Shoprite Holdings Ltd

Good morning, ladies and gentlemen. Welcome to the 2026 full year results presentation. That's for the 52 weeks ending 28 June 2026. We will do our best to complete the presentation in an hour. We really value your time and thank you very much for joining us. I think you've become accustomed to the way that we do it, so I'll do some opening comments. Anton will then unpack in detail the financial numbers. I know that's the part that you're looking forward to most. And then I will end off again with a little bit of operational review and a strategy update of where we are and what we're busy with. And then we'll take questions. So the year that was can probably be summarized in one sentence. ShopRite is winning through customer focus and relentless execution. We had very good momentum. It continued. 1.3 billion customers during the year. An additional 1.1 million customers per week. and of course I know you understand that it has a whole ripple effect back into the supply chain to be able to serve an additional over 1 million customers in a week. But we're very happy, we're very pleased that ShopRite is still growing customers, that people elect to come to us. The year was again the record market share achievement, additional 7.5 billion in market share gains in the supermarket RSA division. And the year didn't come with just increasing prices. We're still a value retailer, even more so a price competitor in the ShopRite brand. So the year came out at a 0.8% inflation. A lot of categories in deflation, which I will unpack later on, where the impact is even more so on ShopRite. So we didn't have the luxury of just increasing prices. The market share growth came as a result of volume and customer growth. And then, of course, the trading margin improvement must be accompanied with very strong cost disciplines, shrinkage and waste management. to offset this low inflation environment. There's a lot of migration happening in South Africa. So there's a lot of new areas still that's underserved. And therefore we could open 262 net new stores during the year. Group sales were up 7.2% to 270 billion. That means we added 18.1 billion in sales. And like I said earlier, percentages can be very deceiving and that's why we will In a few examples here, I also talk about the monetary value to give it this context because the percentage is not always from the same base. Trading profit is up 8.4%, which is now more than what the sales growth was, also again amounting to 16.2 billion. Given the low inflation environment, supermarkets, RSA, still achieved an excellent trading margin of 6.6%. Maybe I must just pause there. 6.6% trading margin for a value retailer, I think is an exceptional performance. The adjusted ROIC increased to 19.8% with a WAC of 11.5. There's a differential of 8.3, which in my memory in the last decade is the highest we have had such a differential. The diluted headline index was up 12.2%, a value up to R1527. We have spoken in the past quite a bit about creating a smarter shop, right? And our investments in the last couple of years was exactly delivering on that forward resilient growth. And there's a couple of examples, I will expand on it later also, but one would be like our price optimization tool. In a low inflation environment like what we had this year, that tool came in quite handy. Planning promotions better, getting the pricing right. Therefore, we didn't have the luxury of just increasing prices. As a matter of fact, later on I'll show you how massive some of the categories were in deflation. And thousands of items were cheaper than last year. Checkers are still leading the growth in the premium food market, especially on the fresh, which we are very pleased about. We continue to expand on the 6060 one-hour delivery service to more locations and categories. Total platform sales were up 34.7%, equal to R25.5 billion. Again, I'm referring to the monetary value because, as I say, percentages can be very deceiving. Adjacent business increased sales by 57.4% to $1.9 billion. That's the patent, outdoor and unique. And I do think we've made some good choices in these adjacent categories to give us a larger share of wallet. The supply chain and here I cannot put it any other way to say I think ShopRite has a superior supply chain. Very few retailers can claim to be now the second year in a row over 98% on shelf in stock. You've seen this before. Our ShopRite purpose is to uplift lives every day. Lots of businesses claim to be customer centric or customer first. I believe in ShopRite we live that. I would be amiss if I don't just stop a moment to thank you Team ShopRite and say how proud I am of what you have delivered again. The consistency every year Team ShopRite delivers on excellence, a very The pleasing statistic is to report that we again have created new employment, almost 5,500 new jobs and consistently have done so year after year. What is also very pleasing is that our people also share