Pepkor Holdings Ltd. · JSE:PPH
Pepkor — H1 2025 Earnings Presentation
54 slides from Pepkor's earnings presentation, May 2025
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION for the six months ended 31 March 2025
Slide 2: Agenda
Agenda 01 Overview of results 02 Financial performance 03 Strategic implementation 04 Outlook 05 Q&A 2
Slide 3: Overview of Results
PIETER ERASMUS – CEO 01 OVERVIEW OF RESULTS 3
Slide 4: H1FY25 – Highlights
H1FY25 – Highlights Solving customer needs Informal market 8% 18.9% growth in normalised HEPS Financial 8% services Consistent performance in retail H1FY25 Strategic execution in fintech Operating profit Financial Informal services market Disciplined cost management 4% 4% 84% Retail H1FY22 Operating
Slide 5: Financial Performance
RIAAN HANEKOM – CFO 02 FINANCIAL PERFORMANCE 5
Slide 6: H1FY25 – Performance
H1FY25 – Performance +12.8% R48.8bn revenue +15.9% R19.1bn gross profit +13.3% R5.8bn operating profit +12.4% 84.3c HEPS +18.9% normalised 82.3% cash conversion* 23.7% return on net assets* Continuing operations Normalised results exclude the normalisation in the effective tax rate 6 * Rolling 12-mo
Slide 7: Normalised HEPS
Normalised HEPS +12.4% +18.9% 84.3 75.0 4.1 27% statutory tax rate 70.9 Tax settlement in FY23 Remeasurement of uncertain tax positions 23.6% to 27.4% normalisation in FY25 – as guided H1FY24 Effective tax rate H1FY24 H1FY25 statutory normalisation normalised statutory Rounded cents 7 Continuing ope
Slide 8: Strong revenue growth
Strong revenue growth +12.8% R48.8bn Cash Credit +7.2% +28.9% 16% +34.5% 85% 15% R43.3bn SEGMENTAL 13% REVENUE CGM +9.1% SALES MIX FAE 71% FinTech +9.5% H1FY24 H1FY25 Continuing operations 8
Slide 9: Strong sales growth – Clothing & general merchandise
Strong sales growth Clothing & general merchandise segment +9.5% +10.2% Cash +6.9% Credit +31.6% Sales growth R34.5bn LFL +8.1% 84% 16% Other* R31.5bn 9% SALES MIX 10% 51% +13.3% +8.5% SALES COMPOSITION 30% +9.9% H1FY24 H1FY25 Continuing operations 9 * Includes Non-SA PEP Africa +26.1% and Avenida +
Slide 10: Strong sales growth – Furniture, appliances & electronics
Strong sales growth Furniture, appliances & electronics segment Cash Credit +9.1% +9.2% +8.3% +15.3% Sales growth 88% 12% R6.5bn LFL +6.3% R5.9bn Home Tech 47% 53% +12.6% +6.3% SALES MIX SALES COMPOSITION H1FY24 H1FY25 Continuing operations 10
Slide 11: Solid revenue growth – FinTech segment
Solid revenue growth FinTech segment 8% +7.0% Financial services +34.5% +32.8% 25% FINANCIAL +16.3% 39% R7.9bn +67.3% SERVICES REVENUE Revenue growth to R3.4bn R5.8bn >100% 28% Informal market +16.7% Revenue growth to R4.4bn H1FY24 H1FY25 11
Slide 12: Gross profit improvement
Gross profit improvement Non-SA currency impact +110bps -40bps Ongoing revenue 39.2% 37.8% contract reset 38.1% -10bps 28.1% Retail credit interoperability +670bps Cellular rentals H1FY24 H1FY25 54.4% 12
Slide 13: Low cost of doing business
Low cost of doing business 26.6% 26.7% Operating +11.9% +7.8% Normalised cost expenses1 normalised Additional investment in: Customer acquisition Salary +7.9% Strategic initiatives cost +8.8% normalised R2.5bn property cost – IAS 17 +6.6% H1FY24 H1FY25 1 Excludes depreciation & amortisation, debtors
