1H 2026 Half-Year Results Presentation

Good morning, everyone, and thank you for attending the DFI Retail Group 2026 Have Your Results presentation. I'm Karen Chan, Strategy and Investor Relations Director. Joining us today is Mr. Scott Price, Group Chief Executive Officer, and Mr. Tom Vanderley, Group Chief Financial Officer, who will be providing prepared remarks on our Have Your Results, followed by a Q&A session. Today's presentation is being broadcast in this entirety. In addition, the food, test results, and presentation slides are already uploaded onto the IR website. Before we start, I would like to remind you of the following forward-looking statement. The information about to be presented is for information purposes only and is not intended to be investment advice for any person. There is no intention to invite for any dealings in any securities. There may be forward-looking statements mentioning the presentation materials which include statements regarding our intent, belief, or current expectation with respect to the company's operations and market conditions. You are expressly advised not to rely on these

forward-looking statements as they are subjective views which are subject to risk and uncertainties. And with that I'll now pass the mic over to Scott. Thank you Karen and good morning everyone. Welcome to the DFI first half results. Let me first take you through some key highlights. Overall, solid performance on revenue, a consistent improvement in our like-for-like and that includes a 3% with the impact of cigarettes as well included and quite pleased with that performance. Overall margins improved across for the most part in the business. We're comfortable where we sit and on our way towards the midpoint guidance that we gave in December of last year in our investor day. So see margin expansion as an opportunity continuing moving forward. Health and beauty deepened its penetration of wellness products.

And for those of you who have attended previous events or have been to one of our stores with the derma, we see great margin opportunity coming out of the health and beauty. Convenience and home furnishing through 18 to 24 months of effort behind not only assortment but also investment in pricing, both of those formats return to growth. And our Hong Kong food business where 18 months ago we sat at roughly a 15% premium to a basket in greater Bay Area Shenzhen for formats. We set it about a 3% discount. So we removed the value of anyone going across the border. During the first half, we gained volume share, meaning absolute volume. We're going to look now through our efforts at that increased traffic to gain value share moving forward. Access to customers continue to open stores and focus

on CapEx Lite in South China and Indonesia. The digital ecosystem, I'll talk about that in a few more minutes in more detail, though, that I think has done very well. And we'll talk a bit about not only the retail media, but the overall digital ecosystem P&L. Lean in Agile, we continue to drive everyday low cost. It is an important part of our business model that allows us to not only take those savings to invest back into pricing for customers, but to also invest in increased margin for shareholders. And finally, we end the first half with a very strong balance sheet and allowing us, therefore, flexibility as we see inorganic opportunities moving forward. A bit more highlights in terms of the key financials before I turn it over to Tom. So over-law underlying profit increase, 44%. Subsidiary revenue grew 4.3% or 2.8% on a light for light.

strong health and beauty performance in terms of market share gains across all of our key markets. Convenience store like for like at a plus 2% driven by the higher margin ready to eat and exclusive collectibles versus the replacement of much lower margin tobacco sales. We did as I mentioned invest in pricing and achieved a like in Hong Kong a 0.5% like for like growth in the second quarter even though overall for the for the fourth half it was flat. Very strong performance in IKEA we put quite a bit of work in that and talk about that in a couple more minutes but a 4% growth like for like in a category that is generally seen as challenged, I think we have the right formula there. Ecommerce, DFI, Q Media, 35% of our revenue growth. And now that ecosystem is margin-accretive to

stores, meaning that the margin out of that digital ecosystem is higher than our store margins. 6.9% penetration of ecommerce and we have 300% increase in DFIQ media. Excluding the impact from cross-reallocation, we declined 15% our SG&A. So again, as I said, a consistent and constant focus upon everyday low cost. And then finally declaring an increase to our interim dividend of 77% to 6 cents 20 and reaffirm our guidance on a 70% dividend policy. And with that I'm going to hand it over to Tom. Thank you Scott. Let me take you to the key financials. Starting with the income statement, a very strong first half of 2026 and it shows that we are delivering this strategy which we set out at the investor days. And this puts us firmly on track to deliver the top end

of our 2028 guidance we've given last year in December. To ensure an Apple to In our actual comparison, we provide a restated 2025 base that excludes the divestment of Singapore food, the closure of Manning's China and the disposal of Robinson Reed Hill. We're starting with revenue from subsidiaries, 4.1 billion, up 4% year-on-year. The same for Maxims, 1.4 billion, also here up 4% year-on-year. So both Maxims and subsidiaries strong growth on top line. On the underlying profit from subsidiaries, $101 million up 49%, that's on the back of a strong earnings recovery of IKEA, food and lower SG&A and financing costs. Maximum is up 15% to $16 million and it gives a total underlying profit of $117 million up 44%. As you can see, the bottom, the interim ordinary dividend per share is $0.6 and $0.20, that's

up 77%, and reflects a more even distribution between the interim dividend and the full year dividend. We still reconfirm our guidance of 70% full year payout on dividend. We can pay more in interim because the momentum is very strong, cash generation is very strong and we are able to pay out this in October. into a bit more detail on the sales slide. So you can see here we continue to deliver a strong growth in margins and returns, all of which are key building blocks for driving our TSR. Subsidiary life for life sales show the consistent improvement to 3% growth in the first half of 2026. Strong momentum and health and beauty, return to growth in convenience and home furnishing, as well as continued improvement in food. Some comments on the key formats. Health and beauty, 8% growth or 6% like for like. We continue to share to gain share in wellness, strong tourist and airport sales store growth, e-commerce growth in Southeast Asia.

