Viva Energy Group Limited

I would now like to hand the conference over to Mr. Scott Wyatt, Chief Executive Officer. Please go ahead.

Good morning and thank you all for joining us to discuss our 2025 full year results. With me on the call this morning is Carolyn Pettich, our Financial Officer and Jan Gray, our CEO of Convenience Mobility. Carolyn and I will share the group results and Jennifer will provide more commentary on our Convenience Chantel business. After a challenging first half, it's been encouraging to see the improvements in all parts of our business over the last rest of the year. From an operational standpoint, our performance has been solid. Our focus in improving safety culture within retail and maintaining strong discipline across the rest of our business has driven a year-on-year improvement in personal safety performance. This is a particularly good result given the level of construction and maintenance activity within our refining operations. Group sales were in line with last year, with commercial delivering another record year underpinned by growth in aviation, but with all segments performing well. Retail fuel sales were relatively strong, taking account of the impact of store closures to support conversion. While convenience sales continued to be impacted by illicit tobacco, gross margins increased slightly to 39% during the year. Refining margins rebounded during the final quarter, lifting LGRM to $9.50 per barrel for the year, supported by the start-up of ultra-low sulfur gasoline production from November. Second half EBITDA was $396 million, up 33% on the same period last year, contributing to group EBITDA of $701 million for the full year. We remain very focused on capital discipline with CapEx in line with guidance and actions underway to reduce gearing over the next two years now that the significant investment program at Geelong is completed. Overall, a strong finish to the year with the company providing a final dividend of $3.94 per share representing 60% of CNI and CNM impact. Attending to slide five, let me touch on some of the more significant achievements we delivered during 2025. During the first half of the year, we stood up an ERP with supporting systems and processes to operate our retail businesses independently from Coles and replace legacy point-of-sale systems in the Ready Express business. This was a major undertaking which has driven changes to the way we do things in just about every part of our business, but critical to allowing us to begin taking further steps to unify our OTR and Express businesses. This level of change has been significant, but this is now behind us, and we are increasingly focused on utilising new systems to improve execution of our retail offers and drive synergies. During the year, we opened 35 new OTR stores through a mix of new stores and conversions, predominantly in New South Wales and mostly over the second half of the year. This has also been a significant undertaking and there have been some challenges driven by the pace of rollout and the capability needed to support the new offer. That said, we've learned a great deal from this early work and will embed these into the full work program to improve execution and outcomes. The change in leadership through the second half of the year has been seamless with Gen bringing a strong focus on execution which is already translating into improving outcomes. Jen will continue to support Teresa Rendo when she joins us in a few months, and together they will drive momentum in the year ahead. You'll hear more from Jen shortly about our retail program. In our commercial business, we continue to drive a strong focus on organic growth and extending our capability into new markets. We now have a presence at 98 airfields across the country and marine barge operations in the three key markets of Melbourne, Sydney and Brisbane. commercial delivered another strong performance in both sales and earnings in 2025. As I mentioned earlier, we've now successfully completed a multi-year investment program at Geelong, bookended in 2025 with the five-yearly major turnaround maintenance program and the commissioning of the ultra-low sulfur