Q2 2026 Spinneys 1961 Holding PLC Earnings Call

August 11, 2026

Speaker #1: Good afternoon, ladies and gentlemen, and welcome to Spinney's Q2 2026. Good afternoon, ladies and gentlemen, and welcome to Spinney's Q2 2026 earnings call. My name is Jean François, investor relations officer for Spinney's.

Operator: Afternoon, ladies and gentlemen, and welcome to Spinneys Q2 2026 earnings call. My name is Jean Fransoa, investor relations officer for Spinneys. Joining me today are our CEO, Sunil Kumar, and our CFO, Mukesh Agarwal. Thank you for being with us this afternoon, and our thanks to Closir for hosting today's call. Before we begin, I would like to draw your attention to the disclaimer on slide 2, which contains important information regarding today's presentation and discussion, particularly in relation to forward-looking statements. Today's call will follow a familiar structure to our previous calls. Sunil will open with our financial and operational highlights, followed by an update on regional challenges. Mukesh will then walk you through our financial results in detail. Sunil will close with our outlook and strategic focus, after which we will open the floor to questions. I will now hand you over to our CEO, Sunil Kumar.

Jean Fransoa: Afternoon, ladies and gentlemen, and welcome to Spinneys Q2 2026 Earnings Call. My name is Jean Fransoa, Investor Relations Officer for Spinneys. Joining me today are our CEO, Sunil Kumar, and our CFO, Mukesh Agarwal. Thank you for being with us this afternoon, and our thanks to Closir for hosting today's call. Before we begin, I would like to draw your attention to the disclaimer on slide two, which contains important information regarding today's presentation and discussion, particularly in relation to forward-looking statements. Today's call will follow a familiar structure to our previous calls. Sunil will open with our financial and operational highlights, followed by an update on regional challenges. Mukesh will then walk you through our financial results in detail. Sunil will close with our outlook and strategic focus, after which we will open the floor to questions. I will now hand you over to our CEO, Sunil Kumar.

Speaker #1: Joining me today are our CEO, Sunil Kumar, and our CFO, Mukesh Agarwal. Thank you for being with us this afternoon, and our thanks to Closer for hosting today's call.

Speaker #1: Before we begin, I'd like to draw your attention to the disclaimer on slide 2, which contains important information regarding today's presentation and discussion, particularly in relation to forward-looking statements.

Speaker #1: Today's call will follow a familiar structure to our previous calls. Sunil will open with our financial and operational highlights, followed by an update on regional challenges.

Speaker #1: Mukesh will then walk you through our financial results in detail. Sunil will close with our outlook and strategic focus, after which we will open the floor to questions.

Speaker #1: I will now hand you over to our CEO, Sunil Kumar. Over to you, Sunil.

Jean Fransoa: Over to you, Sunil.

Speaker #2: Good afternoon, everyone. It's great to be here to present our H1 results. As you have seen, the numbers are strong: we grew revenue by 5.1%—to almost $1.9 billion—and like-for-like stores grew by almost 2%. Our EBITDA margin is at 19.4%.

Sunil Kumar: Good afternoon, everyone, and great to be here to present our H1 result. As you have seen the numbers, we grew 5.1% revenue, so almost AED 1.9 billion. Like-for-like stores grew by almost 2%, and EBITDA margin is at 19.4%. E-commerce was one of the big contributors. It moved to 23.6% growth with a participation of 19%. Therefore, the profit after tax, AED 175 million, and it is up by 2.5%, and interim dividend declared by the board is AED 122 million, which is equivalent to 3.40 fils per share. The contributors for the growth, despite the challenges and disruptions we faced in the second quarter, but still the transactions growth is good compared to the last year. We have got almost a 6% growth.

Speaker #2: E-commerce was one of the big contributors. It moved to 23.6% growth, with a participation of 19%. And therefore, the profit after tax—175 million—and it is up by 2.5%. An interim dividend declared by the Board is 122 million, which is equivalent to 3.40 fils per share.

Speaker #2: The contributors for the growth, despite the challenges and disruptions we faced in the second quarter, still, the transactions growth is good compared to last year.

Speaker #2: We have got almost a 6% growth. Our key pillars of the business, which are the two fresh food businesses, as well as private label, both have done extremely well given the current circumstances.

Sunil Kumar: Our key pillars of the business, which are the two fresh food business as well as private label, both have done extremely well at the current circumstances. We have got a slight decrease in the basket because of the uncertainty and customers' behavior had shifted a bit. They, I should say, trade down, considering that the situation, as well as they started coming to the stores, whether it is e-commerce or in the physical stores, quite often instead of buying a bigger basket. Our store, from 83 stores, we moved into 93, and e-commerce participation is now almost 19%, as I mentioned earlier. Now we have a continuation of our rollout plan, and we have opened 12 stores this year. 11 stores we opened new, and one store we closed. So total stores is 93.

Speaker #2: We have got a slight decrease in the basket because of the uncertainty, and customers' behavior has shifted a bit. They, I should say, trade down considering the situation, as well as have started coming to the stores—whether it is e-commerce or in the physical stores—quite often, instead of buying a bigger basket.

Speaker #2: And our store count increased from 83 stores to 93, and e-commerce participation is now almost 19%, as I mentioned earlier. Now, we have continuation of our rollout plan, and we have opened 12 stores this year.

Speaker #2: We opened 11 new stores and closed 1 store, bringing the total number of stores to 93. One thing I wanted to highlight here is that this is a milestone for the business.

Sunil Kumar: And one thing I wanted to highlight here, it is a milestone for this business. We have now reached 1 million square feet area of trade. As all of us know, the challenge which all of us have faced in this region, the disruptions. As far as the retail is concerned, particularly a retailer who is focused on the fresh food, our key value proposition is fresh food based. We face the challenges like any other businesses. Despite all these challenges and disruptions, our H1 result still grew 5.1%. The sales had an impact on the month of April, and May it had continued, but it was better than the month of April. April, May, June, we saw a positive result when the schools and Eid al-Fitr, actually the vacation is over and customers started coming back.

Sunil Kumar: One thing I wanted to highlight here, it is a milestone for this business. We have now reached 1 million square feet area of trade. As all of us know, the challenge which all of us have faced in this region, the disruptions. As far as the retail is concerned, particularly a retailer who is focused on the fresh food, our key value proposition is fresh food based. We face the challenges like any other businesses. Despite all these challenges and disruptions, our H1 result still grew 5.1%. The sales had an impact on the month of April, and May it had continued, but it was better than the month of April. April, May, June, we saw a positive result when the schools and Eid al-Fitr, actually the vacation is over and customers started coming back.

Speaker #2: We have now reached 1 million square feet area of trade. As all of us know, the challenge which all of us have faced in this region, the disruptions, and as far as the retail is concerned, particularly retailers who are focused on the fresh food, our key value proposition is a fresh food-based.

Speaker #2: And we face the challenges like any other businesses. And despite all these challenges and disruptions, our H1 result still grew 5.1%. Now, the sales had an impact in the month of April, and in May it continued, but it was better than the month of April.

Speaker #2: But in April, May, and June, we saw a positive result when the schools and Eid al-Fitr—actually, the vacation was over and customers started coming back.

Speaker #2: So, if I wanted to dissect our store format: we have four types of store formats. One is purely based in malls. One is office-based stores. Predominantly, it's meal solution stores.

Sunil Kumar: So if I wanted to dissect our store format, we have four types of store format. One is purely based on malls. One is office-based stores. Predominantly, it's a meal solution stores. Then we have a grocery store, which is a meal solution plus a smaller format. Then we have neighborhood stores. The most affected stores on this crisis time was the tourism as well as office-based stores. But from June onwards, when the school reopened, we have seen the sales coming back in the month of June. That's the reasons why we managed to get 5.1%, despite there is a big drop in the month of April. The second challenge, what we faced, was the availability. As I mentioned on the first quarter, we faced a tremendous cost pressure from sea container to air freight containers.

Sunil Kumar: If I wanted to dissect our store format, we have four types of store format. One is purely based on malls. One is office-based stores. Predominantly, it's a meal solution stores. Then we have a grocery store, which is a meal solution plus a smaller format. Then we have neighborhood stores. The most affected stores on this crisis time was the tourism as well as office-based stores. But from June onwards, when the school reopened, we have seen the sales coming back in the month of June. That's the reasons why we managed to get 5.1%, despite there is a big drop in the month of April. The second challenge, what we faced, was the availability. As I mentioned on the first quarter, we faced a tremendous cost pressure from sea container to air freight containers.

Speaker #2: Then we have a grocery store, which is a meal solution plus a smaller format. Then we have neighborhood stores. Now, the most affected stores during this crisis were the tourism, as well as office-based stores.