On a constant currency basis of 7%. Then on convenience, 4% like for like or 2% on a like for like, sorry 4% total 2% like for like. And here the focus on higher margin non-sick categories with RGEB in focus. The cigarettes though have stabilized, so cigarette sales stabilized year on year. Foods broadly stable if we excluded diverse businesses. We see continued improvement in the second quarter of this year on the back of our EDLP pricing in Hong Kong and that supported a 1.2% volume growth in the first half despite ongoing pivot to value for our consumers. Home furnishing, very sharp turnaround, initiatives and price investments, expanding our food range and online presence, which are the 4% life-alike sales compared to a 6% decline in the first half of last year and a 3% decline in the second half last year, so a turnaround for IKEA. And it

makes us up 4% on the back of strong sales in Southeast Asia and return to growth in China mainland. Hong Kong though was quite soft for next month. We're going to profit, operating profit by a format. Now as part of our overhead optimization exercise, our cost reduction exercise, certain resources have been reallocated from the group to format level and that drives greater agility and more accountability. As a result of that we have restated also prior year figures to make the year-on-year comparisons easier and understandable. Starting with Health and Beauty, opening profit of 109 million, up to 2% for like a year on year. The margin though declined slightly with 40 basis points, mainly because intensified competition in Malaysia and the growth of online from third party marketplaces like TikTok and Shopee. However, we are remaining confirming that the guidance we've given

for 28, 9 to 11 percent, we are on track to deliver that. And you will see the second half is going better than the first half for health and beauty. Convenience up 2 percent to 37 million dollars with margins broadly stable. Food here operating margin reach 17 million dollars or 27 percent up year on year and the operating margin improved 30 basis points year on year to 1.5 percent. In Hong Kong, margins are stable as we invested in price and the price investments were paid for offset by lower cost price. So we went, we do more direct sourcing with lower cost prices and helped us to pay for the margin investment in price. Also very strong cost discipline in the format to keep operating costs low for the first half. Cambodia, it doubled the operating profit on the back of double digit growth of sales and strong improvement in margin rate. In IKEA, the strongest improvement, 85% up year on the year,

$215 million for the first half. Top line growth, strong, and cost optimization both on rental and overhead across the business drove the underlying performance for IKEA. The overall margin rose 200 basis points to 4.3%, so strong performance for the first half for IKEA. But then move on to the sub-profit and underlying profit. The underlying profit for subsidiaries of $101 million, up 49%, at a 2.4% margin, up 70 basis points against the same period last year. Key drivers won earnings recovery in IKEA and Efut, as I highlighted before, the SG&A savings, improving economics for digital, including retail media, and our reduced financing cost. The total underlying profit including maxims went up 44%, $217 million for the first

half this year. And as GNA costs decline on a like-for-like basis, 15% year-on-year. And we expect more reductions to come in the second half and the next years.

Cash flow. Operating cash flow up 16% for the first half of the year. Free cash flow is slightly down to 85 million dollars. That's because we have stepped up our CapEx in line with our full year forecast and I'll share a bit later on where we've invested the CapEx in. As we said in the investor day last year, our capital allocation principles are firm and we follow those. So those principles are we first invest in our core, so making sure we continue to renovate our stores, continue to grow our stores. We invest in the future, we're investing in AI and digital to make sure the future profits are secured. We are growing our dividends in line with our policy and our top line and bottom line growth and we pursue only TSR accretive M&A. And if we can't find those, we will return the money back to the shareholders.

In capital expenditure, I've now shared a bit more breakdown of where we spend the cap banks on. So the capex is up to 93 million dollars in line with our four-year guidance of 200 to 220 million dollars. So we are on track to deliver that that that commitment. We invested in in a few key areas. So if you look at omni-channel and technology that the first dark blue building block we added 1200 screens in our stores in the first half for retail media. We have now 11 500 screens in all our stores but all our markets on track to have 18,000 screens by the end of 2028. We invested in AI-enabled replenishment technology in all our markets and we rolling out electronic shelf labeling or ESL in Hong Kong in our welcome that helps us to reduce our store labor and improve productivity. On On store refurbishments, we renovated 157 HSB stores to drive wellness.