gasoline project ahead of the fuel specification changes in December. This was completed on schedule and largely within budget, demonstrating the capability of the organization to undertake major projects. As we look to the year ahead on slide six, there are four overarching priorities which will be critical to driving growth into the future and are very much within our control. With major maintenance and upgrades behind us, our refinery is in a tremendous position to run hard, maximise cash for the next four years through to the next major maintenance cycle in 2030. Low refining margins continue to weigh on refining at the current time, but we remain positive about the environment ahead and encouraged by the negotiations with government to review the FSSP. As mentioned earlier, we are well placed to move forward with stronger momentum in delivering on our retail strategy. The implementation of independent convenience supply chains this year will improve supply chain efficiency, better leverage supply relationships and bring to an end the wholesale supply agreement with Coles. We will skew our conversion program to the second half of this year to give us some time for capability to be implemented and other improvements made, but continue to see the extension of OCR offer as a critical component of our long-term growth. Our commercial business continues to extend its track record of delivery consistent with reliable quality earnings. We extended our business into new markets last year and will continue to pursue organic investments to defend our business and build platforms for long-term growth. With the period of significant multi-year investment behind us, we are committed to reducing capex in the years ahead and improving the strength of the balance sheet without compromising our strategic growth plans. Carolyn will speak more about this later in the presentation. We'll now turn to discuss each of the businesses in more detail. I'll cover our energy businesses and Jen will talk to the retail business with Carolyn bringing it all together with group results and capital management. Our energy businesses as set out on slide eight and nine really do turn on our refining position at Geelong. our nationwide network of terminals and supply chain infrastructure, and our extensive downstream supply chains to support our commercial customers in every part of the country. We have an unrivalled and privileged position which we have continued to build and protect. As mentioned before, last year we entered the marine market in Brisbane, extending our barge operations to all major eastern seaboard ports in Australia, extended our aviation network, which is now approaching 100 airfields, and established the first bulk lubricants and grease import facility in the Pilbara. These are just great examples of how we continue to strengthen and grow our successful commercial businesses. Longer term, we see considerable opportunity to leverage our refining position at Geelong and deep customer relationships to produce and distribute lower carbon fuels. We have contributed to many successful trials over the last year, of these new energies evolve. Reading slide 10, you can see the commercial delivered. Another record year with sales lifting to 11.8 billion litres, driven by continued growth in aviation, but also supported by strong performances in all of the other business units. Earnings are largely in line with the last year, with sales growth offset by a lower overall margin mix, increased supply costs from new market entries, and general cost inflation. Refining as set out in slide 11 had a mixed year, with significant site-wide power outages in January and the impacts from planned maintenance in the third quarter impacting production, and with weak refining margins rebounding in the fourth quarter. I'm proud of the way we executed on the low sulfur gasoline project, which was completed and commissioned in October, with production starting in November. This was a very significant project for the site, and with this behind us, we're heading to 2026 unconstrained by project activity. Let me now hand over to Jen to talk in more detail about our convenience businesses.