with our shareholders in the success of ShopRite. Our employee trust have now paid out to our employees up to 1.3 billion in value, making them share in what they deliver on every day. On top of that, worth mentioning is that in terms of employment training and development, in last year we spent over 1 billion on our people, bettering them, improving their skills to deliver better for our customers. And with that, it doesn't come as a surprise that ShopRite is the retail employer of choice in South Africa. So not only do we develop and create employment, we also support South Africa enterprise. By a long while, ShopRite is the number one supporter of South African farmers. Just to put again a value to that, 1.7 billion of fresh produce was sourced from local SMMEs. Very proud of that. We do a lot to develop small suppliers. We can also report that 88% of our private label products are locally produced and that our smaller SMMEs had a sales growth of 91% in the past year. And it is not that easy. It takes a lot of effort. to take a small supplier into the larger retail and make them grow. And we are very proud of that and we will continue to support them. On top of just being a retailer is that we are also a force for good. It's now a decade since 2016 that we are selling a loaf of bread for R5. No conditions, no extra rules, just R5 for your loaf of bread for 10 years. On top of that, we have served 11.2 million meals during the year through our 148 early childhood development centres as well as our 35 soup trucks. We also care for the environment, so we have managed now to get up to 8% of our electricity that we use are sourced from renewables. And if we just look at our PV electricity generation, that would be able to power 31,700 homes, just to put it in context. Recycling, of course, everything gets transported in plastic or cardboard, and over 83,000 tons of cardboard and plastic that was recycled and reused. It's also good that we can report that almost 96% of our in-store packaging is either recyclable, reusable or compostable. That was the quick overview of the year that was. We will unpack all of the numbers to make sure that you are very clear on what transpired during the year. For the unpacking of the financial results and the numbers in detail, I want to hand you over to our very fine CFO, Anton de Bruyn.

Thank you Pieter for that introduction. Before turning to the detailed financial results for the year, I would like to highlight the restatement of our 2025 financial results, and this relates to the reclassification of the Group's remaining assets in Nigeria as discontinued operations in accordance with IFRS 5. The reclassification reduced our DHEPS number in 2025 by 6 cents and that equates to around R41 million before tax, resulting in our DHEPS in the prior year changing to R13.61. The financial performance presented today relates to our group's continued operations. For the intern to sales, our group reported sales growth of 7.2% to R217.1 billion. What was pleasing for the group and for management was that we achieved similar growth rates within H1 and H2. And I will unpack the performance per segment on the next slide. Cost control remained priority for the group, and we ended our expense margin on 20.1%, very much in line with our performance of last year. And that gave rise to the fact that we could actually achieve our medium-term trading margin of 6%. From a trading profit point of view, we saw an increase of 8.4% to R16.2 billion. and then strong performance in terms of EBITDA where we had an improvement of 7.7% to R25.8 billion. Diluted headliner earnings per share for the year increased by 12.2% with adjusted diluted earnings per share increasing by 12.5%. As part of the appendices is a reconciliation where we show the variances between our diluted Hldns per share as well as our adjusted DFs number. Adjusted ROIC was 19.8%, 8.3% above our weighted average cost of capital, which reduced to 11.5% during the year. Our final dividend increased by 14.1%, with a full-year dividend increasing by 11.8% to 873 cents per share. You will see that there's a slight difference between the 11.8% increase that we had for the full-year dividend versus the HEPS growth, and that was as a result of the restatement in the prior year. Just a reminder that our dividend policy is 1.75 times the DHEBs from continued operations. Return on equity for the year was 27.4% and improvement on the prior year of 26.7%. For the intern to sales, the group saw improvement of sales by 7.2% to 270.7 billion. From a RSA supermarkets point of view, we saw improvement of 7.1% to 228.7 billion. on the back of the opening of 262 new stores, as well as a 0.8% internal selling price inflation. If I then turn to the core brands, we saw an improvement in our ShopRite, Youssef, and liquor business of 4.3% to R121.6 billion, a R5 billion increase purely from that brand, and then we also saw a R9.5 billion increase in turnover within our