DFI Retail Group Holdings Limited

Good morning, everyone, and thank you for attending the DFI Retail Group 2025 Half-Year Results presentation. I'm Karen Chan, Investor Relations Director. Joining us today is Mr. Scott Price, Group Chief Executive, and Mr. Tom Vander Lee, Group Chief Financial Officer, who will be providing remarks on our half-year results, followed by a Q&A session. Today's presentation will be in webcast in its entirety. In addition, the full text of our results announcement and slide presentation have been uploaded onto the Investor Relations section of our website. Before we start, I would like to remind you of the following regarding the information to be provided during the presentation. The information about to be presented is for information purposes only and is not intended to be investment advice for any person. There is no intention to invite for any dealings in any securities. There may be forward-looking statements mentioned in the presentation materials, which include statements regarding our intent, belief, or current expectations with respect to DFI retail groups, businesses, and operations, market conditions, etc. You are expressly advised not to rely on these forward-looking statements, as they are subjective views which are subject to risks and uncertainties. And with that, I'll pass it over to Scott.

Good morning, everyone, and thank you for joining DFI Retail Group's first half 2025 results presentation. We'd like to start this morning by covering off some key highlights that we're seeing in the business in the first half of the year. In general, in my 30-some-plus years' experience in Asia, this is the first time that we have seen such a broad-based negative consumer sentiment. I think that there is overall now both North Asia as well as Southeast Asia a very value-focused, price-focused customer. We spent the last year really preparing to be able to provide those customers, those consumers who have this flight to value with a great assortment across really all five of our formats, and we'll uncover that in quite a bit of detail in the remainder of the presentation. What we see is accelerating growth potential for the business overall in health and beauty as well as we think about franchising and have announced that for our Indonesia business building on a pretty strong store-owned portfolio that exists in the core cities in Indonesia. We're continuing to drive a very much convenience RTE proposition, offsetting some of the impact in particular in Hong Kong as tobacco sales decrease through our outlets as a result of regulatory action on taxes. We see very much in our Hong Kong food value coming from price investments that we've made as we have pivoted our sourcing strategy to bring greater value to our customers. and also very much being able to, I think, protect our margin in gross profit as a result of not only resetting our sourcing, but also the value of our own brand, which I'll talk about a little bit in some coming slides. Importantly, we've reached a milestone where our e-commerce transactions are now profitable in our business. That is part of our overall strategy as we balance between our own platform versus third-party platforms. But importantly, see a path to a creative digital ecosystem, which is both e-commerce plus our retail media. And we'll speak in a little bit more detail in a few slides. Ongoing portfolio optimization. I think, as you know, we have divested Yong Wei, received those proceeds. Divested Robinsons have received those proceeds. Announced the sale, which we'll execute in Q4 of this year. At that point, we'll have proceeds as well. The divestments and those proceeds have, as a result... Retail Group Holdings Limited