Thanks, Scott. I'll start on slide 13 and 14 with a reminder of our retail strategy. The fuel and convenience sector has significant growth potential achieved by extending into a broader range of convenience categories, especially food and beverages aimed at people on the move. International formats set out this opportunity and some Australian players have made good progress. The OTR offer is widely regarded as the best convenience product in Australia. It's a proven offer that we intend to extend into the Ready Express network, which suffers from underinvestment and is operating low on its potential. This is a significant opportunity we see, and we are now well-placed to pursue this strategy with more momentum. Slides 14 and 15 set out our journey and the progress we've made. Last year, we completed the rebranding of our network to our standard brands, stood up systems and processes to end our transitional arrangements with Coles, and began to run our business in an integrated fashion. We fully acquired the Liberty Convenience business, opened 35 new OTR stores, and are in the process of standing up independent supply chains to support our various brands and offers. It was a tremendously busy year, and I'm proud of what the team's achieved. Since stepping into the CEO role, I've focused the team on the priorities ahead, strengthening our retail execution and lifting the capability of the organisation. Teresa will join us in the next few months and I'll continue to support her with our strategic agenda to build on the momentum we've established. Turning to our trading performance on slide 16. Trading conditions improved significantly through the year, with lower oil prices supporting fuel sales and strengthened fuel margins. Tobacco sales have stabilised, and we're beginning to see signs of growth in the rest of our convenience business, which is encouraging. With the impact of tobacco behind us and our organisation now ready to run, I'm confident about the year ahead and look forward to driving top-line growth and continuing the extension of the OTR offer through the Express Network. Slide 17 sets out our financial performance through FY25. The first part of the bridge sets out the uplift we have secured through the acquisition of Liberty Convenience, The transition of ATR's fuel supply to Beaver Energy improved cost reductions from exiting transitional service arrangements with Coles and efficiencies from consolidating retail operations. We have more opportunity to reduce costs and improve margins this year as we transition off the Coles product supply agreement and continue to improve in-store execution. The second part of the bridge sets out the underlying trading performance of the business. Illicit tobacco and general trading conditions were particularly challenging during the first half of the year. Conditions have since improved with the stabilisation of tobacco sales, strengthening of fuel margins and growth in non-tobacco sales and margins. EBITDA in the second half of 2025 was $123 million compared with $74 million in the first half and we are seeing this underlying strength continue into 2026 with typical seasonal variations. We delivered 35 new OTR stores last year, with 25 converted from Reviexpress. These conversions were predominantly delivered during the latter part of the year, with early signs generally positive. January ex-tobacco sales were up 10% on the same period last year, and our top 10 stores were up more than 30%. Guild sales are also lifting significantly, and much of this is not related to pricing, rather an uplift in performance from forecourt works completed and an improved customer offer. As we've laid after our first half results, there are some significant impediments that are holding back performance. These include poor supply chains outside of South Australia, removal of machine coffee, and the lack of flybys. The cumulative effect is significant enough that we have paused conversions so that we can overcome these issues, with conversions continuing in earnest in the second half of the year. The pace of the rollout is something we'll continue to assess as we build plans for 2027. Looking ahead, there are four key drives of growth that the team focused on. Improved retail execution is already driving results and I'll continue to ensure this is our primary focus so the base business performs well and better supports the extension of the OTR offer. We will finish the year with an independent supply chain that supports both OTR and express offers and allows us to exit the product supply agreement with Coles. This is an incredibly important project which will drive considerable synergies in 2027 and largely brings our integration activity to a close. From a customer perspective, the alignment here through your loyalty and digital offers will drive considerable value, improve marketing spend and efficiency, and improve conversion uplift. As mentioned earlier, we will open another 40 to 60 OTR stores this year, and I'm excited about finishing the year with real momentum in this program. Let me hand over to Carolyn to discuss our financial performance. Thank you, Jan. So turning to slide 21, Group EBITDA on a replacement cost basis was just over $701 million, down 6% year-on-year. About 2025, this reflected the peak year of retail integration and capital intensity across the group. Performance improved meaningfully in the second half, reflecting stabilisation in retail execution and operational momentum as major system transitions were implemented, as Jen mentioned. Underlying net profit after tax on a replacement cost basis was $184 million, reflecting the EBITDA outcome as well as high depreciation and finance costs following the recent acquisition of Liberty Convenience and a full year over OCR following its acquisition at the end of Q1 2024 and