Metcash Limited

Good day and thank you for standing by. Welcome to Medcash 2026 Full Year Results Briefing. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press Start 1&1 on your telephone. Please be advised that today's conference is being recorded. I would now like to turn the call over to your first speaker today, Mr. Doug Jones, Group CEO. Thank you. Please go ahead.

Thank you, operator, and good morning, everybody. Welcome to the Medcash Limited FY26 full-year results presentation. As the operator said, my name is Doug Jones, Group CEO, and I'm joined this morning in Sydney by Deepa Sita, Group CFO, Grant Ramage, Food CEO, Kylie Walbridge, Liquor CEO, Scott Marshall, CEO of the Total Tools and Hardware Group, and for the first time, Daniel Jenkinson, Chief Growth Officer, as well as Steve Ash, EGM Investor Relations. Given we issued results pre-release in early May on the 11th, and given the final results are in line with those, I'm going to start today with the strategy update before I get to the results detail. Before I begin, though, I'd like to acknowledge the traditional custodians of the land on which we're meeting today. We're in Wala medical country, and I pay my respects to elders across country, past, present, and emerging. I want to start with our investment thesis and a couple of comments there. If you step back, the investment case rests on a few simple points. Firstly, we operate in large, growing, essential markets. We hold leading positions in supplying independent and non-chain food, liquor, and hardware businesses. We have unmatched supply chain and logistics capability and flexibility, and we sit in the middle of the value chain as an indispensable link between suppliers and customers. So why does that matter? Because it's what drives resilient, quality cash flows, supports steady shareholder returns, and does so with moderate and controllable capital requirements. The message on this page is not that we are simply large. It's that our scale and platform translate into attractive economics. What supports that investment case is the Metcash system or platform we've built over time. There are three mutually reinforcing elements to this platform, scale, trusted capabilities, and competitive networks. The scale is clear, but just as important is how those elements work together as the Metcash platform. We combine wholesale, retail, services, and customer networks across food, liquor, and hardware and tools. These capabilities reinforce each other and make the model stronger than any individual part would be on its own. This is what gives us a sustainable, competitive advantage and creates room for incremental growth opportunities around the core. We operate across three large and attractive markets, and in each one we've got a strong position. In food and liquor, we're the leading supplier to independent retailers in essential categories. In hardware and tools, we hold leading positions in key trade and professional segments, supported by a growing retail network. Diversification is built in. We're not reliant on any single category or earning stream. That gives the group both resilience in the short term and multiple avenues for growth over time. Across the group, the operating model is consistent. And alongside our purpose, this is what links our pillars and is what sits behind the construction of the portfolio. We share the same core strategic objectives in each pillar, a scaled supply chain, strong supplier services, competitive networks, and a diversified customer base. That consistency drives efficiency, supports margin resilience, and allows capability to be leveraged across the group. This is not three separate business. It's one repeatable system driving performance at scale. And it's designed to help us deliver honest value by combining the benefits of scale with the agility and community connections of independent retailers. I want to be clear that we've got a long way to go and much to work on. We're not claiming perfection. And there are significant opportunities ahead of us in opening new stores, increasing our teamwork score, and growing new channels, by way of example. But there is clear progress on our core strategy. The business today is structurally stronger than it was a few years ago. First, competitiveness is improving. Pricing has strengthened across all pillars, and the IGA network is more competitive than ever. We're going to talk about that in some detail. Second, the earnings mix is evolving with greater diversification, with retail and food service inconvenience now a larger part of the group. That matters because it reduces volatility, improves the overall quality of earnings, and presents new growth options. And third, we are strengthening the platform itself. We're not changing it. This is not cyclical. It's a structural shift in how the business is built and where the earnings come from. In hardware and tools, we've completed the merger, removed duplication, and reset the business. We're progressing with a clear eye on a return to mid-cycle economics. Where market conditions are weak, the disciplined work to make our own weather is still progressing, and it's being done ahead of the up-term as we try to recover faster than the market. A big part of all of this is the technology platform. We're building a modern, AI-ready operating environment in partnership with Microsoft. The rollout has well progressed with horizon nearing completion in food and liquor. The benefits are already clear. Better inventory, improved service levels, and stronger data capability. This is about improving how the business runs and lifting performance over time while lowering the cost and risk of future upgrades and development. Horizon is nearing completion and is currently in user acceptance testing phase. We're planning for the first of two final deployments in the last quarter of 26. If we're in a position to go ahead with the second deployment this year without assuming unreasonable risk, our cost guidance will remain unchanged. We'll continue to balance cost, time, quality, and risk in these final stages of the program. We haven't been sitting idly. We've been investing to extend our competitive advantages. And those investments are now clearly delivering. They're driving three outcomes, scaling our networks, improving efficiency, and strengthening our ability to serve customers and suppliers. You can see that in total tools, with strong network and earnings growth. You can see it in food service and convenience, which has scaled quickly and is now a more meaningful contributor. And you can see it operationally, where productivity improvements are increasing capacity and supporting growth. These investments are improving performance today and making the business more scalable for the future. This is not just supporting earnings, it's building a stronger earnings profile that includes higher margin businesses. Speaking of which, Around the core, we're also building additional growth drivers, and they're contributing. And importantly, they're scaling. In retail media, we've built a national network with meaningful revenue and strong momentum. I'm excited to share for the first time this morning the news that we've recently signed a partnership agreement with QMS and the Nine Network, which will accelerate our growth by providing access to a much bigger pool of advertisers and to their scaled network and sales teams. For their clients, it broadens the range of media available. The sorted B2B online products and service marketplace at $5.9 billion revenue is now a significant part of how we operate and engage with customers and supports the modernization of our core wholesale revenue stream. And in retail ownership, we've taken the first steps in food, deliberately building our capability and asset base in a disciplined way. We have big targets here, but we'll be guided by disciplined capital management frameworks that mean that each store or group of stores must fit strategically as well as financially. The common theme is clear. These are margin accretive opportunities that broaden the earnings base. I'll move into the group overview and step through the results in more detail. The key message here, as we go through the section, is one of consistency, a resilient core, a diversified portfolio, and a business that continues to generate strong cash. At an operational level, the result is clear. Food and liquor again provided a stable base of earnings, performing well in a competitive and value-conscious consumer environment, and all this in the face of the continued decline in tobacco sales. Harder-end tools improved sales momentum through the year, despite weak trade markets, reflecting targeted operational actions, and the group maintained strong financial discipline. We kept tight control of costs, working capital, and capital expenditure. We continued to execute the Metcash platform strategy, extending into more products and services, while protecting and strengthening the core. The results reflect solid execution, with the factors impacting performance understood and actively managed. The key material pressure in the results sits in hardware, and that's cyclical, which is why we're working hard to address it. The financials reflect all that. Revenue was $19.6 billion and grew 3.8% excluding tobacco. EBITDA and EBIT both grew on a normalized basis, and operating cash flow was strong at $558 million. The three-year cash realization ratio remains at around 104%, leverage is at the lower end of the range, and dividends were maintained at around 70% payout. So the takeaway is resilient earnings, strong cash conversion, and balance sheet flexibility. Looking at the result by pillar, the portfolio is doing its job. Food and liquor did the heavy lifting in a tougher consumer environment once again. Hardware and tools revenue accelerated in the second half, but earnings still reflect weak trade markets with pressure in retail margins. The strength in food and liquor provides stability, while hardware gives us upside when markets improve, and that's why the diversified portfolio matters. This is a new view. If you look at the business by revenue stream, you can see the same story in a different way. We introduced this view at the half-year results, but now we show earnings as well as revenue. And we'll continue to disclose this in addition to the pillar view, which will remain our primary segmental analysis. A dependable, high-quality wholesale base remains the core earnings engine, while higher growth and higher margin streams are broadening the shape of the business. It's important because it improves resilience today and expands earnings opportunities over time. And it also informs how the business should be viewed, not as a single channel wholesaler, but as a more diversified platform. I really want to bring this to life in this next slide. It shows the progression over time. We've maintained a stable wholesale base while building higher growth streams like food service and convenience and retail. The direction is consistent across both revenue streams and pillars. We're not replacing the core. We're building on it to improve diversification and earnings quality. Since FY19, earnings from wholesale have grown by 35%, but the proportion of the total earnings base has reduced from 91% to 76%. I also want to use this slide to get ahead of a likely question about the low growth in total earnings over the last few years. It's important to remember that since FY21, we've lost $1.8 billion in tobacco sales. Our estimate of the single-year earnings impact between then and now from tobacco itself and the last associated products to be around $25 million. So to be clear, that's $25 million lower earnings than we had in FY21. During this period, the food pillar earnings have grown by 35%. In the same period as the hardware cycle has turned, hardware retail earnings are off by $30 million. What this means is we've offset at least $65 million of earnings by growing the rest of the business. These facts highlight the point that our core is larger and more profitable than it was. I'll now hand over to Deepa to take you through the financials. The headlines are straightforward. Resilient earnings, strong cash generation, and a disciplined approach to capital.

