Good morning everyone. Thank you for attending the DFI Retail Group 2025 full year results presentation.

I'm Karen Chan, Strategy and Investor Relations Director. Joining us today is Scott Price, Group Chief Executive, and Tom Vander Lee, Group Chief Financial Officer, who will be providing remarks on our full year results followed by a Q&A session.

Today's presentation is being webcast in its entirety. In addition, the full text of our results announcement and slide presentation are uploaded onto our IR website.

Before we start, I would like to remind you of the following regarding information to be provided during the presentation. The information about to be presented is for information purposes only, and it's not intended to be investment advice for any person.

There's no intention to invite for any dealings in any securities. There may be forward-looking statements mentioned in the presentation materials, which include statements regarding our intent, believe, expectation with respect to DFI Retail Group businesses, operations, market conditions, etc.

You're expressly advised not to rely on these forward-looking statements, as they are subjective views which are subject to risks and uncertainties. With that, I'll pass it over to Scott.

Scott, please.

Good morning everyone. Thank you, Karen.

Pleasure to be here talking about our full year of 2025 results and also sharing with you some of the insights that we gleaned from the second half of the year versus the last time we gathered here. We're seeing a more confident customer in the second half of 2025.

They're still careful. They're still not going back to, I think, the spending pre-COVID.

We're seeing customers willing to invest in convenience, invest in their own wellness, and also fun, which has been quite interesting. Some of the headlines: we are now up to about 115,000 daily e-commerce orders.

Again, that focus upon convenience. A lot of that is coming from our 7-Eleven China business.

A significant increase in what we would call the wellness category within health and beauty, where customers in particular around derma, supplements are interested in functional value. In particular, a younger customer that I think are more focused upon wellness than particularly previous generations.

Collectibles and characters across, I think, not only our 7-Eleven, but also our own brand. Cute always works, and we're seeing it as an opportunity for us to grow.

I think that we had good strong like-for-like growth. I'll talk about that in a couple of minutes.

Good progress overall in the business, and I think from a financial viewpoint, very pleased with the strength of our balance sheet now as we have paid down debt and are in a net cash position. As we look forward to 2026, I think as Tom will share towards the end our overall guidance, I think that we're having now an opportunity to benefit from really 18 months of hard work pivoting our business to far more of this customer-centric, value-plus again areas where they're willing to spend a bit of money.

We obviously have to focus upon becoming a modern retailer, which means the digital and the role of digital within our business is critical. We'll share some of the statistics there.

We are very much focused upon financial returns, the TSR, our return on capital employed. A key metric that we're using is increasing our revenue and profit per square foot across the business, which is a great metric within retail to really test how you're doing, and continuing to invest in our digital ecosystem, which I'll describe in a little bit more detail.

In terms of overall results which have been released, revenue from our core operating subsidiaries up 0.5%. Now, that was at 0.8% in the second half.

Again, we're seeing this recovery across the total portfolio after a couple of years of challenging revenue. Underlying profit up 34.7%.

We have absolutely focused upon everyday low cost across the entirety of the business, which has continued to drive a much higher growth in profit than revenue. I mentioned net cash position at $538 to $70.

That is after paying a very significant special dividend of $600 million. A 58.3%, we announced a full-year dividend of 10.7% after approval from our board of directors yesterday.

Overall, we're seeing some interesting trends. High-value tourists are coming back to Hong Kong.

We see now in many of our tourist stores great growth. I'll talk a little bit about that in particular health and beauty.

Tourist locations versus the previous tourists who prided themselves on coming to Hong Kong and spending nothing, bring their own water, their own food. We're now seeing a return of high-value tourists, which is a great sign.

Good mix now from cigarettes to ready-to-eat, a little bit more detail in that shortly. Food growth benefited from the Singapore consumption, the government prior to the elections gave each citizen $600 Singapore, and that obviously benefited the food as we saw in our performance there.

Great progress in IKEA, we'll talk about that in a few minutes. Mentioned the doubling of our e-commerce transactions, and again the total shareholder return for the year was 93%.

I'm going to turn it over to Tom for a little bit more detail.

Thank you, Scott. Let me take you through the financials for 2025.

Starting with the income statement, we closed 2025 with an underlying profit of $270 million, up 35% year-on-year. With this, we deliver the top end of our guidance.

This performance was driven by consistent like-for-like recovery, margin improvement across most formats, and decisive portfolio actions, notably the divestment of Yonghui, Robinsons, and Singapore food. For clarity and comparability, we present two additional views here: first, a restated 2024 base reflecting only the comparable periods for divested businesses; second, a restated 2025 view assuming full year deconsolidation of Singapore food and Robinson Retail.

