be. Hopefully surprises like these are a thing of the past. So issue number one. K then N. Misstep. 123 million impact on operating profit. Let me explain what happened, what the impact was and what we have done. The DC attempted to drive top line and loyalty hard. But in doing so, margin was sacrificed. CP fell significantly in December and January. In addition, the warehouse and fleet was ill-equipped for higher volumes. Labor agreements restricted outsourcing flexibility, leading to overtime, and we had to hire additional trucks and incurred additional warehousing costs. Quite ironically, service levels also deteriorated, and out-of-stocks peaked, and retail experience in the region suffered directly as a result. So what have we done? A new leadership team is in place in merchandise, finance and retail ops. A formal stabilisation programme has been launched with defined milestones and workstream ownership. The GP percentage improved through the back-off of H1 with momentum building towards period end. Out of stocks improved materially from its peak. and we have reduced our dependency on expensive external truck hire. As a consequence, KZN delivered three consecutive months of operating profit. The recovery is real but needs to be sustained. It remains a critical execution priority for the second half and it is one both Jerome and I are personally close to. Issue 2 Black Friday is the second on-goal of the half and it was entirely avoidable. We overspent Black Friday by R152 million with a negative margin impact of R60 million in the first half. There was no ROI measurement framework in place. The system was structured to reward supply income rather than volumes and shopper footfall. Accountability was fragmented across DCs, central marketing and merchandising. And the result was that GP was dragged by below-cost pricing and open-ended promotional subsidies. Retail transactions, ironically, were down 2.3%, despite the investment into Black Friday. The required fix is structural, and we have appointed a new CMO who has moved quickly, and he is focused on enhancing our brand, marketing, and promo strategy. The marketing ROI framework is also now live and all marketing, advertising and subsidy spend will be measured against sales, footfall and loyalty. Brand before promotions is now the operating principle and a fully revamped trade plan for 2027 is already underway and a new approach to Black Friday has been agreed. Moving on to SA Grocery and Liquor Loyalty There are some misconceptions about loyalty levels in SA which I want to set straight. And this slide is an honest reflection of retailer loyalty over the past few years. So during COVID, loyalty across the network increased as independent retailers benefited from consumers shopping from neighbourhood stores. And we saw the loyalty peak at just over 83% for the period. The decline that followed was largely driven by the disruption associated with SAP and particularly in KZN. Service levels deteriorated, out of stocks increased and retailers bought outside of the system resulting in loyalty coming under pressure across the network. We have worked hard at regaining that. The continued instability obviously in the last half did not help. However, What is encouraging is what we have seen over the past six months. Our 12-month rolling loyalty for grocers and liquor is 78.2% as at the end of April. It's still below our 88% target, but the direction of travel over the past six months has been positive, albeit marginally. While we are not where we want to be, the trend is stable. And it's also worth noting that the loyalty figure shown on the slide includes our Southern African territories that are outside of South Africa. So in April, our South Africa grocery and liquor loyalty was 79.9%, so effectively at our 80% target, while the foreign territories were lower at 59.4%. And this reflects the local nuances weighing up logistics costs versus benefits. And there's also in-country legislation that forces local retailers to actually source locally. So the message from this slide is straightforward. Royalty was impacted by SAP-related disruption, but it is stable and there are efforts underway to improve it, particularly in KZF. So that is the assessment of where we have been. Now let me turn to what we are building. The SPAR model is a voluntary trade model and it is important to understand what makes SPAR different. Unlike corporate retail chains, we are not a centrally owned retail business. We are a partnership between the independent retailer and the wholesaler. And independent entrepreneurial retailers own the stores and manage the day-to-day with autonomy. They have the local ownership, the agility, the community connection. We provide best-in-class merchandise, warehousing, distribution and marketing capabilities at scale. The two reinforce each other. When both are operating well, it is a formidable combination. And neither side succeeds without the other. Retailers need a strong wholesaler. and the wholesaler needs profitable growing retailers. They are two sides of the same coin. Our strategy hasn't changed. As a wholesaler