Thanks, Doug, and good morning, everyone. I'll build on Doug's overview by stepping through the group financials, focusing on the quality of earnings, the cash generation, as well as how disciplined capital management continues to support both resilience as well as future growth. Starting with the financial overview slide, FY26 reflects another year of resilient earnings, strong cash generation, and balance sheet flexibility. Revenue for the year was approximately $19.6 billion, up 3.8% excluding tobacco, reflecting solid underlying momentum across the core businesses. At the earnings level, the business delivered growth, excluding strategy and integration costs, which are one-off in nature. Importantly, cash conversion continues to be a standout. The three-year cash realization ratio is 104.2%, well above our target range, reflecting consistent working capital discipline, with the three-year measure providing the most meaningful view across the cycle. The balance sheet remains strong, with leverage at one times, which is at the lower end of our target range. The Board has declared a final dividend of 9.5 cents per share, reflecting a moderate increase against the annual target payout ratio, and have suspended the DRP. We have maintained a disciplined approach to capital allocation, moderating investment and prioritizing high return opportunities aligned to our framework. This reflects a consistent approach through the cycle, adjusting investment in line with conditions while maintaining a strong focus on the core business and sustainable returns. As a result, we have delivered strong free cash flow and preserved balance sheet flexibility. Overall, the group enters FY27 from a position of growth and strength, with high quality earnings, strong cash generation, and financial capacity to support both returns and growth. Turning now to the capital management framework. This framework underpins our track record for strong cash generation, disciplined investment, and consistent shareholder returns. While the framework has been refreshed to improve clarity, the underlying philosophy remains unchanged. At its core, it is focused on maximizing long-term shareholder value through disciplined capital allocation and delivering returns above the risk-adjusted cost of capital. The framework is anchored in cash generation, with a target three-year cash realisation ratio of 80% to 90%. Supporting this is a clear and consistent approach to how we invest, built on three elements. Clear capital allocation priorities, rigorous assessment of returns, cash generation and risk, and strong governance, including board oversight and post-investment reviews. With that foundation in place, capital is deployed in a clear and consistent sequence. First, investing in the core business, thereby maintaining and strengthening operations. Second, maintaining financial strength and operating within our leverage range. Third, delivering consistent shareholder returns through a fully franked dividend aligned to our payout ratio. And finally, investing in growth and, where appropriate, return surplus capital to shareholders. The sequencing is key. It ensures we invest from a position of strength, maintain balance sheet discipline, and deliver sustainable returns, with growth investment focused on strategic fit, returns, and execution. Turning now to the FY26 outcomes, which demonstrate this framework in action, investment spend moderated to approximately $244 million, with the prior year including the superior foods acquisition. Leverage remained at the low end of the target range at around one times, preserving sufficient financial flexibility. The total annual dividend declared amounted to 18 cents per share, reflecting a payout ratio of approximately 74% of underlying impact. The key dates for the dividend are provided in the appendix section of the deck. ROFI was approximately 20%, with the moderation reflecting the expected impact of recent acquisitions and investment in long-term capability, as well as the softer earnings in hardware. The net debt remained well controlled over the period, with levels broadly stable and consistent with our disciplined approach to capital management and target leverage settings. Overall, these outcomes demonstrate disciplined capital deployment, strong cash performance, and retained capacity to support growth. Turning to the P&L, revenue in EBITDA remained stable, supported by the strength and diversification of the portfolio. EBITDA before strategy and integration costs increased 3.5% to $774 million. Depreciation and amortization increased year on year, driven by prior acquisitions and ongoing investments. The step-up was noted at the half, with the second half broadly in line with the first. Looking ahead, depreciation and amortization is expected to increase by a low double-digit percentage in FY27, as Project Horizon and other assets come on stream. Notwithstanding the increased depreciation and amortization, EBIT before strategy and integration costs grew by 1.6% and underscores our continued emphasis on cost management as well as operational efficiency. Corporate costs are expected to be in the range of $20 to $22 million per half in FY27. This reflects ongoing investment in growth and capability initiatives, as well as variable employee entitlement costs normalizing to target levels. Net finance costs were $123.7 million in line with the prior guidance. Looking ahead, FY27 net finance costs are expected to be between $130 and $135 million, assuming a moderate increase in rates. The year-on-year change in underlying EPS at 24.5 cents is largely attributable to the one-off strategy and integration costs, which are reflected within EBIT. Excluding these costs, underlying EPS is in line with the prior year. Turning to the cash flow, cash generation continues to be a key strength of the group. Operating cash flow increased to $558 million, supported by solid trading and continued focus on working capital. Investing cash flows reduced significantly, reflecting lower acquisition activity, while capital expenditure remained well managed at $175 million. More broadly, capital has been actively managed with investment directed to high-return strategic initiatives and core platform capability, while overall spend moderated following a period of elevated investment. This disciplined approach has been a key contributor to the strong free cash flow this year, while supporting continued investment in the business. Looking ahead, FY27 CapEx is expected to be approximately $150 million, excluding acquisitions, and will continue to be assessed in line with the Capital Management Framework. The group retains a strong balance sheet flexibility and remains well within the parameters of the capital management framework. Working capital continues to be optimized, with average working capital days improving to 12.7 days. Total funds employed increased in line with strategic investment priorities, while net debt and equity positions remained well balanced. The increase in intangible assets reflect acquisition activities during the year, including goodwill arising from business combinations. In addition, ongoing investments in capitalized software continue to build out core platform capability, partially offset by normal amortization. Together, these investments are strengthening the platform and supporting sustainable growth over time. Finally, on debt and funding, the group maintains a strong and well-balanced funding position, with total committed facilities of $1.57 billion and approximately $967 million of undrawn capacity at year end. Closing net debt was $616.6 million, while the average net debt amounted to approximately $835 million, providing a more representative view of leverage through the year. Leverage remains well within the target range, supporting continued financial flexibility. The weighted average cost of debt reduced to 5.2%, supported by active treasury management. We are currently progressing refinancing activities as part of the normal funding cycle, with strong lender support reflecting confidence in the group strategy and cash generation profile. So in summary, the group has delivered resilient earnings in a challenging environment. Cash generation remains strong and reliable, and our disciplined capital management framework continues to support both returns and growth. Thank you. I'll now hand back to Doug.

