Audited results

for the year ended 30 September 2019

JAYENDRA NAIDOO, CHAIRMAN

CHAIRMAN’S REMARKS

“We believe Pepkor has managed to achieve top-tier operating results. I want to congratulate all the management teams.”

LEON LOURENS, CEO

“It is our purpose to make a positive difference in the

lives of our customers.”

Agenda

Segmental performance03

The year in review01

Outlook04

Financial performance02

Who we are

5

5 415 stores in 11 African countries

2.43 million m2 retail space

56 100 employees

400+ million transactions annually

One billion units sold

Volatile operating environment

6

Low consumer confidence

High dependency on social grants

Low economic growth

Expected GDP growth – 2019

Disposable income growth Q2 2019

+1.7%

Sources: Stats SA / National Treasury / Bureau for Economic Research

+2.4%

High unemployment

SA

29%

Black females

35%

Females between 15 – 34

44%

Grant recipients in SA

Grant-dependent households

17.5m 45%

0

5

10

15

20

25

30

2018 2019

5

26

Key indicators – comparable

7

9.0%revenue growth to

R69.6bn

12.0%operating profit

growth to R7.2bn

improved

freshness

338

new stores opened

growthin market share

8.3%HEPS growth to

107.3 cents

Stock management

1 1 1

1 From continuing operations, before capital items and excluding BVI-related costs and the implementation of IFRS 9 – refer to annexure 1

CEO update

8

Trusted brands

Strong value and discount customer propositions

Resilience of our business model

Flexible store formats

Leveraging store footprint

Diversified service and product offering

RIAAN HANEKOM, CFO

Financial performance

“The resilience of our business model was clearly illustrated

during the past year.”

Statutory highlights

10

1 From continuing operations, before capital items and including BVI-related costs and the implementation of IFRS 9 – refer to annexure 1

9.0%

revenue growth to R69.6bn1

15.6%

growth in operating profit to R6.8bn1

16.7%

HEPS growth to 98.3 cents1

60bps

growth in operating margin to 9.8%1

dividend cover maintained

3XR1.7bn

capex spent

3xR7.6bn

cash generated(excl. new books)

24.3%

return on net assets

Comparable highlights

revenue growth to R69.6bn1

growth in operating profit to R7.2bn1

HEPS growth to 107.3 cents1

growth in operating margin to 10.3%1

impairment on The Building Company

invested in new credit books

IFRS 9 one-off costs

R318m

9.0% 12.0% 8.3%30bps

R1.2bn R3.5bn

1 From continuing operations, before capital items and excluding BVI-related costs and the implementation of IFRS 9 – refer to annexure 1

84.2

99.0107.3

98.314.8

9.0

FY18 statutory HEPS

One-off costs FY18 comparable HEPS

FY19 comparable HEPS

One-off costs FY19 statutory HEPS

Comparable headline earnings per share

12

+8.3% +16.7%

IFRS 9 implementationBVI-related costs

From continuing operations, before capital items and excluding BVI-related costs and the implementation of IFRS 9 – refer to annexure 1

One-off capital items

13

Goodwill

Trade and brand names

Impairment R1.2bn

R672m

R547m

Discontinued operations

14

FY19 loss

Unrealised FCTR

Decision to exit Zimbabwe

R70m

±R230m

Segmental revenue

15

FY19 segmental composition

From continuing operations

FY19 – Rbn

FY18 FY19

6.5%

0.9%

43.9%

+9.0%

63.9

69.6

8.3%

65%

10%

12%

13%

Gross profit margin effectively managed

Weaker trading

Higher markdowns

Inventory management

FY19 FY18

34.5% 34.6%

16

Other income

increase to

R960m

Reduced Capfin distribution fee

Strong growth in commissions

+2.3%

Commissions

Capfin distribution fee

Insurance

Advertising/marketing

Other

56%

21%

8%

10%

5%

17

Low CODB leader

FY19

Lowest in the market

+ 6.2%

+ 7.9% Property

Personnel

CODB composition

18

25.9%

Personnel

Depreciation

Advertising and other

Property

44%

25%

8%

23%

IFRS 9 implementation

19

R318m

on existing credit booksProspective application

Change in provision level

R64mAdditional gross provision raised R252m R66m

ImpactRetained earnings

adjustmentIncremental costs in FY19

14%17%

20%

33%

10%

15%

Retrospective applicationon new internally funded credit books

+ =

Other IFRS changes

20

IFRS 16

• To be implemented in FY20• Modified retrospective approach

IFRS 15

• No significant impact• Applied retrospectively

Right-of-use asset R13.1bn – R14.1bn

Lease liability R17.2bn – R18.2bn

Credit books

21

* New internally funded credit books

No of active accounts

Credit type

Gross book size (Rbn)