This provide a clearer picture of our going forward earnings profile. On revenues, revenue from subsidiaries was $8.9 billion, up 0.5% year-on-year on an organic basis, excluding divested businesses for the comparable period.

Maxim's revenue, our associate, up 0.4% on improved mooncake sales and Southeast Asia restaurant performance, offset by weaker sales in Hong Kong and mainland China. Subsidiaries' underlying profit, $183 million, up 19% on a comparable basis.

All formats improve the operating margin with exception of convenience due to reduced cigarette volumes. Our financing costs were reduced as we paid down almost all our debt.

The share of underlying profit from Maxim's up 9% due to stronger sales and lower cost. The underlying profit is $270 million, as said, 35% up year-on-year, or 18% up year-on-year on a restated comparable basis, excluding the loss-making Yonghui in 2024.

The non-trading items, $36 million, they primarily reflect the losses of the divestment of Yonghui and Robinson Retail, partially offset by the disposal gain on Singapore food. These items are all non-recurring.

The ordinary dividend per share, the 14 cents here, that's based on our new dividend policy which we announced last year of 70%. The special dividend, 44 cents, 30, we paid out last year.

I think overall full year 2025 represents a clear inflection point for the group. We transitioned from a portfolio-driven structure to a much more focused operating company, with stronger earnings quality, lower leverage, and a greater strategic flexibility heading into this year 2026.

Going to the sales summary, as outlined in our in our Investor Day, growth, margins, and returns are the key building blocks for us driving TSR. Turning to sales here on this page, we continued to see a sales recovery across the format in 2025, reflecting improving execution and early signs of demand recovery.

Overall, consistent like-for-like recovery, reaching 2% in the second half of 2025. Turning on to the formats: on H&B, we saw a almost 7% growth, driven by continued share gains in wellness, stronger tourist traffic in Hong Kong, and the growing e-commerce presence in Southeast Asia.

Convenience, the total sales declined 1.5% due to cigarette volume reduction following the tax increase in Hong Kong in February 2024. Excluding cigarettes, sales increased 1%, as we focused on growing higher margin non-cigarette categories, with RTE being the main focus.

Food, sales were broadly flat, excluding divested businesses, as price reinvestment supported volume and transaction amid volume folk- volume value-focused consumer environment. Home furnishings, although sales declined 3.5%, a clear improvement from the decline of 12% in 2024.

That's driven by price resets, range specializations, and accelerated deep- digital penetration. As said, Maxim's grew 0.4% due to stronger mooncake performance and Southeast Asia restaurants.

Breaking this down a bit more detail into half year numbers, you can see the trends here better. Sales and like-for-like trends continued to improve throughout 2025, with a clear step up in the second half across all formats, reflecting strong execution and stabilizing demand conditions.

On health and beauty, health and beauty delivered sustained like-for-like growth, supported by continued share gains in wellness and the growth of tourist arrival in Hong Kong, as well as this e-commerce I mentioned earlier in Southeast Asia. Particularly Indonesia and Vietnam saw double-digit like-for-like sales growth in 2025, very strong performance in these two markets.

On convenience, sales remained pressured by cigarette volume declines following tax hikes, although a clear improvement here is seen in the second half of 2025. That's driven by continued growth in higher-margin non-cigarette categories, particularly RTE.

In South China, like-for-like sales were impacted by the intense subsidy competition from food delivery platforms, particularly in the first half of 2025. As we continue and grow RTE, with margins about four times as much as cigarettes, we expect the financial impact from cigarette sales decline to moderate from 2026 onwards, as we anniversary the full year cycle of the cig- tax increase.

On food, stable like-for-like despite a challenging trading environment. In Hong Kong, pricing reinvestment in the core basket items drove volume up with 2%.

Singapore food, as Scott commented, benefited from the government consumption vouchers, which were only redeemable at supermarkets and hawker centres. Cambodia delivered a very strong like-for-like, both in sales and also improved underlying margins.

In home furnishings, you can see also here a clear improvement compared to 2024, and also the second half is much better. That reflects all our efforts on price reductions, better entry-price range options, and we rationalized non-core items throughout the portfolio.

As a result, you can see that the volumes in the second half are growing. Sales might not grow yet, but the volumes, underlying volumes in the second half for IKEA has been growing.

We then turn on to the operating profit by format, and you can see here also quite strong results, and also good recovery in second half. Starting with health and beauty, the operating profit here reached $228 million, up 9% year-on-year, driven by strong performance on sales across all our markets.

The margin improved 20 basis points to 8.7%. Convenience, operating profit $97 million, although down 6% due to the lower-reported cigarette sales, although the second half here also returned to profit growth, driven by the favorable mix towards higher-margin RTE categories.