Slide 14: Operating profit margin improvement
Operating profit margin improvement +11.8% +11.9% margin margin +13.3% R918m R5.8bn +85.6% SEGMENTAL FINTECH R5.1bn OPERATING 16% OPERATING PROFIT PROFIT 50% 50% 77% 7% Financial services +5.8% +29.4% >100% +2.8% CGM FAE H1FY24 H1FY25 FinTech Continuing operations 14
Slide 15: Financial services
Financial services Operating profit expansion 15% +63.1% +3.1% R918m FINANCIAL 46% SERVICES FINTECH OPERATING PROFIT OPERATING PROFIT 50% 50% >100% 30% Financial services 9% +29.4% >100% >100% 15
Slide 16: Cellular performance
Cellular performance Improved margins Rbn H1FY25 H1FY24 Revenue 12.7 10.6 19.8% Handset & accessories sales 7.1 5.5 Airtime, data & SIM sales 4.6 4.1 Base reset Ongoing revenue (OGR) 1.0 1.0 Positive growth H2FY25 Gross profit 2.4 2.2 11.4% Operating expenditure (1.1) (1.1) Lower security costs Oper
Slide 17: Healthy retail credit books
Healthy retail credit books 8.0 6.6 5.6 Gross book size (Rbn) 2.0 2.0 2.2 1.0 0.8 0.9 H1FY24 FY24 H1FY25 H1FY24 FY24 H1FY25 H1FY24 FY24 H1FY25 33% 32% 30% Provision levels % 21% 21% 21% 19% 19% 19% 23% 23% 21% 14% 14% 15% 13% NPL % 13% 10% H1FY24 FY24 H1FY25 H1FY24 FY24 H1FY25 H1FY24 FY24 H1FY25 17
Slide 18: Unsecured lending and cellular rental credit books
Unsecured lending Cellular credit book rental book ROE >20% 4.0 25% 3.3 3.1 20% 18% 17% 17% 16% 1.7 13% 14% 0.9 8% 8% 8% 0.3 H1FY24 FY24 H1FY25 H1FY24 FY24 H1FY25 H1FY24 FY24 H1FY25 H1FY24 FY24 H1FY25 Gross book Provision Gross book Provision size (Rbn) level % size (Rbn) level % NPL % NPL % 18
Slide 19: Increased debtors’ costs
Increased debtors’ costs +67.3% R2.0bn More customers accessing credit Conservative methodology maintained R1.2bn Stable non- performing loans H1FY24 H1FY25 19
Slide 20: Inventory levels
Inventory levels +13.5% +3.2% R18.3bn R16.1bn Buffered inflows R15.6bn Cellular growth New stores H1FY23 H1FY24 H1FY25 Continuing operations 20
Slide 21: Low net debt
Low net debt DEBT REPAYMENT PROFILE: 30 MARCH 2025 (Rbn) FY26 FY27 FY28 FY29 FY30 R11.7bn R11.6bn 0.97 times net debt-to-EBITDA R10.3bn -1.2 -1.2 6.34 times EBITDA- interest cover -3.3 -3.5 -4.2 R3.3bn notes raised at substantially lower rates R9.8bn funding replaced at lower rates H1FY23 H1FY24 H1F
Slide 22: Lower net finance costs
Lower net finance costs +0.9% R1.5bn R1.5bn R810m R794m 1.9% decrease in non-IFRS 16 component Lower interest rates -50bps Average cost of debt c. 8.7% p.a. R702m R732m IFRS 16 component H1FY24 H1FY25 Continuing operations 22
Slide 23: Resilient cash generation
Resilient cash generation Strategic investment 2 735 1 185 82.3% cash conversion 2 631 LTM 8 226 1 030 1 055 +36.6% 1 467 3 593 2 630 EBITDA1 Non-cash Inventory Retail Handset Lending Trade Cash Cash adjustments credit rental payables generated generated & other by by operations operations 1 EBITDA
Slide 24: Improved returns
Improved returns 23.7% 21.1% Return on net assets Return on equity 9.4% R49.2bn 8.4% goodwill & LTM intangible assets LTM H1FY24 H1FY25 H1FY24 H1FY25 24
Slide 25: Capital allocation
