Earnings call: Shoprite boasts strong performance and expansion plans

Shoprite Holdings (JSE: SHP), the South African retail giant, has reported a robust performance in its 2024 earnings call, with CEO Pieter Engelbrecht highlighting significant growth and market share gains. The company’s revenue outpaced market expectations, doubling the market’s performance and marking its fifth consecutive year of outperforming competitors. Shoprite’s gross profit surged to nearly ZAR58 billion, a rise of 11.7%.

The retailer also celebrated the opening of 292 new stores and the success of its digital and technology investments, including the extra savings subscription model and the 60-60 delivery service.

Despite infrastructure challenges and a sluggish economic environment, Shoprite maintained its position as the most affordable retailer in South Africa and plans to continue innovating, particularly in the fresh food sector, while focusing on customer affordability and satisfaction.

Key Takeaways

• Shoprite’s revenue significantly outperformed the market, with gross profit up by 11.7% to nearly ZAR58 billion.
• The company opened 292 new stores and plans to open 1,000 more in South Africa over the next five years.
• Shoprite remains committed to affordability, offering products at ZAR1 and instant savings at checkout.
• The retailer is investing in technology and digital capabilities, including same-day delivery services and smarter pricing tools.
• Sustainability and community support are key focuses, with food donations and efforts toward renewable energy targets.
• Financially, Shoprite saw a 12% sales growth, a 12.1% increase in total expenses, and a 12.4% rise in trading profit.

Company Outlook

• Shoprite aims to continue executing its strategy and investing in technology and digital presence.
• The company plans to open 1,000 stores in South Africa over the next five years.
• Shoprite is optimistic about the South African market and expects to maintain income margin and cost growth ratios.

Bearish Highlights

• The company faces challenges in the furniture market with modest sales growth.
• Infrastructure issues and low economic growth present ongoing challenges.
• Expenses have risen by 12.1%, with depreciation and employee benefits as major contributors.

Bullish Highlights

• Shoprite achieved 64 consecutive months of market share gains.
• The company’s focus on precision retailing and personalized offerings has strengthened its market position.
• Expansion into specialized stores like Medirite Plus and unique clothing by Checkers shows diversification.

Misses

• There was a slight decrease in gross profit margin despite an overall increase in gross profit.
• The furniture business experienced lower growth compared to other segments.

Q&A Highlights

• CEO Pieter Engelbrecht discussed the launch of the Discovery (NASDAQ:) Vitality program and its benefits for Checkers.
• Expansion focuses on new Checkers stores in underrepresented areas, not targeting the informal market.
• Shoprite aims to open 1,000 Usave stores within the next five years, with 33 new stores already signed for.
• The rollout of Medirite Plus stores and unique clothing stores will be measured, focusing on the right locations and demographics.

Shoprite’s earnings call demonstrated the company’s resilience and commitment to growth despite some market challenges. With a clear strategy for expansion, a focus on digital innovation, and a dedication to sustainability and community support, Shoprite is poised to maintain its stronghold as a leading retailer in Africa.

Full transcript – None (SRHGF) Q4 2024:

Pieter Engelbrecht: Good morning, and welcome to the 2024 results presentation for the 52 weeks ended 30 June 2024. Special welcome to our shareholders, fund managers, the media, and also our employees that are joining on this link. I want to use that opportunity before we go into more of the detail. I absolutely are indebted to the people of Shoprite. Team Shoprite has once again defied all odds, deliver an exceptional set of results, of which I am extremely proud and words is not enough to think Team Shoprite. Our presentation will have the same format as usual, with the exception that from the overall helicopter view of what happened in the past year, I will continue updating you on where our medium-term thinking is, where our attention will be directed to. And then finally, Anton will unpack the financial detail and we did this order change because I know in the end, you are very interested in what the numbers are and what they mean and how to interpret them, for the fund managers important to do your modeling on that. So, we thought let’s leave you with that, and then we end with the questions if you want clarity on things that we did not cover. It is a fairly comprehensive attempt from us to cover the entire business in as close as an hour as we can. It is a rather large business to cover so quickly, but we will do our base. In summary, it’s again fantastic performance, outperforming the market on a revenue side, almost by double. And it is the fifth year in a row that the Shoprite group has managed to outrun the market. We are not going to bore you with excuses and what went wrong and what is difficult. We all face them. So, I will not throughout the presentation refer to load sharing infrastructure problems, high interest rates, low economic growth, customers struggling affordability, none of that. You all know — a very familiar with the South African context. So, we will rather stick to what we can control. So just a quick summary of the year that was. For us, it remains imperative that we execute with precision what we deem to be our purpose and what we set out there to achieve for customers. Customers drive what we do and their needs and their requirements and changes in behavior, that is what we base our actions on, not the reverse. Very proud to be recognized as a top employer for 2024. We employed almost 6500 new members to our team. We opened 292 new stores. We have launched first the extra savings subscription model. That was a defensive play for new entrants in the market, and we see very good traction in that, followed by more digital investment on the Checkers Hyper proposition, new 24 name Shoprite Group is company of the year. Extra savings got some awards, the employee trust, that payouts worth over $500 million to qualified employees. It means that not only — are we customer-focused, but our people are important. That’s how we deliver through people. 60-60 continues to really light and inspired people. Like I mentioned, when we started the revenue or sales for that matter has grown double the market. And with that, by default, another year of very good market share gains. For me, staggering amount is if we look at the value that’s attributed to additional sales for the year amounts to almost ZAR26 billion. That is incredible. If we talk percentages, just mentioning there that it’s 12%, but the like-for-like sales, if you look at our internal inflation, it will explain why we had some good volume growth, and I’ll get to that now. Gross profit, almost ZAR58 billion in monetary value, up 11.7%. And in this very competitive market, and I will Also, again, later on show the numbers that we have given back in discounts, instant discounts to consumers at all point but still managed to be the most affordable retailer and maintain our margins, slight reduction from 24.1% to 24% for this year year-on-year. Trading profit is up a healthy 12.4% above that of the sales growth. And later on, Anton will help clarify the difference between the trading profit growth and that of diluted headline earnings per share, which are equal to a 7.4% growth in the dividend paid this year versus last year. Very pleasing to say we have, again, it’s now 5 years in a row, increased our number of customer visits and basket size growth is actually — in this environment we’re in is exceptional because you will see that customers are much more promotional item focused and hopefully, I think in the Shoprite environment because we give such good promotions and so wide for the things that people need that they save enough to be able to buy an additional item. The volume growth I’ve referenced to, the first half of the year, we did not grow positively on volumes, but that turns around in the second half where inflation actually came down, speaking to a little bit of the affordability of consumers or their ability to have discretionary income. And important, I always say this, is that we need to grow volume to assist our suppliers and manufacturers because that is the greatest tool to reduce their input costs. Sometimes it’s good to just zoom out a little bit and let’s look at a 3-year snapshot quickly. I mean just say where would be in 2021 and where are we now? And that’s just the absolute numbers. It’s not year-on-year-on-year. It is absolute between ’21 and ’24. And we’ve listed a few items there. So, sales grew by 43% or less rather say, that is more meaningful for me, it’s almost ZAR73 billion. We have been speaking quite a bit about how other income is going to grow probably in excess of what revenue will grow in time to come with all these investments we made now starting to show a return on investment. And this will require us to start looking differently at margins as a percentage. If we look completely only at gross profit margin, I always say that customers don’t really mind where the discount comes from, whether we took it from other income or we use some gross margin money to give them a better deal on a promotion and in time, we will have to adapt to that also. Dividends, I already mentioned, but it’s an additional ZAR1 billion almost. Stores grew by 744. Its a lot, I know. And that’s why we stay on quite strong capital spend, capital investment in these. Also, not only new stores but a fair amount of capital being invested in store revamps to make them fresh and new and enticing for people to come. Part of what I referenced why one gets the result of growing your customer base because it is a pleasant experience. And extra savings globally — this is not only South Africa. Globally, this is a top-class program and also in absolute numbers, if one takes 31 million adults over the adult population of South Africa, that number is between 70%, 75%, which is incredible. And they use it, about 85% of our sales is accompanied with an extra savings swipe, 60-60 we all now know what a fantastic story it is 530%, and now it gets into numbers that it’s difficult to comprehend, but continuous growth in this year again. So, I thought it will just give us a little glimpse of where were we and what has happened actually. But Again, for me, the absolute numbers is more meaningful than a percentages, percentages can have a low base and be high. So, in this case, it’s a high base and big numbers. So, I have mentioned that we’ve outgrown the market by almost twice. We believe we are winning with our customers because we are so obsessed with what it is our customers need. The other thing that we’re obsessed with, if I can use that word twice as data and I’ll get to that also. But it’s the data and effect driven decisions that we can make based on what we see customers want and how they behave, just as a reference point, if we exclude the Massmart stores, sales growth amounted 10.5% without question, Checkers is the fastest-growing grocer in the premium food segment. We’re happy about that. It’s almost as if we’re currently in a scenario where Checkers and Shoprite is — so Africa incorporated hedge between people that has more discretionary income and giving people that are very price-sensitive what they need at the absolute best prices. So — and in time, depending on how the macroeconomics changes, those two interplays with each other 66%, up 58%. Usave sales increase for the year, 13.2%. Second half of the year grew actually 14.2%. So, it accelerated. Liquor Store, 20% up. Inflation, interesting. I mean, that’s why the graph — it looks like there’s a decline. But it’s the decline in inflation rate. And consistently, you can see our internal inflation has been below official food inflation. Ending for the year at 4.2% against the CPI of 5.4%. And the food inflation of June only at 3.1%. Now I know everybody says in high inflation, good for retailers, but we have reached the point where customers have [ph] rollout. They cannot anymore, customers, meaning actually consumers. And there’s no point in inflation. If I don’t have any discretionary income left and prices just keep on going up. I have to buy less. I don’t have more money and therefore, we think that lower inflation is not bad for us as a [indiscernible] actually — I think it’s good for volume growth, certainly. And we will certainly make sure that we give customers — continue to give customers the best possible promotionals and deals. I’ve said a couple of times before that we don’t do knee jerk. We’ve got a strategy and we execute against that strategy. And for us, it’s the excellence of execution that surprise and delights the customer, and that is our obsession with the customer and make sure that what we have determined is what they need and want is that we do it with operational excellence. We’ve got this multiyear smarter Shoprite data. And I know I probably overemphasized the data and the importance of it. But I just don’t see one getting ahead without understanding the consumer better. And take the guessing work out of what to do and where you’ll give your attention. Hence, the building of this data constantly for the last 7 years, 8 years to get a better understanding and then be able to deploy new technologies like artificial intelligence, et cetera, into our tech investments to give not us only an ROI, but a better experience to the consumer, both in-store and digital. We have upgraded the stores, don’t underestimate the in-store experience when you want to go digital omnichannel. It can’t be only one. Can’t only invest on the digital and you let slip on win customers in store, they still spend more in store. But they use both. So, it’s complementary. That’s why we refer to ourselves as an omnichannel retailer. We continue to invest in technology, a very important part of our capital spend every year and it will continue to be. As a matter of fact, will probably increase. We continue to innovate and develop in our fresh food department section of the business for easier, better convenience and the investments in our culture and capabilities continuously to ensure not only in-store, but by the time that you’re in your home