Food, operating profit reached $62 million, a 15% year-on-year increase, driven by earnings recovery mainly in Singapore food following the distribution of the government consumption vouchers which led to higher sales. Again here, Hong Kong pricing investment drove volume growth, but did not impact our margin because we offset the lower prices with better sourcing in our business.

Last, home furnishings, here we can see improved margins year-on-year despite slightly lower sales, and that's because of significant cost optimization across labor, supply chain, and rent across most of our markets. As a result of that, we had a $10 million uplift in profit for IKEA, or home furnishings, in 2025.

Turning to this the total subsidiary operating profit and the underlying profits. Starting with the subsidiary operating profit, the operating profit, that is post-IFRS, increased 7% year-on-year, driven by broad-based improvements in subsidiary profitability, with operating margins now 4.2%, up 30 basis points.

The underlying profit, as mentioned earlier, is up 35% to $270 million, supported by stronger subsidiary earnings, as you see above, lower financing costs—we moved from a net debt to a net cash—and a higher contribution from associates, following the divestment of the loss-making Yonghui. The reported SG&A costs are slightly up, but on a like-for-like basis, they are down.

There are a few one-offs which are not recurring, and you will see this year that costs are coming down on the SG&A line. Turning to cash flow, strong cash flow, $430 million cash- operating cash flow, up almost 30% year-on-year.

Our free cash flow grew 78% to $281 million in 2025, both because of underlying profit improvements, improved working capital efficiency, and the interest savings which I highlighted earlier. CapEx, our CapEx was clearly below our guidance and landed at $149 million.

Of the CapEx spent, 50% of the CapEx spent on stores and refurbs, 30% on digital and IT, and the remainder on supply chain, sustainability, and maintenance. We however remain committed, as you will see later in the guidance, to invest $200 to $220 million per year, again focused on store, store renewals, and technology, particularly AI, as we will highlight later.

Following the $1 billion of divestment proceeds, we moved from a net debt to a net cash even after returning $600 million to shareholders via special dividend. That moves to the return to shareholders, as you can see here.

Our total ordinary dividend is 14 cents in 2025, up 33%, and that reflects stronger per- earnings, but also the increased payout from 60% guidance to 70% policy. We returned $740 million to shareholders, including the $600 million special dividend, while we strengthened the balance sheet.

We delivered a total shareholder return of 93% in 2025, driven by earnings recovery, portfolio simplification, and disciplined capital deployment. With this, we've outperformed our retail peers and major global indices.

Last, the ROIC improved to 9.4%, with a clear pathway to 15% by 2028, as we announced during our Investor Day. With that, I would like to turn it to Scott for strategy and business updates.

Thank you, Tom. For those who attended our Investor Day, this framework was presented, and the strategic deliverables are really just the anchoring structure by which we focus our investments, and as well, the priorities for each one of our formats in the business.

We talk about the key deliverables in 2025. Retail excellence, being really good retailers.

We have a, I think, a portfolio that brings synergy across, but each one has a different assortment. We have thousands of products in each one of our stores.

The reaction to the inflationary environment meant that we've really had to focus upon repivoting. We had a good, I think, 12 to 18 months of really resetting our customer proposition and being really good retailers.

In health and beauty, curating the range, moving out of commodities, much more into functional value product lines. We're seeing great progress there.

On convenience, moving away again from tobacco into far more of the RTE, ready-to-eat. Food really strengthened our proposition there as well, the value to customers.

On home furnishing, enhancing the value of the product lines as well accessibility by the way that we have gone to market, in particular in Southeast Asia, Indonesia, on platforms. Access to customers, we have targeted, I think, appropriately if we focus upon TSR and ROCE on the convenience and the health and beauty range.

There may be stores available in food, Cambodia, one or two stores potentially in IKEA in Taiwan. For the most part, the majority of our store growth will come from those smaller-format, high-return and low-CapEx because of the franchise model.

Omnidigital, more than 90 digital channels, that's apps, loyalty programs, the launch of our DFI-Q vendor platform, all increasing the mechanisms by which we build a more powerful digital P&L moving forward. Good initial progress on media.

As you go through our stores, you'll see screens, you'll see advertising. Our proposition, rather than going with Alphabet or Meta, you can have a higher purchase conversion, because that new product launch is going to be right next to the product as opposed to seeing it late at night on your phone and trying to remember it the next morning.

I think the retail media is quite a powerful opportunity for us as we presented in the Investor Day. We continue to make progress, I think, in terms of divestments.

Pretty comfortable with the portfolio as it stands today, now ensuring that we redeploy our capital moving forward into the highest-value opportunities for shareholder return. We go through some of the formats in particular.

I'm not going to go through each one of the aspects here. Tom unpacked the sales and the operating profit in detail.

Overall, just this growing wellness focus upon, I think, the generation that traditionally has been the silver hair, they call it. I put myself in that category.