we remain firmly committed to unleashing the power of independent retail. We are addressing the issues that have created friction for retailers while at the same time we are strengthening the wholesale and distribution business that supports them. And in the next few slides I will set out exactly how we are doing that. Restoring retailer profitability on the one hand and improving wholesale execution, service levels and margins on the other. I split this part of the presentation into two. First, focusing on the issues at retail. Restoring retailer profitability and fixing the fundamentals. So recent Public commentary has made it clear that some retailers are frustrated. We have listened carefully to those concerns. There are areas where retailers have been looking for faster progress and we are changing the pace at which we are addressing them. So over the past few months I have spent considerable time engaging with retailers individually and with the National Guild to better understand the issues and to align on priorities. We have existing structures in place to engage with retailers like the National Guild, subcommittees and regional committees. However, those structures have not always worked as effectively as they should and strengthening that partnership, improving communication and ensuring that issues are resolved quickly is the key. So each of the five areas I'm about to cover has an executive owner, a detailed action plan Clear Accountability There are five retail focus areas Stronger procurement and sharper pricing Brand and marketing effectiveness Repositioning SPAR to you Building a future for the retail technology platform Empowering retailers to improve profitability and manage their costs Let me cover each one briefly Starting with stronger procurement, and this is led by our merchandising executive. This is about using our scale shift to buy smarter and improving availability and pricing on key value lines for our retailers. There's no doubt there's been inconsistencies in pricing that need to be resolved. We have started with the tiling of pricing tools, with greater collaboration with our suppliers to address also price disparities and also the central management and tracking of key value items. I've met with a number of our major suppliers and I've really been struck with the goodwill shown. They are really keen to support and partner with us and that is an asset we have not been fully leveraging. So in terms of brand and marketing effectiveness, this is an area of significant investment for retailers, through the guilds, for us at the centre, and through the regions. The Black Friday experience showed clearly what happens when that spend is not coordinated, not measured, and not focused on the right outcomes. A full review of marketing processes and the spend is underway, led by our newly appointed CMO, John Bradshaw. And the aim is to rebuild brand conviction, positioning the independent SPAR retailer as the accessible, community-focused hero. I am very excited by the work that is happening here. John has been in the role for two months and is really the ground running. Turning our attention to SPAR to you. We have been late to the on-demand journey and in some ways we are playing catch-up. So our current SPAR to you proposition is not sufficiently differentiated to materially grow market share against the established online players. The repositioning is built on a clear insight. We do not want to fight our peers on their terms. Our advantage is the MySpar, its personal proposition. The uniqueness and nuance of each individual store connected to its retailer and the local community. That cannot be replicated by a chain. We are establishing a dedicated, focused team with direct accountability for tech enablement and improving the user experience at the retailer and customer level. On the fourth pillar, building a future-fit retail technology platform. So our retail systems landscape is aging, and we need to arm our retailers with modern tools. There is too much manual intervention in the retailer-authorized interaction, in claims processing, in settlements, and in reconciliations. And Brett McDougall and the team are leading this for the Guild IT Subcommittee. We are launching SPAR IQ as a platform for expanded retail reporting, enabling better insights and real-time visibility at the store level. Modernising retail technology without disrupting day-to-day operations. That is a principle we are working to. So lastly, empowering retailers to manage their profitability and their costs. So with stagnant sales, rising wages, rising rental and utility costs, retailer profitability is being squeezed from both ends. Benchmarking an exchange of best practice between retailers is a sensible and immediately actionable lever. We are looking at staff scheduling tools, support on rental diversions and negotiations, and cost-effective approaches to store revaps. This work is being led by Retail Operations, alongside the National Guilds Profitability Subcommittee. Now to the wholesale side. There are levers that are directly under our control, and the areas we