Speaker #2: But from June onwards, when the school reopened, we have seen the sales coming back in the month of June. That's the reason why we managed to get 5.1%, despite there being a big drop in the month of April.

Speaker #2: And the second challenge we faced was availability, as I mentioned in the first quarter. We faced tremendous cost pressure, from sea containers to air freight containers.

Speaker #2: But one of the key objectives for Spinneys was to ensure that we will have stock on shelf and to achieve stock on shelf.

Sunil Kumar: But one of the key objectives for Spinneys was to ensure that we will have a stock on shelf. To achieve stock on shelf, we had taken many routes, including a road corridor to get the stock on time. We should say we were almost on the normal pre-conflict time. The stock availability and service level were on almost 92%. Now we are running in between 83% to 88%, which we are very happy that we have managed to get it. So if you are a customer, if you go to Spinneys or Waitrose or any of meal solution stores, you will see the availability as it used to be in the past. The freight and ports, which we had a challenge, we couldn't get anything on Dubai port or Abu Dhabi port.

Speaker #2: We had taken many routes, including a road corridor, to get the stock on time. And we should say we were almost on the normal pre-conflict time—the stock availability and service level were at almost 92%.

Speaker #2: Now we are running between 83% and 88%, which we are very happy about—we have managed to get there. So if you are a customer, if you go to Spinneys or Waitrose or any of the meal solution stores, you will see the availability as it used to be in the past.

Speaker #2: The freight and ports, which we had a challenge with—we couldn't get anything on Dubai Port or Abu Dhabi Port. We had to use Fujairah, Khorfakkan, Salalah, Jeddah—those ports.

Sunil Kumar: We have to use Fujairah, Khor Fakkan, Salalah, Jeddah, those ports, and therefore the freight cost was almost double. An example, $3,000 per container pre-crisis time. That in the crisis time, from the month of April and May, it moved into almost $17,000, if it is from UK or from Europe. Now it is almost a sustainable manner, I should say. It is almost on $17,000, which is still higher, but we are managing, and we are looking as the best cost options and optimizing the containers into the productive assortments into the country. We also look at what are the other areas of improvement we can bring it to navigate and mitigate this disruption. We saw one of the corridor which was available was road transport. So we started bringing things, stock from UK and Europe because it required only 17 days.

Speaker #2: And therefore, the freight cost was almost double. An example: $3,000 per container pre-crisis time. During the crisis, from the months of April and May, it went up to almost $17,000 if it was from the UK or from Europe.

Speaker #2: Now it is almost at a sustainable level, I should say. It is almost at 7,000, which is still higher, but we are managing and we are looking at the best cost options and optimizing the containers into productive assortments into the country.

Speaker #2: We also look at what are the other areas of improvement we can bring in to navigate and mitigate these disruptions. We saw one of the corridors which was available was road transport.

Speaker #2: So we started bringing stock from the UK and Europe because it required only 17 days. In earlier days, it was 19 to 20 days.

Sunil Kumar: Earlier days, it was 19 to 20 days, but now we got into almost in 15 to 17 days the product from UK or Europe on our warehouse. We are very happy. We have taken 27 containers on road corridor. Though it is an expensive, but if you are looking at the lead time of the product, for example, eggs, chips, whatever the short shelf by products, we were able to bring it by road corridor because it has a reduced lead time, and therefore you have a better shelf life to sell within the stores. That was a venue which we have got it through this crisis, and we will be using in the future, regardless of what the cost is going to be. The margins still we have managed to get it.

Speaker #2: But now we've gotten it down to almost 15 to 17 days—the product from the UK or Europe arrives at our warehouse. So we are very happy.

Speaker #2: We have taken 27 containers on the road corridor. Though it is expensive, if you look at the lead time of the product—for example, eggs, chips, or other short-shelf-life products—we were able to bring them by the road corridor because it has a reduced lead time.

Speaker #2: And therefore, you have a better shelf life to sell within the stores. So that was an avenue which we have got through this crisis.

Speaker #2: And we will be using it in the future regardless of what the cost is going to be. And the margins—still, we have managed to get it.

Speaker #2: I know you may have many questions on the second quarter, Q2, margins—why they became better than 41 to 42%. We can give you details on those questions going forward.

Sunil Kumar: I know you may have many questions on the Q2, H2 quarter margins, why it became better than a 41% to 42%. We can give you details on the end of questions going forward. Next slide. While we were all going through April and May, we realized that we always wanted to help the community, and we believe that is inspire our communities to live better lives is our motto. From the lessons we learned from incubator program, we identified the individual chefs who were struggling on the crisis time to operate their own restaurants. We invited those chefs to operate our counters with their key products. Also it is not a restaurant, it is not a dining restaurant, but understandably, it is a supermarket. Customers have an expectation on the price points as well as the quality.

Speaker #2: And next slide. So, while we were all going through April and May, we realized that we have always wanted to help the community, and we believe that inspiring our communities to live better lives is our motto.

Speaker #2: And from the lessons we learned from the incubator program, we identified the individual chefs who were struggling during the crisis time to operate their own restaurants.

Speaker #2: So we invited those chefs to operate our counters with their key products. And also, it is not a restaurant, it is not a dining restaurant, but understandably, it is a supermarket. Customers have an expectation on the price point as well as the quality.

Speaker #2: So, we managed to get 10 chefs to work with us, and we received high traction and customer appreciation. We got almost 20,000 transactions from the chef counters.

Sunil Kumar: We managed to get 10 chefs to work with us, and we got a high traction and customer appreciation. We got almost 20,000 transaction from the chef counters. We also did another drive. Understandably, we were looking for a local recruits. Why it is a local recruits? Because we realized that there are a lot of opportunities within Spinneys, and we wanted to extend our hands to the community and the local market, and we have got a very good traction and good appreciation from customers as well as the people who are looking for a job in need. Now, the next is financial insights and highlight. Mukesh will take you through. Any questions you may have it, please ask the questions, and we are ready to answer those questions. Thank you, Mukesh.

Speaker #2: We also did an other drive understandably we were looking for a local recruits why it's a local recruits because we realized that there is there are a lot of opportunities within Spinney's and we wanted to give extend our hands to the community and the local market.

Speaker #2: And we have got a very good traction and good appreciation from customers as well as the people who are looking for a job in need.

Speaker #2: Now, the next is financial insights and highlights. Mukesh will take you through any questions you may have. Please ask your questions, and we are ready to answer those questions.

Speaker #2: Thank you, Mukesh.

Speaker #1: Thank you, Sunil. Good afternoon, dear investors. Pleased to meet you again since last quarter, and we have had multiple rounds of investor engagement since then. We were able to update you regarding how we are navigating through the current crisis, and I presume most of you would be aware of how Spinneys as a company has managed.

Mukesh Agarwal: Thank you, Sunil. Good afternoon, dear investors. Pleased to meet you from last quarter, and we had multiple rounds of investor engagement since then. We are able to update you regarding how we are navigating through the current crisis. I presume most of you would be aware how Spinneys as a company, as management, we have dealt with the situation. You can see the numbers, how our management or how this entire process has resulted in some good dividends for us. If you can see the number for the current period, our revenue, despite all the current challenges in the Q2, especially even the month of March, you can see we have grew by 5.1%. Last year, it was AED 1.8 billion in revenue. Our GP has AED 87.84 million, which is a growth of 4.1% from last year.

Speaker #1: We have dealt with the situation, and you can see the numbers—how our management, or how this entire process, has resulted in some good dividends for us.

Speaker #1: If you can see the number for the current period, our revenue, despite all the current challenges in the second quarter—especially even the month of March—you can see we have grown by 5.1%.

Speaker #1: Last year, revenue was $1.8 billion. Our GP was $87.84 million, which is a growth of 4.1% from last year. Our cash profit, which you call adjusted EBITDA, is $369 million.

Mukesh Agarwal: Our cash profit, whatever you call adjusted EBITDA, is AED 369 million from last year to AED 365 million, grown by 1.2%. Similarly, our profit before tax, which is a key indicator for our performance, has remained stable. Last year, it was AED 202. This year, it is AED 203 million, a growth of 0.5% year-on-year. Our profit after tax, after considering the corporate tax as well as the Pillar 2 tax requirements, has grown from AED 81.70 million last year to AED 81.75 million, a growth of 2.5% year-on-year. Our free cash flow conversion is still AED 81.94 million. That gives us a very strong position to meet all the capital requirements for the remaining six months, as well as our future expansion plans, together with our priority as making sure that we pay stable dividend to our shareholders as we have promised in our dividend policy during the IPO.

Speaker #1: From last year it was 365 million, grown by 1.2%. Similarly, our profit before tax which is a key indicator for our performance has remained stable.