Thanks, Deepa. Let's turn to the operating pillars now. And the focus from here forward is how the platform strategy and execution this year showed up in these results. Turning to food, the key message here is one of resilience, competitiveness, and the benefits of that diversification strategy. Food again demonstrated why it's such a resilient and important part of our portfolio. Supermarkets remain competitive and a highly contested grocery market, and a diversification into food service and convenience continues to support growth and reduce our reliance on supermarkets and helps offset the impact of tobacco. In tobacco, we are seeing the early signs of improvement where enforcement has actually taken place and on the back of strategic actions we've taken, but I'll get there in a moment. These strategies and the resulting earnings mix shift is now clearly flowing through into the results. Food EBIT increased to $261.8 million, up 5.4% or 7% on a normalized basis. EBITDA grew by 8.5% to $374.8 million. EBIT margins improved to 2.5%, up 14 basis points, supported by a low weighting of tobacco. This is high-quality earnings growth, supported by diversification, improved mix, and disciplined execution, and founded on the sustainable competitive advantages. The improvement in food earnings has occurred over a long period, demonstrating the resilience over time and reinforces that Metcash's core food business is a larger and better business than it was a few years ago. While tobacco remains a headwind in reported sales, it's not reflective of underlying performance. That impact is being offset in a few ways, including better tobacco procurement, the food service and convenience strategy, and other growth streams. So while reported sales are affected, the earnings base is becoming more diversified and more resilient over time. Let's turn to tobacco. The data shows a clear link between enforcement and our tobacco sales, as evidenced by the fact that Queensland was actually in growth in the second half, and our total sales were higher in the second half than in the first. You can see this in the channel graph. It's pleasing to see other states following Queensland lead, but the reality is that much, much more work needs to be done. We're not standing still, though, as you'd expect, and in food service and convenience have established new distribution agreements with the three major tobacco suppliers and signed new contracts with BP and Ampol. Together, these are worth around $170 million per year. Price competitiveness has improved materially across the IGA network, and that's a statement you've heard from us for a few years, and I'm really pleased to share the data and the facts behind it today. The price gap for large stores has narrowed to just 2.1% from 3.4% a year ago. And across the total network, it's come down by a full percentage point. I'll point out that this comparison includes all IGA stores, from metro to regional, large to small. This improvement has been driven by a combination of factors and years of hard work. including supplier support, targeted promotional programs, and improved retail execution, and has been accompanied by a stronger focus on price perception. Importantly, the most competitive IGA stores are now close to parity in key markets. All of this supports both volumes and the health and competitiveness of the network. You've heard us say for a while that retail ownership is a key lever for the food business. and a structured plan strategy, not a shift away from independence. We're acquiring high-quality IGA supermarkets in a disciplined way. We've taken the first steps through the initial supermarket acquisitions announced this year. We've got ambitious targets, as I said earlier, and we'll be balanced by disciplined capital management using the refreshed capital management framework and investment discipline and governance that Deepa spoke about. Acquisitions must both meet strategic and financial hurdles. Store ownership enables faster rollout of initiatives such as loyalty, retail media, and e-commerce, and provides exposure to retail margins, strengthens alignment across the network, and improves execution through hands-on operational insight. It also supports the network continuity by providing succession pathways for independent retailers. Over time, this strengthens competitiveness, improves execution, and lifts earnings quality across the network. All of these improve our structural competitive advantages. Turning to liquor, the business is stable and continues to take share. The variability this year is in margins, not demand. Liquor delivered sales growth and our independent networks continued to gain share. The model works. The multi-channel offering across retail and on-premise, enabled by a unique combination of flexible supply chain and scale, continues to capture demand. Earnings were softer year on year, reflecting margin pressure in the first half from lower volumes and muted inflation. As I mentioned at the half, both of these occurring at the same time has historically been very unusual. That pressure eased in the second half with margins recovering to historical trend levels. Volume on the back of share gains and new supply agreements were steady. The movement this year sits in the lower first half margin. Over time, the business has operated within a margin range of around 1.8% to 2.1%, and we expect it to continue to operate within that range across the cycle, although we do expect it to be at the lower end of the range in the first halves going forward. So while margin can move in the short term, underlying earnings range is stable. The strategy has delivered share growth in what has recently been a low growth market, evidenced by consistent delivery of market share gains, with 570 basis points earned since FY20. Continued share gain over multiple years is strong evidence of both competitiveness and the attractiveness of the independent convenience and localized offer. 6.7% revenue compound annual growth over six years has been supported by those share gains and by a positive mix. which is really ALM growing in categories where growth matters most, and that in turn is independent retailers meeting the needs of their customers in their communities. These gains are not luck or chance. They reflect strong program design and execution, pricing competitiveness, and the strength of the network, and just as in food, are founded on the Metcash platform advantages. Let's turn to hardware and tools. Demand is holding up across the business, and we continue to perform well in our key markets. The earnings movement this year sits in hardware retail margins. In sales, momentum is improving in what remains a weak and uneven trade market. Revenue, including charge-through, was $3.7 billion, up 4.3%, and we saw positive like-for-like growth across both hardware and tools, with momentum improving into the second half. Market conditions remain uneven. Trade activity is soft and lumpy, particularly in Victoria and Tasmania, where we're more exposed, while performance has been much stronger in other states, particularly Queensland and WA. The external environment remains challenging, but the business is taking action to improve its own performance through network strength, improved customer propositions, and targeted interventions. Momentum is improving ahead of any broad recovery in end markets. On earnings, the outcome is below where we'd like it to be, and that reflects where we are in the trade cycle. Tools deliver earnings growth, reflecting the strength of the network and the model. Hardware, particularly retail as I've said, remains under pressure due to weaker building activity and softer margins. Wholesale performance remains more stable, reinforcing the underlying resilience of the business and of that revenue model. So the variation in EBIT is cyclical, not structural. We're not waiting for the market to improve, however. We've reset the strategy, and we're acting to improve retail margins and execution ahead of any recovery. Total Tools and Hardware Group has two revenue streams, wholesale and retail. The wholesale base is relatively stable, with steady margins and volume linked to network DIY volume. The retail component is more cyclical, being directly exposed to housing activity. Note that when I say retail, I'm including distribution from our trade sites. Single dwelling commencements or residential building activity is a useful lead indicator for retail margins, as you can see in the graph. So when building activity slows, margins come under pressure, and when activity recovers, we expect margins to move back. So while the wholesale base remains resilient, retail leverage to market condition introduces more variability. And that's why restoring retail margins matters and why we're taking action in retail now. I'd like to think of this slide as the control what we can control slide, like the idea of making our own weather and not waiting for it to change. We've reset the strategy with a clear focus on retail standards, leveraging our full network, supplier partnerships, and trade customer experience. Each of these improve our competitive advantages, and the early indicators are encouraging. It gives us confidence that we're improving the business ahead of the cycle turning. The current TTHG results sit below potential, and we continue to see this business operating at mid-cycle margins over time. So there's a clear upside in both market conditions and our own actions. This is a business with a resilient base and a cyclical upside. In hardware, wholesale provides a stable base with consistent margins that grow with volume across the network. Retail is more cyclical, driven by trade activity, mix, and pricing. In tools, the franchisor model adds another layer of stability, with income linked to network sales and benefiting from operating leverage. Tools' retail margins are impacted by market conditions, sales mix, promotional mix, as well as competitive pricing pressures. Let's turn now to the trading update and outlook. Group sales for the first seven weeks have been steady, with May softer in food and liquor, but bouncing back well in June. In food service and convenience, we've cycled the Ampol contract win, but we expect to see contribution from new tobacco contracts starting later this half. We expect food earnings to be impacted by approximately $10 million from the removal of the accelerated tobacco excise program. I want to spend a moment on this. Last year, you'll recall that we flagged $5 million, but this year we improved the contribution, hence the higher number. While we don't foresee much change in market conditions in hardware, it's pleasing to note the continued momentum in hardware and tools in both our sales and network like-for-like numbers. So in summary then, we remain well positioned with sustainable competitive advantages, clear strategies, and healthy retail networks. Our balance sheet retains capacity and flexibility to support our plans, and it will continue to target delivery of resilient, quality cash flows. Thank you. I'll now hand it back to the operator for questions.