Growth in gross book (yoy)

Business objective

147k 287k

2.2

–*

1.3

–*

Term

Sales enabler

1.4m

2.8

20%

Revolving credit

Sales enabler

Unsecured lending

Financial services

19% 0%7%Segmental sales contribution

Comparable operating profit

22

FY19 – Rm

5 880

6 391

7 155 6 797

511

66 252 40

FY18 One off FY18 comp FY19 Comp JD TBC Fin FY19 StatutoryFY18Statutory

FY19Statutory

FY18Comparable

FY19Comparable

IFRS 9 IFRS 9 BVIBVI

+12.0%+15.6%

From continuing operations before capital items

88%

2%2%8%

Comparable operating profit growth

6 391

7 155 >100%>100%

3.7%

(28.5%)

FY18Comparable

FY19Comparable

From continuing operations, before capital items and excluding BVI-related costs and the implementation of IFRS 9 – refer to annexure 1

23

FY19 segmental compositionFY19 – Rbn

+12.0%

Finance cost

Funding of new credit books

+35.4%

FY19 FY18

R1 168m

R1 581m

24

4.7% decrease in taxation to R1.7bn

28.0%

44.1%

South African standard rate of taxation

Effective tax rate

28.0%

35.6%

Excluding impairment

25

Effective tax rate

Net working capital

26

1 Year-on-year movement in net working capital as a percentage of total revenue2 Excluding investment in new credit books

+R2.0bn Inventory +R0.8bnTrade receivables2 +R0.6bn

Trade payables

4.8%

FY19 FY18

% of revenue13.3%

4.8%

Cash generated

27

FY19 – Rm

1 Before capital items and including discontinued operations2 Including incremental IFRS 9 costs3 Includes movement in provisions and share-based payment expense, etc.

6 726

4 086

1 227

1 299

507 3 487

2 186

H1 FY18 Debtors cost Amort Depn Other non-cash Consumer finance NetWC Guarantee provision

3 392

Debtors’ cost2 Amortisation depreciation

Net changes in working capital

Cash generated from operations

New credit books funding

Operating profit1

R7.6bnCash generated

excl. books

1

Other non-cash adjustments3

Net debt

Net debt-to-EBITDA

EBITDA interest cover

Net debt

28

Targeting 1 x net debt-to-EBITDA

R13.9bn

1.70 times

5.42 times

Debt repayment profile – Rbn

-1,5

-5,0

-8,0

-2,5

FY20 FY21 FY22 FY23

Capex and depreciation

29

R1 717mCapex

2.5% of revenue

R1 299mDepreciation

1.9%of revenue

30%

30%

10%

FY20 expectation: 2.3% capex and similar depreciation levels

LEON LOURENS, CEO

Segmental performance

“Our group strategy of providing the right product at the best possible price in accessible locations continues to underpin Pepkor’s performance.”

Segmental performance

Clothing and general merchandise

PEP and Ackermans

32

6.3%

sales growth

2.6%

LFL sales growth

4.8%

core CFHRSP inflation

1.5%

5.4%

retail space growth

core CFH total volume growth

PEP

+117new stores

96.5%

Best Price Leadership

2 327

stores

23%

sales growth in PEP Home

>10%

sales growth in FMCG

>40%

growth in PEP Money transactions

33

Ackermans

34

+81new stores

18.6%

credit mix

806

stores

>19%

growth in Cellular sales and profit

>10%

growth in Ladies Wear

Click &Collect

launched

sales growth1

(constant currency)LFL sales growth1

(constant currency)stores1 employees

+14.3% +13.5% 313 3 000

Phase of consolidation

PEP Africa

Zimbabwe operations discontinued 20stores

1 Excluding Zimbabwe

-4net stores

closed

35

Speciality

36

949+7.7%

storessales

growth

+3.0%

LFL sales growth

Stockholding and inefficiencies receiving attention

Healthy market share gains

+73new stores

Segmental performance

Furniture, appliances and electronics

JD Group

38

LFL sales decline

revenue growth

sales growth

operating profit before IFRS 9

retail space

8.3% 2.7% 0.6% R167m 3.9%

+8net new stores

Furniture retail division

39

lay-bys contribution

storescredit mix

16% 76126.9%

8.1%

credit mix

4%

online sales contribution

139

storesgrowth

in online transactions

90%

Consumer electronics and appliances division

40

Segmental performance

Building materials

The Building Company

-4net stores

closed

12k SKU online platform

launched

0.9%sales growth

stores

120

2.2%LFL sales growth

1.9%operating margin

42

The Building Company interventions

43

Restructuring and consolidation

Realise efficiencies

Corporate culture established

Clarification of strategy

Central procurement

Defining customer value proposition

Segmental performance

FinTech

169k 3.1m

monthly customers

22m +23%

tradersaverage daily transactions

virtual turnover

Informal market

Group structure

FLASH

45

Capfin

approval rate

20%287kactive

customers

40%

of new loan applications are digital

960

employees

Internally funded credit book established

IFRS 9 implemented

46

LEON LOURENS, CEO

Growth drivers

“We have a range of affordable products, a great team of retailers

and a proven business model.”

