DFI Retail Group Holdings Limited

Good morning, everyone, and thank you for attending the DFI Retail Group 2026 Half-Year Results Presentation. I'm Karen Chang, Strategy and Investor Relations Director. Joining us today is Mr. Scott Price, Group Chief Executive Officer, and Mr. Tom Vander Lee, Group Chief Financial Officer, who will be providing prepared remarks on our half-year results, followed by a Q&A session. Today's presentation is being broadcast in its entirety. In addition, the full text of results and presentation slides are already uploaded onto the IR website. Before we start, I would like to remind you of the following forward-looking statements. The information about to be presented is for information purposes only and is not intended to be investment advice for any person. There's 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, believe or current expectation with respect to the company's business operations and market conditions. You are expressly advised not to rely on these forward-looking statements as they are subjective views which are subject to risk and uncertainties. And with that, I'll now pass the mic over to Scott.

Thank you, Karen, and good morning, everyone. Welcome to the DFI first half results. Let me first take you through some key highlights. Overall, solid performance on revenue, a consistent improvement in our like-for-like, and that includes a 3% with the impact of cigarettes as well included, and quite pleased with that performance. Overall margins improved across, for the most part, in the business. We're comfortable where we sit, and overall on our way towards the midpoint guidance that we gave in December of last year in our investor day. So seeing margin expansion as an opportunity continuing moving forward. Health and beauty deepened its penetration of wellness products. And for those of you who have attended previous events or have been to one of our stores with the derma, we see great margin opportunity coming out of the health and beauty industry. Convenience and home furnishing through 18 to 24 months of effort behind not only assortment, but also investment in pricing. Both of those formats return to growth and are... Retail Group Holdings Limited Access to customers continue to open stores and focus on CapEx Lite in South China and Indonesia. The digital ecosystem, I'll talk about that in a few more minutes in more detail, though, that I think has done very well. And we'll talk a bit about not only the retail media, but the overall digital ecosystem P&L. Lean and agile, we continue to drive everyday low cost. It is an important part of our business model. That allows us to not only take those savings to invest back into pricing for customers, but to also invest in increased margin for shareholders. And finally, we end the first half with a very strong balance sheet and allowing us, therefore, flexibility as we see inorganic opportunities moving forward. A bit more highlights in terms of the key financials before I turn it over to Tom. So overall, underlying profit increased 44%. Subsidiary revenue grew 4.3% or 2.8 on a like-for-like. Very strong health and beauty performance in terms of market share gains across all of our key markets. Convenience store like-for-like at a plus 2%, driven by the higher margin ready-to-eat and exclusive collectibles. versus the replacement of much lower margin tobacco sales. We did, as I mentioned, invest in pricing and achieved a like in Hong Kong, a 0.5% like-for-like growth in the second quarter, even though overall for the first half it was flat. Very strong performance in IKEA. We put quite a bit of work in that. We'll talk about that in a couple more minutes. But a 4% growth like-for-like in a category that – is generally seen as challenged. I think we have the right formula there. E-commerce, DFI, Qmedia, 35% of our revenue growth. And now that ecosystem is margin accretive to stores, meaning that the margin out of that digital ecosystem is higher than our store margins. 6.9% penetration of e-commerce, and we have 300% increase in our DFI Qmedia. Excluding the impact from cost reallocation, we declined 15% our SG&A. So again, as I said, a consistent and constant focus upon everyday low cost. And then finally, declaring an increase to our interim dividend of 77% to $0.0620 and reaffirm our guidance on a 70% dividend policy. And with that, I'm going to hand it over to Tom.