Thank you. We will now begin the question and answer session. To ask a question, please press star 101 elephant. Please stand by while we compile the Q&A roster. One moment for the first question. The first question comes from the line of Tom Kira from Baron Joey. Please go ahead.

Morning, Doug. Morning, team. Just a question on the retail. hardware margins how are you kind of seeing that right at the moment and how should we kind of think about that for 27 like i can see that there have been um they've come down quite a lot in the second half you've got slide 43 which is showing they're obviously well below kind of mid-cycle but but how are you kind of seeing them are they starting to bottom just be interested in some commentary on that please

Yeah, Tom, thanks for the question. Look, I mean, that slide that you just referred to, I think you said 43. I mean, that really, I think it gives you everything you need. And I hope that it's well received. Obviously, we can't give you guidance as to when the market will return. But, you know, I think I said it probably six different times already. In the last half an hour, we're not waiting. We're taking action to improve our performance. So I'll point you to the restructuring that we spoke about when we did the May 11th pre-results announcement. We told you that we were going to take out approximately $15 million of people costs weighted towards hardware. So that would be included in that. We're working very hard to restore those mid-cycle margins, but the reality is that we're not seeing a lot of improvement at a market level.

Great, thanks. And just secondly, really quickly, you're saying you had a weak May and a better June. Was there some sort of benefit you had in the FY26 results from kind of pantry stocking and is that part of the reason that May was a little softer and just thinking about lapping that in 12 months' time?

Yeah, when we did that pre-results announcement, we actually – I spoke about the fact that we didn't see a material uplift in sales towards the end of the period in that pantry stocking. I mean, you saw a little bit of shift in terms of dry grocery, but it wasn't material. So, no, I don't think so. Our read on it is that the consumer environment was very low confidence following the outbreak of the Iran conflict. There had just been an interest rate increase. The federal budget had just been released. And so we saw a small pullback. Anecdotally, we're seeing that across the market, but obviously our competitors haven't released results. But we're really pleased that it came back in June. So I think I'd probably leave it at that. It was fairly short-lived.

Great. Thanks, Doug. Thank you for the questions. One moment for the next question. Our next question comes from the line of Sean Cousins from UBS. Please go ahead.