For food, we are remodeling our largest stores in Hong Kong, driving top-line growth. And for convenience, we have larger refurbs in Hong Kong and we added 128 new food bars in China. As for new stores, we opened 190 new stores in the first half of this year, up from 154 in the first half of last year. We also closed off stores, but the CapEx represents the gross investment in new stores. Then on shareholders, so as announced earlier, our interim dividend will be $0.620. Again our full year guidance will remain 70%, but that's the better balance between the the interim and the full year dividend. And the return on capital, 11.7% in the first half, up from 9.4% end of last year. And we are on track to deliver 15% by 2028 as we shared and committed in our investor

day last year. And with that, I turn it over to Scott for the strategy and updates. Thanks, Tom. Just want to spend a few minutes on the operating segments in a little bit more detail. So I'll start with health and beauty. So 8% growth in sales. Obviously, we've opened some new stores. So the light for light store sales is plus 6%. Representing market share gains across all of our key markets. Interestingly, Hong Kong Macau growth at plus 5%. One is the wellness leadership, but also now We're seeing higher value tourists come back to Hong Kong. Our tourist stores had revenue growth of roughly 10%. And I think that this is a bit of a trend that we're seeing, which is people are still traveling, but they're traveling closer to home. Southeast Asia business, very pleased with the growth that we're seeing there. Plus 9%, and you'll see in Indonesia and Vietnam,

we had close to a 20% light for light growth. We're seeing a pretty significant positive reaction to the health proposition that we're bringing forward, wellness. Gen Z, which a few of you probably in this room are Gen Z, maybe at the outer edge of it, far more attuned to wellness than necessarily previous generations. Exclusive distribution now announced with Holland and Barrett, which is a great brand. We're very pleased with that and believe that that will be a great part of our assortment as we expand that across several of our markets. In-store coverage now has expanded across our skin and scalp assessment tools. So that is an AI-driven tool that we developed in conjunction with Samsung. And as I mentioned previously, a significantly higher basket value than a customer who does not participate. We've done about 20,000 of those. Over 20% improvement.

Our own brand offers value in key commodities. So although we are expanding into wellness, we are keeping in mind the value-based customer. So our own brand plays that position in the assortment and a great improvement in productivity. Importantly, though, in margin as well. Open 41 stores in the first half will continue on that path, including two new franchise stores in Indonesia. We're working very hard to ensure that the Indonesia market will have a profitable franchise model so that as we expand that out across second tier cities, we have confidence that franchisees will become long-term businesses as opposed to in and in and out. Again, margin doesn't concern me at all. We strategically invested in the Malaysia business. We have a competitor who likes being number one. I'm competitive, I'd like to be number one. So we're strategically investing where it's necessary.

We have the margin and flexibility to be able to do that in Malaysia. So again, it was a thoughtful investment and I think the right investment. Moving on to the convenience format. So again, as I mentioned, great performance as we return to growth. 4% year on year, 2% like for like as we increase our ready-to-eat sales penetration, which is now 24%, or if you exclude the cigarettes from our revenue base, a 34% penetration. It was very small years ago, a couple years ago. We've done a great job of bringing in a bit of a Japan-themed. It seems like every second person in Asia, every other person in Hong Kong has been to Japan three times this year. So clearly, there is an affinity. And we believe that that is having a very positive impact. Overall, Hong Kong-like for like, great final impact in terms of putting behind us 10 consecutive quarters

of decline. The team there did an outstanding job pivoting away from not too many years ago, guys, we were 50% of our revenue in convenience stores with cigarettes. Very low margin, but that is a revenue driver. We've now balanced out that assortment with not only a high level of ready to eat penetration, but collectibles. I am not the customer. I still don't get LaBubu. But K-pop, these sorts of collectibles, it's bringing new traffic, new customers, and I think a new energy to our Hong Kong stores, and it's going very, very well. Singapore again a great performance 8% with same collectible strategy and as well some great promotions. We increased our store base by 112 in South China to nearly 2,000 and see a pathway to continuing to invest. We really in

Guangdong Province have just the three main cities covered. We see lots of opportunity now to expand out and and broad the portfolio. Overall the food bars are going well in southern China. We are giving QSR to run for their money. In terms of value meal we have the convenience of the click and collect as well set up. We have tens of thousands of orders a day I think that's right. So 110,000 orders a day across our stores of click and collect each day of of a convenience meal, you pick up a breakfast in a coffee or a breakfast in a beverage, pop in, grab it as you're on your way into the office. Good growth of online sales. Generally this has been deluded, I'll talk about that in a couple minutes when we get to the Omni, but we're very pleased with the performance here. You have to meet the customer where the customer wants to be met. These offline stores that refuse to engage

with platforms and digital are not, I think, playing the right strategic game. And then overall, higher margin categories in franchise stores means that we continue to see opportunity to increase our margin as we think about the next couple of years to the guidance that we gave in December of last year. If I move on to food, food has probably been the most challenging format over the last couple of years is we have dealt with not only a divestment, but also just the fact that you see now in particular in our market of Hong Kong and Macau, you have Shenzhen and Juhai right across the border and a relatively convenient way to go and shop. There was a lot of noise, say 18 months ago about that traffic happening. Overall, we've done well. I'm really pleased with where we have landed. We were not in a good competitive position 24 months ago, 18 months ago. I think we're in incredibly good competitive position.