Speaker #1: Last year it was 202. This year it is 203 million. A growth of 0.5% year on year. Our profit after tax after considering the corporate tax as well as well as the Pillar 2 tax requirements has grown from 81, 70 million last year to 81, 75 million a growth of 2.5% year on year.

Speaker #1: Our free cash flow conversion is still 81, 94, 194 million. That gives us a very, very keeps in a very strong position to meet all the capital requirements for the remaining six months as well as well as our future expansion plans together with our priority as making sure that we pay stable dividend to our shareholders as we have promised in our dividend policy during the IPO.

Mukesh Agarwal: Our free cash flow conversion is still AED 81.94 million. That gives us a very strong position to meet all the capital requirements for the remaining six months, as well as our future expansion plans, together with our priority as making sure that we pay stable dividend to our shareholders as we have promised in our dividend policy during the IPO.

Speaker #1: Our net debt is AED 225 million. That includes the lease liabilities of AED 1.06 billion. From that, if you remove the cash balance of AED 843 million, our net debt is only AED 225 million.

Mukesh Agarwal: Our net debt is AED 225 million. That includes the lease liabilities of AED 1.06 billion. From that, if you remove the cash balance of AED 843 million, our net debt is only AED 82.25 million. The dividend that was proposed and approved by the board of directors is 3.4 fils per share, which is equivalent to AED 122.6 million. That gives an annualized dividend yield of more than 5% on the current share price. If you have to dissect the retail revenue further, you can see that last year we were AED 1.79 billion. Almost 2% was contributed by the existing stores, which is like-for-like growth of 1.9%, and the new stores contribute around 3.5%, which is AED 63 million. AED 2 million we lost because of the fact that we closed one store. On overall basis, we opened 11 stores, and we closed one store.

Speaker #1: And the dividend that was proposed and approved by the Board of Directors is 3.45 per share, which is equal to 122.6 million. That gives a dividend yield—an annualized dividend yield—of more than 5% on the current share price.

Speaker #1: If you have to dissect the retail revenue further, you can see that last year we were at 1.79 billion. Almost 2% was contributed by the existing stores, which is like-for-like growth of 1.9%.

Speaker #1: And the new stores contribute around 3.5% which is 63 million. And 2 million we lost because of the fact that we closed one store.

Speaker #1: On an overall basis, we opened 11 stores and closed one store. Our online sales penetration is also helping us increase our overall sales numbers.

Mukesh Agarwal: Our online sales penetration is also helping us increase our overall sales number, and you can see that the penetration has increased to 19.1%. Also driven by the fact that the fresh sales and the private label penetration is up by 20 basis and 260 basis per respectively. Our retail revenue, if you look at the two quarters, there is a blip of -5.4% LFL in this quarter, mainly driven by the UAE numbers, especially considering the fact that April, as Sunil mentioned, was significantly down. But the degrowth that we saw in the month of May was lesser because schools reopened from end of April, and then people started coming to offices by the end of April as well. So May was better, and June was still better than last year.

Speaker #1: And you can see that the penetration has increased to 19.1%. This was also driven by the fact that fresh sales and private label penetration are up by 20 basis points and 260 basis points, respectively.

Speaker #1: Our retail revenue, if you look at the two quarters, there is a blip of negative 5.4% LFL in this quarter, mainly driven by the UAE numbers, especially considering the fact that April, as Sunil mentioned, was significantly down. But the degrowth that we saw in the month of May was lesser because schools reopened from the end of April, and then people started moving—coming to offices.

Speaker #1: By the end of April as well. So the the May was better and June was still better than better than last year. So overall overall basis you can see we had an FL of minus four but it really helped us in getting us in getting us an overall positive growth of 5.3% for the entire six month period.

Mukesh Agarwal: On an overall basis, you can see we had LFL of -4, but it really helped us in getting us an overall positive growth of 5.3% for the entire six-month period. If you have to split the GP, dissect the GP further, it looks a bit different to what you would assume. Our GP has gone down by 0.5% from H1, from 41.5% to 41%. That itself is a very robust margin in terms of growth. We have grown from AED 753 million to AED 784 million. If you look at overall GP has gone down by 0.5%, mainly because of the fact that during the Q2 we have the higher freight cost and the inflationary pressure, which is also due to the fact that there are a lot of container delays, which resulted in lower shelf-life products coming at the time of receipt.

Speaker #1: So if you have to split the GP, dissect the GP further, it looks a bit different to what generally you would assume.

Speaker #1: Our GP has gone down by 0.5 basis points, or 0.5%, from half-year, from 41.5% to 41%. That itself is a very, very robust margin in terms of growth.

Speaker #1: We have grown from 753 million to 784 million. And if you look at the overall GP has gone down by 0.5% mainly because of the of the fact that during the second quarter we have the higher freight cost and the inflation inflationary pressure which has which is also due to the fact that there are a lot of container delays which resulted in lower shelf right products coming to coming at the time of receipt.

Speaker #1: So we had to pass on higher wastages and higher provisions on on the income statement as well as the fact that in terms of the cost that we were able to pass on to the customers were not on on 100% basis because as we discussed in our previous engagements in the month of March we as a company as a management would consciously decided not to pass on the price increase in the month of March and in the in the first few weeks of April even for around 500 plus lines we we did not pass the price price increase and then post April onwards May and June onwards we have been trying to see how much we can pass on the price increase on a on a strategic level as a result you can see there is a impact of 0.5% on on a half year basis but if you look at the quarter itself you can see there is an increase of 0.6%.

Mukesh Agarwal: We had to pass on higher wastages and higher provisions on the income statement as well as the fact that in terms of the cost that we are able to pass on to the customers, but not on a 100% basis. Because as we discussed in our previous engagements, in March, we as a company, as a management, consciously decided not to pass on the price increase in March. In the first few weeks of April, even for around 500 plus lines, we did not pass the price increase. Then post-April onwards and May and June onwards, we have been trying to see how much we can pass on the price increase on a strategic level. As a result, you can see there is an impact of 0.5% on a H1 basis.

Mukesh Agarwal: But if you look at the quarter itself, you can see there is an increase of 0.6%. I just want to clear the air that this is not because of the fact that we have increased the GP margin. It is because of the fact that we had made a provision in Q1 regarding since we were expecting some significant container delays due to the straight situation. So we had made a provision for all the goods in transit. Some of that we were able to recoup. As a result, we had to reverse those provisions in Q2, which helped us increase the margin. As a result, I would request that you look at the GP margin on H1 to H1 basis rather than just having a look at the Q2 GP margin.

Speaker #1: I just want to clear the air that this is not because of the fact that we have increased the GP margin. It is because of the fact that we had made a provision in the first quarter, since we were expecting some significant container delays due to the Suez situation.

Speaker #1: So, we had made a provision for all the goods in transit. Some of that we were able to recoup. As a result, we had to reverse those provisions in the second quarter, which helped us, you know, increase the margin.

Speaker #1: As a result I would like I would request that you look at the GP margin on half year to half year basis rather than just having you know just having a look at the second quarter GP margin.

Speaker #1: So the net GP that we made is 41% for the second half. Yeah. If you look at EBITDA mainly flowing from the flowing from the GP if you the GP is down by 0.5% but you can look at the adjusted EBITDA which is down by 70 basis points because the fixed cost tend to remain remain remain the same.

Mukesh Agarwal: The net GP that we have made is 41% for H2. If you look at EBITDA mainly flowing from the GP, the GP is down by 0.5%, but you can look at the adjusted EBITDA, which is down by 70 basis points, because the fixed costs tend to remain the same. Still at EBITDA level, we are at 19.4% with increase of 1.2% from last year. On the quarter basis, our adjusted EBITDA is 60 basis point up, which again, as I said, is flowing from the GP, since we reversed some of the under-accrued provisions from Q1, and we have made an EBITDA of 20.7%. Our profit before tax is up by 40 basis point quarter-on-quarter, but again, down by 40 basis points in H1.

Speaker #1: And still at EBITDA level, we are at 19.4%, with an increase of 1.2% from last year. On a quarterly basis, our adjusted EBITDA is 60 basis points up, which, again, as I said, is flowing from the gross profit since we reversed some of the unutilized provisions from the first quarter.

Speaker #1: And we have made an EBITDA of 20.7%. Our profit before tax is up by 40 basis points in the quarter-on-quarter.

Speaker #1: But again down by 40 basis points in in in the half year because and we made 10.7% on sales which is again a significant achievement considering the current situation because as management we also took a lot of cost rationalization measures in the in the in the second quarter and we did our staff realignment in in the stores.