Great. Thanks. Good morning. Doug, can you just discuss the long-term target to own 25% to 30% of IGA network revenue? This is on slide 15. 33, maybe just how do you consider the shareholding in met cash, pardon me, in riches that you have? And then does that give you a share of IGA network revenue already? And does that step up in capex to 40 to 60 million per annum by fiscal 30? Does that help you get part of the way? Just curious around how you get to, pardon me, when you think you might be able to get to this 25 to 30% is an aspiration or are there sort of an expected sort of date when that could be achieved or some of the markers there, please?

Hey, Sean, thanks for the question. So firstly, no, we don't include that Ritchie's minority holding in that calculation, just to be clear. That chart on whatever slide it was that we showed you indicates a steady progression of approximately 10 to 15 stores per year, and That would take us to the 25 to 30 in around five to six years. The reality, though, is that we would expect what will actually happen is that it will be much more lumpy than that chart shows, depending on what we faced, and we'll assess every opportunity on its merits. So if a larger opportunity came before us, we'd assess it. But we're planning, as we've shown in that chart, for a steady, disciplined, clear progression.

Great. And my second question is just around your sort of one-off cost. I think it was $12.4 million in strategy and integration costs in 2016. What's the outlook for those costs in 27, please?

So those are one-off. One-off means one-off. We won't repeat them. We may have some – we've told you that we're going to have some restructuring costs already, but they're of a different nature. And the reality is, as I said when we spoke to you guys in May, cost out and making sure that we invest people, time, resources in the right places – is an ongoing discipline for us, not a once-in-a-five-year event. But no more strategy and integration costs called out in that way.

Sorry, that might have been a poorly worded question. What other sort of costs... Maybe they're not called strategy or integration or there are other costs that we should look for. Just curious to get a quantum there. I mean, we had this situation last year, I think, where they were quantified at the AGM in, say, during 26. So just, you know, you can provide us some sort of guide to what that number will be. That would be sort of helpful.

Yeah, I want to do my best to answer your question, so tell me if I haven't. But there will be no further strategy and integration costs of the same nature as last year. Secondly, for a few years now, we've been investing in various growth and capability projects capability, including retail media. We've been improving our cyber posture. But we don't call those out as significant. They sit within our corporate costs. We expect those, I think we've said, we expect those to run in the $20 to $22 million a half, which should be unsurprising. And then finally, as I mentioned a moment ago, the restructuring costs that we told you about, all of that will be above the line for So there's nothing new of that nature. Remember, all of that is to deliver those targeted $25 million of cost savings, 15 in people and 10 in procurement costs.

Okay. All right. Thanks for that. Thank you for the questions. One moment for the next question. Our next question comes from the line of Craig Woolford from MSD Marquis. Please go ahead.

Good morning, Doug. So, yeah, can I just clarify a bit more about that retail store ownership in supermarkets? In terms of the motivation, you said you'd be financially disciplined, but how do you take into consideration retailers that may want to close stores or retailers that may want to leave the network or choose to leave the network here, thinking about some broader perspective there on the risk of reduced volumes through the Metcash wholesaling business?

Yeah, absolutely, and it's not a new risk. It's something that we've faced into for many years now. So, yes, as I said, one of the motivations is to provide a succession pathway to protect the network. But I think, let me call Grant in to talk in some more detail about the rationale including succession pathways.

Thanks, Craig. As Doug says, It's not a new challenge for us to manage succession planning in the network. We do it all the time. We still see many likely situations where retailers that are choosing to exit will sell their stores within the network to other independent retailers. And I expect that to continue to be probably the biggest source of churn in the network. We will focus on looking for stores that fit the profile that we think is going to be successful under our ownership and then work in a disciplined way to acquire them at the right price and operate for the benefits we've outlined on the slide. I just think it's good to call out that this wholesale and retail piece really is mutually reinforcing. It's another example of strengthening the platform where by owning retail stores, that actually is very helpful to us as a wholesaler and the things we want to drive, as well as clearly having more exposure to the retail margins.

Okay. Is there, what we're seeing in the Metcalfe's result today with some of the disclosure on riches is just a bit of pressure on profitability for IGA retailers. So the concern that I would have is that you're having to stump up on retailers that need to exit or have chosen to give up on running their own business, which may not be the best source to acquire.

Yeah, I just want to remind you that in those numbers last year, we had a benefit on the sale of our share in the joint venture DRAMET of $3.2 million. So you've got to take that out. But you're right. Some of the... retailers are facing store pressures. We've got a lot of exposure in Victoria in food as well, where the market is certainly tougher. But, you know, when we talk many, many times about disciplined capital management, it's also about making sure that we pay the right price for what we believe are maintainable earnings in current market conditions.

Okay, makes sense. And can I just clarify the comments from Dika just on, so depreciation and amortization will increase by double digits in FY27. Just want to clarify that. And then, Doug, your point on the 10 million excise figure, tobacco excise figure, you're saying that'll be 5 million in FY27. Is that how I should interpret that?

I'll let Deepak go first, and then I'll answer that.

Cool. Thanks, Doug. Yeah, the comment around depreciation and amortization is low double-digit percentage growth in FY27 versus FY26.

Craig, the point I'm trying to make on the guidance we're giving you on the net effect on food earnings of the removal of the X size, accelerated X size, is that this time last year we told you that we expected it to be $5 million. We actually did better than we did in FY25 in FY26. And so that gap, while we assess the impact to be the same, the gap from FY26 is $10 million. So the flip side of that coin is that there was a benefit in FY26's earnings from improved strategic procurement of tobacco. I don't know how to say it any more clearly than that.

I think just to clarify that in FY27, because of the way the excise is operating, there may not be that $10 million benefit.

Correct. The government has removed the accelerated excise, so excise will move up now only by AWATCH and not by an additional 5%, as has been happening for the last three years. Understood.

Thank you. Thank you for the questions. Please hold for the next question. Our next question comes from Ben Gilbert from Jarden. Please go ahead.

Good morning, Doug and team. Just for me, just online, your competitors across grocery and hardware and liquor are investing pretty aggressively behind it. You've got coal sorting upwards of 20%. Obviously, Bunnings is pushing pretty hard now as well. How do you position yourselves better to monetise this opportunity? Because if suddenly we're going to have a pit at the market online in a few years and appreciate your structure is a bit more challenging, how do you put yourselves in the best position to capture this profitably while also supporting your members to do so?

I know Grant wants to take this question.