This next generation is far more health-focused, and we are finding then an opportunity to pivot towards a younger generation on the health. We still have beauty, appropriate beauty, but it's functional beauty.

Hair care that has a far more beneficial, derma, as opposed to more traditional cosmetics. Hong Kong, Macau, again, tourists coming back.

Our tourist stores had a 9% revenue growth in 2025, the second half higher than the first half. We see that as an improvement.

We exited the stores in China, return on capital invested being a huge driver of that, and then focusing on the GBA strategy. A good increase in sales with Vietnam and Indonesia, a 10% and greater like-for-like growth across our stores.

Own brand, a critical part of delivering value while also good functional, I think, benefits to customers through our products, 35% improvement in gross profit, productivity. We did close the non-performing stores.

Any healthy retailer continually assesses. Things change relative to pattern, competitive landscape.

At any given time, you're looking at a single-digit full percent of your store portfolio to ensure that you stay healthy. A 38% growth across e-commerce in the health and beauty area.

On convenience, it was a year of transition, I think. First, a good portion of our sales traditionally came from tobacco.

31% of our sales were tobacco-related transactions. Generally, that's a one or maybe a two-item basket, and we shared that in the Investor Day.

They're low margin. There's a huge opportunity to pivot to ready-to-eat and also, I think, collectibles, creating fun transactions for customers who come into our stores to buy something new and generally then a larger basket.

The innovation that we look at for ready-to-eat, it seems like half the population of Hong Kong goes to Japan at least twice a year, if not more often. Again, that Japanese-themed ready-to-eat excellence, and that is one of the benefits of the franchisor.

Our penetration now, excluding cigarettes, at 33% of sales, ready-to-eat a substantially higher margin than traditional tobacco. Asians prefer hot food, and we see, in particular in China, across our stores, we're launching out food bars, which really is a small quick-service restaurant.

The challenge that we had is with that proposition, when you saw a bit of that platform battle that occurred, we were not part of that subsidy drive for the big players who apparently are trying to kill each other and not making any money out of it from what we can see. We were excluded from that, but we were picked up by the platforms from August as a quick-service restaurant.

We saw obviously the value in that, in particular when it came to those e-commerce click-and-collect, order online as you gotten onto the train, pick up at the 7-Eleven near your office, bring that breakfast or that lunch back into the office. We also see, again, franchisee penetration is a great way for us to drive our ROCE with a lower-CapEx intensity in terms of revenue growth.

We've got, I think, good progress by the team. I think always want more, faster, broader, bigger.

Our 7-Eleven team's looking very nervous right now, but I'm pleased with the progress and looking forward to more. Moving on to food.

Food was a huge year of pivot. The news last year, everyone going north to buy their groceries.

To me, that was a substantial risk. I see a huge opportunity for us based upon the deep knowledge of our food team and the experiences they bring to drive basically affordable food in Hong Kong.

We should not become the food desert that you see in many capital cities around the world. Hong Kong, I think, is unique in that way.

We have embarked upon pretty substantial investments in re-sourcing our product line to be able to eliminate traders, middlemen, all the ones who were adding an incremental margin, and go direct across many of the product lines. We strategically identified three to four competitors in Shenzhen.

We identified the 200 most common items in the basket. We shopped that basket, and then we came here to Hong Kong.

It was 18% more expensive at the beginning of last year. We achieved a 1% difference during Chinese New Year.

As a result, with increased profit, we now are able to really, I think, bring forward quite a very powerful proposition in terms of the confidence that Hong Kong customers can shop here. They're not going to get a better deal in Shenzhen.

As well, we saw that in the volume growth. We had a 2% volume growth as a result of all these efforts, and a good solid start to the year during Chinese New Year, which tells me we are on the right path moving forward.

Those strategic price investments, etc., while protecting margin, was seen in the results. Again, second half better than the first half.

Tom mentioned the Singapore government vouchers. We also, I think, have a unique opportunity in Cambodia, a business that was pretty small, not really doing much, all of a sudden became very interesting to us as a part of the portfolio, and we now plan 50 new stores, has a very good margin and a very good return on capital employed, an interesting business.

We completed the Singapore divestment. Frankly, I think we divested at the right time.

I think ex those Singapore vouchers from the government, the business will not be, I think, as attractive, and similar to Hong Kong to Shenzhen, you have the same challenges between Singapore and Johor Bahru. In particular, as they open the train lines and ease up on the border, you're going to see a lot of those baskets going north.

I think our timing was very good. On home furnishing, excellent progress.

Look, all of our formats were challenged by this change in customers, but I'd say IKEA was the most challenged by the macroeconomics. The fact that we do not have a high level of real estate transactions in 2025.