are driving every day with defined KPIs, accountability, and monthly progress review. On the SM margin, I know many of you want to ask me about the 3% operating margin target. And let me be direct, we went backwards in the first half. And the reasons are two operational missteps I described, KZN and Black Friday, which point to instability in the system that we are actively fixing. What I can tell you is that 3% operating margin remains an ambition. Right now we are focusing on fixing the foundations. which should result in margin improvement. And when we are ready, we will share targets and timelines with you. I'm not going to over-promise and under-deliver. Okay, looking at the wholesaler focus areas. The SPAR model succeeds when a wholesale business performs at a best-in-class level. And we recognize that we have not consistently met that standard in recent years. So our priority is therefore to strengthen the fundamentals of the wholesale business. Many of the initiatives listed on this page are the same initiatives we discussed earlier. So don't look at this as 20 different projects. This is one integrated recovery plan with multiple leaders. We have divided the wholesaler initiatives up into three buckets. Margin optimization, improving efficiency and growth initiatives. As you can see there are a number of initiatives under each of these pillars and I will call out three areas specifically that we haven't dealt with previously. So firstly, corporate store losses. Our corporate store portfolio has historically been managed across the six regions resulting in fragmented accountability and inconsistent execution. So to address this we have consolidated approximately 50 corporate stores under a single executive leader and a dedicated management team. This creates clear ownership, consistent performance management and strong alignment between the store portfolio and our wholesale operations. The team now works closely with each of our six DCs to improve overall store profitability. By centralizing accountability and with greater operational focus, we expect to reduce losses and improve returns from the portfolio. So to date, we've completed a detailed store portfolio analysis and are clear about which stores should be closed, turned around or sold. As the business has evolved, our supply chain network has become increasingly complex, with multiple DCs, several in-land facilities and a separate private labour warehouse. While these assets provide capacity, they also create opportunities to simplify operations. We have started with warehouse flow improvements in KZN while reviewing the broader network design, transport operations and facility utilization. Moving on to private label. Private label is one of the most significant growth opportunities available to us. While we acquired this capability through Encore in 2023, we have not yet fully integrated into SPAR. And today it continues to operate with separate structures, warehousing and logistics. Our focus is now on completing that integration. There are two key opportunities for us. Firstly, accelerating product innovation and new product development to build a stronger own brand and controlled label capability. And secondly, simplifying the inter-end value chain between suppliers, Encore, our distribution centres and our retailers. And the opportunity and the value creation is compelling. So globally, Private Label continues to gain share as consumers seek affordable value. We have a trusted brand, strong supplier relationships and a retailer network that can benefit significantly from a more integrated Private Label platform. Ultimately, all of these initiatives are aimed at the same outcome A stronger wholesale business, more profitable retailers and a healthier SPAR network. So over the last few slides we have spoken about a number of initiatives across both retail and wholesale. But ultimately you will judge us on outcomes, not activities. So on this slide we have listed five areas that will clearly measure our progress. Margin and growth, service levels, retailer health, e-leveraging and cash generation and the future for IT platform that we are investing in. So these are clear measures that will tell us whether we are succeeding or not. So today we can point to some encouraging signs which we've listed in the middle column. And ultimately these are the measures that we will use internally to also measure progress. And going forward, there are also the measures that you will use to assess whether we are delivering on the turnaround. I will now hand you over to Megan, who will walk you through the financial detail. Megan brings deep turnaround experience and operational knowledge of this business. She was Group's CRO before stepping into the CFO role, and that perspective shapes how she reads the numbers. Megan, over to you.

