Pepkor Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2017/221869/06)
Share code: PPH
Debt code: PPHI
ISIN: ZAE000259479
LEI: 3789006D677C34F69875

(“Pepkor”, the “company” or the “group”)


REVIEWED ANNUAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2023 AND
DIVIDEND DECLARATION


Pepkor delivers solid cash generation, driven by a compelling second-half performance

Continuing operations

PERFORMANCE HIGHLIGHTS

   ●   7.7% growth in revenue to R87.4 billion

   ●   20 bps increase in gross profit margin

   ●   15.9% increase in cash generated to R13.0 billion

   ●   48.1 cents dividend declared

   ●   4 100 learnerships provided

   ●   6 MWp solar capacity installed



                                               Year ended      Year ended
                                             30 September    30 September
                                                     2023            2022
 Results                                             FY23            FY22   % change

 Revenue (Rm)                                      87 408          81 154        7.7%

 Operating profit before capital items
 (Rm)                                               9 512          10 347      (8.1%)

 Group earnings per share (cents)                   (35.4)          165.5    (121.4%)



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 Earnings per share from continuing
 operations (cents)                                   (35.1)              166.6       (121.1%)

 Group headline earnings per share
 (cents)                                              149.2               162.6          (8.2%)

 Headline earnings per share from
 continuing operations (cents)                        149.1               163.3          (8.7%)

 Dividend per share (cents)                             48.1               55.2         (12.9%)

 Net asset value per share (cents)                  1 604.9             1 706.5          (6.0%)


Stronger sales performance in the second half of FY23 drives market share gains
Trading improved during the second half of the year, supported by a 53rd trading week in the
group’s South Africa-based clothing and general merchandise retail brands. Market share gains
were achieved in key product categories1.

Robust cash generation
The group’s operations generated R13.0 billion in cash this year, reflecting an increase of 15.9%
on the prior year. This performance is the result of impeccable working capital management.

Growth and expansion accelerated in Brazil
Capital allocation to the Avenida business was increased to accelerate growth and expansion
based on continued strong performance and good progress made to reposition the business to a
discount retailer in the Brazilian market.

TRADITIONAL RETAIL SEGMENTS

Clothing and general merchandise segment
PEP achieved very pleasing results with strong like-for-like sales growth. Market share was
expanded in the Babies, Adult and Home product categories1. The PAXI parcel distribution
service, which leverages the retail footprint of PEP and other Pepkor brands in more than 2 800
locations, increased volumes by 18% to 4.9 million during the year.

Trading in Ackermans showed a marked improvement during the second half of the year with
market share gains in the Schoolwear, Younger girls and Lingerie categories1. Good progress
was made to clear underperforming merchandise through markdowns, resulting in improved
inventory levels. A new teenage range, CUBE, was launched with positive response from
customers.

The Speciality business gained market share across most brands in the adult wear market1.

PEP Africa reported good trading results across most countries of operation, supported by
customer and volume growth. The exit from Nigeria was completed during the year.


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Performance in Avenida exceeded expectations and the business is well ahead of its original
value creation plan. Plans to expand the retail footprint and distribution network have been
accelerated with 50 new stores planned per annum.

1
    Retailers’ Liaison Committee September 2023 data

Furniture, appliances and electronics segment
Following two consecutive years of solid performance in JD Group, consumer demand for
household goods and consumer electronics weakened during the year. Notwithstanding this,
market share was expanded in computer and audio product categories (Growth from Knowledge
data). Performance in the Home division was most constrained. Two new store formats were
developed and successfully launched to supplement the Incredible format. The new Incredible
Cellular format, focusing on the higher-end post-paid cellular market, was expanded to five stores.
The Incredible (mega) format offers the traditional range of consumer electronics and connected
devices, together with a wide range of large and small appliances, with three stores opened.

Building materials segment
The Building Company (TBCo) managed to maintain sales performance in an extremely
challenging building materials and construction market, with reduced activity and low levels of
confidence. TBCo’s customer value proposition was enhanced through an expanded product
range into new categories such as garden while the launch of house and private label brands will
improve margins. The new convenience store format was successfully launched and the store
base expanded to 137 retail stores, with six new stores opened during the year.