So if you were to look at overall continuing a 1% growth, light for light plus 0.5 in the second quarter so we are accelerating the improvement. Volume share first, then value share second. Big price investments as a result of resetting our structure of our supply chain and where we source our goods. Hong Kong has been controlled by lots of trade and middlemen and various and sundry exclusive partnerships. We have worked our way around those, gone direct, meaning that we're able to get much lower costs that we can pass on to our customers. So that margin has now been protected through that direct sourcing. And from 18 months ago when we were about a 15% premium to Shenzhen, so if you pick say 250, 200 items, the biggest selling items in Hong Kong. And you went across the border to Shenzhen and picked four retailers. And you shop there, it was 15% cheaper to go across the border. Hong Kong's now 3% cheaper. Now, one would say, how does that happen?

It's because those retailers have to use the higher margin tier one city to pay for some of their lower margin loss making tier two cities. We don't have that problem. We're only in Hong Kong. We've got the ability to deliver not only to our customers, but also to our shareholders. So C margin expansion is a great opportunity as well for the food business. Accelerating our omnichannel with a 35% increase and online orders, quick commerce, which are smaller baskets, but we're able to charge a premium is a good part of that growth. And then finally, our Cambodia business is just growing by an extraordinarily high level. So we're very pleased with that business. We are the only real modern food retailer in Cambodia. And we're seeing great financial performance. And then finally, on to IKEA. Last but not least, it has been, in the last few years, a bit of a problem child.

The reason being that we didn't necessarily have the right assortment at the right pricing with the right proposition. We didn't necessarily have the strength in the categories that we needed to have. So great credit to the team that has been running this IKEA business. So a strong turnaround, life for life sales growing at 4%. That was negative 6% a year ago. Hong Kong, positive growth of 3%. Big pivot upon value, local relevance, food. Hong Kong years ago launched the durian ice cream, another thing I will never get. But in any event, we have taken that concept of how do you take the intersection of Scandinavian life and local taste and create some interesting food opportunities, which we're driving, including Swedish-themed breakfasts in our stores. We're now seeing the traffic, and we're now seeing the progress from that.

Taiwan again continues to be a stronghold for us, a great growth. And we see store expansion. We do not have yet the penetration that we could in terms of number of stores. So we're back into investing in store growth in Taiwan. See, again, Omni Channel, where we went on to Shopee, first ever franchisee, where we went out and put our proposition. We have stores in Jakarta. We have stores in the major city. It's a huge country, 250 million plus people. We can't possibly get into all of the islands. Shopee is profitably allowing us to expand. Good food innovation, as I mentioned, and that Nordic theme, Scandinavian theme, is drawing some great traffic into our stores. Overall, think that we have got through some of the efforts that we've made of divesting or eliminating assortment that was not relevant to our Asian markets,

investing in items that, in collaboration with the franchise, or I think have had powerful impact. And then people still want little treats, right? Still, again, the number one selling IKEA item across our Asian markets. Again, I don't understand, lamps, why lamps? Don't know. But if it makes you feel good, we'll sell it to you. And so again, that allows us to have deep insight as to how the average consumer is really starting to understand where can they afford give them some treats. Apparently I was on CNBC a little bit earlier and I didn't know this but apparently that's the first thing decorators start with their lamps. So there you go. That explains it and we have got lots of great lamps at IKEA. And then again we are focused on the portfolio and closing stores that we we do not think are profitable. Finally just wanted to talk a little bit about our digital ecosystem. We talked about quite a bit. So our digital ecosystem is

made up of all of our e-commerce transaction, generally deluded. For 50 years, the customer did the fulfillment in the last mile delivery for free. Now you've got to pay somebody to do it. So you take those transactions. We have worked very hard at investing in technology that helps us make that very efficient. That business is relatively break-even. And for the first time after five years, we have now pushed that into break-even. But the ecosystem is then made up of the YUU profitability, our retail media profitability, and the ability to, with 20 million transactions a week, we've got the ability to know more about our customers, and we're able to sell that data. That ecosystem was 35% of our revenue growth, and is a higher margin than selling product in store. To me, this is what represents what a true omnichannel player does. Now, what right do we have to play in media? It's a bit challenging in Asia, very fragmented market. The media buying agencies generally do pan Asia.

So that led us to the decision to buy Cody. Cody is the advertising agency that controls contractually

all of the media that you see on the buses, the K and B buses, and the subways here in Hong Kong. And it was a little bit hard to break in. Now what happens with the close of this business, we see an opportunity to be able to bundle deals. So new product launches, promotions, whatever it is, they come in, they want access there. We then add it with the thousands of screens that we have in store across our formats here. Giving us, I think, quite a competitive advantage to be able to really move quickly in Hong Kong in terms of retail media. It's a minor investment. I don't know that we've announced the investment amount. So I'm not gonna say it, so I don't get into trouble later with Tom and Karen. But look, it is mildly deluded in the year one. I think within 12 to 18 months, it'll be profitable. But if you add it up into the overall retail media P&L, it's a great, accretive part of that business.