Morning everyone and welcome to our half-year presentation. It's been a difficult six months and I want to start by giving context to the macro operating environment. In South Africa, food inflation softened to 3.4% by March 2026, down from 4.4% in September. However, we are seeing signs of re-acceleration driven by fuel costs. Consumer habits are shifting toward discount in online channels, SPAR Group Ltd Both environments demand disciplined execution. Let me take you through the group's salient features for the half. This was a challenging six months, and these numbers reflect that. Turnover was $67.5 billion, up 2.1%, but that's below our internal inflation, which tells you volumes went backwards. The pressure showed through an operating profit, $730.7 million, at a margin of just 1.1%. That's roughly half of where we were a year ago. Three major items drove that decline, all related to the Southern Africa grocery and liquor business. The KZN distribution disruption, the Black Friday investment that didn't deliver the return we expected, and a series of balance sheet clean-ups. I'll unpack each of those in the slides that follow. EPS at $0.200 is down nearly 55.9% on a comparable basis. Earnings were materially lower and we did not declare an interim dividend consistent with the prior year. Free cash flow was negative $2 billion, largely driven by working capital movements related to trade creditors. Despite the earnings pressure, the balance sheet held. Rokey at 11.7%, net debt at $7.3 billion, and Gearing actually improved to 2.75 times and better than the 2.81 times a year ago. H1 was under real pressure. The causes are specific and largely within our control, and the balance sheet gives us the room to fix them. H2 is where we are going to have to show and focus on that. Moving to the Group Income Statements. I'll give you the shape of it and then flag where we're spending our time unpacking the performance. Starting with turnover, growth was muted with highly competitive trading environments on both sides of the business. South Africa was up 1.7% and Ireland was up 2.2% in Euro, translating to a 1.8% increase in constant currency at group level. So the top line grew, but slowly and behind inflation. Island largely performed in line with our expectations. It delivered solid organic growth, the gross margin held, costs were well controlled, and finance costs were down as we kept deleveraging. Island is doing what we need it to do, a stable cash generative business, which means the story of the half and the reason earnings are down as much as they are sits almost entirely in South Africa. In the following slides, I will unpack the SA performance in detail. On gross profit, the margin softened, driven by product mix and promotional activity. Most notably, the Black Friday campaign and softness in gross profit margins in KZN. On costs, operating expenses are where the real pressure shows. SA marketing and selling costs rose sharply on the Black Friday investments. The cost to serve in KZN from a logistics perspective ran over, and we raised elevated credit loss provisions on SA debtors. Extraordinary items comprise balance sheet clean-ups, which are largely non-cash and included impairments related to Goodwill and PPE, system software, and building imports warehouse closure and corporate store impairments. Net finance costs were marginally lower overall, Profit after tax on continuing operations was $292 million, down 64%. If we now turn to unpacking Southern Africa grocery and liquor revenue, wholesale revenue from our core grocery and liquor business grew just over 1%. Our internal selling price inflation was 2.6%. Revenue grew slower than that. So once again, you strip out price, real volumes went backwards. Perishables held up better than dry groceries, where demand was softest and reflecting renewed focus on a higher margin category. Liquor continues to shift towards lower alcohol lines. And then there's a clear geographic split. Coastal regions are growing ahead of our inland divisions. Retailer loyalty held at 78.5%, albeit less than our 80% target. And reward sales were up 9.3%. So even in a soft volume environment, shoppers are staying engaged with the brand. This slide tracks how revenue and gross profit moved across the half. And the story is really of one of three distinct phases. It opens with Black Friday in October and November. We saw a sharp, short-lived lift in revenue, but it came at a cost. The promotional intensity and below-cost pricing we ran to drive that volume suppressed margin heavily. Through the festive period in December and January, sales momentum held as consumer activity stayed strong, but gross profit remained deeply negative, weighted down by the same promotional drag and ongoing margin pressure in KZN. The encouraging turn comes in February and March. This is the most positive period of the half. Revenue growth accelerated to 2.1% and crucially growth profit growth turned positive at 2.3%. That reflects early stabilisation in KZN, less promotional drag and a better category mix. So the underlying trend is improving, even if the reported numbers don't fully show it yet. Buildit delivered resilient organic retail sales growth of 6.1% in H1, an improvement on the 5.4% achieved in the prior year, supported by increased access for consumers to microfinance, particularly in South Africa, through our recent partnership with