Mukesh Agarwal: We made 10.7% on sales, which is again, a significant achievement considering the current situation. Because as management, we also took a lot of cost rationalization measures in Q2. We did our staff realignment in the stores. We looked at each of the superfluous spending that we are doing, making sure that the cost which are really necessary to make the product available on the shelf as well as keep our stores in motion. That was the cost we were incurring. Any cost which were superfluous in nature, we are trying to see if it is really required. As a result, we can say that despite the fact that our GP went down by 70 basis points, our profit before tax has gone down by 40 basis points. That is a 30 basis point saving in the overall cost structure of the company.

Speaker #1: We looked at each of the distribution spending that we are doing, making sure the costs are really necessary to make the product available on shelf as well as keep our stores in motion.

Speaker #1: That was a cost we were incurring. Any costs which were discretionary in nature, we are trying to see if they are really required. So, as a result, you can say that despite the fact that our GP went down by 70 basis points, our profit before tax has gone down by 40 basis points.

Speaker #1: That is a 30 basis point saving in the overall cost structure of the company. The profit for the period similarly has gone down by 30 basis points, and we have achieved 9.1% on sales as overall profit after tax, resulting in a net profitability from 8,170 to 8,175 million in the first half.

Mukesh Agarwal: The profit for the period similarly has gone down by 30 basis points, and we have achieved 9.1% on sales as the overall profit after tax, resulting in a net profitability from AED 170 to AED 175 million in the H1. This is a standard slide we present every year. Very important from the shareholders' perspective that we are generating cash, and the cash that we have generated is 77.5%, almost 194 million, which after paying for the previous quarter CapEx and the free cash flow is available. So 194 we can use to pay off the dividend that we have committed as well as all the future expansion plans and dividend in the future. Net debt is negative if you exclude the lease liabilities. We have significant cash balances on the balance sheet, giving us a very strong edge to prepare for expansion.

Speaker #1: Yeah. This is a standard slide we present every year. It's very important from the shareholders' perspective that we are generating cash. The cash that we have generated is 77.5%, almost $194 million, which, after paying for the previous quarter capex, leaves the free cash flow available.

Speaker #1: So $194 million we can use to pay off the dividend that we have committed, as well as all the future expansion plans and dividends in the future.

Speaker #1: Net debt is negative if you exclude the lease liabilities, so we have significant cash balances on the balance sheet, giving us a very, very strong edge to prepare for expansion.

Speaker #1: So, I'll pass it on to Sunil to discuss the strategy for the remaining months.

Mukesh Agarwal: I'll pass it on to Sunil to discuss about the strategy for the remaining months.

Speaker #2: Thank you very much. Mukesh, the strategic focus, if I look at the operations side, is of course—as we know—the cost of goods is still inflated. Air freight cost is still three times more than what it would have been in the normal pre-conflict time.

Sunil Kumar: Thank you very much, Mukesh. Strategic focus, if I look at the operation side, is of course, as we know, still the cost of goods is still inflated. Air freight cost is still three times more than what it would have been in the normal pre-conflict time. The supply chain efficiencies we are focusing on, where we can bring the ingredients in the best quality, but an affordable price, which regions we might have to pick, whether it is an American continent or Asian continent or European continent. We are working on that to get the efficiency. Our focus is on store opening, which we have committed, and we wanted to get the dates on calendar and on time. We have, as we mentioned in the Q1, we are going to Kuwait and Philippines.

Speaker #2: And the supply chain efficiencies we are focusing on where we can bring the ingredients in the best quality but an affordable price which regions we might have to pick whether it is an American continent or Asian continent or European continent we are working on that to get the efficiency and our focus is on store opening which we have committed and we wanted to we wanted to get the dates on on calendar and on time so we have as we mentioned in the first quarter we are going to Kuwait and Philippines and Kuwait we will be in a position to say 100% when should be in a position to open it which will be in somewhere in December we wanted to open but it will be moving to if the things are what today we will be in a position to tell by October which whether it will be on December or in January Philippines we are looking at the dates whether it is in December or in January but we wanted to open end of this year as possible and of course one of the key decisions which we declared into the DFM that we are taking an additional 20% of the share from our partner in Saudi Arabia the reasons why we are increasing because we believe in Saudi Arabia we understand that to turn around that stores we required economies of scale we will we are already on the site and almost getting finished those two sites one is in Jabarat Mall one is in Diraya we will be in a position to open in December or in January but there are two more stores which we have committed and which are the ideal situation for customers finish customer base one is in Roshan Development and one is in Kaft Kaft 3 they call it Kaft 3.

Sunil Kumar: In Kuwait, we will be in a position to, let's say, 100% when should be in a position to open it, which will be in somewhere in December, we wanted to open, but it will be moving to, if the things are what today, we will be in a position to tell by October whether it will be in December or in January. Philippines, we are looking at the dates, whether it is in December or in January, but we wanted to open end of this year as possible. Of course, one of the key decisions which we declared into the DFM that we are taking an additional 20% of the share from our partner in Saudi Arabia. The reasons why we are increasing, because we believe in Saudi Arabia. We understand that to turn around that stores, we require economies of scale.

Sunil Kumar: We are already on the site and almost getting finished those 2 sites. One is in Jawharat Riyadh Mall, one is in Diriyah. We will be in a position to open in December or in January, but there are 2 more stores which we have committed and which are the ideal situation for Spinneys customer base. One is in ROSHN development, and one is in KAFD3. They call it KAFD3. We have seen a turnaround of Saudi stores, particularly the first store we opened, and second and third store. In some of the months, we have seen cash positive, and we have to look at what we can bring into the business, whether it is in how will we increase the sales revenue as well as the efficiencies, then we can turn around these 3 stores.

Speaker #2: We have seen a turnaround of Saudi stores, particularly the first store we opened and the second and third stores. In some of the months, we have seen cash positive results, and we have to look at what we can bring into the business—whether it is in how we will increase the sales revenue as well as the efficiencies. Then we can turn around these three stores. We have successfully acquired a 20% share from our local shareholders, and we will be in a better position, which shows the confidence in the market and what we wanted to achieve from the Saudi market.

Sunil Kumar: We have successfully acquired 20% share from our local shareholders, and we will be in a better position, which shows the confidence in the market and what we wanted to achieve from Saudi market. We haven't changed any guidance for 2026. It will be bit of a responsibility from our side to change for the future, not understanding exactly how the crisis and challenges are going to be for the next 6 months. But we are still confident that the guidance which we have given in the beginning of 2026, and we stick to that guidance and we don't want to change at the given time. I hope you understand the current situation, and anything changes in the future, the next quarter, we will be in a position to explain.

Speaker #2: We haven't changed any guidance for 2026. It would be a bit of an irresponsibility on our side to change it for the future, not understanding exactly how the crisis and challenges are going to be for the next six months.

Speaker #2: But we are still confident that the guidance which we have given at the beginning of 2026, and we stick to that guidance, and we don't want to change it at the given time.

Speaker #2: And I hope you understand the current situation. If anything changes in the future, in the next quarter we will be in a position to explain.

Speaker #1: Thank you, Sunil. We will now hand over to Closer to moderate a Q&A section for us.

Jean Fransoa: Thank you, Sunil. We will now hand over to Aqsa Shaikh to moderate the Q&A section for us.

Speaker #3: Thank you. Thank you very much for the presentation. Just before we open the floor for the question-and-answer session, we will be displaying a short survey on your screens.

Aqsa Shaikh: Thank you. Thank you very much for the presentation. Just before we open the floor for the questions and answer session, we will be displaying a short survey on your screens. Your feedback will be greatly appreciated. Without further ado, if you're connected via the phone and you would like to ask a voice question, please press star 2 on your phone keypad and wait for your name to be prompted. If you're connected via the web, you can also request to ask a voice question or send us your question as a text. We'll just give a moment or so for the questions to come in.

Operator: Thank you. Thank you very much for the presentation. Just before we open the floor for the questions and answer session, we will be displaying a short survey on your screens. Your feedback will be greatly appreciated. Without further ado, if you're connected via the phone and you would like to ask a voice question, please press star 2 on your phone keypad and wait for your name to be prompted. If you're connected via the web, you can also request to ask a voice question or send us your question as a text. We'll just give a moment or so for the questions to come in.

Speaker #3: Your feedback will be greatly appreciated. So, without further ado, if you're connected to the phone and would like to ask a voice question, please press star two (*) on your phone keypad and wait for your name to be prompted.

Speaker #3: If you're connected via the web, you can also request to ask a voice question or send us your question as a text. We'll just give a moment or so for the questions to come in.

Speaker #2: I wanted to give you an answer. Actually, I started with a Saudi in the last slide, so I wanted to continue with this Saudi.