your product is the fresh as possible. I’ve made reference to market share before 5 years of market share gains. In actual effect, is 64 months of consecutive market share gains. Sales growth versus the rest of market. If you look at that graph, it looks like it’s a diminishing graph. So, a matter of it is obviously has to reference back to what the inflation is. What’s important of the graph is that, that gap remains. Now we pride ourselves on saying we are Africa’s most accessible and affordable retailer. It’s not a marketing story. It’s factual. So much so, and I love this, very creative from our marketing team is to create what it is in the form of the logo because affordability for us equals a promise. It’s not a statement, it’s not a marketing ploy. And if I show you that number now or we talk about that number of what that meant for the consumer. But that sort of collect for me what it is that Shoprite in particular stands for, a price promise, most affordable supermarket in South Africa. We stick to our five range solutions. My old story of, I can do something small. I can be a car guard for an hour, so I can get a ZAR5 coin then I can buy a loaf of bread. Since 2016, we kept the price at ZAR5. If you compare that with what is currently the average price of [indiscernible] in bread, ZAR17.99 around, maybe on promotion, ZAR15.99. You understand that we invest a lot to help people actually survive and make things, or make a meal, something in the stomach for ZAR5. On top of that, there’s no other retailer that I’m aware of that sells products for ZAR1 that is commercially produced and available every day. But the Shoprite Group does, you think about that. You can pick up a ZAR1 coin and surprise and delight the kit with a packet of biscuits at ZAR1. That’s what we think about. When I say we customer obsessed, that’s been the result of that. To put it into the bigger picture for me, a staggering amount, I mean it’s almost difficult to believe. But almost ZAR17 billion in instant savings at Toll point in the last year, through our extra savings customer discounts. Customers love it on the spot, not points and I redeem it later for a coffee market. instantly. And on the products that I need so that I can maybe buy something extra. I can now buy a ZAR1 suite for my kid also. What has become a very fine balance is the discounts, the promotions, the width of the promotion, balancing that with the gross profit margin because you will see there’s the hires that contribution of promotional sales to the basket that we’ve ever had, and it’s continuously increasing. It actually varies between brands. Some brands is higher than that and still for the Shoprite Group to maintain gross profit margin is exemplary. Most of you are familiar with this slide, where we illustrate just how we cover the entire spectrum of the consumer market. I especially show this for our international shareholders. It is clear that we are a multi-branded retailer for the purpose to cover the entire spectrum of the South African consumer market. It goes from Usave, our franchise model across the spectrum Checkers at the more affluent market and Shoprite just this mass morale and price-sensitive market. And with it all covering the entire customer base. We have of late went into some adjacent categories for a very good reason. We are in PET, but there are certain PET products only allow to be sold in specialized stores. I just quickly want to single out Medirite Plus and unique clothing by Checkers. Those were borne out of what we saw in consumer behavior. We used to have quite a big clothing section in our hyper stores, and we noticed that people. They’d like to buy those in a specialized store. And understandably, you buy chicken and then you throw a shirt on top of that and then you wear to work tomorrow, doesn’t feel right. So, customers started to prefer specialized stores. So, in the same in the health and wellness section of the business. Not total toiletries, just that people feel I want to buy that at a specialized or seemingly specialized store. And then we also noticed that most of those specialized stores are actually very close in close proximity to our store entrances. So, the supermarket does the hard work to attract the customers and a lot of people feed off it. And hence, that we said, because we own or not own, we have around 140 pharmacy licenses. We can venture into also a wider selection in these specialized stores. Shoprite and Usave the brand just missed this year, the ZAR100 billion mark. And that’s now excluding liquor, if we add there’s obviously much more. Also, double-digit sales growth, very good 19 million extra savings members, big number. Those value propositions you can see there on the board. Checkers & Checkers Hyper hitting almost ZAR80 billion, very good growth. And by the nature of the offering and what customers buy, it comes at a better margin. And that’s when I referred to it’s almost also on a margin level, a bit of an edge between Shoprite and Checkers, 12 million extra savings members, very loyal. The rest of the business units, the supermarkets, non-RSA as we refer to it. Very happy to say that again this year, now 2 years going almost 3 hitting our medium-term target of around the ZAR500 million profit contribution. This year, very good at ZAR631 million typical, what we become used to in the African context is, right, at the last month of the year, June, we had some currency devaluations of 50%. So, when you convert to ZAR, economy is the money, but still managed to report the result of ZAR631 million. The other operating segments did well, almost ZAR18 billion in sales, up 21% and which is commendable. What is notable here in other operating segment is okay franchise. Not that they’re only gain market share, they increase their loyalty buy from us, and they at above 20% purchases from Shoprite directly into business growth into their business growth. Really a good momentum we’re currently experiencing and also interest from prospective members to join the franchise team, now a total of 621 stores. On the furniture side, it’s a difficult market for furniture at the moment. But I think the most important point here is that we have scale in food. We certainly don’t think we’ve got scale in furniture per se to get there, and we come from, it will require substantial investments to really move a dial here, but I am not unhappy with the year-on-year on the profit line, you will see later Anton will show that also around about 80% profit growth for the year. So, it’s not that they’re not performing, but it is subdued at the moment. This then concludes my operational summary. We’re going to continue in to just give you a bit of a glimpse into where our edge space is currently for the medium term. We our investments — are what our priorities are. If I just quickly say, this is what we do every day, and it has not changed in the last couple of years is to uplift lives every day, the lives of people, our customers and our people, our colleagues, our team members. And through all of this, not forgetting also our responsibility to the planet. You’re very familiar with this. It’s been fairly consistent over the last 8 years, but we have to adapt. So, adapt one or two, and this is our priorities for sustainable long-term growth. And if I can just very quickly, I know you know all of these and you can read. But it’s in those three columns, a smarter Shoprite and then the slots in the places to grow. What can we do to as I say have sustainable long-term growth? If you ever thought why are we investing in those adjacent new businesses, because we need to continue to grow. And if you add in a single year, ZAR26 billion in additional revenue, you have to look wider than that just a single discipline. Also, within the core business, where there’s still a lot of opportunity, investment in the data and now we use it. Winning in the long run, there’s a statement of leverage the platform, that is what we do. And if I reference to the flywheel, that’s very clear then right at the end, I’ll show it again, although I know you know it. Just quickly, we thought let’s just stop for a moment at Usave. Usave usually get neglected when we have visit from fund managers, so it’s always a bit busy and people don’t get to Usave, so — they had also in always in convenience places. So, we’ve got some Usave products just behind me. I’ve got my Usave shirt on today. And I’ve got a very personal relationship with Usave. I incubated it. I opened the first store in 2003. And then over time, it has been adapted to what it is today. And what is it today? It is a true limited assortment discounter or discounter. Definitely, the cheapest formal retail format in South Africa, 1,900 products on sale. In some regions, we are over a 40% private label contribution, and it’s growing by the day. You will see, I did reference the ZAR14.2 million of the second half. So accelerated growth. The tougher it gets out the less disposable income out there, the more relevant Usave becomes, because of the interplay that there is between Shoprite, the largest store format and Usave. I know I’m repeating myself, I explained it before, but with the interplay is very simple that month ends when I have a bit of disposable income, I go to the Shoprite. The offering is much wider. There’s other services. And anyway, I have to go into town maybe by something else in insurance or whatever. And mid-month, I’m a little bit strapped. So, I can now save my transport money, which has become very expensive, and I can walk to a Usave and get my essentials. That’s the interplay, we’re also not ignoring digital. We have a digital presence. It doesn’t mean we are moving away from a no fraud business. We’re just there on the mediums where our customers are. And certainly, I believe that there’s room for at least 1,000 of these stores in South Africa over the next 5 years. And we’ve got the various formats that the one on that picture is [indiscernible] store. We use these formats, especially where we can’t own land like in tribal land areas. And also, when there’s very limited infrastructure, we can put these down and don’t have these people that live in these areas at a at a disadvantage and not having access to these products and pricing. And then we have a normal standard is around about 750 square meter. So, we decided to just show you this video clip give you a little bit of insight of what Usave and what customers think of it. [Video Presentation] I hope that help a little bit for those that are not familiar with the Usave concept, what it’s all about. Precision Retail, I’ve been saying for a long time in the beginning, I don’t think I was understood at all. It’s becoming the terminology of a lot of retailers these days. If you’re not laser-focused precise on what the customer looks like that you serve with which brand and then in return, what you then give them, offer them in terms of promotions and assortment and win. Not everybody