Capital allocation Capex Strategic investment in sales Dividend % of group revenue1 enablers & lending 3x 2.3% 2.4% R4.7bn earnings cover 2.2% invested in retail credit & cellular rentals No interim dividend declared – in line with history M&A Concluded Announced Announced H1FY23 H1FY24 H1FY25 Imple
Slide 26: Strategic Implementation
SEAN CARDINAAL – COO 03 STRATEGIC IMPLEMENTATION 26
Slide 27: The Pepkor strategic model
The Pepkor strategic model +10.0% +7.8% +167 sales LFL sales new growth growth stores SCALE DATA & TECHNOLOGY PEOPLE Channels Customer needs Segments Execution Categories Monetisation 27
Slide 28: Growth levers
Growth levers TRADITIONAL FIN SERV & LEVERAGE & OMNICHANNEL RETAIL CONNECTIVITY EFFICIENCY New & Underweight Retail Credit Informal Market Sourcing Segments Insurance Digital Supply Chain New & Underweight Cellular Categories New Geographies Entrenching our core 28
Slide 29: Traditional Retail
TRADITIONAL RETAIL 29
Slide 30: PEP: >1m accounts
2 649 stores +43 +23 >10% LFL sales growth Enter off-price segment 6 consecutive months +11.9% Acquisition completed Market share gains in Babies, Kids, School, June 2025 implementation Adult & Home 11% credit sales mix >1m accounts 150m #PEPfinds customer views 180m #PEPHOMEfinds customer views 30
Slide 31: Ackermans: 2m accounts
1 018 stores +19 Strong LFL sales growth +9.6% continued recovery Market share gains in Babies, Women + Kids (incl. CUBE) 21% credit sales mix 2m accounts +20% online sales growth Exit completed Women stand-alone format Men’s range launched 31
Slide 32: Speciality: +32 stores
972 stores +67 +32 stores LFL sales growth +4.2% Market share gains in Adults & Kids Launched Launched 17% credit sales mix Acquisition +33% online sales growth Solid performance in 462 stores Dunns, Refinery & CODE Expand adult wear market share Improvement Leverage Speciality infrastructure in Tek
Slide 33: Home: 200k accounts, +67% in Home
922 stores +27 Solid LFL sales growth +6.3% Market share gains in key categories 12% credit sales mix 200k accounts Acquisition +16% online sales growth +67% in Home CompCom process underway H2FY25 expected implementation 33
Slide 34: Tech: 3.5m accounts
193 stores +12 Challenging macro Improved LFL sales growth -1.8% Targeted interventions Merchandise +4.6% Base stores: +4.2% ● KVIs ● Home +0.5% ● Footwear Q1 Q2 Apr Q1 Apr Product allocation -1.0% Q2 -0.3% Reduced credit -2.7% granting Slowed store expansion 42% credit 3.5m accounts New store matur
Slide 35: Financial Services & Connectivity
FINANCIAL SERVICES & CONNECTIVITY 35
Slide 36: Retail enabling financial services & telecoms
Retail enabling financial services & telecoms Monthly in-store activity Customer acquisition Payments Transactions 100k 1m 2m new cellphones money accounts transfers 2m 10m 5 000+ stores account airtime vouchers payments WiFi enabled 165k 780k 500k SIM cards cash-backs Biometric enabled 590k 4m bill
Slide 37: Retail credit
Retail credit 3.1m R1.8bn Cross- account base shopping +564k new customer behaviour accounts Other Own brands 40% 60% brand 18% more applications CROSS-SHOP 29% approval rate (H1FY24: 33%) 71% able to buy – stable 37
Slide 38: Cellular
Cellular 6.8m handsets sold +17% 65% smartphones 20% private label +23% +18% market share Expanding market share 8 out of 10 prepaid handsets sold in SA (GfK) 30m active SIM base +5% OGR ahead of expectations 38