Thanks, Doug. Look, I think what you can see from the numbers we've disclosed around the high growth rates in rapid delivery is that the market is actually shifting to shorter and shorter delivery times. It's probably more analogous to our bricks and mortar shopper missions, which are intra-week and needed now for earlier consumption. So we're pleased to see growth in rapid delivery, but we certainly believe we can do more in this space, and we're working on that with our customers. And I think it's important to remind ourselves that We haven't applied significant capital in this space. It's almost been a no capital exercise for us, a small amount on our proprietary website, but mostly it's just driven through existing resources.

Do you need to do something more fundamental around a capex standpoint? It's obviously doing a lot. You guys have got a great supply chain. You've got a lot of single-pick smaller capabilities. Do you need to lean into this more aggressively? So I'm just concerned that we look around five years and 27 markets moved online and you're still playing rapid through a door dash. It's capped a little bit, particularly how profitably you can actually do it.

Hey, Ben, yeah, let me take that. So I think the short answer is absolutely, and we are working hard on it. Our unique network of stores across not only food but also into liquor and hardware have thousands of points of forward-deployed inventory that is uniquely positioned to take advantage of that. So, yes, we agree with you.

Okay, thanks. And there's a final one for me. Just on the mid-cycle hardware margin aspiration of that sort of three to four, why isn't it higher? You've got your biggest competitor that's generating margins of sort of three times that, appreciate a bigger retail mix, but why wouldn't you be aspiring for a higher mid-cycle margin? Because I would have thought your vertical margins, when you put your wholesale customers together, where that would be well above three to four, at least for the good operators.

So a couple of things. Firstly, that's an average across the network, and you will see some of the larger stores having higher margins than that. Secondly, we have a significantly higher trade contribution than, I assume, the competitor you're referring to. Third, Ben, that's our retail margins only. You would have to add the wholesale margins to that to have a fair comparator.

Okay, so that's just retail. So if we then put your vertical margin, because you're operating retail as well, you could add a wholesale margin plus a retail, which would then get you to a bigger number.

That's right.

Okay, that's helpful. That makes a lot more sense.

Thanks, Gus.

Thank you.

Thank you for the questions. Please hold for the next question. The next questions will come from the line of Brian Raymond of JP Morgan. Please go ahead.

Thanks and good morning all. I'm just back again on the retail strategy in food. Just wanted to confirm the 10 to 15 stores, I think Doug, you mentioned earlier, per annum correlates with that 40 to 60 mil of per annum capex. So we're talking kind of on average for, and I guess the question is, is that a $4 million per store type cost? Or is there other capex that we should be thinking about in the context of refurbishing or reinvesting in those stores along the way? I'm just trying to get some rough numbers around the sort of how much you're acquiring and then how much earnings that might contribute.

Yeah, it's always difficult when you use averages because they're going to be some that are bigger stores, more profitable, that are going to be more and obviously some less. But we don't anticipate that there would be material capital beyond that beyond what you would do as a retailer, which is make sure that you keep your store base refreshed. We'll execute the DSA program, et cetera. But if we were to acquire a store that needed a refurbishment immediately, we would include that in the acquisition capital.

Right, okay. Okay. And just to confirm then, the sort of 25% to 30% of the network that you're referring to, you're going to have a skew towards larger stores in that rather than the sort of store numbers would take you longer than that. I've mentioned before, four or five years or five or six years to get to that target. If you just do it on that 10 to 15 per annum, obviously, if you can look at your entire network, it would require more years than that, but... Is that a sales mix or a mix shift towards bigger stores?

Yeah, yeah, absolutely. That's a revenue number, not a stores number.

Yes, yeah, yeah. So high revenue for stores, what you acquire. Okay, and then just another one just quickly on food for me is just around the price gaps. Encouraging to see some pretty low price indices there, 101 and 102 for the larger stores. Could you help us understand how it's flowing through this? sales growth for those respective networks? Because obviously you've got pretty good value positions sitting there. How are those stores performing versus the broader network? And are you seeing better sales performance on the back of better value position?

I'll take that one. From the beginning of the High Compete Program, we've seen the stores on that program growing at about double the rate. So extra specials is what you see as a shopper. So growing about double the rate of the rest of the network. And from a wholesale point of view, about double that, so about four times. They are outperforming. That's the first of our clustered approach to targeting activity to, in that case, stores that are up against full competition in metro markets, but we see more opportunity to do that.

So I guess, sorry, just a final follow-up, is just that there's 121 stores on extra specials based on that chart. I just wanted to understand if there's an opportunity to sort of roll that out more broadly, given your overall large store fleet. I think you've got 243 based on your disclosure at the back of your pack there. Can you go more broadly with that extra specials?

Yep, that 243 includes Foodland and large IGEs. Yes, we think there's a few more stores that will go on to the extra specials program, but it's targeted to the stores that will get most impact from it. I think that's the point I'm making about clustering is we're investing in technology. we're focused on delivering value in meaningful local ways and working hard with suppliers to make sure that that promotional investment's really focused on where it needs to be. So we see more opportunity with a more sophisticated program to deliver that value locally. And on that basis, I think we'll continue to drive growth outcomes for each cluster of stores.

Okay, excellent. Thanks. Thank you for the questions. Please hold for the next question. Our next question comes from the line of Caleb Whitley from Macquarie. Please go ahead.

Morning, Doug, Deva and team. Just a follow-up question on the RGA price gap. Can you sort of explore how you're thinking about, I guess, the opportunity to continue to drive that down and how you think about sort of private label as a lever to continue to drive that gap? Are you kind of happy with that 106% or do you think there's kind of more opportunity across the network place?

I think as Scott said, when you consider the distribution of IGAs around the country from metro to ultra-remote locations, you look at large stores but also medium and really small stores. The progress we've made to get to that 106.4% gap is really quite impressive. I think to the point about can you continue, well, that spread of stores and that mix of stores means that our focus is really more on getting credit from shoppers, so driving our price perception, really getting our messages home through campaigns like Can't Believable Prices. Obviously, Price Match is well-established. rather than thinking that we can continue to lower those prices forever. I think we're at the point where we're providing fantastic value locally. In the largest stores, we're really close to parity. And of course, there's lots of other benefits that come from shopping independent and shopping local.

Sure. And more specifically on the partner skews that you're calling out, but yeah, how much more of a role do you see that playing?