Thank you, Scott. Let me take you to the key financial highlights for the first half. The underlying profit is $105 million, a 39% increase year over year. The improvement is driven by associates following the divestment of Yonghui, Maxims, but also better results for Robinsons. In addition to that, we have strong results for HMB, food and home furnishing, combined with lower interest costs. This was partially offset by lower resulting convenience and higher SG&A cost in the first half due to reversals in the first half of last year. The reported profit though is a loss and that's because of a translation impact after we completed the divestment of both Yonghui and Robinson. We see life-alike sales stabilising, so excluding investments and cigarette sales. Last year life-alike growth was negative 1.5. In Q1 it was negative 0.3 and in Q2 we see a positive life-alike growth of 0.9%. So the trend is positive. Health and Beauty delivers strong sales and profit growth. Like-for-like sales were up 4% and profit up 8%, driven by a higher basket size. The convenience profit has been impacted by a one-off windfall gain from cigarettes in 2024. So we had a windfall gain of about $12 million in the first half last year as we purchased cigarettes ahead of the tax increase. Excluding which, the convenience profit is up 9% year over year. We see strong profit growth in food, disciplined by cost control and the turnaround of our food business in Singapore. Investments in price in Hong Kong have resulted in increased food fall and items for basket. That is funded by lower cost prices as we have improved our sourcing for our business in Hong Kong. We see resilience in IKEA Taiwan and effective cost savings to support underlying earnings recovery of home furnishing. Growing e-commerce penetration from 3.6% in the first half of 2024 to 4.8% in the first half of 2025. Our daily orders in e-commerce reached 96,000 per day, an 85% year-on-year increase, and as Scott said, e-commerce is now profitable. We also see a strong momentum on retail media, as you call DRIQ, with 165 ad campaigns done in the first half of this year, compared to only 12 in the first half of last year. The net cash position of $442 million, that follows the proceeds from Yonghui and Robinson Retail. And we therefore raise our full-year underlying profit guidance between $250 to $270 on the back of much stronger returns. Retail Group Holdings Limited Retail Group Holdings Limited Retail Group Holdings Limited Retail Group Holdings Limited Retail Group Holdings Limited The total revenue on the first half of this year on a restated basis is 7.6 billion, roughly in line with last year. The same for subsidiaries, 4.387 billion total sales in line with last year. The subsidiary underlying operating profit is up 2% year over year. Here we see a strong growth of profit in HMB and food, which are partially offset by convenience, as I mentioned earlier, due to the zero tax impact. The subsidiary underlying profit of $75 million is up 3%. Here we see lower financing costs being offset by higher SG&A costs due to this one-off reversal in 2024. Share of associates and joint ventures, $30 million, up $27 million in the half. That's because we have divested Yonghui. We have two additional months of pickup of Robinsons. and a better result of Maxims. Even without those two months of Robinsons, it's still up year on year on Robinsons. The total underlying profit for Shell is $105 million, as you can see here, and the net non-trading items, $143 million negative. Of that, $146 million results to the divestment of Yonghui, and Robinsons are just translation losses going to the balance sheet and the P&L. That leaves a reported profit of minus $38 million. At the bottom, you can see the total dividend per share, $0.4780. And that's the combination of the interim dividend as well as the special dividends we have. And again, this underscores our confidence in our long-term growth, focused on disciplined capital allocation and THR. We then move on to the revenue summary. If we look at the like-for-like column on the right, the restated like-for-like, the total like-for-like on the restated basis, excluding cigarettes, is flat, or 0.3% in the first half. Again, the first quarter was negative, the second quarter was positive, 0.9%. On the key formats, health and beauty, there we see a positive LLL growth of 4%, and even with Hong Kong itself doing 6% like-for-like growth in the first half. Our strategy for health and beauty is to focus on the growing brand equity as trusted advisors in health and wellness. We see initial results in growing basket sizes across our markets. We'll accelerate revenue growth by franchising Guardian brand in selected markets. And franchising is highly successful in our 7-11 markets and is accredited to both Profit as well as Roki. Convenience, that's down 3% year over year, mainly due to the lower cigarette volumes in Hong Kong following a tax hike in last year Q1. We remain optimistic on the long-term prospects for convenience because the higher margin RTE category is growing fast and will offset the decline in cigarette volumes. This in addition to store growth in China in 2011. Food is lifeline negative down 1%. In Hong Kong, as I said earlier, we are investing in price to address the GVA competitive threat. This is important for the medium and long-term returns of our food formats. We fund these investments with lower sourcing costs. We're going to source more direct to the suppliers. The initial results are very promising. The items in the basket are up. The transaction volumes are up. And our volume share is up. So it's early days, but the initial signs are very positive for food in Hong Kong. The home furnishing is down 6%. Many users were chasing baskets, which in Indonesia and in Hong Kong, despite the resilience in Taiwan. Also here in Hong Kong, we will invest in price. to get our prices down to be able to compete better with the China online mainland players. Those price investments are again funded by lower cost prices. Maxims flat year on year. We see a strong growth in Southeast Asia for Maxims, offset by a slightly weaker performance in restaurants in Hong Kong and in mainland China. Now, Robinson's, you see here, an increase of 39%. That's because we picked up two additional months in the half compared to last year. Even without those two additional months, Robinson was still up 5% year-on-year. We then move on to the operating and underlying profit by format. I compared here against the half-year 124 restated column. As we discussed in our last earning calls, our own brand and e-commerce costs under HMB and food are reclassified under the corresponding formats in the beginning of the second half of 2024. So we therefore restated the first half of last year to make the numbers comparable. On health and beauty, we've seen $8 million increase, or 8% on profit. That's driven by very strong growth, as mentioned earlier, in Hong Kong, but also in Southeast Asia. Convenience, we see here a drop of $9 million in the operating profit. That's because we had a windfall gain last year for cigarettes of $12 million, excluding which the convenience profit is up by 9%. And as cigarette tax impact annualizes, we expect the profit to continue to grow in the second half compared to last year. The food improvement from $24 million to Retail Group Holdings Limited Retail Group Holdings Limited Retail Group Holdings Limited Retail Group Holdings Limited on SG&A. Then moving to the operating profit, $175 million, 4%, up 20 basis points from last year. And then we see the total subsidiary underlying profit being $75 million, up $2 million from last year. Cash flow statements. Our free cash flow in the first half is $89 million, $28 million better than last year. As you can see here, that's from the back of lower CapEx. We expect CapEx to normalize in the second half. But again, on CapEx, we are very disciplined on allocation. It's all about making sure we get return on the CapEx we invested. So the second half will be higher than what we see here. The underlying message is we focus on disciplined allocation of cash in our business. The investments resulted in $912 million of inflow. and therefore the net cash flow is less than $10 million for the first half. That leaves with a net cash position of $442 million. After accounting for special dividends, this still leaves with sufficient financial bandwidth for inorganic growth should there be shareholder accretive investments opportunities arise while maintaining a healthy balance sheet and equity. So let me hand over to Scott to take you through the strategy.