DFI Retail Group Holdings Limited

Ladies and gentlemen, thank you for standing by and welcome to the DFI Retail Group Holdings 2024 half-year results briefing conference call. At this time, all participants in a listen-only 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 1-1 on the telephone. I would now like to hand the conference over to our host today, Mr. Scott Price, Group Chief Executive of DFI Retail Group and Mr. Quyen Constantine, Group Chief Financial Officer and Property Director of DFI Retail Group. Thank you. Please go ahead, gentlemen.

Good morning, everyone, and welcome to our 2024 half-year results presentation. So I'd like to begin this morning by sharing some key highlights from the first half of 2024. We've reported an underlying profit of $76 million, which is a pretty healthy growth versus the same comparable period last year. As we've stated in our press release, a good portion of that profit improvement was in the food and convenience store, but as well reduced losses in Yonghui, our substantial ownership in that China retail business. Overall, subsidiary sales were down 2% when you exclude the Malaysia food divestment impact, putting a little color around that revenue number because growth is important in retail. There was an unplanned change in cigarette taxes by the Hong Kong government. We are obviously as the largest convenience store seller chain in Hong Kong. We also substantially sell cigarettes. If you exclude the impact upon revenue from that change in cigarette sales tax, our revenue would have been relatively flat, pretty close to flat, which I take again given some of the market dynamics as a very positive indication that as consumer confidence returns, we are well positioned. Very encouraging profit improvement for the food retail business. led by Singapore, where we have put quite a bit of effort in improving not only the overall store proposition, but also in talent. Food, we'll see now a handover from Mr. Chu Peng Chee, who has been with DFI for many, many years, will retire in the coming months to be replaced by Curtis Liu, Curtis Longtime Asia Retailer Food, including in Walmart. And so expect to see continued progress there. Our convenience stores posted double-digit operating profits. So Danny Pierce and the team have done a great job there. Yes, we've had decline in cigarette sales, but it's low margin. They have moved very quickly to push a very strong Ready to Eat Proposition with very high margins. As a result, you see the flow through into our profit. Health and Beauty has had some strong comparables. So last year in particular, our main market of Hong Kong for Mannings, the government in April put out some consumption vouchers across the entire business. And as a result, we had a very strong profit, which obviously had an impact. But I would call out the fact that if you look at a two-year stack, we're an 11% CAGR revenue on the health and beauty business. So again, a lot of opportunity moving forward. Home furnishings, Martin Ludstrom and the team there, high interest rates obviously continuing to mute growth in areas that generally tie very closely to people moving house. kitchen renovations, bathroom renovations, and heavy furniture. We do expect to see that to recover as interest rates come down and the residential markets begin to recover. A great growth in volume on our e-commerce, I'll talk a little bit more about that later, but a 40% volume growth, and importantly pivoted to a sustained model that ensures that our profit on e-commerce is not dilutive to our brick and mortar. Associate businesses overall delivered improving underlying profit. Those are quite different mixes of portfolios across Asia, so an interesting type of movement from those businesses. And then we have a pretty healthy reduction in our overall net debt position. So with that, I'm going to turn it over to Clem, who will take us through the financial results.

Thank you, Scott, and good morning, everyone. Let me take you through the results for DSI for the six months to the end of June 24. Let's start with revenue and underlying profit. Total revenue, including associates and JVs, was at $12.643 billion, down 6%. primarily driven by lower sales in Yung Wei and the divestment of our Malaysian grocery business, which we completed in March last year. If we exclude these, group sales were down by just 1%. Subsidiary revenues were at 4.405 billion, down 4%. But again, if we take out the divestment of our food businesses, sales are down by 2%. Our subsidiary's operating profit was at £121 million, up 40% on last year, underpinned by strong growth of CVS and food, as Scott just mentioned. After deducting tax, accounting and finance charges, our subsidiary's underlying profit was at £73 million, up from £40 million last year. Our share of Associates and JV's underlying profit was at 3 million, a swing of 10 million from last year, and again, as Scott's mentioned, primarily driven by significantly reduced losses in your way. Underlying profit attributable to shareholders was 76 million, 127% better than last year, and encouraging 43 million profit swing. Net not trading items were 19 million. and this was largely driven by 16 million one-off gain from Robinson's investments in the Bank of Philippine Islands which was completed earlier in the year. Our reported profit attributable to shareholders was therefore at 95 million up from 8 million last year. Our underlying EPS was at 5.62 cents from 2.47 last year and our entering dividend per share is at 3.5 cents, up 17% on last year, demonstrating our commitment to driving sustainable, improved shareholder return. Let me turn to sales. And as I've mentioned, total sales were marginally down on the year.