I think the role for private label can be bigger, but it's going to come from more prominence, more distribution around the network. And I think, again, if you look at owning stores, that's where one of the things that we would look to do in the stores that we own is make sure that those things, private labels, have the right level of positioning and prominence in the stores and reflecting what shoppers are expecting and the value that they're looking for.

Great. Thank you. That's clear. This is the second one might be for Deepak. But how do we think about the pathway for CapEx? I know that you've obviously guided to a number in 2017, but it is quite a meaningful step down. You're saying that $80 to $100 million worth of sustaining CapEx. Do we think about a sort of renormalising back up over time from 2017?

Thanks for that question.

I think, you know, we've obviously been very diligent in terms of taking cognizance of where we are in the market, what the required capex is, investment required in terms of our growth and capabilities as well as our core business. So, you know, we believe the The 150 mark is reasonable. I mean, you would have seen 175 this year. Important to call out that that's obviously excluding the M&A spend, and obviously a lot of questions around the retail ownership that we're talking about now. That would be additional capex that we would be required to invest. Again, just calling out the capital management framework, you know, the disciplines around that, and that certainly drives the decisions that we take around investment in the capex.

Caleb, I would add that you must remember we're getting towards the end of Horizon. We've done Jepps Cross in South Australia as a mega DC. We've done Traganina in Victoria. I think I regularly flag that we'll continue to invest in the core of our wholesale business, and so we'll upgrade technology, et cetera. So it won't be zero spend, but we expect it to be less lumpy, at least for the next few years. And all of that plays into why we feel we're pretty comfortable with that approximately 150 level for the foreseeable future.

Okay, great. That's clear. Thank you. Appreciate that, Tom. Thank you for the question.

Our next questions will come from the line of Peter Marks of Goldman Sachs. Please go ahead.

Good morning, Doug and team. Just one question for me on liquor. Slide 37's got some good data there. It looks to me like the independents are winning market share from the majors through providing better range, particularly in some of those niche categories. Is that how you're seeing things in the liquor market? And then if so, I guess, are you confident you can sort of hold on to that market share gains that you've made versus the majors? given it looks to be driven by range rather than anything that's happening on the pricing side.

Hey, Peter, thanks for the question. I'm going to invite Kylie in in a second, but without wanting to sound like I'm stating the obvious, that is at the core of good retail is making sure that you meet the market where your consumers want to be met. And certainly by sharing where we're doing well, it shouldn't be a surprise to anyone, our competitors included, they have access to the same data that we do. I think it's a difficult question if you say, are we confident of holding on to it? Well, absolutely, because we're going to continue to execute those same plans. But we know that we have a series of very competent and fierce competitors that we've been competing against for a long time now. So our confidence is based on historical performance and our committed strategy. Yeah.

Thanks for the question, Peter. I think we're really pleased this year to have gained share again over the year and particularly since October when we saw elevated levels of pricing activity in the market. So I think that gives great confidence and I hope to you also that the ongoing share gains that our ALM-supplied independents have consistently realised over the past six years are actually resilient and repeatable even in light of elevated pricing activity. The independent channel in liquor is actually run through a series of very well organised and really sophisticated banner groups which are investing really heavily in the shopper experience and the suppliers understand the value of that and appreciate it. So it means that they're well positioned not just through range and the scale that ALM and Metcash provide but in terms of that supply leverage and negotiation as well.

That's great, thank you. Thank you for the questions. One moment for our next question. Our next question comes from Adrian Dami of Citi. Please go ahead.

Good morning, Doug and team. I just wanted to pick up on Craig's earlier question about the supermarket retailer margins. Can you confirm what degree the store wages the independent retailers are linked to that fair work commission decision of the 4.75% increase in 2017.

Sorry, Adrian, you asked wages?

Yeah, I know you guys don't have the direct impact there, but the independent retailers, are their agreements for their store wages tending to be linked to the fair work commission, or do they have, I don't know, their own store level type agreement?

Yeah, so a gradual comment.

Yeah, they're often they'd be linked to the general retail awards. And even if they're not, then you know, those broader market wide changes tend to flow through in the stratification of wages across the market. So yes, they will be feeling that.

Okay, okay. So I guess I'm just trying to square off, obviously, that the top line is a bit challenged. It's a tough market at the moment, they've got growing costs. So I mean, Are you seeing any requests from them for support, or what are you trying to do to help them?

No, nothing unusual. We're seeing them under some pressure, fuels being part of that, but that's sort of abated by now. Generally speaking, there are parts of the country, and Doug mentioned Victoria already, where they're feeling a bit more pressure, but overall, no, not seeing anything unusual, really.

Okay, thank you. And can I just ask another one just on the private level? Thank you for the extra disclosure. I noticed the growth rate was 1.4% this year, sort of down on where it was in 25 and 7.4. Is that reflecting the price investment to match the competitors, or has there been a decline in volume growth there? Go ahead.

I think it reflects the high growth in the year before. We pushed private label distribution pretty hard in 25, saw some distribution gains as a result of that, which led to that increase. And what you're seeing is we're cycling that, but those gains have generally held, and private labels still growing modestly in the share of the store mix.

Thank you. And can I just ask, do you have a sense for what the share of private label is of the supermarket network sales? Just a rough guide.

Yeah, it's low to mid-single digits.

Thank you very much for that.

Thank you for the questions. Please hold for the next question. Our next question comes from Richard Arwick of CLSA. Please go ahead.

Good morning, Tim. I've got another question on the food retail strategy. I guess, firstly, I think you first talked about that, Jeff, back at that Melbourne Strategy Day, which is a few years ago now. So what was sort of what happened for the decision to move now? What sort of tipped the scales in favour? And then just In terms of what the stores you'd be going after or where it makes sense, how do you think about that on a geographical basis? What I'm getting at here is if you own stores spread over vast distances across different states, does that not create inefficiencies for you as the owner of those stores? Or, I guess the flip side of that, do you think about that and will be trying to own stores in closer proximity to each other from a management perspective running those stores?

Hey, Richard. Yeah, I can answer both of those. So the first one about why it's taken us so long, my words, not yours, is, as I've said a number of times facing this question, is that, as Grant alluded to, often when stores come available for sale, there's a lot of competition from other store owners, which we see as very healthy. It talks to the confidence that store owners have in the network and the proposition that they're looking to invest, and we're not looking to drive up pricing. And, you know, as I think we've all said maybe 10 times this morning, you know, we have a very disciplined capital assessment process. So that would be the first two reasons. In terms of your outline of the strategy, regional clustering, spot on. That is our strategy, and it's going to be really difficult for us to add real value or it's harder for us to be effective in far-flung projects. individual stores you've heard me talk about this as a replication of the hardware strategy they they have clusters of groups that that have shared capabilities and and common management structures which allows us to leverage scale so yes we agree with that entirely okay so almost by definition

as you sort of make these acquisitions, they're going to be the small groups at a time because, again, those small groups would already have some sort of geographical synergies in place.