And we'll continue to look for those inorganic opportunities that to me represent a very strategic chance to continue to build not only our proposition for customers, but also for shareholders. And with that, I'll turn it back over to Tom. Thank you, Scott. Let me take you to the outlook for 26. So based on a very strong first half, we are revising upwards our guidance for sales and for profit. So sales, the previous guidance was 2 to 3% organic growth. We upgraded to 3% to 4% for the full year. The same for the underlying profits, between 270 to 300. The previous guidance, the current guidance will be 285 to 305. And we are confident that we're going to make sure we're going to deliver those numbers. CapEx, Dividend, Arosi, those all remain unchanged. And with that, I think we are ready for the Q&A.

Kevin. Thank you Scott and Tom, and with that we'll open up the floor for Q&A. If you wish to ask a question, please raise your hand, and we'll have someone to assist you. We kindly ask you to please indicate your name and the company name you represent. And for those participating online, you may submit your question on the platform, and we will direct them to the speakers. First question. Yes, this is Brian from city. Hi Scott, hi Tom. I have two questions. First question is about the margin profile. If I use your numbers in the presentation, we can see that the health and beauty margin is pressured by the Malaysia price promotion, right? And the convenience stores drop a little bit. I don't know if it's a rounding issue or not and put improved on direct sourcing. I mean, could you share more color on the margin profile progress we had in the first half and in the second half, what should we be looking at? And if there any, I mean, we shared a lot about the margin

initiative that we are doing, but is there any other factors that we're missing that might harm our operating margin for that? That's the first question on margin. My second question is about the management change. We have some, you know, quite a big change in the management and I wanted to know the rationale behind it. hold from the Bao Lin, it says for the next phase of growth. So I just wanted to know what that is. Because Angel is from health and beauty, right? And it was a high growing business, and it switched into Ikea. So and we have any other changes. So I just want to know if for health and beauty, are we having a, are we not accelerating, I mean, I just want to know the rationale behind all these management changes. Great. Let's do it.

Well, I'll answer the second question first and then turn the margin over to Tom. So the first, you know, retail is fast moving and my job is to develop our leadership team and develop the skill set of our leadership team in conjunction with our board. Each one of our formats, compared to two years ago, I call it we went from DFI 1.0 to DFI 2.0. AI, technology, competition, customers, means that we have to focus on this next phase of competitiveness and I call it DFI 3.0. Each one of our businesses have great skills and new leaders bring in a different perspective. And so I can tell you, as Andrew goes into IKEA, he sees enormous opportunity to take some of the things that he learned in health and beauty and grow. Curtis, the last time I looked is an intensely

competitive human being.

Sometimes we have to coach him not to be so competitive. I'm joking. I've never done that. But he comes out of JD. He comes out of Walmart. His job has been fixing the food business. Tom is now going to challenge himself to grow that business. And so I think overall, we're in good position to be able to test our leadership and our management while continuing to be able to deliver to shareholders. And as I said in December, I am a big underpromise and overdeliver. And I think our first half reflects we're moving from strength to strength. And I think with this leadership team, who are an A team, best team I've ever worked with, we will continue to do that on the margin piece. Yes, on the margin. So let me just take you over the key format. So health and beauty, a slightly lower margin. However, Malaysia will recover at some point, right? So we expect that intensity will come down at some point and in Malaysia will recover.

The other point on health and beauty is the e-conf platforms. We are driving really hard our own e-conf platforms margins are much better. So that's the growth opportunity that will improve margins. For health and beauty, we expect the second half to be much better than the first half and will end up in the range of giving you in the investor day for health and beauty. Same for convenience. It's a small rounding for the first half. For convenience, the second half, and you can see in the past, always significantly better than the first half. So we also expect that to happen for this year, and margins will be better for the full year. And we are on track over the next few years as we grow RTE and grow non-food, margin mix improves. I will get to the range we also indicated in our analyst presentation on investor day last year. Same for food, he also expects margin to improve in the second half and my key will be flat. So overall the second half is going to be better than the first half and we are on track to deliver the margins we indicated in our investor day last year in December. The question on heterens,

go ahead please. Look there's always there's always heterens and if you ask CFO I only see risks but but on the heterens you see that cost prices do increase sometimes we of the oil price increases so we are first of pushing back on cost price increase to our suppliers and secondly if we pass them on we've been selective so we will not hurt margins but we also don't want to hurt demand so it's a it's an arc to make sure that's the right balance but even that in the first half we have played that really well and we see that margins actually are quite stable and demand is still there which is most important. The only thing I'd add is as a retailer the worst thing you can do is to have a margin expansion commitment with no levers to pull. The reality is we have an enormously agile portfolio. We are fully focused on daily essentials. No matter what happens people are going to eat, they're going to bathe, they're going to want a bottle water and for some reason they want a new lamp. In that environment we have the flexibility to continue to meet our market commitments while also ensuring we