Sunil Kumar: I wanted to give you an answer. Actually, I started with Saudi in the last slide, so I wanted to continue with the Saudi. The question is whether it was the other party, our joint venture party wanted to sell it. The answer is no. We approached them, and we wanted to sell their 20%. We were looking for, in fact, a major share, but they were not willing to pay because they also see the future in Saudi Arabia. It was from our side we approached to get that 20% of the share. Strategically, we wanted to have a majority of the shareholding. When we started in Saudi, one of the objectives, one of the strategic approach we had it, we wanted to have a local partner all the time and the countries where we don't have our own know-how.

Speaker #2: The question is whether it was the other party—our joint venture party—who wanted to sell. The answer is no. We approached them, and we wanted to sell their 20%.

Speaker #2: We were looking for, in fact, a major share, but they were not willing to pay because they also see the future in Saudi Arabia. So it was from our side that we approached to get that 20% of the share.

Speaker #2: And strategically, we wanted to have a majority of the shareholding, but when we started in Saudi, one of the objectives—one of the strategic approaches we had—was that we wanted to have a local partner all the time in the countries where we don't have our own presence and know-how.

Speaker #2: So it was a inevitable proposition that we wanted to maintain that's why we have minority shareholding and the the the second question is we are taking the measures it is a day-to-day business and it's a very dynamic and complex business every day we had to consider what are the actions we are going to take whether it is in a factory sourcing offices in commercial side as well as in the operation so it is not a specific specific one bullet thing it is a combination of day-to-day efficiency which we wanted to bring it so I can't specify which areas where we are looking at it of course you have seen the the varieties one of the components which pays much more cost and therefore the inflation so we are looking at what are the options we could bring it and if the first question if you are asking as I mentioned April was the the month which is a double digit minus figures in May we saw it is a single digit and in June there was a growth compared to April June April May and June so we are very happy to see that June has grown a single digit in July we can see a double digit growth and August I don't want to give you what is it then otherwise you will make the same why I am giving a an advanced guidance of what is going to happen in July August sorry that I've not been a position to say what is the growth of in July and August in specific.

Sunil Kumar: It was an inevitable proposition that we wanted to maintain. That's why we have a minority shareholding. The second question is, we are taking the measures. It is a day-to-day business, and it's a very dynamic and complex business. Every day we had to consider what are the actions we are going to take, whether it is in the factory, sourcing offices, in commercial side, as well as in the operations. It is not a specific one bullet thing. It is a combination of day-to-day efficiency, which we wanted to bring it. So I can't specify which areas where we are looking at it. Of course, you have seen the freight is one of the components which pays much more cost and therefore the inflation. So we are looking at what are the options we could bring it.

Sunil Kumar: If the first question if you are asking, as I mentioned, April was the month, which is a double-digit minus figures. In May, we saw it is in single digit, and in June, there was a growth compared to April, May, and June. So we are very happy to see that June has grown a single digit. In July, we can see a double-digit growth. In August, I don't want to give you what is it then, otherwise you make the same call. Why I am giving an advanced guidance of what is going to happen in July, August. So sorry that I've not been in a position to say what is the growth of in July and August in specific. Now, the last question, has the situation deteriorated further following the recent geopolitical escalation? It is not.

Speaker #2: Now the last question has the situation deteriorated further following the recent geopolitical escalation and it is not we are I am very happy that as I mentioned our service level has moved from in April month it was more or less a 75 to 80% but it moved into now some days it is touching on 90% availability look one of the things which we have managed very well because of the private level we got from where it was five years back and where it is today we have a 47 plus market I mean revenue generated from private level so two things is visible here one we have 100% end-to-end control not dependent on the suppliers not dependent on the local vendors not dependent on the national brands but we are depending on ourselves and our efficiency as well as the supply chain cost effectiveness.

Sunil Kumar: I am very happy that, as I mentioned, our service level has moved from in April month, it was more or less a 75% to 80%, but it moved into now some days it is touching on 90% availability. Look, one of the things which we have managed very well because of the private label we got from where it was five years back and where it is today, we have a 47-plus market revenue generated from private label. Two things is visible here. One, we have 100% end-to-end control, not dependent on the suppliers, not dependent on the local vendors, not dependent on the national brands, but we are depending on ourselves and our efficiency as well as the supply chain cost-effectiveness. So we are happy to see that the private label is growing, which shows the customer's confident on the private label.

Speaker #2: So we are happy to see that the private level is growing which shows the customers confident on the private level and at the same time you have to look at the margin we have maintained so one of the the my personal view why it has by June and July it started coming back as it was in the past because of the customers confident the shelf availability of the product in the store.

Sunil Kumar: At the same time, you have to look at the margin we have maintained. One of my personal views why by June and July it started coming back as it was in the past because of the customer's confidence, the shelf availability of the product in the store. If you go to a physical store today and you cannot figure it out whether there were any challenges we faced. Thanks for our team who is working day and night to ensure that where we can bring the best source of quality product and how will we get those products by freight effectively into the store. Thank you.

Speaker #2: If you go to a physical store today and you can't figure out whether there were any challenges we faced. So thanks to our team, who is working day and night to ensure that we can bring the best source of quality product, and how we will get those products by freight effectively into the store.

Speaker #2: Thank you.

Speaker #3: Thank you. Thank you very much. Our next question comes from Liam Brown at Equilibrium. Liam, please go ahead. Your line is now open.

Aqsa Shaikh: Thank you. Thank you very much. Our next question comes from Wayne Brown, Equilibrium. Liam, please go ahead. Your line is now open.

Operator: Thank you. Thank you very much. Our next question comes from Wayne Brown, Equilibrium. Liam, please go ahead. Your line is now open.

Wayne Brown: Hi. Yes, it is Wayne Brown at Equilibrium. Just two quick questions from me, please. If you can just walk me through price and volumes in H1. Then secondly, you refer to strict control over discretionary CapEx and OPEX in the half. Can you just run me through what costs were reduced or deferred, and how much did that support your Q2 EBITDA? Thank you.

Speaker #4: Hi, yes, it's Wayne Brown at Amulibrium. Just two quick questions from me, please. If you can just walk me through price and volumes in H1, and then secondly, you refer to strict control over discretionary capital and opex in the half.

Speaker #4: Can you just run me through what costs were reduced or deferred, and how much did that support your Q2 EBITDA? Thank you.

Speaker #2: Yeah. Okay. The first question regarding the transition growth or transition growth has grown by 6% in in this in this period and our average basket size has gone down by points 0.7%.

Mukesh Agarwal: Yeah. Okay. The first question regarding the transition growth, our transition growth has grown by 6% in this period, and our average basket size has gone down by 0.7%. If you look at the transition growth, as Sunil also mentioned, the Q2 reduction regarding the volume, it was mainly coming from the mall stores in the month of April. Post the conflict, when the flights were not working, were not flying, the airports were not working. We had a significant impact when the repetitive flights restarted, then we had a significant impact on the tourism. A lot of tourist-based stores had a more than a double rate impact, even on the higher side. When the schools reopened in the month of April, when the schools reopened and when the students came back and when the offices started coming back, the volume started increasing.

Speaker #2: Now if you look look at the transition growth as Sunil also mentioned the second quarter reduction regarding the volume was mainly coming from the moss stores in the month of April post post the conflict when the flights flights were flights were not working were not flying the airports were not working so we had a significant impact once once the flights repetitive flights restarted then we had a significant impact on the tourism a lot of tourist based stores had a more than double digit impact even on on the higher side and when then the schools reopened in the month of April so once the schools reopened then when students came back and when the office started coming back the all the the stores the the the volume started increasing the meal solution based stores were still still impacted because of the fact that working from home was still still continuing like some stores for example the terminal one store in in the airport was still facing issues because of the fact that the flights are not 100% 100% operations but the degrowth that we saw in the mall stores in in the month of April that degrowth as you see today and even in the May and June the the degrowth has come down significantly the meal solutions as a store are are improving now but still not to the not to the same level that that we would expect the neighborhood stores were quite resilient though even during the during the situation and even post that they they have been quite quite persistent so on an overall basis we see the degrowth which we saw in month of April is coming down consistently and in the June it was better than last year and things are looking better and better since then.

Mukesh Agarwal: The main meal solution-based stores were still impacted because of the fact that working from home was still continuing. Some stores, for example, the Terminal 1 store in the airport was still facing issues because of the fact that the flights are not 100% operations. But the de-growth that we saw in the mall stores in the month of April, the de-growth as we see today and even in the May and June, the de-growth has come down significantly. The main meal solutions as a store are improving now, but still not to the same level that we would expect. The neighborhood stores were quite resilient, though, even during the situation and even post that. They have been quite persistent. On an overall basis, we see the de-growth, which we saw in month of April, is coming down consistently.