Look, when people don't move, then they don't do home renovation, and they don't buy heavy furniture, which meant that a good part of our portfolio assortment was challenged in 2024 and 2025. We've made really good progress, focusing on what matters.

Sensible, I think, investments for customers coming in, particularly our marketplace area. With that understanding of a different economic relative to the basket and the margins for the businesses, the team did an outstanding job of really cutting costs, which meant that despite challenged revenue, we delivered, I think, quite a strong profit position.

Taiwan continues to be a very good market for us with greater than 10% profit margins. We are quite unique in Indonesia.

IKEA, the franchisor, has only approved two markets around the world to test platforms. We have a mainly Jakarta-based Indonesia IKEA business with one store in Bali.

We went onto Shopee in Indonesia, and now are able to offer a good, relevant part of our assortment to the entire country of Indonesia, which, of course, as an archipelago of 200-plus islands with 200-plus million consumers. Find that as an interesting opportunity moving forward.

Again, those are more of those sensible splurges around portable items. No one's ordering a leather sofa online.

It's an appropriate assortment. Then scaling our food business, everyone loves a good Swedish meatball.

We now, through research, we now know that 45% of our customers visit IKEA for food. You'll see that we have increased the overall proposition as well, importantly, reset the stores to make it more convenient to engage in our food assortment.

On our digital, great progress on the digital ecosystem. You see across here in terms of driving our online penetration, driving launches.

As a result, we had outstanding economic results. Our retail media grew 400%, 1,000 new in-store digital screens, which we are now making available to our vendors to invest in a media present.

We now have 13 million active users. We now have 100 million-plus visits to our store each month.

That's in essence 20 million transactions a week now across the DFI portfolio, which is a very powerful data source. Now 33 million loyalty members across all of our programs in the markets in which we operate.

YUU continuing to expand across platforms. We're now on Foodpanda with access to the data, which is very important as you think about when you interact with the overall platform.

This is another area where the digital media team and the data team know that we can do so much more. I'm looking at him, and so we want to move faster, bigger, harder.

He shook his head yes, which is a good thing. With that, I'm going to turn it over to Tom to review our business outlook.

Thank you, Scott. Onto the full year 2026 outlook.

Starting with the revenue, excluding Singapore food, which we deconsolidated last year December, we expect to grow our top line organically by 2% to 3%, as we continue to gain market share across our formats. The underlying profits expects that to grow between $270 to $300, and that's implied a 13% to 25% growth, excluding the discontinued Singapore food and Robinsons.

We go with a $230 restated last year base to the $270 to $300 million. CapEx, we affirm that we're going to spend about $200 to $220 million this year, half again on new stores and store refurbs, but 25% to 30% on digital and IT, and split on formats about 65% on health and beauty and on convenience, the remainder on food and IKEA.

The dividend payout, the policy we announced last year, 70% payout, and our return on capital employed will go from 9.4% to between 11% to 13% for 2026. With this, I hand over to Karen for the Q&A.

Thank you, Scott. Thank you, Tom.

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 you're representing. For those participating online, you may submit your question on the platform, and we'll direct them to the speakers.

First question, Jeffrey.

Hi. Thank you very much.

I'm Jeff from CLSA. My first question would be regarding the organic revenue guidance, 2% to 3% for 2026.

Presumably, we exited 2025 with a similar momentum. Can you walk us through maybe year-to-date what you are seeing across different formats on the revenue momentum?

My second question would be on the guidance for 20- CapEx for 2025. It is quite meaningfully below the previous guidance we've received.

Just want to understand, was this some timing difference, or was this something that happened that makes the CapEx has been low? Just anything would be helpful on that front.

Thank you.

I'm going to cover the first one, and Tom, who knows my view on the second one, will cover our performance on CapEx, because I'm not a happy camper. In any event, we had a solid start to the year across all formats, and saw positive total and positive like-for-like consistently.

I really do think 2025 was a very important year for us relative to the change in proposition, much more value-based, much more attuned to the customers relative to what they're willing to spend their money on. Very pleased, in line with guidance is what I would say.

I think we can do more. Collectively, we gained share across most of the banners in 2025.

I would like to see that continue into 2026. Tom, how do we feel about CapEx?

Let me try to answer this. I think the first thing is a bit impact of Singapore food.

We divested Singapore food, and as we announced the divestment, we stopped most of our CapEx. There was no point to invest.

Still, even without that, we're still materially below our guidance. Here, I think we have to significantly improve our planning.

There is still a culture of holding onto your budget to the last minute and then realizing you can't spend it. We have to improve planning.

We have to make sure that if we give you a guidance that we are going to spend it, because the spend is not just for spend's sake, it's to make sure we drive revenue and drive profits. That has to improve this year so that we get back to our guidance of the $200 to $220 million, because we don't want to miss opportunities to get the top line and bottom line improved.