higher average debt levels during the year. 2025 significant items totaled $654 million pre-tax, the large majority of which was non-cash. The largest item was a non-cash impairment of $556 million relating to retail sites. This reflects site level assessments from an accounting standards perspective. There is no impairment at the convenience and mobility business level. It primarily relates to a reduction of the least right-of-use assets for certain sites during a period of softer trading conditions. It was calculated by applying earnings in line with FY25 performance which we regard as a low point in retail's earnings cycle, and then applying conservative growth rates before discounting the results in cash flows. Accounting standards require that the cash session does not incorporate future earnings, improvements, initiatives, or management actions of gen-type funds. As a result, this intent should not be interpreted as a reassessment of the long-term value or strategic rationale of retail business. We also incur $97.5 million of transition, integration and restructuring costs. Around $67 million relates to the implementation of replacement IT systems and platforms required to support an integrated operating model with a balance reflecting rationalisation of functions following our multiple acquisitions. These costs represent the final stages of a multi-year integration program and are expected to reduce from here. The last item to call out on this slide is $29 million of OTR prior period impacts. Following the integration of OTR finance into the VEBIS control environment, we identified that certain inventory costs had historically been capitalised when they should have instead been expensed. These items were required to be expensed in the FY2025 statutory financial statements. Now, as these costs related to prior reporting periods, they have been treated as significant items and are excluded from the FY25 underlying earnings. Of the $29 million, $18 million relates to pre-completion periods. We acknowledge that there was frustration that we did not provide FY2025 EBITDA guidance in the Q4 Rating Update. However, given the ongoing assessment of these items in conjunction with our auditor, we did not believe it was appropriate to provide guidance until the FY25 numbers were finalised. Attending to slide 22, Operating free cash flow of $542 million included $105 million of one-off costs, which largely corresponds to the transition, integration and restructuring activity I've mentioned. You can see the bridge from EBITDA to net free cash flow, the impact of capital expenditure on multi-year projects, the acquisition of liberty convenience under the investments category, as well as the integration costs we talked about. When we adjust for these items, underlying free cash flow is positive. Given we report on a pre-SSB16 basis, these data remains a good proxy for underlying operating cash flow generation. Now, on slide 23, I'll talk to CapEx. So 2025 was a peak CapEx period, as we've discussed before, as we completed the planned major turnaround at the Geelong Refinery and commissioned the ultra-low sulfur gasoline plant. Looking forward, we expect CapEx to moderate meaningfully. In 2026, we expect CapEx $400 million, depending on the pace of conversions, as Jen outlined earlier. This will support improving net cash flow and strengthening our balance sheet. And as you can see on slide 24, net debt closed the year at $2.1 billion, and gearing in respect of total net debt to EBITDA was three times, and we continue to target gearing towards two times by the end of FY27, and I'll provide more colour on this next. Meanwhile, term debt to EBITDA gearing reduced to 1.4 times within our target range of 1 to 1.5 times. And liquidity remains strong at approximately 0.9 billion. Slide 25 sets out our capital management framework and our priorities. We are focused on maintaining safe and reliable operations, a strong balance sheet and retaining dividends to shareholders in line with our policy. Additional cash flow can then be directed to growth projects and additional returns to investors after satisfying these three Our key priorities ahead are outlined on the slide and include lower capex in FY25 by approximately $100 to $150 million following the successful delivery of key projects at the refinery, improving networking capital with a particular focus on inventory as we stand up our new convenience supply chain, Improving earnings by reducing earnings volatility from the Geelong refinery following ongoing renegotiation of the FSSP Phase 1 and improving convenience mobility earnings through the various initiatives outlined earlier. Also, we've flagged that we're reviewing opportunities to divest surplus land. These initiatives will set us up for a strong balance sheet with management continuing to target gearing towards two times, as I mentioned earlier before, by the end of 2027. Moving to slide 26, the board has determined a final, fully-franked dividend of 3.94 cents per share, and this represents a payout ratio of 60% NPAT-RC from the convenience and mobility and commercial industrial segments in the second half. Consistent with our dividend policy, the E&I segment is assessed on a full-year basis. With E&I recording a net loss of $14.4 million at the NPAT level in FY25, Dividends for the full year represent 60% group net profit at the midpoint of our policy range between 50% and 70%. Final dividend will be paid on 31 March 2026 to shareholders on the register on 13 March 2026. Our dividend reinvestment plan remains active with 44% participation in the first half 2025 dividend. Eligible shareholders can reinvest their dividends directly into shares at a 1.5% discount. the dividend reimbursement plan continues not to be underwritten. I'll hand back to Scott to provide my take on the hours.