has money at the same point in time. So — it’s important for us to continue with this. And just as an illustration of why excess savings has been an award-winning rewards program as the most used in South Africa of the 31 million members. They have swapped 560 million times, and that then equates to a sales contribution of 85% and in that, we have 5,000 data points of customer purchases behavior on each member that will assist us in determining what the correct pricing is, what the right assortment is what we need to promote and drive this whole notion of precision retail. As part of the precision retailing is, what does it mean? So, in the last year, we have deployed a smarter pricing and promotion tool. It’s things that the human can’t do. Gone out the days, it’s the gut feel of a buyer to say, this is the product I’m going to put out and this is going to go on headwind. So, we can actually determine with the data, which is the preferred decision. And to illustrate what this can do is it has got 83,000 item relationships through artificial intelligence, the pricing engine then makes recommendations to the buyer, just giving us better ability to get the pricing absolutely right. Assortment, similarly, that links into the right assortment at store level. And then the personalization by definition, is I get a different item at a discount to the person next to me opposed to a shotgun approach of general marketing. Looking at future channels, not only fantastic growth results, performance, profitability, et cetera, coming from 60-60, also now advancing into more categories. I will cover that now. Beautiful story since 60-60 started, created over 11,500 new job opportunities. And in the last 12 months, it was extended to another 73 locations. And you can see, although a lot of people thought that after COVID this will fall off a cliff. As a matter of fact, it’s just continued to grow. On the right-hand side, you will see the delivery performance. So, you can see every year, we’ve improved on that. And now with the average delivery time at 33 minutes, if you think what does it really mean it’s not that it’s a record of any sort that we’re trying to achieve. But that now reduces the amount and the necessity of additional investment in cold facility, keeping product fresh because 33 minutes is much faster than what any shopper would do by themselves, putting it in your car or going home in it. So — it’s just another enhancement to make sure that when the product reach your house, your home, that it’s fresh, as fresh as possible. In the digital world, one must continuously innovate and be — to stay relevant and to keep the eyeballs on your platform. So, what is new? We’re going to extend the offer from 60-60 to also include now additional 10,000 general merchandise products. And that means now on a single platform, you could order both your on-demand 60-60 grocery and liquor requirement and also order some general merchandise that requires a larger delivery vehicle but still be able to have a same-day delivery within a 60-minute window. When — so you determine when will I be home and I select that time slot, but in the same day, you will still get your delivery. It may sound like I’m overemphasizing the importance of data and data-driven decision-making. But not only does that allow us to give consumers what they need and at the right price. It also allowed us to earn alternative income from these investments and from the information we have. And how we can help other brands and our associates and partners with their own products, determining when people consume when they are good for it on a promotion and were not and also reduce the wastage when we fish when there are no fish. Rainmaker Media has really started to settle down. There’s great interest in the market to use that medium. The Shoprite Direct platform, you will remember, we had a partnership with Dunnhumby before. Now we’ve taken this all in-house, the thing of becoming a master of your own destiny, and through that also is now assisted our financial services investments, growth opportunities to be seized really understanding what it is our consumers are looking for. And in one sentence, what we try to achieve through the financial services is to reduce the cost of transacting with us so that it gives you more discretionary income. Private label stays a topical subject all around the retail in the world and South Africa is no different. I’ve mentioned before that we don’t have a specific target to reach at all cost because it will drive the wrong behavior. So, Africa has got a very limited supply of products and manufacturing capability. Certainly, in our industry, it is not infinite. And our manufacturers are very sensitive in terms of volume. We are actually a very small community. And we are very protective to also help our suppliers through all of the macro environment that we have listed. So, we look at private label is completely different. It’s not more of the same. It’s what is missing in the category and then that is where our attention goes. The result of that is we’ve now got 35 of our own private labels, so call it confined labels. It is now worth or exceeds ZAR100 million of annual sales. A big change in consumer behavior is there’s a higher propensity of people buying into private label. As much as 96% of all of our customers now buys into that. Very great statistic is everybody always say local support, local trade we certainly do. If you think that slightly less than 90% of our sales comes out of South Africa, the rest outside of South Africa and our private labels sourced locally amounts to over 90%, a very good number for us. We do support local. If you introduce a lot of new labels this year, 846 — the — we won some awards, difficult category baby. Very pleased to have such a high-quality product partnership is important to us. We know we’re not the best at everything. We can’t do everything. Okay, franchise is really exemplary partnership I mentioned before that there’s great interest and more and more so in that brand as we give it more and more attention. We are going to invest into growing that business and we see the results. They grow our sales into our franchisees have grown by 23.8% and they have managed their sales out in total market measured by total market sales, they’ve increased their market share, which is great. Also, something new, we fantastically happy or rather elated by the fact that we can join Discovery Vitality program from September. And where we are is it’s you are now have got the ability to select between what digital platform you want to use and what physical platform you want to use in terms of the whole food buy. We also — of late — have decided to join forces with some global players, especially on the tech side of the business where there are a lot of innovative start-ups and it’s expensive to some — on your own to actually scale them and start to use their products and integrated. So, we formed a partnership called W23 between Sobeys, from Canada, Tesco (OTC:), all [indiscernible] and Woolworths Australia. And the idea behind this is that we will decide on a common purpose of investment and we are currently — it would actually result in anything that we do is multiply by five in terms of costs. And what we try to achieve is divide by five in terms of the cost that we can share commonly in noncompeting technology. We’ve now mentioned a few times that we invest for the future and for the long term. This year, we have invested substantially in expanding our distribution capability and capacity. First part of it is necessitated by deteriorating service levels inbound into our business running at around 80%, with an outbound service level, that means from our distribution centers to stores at 99%. Hans see this also together with our stockholding for us to ensure the on-shelf availability that supports customer service and the lighting of customers. When they come to stores, the product they’re looking for is there, but also digital they, not they, but the digital customer is even more demanding. They want to now and they want it within an hour and we deliver it in 33 minutes. But it’s no good if I give you half of what you order. So, you can only deliver on that promise if you have the product on shelf. So, we’ve increased quite a bit our on-shelf availability levels, although we also managed to keep stockholding as a percentage to revenue or sales equal to last year. We also have to support the number of new stores. I mean, the last year, we opened 292 stores. This year, we plan to do 265. Important point that I also must mention is really a replat forming our point-of-sale system. We really sweated that asset as far as we could. And — we’ve got this new state-of-the-art latest technology point-of-sale system that will allow us to now accelerate and introduce more or things we couldn’t do before because of the aging of the platform. And then kudos to our IT team and also a record deployment for both them and us for a project of this nature. And we are very confident that we will be done before peak season starts. We don’t forget our responsibility to, firstly, our people and people meaning our customers and also then the planet. So, we donated surplus food almost ZAR234 million for the year. The sustainable community food guidance we have 248. — staggering number. I mean 88 tonnes of food, and that’s in most cases, the entire livelihood of that community and the people around them. A good story. And we’re in there with heart and soul and we give a lot of effort to our people in all of the communities where we trade. In terms of the environment, we’re driving what we can control the hardest. That is our in-store packaging. We’re almost there that we can claim at some point that all of our own in-house packaging is reusable, recyclable or combustible. It is widely publicized how much we already have done in terms of renewable energy, 6.5% our total requirement is now there. Also, big numbers recycled reasonable 67,000 tonnes of cardboard and plastic and we also have commenced with probably one of the first wheeling examples where we will renewable energy to a specific location. And that holds very good for introducing more renewable energy into our environment in time to come. You’re all very familiar with our flywheel. I’m not going to explain this again. It’s very clear — we — each of the developments and investments actually fits in this flywheel. The important thing that I want to reiterate and leave with you is that — we understand all of us that the core supermarket business allows us to do all these adjacencies and assist in the customer experience and also help us to continually grow and continually be innovative and interesting and with the partnerships and really try to give consumers and surprise and delight experience when they interact with us. This is the end of my part of the presentation. I hand you over to our very capable CFO, Anton de Bruyn.