Mukesh Agarwal: In the June, it was better than last year, and things are looking better and better since then. Regarding the cost measures, Sunil said, we are looking at each and every line in the P&L to see what savings we can achieve. We are challenging every cost, and we are talking to the relevant contractors, relevant suppliers to see where we can save cost. Some cost that we save could have a long-term advantage, a long-term savings for us. Some cost could be just one-off in terms of making sure that, for example, some of the business travel, which were really necessary were only allowed, but something which was not necessary was postponed or which was not allowed. Every line item was looked at, and that's the reason you can see there's impact of 0.3% on the overall SG&A.

Speaker #2: And regarding the cost measure, Sunil said we are looking at each and every line in the P&L to see what savings we can achieve.

Speaker #2: We are challenging every cost and we are talking to the relevant contractors relevant suppliers to see where we can save cost some cost that we save could be could could have a long-term advantage a long-term savings for us some some cost could be just one off in terms of making sure that for example some of the business travel which which were really necessary were were only allowed but something was which was not necessary was postponed or which was not allowed.

Speaker #2: So, it's a—every line item was looked at, and that's the reason you can see there is an impact of 0.3% on the overall SG&A. That is a reduction because of the fact that we were able to successfully navigate the cost rationalization.

Mukesh Agarwal: That is a reduction because the fact that we were able to successfully navigate the cost rationalization.

Speaker #2: Thank you.

Wayne Brown: Thank you.

Speaker #4: Yeah, no, that's very helpful. Thank you. Can I follow on with two more, or should I wait?

Wayne Brown: Sure. No, that's very helpful. Thank you. Can I follow on with two more or should I wait?

Mukesh Agarwal: Sure.

Wayne Brown: No, that's very helpful. Thank you. Can I follow on with two more or should I wait?

Speaker #2: Please wait. I can see other questions, and I realize, moderator, I was answering one of the first questions Ahmad asked, and unfortunately, those people who were listening didn't understand what was the question.

Mukesh Agarwal: Please wait. I can see other questions.

Aqsa Shaikh: Yeah

Operator: Yeah

Mukesh Agarwal: Moderator, I was answering one of the first questions Ahmed asked. Unfortunately, those people who were hearing, listening, didn't understand what was the question. Sorry for that. Back to you, moderator.

Speaker #2: So sorry for that. Back to the moderator.

Speaker #3: No worries. Thank you, thank you very much. Wayne, we will move to the next question, but we will take yours later on, so thank you.

Aqsa Shaikh: No worries. Thank you. Thank you very much. Wayne, we will move to the next question, but we will take yours later on. Thank you very much. Just a quick reminder, if you're connected via the phone and you want to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted. If you're connected via the web, you can also request to ask a voice question or send your question as a text. Our next question is a text question from Aqsa Shaikh from Decimal Point Analytics. What is the expected for year 2026 CapEx, and how does it split between new store build-out and refurbishment of the existing base?

Operator: No worries. Thank you. Thank you very much. Wayne, we will move to the next question, but we will take yours later on. Thank you very much. Just a quick reminder, if you're connected via the phone and you want to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted. If you're connected via the web, you can also request to ask a voice question or send your question as a text. Our next question is a text question from Aqsa Shaikh from Decimal Point Analytics. What is the expected for year 2026 CapEx, and how does it split between new store build-out and refurbishment of the existing base?

Speaker #3: Thank you very much. And just a quick reminder: if you're connected via phone and you want to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted.

Speaker #3: And if you're connected via the web, you can also request to ask a voice question or send your question as a text. Our next question is a text question from Aksa Shaikh from Decimal Point Analytics.

Speaker #3: What is the expected full year 2026 capex and how does it split between new store build out and refurbishment of the existing base?

Mukesh Agarwal: Aqsa, thank you for the question. We have budgeted the new store as well as the refurbishment. If you look at our income statement and cash flow, which doesn't have any much variations, we are still going ahead with whatever we have planned and budgeted because we don't see that it will have an impact on our cash flow nor on the balance sheet. We see a great opportunity for going forward because many of the stores which we have signed, as a retailer who is confident about the region, we are actually looking and building those stores. For example, on the crisis time, we opened two stores. in May, we opened one store in JBR, Jumeirah Beach Residence.

Speaker #2: Aksa, thank you for the question. We have budgeted for the new store as well as the refurbishment, and if you look at our income statement and cash flow, there aren't any major variations. We are still going ahead with whatever we have planned and budgeted because we don’t see that it will have an impact on our cash flow nor on the balance sheet.

Speaker #2: And and we see a great great opportunity for going forward because many of the stores which we have signed and as a as a retailer who is confident about the region we are actually looking and building those stores for example on the crisis time we opened two stores in May we opened one stores in JBR Jumeirah Beach Residence it was a tourism based stores but still we believe that the residents who are around will come to our stores and we are happy with the result and one stores we opened in Abu Dhabi so we are happy that we we will still be going with the plan as we have budgeted with the capex and we don't see any problems going forward in terms of cash availability or cash flow or balance sheet.

Mukesh Agarwal: It was a tourism-based store, but still we believe that the residents who are around will come to our stores, and we are happy with the result. One store we opened in Abu Dhabi. So we are happy that we will still be going with the plan as we have budgeted with the CapEx, and we don't see any problems going forward in terms of cash availability or cash flow or balance sheet. Thank you.

Speaker #2: Thank you.

Speaker #3: Thank you. Thank you very much. Perhaps you can go back to Wayne for his follow-up questions now. Wayne, your line is now open again.

Aqsa Shaikh: Thank you. Thank you very much. Perhaps we can go back to Wayne for his follow-up questions now. Wayne, your line is now open again. Please go ahead.

Operator: Thank you. Thank you very much. Perhaps we can go back to Wayne for his follow-up questions now. Wayne, your line is now open again. Please go ahead.

Speaker #3: Please go ahead.

Speaker #4: Thank you. So, three from me, please. First, the new stores—can you just talk us through how they've been performing relative to your expectations? Earlier, there were trading differences this year, but just how are the returns that those new stores are generating? Then, on the cash conversion, if you could just walk us through why the cash conversion weakened. And then lastly, from me, in the Philippines and Kuwait—can you walk us through the costs relating to the launch in those new markets, and how you're managing the management bandwidth to obviously be operating in two new geographies again?

Wayne Brown: Thank you. So three from me, please. The new stores, can you just talk us through how they have been performing relative to your expectations? Clearly, there were trading differences this year, but just how the returns that those new stores are generating. On the cash conversion, could you just walk us through why the cash conversion weakened? Lastly from me, in the Philippines and Kuwait, can you walk us through the costs relating to the launch in those new markets and how you're managing the management bandwidth to obviously be operating in two new geographies again? Thank you very much.

Speaker #4: Thank you very much.

Sunil Kumar: I will answer the first question. When we sign with the properties and availability of the properties, as I mentioned earlier, we have four formats. One is meal solution-based store format, which we call The Kitchen by Spinneys, and one is a grocery model, one is purely on the malls, and one is neighborhood stores. The neighborhood stores will normally, it takes time, one to 2 years, because if we are not there, we lost an opportunity, and it is our job as a community to ensure that we are going along with them. All the developers here prefer us to be with them because they know we will be accelerating and we will not be compromising on the quality of the operation regardless there are residents or not.

Speaker #2: I will answer the first question the news when we signed with the property properties and availability of the properties as I mentioned earlier we have a four format one is meal solution based store format which we call it kitchen by spinneys and one is a grocery model one is a purely on the malls and one is neighborhood stores so the neighborhood stores will normally it takes time one to two years because if we are not there we lost an opportunity and it is our job as a community to ensure that we are going with along with them all the developers here prefer us to be with them because they know they we will be accelerating and we will not be compromising on the quality of the operation regardless there are residents or not so if you ask me what is the return on investment within six months to one year two years we haven't seen any problems now also please bear in mind we closed a store last year this year because it was not working for us and we don't we don't carry forward a store if it is not working and we don't see there's a future within that store doesn't matter whether we have signed it but we will take a categorically a categorical decision making saying that if it is not a future store for us rather than you are bleeding and allowing that to dampen we will take an immediate decision to close the store we are so active to take the decisions if it is not working but all the 11 stores apart from the one store we closed we are happy with the performance and I think that these stores will as stores will give us a future revenue and the bottom line and second store second question the cash flow please Mukesh.

Sunil Kumar: If you ask me what is the return on investment within 6 months to one year or 2 years, we haven't seen any problems. Now, also, please bear in mind, we closed a store this year because it was not working for us. We don't carry forward a store if it is not working and we don't see there's a future within that store. Doesn't matter whether we have signed it, but we will take a categorical decision-making saying that if it is not a future store for us, rather than you are bleeding and allowing that to dampen, we will take an immediate decision to close the store. We are so active to take the decisions if it is not working.