Yeah, like I really want to be cautious about giving you, you know, making commitments that I can't meet because, you know, we're going to play what's in front of us to a large degree. I would say, I'd repeat back to you what you said in a slightly different way, which is that small groups would be more attractive to us, you know, all other things being considered unequal.

Yeah, okay. And can I just go back, a bit of a clarification, Doug? At the start of the call, you were talking about the impact on tobacco. Can you just talk through some of those numbers again? Because you talked about $1.8 billion of lost revenue and $25 million of EBIT. But you mentioned some other impacts or numbers then. Would you mind repeating what you had said then?

Yeah, sure, no problem. So just to step you through the logic, it's $1.8 billion of lost sales since FY21 to FY26. The earnings impact bar estimate, including the lost sales of what we call associated products that would have otherwise been in the basket, is approximately $25 million. So that earnings would have been in FY21 and they're not in the FY26 earnings. So it's not a FY25 to 26, it's since FY21. The other point I mentioned when I was talking about that was the impact on retail hardware earnings, which are all $30 million. You just have to look in our accounts and you'd see that. And so the point I was making is that despite a $65 million earnings headwind, we've delivered consistent earnings growth. It's not to say that we want those earnings headwinds. It's not to say that we're not working incredibly hard. But the point about the model is that they absorb those. And as a result, the core takeaway here is that the platform is essentially operating at a higher base.

Yeah, okay. That's good. Thanks, Doug.

No worries.

Thank you for the questions. Our next question comes from Philip Gimber of EMP Capital. Please ask a question.

Okay, Doug, two questions. The first one was just a follow-up on that retail strategy. You mentioned that it's taken a little while because you didn't want to effectively get into bidding wars with your customers. and your capital discipline. Is something changed on that front then in terms of you're now prepared to, you know, be a bit more aggressive and compete with your retail customers when these stores come up or did I sort of misunderstand that?

No, I mean, I don't think that just because we've now concluded the first acquisitions, you would say that there's a lower appetite from the rest of the network or something's changed. It's really just we've assessed and been presented with a number of opportunities over the period, and the confluence of events is such that this group of stores, the daily stores, were available and met our criteria. So nothing's changed, no.

Okay. Thanks. And can I, sorry, and I'm sorry because I know you tried to answer it with Craig, but I was getting confused on this 10 million excise impact. Is that, I mean, just simplistically, I was interpreting that that is a headwind for earnings in FY27. Have I got that right or is it actually a tailwind?

No, it's a headwind.

Yeah, that's what I thought. Sorry, I just wanted to clarify that. Thank you.

Okay.

with the questions. One moment for the next question. Our next question comes from the line of Michael Simotas from Jefferies. Please go ahead.

Good morning, everyone. First question from me is on the sales trends in both hardware and tools. So they're now running at a fairly reasonable clip, notwithstanding some of the challenges that are out there. You've spoken to soft margins in retail hardware. Are you actively investing in margin in either hardware or tools to reinvigorate that sales line?

Yeah, I'm going to call Scott in to give you some more detail, Michael. But, you know, we trade. We make a price, so to speak, as is common in the market. You meet the market where your customers will conclude the deal. So, yeah, this is not new. That's how it works. Scotty?

Yeah, thanks.

Nice to hear from you, Michael. We've called out in the pack some of the things we're doing to improve the offer, and I think we're starting to see increased customer transactions on the back of that. So we've called out where we're improving our retail standards. In the cycle of the market, you absolutely have to be competitive. But I think that under current, what you're asking is, are we buying sales? No, the market's competitive. We think we've improved our offer in that market. And I can point to things we've done around ranging both in tools and hardware to improve the offer for our customers.

It's more about making the market and improving your offer rather than investing in price to try to drive sales.

Yeah, absolutely right.

And then a question for Deepa, if I can. This business in recent times has delivered much better operating cash flow outcomes than we've seen for a long time. How much more can you do? Is there more working capital that you can pull out of this business? Can you continue to deliver cash realisation at these sort of rates or should we expect it to sort of head back to more historic levels?

Thanks for that question.

Yeah, look, as I've said before, we continue to look for opportunities to optimize working capital, et cetera. But I think the important message and take out from this morning is that we haven't adjusted the range. And the reality of it is we do have fluctuation in terms of timing and seasonality with our working capital. And we believe that the ranges that we've called out and guided towards are are appropriate and factor those into account. But bottom line is we'll continue to look for opportunities to optimize working capital as they present themselves.

Michael, I just want to add to this because it comes up a lot, and there's no doubt that the investment we've made in some of the systems to support our inventory management have paid off. And it's not just deeper in the finance community. It's the operators, the merchandise leaders who've really dived in. And we're seeing better customer outcomes with less inventory. Why that's really important from a market perspective is because it gives us more flexibility to take positions in inventory where we have the opportunity to do so. I always think about... this idea of how much capacity have you got in the shed and how much capacity have you got on your balance sheet. And you want to maximize those while making sure that you deliver for your customers. That's what a healthy wholesaler does.

Yep, that makes sense.

Thank you. Thank you for the questions. Please hold for our last question. We have a follow-up question from Tom Kura from Byron Joy.

Please go ahead. Thanks. Just a really quick one on the DNA guidance, the low double-digit increase. Is that based on the 258 mil of the right-of-use, which includes the right-of-use assets, or is it on the, I guess, X right-of-use assets, the 100 mil? Please.

So it's actually a combination. You're absolutely right. There's a portion of it which relates to the right of use assets of 258, so that's bang on. The other element of the increase is also going to come through as a result of assets like Project Horizon coming on stream during the year. So there's also an element of that going to contribute towards the increase year on year.

Sorry, so the low double-digit increase is on the base of the 258? Yeah.

Yes, yes.

Yeah, yeah, cool. Okay, thanks, Deva.

Thank you.

That concludes the Q&A session. I would now like to hand the call back to the management for closing.

Thanks, operator, and thanks to everybody that took some time out of their day to share this call with us. We really appreciate your interest and your questions, and no doubt we'll be seeing many of you through the course of this week. With that, I'll close the call. Thank you.