Anton de Bruyn: Thank you, Peter, for that introduction and also giving us some insights into the operational performance of the business and also reminding us of some of the key drivers that is driving the growth within the group. Before I delve into the numbers, there’s two aspects that I would just like to deal with and a reminder just the listeners is the first one is we adopted IFRS 17 during the financial year, which meant that we had to restate our 2023 financial results. And secondly, the Ghana region has been identified and classified as hyperinflationary, which means that our Ghana operation, we also had to account in terms of hyperinflation. If I look at sales growth, I spoke about that 12% growth. Total income increasing 12.1% to ZAR63.5 billion, total expenses increased by 12.1% to ZAR50.1 billion. And I think what pleasing was for management is that we saw a slowdown in expenditure growth during the second half, where we saw a 9.5% expense growth on the back of a 10.1% sales growth compared to that 14.8% expense growth that we saw in the first half mainly driven through, obviously, our savings within our load chilling cost, which I will deal with later. Trading profit increased by 12.4% to ZAR13.4 billion. And again, if I look at EBITDA, strong growth and reflection of the cash generation capabilities within the group to around ZAR20.5 billion. Diluted headline earnings per share increased by 7.4%, and there seems to be a lag between what we see in our trading profit growth vis-a-vis our diluted headline earnings per share, but one has to take into account base effects where we had a foreign exchange profit in the prior year, that mainly resulted as we saw the Angolan Kwanza devalued during June of last year. And because of our hedging position, in terms of our U.S. dollar-linked bonds, we realized a ZAR384 million profit, which gave rise to the profit — increases in profit during our 2023 numbers. Also, a difference between what we look at trading profit and our profit before tax is the impact of the move within our finance cost in terms of the IFRS 16 leases, where we saw another 17% increase in the current year, which I will deal with later in the presentation. I think a more comparable number for us when we compare our trading profit growth will be to look at our adjusted headline earnings per share growth where we saw a 10.3% growth. Return on invested capital, excluding IFRS 16, was 16.3% versus 15% in the prior year and a WACC rate of 13.8%. Just a reminder on why do we look at ROIC excluding IFRS 16 is that we deem the lease liability that we account for as part of our invested capital as a noncash flow item. Our dividend per share for the year, a very positive growth of 7.4%, in line with our diluted headline earnings per share growth for the full year dividend of ZAR0.712 with a final dividend of ZAR4.45. Our return on equity was 26% versus a prior year of 24.8%. If we then turn to sales, Peter spoke a lot about what we’ve seen within the Supermarkets RSA, where we saw that 12.3% growth to ZAR195 billion. Like-for-like sales growth of 6.3% and internal sale growth inflation of 5.8%, nearly eating that ZAR6 billion sales target, positive growth within Shoprite, Usave, the Checkers stores, another 20% growth in our liquor business. And then pleasingly is where we look at our unique clothing by Checkers as well as the outdoor stores where we nearly reached a ZAR1 billion turnover in a very short period. Supermarkets non-RSA increased sales by 6.1% to ZAR20.8 billion, with like-for-like sales of 4.3% and an internal inflation of 9.3%. We’ve spoken about it so many times around the devaluations in the local currency and compared to the constant currency growth of 22.1% we again see a devaluation in Zambia of around 25.8% for the full year and Angola, another 60%, which had a negative impact on purely looking at the rand conversion of the sales. Furniture increased by 2.3% to ZAR7.2 billion. Our credit participation was in line with prior year with around 14.9%. Although we saw a more positive contribution in sales growth within our Rest of Africa business, the South African market remained muted during the second half as well. Other operating segments that is mainly driven by the growth in our franchise business as well as our pharmacy and Medirite business. We saw a growth of 21.1% to ZAR17.7 billion. OK Franchise business grew at 23.8%, and our pharmaceutical business showed an increase of 15.3%. Although the group has got a strong franchise offering the heart and the core of the Shoprite Group is through our corporate store portfolio, where we currently have 2,322 stores. We added 201 stores, which came to about 4.5% in space growth and if I look at what we can add next year than add another 195 stores which will equate to around 4.3% in space growth. We saw a banner and I think was more excitingly is that we seen positive growth in stores — in Shoprite, where we will add another 34 stores, Checkers and the Hyper where we’ll add 38 in one store. And in our liquor business, still opening more than one store a week plan for next year 61 as well. A Petshop we see during a previous presentation at the end to open [Indiscernible] store by June, but we missed that target. And from the [indiscernible] store openings, it looks like we will be hitting that target before the end of December. If I look at total income, we saw an increase of 12.1% to ZAR63.5 billion. Excluding the impact of our loss of profit insurance plan that we received in the prior year. That growth number would be around 12.6% for the year. Gross profit increased by 11.7% to ZAR57.7 billion, with a slight decrease in margin from 24.1% to 24%. I think what is important to note is that the gross margin that we show here is a combination of all the segments. So, although we saw a slight improvement and increase within our supermarkets RSA, the other segments, we saw a slight decrease, especially from a non-RSA point of view, where we saw those currency devaluations. I think what is very important to note again is also what Peter referenced to is the ZAR16.9 billion price investment in our customers. And then what is pleasingly is how we still managed a good performance in terms of our shrinkage and waste management. Other operating income, we saw a 15.2% increase, and I will unpack that in the next slide. Interest revenue that we earn from our franchise business and our members as well as our furniture business and then more excitingly, as well the growth that we saw within our Creditex business, we saw an 8.3% increase to ZAR759 million. Our share of profit of equity accounted investments. This is where we referred to our investment in Pingo, our last-mile service that we have as part of our 60-60 offering, where we own 50% of the business. We saw some strong growth. And then as well as the retail logistics fund, where we saw the expansion and funded the expansion of our Cadence distribution in KwaZulu-Natal as well as the new Walsestate distribution center that we’re developing in the Eastern Cape. We saw an increase of 6.8% to ZAR268 million. Insurance revenue linked to our furniture book and sale, we saw an increase of 19.2% to ZAR298 million. The Ghana hyperinflation I referred to, the net monetary gain was around ZAR135 million. If I then look at the various components of other operating income, what excites me about this slide is that Peter spoke a lot about some of these brands and banners and new business units the Racks, the extra savings rainmaker. And if we look at all those various revenue streams, we see a growth of more than 20% on all three of those business units. Again, if I just had to exclude the impact of the insurance claim, this part of our income statement line actually increased by 23.3%. Just quickly some of the income lines, our commissions received from our in-store kiosks. We saw an increase of 11.7% to ZAR1.2 billion. And there, I must also mention the increase that we saw and the profitability that we saw within our competitor business. I spoke about the Rex and extra savings as well as our 60-60 business, where we saw an increase of 22.5% in delivery income on the back of that 58.1% sales growth in our 60-60 business and then Rainmaker in a very short period of time already producing revenue of ZAR473 million. Operating leases reduced slightly by 1.5%, and it’s just part of the process on how we’re consolidating our property portfolio. If you look at the notes to the financials, you will see that there’s another ZAR1 billion of assets held for sales where we’re consolidating our property portfolio. Franchise fees received increased by 10.2% to ZAR183 million on the back of that 23.8% revenue growth. If we turn to expenses and unpacking expense growth, we saw a growth of 12.1% to ZAR50 billion but our expense margin currently at 20.8%. Some of the major lines and cost elements within that total expenses were depreciation and amortization, where we saw an increase of 15.2% to ZAR7.3 billion, still within that target range of 3% to sales that we’ve set ourselves. We saw growth on PPE to around ZAR3 billion for the full year, depreciation on our right-of-use assets was about ZAR4.2 billion. And then we also saw an increase in some of our intangible assets in terms of our software development the increase in depreciation there as well as we started landing some of these capabilities and projects, which I will deal with when we talk about our capital expenditure. Employee benefits increased by 13% to ZAR19.2 billion. I think what makes the group very proud is that we were able to create 6,419 new jobs. We contributed again more than ZAR100 million to the used employment scheme. Peter mentioned that ESOP and how we staff benefited through that ZAR247 million paid for the year. The ZAR500 million Peter mentioned was already for cumulative up to this financial year. And then last but not least, we continue investing in our staff in terms of training. And this year, again, we spent ZAR460 million on trading. Insurance expenses relates to our insurance sale, where we saw an increase of 33.8% to ZAR178 million. Other operating expenses increased by 10.2% to ZAR23.4 billion and the majority of that expense, we saw our electricity and water increased by 1.9%. You will remember that in the previous financial year, we spent close to ZAR1.3 billion on diesel costs. That cost reduced to around ZAR754 million for the year. We did not get that full saving because we obviously had to spend electricity cost and I think the best way to understand the impact of the interplay between the diesel spend and electricity is to look at the electricity and water cost as a percentage of sales. Historically, we were running at a 2% ratio to sales. We saw that spike in the previous year up to 2.4%, and we’re currently at 2.2%. So