Sunil Kumar: All the 11 stores, apart from the one store we closed, we are happy with the performance, and I think that these stores will give us a future revenue and bottom line. Second question, the cash flow, please, Mukesh.

Speaker #2: Yeah.

Mukesh Agarwal: Yeah. On the cash flow conversion, if you look at the number 77.5%, this is more to do with the timing difference because, for example, if on the month end or in the period end, in our company, the payment cycle run twice in a month. It's on 15th and on 31st. 13th and 31st. If for some reason the payment cycle falls on 30th, 31st, which is a holiday, then the payments happen on the coming Monday. Effectively what happens, the real cash out, the checks are cleared only one day after the month end. If you go back to December, it looks very high because of the fact that most of the payments are made in post year-end. As a result, there's a gap between the payable balance as of the period end and 30 June.

Speaker #1: On the cash flow conversion if you look at the number 77.5% so this is more to do with the timing difference because for example if if on the month end or in the period end the the the payments in our company the payment cycle run twice twice in a month so it's from 15th and on 31st 30th and 31st so if for some reason the the payment cycle falls on 13th 31st which is a holiday then the payments happen after on the coming Monday so effectively what happens the the real cash out the checks are cleared only one day after after the month end so if you look go back to December it looks very high because of the fact that the payments most of the payments are made in post year end so as a result there's a gap between the payable balance as of the period end and and 30th of June so you'll see the huge difference due to this timing difference as a result you will see almost a number which is 77.5% right so there's a difference the working capital movement which is driving driving this calculation.

Mukesh Agarwal: You will see the huge difference due to this timing difference. As a result, you will see almost a number which is 77.5%. There is a difference of working capital movement, which is driving this calculation.

Speaker #2: Yes.

Wayne Brown: Yeah. Okay.

Speaker #3: Thank you.

Speaker #2: I think there is one more question on Kuwait and the Philippines.

Sunil Kumar: I think there is one more question on Kuwait and Philippines.

Wayne Brown: Yeah. It was-

Speaker #4: Yeah it was.

Speaker #2: The Philippines yeah Philippines is is an investment which is a 40% investment which we do we don't consolidate that account the Ayala which is the biggest property developer in Metro Manila they wanted to have a retailers and existing retailers they were not happy because they were not keeping up the premiumness of the malls if you know Metro Manila well and we thought that that is a great opportunity for us at the same time we don't want to manage it because we don't know that region well we haven't moved out from GCC and we don't want to experiment in the in the market where we don't want to manage and we don't want to spend time and efforts of the management in that on that region so we took a strategic decision we will be managing that store on behalf of not managing what the word you want to operation operational we will operate that store for two years and we will be charging the time spent as well as the brand and the private level opportunities etc so we are looking at the financial model it will work with us but it is our responsibility to hand over a store which will carry the brand value in Philippines and in Manila at the same time it is a test market whether we can go to the outside GCC and how the customers are going to accept and it is a it is a better model in Philippines and we have already assigned the commercial team they are working on already in Manila while we speak we also have a construction taking place of two stores we will be opening a 3,500 stores which the construction is taking place and there is another neighborhood store our plan is to get 10 stores within two years time within the Ayala properties and because the Ayala properties having enough customers inflow as far as mall is concerned in Kuwait we have a 50% shareholding between Alshaya and Spinneys 1961 and we manage the business why Alshaya because Alshaya is a very prominent business entity in Kuwait and they understand the Kuwait market very well they help us to navigate around the issues we may face which we don't know but we are confident that Kuwait is a market where the premiumness and our proposition will be well accepted we are while we speak already the construction is taking place in Avenue Mall that is the first store and second and third store are in pipeline and hopefully I don't think that it is I don't want to say hopefully we will not be opening this year but we will be in a position to open in January and second store will be on second half H1 next year and thereafter couple of more stores thank you for the question.

Sunil Kumar: Philippines-

Wayne Brown: Yeah

Sunil Kumar: Philippines is an investment, which is a 40% investment which we do. We do not consolidate that account. Ayala, which is the biggest property developer in Metro Manila, they wanted to have retailers and existing retailers. They were not happy because they were not keeping up the premiumness of the malls, if you know Metro Manila well. We thought that that is a great opportunity for us. At the same time, we do not want to manage it because we do not know that region well. We have not moved out from GCC, and we do not want to experiment in the market where we do not want to manage and we do not want to spend time and efforts of the management in that region. So we took a strategic decision. We will be managing that store on behalf of, not managing, what the word you want to-

Mukesh Agarwal: Operation.

Sunil Kumar: Operational. We will operate that store for 2 years, and we will be charging the time spent as well as the brand and the private label opportunities, et cetera. So we are looking at the financial model it will work with us. But it is our responsibility to hand over a store which will carry the brand value in Philippines and in Manila. At the same time, it is a test market whether we can go to the outside GCC and how the customers are going to accept, and it is a better model in Philippines. We have already assigned the commercial team. They are working on already in Manila while we speak. We also have a construction taking place of two stores. We will be opening 3,500 stores, which the construction is taking place, and there is another neighborhood store.

Sunil Kumar: Our plan is to get 10 stores within a 2 years time within the Ayala properties, and because the Ayala properties having enough customers inflow as far as mall is concerned. In Kuwait, we have a 50% shareholding between Alshaya and Spinneys 1961, and we manage the business. Why Alshaya? Because Alshaya is a very prominent business entity in Kuwait, and they understand the Kuwait market very well. They help us to navigate around the issues we may face, which we do not know. But we are confident that Kuwait is a market where the premiumness and our proposition will be well accepted. While we speak, already the construction is taking place in Avenue Mall. That is the first store, and second and third store are in pipeline.

Sunil Kumar: Hopefully, we will not be opening this year, but we will be in a position to open in January. Second store will be in H1 next year, and thereafter, a couple of more stores. Thank you for the question.

Speaker #3: Thank you. Okay, thank you. Thank you very much. Just another quick reminder: if you're connected via the phone and want to ask a voice question, please press star two (*) on your phone keypad and wait for your name to be prompted.

Wayne Brown: Thank you.

Aqsa Shaikh: Okay. Thank you. Thank you very much. Just another quick reminder, if you are connected via the phone and want to ask a voice question, please press star 2 on your phone keypad and wait for your name to be prompted. Our web participants can also request to ask a voice question or send their question as a text. Our next question is a text question from Rahul Shah from Catlers Revo. Can you provide more information on the quarter-on-quarter gross margin improvement? Is it due to mix, more private label? To what extent have you been able to pass on higher input costs?

Operator: Okay. Thank you. Thank you very much. Just another quick reminder, if you are connected via the phone and want to ask a voice question, please press star 2 on your phone keypad and wait for your name to be prompted. Our web participants can also request to ask a voice question or send their question as a text. Our next question is a text question from Rahul Shah from Catlers Revo. Can you provide more information on the quarter-on-quarter gross margin improvement? Is it due to mix, more private label? To what extent have you been able to pass on higher input costs?

Speaker #3: Our web participants can also request to ask a voice question or send their question as a text. Our next question is a text question from Rahul Shah for Katya Shirvol.

Speaker #3: Can you provide more information on the quarter-on-quarter gross margin improvement? Is it due to a greater mix of private label? To what extent have you been able to pass on higher input costs?

Speaker #2: Thank you for the question. It is a very, very insightful question. In fact, if you look at the Q2 results, you have seen that we have generated a 42.2% margin.

Sunil Kumar: Thank you for the question. It is a very insightful question, in fact, because if you look at the Q2 result, you have seen a 42.2% margin we have generated. Of course, I am expected that question. There are a couple of things, realistically. What happened in the month of April, as I said, the service level of the local vendors were very low. Of course, Spinneys as a brand always give a paradox of choice, particular categories for each and every category. So we give more assortments because we consider the ethnicity, and they may have their own choices, and it is our job and responsibility to give the product which each and every customers are looking from Spinneys.

Speaker #2: Of course you can I am expected that question there are a couple of things realistically what happened in in the month of April as I said the service level of the service level of the local vendors were very low and of course Spinneys as a brand always give a paradox of choice a particular categories for each and every category.

Speaker #2: So we give more assortments because it's the ethnicity—we consider the ethnicity—and they may have their own choices, and it's our job and responsibility to give the product which each and every customer is looking for.

Speaker #2: So when the local vendors were struggling to give us the stock, we had a lot of tail stock—in the sense, we call it in the retail term, it's a tail—and the tail, normally, Mukesh is very prudent, and he will be considering as in a stock aging provision, and we had certain stock aging which was sitting because the tail was not working well, and we had to take an action. That's one factor. And the second factor is, when in March, when the crisis started, we had nearly 198 containers that were on the sea—we didn't know where they were. Some of the containers were diverted to Africa, India, Sri Lanka, Singapore, etc. So, we had to provide for those containers, because there was uncertainty on the containers. That's why you may see in the first quarter the margin was only 41.1%.

