WELCOME TO CILMOR DC
TRACK RECORD OF GROWTH
AFRICA S NO. 1 RETAILER
FINANCIAL HIGHLIGHTS
TRADING MARGIN
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS Sales growth per segment Existing stores Net new stores Total 52 weeks Total 53 weeks Supermarkets RSA 6.9% 3.6% 10.5% 8.0% Supermarkets Non-RSA 1.0% 12.5% 13.5% 11.7% Furniture 1.9% 4.3% 6.2% 4.3% Other Operating Segments - - 7.7% 7.0% Total 5.8% 4.8% 10.6% 8.4% Supermarkets Non-RSA at constant currencies: 31.6% (52 weeks = 33.8%)
GROSS PROFIT MARGIN
FINANCIAL HIGHLIGHTS (53 weeks) Other operating income 2016 Rm 2017 Rm Growth Finance income earned 327 325-0.6% Net premiums earned 416 384-7.7% Operating lease income 426 435 2.1% Commissions received 784 811 3.5% Franchise fees received 65 75 16.1% Investment income 111 189 68.8% Sundry income 315 396 25.7% Total 2,444 2,615 7.0%
FINANCIAL HIGHLIGHTS Depreciation and amortisation: 7.5% Operating leases: 9.6% Employee benefits: 10.5%
KEY INFORMATION PER SEGMENT KEY INFORMATION PER SEGMENT Trading Profit 2016 Rm 2017 Rm 53 week growth 52 week growth Supermarkets RSA 5 828 6 424 10.2% 14.1% Supermarkets Non-RSA 1 227 1 407 14.7% 18.9% Furniture 91 123 35.2% 38.0% Other Divisions 135 173 28.1% 30.0% Total 7 281 8 127 11.6% 15.7%
EXCHANGE RATE DIFFERENCES Rand appreciation against the US Dollar June 2015: R12.13/$ June 2016: R14.78/$ June 2017: R13.04/$ R46.1m loss 2016 R235.9m loss 2017
INVENTORY LEVELS Growth in inventory: 18.2% R687m lower than December Excl. Supermarkets Non-RSA = 8.9% Provisioning Cilmor DC Angola stock clearance issue
FINANCIAL HIGHLIGHTS Capital expenditure 2016 Rm 2017 Rm Land, Buildings and Leasehold Improvements 1 051 1 129 Store Refurbishment 698 740 New Stores 966 790 Information Technology 1 125 1 276 Other Replacements* 912 1 232 Total 4 752 5 167 * Includes new Cilmor DC equipment, vehicles and office furniture
FINANCIAL HIGHLIGHTS KEY INFORMATION PER SEGMENT 2016 Rm 2017 Rm Growth Net Cash Balances 3 819 2 709-29.1% Investment in USD Index Linked Angolan Government Bonds
Reflects 52 week comparison
WINNING THE BATTLE FOR CUSTOMERS Relentless focus on customers reaping rewards 52 week comparison
SUPERMARKETS RSA Double digit sales growth of 10.5% (5.9% internal inflation) R100bn sales milestone achieved Sales growth outstripped market every quarter Record share in June 17 at 33.2%
FOCUS ON AFFORDABILITY
SUPERMARKETS NON-RSA 13.5% sales growth conceals strong constant currency growth of 33.8% Currency devaluations vs Rand in all countries Slowing GDP growth and forex shortages Non-RSA Constant Currency growth
NON-RSA SUPERMARKETS Angola Turnover growth Non-RSA Supermarkets: 52 week local currency Trade normalising after exceptional half year growth of 130.2% Loyalty of new customers: +23% like-for-like Nigeria Import restrictions, local products now 80% of sales Shopping centre developments have stalled Namibia Turnover increased by 11.5% Zambia Political noise, depressed copper price Increased competitor presence
COMPLEMENTARY BRANDS 438 total stores (incl. franchises) 0.72% share gains Trading Profit +38% 36% Sales growth
COST LEADERSHIP Expense growth well controlled Shrinkage well below global benchmark
6 DRIVERS OF FUTURE GROWTH
1. CUSTOMER-FIRST CULTURE No customer leaves the store unhappy Operational management aligned to brands Invested two million training days (+12%) 35% reduction in customer complaints Invested in customer science and data capabilities More relevant ranging and pricing On-shelf availability improved 2%
2. GROWING UPMARKET SHARE OF WALLET Chasing share of wallet of 1.9m LSM 8-10 cross-shoppers Dismantling the monopoly in premium food retail Accelerating market share gain in upmarket segment Record high share in June 17
3. DEVELOPING PRIVATE LABEL Participation +1% to 14.7% in SA Private Label Margin up 2.3 percentage points Opportunity: Industry participation 18.5%* *Source: Nielsen, July 2017
4. STRONGER FRANCHISE OFFER Increased appeal: 29 net new members Gained market share Rebranded stores growing 2x other stores Retailer Margin improved 0.5% Profit growth ahead of Turnover growth
5. LEVERAGING AFRICAN ADVANTAGE McKinsey Global Institute, 2016 Headroom to grow in untapped formal market 21 new stores opened, 35 confirmed, 116 further opportunities
6. STRATEGIC EXPANSION Amplify value chain on the continent - Photy Tzellios- Sizeable competitive advantage in Supply Chain: Learnings from 24 years experience R40bn of investment 750,000m 2 of distribution space Source from 43 countries and export to 14 countries Optimising inventory and improving cash cycle
NEW GENERATION CILMOR DC
6. STRATEGIC EXPANSION Capitalise on bricks-and-mortar Extend footprint lead in Africa - advantage for omni-channel (Amazon/Wholefoods) Optimised store size with improved ROI New agile technology enables scalability ERP replatforming for rapid deployment (acquisitions) Going Google enhancing collaboration Expanding borders New African countries Beyond the continent under investigation New supermarket openings