Growth drivers

Leveraging footprint

40%

71thousands

p/m

Financial service transactions

New geographies

New formats

15

14

New channels

48

growth

Growth drivers (continued)

49

Adult wear market

Informal market

New product categories

Store growth

LEON LOURENS, CEO

Outlook

“Pepkor remains optimistic despite the current trading environment. We are focused on exploring the opportunities

and potential that this market presents.”

Thank you

Annexures

1. Comparable results – FY19

53

Statutory resultsRm

Provision for guarantee and loan impairment

Rm

Implementation of IFRS 9

RmComparable results

Rm

Operating profit before capital items 6 797 40 318 7 155

Capital items (1 278) – – (1 278)

Operating profit 5 519 40 318 5 877

Net finance costs (1 581) 40 – (1 541)

Profit before taxation 3 938 80 318 4 336

Taxation (1 707) – (89) (1 796)

Profit for the year from continuing operations

2 231 80 229 2 540

Profit attributable to:

– Owners of the parent 2 230 80 229 2 539

– Non-controlling interest 1 – – 1

Basic earnings per ordinary share (cents) 64.6 2.3 6.7 73.6

Headline earnings per ordinary share (cents) 98.3 2.3 6.7 107.3

Weighted average number of ordinary shares in issue (millions)

3 450 3 450 3 450 3 450

1. Comparable results – FY18

Statutory results

Rm

Provision for guarantee and loan impairment

Rm

Comparable results

Rm

Operating profit before capital items 5 880 511 6 391

Capital items (37) – (37)

Operating profit 5 843 511 6 354

Net finance costs (1 168) – (1 168)

Profit before taxation 4 675 511 5 186

Taxation (1 791) – (1 791)

Profit for the year from continuing operations 2 884 511 3 395

Profit attributable to:

– Owners of the parent 2 874 511 3 385

– Non-controlling interest 10 – 10

Basic earnings per ordinary share (cents) 83.3 14.8 98.1

Headline earnings per ordinary share (cents) 84.2 14.8 99.0

Weighted average number of ordinary shares in issue (millions)

3 450 3 450 3 450

54

1. Comparable results (continued)

55

The comparable results as set out in this results presentation have been prepared for illustrative purposes only, in order to

provide shareholders with comparable results and to show the impact of the comparability of results adjustments on the

company’s statutory results. The impact of the comparability of results adjustments are deemed to be non-recurring in

nature.

Because of its nature, the pro forma comparable results may not fairly present Pepkor’s financial position, changes in

equity, results of operations or cash flows. The comparable results are presented in accordance with the JSE Listings

Requirements and the Guide on Pro Forma Financial Information issued by SAICA.

The comparable results and any forward-looking and forecast information presented are the responsibility of the board

and were not reviewed or reported on by Pepkor’s auditors.

2. Continued retail space growth

56

FY19 – Retail space (m2)

2 374k

2 434k

+5.6% (3.9%)

(3.2%)

FY18 FY19

+2.5%

3. Retail footprint

57

1 Excludes discontinued operations in Zimbabwe2 Includes Dunns, John Craig, Refinery, Shoe City and Tekkie Town brands3 Includes Russells, Bradlows, Rochester and Sleepmaster brands4 Includes Incredible Connection and HiFi Corp brands5 Includes (retail and wholesale): BUCO, Timbercity, Tiletoria, Floors Direct, MacNeil, Cachet, B-One, Buchel, W&B Hardware, Bildware, Citiwood and Brands 4 Africa

30 September 2018 Openings Closures Net movement 30 September 2019

Retail storesRetail area ‘000

m2 Retail stores Retail stores Retail storesRetail area ‘000

m2 Retail storesRetail area ‘000

m2

4 181 1 582 289 (75) 214 89 4 395 1 671

PEP 2 231 802 117 (21) 96 30 2 327 832

Ackermans 731 440 81 (6) 75 37 806 477

PEP Africa1 308 120 18 (14) 4 (0) 313 120

Speciality2 911 220 73 (34) 39 22 949 242

892 447 47 (39) 8 (18) 900 429

Furniture brands3 760 356 35 (34) 1 (15) 761 341

Appliances and electronics brands4 132 91 12 (5) 7 (3) 139 88

124 345 2 (6) (4) (11) 120 334

Pepkor 5 197 2 374 338 (120) 218 60 5 415 2 434