have the ability to invest in market in a particular format that we think deserves the attention to gain share. We have the ability to invest in AI as we think about the ability to grow our business and personalize relationship to our customer and make strategic investments without harming that that commitment to the market. So I see that the flexibility and the scale of our business is actually a competitive advantage because we don't have to have a trade-off between a strategic investment and our return to our shareholders. Next question please. Thanks Tom, this is Jeff from CSA. So again just going back to first is on food. So now I think we are seeing our basket size is training at discount to the GBA area. So just trying to pick your brain on how do we think

about price investment going forward. Is it going to stabilize or are we still going head to head on onshore retailers here? That's my first question. And the second is more on the Malaysia health and beauty, promotional spending. Just want to understand the nature of that. Is it price investment or are you ramping up the sales force there? So any color on that will be helpful. Thank you. So on the first question, we have achieved the right margin, mix, and price to customers where I believe now with that 3% discount and certainly the price comparisons that we do to our competitors here in Hong Kong, we don't need significant investment in price. As a result now, we have the ability to pivot maybe more towards own brand and continue to expand our own brand. We may look at potentially opening new stores again for the first time in a long time here in Hong Kong. I believe again margin expansion is an opportunity here in Hong Kong.

We don't see the need now to invest into further volume share without value share and positive revenue growth. On Malaysia, it is a highly promotional market. As an everyday low price proponent, I find overpromotion confusing for customers. You go in, you buy one, you get one for free. Well, all that does is it goes in your pantry. If I get buy one, get one free shampoo, I'm not washing my hair more often. You're forcing me to put more dollar in my pantry than an everyday low price. So we are looking how do we strategically migrate towards that. understanding we're not number one in the market. We've got a competitor who loves that kind of, I think, superficial value, and we are selectively investing in those promotions where we have to, but also in terms of moving more towards an everyday low price model. So it's not an infrastructural investment

in terms of significant labor increases or anything. It's very much around this pricing pivot. Jeff, one more thing on Malaysia. There's a Malaysian government issued vouchers called Maisari, and those vouchers are only we spend at supermarkets, not in health and beauty stores. Some of the volumes on basic shampoos and basic H&B items moved away from health and beauty channels to supermarkets. As a result of that, it intensified the competition within the H&B channel. That we think is temporary because those vouchers are not being issued every week. This year they might stop at some point in the future. It is temporary, but we've got to make sure as we can, we have to hold onto market share in this period. We can say, oh, we want to drive profit. But if you drive profit today, you might be at a big loss tomorrow. So it's a balance. Next question. Thank you. And also, congrats to the good result.

This is John from UBS. I just have one question. It's more about the store count by segment. So I'm not sure if management could share about the store edition and also the store closure by each of the seven. Just want to gauge about your CapEx attitude by different seven. Thank you. I don't have the details and job but where we see the store, look we're always closing stores, every retailer, unprofitable stores we will close right? At the same time we're growing stores. The major growth in the first half this year is mainly in China 7-11 where it can on franchise also on stores and And secondly is Indonesia. Yes, we also go in stores in Malaysia, other markets with the bigger growth Go from those two markets in line with our growth ambitions. We said earlier last year We see still that the payback for new stores is very strong So we see that around two years for new store payback actually they've been they've been they improved the last two years and they're quite stable as you speak

Just adding on to that, Asia is quite unique, which is the opportunity to own stores is pretty low. You go to major and mature markets around the world, and a big retailer, for the most part, will own a portion of their real estate. It's all rental. And if we go back a couple of years ago, we talked about the fact that we brought rents down. But we have three plus three, so we have a good part of our portfolio every year up for renewal. And that gives us the opportunity, when the landlord comes in with a rent increase, potentially, say you know what we can go somewhere else so it gives us a great flexibility. We do want to increase our store count where we see opportunity to continue to grow market share but what we're finding is that as we have refined our assortment as we have increased our transactions and we've increased our market share landlords want us in their malls. Landlords want us in their businesses which has given us a greater negotiating position and as a result I think ends with the ability to continue to grow profitably in terms of shareholder returns.

Yeah, maybe last comment on Indonesia because people are very concerned about Indonesia. Actually our health and beauty in Indonesia is the best performing business across all the markets. Life lives are really, really high. Profits are exceptionally high too. And because people still want to spend the little money they have on those things which make them feel good, being a lipstick, being a cosmetics, being a vitamins, that is still very, very essential. So these stores in Indonesia cross all our formats and all our areas for HMDO particularly well. So we are actually quite confident that it will continue. And a big part of that assortment is locally sourced and therefore does not have the currency risk if you are an entirely import driven business. Bit of a challenge for us on IKEA but we've mapped a path that we think works well. Thank you. Let's move on to online for a second. Your next question comes from Matt Candy of CGS International. I have two questions. First, given the stronger revenue outlook for 2026, does that change your thinking on the