Checkers and Checkers Hyper brand, where we saw a 10% increase to R105.2 billion. From an adjacent business point of view, we saw an increase of 57.4% and that was mainly driven by the expansion within our pet shop science business as well as our unique business. Supermarkets non-RSA, we saw an increase in sales of 11% to 22.8 billion. Like-for-like sales growth was 8.6%, with constant currency growth of 7.1%. Internal food inflation for the regions measured 2% for the period, but we again saw outpaced inflation with regards to higher inflation in Zambia of 6.5%, as well as Angola of 10% during the year. We opened a net new 8 stores in the rest of Africa segment. Sales growth in our other operating segments totaled 3%. The 0.6% growth in franchise sales was mainly driven by the net decrease of 42 stores during the last 12 months, following the termination of a single franchise agreement of 51 stores during our second half of the year. Our many rights and transform business increased sales by 9.2%. The group continued to invest behind our store expansion program, especially in supermarkets RSA, where we added additional 262 stores for the year. On the back of 255 stores in the prior year, space growth again this year was around 6.1%. Within the ShopRite USAFE and ShopRite Liquor business we opened an additional 136 stores and likely also in the Checkers and Checkers Hyper business we opened 72 stores. Meaningful is our Liquor business where we added 93 stores and that was also driving the 12% sales growth that we achieved within those banners. and Store Formats. Adjacent businesses, we added additional 54 stores, which 41 was new pet shop science stores, bringing that total now to 185 stores for the full year. If I then again look forward in terms of new store openings, we already confirmed 211 new stores opening for the 2027 financial year, which will drive again that space growth, which we estimate between 5.8 and 6%. Total income increased by 7.8% to 17.7 billion, which is also very good to see that our income margins also improved from 26% to 26.1%. And that growth was mainly driven within the gross profit growth within the second half, where we saw a 9.2% growth. For the full year, gross profit increased by 8.1% to 66.5 billion, and I will unpack that in my next slide. Alt revenue saw an increase of 3.4%. That is 7.2% excluding the impact of the reclassification of the revenue streams, our delivery recoveries, as well as our subscription income. That's linked to our 60-60 e-commerce business that we reclassified during the prior year as part of revenue and not as part of other income anymore. If I then turn to the main drivers in terms of the 7.2% growth, Commission received increase by 9.6% to 1.4 billion. Despite the growing competition in the financial services market, especially relating to money transfer offerings and other value-added services, our money markets offer in our checkers as well as in our ShopRite stores has seen an increase in activity, which drove that profitability and growth, especially also our contribution and the growth that we've seen within the payouts relating to government grants. Our marketing and media business Rainmaker, together with our business Rex that looks after the customer insights revenues, we saw a very strong growth of 17.3% to R1.1 billion. Operating lease income remained muted with growth of 2.2% to 513 million and we have spoken in the past around that we expect to see muted growth within our lease income from our own properties as we again sold some of our properties during the 2026 financial year and we do foresee as well that we will sell additional properties within the group during the 2027 financial year. Franchise fees received reduced by 0.5% to R191 million and I've referenced back to the termination of that franchise agreement and that was really driving the decline in our franchise income. Sundry revenue reduced by 5.9% due to advertising rebates recovered by the OK Franchise business being reclassified of cost of sales. and the R65 million that was impacted here we will see giving us growth within our gross margin within our other segments. Interest revenue decreased by 16.1%, and that decline was attributable to the decline in our investment in Angolan government bonds, as well as our US dollar-linked government bonds, where some of those bonds matured during the year, and as usual, we repatriated that money back to our operations in Mauritius, which obviously gave rise to lower interest. The decrease in the interest also negatively impacted the trading profit of the non-RSA segment. The majority of the share of profits of equity-accounted investments are derived from our retail logistics fund, which is the owner of our key distribution centres across South Africa. Gross profit increased by 8.1% to R66.5 billion. We also saw that improvement in our margin from 24.3% to 24.5%. From the graph below, it is clear that in a period of and following a deflation, we