as the load setting improve, there’s no reason why we can’t normalize back to that 2% ratio. Some of the other expenses that also increased, what’s mentioning is our advertising expenditure where we saw a 10.5% increase to ZAR4.1 billion, and that’s on the back of supporting the growth within the business as well as some of the advertising costs relating to our Rainmaker business. We saw our maintenance expense increase at 12.1% to ZAR2.8 billion, and then our security costs increased by 13.5% in which included some one-off expenses relating to protecting our stores during the election period. I think pleasingly, we saw a slight reduction in our insurance cost — you will recall during the last year, we saw an increase of more than ZAR100 million in our PTS insurance, and we saw a reduction during the last financial year in that. But then turn to trading profit to the various segments saw that 12.4% growth to ZAR13.4 billion. And I think pleasingly is our trading margin at 5.6%. We have not moved away from our longer-term target of achieving that 6% trading margin. From a supermarkets RSA point of view, 11% growth to ZAR12 billion with a trading margin of 6.2%. Again, very pleasingly, if we look at our performance in the first half, we had a trading margin of 6%, improved during our second half to a 6.3% trading margin on the back of those cost savings that we achieved through our low creating cost. Supermarkets non-RSA increased its trading profit by 6.2% to ZAR631 million. We did see a slight pullback in the profitability of that segment during the second half as a result of the currency devaluations we spoke about earlier, especially in key markets like Zambia and Angola. And we also had to take a credit loss impairment on our loan structures within the resilient property structure of ZAR112 million. Our furniture business on the back of a 2.3% sales growth, so 82.2% profit growth to ZAR195 million as a result of insurance revenue and insurance income within that business within the second half maturing as well as an improvement in our provisioning in terms of IFRS 9. Other operating segments increased by 8.5% to ZAR506 million and mainly driven by that strong growth that we saw within our franchise operations. A year ago, we were standing here and I showed this graph and we were looking at interest rates. And by now, all of us would have hoped that we would have seen a reduction in interest rates. There’s a lot of talk about reductions now in September, but the elevated level of interest rates has had a negative impact on our net finance costs, where we saw an increase of 17.5% to ZAR3.8 billion. The majority of that finance cost relates to our lease liabilities, where we saw an increase of 17.3% to ZAR3.6 billion. Our interest on our bank accounts that we earned, we increased by 16.8% to ZAR529 million. And then our borrowings, although we saw a slight decrease in our borrowings with the elevated interest rates we actually saw an increase of 17.7% to ZAR704 million. If we then turn to more of the balance sheet indicators, we saw a very strong improvement in our borrowings to equity ratio where we went from 24.2% to 21.6%. And we had strong cash flows out of the Rest of Africa back into Mauritius and that really helped us to reduce our reliance on U.S. dollar borrowings from $29 million down to $8 billion. We moved $70 million or repatriated $70 million from our operations in Angola back to Shoprite International. And we also were able to move or repatriate $14 million that was restricted in Nigeria back to our operations in Mauritius. Our right-of-use assets increased by ZAR3.7 billion, and these liabilities increased by ZAR4.9 billion. We saw a very strong positive move within our working capital. If I break it down, we saw an increase in our inventory levels, but I will discuss later. We also saw an increase in our trade and other receivables on the back of the stronger growth in our furniture book as well as our CredX — the growth in our CredX business. And then trade and other payables, we saw an increase of ZAR7.7 billion, that increase, the majority of that increase was a result of cutoff, where we made a payment of ZAR4.3 billion post year-end. Now if we look at our net cash balances of around ZAR8.8 billion, where we saw that improvement of ZAR2.2 billion. Part of that is related to the fact that we only paid some of that trade and other payables post year-end. We’ve changed the layout in how we present our capital spend to give the market a better perspective of what we deem as growth CapEx and the items that’s driving that growth within the business. For the year, the group spent ZAR7.7 billion on CapEx. And as a percentage of sales, that is 3.2%, slightly higher than the target of 3% that we’ve set ourselves. But during our previous communications, we did give guidance to the market that we would spend additional costs and refurb cost on the stores we acquired from Massmart. That was ZAR433 million for the year. And then secondly, also the expansion within the supply chain that Peter referenced to as well. From a growth CapEx point of view, that ZAR5.7 billion. The majority of that was spent on our 292 new stores, supply chain, we spoke about and then some of the projects that was actually landed during the year and on which we’re currently working is the point-of-sale system where we’ve rolled out more than 1/3 of the portfolio of the stores. The 60-60 general merchandise delivery that Peter spoke about, and then the personalization and pricing engine that we also rolled out during the year — and then Rex, there’s continued developments on Rex, but we can also already see the positive revenue growth. What is important to note is that — all these projects are currently in implementation phase already implemented. And that also gives rise to the increase in our depreciation cost where we have to depreciate these projects. From a maintenance CapEx point of view, 26% of our CapEx was spent on that, and it was around ZAR2 billion. We then turn to inventory, saw a growth of 13.1% to ZAR28.4 billion for the year. The majority of that increase was within the supermarkets RSA business, where we saw a ZAR2.7 billion increase — what is pleasing for management is that although we had the expansion within Canelands as well as already taking more than ZAR450 million stock in on our River field site. We still maintained our inventory to sales ratio in line with last year, around that 11.7% from a Supermarkets RSA point of view, the majority of the stock increases are within our distribution centers. And if I look at the store portfolio, excluding the impact of the distribution centers, we actually saw an improvement within the stock turn in our stores, and we see that improvement from the 8% to 7% inventory to sales ratio. Some of the reasons why we invested in additional stockholding is obviously to support that growth in our stores and also how we service our franchisees, maintaining our in-stock levels and servicing our 60-60 customers through our store portfolio and then the distribution expansion. Supermarkets non-RSA, we saw a slight increase of ZAR200 million. And then although furniture looks like we had an increase of more than close to 1%. It’s really on the back of the muted sales growth. From a rand — point of view, we saw ZAR100 million increase. The group understands the importance of cash flow and how it acts as oxygen to deliver on the group strategies. And for us, there are two key metrics that we look at. The first one is free cash flow conversion ratio, and that’s purely using our free cash flow of ZAR15.4 billion, as a percentage of EBITDA of ZAR20.5 billion, that gives us that 76% ratio. And the second one is how we look at our operating cash flows. That was around ZAR 23.6 billion as a percentage of EBITDA and that was 117%, both do very good performances. If we look at some of the various line items in our free cash flow, we saw improvement on our effective tax rate from 30.8% in to 30.2% during the year. Spoke about that positive inflows in terms of — or changes as a result of the — in the working capital. And then our maintenance CapEx, which gave rise to a free cash flow generation of ZAR15.4 billion. And then our expansion capital and our continuation of paying dividends and following our dividend policy, which gave rise to a 2.2% increase in our free cash flow. If I then look forward to 2025, if we look at certain of the financial indicators, there’s no reason why we cannot maintain our income margin currently and then if I look at some of the cost growth for the major items within our cost base, staff costs, we currently at around 8% ratio to sales. No reason why we cannot maintain that. electricity and water spoke about that improvement in load setting that we hope over the medium term will be able to get us back to that 2% ratio of sales and in depreciation currently sitting at that 3% ratio to sales. We sometimes forget the impact of finance costs when we compare our trading profit to our headline earnings per share growth or profit before tax. And because it’s such a meaningful number, 1 has to take that into account. We do expect to see interest rate improvement. But although that improvement will help us marginally, I think the growth within that expense line will be between 15% to 17% for the full year. our effective tax rate, we estimate to be between 30% to 30.5%. Trading profit within our non-RSA operations. We just spoke about that short-term target of 500. We have given guidance to the market that for a medium-term target, we’re looking at a ZAR600 million to ZAR700 million. That will only be achievable if we have currency stability. And we’ve already seen, again, currency instability within Ghana, where we saw the hyperinflation impact as well. From an inventory point of view, although the 11.8% for us was a very pleasing number. We have to take into account that we will also take live the Wells Estate distribution center in the Eastern Cape during the year, which should add between ZAR400 million to ZAR500 million of additional stock holding. And then we’re also moving in the second half of the year, we will be moving our Transform wholesale business into a new site. From a capital allocation point of view, the board is applying that 1.75 times full year dividend cover. Again, no reason for us to see that change in the short term. And then although we have a share buyback authority or mandate in place, our expansion capital is priority to anything we do within the business. Lastly, from a capital spend point of view, we’re looking at around ZAR8 billion of capital expenditure on how we will invest in our new stores as well as refurbing and doing maintenance work on our existing store base. That concludes my part of the presentation. Thank you very much, Peter.