Thanks, Carolyn. As I mentioned at the beginning of the presentation, we finished 2025 with strong momentum in our retail business, the successful completion of our refining investment program and another solid and respectable result from our commercial business. I expect 2026 to build on this platform, further growing our retail business and improving cash generation from our refining business in particular. The outcome of the FSSP review will clearly be very important in this regard. Looking to the longer term, let me conclude on slide 29. We have an outstanding business which has a strong infrastructure-backed position and clear strategies to drive long-term growth and shareholder value. We are already the leading supplier of energy and specialties in our markets and are now well on the way to building the leading convenience business in Australia. With a lower capital cycle ahead, coupled with earnings growth from our strategic agenda, we are also well-placed to strengthen our balance sheet, and this will clearly be a clear priority for the year ahead. On that note, let me hand over to you now for your questions.

Thank you. We will now begin the question-and-answer session. If you wish to ask a question via the phones, you will need to press the Start key, followed by the number 1 on your telephone keypad. Today's first question comes from Michael Samotis with Jefferies. Please go ahead.

Morning everyone and well done on the cash position. First question from me on the Outlook commentary, just trying to understand a little bit better the messaging around convenience retail into FY26 and then 27. A comment Scott in your shareholder letter which suggests that FY26 growth for convenience retail will only be modest, should we think about that as relative to the 25 year or does that comment relate to an annualised second half of 25 base given the first half was so low?

Thanks for the question Michael. You'll notice in the bridge for retail that we have specifically focused on the second half performance relative to second half 24. A few reasons for that, Michael. One is, you know, first half was really an outlier for us. It was a particularly challenging market and, you know, obviously a period of intense transition for us as well. 2020 second half, by comparison, is a much cleaner half. It has... obviously a full period in both 25 and 24 of OCR performance and a full half for Liberty Convenience as well in terms of its full acquisition. It's a more constructive trading period which reflects how the market is trading more recently. Tobacco stabilised, so for many reasons it's a cleaner period to use as a baseline heading into 2026. Now, that said, it's obviously a seasonally better half than the first half, typically, and the retail fuel margins through the half are elevated compared to previous years, so you probably need to make some adjustments to that when you think about 2026, but certainly I am thinking about the second half as being more representative of reflection of the underlying performance of the retail business now.

Okay yeah that's clear and then the second question I've got is on shop margin and then I just have a quick clarification as well. So if we sort of do some rough maths on what your shop margin would have done if not for the tobacco mix shift it looks like you've given up maybe 200 or 250 basis points of gross margin on the shop in the 25 year. Now 25 year was a transition and it was a tough year for lots of reasons but that equates to $25 or $30 million of gross profit and EBITDA. Can we get that back?

Yeah, great question. I might give Jen the opportunity to talk to it but what I would say before I hand over to her is that I think we have left money on the table in terms of shop margin. We have, you know, we have, certainly in the first half of the year, we certainly suffered from not having good visibility or the right level of visibility across our convenience businesses. We stood up ERP systems and moved off legacy, and I think that hindered our responsiveness to what was, you know, a high inflation period as well. I mean, partly certainly managing store margins accordingly. That improved, has improved a lot since actually behind us. The impact on tobacco and the knock-on impact to non-tobacco categories just from having less visitation is also something that we have needed to manage and probably not managing as well as we should do but from a visibility perspective we're now really starting to get on top of that as well. And then finally I think just generally wastage and shrinkage has It's been elevated over the last year. We've got work to do to get on top of that and get that back down. So I think we can definitely do better than what we delivered in 2025. We have been getting better through the second half of the year and I think that will carry through into 2026 as well. Like I said, it's an opportunity for uplift just by executing better, essentially, which is one of the key priorities that Jen's been bringing to the business. Have you got some reflections?

Yeah, I think the other opportunity for us as we progress through 2026 is the transition of our supply chain, which will move our product supply in the Ready Express network away from the transition arrangement with Coles and we will have those relationships directly with our supplier base. That allows us to actually bring our OCR purchasing and our Ready Express purchasing together and leverage that with suppliers for the first time. It also means the flexibility of bringing new products to market and being able to innovate in that space has materially changed from where we are today. So I think that will also help improve our store margin and our opportunity to grow top line sales.

Thanks. And then just a quick clarification. I just want to make sure I'm interpreting the significant item around the... capitalised imagery correctly, if I use the 25 year as a guide, does it effectively mean that that roughly $100 million earnings base when OTR was acquired was overstated by about 10%?