Capitec. Headline retail sales growth of 1.5% was below the 5.1% reported in H1 2025. primarily reflecting store closures and a strategic exit from Mozambique. Organic growth significantly exceeded product inflation, demonstrating underlying volume growth rather than price-led expansion. Wholesale revenue increased by 1.3% to 5.2 billion, while retailer loyalty remained broadly stable at 68.1%. On a reported basis, Loyalty showed a marginal increase, supported in part by the exit from Mozambique, which represented a relatively small component of wholesale sales. Excluding Mozambique, underlying loyalty declined by approximately 2%, driven by a combination of factors, including shifts in product mix across the network. This trend highlights a clear opportunity for growth to recover lost loyalty and strengthen performance off the current base. The business continues to build organic growth momentum and remains well positioned for sustainable growth with positive trading trends continuing beyond the half-year period. Turning to SPAR Health, the story here is one of continued sales momentum. While profitability sits a little behind, and that's by design as we work through a deliberate investment cycle. Total sales revenue reached $1.2 billion, up 26.1%. Part of that step-up reflects the addition of Aptirco, the Western Cape pharmacy wholesaler that has operated as a SPAR subsidiary since 1 November. Below the top line, the operating businesses are performing well. Scriptwise was up 12.2% and continues to hold its number one position in patient support programs, while pharmacy at SPAR delivered retail turnover growth of 13.6% year-to-date. 7.7% on a like-for-like basis, comfortably outpacing competitors. Customer engagement is also moving in the right direction, with loyalty climbing to 65% from 58% a year ago. This is largely attributable to having a DC in the Western Cape. On profitability, the single exit price regulatory cap at 1.47% versus an expected budget 5% based on the prior year, is a regulatory headwind entirely outside our control and has had an impact on gross margins. We also launched Project 125 a year ago to drive our pharmacy footprint. 47 pharmacies have signed up to date, of which 28 launched. SPAR Health is a healthy growing platform that we are deliberately investing in now to build a stronger earning space over the next few years. Moving across to Ireland and the BWG business. This is a solid set of results and they're all the more credible given the challenging Irish consumer backdrop that we've had through the half. Sales came in at €856 million, up 2.2% across the Irish business with continuing strong growth in our food services business. Encouragingly, the quality of sales improved too. Gross margin rose 20 basis points to 13.7%, helped by better supplier trading terms and an improved product category mix. On costs, the team kept a tight grip. Wage inflation of 3.5% was absorbed through distribution efficiencies. Payroll and operating costs stayed well controlled. The standout, though, is the balance sheet. Net interest fell almost 23% to 3.8 million euros. as the deleveraging program continued. Net debt is now €139.3 million, some €44 million below the 2022 peak. And we still have €96.7 million of available facilities. In short, Ireland is converting steady top-line growth into healthier margins and a materially stronger balance sheet, a resilient performance in a tough market. As we simplify the group portfolio, and sharpen our focus on South Africa and Ireland, BWG remains an important part of the group. It is a high-quality business with a strong market position, disciplined management, and a proven ability to generate earnings and cash through the cycle. This bridge explains the operating profit decline by separating one-off drag from underlying performance. We have bucketed it into two parts, the first being current period anomalies, which includes the KZN disruption and the Black Friday promotional spend. We have also included the currency impairments which related to corporate stores in South Africa and Ireland and then the costs for the closure of Build It Imports warehouse. Secondly, our legacy matters are the balance sheet cleanups, provisions and historic items. The impact on performance is within our control and not necessarily structural. We need to ensure we exercise tight discipline in managing the business. This slide is really here for reference. It bridges reported profit through to headline earnings. HEPs is down 55.6% on a comparable 182-day basis, with headline earnings of $385 million against $835 million a year ago. The adjustments are mostly non-cash and one-off impairments and asset disposals rather than anything in the underlying trading that we've already covered. A few key lines from the balance sheet. Total assets of $44.8 billion made up of non-current assets of $19.4 billion including property, plant and equipment of $5 billion and goodwill and intangibles of $6.5 billion. Current assets of $25.4 billion includes inventories of $4.6 billion and trade and other receivables of $16 billion. Cash and cash equivalents excluding guilds