DFI Retail Group Holdings Limited

Ladies and gentlemen, thank you for standing by and welcome to the BFI Retail Group Holdings 2023 Full Year Result Briefing Conference Call. At this time, all participant lines are in misanonym mode. There will be a presentation followed by a question and answer session, at which time, if you wish to queue for a question, you will need to press star followed by 11 on your telephone. I would now like to hand the conference over to your host today, Mr. Scott Price, Group Chief Executive of DFI Retail Group and Mr. Clem Constantine, Group Chief Financial Officer and Property Director of DFI Retail Group. Thank you. Please go ahead, gentlemen.

Good morning and welcome to our 2023 full year results presentation. I'm Scott Price, Group Chief Executive of DFI Retail Group. Since August the 1st of 2023, Clem and I this morning will be presenting on behalf of the group today. Before I hand it over to Clem, I'd like to share some highlights from 2023. So our subsidiaries sales were in line with last year. From a format perspective, we exited a Malaysia food business and on a like for like, then our total sales were plus 5%. Excluding that divestment. As already reported, underlying profit improved significantly in the year. We did see some changes in post-COVID behavior as dine-in moved to dine-out. So there was a food impact, but we were quite encouraged by the second half improvement in trends. Very strong performance in our health and beauty formats across the countries with profit more than doubling. Convenience stores, again, very strong performance with growth across all three core markets. We do see the high interest rate having an impact on home furnishings with reduced demand, and we'll address that a little bit later in the presentation. I'd now like to hand over to Clem.

Thank you, Scott. Good morning, everyone. Let me take you through the results of DFI for the year ended December 2023. Let's start with revenue and underlying profit. Our total revenue, including associates and JVs, was at 26.471 billion, marginally down 4% year on year, primarily driven by lower sales in Yung Wei. If we exclude Yung Wei, total revenue for the group was plus 6% year-on-year. Our total subsidiaries revenue was at 9.170 billion, in line with last year, but 5% up if we exclude our Malaysian grocery business, which we divested in March of this year. Subsidiaries underlying profit was at 212 million, up 59%, underpinned by strong profit growth in Convenience and Health and Duty. Now, after deducting tax, accounting, and finance charges, our subsidiaries' underlying profit was at 112 million, up 75%. Our share of associates and JVs' underlying profit was 43 million, up 78 million on last year, primarily driven by a significant profit recovery from vaccines and reduce losses at Yung Wei. Underlying profit attributable to shareholders was therefore 155 million, up 437%, an encouraging 126 million positive profit swing compared with last year. Net non-trading items were minus 123 million. And these were mainly driven by 103 million combined non-cash goodwill impairments for SamYu and Giant Singapore, and secondly, a 54 million reported loss on the sale of our Malaysian grocery business, driven primarily by the crystallization of foreign exchange losses. However, this was partly offset by gains in property sales. Our reported profit attributable to shareholders was 32 million, Our underlying EPS was 11.49 cents and our total dividend per share for the year was eight cents, up 167%, demonstrating our commitment to driving improved shareholder returns as well as confidence in the underlying strength of the business. Now turning to sales. Our total subsidiary sales remained in line with last year, highlighting a well-balanced and hedged portfolio of businesses A strong sales recovery in health and beauty and convenience was offset by lower sales in food and home furnishing. Food sales were at 3.285 billion, down 15%. Excluding the Malaysian food business, sales were down 5%. And if we also take into consideration the high sales base in Q1 of 2022, driven by COVID, sales were effectively down 2%. We are, however, encouraged to see LFL trends improving in food in the second half across our North Asia and Southeast Asian markets. Furthermore, we continue to gain market share in our key food markets. In terms of convenience, our sales were 2.441 billion, up 8%, with encouraging LFL sales growth across all our convenience markets. Health and beauty sales were at 2.445 billion, up 21%, underpinned by a strong traffic recovery as borders reopened, led by our home market here in Hong Kong. Home furnishing sales were at 794 million, down 5%, impacted by a slowdown in the property market, but we still saw positive market share growth in all our markets. In terms of our key associates, max themes were at 3.109 billion, up 23%. underpinned by a rebound of dining out activities in Hong Kong as COVID restrictions were removed. China and Southeast Asia also saw positive year-on-year trends compared to last year. Yung Wei sales were at 10.697 billion, down 16%. Sales were lower as spending normalized post-COVID. Despite lower sales, the underlying loss was reduced as the business closed loss-making stores and reduced costs and we're partnering with Yung Wei and its management team to develop a growth plan going forward and we remain confident in Yung Wei's underlying future strength. Finally, Robinsons were at 3.416 billion, steady progress at 9%. Moving to subsidiaries operating profit, our food profit was 45 million, down 46 million on the year. Food was essentially impacted by two things. Firstly, rising cost concerns and a poorer economic outlook led to cautious consumer spending and hence lower sales in Southeast Asia. And secondly, in North Asia, the annualization of COVID wave five in Q1 of 2022 impacted the comparative performance in 2023. Our convenience profit was at 88 million, up 74% on the year. Driven by strong recovery of foot traffic in all markets, together with margin improvements. Our health and beauty profit was at 213 million, up 127%, again supported by sales uplifts, margin improvements, and operating leverage benefits. Home furnishings profit was at 19 million, down 27 million, mainly impacted by a sales shortfall. SG&A costs are broadly in line with last year, but again include our digital investment costs and overall SG&A costs remain tightly controlled. Operating profit was at 212 million, up 59%, a very encouraging profit performance overall. And operating profit post IFRS 16 was at 294 million, up 85 million or 40%. Finally, moving to cash flow. Operating cash flow reported a significant improvement from $279 million last year to $419 million this year, mainly driven by stronger trading performance across the board and improved working capital. The group remains disciplined with respect to CapEx. $197 million was invested this year, lower than the 2022 level. Free cash flow was therefore $222 million, up from 35 million last year. And our net cash flow after taking account of investments and dividends was at 247 million. Group net debt as a result was managed down to 618 million, a very encouraging performance given the high interest rate environment we're now in. So in summary, the results were a significant improvement on last year, and I'm particularly encouraged with our reduction in net debt. Thank you, and I'll now pass you back to Scott to cover our strategy and a business update.