As I said to our board of directors yesterday, as God is my witness, we will spend and invest the midpoint of our CapEx guidance in 2026.

Next question, please. Brian.

Hello. Hi, this is Brian from Citi.

Hi, Scott. Hi, Tom.

I have two questions. My first question is that I see that 2026 guidance is actually not too far away from 2028 guidance.

I'm getting a feel that we are getting more optimistic on the overall performance in the mid-term. Just want to check how you feel about that, and are we revising any of our medium target that we released in December?

That's the first question. The second question is that just looking at 2026 alone, for each business formats, is there any quantitative or qualitative that the main target, main missions that you need to achieve in 2026?

Thanks.

Tom, why don't you cover the first one?

On guidance, we've laid out the guidance in our Investor Day in December, and we said we want to underpromise and overdeliver, right? We've seen good progress last year.

This year, we expect also significant improvements on the back of improved underlying performance as well as lower cost. On the back of that, we'll see how 2027 goes for that.

We are quite confident that we can at least meet, and hopefully at some point exceed, the guidance we've given you last year December.

In terms of the by-format quant qual, we were very thoughtful around how we positioned the Investor Day by-format strategy. Again, in a customer-first environment, that retail excellence and being laser-focused on a winning proposition for customers, communicating that, and ensuring that we are modernizing our digital proposition, I think in 2026, to Tom's point, we want to underpromise and overdeliver.

'26, based upon the first few months and this sense of renewed customer confidence, gives me good hope. Look, we live in a challenging world.

Who knows what oil prices are going to do, what that could do to energy costs. Therefore, do we go back to a far more value-oriented customer, some of that splurging may end.

There is great strength in being a daily essential retailer, but it's not without its challenges relative to consumer confidence and people saying, "You know what? I'm going to spend 10% less and save that, or I need to, paycheck to paycheck, put more into paying my electricity bill."

Cautiously optimistic, but it's way too early to change mid-term guidance.

Any question? Ben.

Thank you, Scott and Tom, for taking my question. This is Ben from UBS.

I have two questions from my side. First one is, it's been two months after the Investor Day, just wondering if you could share some updates with us on the e-commerce penetration, and also the progress made on retail media, specifically two months into 2026.

Then the second one would be regarding in Hong Kong market, you can know that Chinese e-commerce platform has been aggressively penetrating the market with cross-subsidy. How long do you expect this to last, and what would be our strategy?

Again, it's been roughly 73 days, a little early to change our minds in terms of, again, the mid-term guidance. E-com penetration, we make great progress.

I think it was 140 basis points up to 6. 5.9?

6.2%.

6.2%. Look, we are after fair share.

I'm not trying to win in the digital world. As you think about overall spend, what percent is e-commerce, we want to have a fair share of that.

We don't want to be left behind. The market interaction is wildly different.

In Hong Kong, for example, it is some of the lowest e-commerce penetration in the world because there's one a store every 20 meters. Why would you wait for someone else?

As well, there's a substantial for families number of helpers who get sent out to do a lot of the shopping. Where I see us needing to focus is instant commerce.

That will grow. You see this through the platforms.

People forgot something, they want something quickly. As well, retail entertainment, there used to be a word for it, I have forgotten it, apologies.

People do shop online because it's interesting, and it's an assortment that you can't necessarily get in the store. I think we are in a good shape to continue to drive our e-commerce penetration relevant to the market share.

It will grow because in markets like in Indonesia, it's very high. Access to goods and stores in brick and mortar is very limited.

Same as I think in a Vietnam, where we see much higher growth. We will keep up and focus on that fair share, not ready to change in the environment.

In terms of the platform battle that took place in the north, I think that is calming down a bit. We actually, other than really the Guangdong impact to our 7-Eleven business, didn't necessarily see across the rest of our format portfolio a significant impact.

I don't think trying to get across the border a lot of those products don't move very well through the approval process with some of the ingredients, etc., in particular in health and beauty. What we see is actually a reverse opportunity, which is there is a very large amount of our product line here in Hong Kong that's very interesting, certainly we see it through the mainland tourists, to be able to now digitalize that and make that available in Guangdong.

Rather than necessarily a risk, we see it as an opportunity for us to be able to grow our business through some of those assortments being made available for purchase. We've expanded now the YUU loyalty program into Guangdong.

I think that is a first step in being able to create a digital ecosystem that is far more in line with the retail-porous border that's envisioned with the Greater Bay Area.

We'll move to online questions. Question from Jayden Vantarakis of Macquarie.

He has three questions here. First, at the recent Investor Day, management provided clear segment and market targets for M&A.

Are there any updates to share? Second, how is the progress on the franchising model for Guardian in Indonesia?