and trusts were $1.1 billion at period end. On the liability side, total liabilities of $39.4 billion, net long-term borrowings of $6.4 billion and equity of $5.4 billion. The balance sheet is cleaner and more focused than at any point in recent years, and with the completion of the disposal of the UK business by year end, we will be through our cycle of assets held for sale. Let me turn to the debt picture, broken down by country here so you can see where leverage sits across the group. The 5.4 billion net debt at September 2025 moved to 7.3 billion at March 2026. driven primarily by the unfavourable working capital amusement due to timing. Overall leverage has decreased from a year ago, with improvement in our leverage ratio. Considering the Swiss debt that was taken onto the SA balance sheet of around $680 million in September, it's a really good outcome. Funding was adequate at the reporting date, and we retained good headroom across cash and facilities. Working capital management remains a priority. The adverse H1 movement was driven primarily by a trade payables reduction and it can be clearly seen where we generally run on close to net neutral working capital. September last year was an anomaly and has affected cash flow negatively this year. This is a timing distortion, not a structural deterioration. Inventory was well managed through the period After the build-up to the festive season, we sought tight discipline to bring stock levels down. Going into debtors in a bit more detail, and specifically putting the spotlight on the South African debtors book, and more broadly the health of our retailers, an area we're watching closely. The honest message is that rising overdues are signaling genuine distress among some retailers, as cost pressures work their way through their businesses. The takeaway is how actively this is being managed. Credit committee oversight has been intensified and early warning indicators are in place. We identify problems sooner and ensure our retail operations teams are on the ground to assist the highest risk sites. So while overdues are a real watch item, the takeaway is that we have visibility, the right governance and active mitigants in place. Free cash flow was negative $2 billion versus positive $694 million in H1 FY25. The primary driver is working capital, a net outflow of $1.8 billion. This is overwhelmingly driven by the trade payables timing distortion I mentioned. It is a mechanical timing driven number, not a structural cash deterioration. As the AP timing normalises in H2 and earnings recover, the free cash flow picture should improve materially. SA operational cash flow is €1.5 billion, while Ireland is slightly negative at €15.5 million, which is manageable. This waterfall chart captures the total cash movement, including discontinued operations. Including the UK discontinued operations, total cash has been absorbed this half by operations and the disposal process. The UK exit eliminates a structurally loss-making business. Cash flows will normalise as the disposal completes in H2. Turning to capital expenditure. Our CapEx target remains firmly in place at roughly 1% of revenue. In the first half, spend was concentrated on our strategic initiatives, principally the SAP and Omni initiatives. On the expansion side, we deployed 118 million on store acquisitions in South Africa and purchased a cash and carry business that strengthens our footprint in Ireland. Looking at replacement capex, retail capital contributions of 3.8 million euros went towards store revamps, keeping their state fresh without over-committing capital in Ireland. And as we move into H2, the strategic spend largely relates to the SAP finance go live. We are ensuring we are disciplined around capital deployment. We have a clear hierarchy when it comes to capital allocation. Operational investment and CapEx first, debt reduction and covenant headroom seconds, shareholder returns were unsustainable. Dividends remain suspended. Free cash flow has been negative this half. Earnings are not yet restored and gearing is still elevated. Capital preservation and debt reduction is the mandate. This is not a permanent position. It is the right position for now. Our intention is to return to paying dividends. On the share buyback, the Board has the authority in place but we are deliberately not activating it now. With rising interest rates and the current market conditions, the cost of carrying debt is elevated. Returning cash to shareholders while leverage sits at 2.73 times and free cash flow is negative in the first half would not be responsible capital stewardship. Shares are materially undervalued, which makes the case even more compelling when conditions allow. Prudence comes before returns. Importantly, holding backyard is a position of strength, not weakness. We retain real optionality. We have $6.6 billion of total available funding. Covenant headroom is maintained and the balance sheet carries unencumbered hard assets. This gives us further flexibility should we choose to use it. Our focus remains on operating cash generation, deleveraging through earnings recovery