Thank you, Scott. Let me take you through the key financials. Starting with the income statement, a very strong first half of 2026. And it shows that we are delivering a strategy which we set out at the investor days. And this puts us firmly on track to deliver the top end of our 2028 guidance we've given last year in December. To ensure an apple-to-apple comparison, we provided a restated 2025 base that excludes the divestment of Singapore Foods, the closure of Manning's China, and the disposal of Robinson Retail. We're starting with revenue from subsidiaries, 4.1 billion, up 4% year-on-year. The same for Maxins, 1.4 billion, also here up 4% year-on-year. So both Maxins and subsidiaries, strong growth on top line. On the underlying profits from subsidiaries, 101 million, up 49%. as on the back of a strong earning recovery of IKEA, food, and lower SG&A and financing costs. Maximum is up 15% to $16 million, and it gives a total underlying profit of $117 million, up 44%. As you can see, the bottom of the interim ordinary dividend per share is $0.0620, that's up 77%, and it reflects a more even distribution between the interim dividend and the full year dividend. We still reconfirm our guidance of 70% full-year payout on dividends. And we can pay more in interim because the momentum is very strong, cash generation is very strong, and we are able to pay out this in October. Going into a bit more detail on the sales slide. So you can see here, we can see we deliver a strong growth in margins and returns, all of which are key building blocks for driving our TSR. Subsidiary like-for-like sales showed a consistent improvement with 3% growth in the first half of 2026. Strong momentum in health and beauty, return to growth in convenience and home furnishing, as well as continued improvement in food. Some comments on the key formats. Health and beauty, 8% growth or 6% like-for-like. We continue to gain share in wellness. Strong tourist and airport sales store growth. Retail Group Holdings Limited Retail Group Holdings Limited Retail Group Holdings Limited Broadly stable if we exclude the diverse businesses, we see complete improvement in the second quarter of this year on the back of our EDLP pricing in Hong Kong, and that supported a 1.2% volume growth in the first half, despite ongoing pivotal value for our consumers. Home furnishing, very sharp turnarounds, initiatives in price investments, expanding our food range and online presence resulted in 4% like-for-like sales. Retail Group Holdings Limited Retail Group Holdings Limited As part of our overhead optimization exercise, our cost reduction exercise, certain resources have been reallocated from the group to a format level. And that provides greater agility and more accountability. As a result of that, we have restated also prior year figures to make the year-on-year comparisons easier and understandable. Starting with Healthy Beauty, operating profit of 109 million, up 2% year-on-year. The margin, though, declined slightly with 40 basis points, mainly because intensified competition in Malaysia and the growth of online from third-party marketplaces like TikTok and Shopee. However, we are remaining confirming that the guidance we've given for 28, 9 to 11%, we are on track to deliver that. You will see the second half is going to be better than the first half for health and beauty. Convenience up 2% to $37 million with margins broadly stable. Food, here operating margin reached $17 million or 27% up year-on-year and the operating margin improved 30 basis points year-on-year to 1.5%. In Hong Kong, margins are stable as we invested in price, and the price investments were paid for offset by lower cost prices. We do more direct sources, lower cost prices, and help us to pay for the margin investment in price. Also, very strong cost discipline in the format to keep operating costs low for the first half. Cambodia doubled the operating profit on the back of double-digit growth of sales and strong improvement in margin rate. Then IKEA, the strongest improvement, 85% up year-on-year to $15 million for the first half. Top-line growth, strong, and cost optimization both on rental and overhead across the business drove the underlying performance for IKEA. The operating margin rose 200 basis points to 4.3%, so a strong performance for the first half for IKEA. We then move on to the sub-profit and underlying profit. The underlying profit for subsidiaries is 101 million, up 49%, at a 2.4% margin, up 70 basis points against the same period last year. Key drivers, one, earnings recovery in IKEA and at food at a higher than before, the SG&A savings, improving economics for digital, including retail media, and our reduced financing costs. The total underlying profit, including elections, went up 44%, $217 million for the first half of this year. And SG&A costs declined on a like-for-like basis 15% year-on-year. And we expect more reductions to come in the second half and the next years. Cash flow. Operating cash flow up 16% for the first half of the year. Free cash flow is slightly down to $85 million. That's because we have stepped up our CapEx in line with our full year forecast. And I'll share a bit later on where we've invested the CapEx in. As we said in the Invest Today last year, our capital allocation principles are firm and we follow those. So those principles are we first invest in our core, so making sure we continue to renovate our stores, continue to grow our stores. We invest in the future. We're investing in AI and digital to make sure the future profits are secured. We are growing our dividends in line with our policy and our top-line and bottom-line growth. and we pursue only PSR accretive M&A. If we can't find those, we will return the money back to shareholders. In capital expenditure, I've now shared a bit more breakdown of where we spent the CapEx home. So the CapEx is up to $93 million in line with our four-year guidance of $200 to $220 million. So we are on track to deliver that commitment. We invest in a few key areas. So if you look at omnichannel and technology, that's the first dark blue building block, we added 1,200 screens in our store in the first half for retail media. We have now 11,500 screens in all our stores across all our markets, on track to have 18,000 screens by the end of 2028. We invested in AI-enabled replenishment technology in all our markets, and we're rolling out electronic shelf labeling, or ESL, in Hong Kong in our welcome that helps us to reduce our store labor and improve productivity. On store refurbishments, we renovated 157 H&B stores to drive wellness. For food, we are remodeling our larger stores in Hong Kong, driving top-line growth. And for convenience, we have larger refurbs in Hong Kong, and we added 128 new full bars in China. And last, for new stores, we opened 190 new stores in the first half of this year, up from 154 in the first half from last year. We also closed some stores, but the cap actually presented to gross investment in new stores. Then on retail, As announced earlier, our interim dividend will be $6.20. Again, our full-year guidance will remain 70%, but that's a better balance between the interim and the full-year dividend. And the return on capital, 11.7% in the first half, up from 9.4% at the end of last year, and we are on track to deliver 15% by 2028, as we shared and committed in our investor day last year. And with that, I turn it over to Scott for the strategy and updates.