Third question, margin improvement at IKEA is stronger than expected relative to what has been shared at the Investor Day. What has gone well during second half of 2025, and is there more room for higher margins in 2026?

Tom, I'll leave the margin improvement to you. On the M&A, we're very clear what we will and what we will not do on M&A.

I think that what we divested relative to minority positions will tell you very clearly what we don't want to do. We only want operating businesses that bring scale synergy to our existing business to allow us to continue to deliver on improved ROCE and improved TSR.

This is a situation where we're in the market. We continue to look, I think, more strategically in the health and beauty and the convenience store area, but would not say, I think, no to interesting affordable options in digital.

The affordable piece is a little bit more challenging given the multiples on which many of the digital assets trade. We will follow the policy.

We will follow the procedure. M&A activity is episodic, and so we'll update you at the appropriate time.

On Indonesia, we have two trial stores. You have to get the model right.

You have to be able to ensure that a franchisee can make a living income and that this is a good return on investment for them. You cannot go out with a proposition that has not been trialed and tested.

We trialed two stores, we're pleased with it. We'll do another 40 stores this year in terms of the Indonesia franchise stores.

This is a model that you perfect over a couple of years before you really go after the substantial growth. Pleased with the pace, and it is as referenced in line with our commitment that we made during the Investor Day in December.

IKEA margin improvement?

On IKEA, so...

Other than brilliant leadership by the IKEA team, right?

Absolutely. Martin and the team did a fantastic job last year.

If you look at 2025, the big improvement in underlying profits is because of lower cost. Labor cost, rents, but also supply chain.

Significantly lower cost in IKEA. Part of the lower cost we have invested in lower pricing.

We saw that volumes are picking up, although sales are still down last year. We now need to make sure that sales are up.

If sales are up, we'll expect better results, but that will take some time. Investing in margin, investing in price, will take time before it turns into higher sales numbers.

The initial signs are positive, hopefully we get at least a revenue stabilization in 2026, and then we'll see higher profits the following years.

Thank you. Your next question comes from Mack Candy of CGS International.

"Congratulations on an exceptional year. Now with a strong foundation built looking forward into 2026, can you give us some color of the levers you're tapping for further shareholder return from here onwards?"

Tom?

On shareholder return, I think what we announced earlier is for us the most important driver is top line growth, right? Growth, and we see the first two months this year we are in line with our guidance, and hopefully at some point we exceed.

Growth is a key driver, and we do that with the right pricing, the right ranging, and the right stores. In addition to that, we started last year with a large cost optimization project, and we've seen the results in IKEA, but also across all our formats, and also on our SG&A.

Our costs are coming down. You can expect this year that SG&A on group level is coming down.

That's another lever where you can see profits going to be increased. In the long term, it's sales and margin; in the medium term, you will see costs coming down.

Probably what I would add to that is there needs to be a incremental value to this portfolio versus the break-up value. Otherwise, what's the point of it?

Where I see value is across three areas. First, it's cost optimization.

We have relentlessly focused on being able to ensure that we're an everyday low-cost operator. As a result, we are able to, I think, operate at a lower overhead as a percent of revenue than any nearby competitor by format.

That's first and important. The second is the synergy of the digital ecosystem.

It would be very expensive for all of our individual formats to try and create their own ecosystem, which means the e-commerce platforms and the e-commerce transactional capability, their own loyalty program, their own ability to drive retail media as well data monetization. Then the third is the value of the data holistically that we're able to bring through our loyalty programs.

We know customers better than anyone else, and the ability to partner with vendors and be able to say, through purchase behavior in IKEA, we understand that this is a young family about to have a child, that helps health and beauty personalize offers that are relevant to pre-natal and then baby assortment moving forward. The ecosystem to me is going to be a huge driver of this TSR moving forward relative to investing in a competitor who does a single format only.

Thank you, Scott. Next question comes from Adrian Low of UOB Kay Hian.

"Congratulations on the strong set of results. For the convenience business, you had around 100 net new stores in South China 2025.

What are your targets for this in the near to medium term? Second question, on the M&A front, is there any more divestment on the horizon, or we're feeling more comfortable with the portfolio we're standing at right now?

Thank you."

Tom, why don't you cover the CVS new stores? As we share

as we shared in our Investor Day, the medium term 2028, our goal is about 2,400 stores by 2028 in Southern China, and overall about 4,000 stores for 7-Eleven as a whole for all our markets. We open last year 100 stores net.

We did close some stores that were loss-making, and we do always we open more stores and we close a few so making sure that the overall portfolio remains healthy.

On the divestment side, I think that we have, for the most part, eliminated the parts of the business that had been dilutive in terms of TSR and ROCE. It was not too many years ago, I think it was 2023, we had a 1.7% ROCE.