2028 targets? Specifically could that be room for upside to your 2 to 3% three-year revenue KGO guidance? My second question is on the Cody Hong Kong acquisition. The retail media strategy so far has centered on apps, in-store screens, and on the channel. While Cody brings outdoor ad inventory on buses and trims, could you help us understand how out-of-home advertising fits into the broader DFI Q media strategy? Thank you. So I'll answer the second one and then pass the first one to Tom. So look, we are not getting into outdoor advertising through the Cody acquisition. What we are doing is we are accessing a pool of media dollars that we were not able to break into without having that ability to drive. So this should not be seen as DFI suddenly wanting to be in the media business in terms of terrestrial out of home. Very little interest. And it's an industry that I think is volatile and, again,

not something that is part of our core proposition. It was a very good strategic buy. And I made clear, I think, in our investor day, and potentially this time six months ago, we have got a history of having purchased many minority positions where you influence the rich. It just doesn't work for us. We are going to stay Asia focused. We are going to stay in the formats in which we are in. We are going to look for retail media that drives the app and the in-store opportunity for growth. And we are not going to acquire anything unless it's TSR creative in the short term. And that is, I think, a good set of principles. And CODI will fall to within that. It does not signal a sectoral pivot in terms of where we want to put more capital. On CODI, I can say it's a number. So we spent less than $4 million US. It's a very, very minor acquisition. and will be close to break even next year.

So it will not be dilutive. So it's a very small investment, won't be diluted, but it unlocks a lot of potential for our retail media across platform. So I think it's- Hopefully P&L that retail media. Absolutely, so that will help to drive the offer. Back on the first question on guidance, we're not ready to revise our guidance, but as I said earlier, we are quite confident that we will deliver at least the top end of the guidance. And when we are ready, we'll come back to the community to share our revised guidance, but for now, the top end, I think you shouldn't take into account. The next question comes from Jaden Fentericus from Macquarie. I have two questions here. First, the restatement of corporate overhats into operating settlements this half. How much was that impact in absolute terms and where did most of the allocations go? Second question on retail media. How much was the current revenue contribution from retail media given it's now contributing close to 35% growth. And this was recognized, please. Thank you.

So I was trained, I call it the foot of Walmart. Sam Walton was a great guy. And there are a lot of very powerful truths in their economic model. And the first powerful truth is that every dollar of overhead must be correlated to profit. And if you can't, you shouldn't be spending it. We had a quite general liberal view as to what our overhead is. Tom and the finance team went through a very disciplined process and said, where is this adding value in the P&L? And if that is adding value to the food P&L, then the food needs to pay for it, not have it allocated to health and beauty or to 7-Eleven. If everyone believes that they're getting value from it, then we all have to agree, their allocation has a return on investment. And that process resulted in a very, very clean P&L,

where we started at 1.8%, I think we announced, with a commitment by 28 to get that 1%. So shared overhead will be less than 1%. Everything else is directly attributable to the margin path, each one of our format and business segments have committed to. So very, very comfortable that we have the right model. And it is going to be, to me, the best way, as we think about AI and technology investments, is making sure that the technology team is investing dollars, that the cost of that investment is going to be borne by those P&Ls and not buried in general overhead, which to me is very dangerous as an everyday low-cost player. When it comes to the retail media, my second lesson from Walmart, it's a shadow P&L, we manage it internally, we'll talk about it in generally, we report only segments. So I'm not gonna talk about a retail media P&L, I'm not gonna talk about data monetization P&L,

I'm not gonna go, why are you P&L?

That doesn't help us serve our customers better and nor does it help us guide our shareholders better. So in general, we'll talk about that media as a part of that digital ecosystem. I think to say that it's 35% of our revenue growth and it is a higher margin than the rest of our business is as much guidance as I wanna give. Maybe on the overheads a little more detail. So, Dr. Jaylen's question. So, we allocate over to the forearms because they can make it more agile. So they can take it on then and they can lower the cost. That's the first principle. If you look at the allocation, so roughly $9 million, which we reallocated from the center to back to the formats. By format, roughly $3 million for health and beauty, similar amounts for food, $2 million for convenience, about 0.6, 0.8 to IKEA. And you get the numbers for that being. So it's not only just trying to make it look better for the center, but making sure

that the formats can deal with it over to reduce them and to make sure they are put at work. Thank you, Scott and Tom. Your next question comes from McCreed Wang of Bank of America. Just want to follow up on sentiment margins on health and beauty. Can you elaborate a little bit more about drivers to drive a much better health and beauty margin in second half? Second question is on CVS. Despite higher RTE and online sales penetration versus first half of last year, can you elaborate on the reason why margin remains broadly stable year on year? Thank you. Yeah, so on health and beauty, as I've covered up, we made a strategic investment in Malaysia. I don't know exactly what the change would have been if we had not made that investment. I know numerically we're tracking that. But to Tom's point, this is an episodic, which is, as we grapple with the decision by the government