Pieter Engelbrecht: Thank you, Anton. I hope that has clarified a lot of your questions. So, while we wait for Anton and for the questions to note, I just quickly want to take you through post balance sheet transactions that occurred. I’m sure by now you’ve read both our sense ended of Pepco around our furniture and the decision we made around the furniture segment. So just very quickly then, I think there’s a lot of detail in the sense per se, so it’s a sale of assets and it includes both of the brands, Coke Furniture and House & Home, excluding the geographical areas of Angola and Mozambique. Why — what — what were we thinking? It’s a question of we’ve got scale in food. We don’t believe we’ve got scale in furniture. And therefore, I think that excellent partner in this transaction is Pepco. And I always feel a little bit balty because we have got an extensive capital investment program and every time we get to prioritize then furniture is the last one to get it bite of the cherry. So, for us to really — and I do think there’s a lot more 1 can extract out of that business. And but it will require a significant capital investment from Shoprite. In this case, it’s already been made by the Petco group and they’ll be able to integrate this seamlessly like we integrate our adjacent businesses in existing infrastructures, they have invested in technology. So, I think it’s a very good fit for them. and it allows us to appropriate the capital where we are enjoying a much better return. Then also in terms of the Pingo business, we’ve been a 50% partner up to know that is the company that performs the last mile logistics, both the digital offers and we have decided to start discussions, we advance discussions at this point, around getting 100% acquire 100% of the equity in Bingo. Reason being is simply for us to own end-to-end the customer experience and also to invest we believe we’ll marry that the boat the most. So — and also at the pace that one has to advance and enhance the technology to support an ultimate or very good customer experience. In terms of timing, both transactions, we expect in the second half or 2025, i.e., after December. So, on that, as usual, we very quickly will run through outlook, just what we think most prevalent would be the question around inflation. So, you saw what I already said that June came down from 8.6% last year to 3% this year, and the trend is still continuing. What would be case be looking forward for the year would be a tough call to say below 3%. It’s our arc. But let’s it would be below 5% is what we expect inflation to be for the full coming year. And there’s a lot of positive currently in terms of disposable income from consumers. There’s some wage growth pressure to reduce loading fuel prices coming down on Wednesday, again, and what Anton mentioned around the interest. So, some good. And overall, a great positive environment we’re experiencing, especially under — or amongst sorry, amongst the business community is a positive outlook on South Africa at the moment. If we look at just at the capital inflow 3 times that of last year already, that goes well for the future or the medium-term future for us in terms of returns. So overall, there’s a very positive look and we have invested accordingly. I don’t say we knew it’s what was coming. We didn’t know where the election was going to go. But because we are focusing on the South African business and we invest accordingly. We’ve invested in the supply chain. We’ve invested in digital, and we’ve invested in new stores, especially in areas where we underrepresented. And we did not hope — we think any green shoots that will come out of the economy or for the consumer. We will — we really — we’ve made the investment. We’re ready to receive the rewards from those investments we have made, especially also on the supply chain and very excited about that. And we have the platforms in place. I mentioned earlier the Novo, we call it Novo, but the GCP implementation that we will complete before going into peak, just more of investments made that can be leveraged more and more and stand as good similar to the investment that was made 7 years ago on the office platform. And through all of this and the money spend, we will stay true to being the cheapest supermarket in South Africa and always focus on how can we help consumers for better life and to survive. So, on that, I think, Anton, the questions is probably now loaded. So, we’ll go to some questions now. Thank you.