Sunil Kumar: When the local vendors were struggling to give us the stock, we had a lot of tail stock in the sense we call it in the retail term, it is a tail. The tail, normally, Mukesh is very prudent, and he will be considering as in a stock aging provision. We had a certain stock aging, which was sitting because of the tail was not working well, and we had to take an action. That is one factor. Second factor is when in the March, when the crisis started, we had nearly 198 containers were on the sea. We do not know where it was. Some of the containers were diverted to Africa, India, Sri Lanka, Singapore, et cetera. So we had to provide those containers because there was an uncertainty on the containers.

Sunil Kumar: That's why you may see in Q1, the margin was only on 41.1%. Once we got those containers back into shelf and Mukesh was in a position to release some of the stock aging provisions. Second, because of the tail and the stock which was not moving as we expect, we are not expecting some of the stock may not be moving faster, but it is a requirement for the business to keep the commitment for the customers and ethnicities. But those stocks started moving. The third thing is the private label. You have seen the growth of private label and customers got more. Of course, the commercial team had introduced more SKUs on private label. It is a combination of three things together. That's what made us 42.2.

Speaker #2: So one once we got those containers back into shells and Mukesh was in a position to release some of the stock aging provisions and second because of the tail and the the stock which was not moving as we expect we are not expecting some of the stock may not be moving faster but it is a requirement for the business to keep the to keep the commitment for the customers and ethnicities but those stocks started moving and the third third thing is the private level you have seen the growth of private level and customers got more and of course the commercial team had introduced more SKUs on private level so it is a combination of three things together that's what made us a 42.2 and still we see the continuation of that growth in the in the month of June and July.

Sunil Kumar: Still we see the continuation of that growth in the month of June and July. Thank you. It's a long question.

Speaker #2: Thank you. It's a long question.

Speaker #3: Thank you. Thank you very much. Our next question is a text question from Amat Rokhani from Bastro. Congratulations on keeping the first-half revenue and profit growing.

Aqsa Shaikh: Thank you. Thank you very much. Our next question is a text question from Emad Bakheet from Baswe. Congratulations on keeping H1 revenue and profit growing despite the freight disruption. First question is, you show total availability at 83, 88% in Q2, and shipping delays came down from a peak of 38 days in March to nine days in June. As you revisit full year guidance in Q3, what would you need to see in availability and like-for-like sales before you feel the business is back to a normal trending run rate? There is a second question. On Saudi, now that you've moved from 50% to 70%, does that change how you think about growing the business there, or is it mainly an ownership step?

Sunil Kumar: Thank you. Thank you very much. Our next question is a text question from Emad Bakheet from Baswe. Congratulations on keeping H1 revenue and profit growing despite the freight disruption. First question is, you show total availability at 83, 88% in Q2, and shipping delays came down from a peak of 38 days in March to nine days in June. As you revisit full year guidance in Q3, what would you need to see in availability and like-for-like sales before you feel the business is back to a normal trending run rate? There is a second question. On Saudi, now that you've moved from 50% to 70%, does that change how you think about growing the business there, or is it mainly an ownership step?

Speaker #3: Despite the freight disruption. First question is, you show total availability at 83–88% in the second quarter, and shipment delays came down from a peak of 38 days in March to 9 days in June.

Speaker #3: As you revisit full-year guidance in Q3, what would you need to see in availability and like-for-like sales before you feel the business is back to a normal trading run rate?

Speaker #3: And there is a second question on Saudi: now that you've moved from 50% to 70%, does that change how you think about growing the business there, or is it mainly an ownership step?

Sunil Kumar: Thank you for the question. As a business leader, I wanted to see almost a 95% service level. What we mentioned by 38 days of the delay, we got it now to nine days delay, but still that's a delay. Nine days is still delay. We wanted to ensure, as a business and everybody's looking and working towards how can we reduce the lead time. So we are working on the lead time. Our objective is not to get into 83 or 85 or 88. Our objective is to get, regardless of the crisis there or not, but I wanted to bring into a 90 plus service level, which will make us in a position to cater enough quantity on the shelf. Now, another thing I wanted to just remind that our business model is 65, 64 plus percentages of fresh food.

Speaker #2: Thank you for the question. As a business leader I wanted to see almost a 95% service level. So we what we mentioned by 38 days of the delay we got it now to 9 days delay but still that is a delay 9 days is a still delay and we wanted to ensure as a as a business and everybody is looking and working towards how can we reduce the lead time so we are working on the lead time our objective is not to get into 83 or 85 or 88 our objective is to get regardless the crisis there or not but I wanted to bring into a 90 plus service level which will which will be which will make us in in a position to cater enough quantity on the shelf.

Speaker #2: Now, another thing I wanted to just remind you is that our business model is about 65–64 percent fresh food. So, it is a high turnover business in terms of—we have to bring it in today and we have to sell within two days. The chilled products are the only ones that give us a one week or maybe a ten days shelf life. But it is a high turnover business, and that's what's making us so successful.

Sunil Kumar: It is a high turnover business in terms of we have to bring today, and we have to sell within 2 days. The chilled products, that is what give us a 1 week or maybe a 10 days shelf life. It is a high turnover business, and that is what making us so successful. Second question is, of course, we bought Saudi business considering that we can turn it around, and we wanted to have a control stake in our. We had the control stake, 50% plus management belongs to Spinneys 1961, as well as the voting right was with Spinneys 1961. But we wanted to ensure the speed which we take in terms of the capital deployment is in a position, we do not want to ask our local partners to inject money while they see that it is not making profit.

Speaker #2: And the second question is of course we bought Saudi business considering that we can turn it around and we wanted to have a controlled stake in our we had the controlled stake 50% plus management was belongs to Spinneys 1961 as well as the voting right was with Spinneys 1961 but we wanted to ensure the the speed which we take in terms of the capital deployment is in a position we don't want to we don't want to ask our local partners to inject money while they see that it is not making profit because you know sometimes the local partners may have their own expectations and that's why we approach them saying that we wanted to get the the investment 20% additional I was actually asking 30% and they gave only 20% but we are in a position to speed it up.

Sunil Kumar: Because sometimes the local partners may have their own expectations, and that is why we approached them saying that we wanted to get the investment 20% additional. I was actually asking 30%, and they gave only 20%, but we are in a position to speed it up. Always remember, retail is an economies of scale, and since we have signed 4 more stores and committed 4 more stores, that will be making us in a position to turn around that Saudi business. So I am very confident that we will be in a position to turn around the Saudi business. Thank you.

Speaker #2: Always remember, retail is an economy of scale, and since we have signed four more stores and committed to four more stores, that will put us in a position to turn around that Saudi business.

Speaker #2: So, I am very confident that we will be in a position to turn around the Saudi business. Thank you.

Speaker #3: Thank you. Thank you very much. It looks like we have no further questions from the audience. I will now pass the line back to the company for their closing remarks.

Aqsa Shaikh: Thank you. Thank you very much. Looks like we have no further questions from the audience, so I will now pass the line back to the company for their closing remarks.

Operator: Thank you. Thank you very much. Looks like we have no further questions from the audience, so I will now pass the line back to the company for their closing remarks.

Speaker #2: Thank you very much for I know all of us have gone through a bit of a challenging time the second quarter and we have the management have done everything possible to protect the business protect the customers protect the shareholders as well as stakeholders and we are looking forward for the next six months and we are we are confident that we will be achieving whatever the guidelines we have set on the beginning of 2026 and I don't want to give revise a guidelines not because of we we don't want to because of you know we are confident that this will continue as we have seen couple of months thank you very much.

Sunil Kumar: Thank you very much, for I know all of us have gone through a bit of a challenging time the Q2. The management have done everything possible to protect the business, protect the customers, protect the shareholders, as well as the stakeholders. We are looking forward for the next 6 months. We are confident that we will be achieving whatever the guidelines we have set on the beginning of 2026. I do not want to revise the guidelines, not because of we do not want to, because we are confident that this will continue as we have seen couple of months. Thank you very much. Thank you. Thank you very much. Thank you very much.

Speaker #2: Thank you very much. Thank you. Thank you, everyone. Thank you very much.

Aqsa Shaikh: Thank you. This concludes the call for today. We are now closing all the lines. Thank you and goodbye.

Operator: Thank you. This concludes the call for today. We are now closing all the lines. Thank you and goodbye.

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Q2 2026 Spinneys 1961 Holding PLC Earnings Call

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