to offer excluding health and beauty, a set of free vouchers to the average Malaysian. It had an impact, we pivoted, we strategically invested. As I mentioned, if you look at the midpoint that we guided on health and beauty in December of last year, we're still below that. Midpoint is a good starting point in terms of where we would obviously wanna be in 2027. And so we are continuing to invest in own brand. We're continuing to invest in wellness, which have higher margin. We're continuing to invest in the AI that is bringing in new traffic, health pods bringing in new traffic. There's a lot of upside on the margin. This was a one-time event in the first half, and very confident moving forward. In terms of the CVS margin, we again are rebalancing our go-to-market strategy. And so as we mentioned, in Hong Kong,

we had 10 quarters of negative growth, which meant that, of course, overhead as a percent of revenue was going up, labor costs as a percent of revenue is going up. You have all of these headwinds when you're not growing a business. And so the fact that we have pivoted to growth in Hong Kong that we had great performance in Singapore means that it's the virtuous cycle of retail, which is revenue goes up, your gross profit improves as a result of that going up, you have the ability to reduce the over-whole costs as a percent of revenue, which means that you've got the ability to increase your margins. It was pretty stable because, again, we still have, I think, a pretty significant competitive situation in some of our markets. China is incredibly competitive. As you think about the platforms and the battles that the platforms have been under in terms of Alibaba,

JD, Mitaan, et cetera, we have been very thoughtful of how we engage and, as a result, have had to invest in pricing, though. And China is an incredibly competitive market, as you know, but that's the value of a portfolio. we can pull levers here and there, still deliver an overall, I think, good performance. Same as health and beauty, if you look at where we guided in December of last year at the midpoint, we are below that. And I think that's a reasonable target as a guideline as we think about 2027. Yeah, on health and beauty, on CVS, what's, I mean, we were surprised a bit in the first half, that the cigarette sale is stable. Actually, cigarette sales in Singapore increased. Singapore government bans vaping. We really strict on it. And what do people do? Go back to cigarettes. Where can they buy them? In 7-Eleven. Yes, it's lower margin, but every dollar counts. So I'm OK with lower margin percentage if that means more margin in the bottom line.

So that's, I think, what we saw a decline in the last few years. Actually, it stabilized not what we expected in the first half of this year. Somebody needs to tell Gen Z, vaping is not good for you. I don't get it. Thank you. Next question comes from Zhangfengqi of DBS. SGNA, as percentage of sales now at 1% ahead of 2028 target, can we expect to see further cost savings moving forward? Thank you. Tom? Yeah. So SGNA will be a bit higher second half, but overall, the full year will be lower. We expect that those cost savings we started last year, they are coming through. you can see them like flying down 15% and we expect more to come in the second half. These cost saving programs are large and they're multi-year. So the first results you see now, the next few years you see probably more. We started another saving program at the start of this year where we see results next year coming through. So I'm confident that we will definitely beat the target we set ourselves for 2028 on

the overheads. Not only overheads on the total level, but also overheads in the formats. formats. A storm that we might reinvest in AI or reinvest in price, but we meet that flexibility for us to make decisions. So to answer the question, yes, over it will come down further in the periods ahead. Thank you, Tom. Due to the interest of time, we'll be taking the last question from online of HSBC, South Vienna. Her question is on Cody, Hong Kong. Given the business was last making in 2024 and five, what's the plan around turning the company around and achieve positive accretion within the next 12 to 18 months. Yeah, so first it is a standalone business with overhead we don't need, systems we don't need, etc. So we have the ability to bring it in in terms of revenue, it is gross profit positive in terms of the contracts that they have with the out of home providers. So as we've looked at it, we're very clear that we have the ability to run it just at a much

lower cost. We have signed on management which is I think important to bring over that key management personnel. We don't acquire anything unless we believe in the business case and as Tom mentioned we believe that business should be break-even within 18 months but it is from day one bringing more revenue to a very very healthy margin retail media business across all of our stores. We're not yet ready to announce at some point, I think it'll be an important statistic. As you look at the totality of our screens across all of our markets, we're at 12,000 roughly, we've got a commitment to get to 18,000. We're selling 10, 20, and 30 second segments. We're open 10 hours a day, 12 hours a second. We have calculated the total capacity. So at some point we're going to be ready to talk about about what is the capacity utilization in terms of paid media. Right now, we're not ready for that, because it's not high yet, huge upside.

Now, we do fill it with our own brand. We fill it with promotions, et cetera. That will also be part of the balance. So a good part of this CODI acquisition is giving us the opportunity to be able to increase the paid media penetration that we have across all of our stores here in Hong Kong. Thank you. Ladies and gentlemen, this would conclude our section today. As a small token of appreciation, please remember to take a goodie back before you leave. And for those participating online, you may now disconnect. Thank you and we look forward to seeing you at the next hour's briefing. The thing before anyone disconnects, my microphone's off, it's back on. So to thank Tom for his two years as service as chief financial officer, he adds up pretty well. So it's gone well. And welcome to Kai Jour, who will be sitting here with me six months from now. Thank you. Thank you. Thank you.