FINTECH SEGMENT

Financial services
Performance in the financial services businesses was supported by the group’s credit
interoperability strategy and a high interest rate environment. The group maintained its
conservative approach to credit granting. Collections, non-performing loans and provision levels
remain well within tolerable levels across all credit books. Credit book growth has, however,
resulted in increased debtors’ costs for the year.

Tenacity, which supports the South Africa-based clothing and general merchandise retailers,
opened a record number of new A+ accounts (794 000) during the year. This positively impacted
sales through cross-shopping by customers across group retail brands. The approval rate
decreased to 36% from 40% in the prior year, and compares to a historical average approval rate
of 38%. Tenacity adopts a more conservative approach compared to peers, where customers are
not allowed to make further purchases if one payment is missed. Under this definition, customers
able to make purchases amount to 75%, in line with the historical average.


The group started to leverage its insurance capability in the Abacus business and introduced
credit life cover on Capfin loans and funeral cover in PEP.

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With the aim of making smartphones affordable for customers, a cellular handset rental product
was developed and is being tested in 180 stores. To date, 120 000 cellular rentals have been
provided through both the group's internally developed capability and third parties.

Informal market
Flash performed well and increased profitability by more than 20% for the year. Annual throughput
(virtual turnover based on face value of products sold or cash digitised) increased by 11.6% to
R37.1 billion this year.

The average throughput per trader across the base increased by 11.3%. In terms of making
customers’ lives easier, traders are now able to facilitate SASSA grants distribution to
beneficiaries.


OUTLOOK
The consumer and operating environment in South Africa continues to pose challenges.
Substantial disruption in port operations is adversely affecting stock inflows following year-end.

Although sales performance exhibited fluctuations in October 2023, trading remains resilient and
robust during periods when money is injected into the market, such as payment days for social
grants, salaries and wages. The success of the first quarter of FY24 will hinge on the performance
of festive and back-to-school trade.

Pepkor remains dedicated to fulfilling customer needs and making a positive difference in their
lives.


Dividend declaration

The board declared a cash dividend of 48.07572 cents per ordinary share payable to shareholders
on Monday, 22 January 2024. The dividend has been declared out of income reserves.


The salient dates of the dividend declaration are:

Last date to trade cum dividend                             Tuesday, 16 January 2024
Date trading commences ex-dividend                          Wednesday, 17 January 2024
Record date                                                 Friday, 19 January 2024
Payment date                                                Monday, 22 January 2024


Share certificates may not be dematerialised or rematerialised between Wednesday, 17 January
2024 and Friday, 19 January 2024, both days inclusive. The maximum local dividend tax rate is
20%. The net local dividend amounts to 38.46058 cents per share for shareholders liable to pay
dividend tax at the maximum rate. The issued ordinary share capital of Pepkor Holdings Limited

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as at the date of this declaration is 3 667 426 643 ordinary shares. Pepkor Holdings Limited’s tax
reference number is IT9542320180.

Results webcast

A webcast of the results presentation will be broadcast at 11:00 am (SAST) on Wednesday,
29 November 2023. The webcast registration link is https://www.corpcam.com/Pepkor29112023
and can be accessed on the Pepkor website: www.pepkor.co.za.

Short-form announcement

This short-form announcement (this announcement) is the responsibility of the directors. It should
be noted that this announcement is only a summary of the information contained in the detailed
announcement and therefore does not contain full or complete details.

Any investment decisions by investors and/or shareholders should be based on the information
in the detailed announcement. The full announcement can be accessed at
https://senspdf.jse.co.za/documents/2023/jse/isse/pphe/FY23.pdf

The reviewed condensed consolidated financial statements for the year ended 30 September
2023 have been reviewed by PricewaterhouseCoopers Inc., who expressed an unmodified review
conclusion. The unmodified review opinion forms part of this detailed announcement.

Copies of the detailed announcement are also available for viewing on the company’s website at
https://www.pepkor.co.za/wp-content/uploads/2023/11/Pepkor-reviewed-results-for-the-year-
ended-30-September-2023.pdf or may be requested in person at the company’s registered office
or the office of the equity sponsor, at no charge, during office hours.


Parow
29 November 2023

Equity sponsor
Investec Bank Limited

Debt sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)




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