Slide 39: +165k pm
1.5m active customers +994k +165k pm +202k H1FY24 H1FY25 Expanded range Available in 3 500 stores Digital channels activated 39
Slide 40: Insurance
Insurance Embedded 3.3m parcels covered Bundle 95% credit life >R7.5bn credit life cover +16% >R2bn goods cover +9% Funeral Embedded in R2.8bn cover 840k devices covered 40
Slide 41: Omnichannel
OMNICHANNEL 41
Slide 42: Informal market
Informal market R29bn throughput +24% Trader business 175 000 traders Cellular business +32% acquiring devices 3.1m active SIM base +48% tapped value to R10.2bn Aggregation business Voucher products +64% throughput 177m voucher redemptions +36% 67 active partners 42
Slide 43: Digital channels
Digital channels c.10m members 24% in newly contactable March 2024 customers +63% monthly active users +47% app downloads 3.8m USSD most popular registration channel 43
Slide 44: Digital channels
Digital channels +18% online sales growth +33% +18% +20% +67% in Home COMING +16% SOON Top 10 store 44
Slide 45: Leverage & Efficiency
LEVERAGE & EFFICIENCY BEBOR
Slide 46: Leverage & efficiency
Leverage & efficiency 27% CODB maintained Cross-brand distribution optimisation +31% growth in PPS order book Group darkstore capability AI & technological advancements Customer segmentation & marketing Price & markdown optimisation Gen AI – Product design & development LLMs – document vetting 46
Slide 47: Outlook
04 PIETER ERASMUS – CEO OUTLOOK 47
Slide 48: Outlook
Outlook Execution of strategic growth levers Sustained performance in Traditional Retail Integration of acquisitions Disciplined cost management 250 – 300 new stores in FY25 48
Slide 49: Thank you
PEPKOR Holdings Limited YOU
Slide 50: H1FY25 – Sales growth
H1FY25 – Sales growth Total sales LFL sales growth growth Total retail +10.0% +7.8% +10.2% +8.1% +13.3% +11.9% +9.9% +9.6% +8.5% +4.2% * +26.1% +21.3% * +12.1% -1.8% +9.2% +6.3% * Constant currency sales performance 52
Slide 51: Cash vs credit sales mix
Cash vs credit sales mix 11% 21% 100% 17% 42% 12% 15% 89% 88% 83% 85% 79% 58% Credit Cash PEP Ackermans PEP Speciality Avenida Lifestyle Pepkor Africa group 53
Slide 52: Retail store footprint
Retail store footprint 30 September 2024 Openings Closures Net movement 31 March 2025 Retail area Retail area Retail area Retail stores ‘000 m2 Retail stores Retail stores Retail stores ‘000 m2 Retail stores ‘000 m2 Clothing and general merchandise 4 993 1 910 141 (78) 63 17 5 056 1 927 PEP 2 617 91
Slide 53: Normalised HEPS FY24
Normalised HEPS FY24 140.2 9.7 130.5 27% statutory tax rate Tax settlement in FY23 75.0 Remeasurement of uncertain tax positions 65.3 23.6% to 27.4% normalisation in FY25 – as guided H1FY24 H2FY24 FY24 Effective tax rate FY24 statutory statutory statutory normalisation normalised Rounded cents 55 Co
Slide 54: H1FY25 highlights
+12.8% H1FY25 highlights growth in revenue to R48.8bn Building Better Business +110bps increase in gross profit margin to 39.2% Access and affordability +18.9% 175k informal market traders 01 02 increase in normalised HEPS to 84.3c CUSTOMERS 3.1m A+ accounts supporting EMPLOYEES Enabling COMMUNITIES