and working capital discipline, rather than dilutive equity. The buyback like the dividend will be reconsidered once leverage is on a sustainable downward path and free cash flow is consistently positive. The final milestone in portfolio simplification is complete with the disposal of our UK business. The asset purchase agreement was signed with AF Blakemore for the Saltash Depot and 71 stores on 4 May 2026. We expect the Saltash takeover at the end of June and it's all on track. Phase store transfers go through until September. The H2 UK trading losses are forecast at approximately £5 million. It's important to note the disposal structure does not involve a group assuming all settling AWG debt as part of the exit consideration. At September 2025, AWG bank debt had already been reduced to nil. The £13.875 million intercompany loan balance was fully impaired as part of the broader impairment recognised during FY25. This is the final step in a three-year portfolio simplification programme. With the UK exits, Spar's footprint is now South Africa and Ireland. This is where our focus belongs. Given how topical this is, we wanted to give you a sense of how fuel costs impact our business. H1 was actually a tailwind for us. Diesel averaged at R18.42 a litre in H1 versus R18.67 a litre in the prior period. Fuel represents around 15-18% of warehouse and distribution costs. is the single largest cost variable in our DC network. Total fuel spend was $254.6 million. Litres consumed were down 3.5%, reflecting route optimisation efforts. In the first half of the year, fuel actually helped us because prices were lower than expected. We expect that to flip in the second half and work against us, but we have already sized it and have a clear plan to absorb it. There are three parts to the plan. Firstly, we are simply using less fuel by running our trucks smarter, planning better routes and loading them more fully. Route optimisation and load consolidation already reduce litres consumed by 3.5% in H1. Secondly, we look to suppliers for surcharges, so we are not carrying the whole cost ourselves. Thirdly, because we now buy Trucking across both South Africa and Ireland, we have more weight at the table when we negotiate with outside hauliers. And in KwaZulu-Natal, we have moved away from renting trucks at short notice towards owning more of our fleet, which makes costs far more predictable. In short, fuel will be a headwind in the second half, but is a known and manageable one. H2 presents a constrained macroenvironment. In South Africa, we see intensifying price competition as chains expand discount formats. Independent retailers are under margin pressure, and we see a significant growth in promotional activity. Successive fuel hikes are putting pressure on the supply chain, and the SOG raised rates 25 basis points in May. We are also seeing increased prices coming in from our suppliers. and expect inflation to uptick if the Iran war remains unresolved. In Ireland, the convenience market remains highly contested. We expect the ECB to raise interest rates by at least 50 basis points through 2026, while consumer confidence is at a three-year low. These headwinds are real as we go into H2. This leads me to the next slide, which sets out a response to our low-growth top line and constrain margins from a cost perspective. This is what we are doing about it. Cost growth ran ahead of inflation in the first half, so we put a structural cost reset in motion, a realignment program designed to start showing through in the second half. We have started with an overall review of our operating costs to understand our cost base, organizational structure, and design compared to benchmarks. We have identified where we can get the quickest wins. This is not a once-off program and will be embedded into a continuous improvement plan as to how we drive cost efficiencies across the business. We have also established and centralized non-trade procurement. Historically, each DC sourced independently. We are now sourcing centrally and some examples include marketing agency costs On our distribution network, we have had to very quickly respond to the increased fuel price by optimising routing and frequency of deliveries to bring down logistics costs per kilometre. The consumer and our retailers can't afford to absorb the increased cost of fuel. As outlined earlier, we have various initiatives underway. On marketing, as already touched on by Reza, We've completed an effectiveness review of spend and adopted an ROI framework to ensure spend is better controlled and more effective. On people, the voluntary service program in the centre is the clearest early proof point. The 27.3 million cost, which falls into H2, but that unlocks around 33.2 million rands of annual savings. Alongside this, the organisational design and spans and layers work is now underway across various functional areas. This is a deliberate structural reset rather than short-term trimming. The actions are already in flight and we'd expect the benefit to build through the remainder of the year. On that sobering note, I would like to hand back to Reza.