We're now up to a 9, and as Tom said, we aim for a 15% by 2028. In general, I think we've got the right portfolio.

I think we have to keep a pulse as changing customer behavior. If we see a substantial move away from stores into digital, we may rethink maybe some of our store commitments moving forward and pivot more towards revenue coming out of the e-commerce, which we are on a good path to make neutral to accretive versus an in-store margin.

Overall, I think we're in good shape, but we constantly evaluate. We've had a great year when it comes to TSR.

We want to continue to maintain that great opportunity for the capital markets to use DFI as a mechanism to invest broadly in retail in Asia, because we're multi-format multi-country.

Your next question comes from Salviana Aripin of HSBC. "Thank you, management.

Could you share your thoughts around the impact of inflationary pressure, such as higher oil price, on your guidance in 2026? If you could share some thoughts around sensitivity to oil prices, that would be helpful.

Thank you." Maybe,

Tom, you add on. We've looked at it.

We've actually looked at our supply chain. We've looked at our sourcing.

We have modeled a 20% increase in oil prices. The reality is that as a large-scale daily essential, that as a percent of our net product is not substantial.

We now have over 50 country of origins from which we source. We have the ability to pivot in terms of not only geographically where we source, but also, I think, through the right mix able to mute any impact on customer pricing.

If it becomes substantial at any given time, clearly there'll be an inflationary impact. I think we would like to be the last to raise prices as a strategy.

I think there's other things that we can do to protect the bottom line while also being able to serve our customers.

I think to add on, if we model a 20% increase in oil price for this year, we will still stay within our guidance. It has an impact, and we'll do all we can to minimize the impact, but it will remain within the guidance.

Thank you, Scott and Tom. Your next question comes from Changfeng Chi of DBS Bank.

"Congrats on the strong results. Two questions here.

First, given the recent Dingdong acquisition by Meituan, is there any change to your Hong Kong food strategy? Second question, in Malaysia, is your second largest geography outside of Hong Kong.

Your biggest competitor is planning a listing this year with a valuation as high as $5 billion US dollar, which could bolster the firepower for expansion. Could you share your views if that will affect, if at all, your overall competitive environment?

Thank you."

In terms of the DDL, we actually are involved and engaged in and are very aware of that transaction. We have an exclusive relationship here in Hong Kong.

We have their commitments. Frankly, we are a valuable customer to them.

They're not a direct competitor to us in Hong Kong, we see no conflict nor issue from that. In terms of how we look at the listing of AS Watson's, I was raised in retail by Walmart, and it always was a bit perplexing to me, but now appreciate this view that says you want a really strong competitor.

It is to your value to keep you on your toes, constantly looking as to how you can be better. If a listing helps them become a stronger competitor, net, I think we have an opportunity to one, have a benchmark, but also it just ups our game as well as we move forward.

I don't see that as really a threat. We'll watch with interest, but we're focused on ensuring that we beat everyone, including those admirable competitors at serving our customers.

Thank you, Scott. Any questions from the floor?

Hi, I guess I have a follow-up question on the DFI-Q. I know we're 70 days after the presentation during Investor Day, but we've launched the DFI-Q portal, right?

For the DFI-Q media, we also increased the revenue by fourfold. Are we that serious about the 1% revenue contribution by 2000- 2028?

How do we see about the EBIT margin? Because if it's more than 50%, then we have a meaningful contribution to the bottom line by 2028.

As we think about our TSR model, I'm very well aware that an omnichannel retailer has far superior P/E multiples than a traditional brick and mortar only. As we map our way forward, we are pioneers in this area.

There is no substantial retail media player in the markets in which we operate today. DFI-Q is a critical enabler for us to be able to create a seamless ability for vendors to go through DFI-Q and access specific screens in specific locations in health and beauty in certain markets.

At some point, I'd call this Retail Media 1.0. 2.0 is also going to get to a time of day relative to traffic patterns, etc., etc.

We believe again through conversion of immediacy a much higher effective proposition for a very substantial above-the-line media budget, including digital penetration coming across to us. It's been 90 days.

Internally, the team knows more, more, more, more. If I were to say what is the area where we would potentially relook at mid-term guidance, it's going to be in this area, because it is so new.

I do think in the future, I'm talking 5 to 10 years from now, 15 years from now, my North Star would again be the progress that Walmart has made in this area. We will never have digital as a reporting operating unit.

It's too complicated and it's artificial. It's embedded across our formats.

Speaking about what is the penetration of sales growth and profit growth from the digital proposition is an area that we're focused on as we progress forward. I'd say watch this page.

Too early to guide anything other than what we said in December.

Thank you, Scott. If there are no further questions, this will conclude our session for today.

Thank you very much for your participation, and we look forward to seeing you in our next analyst presentation.