do see a margin increase and the opposite that happened during our 2024 financial year where we see a period of rapid inflation. Our gross margins did reduce to 23.9%. But then just look per segment from a supermarket's RSA point of view, we saw that increase of 7.8% to close to R60 billion of gross margin. We also saw improvement in our margins from 25.9% to 26.1%. What makes this much more meaningful is that this growth was against a backdrop of sales growth of 7.1%. If we look at some of the main drivers within that growth in gross margin, spoken about the impact of inflation and what that does within the various deflation and inflation periods. We also saw strong growth in the higher margin checkers banner, where we saw sales growth of more than 10%. And then as a result of the growth that we've seen in the checkers banner, and because it's growing ahead of our ShopRite banner, it's also now contributing more to the overall gross margin of the group, which also was driving that margin expansion. Lastly, I must mention the investment within our supply chain. During 2024 and 2025, we did invest in additional capacity within our Canaan's distribution center in Natal. And then in 2025, we also expanded into the Riverfields DC in Gauteng and in the Wells estate in the Eastern Cape, which is currently delivering us profitability ahead of our initial expectations. From a non-RSA point of view, we managed to increase our gross profit by 8.9% to R4.7 billion. We did, however, see a decrease in the gross margin from 20.9% to 20.5%, and that was mainly driven by the fact that there's a difference between our internal selling food inflation versus the official inflation within the country. Other operating segments saw improvement and increase of 11.3% to R2.2 billion. And that's where I mentioned the reclassification of the franchise advertising rebates, not forming part of revenue anymore, but now as part of gross profit. and that was the main reason why we saw an improvement within that segment. We also saw a much more improved gross margin performance from our Medirite business as we roll out more of the standalone Medirite Plus pharmacies. Total expenses increased by 7.6% to R54.5 billion and what was very pleasing for us is that we could maintain our 20.1% expense to sales ratio Cost growth in the first half was 6.6%, and that accelerated to 8.6% in the second half. The main drivers of the cost growth between H2 and H1 was mainly the additional cost in terms of electricity and water, as well as our support in sales, where we saw an increase in advertising spend. Just a reminder that all delivery costs and all other related costs to 6060 forms part of cost of sales and not operating costs. Depreciation and amortization increased by 7.9% to R8.6 billion. on the back of new store openings as well as 382 store leases during the financial year. Our target is still to get to a 3% depreciation to sales ratio and we're currently sitting at around 3.2%. Depreciation on PPE increased by 8.4% to R3.9 billion, and then depreciation on our RAU asset increased by 13% to R5.3 billion. From an employee benefits point of view, we saw an increase of 7.3% to R21.7 billion. A much better performance this year versus the 10.8% growth in the prior year. Employee costs as a percentage to sales is currently still 8% and that was also 8% in the base. Some of the reasons why we saw growth within our employee benefits is the new store openings that obviously drive the direct job creation within the business. We also spent R1.1 billion on training for the period, which included R102 million spent relating to support of the YES programme. and then there was R319 million distribution during the financial year relating to the ShopRite Employee Trust. And we also had equivalent awards granted to our non-RSA beneficiaries. Other operating expenses increased by 7.7%. Some of the main drivers there is advertising where we saw an increase of 7.2% to R4.4 billion and electricity and water increased by 19.2%. on the back of a 12.7% National Energy Regulator of South Africa increase, NRSA. Pleasingly was that we could reduce our reliance on diesel and we saw a reduction in diesel costs. The main driver behind the reduction in our diesel costs was our diesel expense in Zambia, which obviously benefited that operation and that also flows through in terms of the increase in our training profit within the non-RSA segment. Security costs increased by 11.2%, still a 1% cost to sales ratio, which we've maintained now for a few years. From a trading profit point of view, very pleasing to have achieved that 6% trading margin, and we saw an increase of 8.4% to R16 billion. On the back of that second half, strong performance within the business. We saw a 6.3% trading margin during the second half compared to a 6.1% in the base year. From a trading margin improvement point of view, RSA supermarkets were leading with a growth of 7.9% to R15 billion. Trading margin also improved