A – Anton de Bruyn: So maybe on that last point, Peter, that you made is there’s quite a few questions around gross margin and with inflation and your price investment strategies are, how do you think about gross margin going forward?

Pieter Engelbrecht: So, like I started off almost to say there was market share gains. There’s growth in excess of the market. And through all of this, it’s one thing if you buy market share. It’s another thing if you can gain market share and maintain your gross profit margin, and that means customers have given you the market share. Not trying to buy it through this. So, it’s a responsible way of pricing — what we can’t ignore is the increase, and it’s actually increased from that 35% that I mentioned into the news on the participation of promotional items in the basket. So, we have to balance that to make sure that we can maintain those gross profit margins.

Anton de Bruyn: And then obviously, with the investments in the pricing tool and all those things.

Pieter Engelbrecht: Yes. I think there was a lot of not questions, but attention on AI, the use of artificial intelligence in terms of pricing. Yes, we have invested in that. It’s early days, and the algorithms are learning every day. It’s merely to empower the buyer to make the final decision. And yes, there is transparency for the buyer that decision-making time of what its effect will be on its gross profit margin, what’s the likely uptick in volume. So, they just equips them better. But I mean, it’s early days, but it helps — it helps a lot.

Anton de Bruyn: So, I think — I mean, you’ve spoken a lot about growth. So obviously, the launch of an onboarding of Discovery Vitality, how do you look at it? And obviously, what benefits will that actually bring to Checkers?

Pieter Engelbrecht: The start of it all is thing about the customer we only listen to the customer. It wasn’t us today, let us do this. Customers ask for it from the Discovery side, they saw it also and their customers have asked for it. So how this works, let’s just start by it. The firstly is we pay alternate partner. So — you can select us and you can select separately physical and digital, okay? So, you’ve got choices. It’s just we’re another choice. In terms of what does it cost — so for us, it’s mostly marketing costs and some printing costs. We’re changing some of the labels to indicate — so if you’re walking in store, you’ll see on our price level. There’s that little right to show to you that there is a qualified product for the program. And where we are today, it’s I almost want to say a marginal fixed cost, so it’s not escalating scale or volume-driven scale in terms of what it will cost Shoprite. So, it’s just one of those to be delivered to customers what they want. And I am very happy and grateful that Discovery saw their way to do a partnership with us, and we’re very happy with. In terms of how many customers, how big it will be. It’s really not material. It is more important that we’ve delivered what our customers ask for.

Anton de Bruyn: Okay. Thanks for that. We’ve mentioned the 4.5% space growth, and we’ve mentioned again the 4.3% space growth for next year. So — there’s quite a few questions around how do we look at store expansion, especially now that you can see we’re also expanding in Checkers and Shoprite next year and in cannibalization. So how do we play that off.

Pieter Engelbrecht: If we just look back where we come from as an industry, I mean, we had the exclusivity arrangements. Some of them were geographical areas, not only in a center or a very small catchment area, it was much larger. So now as we’re moving forward, there are a lot of areas where we didn’t or could not open some of our branded stores. And now those — as those areas now become available, this — we still see a lot of growth for us in areas where we are underrepresented. And you will notice that we are opening more new checker stores than Shoprite stores, which has a much, much bigger distribution footprint already. So that’s where we focus.

Anton de Bruyn: So, that David just around discontinued operations and furniture. So obviously, as soon as we trigger all those requirements in terms of IFRS 5, we will look at how we report on furniture in terms of discontinued operations and also how we will report in terms of our segmental reporting in the future. So, at this stage, that’s where we are. Peter, there’s a question around. How do we take a point-of-sale system, the conversion live without disrupting our sales in the stores?

Pieter Engelbrecht: At night.

Anton de Bruyn: It’s a short answer there. Too quick on the side. I don’t have the next question for you. There was also a question around the Angolan bonds. So yes, all of those Angolan bonds were shown as current assets because they matured within — at the end of August. And we did manage to actually get another $30 million of dollar-linked bonds in Angola, which will act as aging for us within that market. So that was completed in the first 2 months. Peter, maybe just — I know you talked a lot about the rationale around the furniture transaction is I think there’s quite a few questions, and maybe that was before we saw the slide. I don’t know if you want to add anything. I think you’ve spoken a lot about the furniture transaction. So, when the — that’s basically — I think maybe, yes, there is a good question around Usave. You’ve set yourself a target for the 1,000 Usave stores within the next 5 years. We did mention around the store openings that we will achieve in the 20 years, 25 years. But how do you look at that you have? And what type of market are you really targeting within that environment? And how do you think about the informal market?

Pieter Engelbrecht: Let me is very clear. We don’t target the informal market. They do a fantastic job. They price by time of they give credit. They — remember, they in the community so they know where you live. You’re not going to run away when they give you credit. So, it’s a completely different offering we’re not trying to compete with that. We are focusing about the consumer and what we can offer them. You know how in love I am with a 1 rand story. And you just have to come with me visiting those stores. You understand why I’m so obsessed about it I know we all poor people, but we have a lot in this country. So, it’s a responsible thing to do. So that’s the rationale for Usave. In terms of 1,000 stores that I mentioned, that is aggressive, I understand it. And yes, there may be some obstacles to get there, but to give it some context. I mean for the 2 months of the year now July, August, we already signed for 33 new stores. So, the 100 a year is sort of — it’s not out of balance. It’s not crazy. But yes, it will take some serious work to get there, but the opportunity is there. So, if we don’t hit the 5 years so don’t shoot me, but we’re going to try.

Anton de Bruyn: I think if you talk about opportunity, you’ve spoken about the fact that we have those many right licenses. So how do you see the pace at which we actually roll out the Medirite Plus stores? And then also there’s a question around the unique stores? How do you think about the pace at which we are currently rolling out?

Pieter Engelbrecht: Almost the same immediate answer is that it will be measured. It will, i.e., could — will be not overnight. We’re still in the learning phase, certainly, as far as unique clothing is concerned, which of the income levels and geographical levels we see immediate returns and the most returns, you don’t want to discourage people on people that needs to do their work and one can see that they’re doing well and if you make wrong decisions in terms of the catchment areas where the correct audiences, you will affect their own performance. So, we’re careful in how we roll it. Secondly, what makes clothing difficult in terms of fast rollout is you are seasonal [indiscernible]. So, we buy stock at least a year ahead of season and you’re going to get the stock if you now run too fast. So, it’s a balanced approach. And then on Medirite Plus, I think it’s a correct opportunity. But again, it will be measured. We have that almost road almost already designed in front of us because we have 140 licenses. And that’s what we will focus already because you’ve got already a loyal customer base and it’s much easier to move them to a location as far as we can as close to our own stores — supermarket stores. I did mention earlier. I mean, they do all the hard work, attracting the customer and then a lot of businesses live off that.

Anton de Bruyn: I think the last question that I’m going to ask you, and I’ll end on a high note is, how do you think about the competitive landscape that we’re currently finding ourselves in.

Pieter Engelbrecht: We focus on what we do. As long as we deliver on the customer promise and what we see they require Pricing is good. Customers are really, really looking for value. I think our pricing policy has been consistent and is right there on what is currently relevant in South African context. So, I mean we don’t get up in the morning and then we say, what is the competitor? What are they doing? I mean we first start are you — are we doing what we’re supposed to do. So that’s our focus absolutely customer not competitor-driven.

Anton de Bruyn: Great. I think we dealt with all the questions.

Pieter Engelbrecht: Thank you very much. I know it’s been a little bit long. What we’re going to attempt to do is try and be more cryptic in our interim presentations and then a little bit longer in — or more detail at year-end. Thank you for your attention. Those of you that managed to stay with us, I appreciate that. And that then now concludes today. I’m going to — we are going to leave you with — for those that have a few minutes spare there’s the endorsement of Jan Oliver of our partnership on the Discovery Health Vitality program. Thanks a lot, and goodbye.

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