from 6.5% to 6.6% for the year. From a non-RSA point of view, also strong performance. Trading margin increased from 2.9% to 3%, with profit growth of 13.4%. I've spoken about the impact of the diesel expense that was lower this year than the previous year. That obviously helped the Zambia operations. But performance remains challenging within our business in Mozambique, where we had the adverse conditions. We also saw that the reduction in interest revenue, our reliance on interest from our government bonds in Angola, and that we estimate to be around 30 million for the year. Other operating segments decreased by 5.4% to 617 million, mainly driven by the impact in the franchise operations. From a net finance cost point of view, we saw an increase of 5%, much better performance than our prior year where we saw a growth of 30.9%. And that was mainly due to a reduction in our finance cost where we saw a 20.9% reduction during the year. That was on the back of a much stronger performance in terms of our cash generation within the business as well as cash. flows within the business. We also saw additional 100 basis points reduction in the borrowing rate from our various financiers, which gave rise to nearly a R200 million saving year on year. From IFRS 16 point of view, we saw increase of costs of 10.7%. That's also much lower than our base effects of where we saw growth in the prior year of 20.7%. I spoke about the normalization of our lease liability in the previous presentation and also base effects and during 2026 we did see a reduction in lease renewals that also supported the lower growth. We will, however, see an increase in our planned renewals again for 2027, where we plan to renew around 508 leases, but we do expect similar growth in terms of the finance costs that we've had in 2026. Very important to note is the comment that I make there around the impact of IFRS 16 if you really look at cash flows within where we normally pay our landlords vis-à-vis the total cost of IFRS 16 coming through our P&L relates to the REU asset as well as the finance cost bit and that was R1.7 billion for the year. Now, if we just purely look at that impact on our headline earnings per share, it's around 15% that our current headline earnings per share is lower than we would have reported in terms of the old standards. If I then turn to cash and capital allocation, there are several ways to assess liquidity in the business. Management applies more a risk-based approach where we try and balance the level of capital we require to reinvest back into the business against possible volatility that's in the market that could require additional liquidity. The Iran conflict did increase risk during the second half and that together with timing differences in the anticipated payments of the SAP S4 HANA project resulted in CAPEX expenditure being lower than communicated in the H1 results presentation, which in turn then contributed to higher cash balances at the end of the year. This does, however, position the group well for local M&A opportunities, and the example is that we'll be presenting two of those opportunities today. And there are also other opportunities, obviously, within the market. which bodes very well for us if we're selling in a strong cash position. From a core cash point of view, we generated R24.2 billion for the year. Some of the major items impacting then obviously our cash flow was debt and financing, of which R5.4 billion related to interest payments, R4.3 billion of the R11.3 billion was lease liability repayments, and then R1.6 billion was due to net settlement of borrowings. In terms of shareholder returns, we did pay R4.4 billion in dividends during the year, and there was around R300 million in share buybacks we did, purely relating to the staff share schemes that we classified as treasury shares. From a growth and maintenance CapEx point of view, we spent R6.8 billion, and in working capital, we actually had a positive move of R1.6 billion, and that was mainly as a result of cut-off over year-end, Very important to note that that will change during the 2027 financial year as a result of the 53rd week that I will speak a bit later about. And I estimate the impact of that switch around cut-off to be around R6 billion. The net cash movement for the year was R3.6 billion. And that also then basically led that we can report cash and cash equivalents for the full year of R12.9 billion. From a growth and maintaining CapEx point of view, Our capital expenditure as a percentage of sales dropped from 3.2% to 2.5%. I did mention the timing differences that we had relating to the S4ANA project, and that was one of the main drivers of why we spent less capex than we initially communicated to the market during our H1 results. From a growth CapEx point of view, we spend the majority of our CapEx is in terms of our investment relating to our store expansion program, as well as the upgrades, especially within our checkers footprint. There we spend around R4.2 billion. And then we kept on investing in terms of and improving our digital capabilities, where we spend an additional R1.2 billion during the year. Our continued investment in key growth drivers is supporting our improvements in both our trading margin and our ROIC, while the structures in place to prioritise this capital proved to be very effective during the year. I think also importantly to mention is that the majority of our capex spend was within our RSA segment. Inventory increased by 6.6% to R31.7 billion for the year. Majority of that growth in inventory occurred within our supermarkets RSA business. What is very pleasing is our inventory to sales ratio. We saw improvement from 2025 where we were sitting at 11.8% to 11.7% in 2026. Also from the graph below, you can see that our inventory to sales has now really settled. I think what makes it very compelling is the fact that we've added additional distribution space, especially in the 2025 financial year. And with that additional space, we could still maintain our inventory to sales ratios. From a supermarket's non-RSA point of view, our stock levels remained in line with the prior year. And then we also saw a slight improvement in terms of our other segments. In summary, before we look at our 2027 guidance, the group has a very clear vision on how we measure our affordability of capital that we invest back into the business and the returns we need to achieve. We've invested R34.8 billion over the last five years back into the business, strengthening our supply chain, our store footprint, as well as the scale that the group can now operate in terms of our digital ecosystem. What makes it actually more compelling is that the investment was funded through cash generation by the business, with our borrowings to equity ratio being at a seven-year low of 19.8%. We estimate that the continued investment for us to continue growth within the business as well as to maintain the required maintenance on our IT infrastructure and aging store portfolio will be less than the 3% to revenue ratio. Adjusted ROIC of 19.8% is now also our best performance in the last decade where we also saw that gap widening to 8.3% compared to our WAC rate. We have, however, seen a reduction in our WAC rate on the back of lower interest rates within the environment. We are proud that we could deliver R19.7 billion of cash returns back to our shareholders during the last five years. We've again looked at our dividend policy and we are very happy with having a 1.75 times diluted headline earnings per share policy, which drives a 57% payout ratio if we compare that to profits after tax. I think then lastly, if we put a look at guidance in terms of the 2027 financial year, first, very importantly, is that we have a 53rd week that we will report on for the 2027 financial year. Now if I purely compare that to what we reported during our 2021 financial year, and that was the last time that we actually had a 53rd week, That last week added around R331 million of additional trading profit. So that's just a date or reference point for you when you have to model that 53rd week. From a sales point of view, I've mentioned the confirmed new store openings. There's always new opportunities that come along during the year. So that 6% increase in space is definitely something that we will target. and then from a financial indicator point of view if we can maintain our six percent trading margin that is currently our target again for the 2027 financial year and then cost growth will always remain top of mind we will look again at how we do our store expansion The continued investment within supply chain and then also now the introduction of the SAP S4 HANA project that will kickstart or kick off during the 2027 financial year. We have seen a quite a big reduction in our effective tax rate during the last few years. And I think we are getting much closer to, if we look at the predominance of the profitability within the South African business, where we have, and within South Africa, where we have an effective tax rate of 27%. So we are getting now much closer in terms of how we think around our tax rate. And that's why I think we can again say that our effective tax rate for the year will be between 26% and 26.5%. Inventory levels we will maintain at 11.7% is our target. And then from a capital allocation point of view, spoke about the dividend cover. We also received a new mandate from the board in terms of how we think and how we look at share buybacks. And that again will be valid for the next five years. And then in closing, from a capital and capex spend point of view, we estimate to spend around R7.7 billion for the 2027 financial year, which is below the 3% capex to sales ratio. Pieter, that then concludes my part of the financial results presentation, and I'll now hand over to you to take us through our strategy in terms of what we're working on for 2027.

Thank you very much.