Yeah, thanks Michael for that question. So you shouldn't just use the run rate that we've got in 2025, but the prior completion period was like a multiple period impact.

So, yeah, that's just not the right way to look at it.

Okay. Can you give us a guide on what the underlying earnings were when you bought the business?

The 26, Michael, or 25? Sorry, 25 or 24?

I'm more sort of thinking about that roughly $100 million of EBITDA the business was doing when it was... purchase just so we can sort of think about that as a baseline that we can get back to and then grow on top of that.

Yeah, so the pre-completion number that called out in the deck is about $18 million, Michael, which goes back a couple of years.

Okay. Yeah, all right. Thanks. So that would be how to think about that. Yeah, that's right. It's a multi-year impact, so you shouldn't just think about it as one year or 10 years.

because it wasn't it wasn't it wasn't recognised and it therefore wasn't recognised in the categories in the stores in which it was impacting results I think if you replayed it and with visibility we would have well the business would have responded differently to that situation and you probably would be managing margins a bit differently as a result right so I think it's and having done the reconciliations now and understood the impact of of the way it's been treated, we will certainly respond differently in store in terms of how we price for those particular categories to recognise that cost that we previously weren't recognising. Does that make sense?

No, it does. You weren't quite earning the margin you thought you were earning, I guess.

Yeah, no, completely. So you kind of get... Obviously, you can't be comfortable with that when in reality, for those stores and categories that were affected, we shouldn't have been, right? So... Okay, thank you. I'll drive a different management outcome going forward for those stores and categories.

Thank you. And our next question today comes from Dale Cunders at Bear & Joey.

Please go ahead. Morning, Scott and team. I just kind of wanted to dig more into this sort of outlook for retail going forward. In the waterfall chart for your fuel growth in second half 25 versus second half 24, there's quite a large step up in fuel margin, and you said there's seasonal benefit. Have you done anything to change your pricing strategy? Like, will any of that fuel benefit be sort of kept and sustained going forward?

Yeah. Do you want to? I think, yes, we have and we've seen it continue into the beginning of this year as well. The market has certainly supported that increased fuel margin as well to a large degree. Our fuel pricing strategy is in line with the market and ensuring that we remain competitive with the market as part of our core offer to customers. So the market supported it. Where the market continues to support it, obviously, we will continue to optimise that where we can.

I think, just to add to Dale, I think our management of fuel generally is in really good shape. job. We're, as always, trying to be quite dynamic in how we price fuel and alongside the broader offer that we have in store and every store and every market is different and I feel we're managing that extremely well. And then from a market perspective, it was quite encouraging so quarter four, obviously it was with the lift and strengthening of margins and obviously that was supported a bit by cost of product decreases through the period as well but I think generally it's been 18 months, two years now of significant cost pressure in the convenience sector, driven by obviously declines in tobacco and high inflation, particularly impacting wages as well. These are costs that impact everybody. And so I think at some point you would have expected those cost pressures to lift margins. market pricing generally as well. So, yes, it was an exceptional period, I think, but it's carried through into this year and I think because of those cost pressures, it would expect some upward pressure on margins to continue through the year.

Are there any other one-offs worth calling out, Scott, when we think about second half minus a bit of seasonality times two for an outlook for 2016? Are there any cost duplication on supply chains or are there any benefits from the OTR conversions that you think we should be banking in or it's be conservative and wait for our performance on that?

I think there's – we've still got work to do on improving, you know, improving the cost base of the business, not just retail but the whole business, particularly just giving – you know, in the bridge around above store costs performance. Some of that's within retail, some of that's from contribution from corporate overheads as well. But there's more to be done though for sure. I think, just to remind, I mean this year is another, there's a big transition activity happening this year with the transition of supply chain. So we want to make sure we support that change and we do that well. the overriding priority in the area. And with that behind us, I think that in itself will allow us to move with even further consolidation of retail activity across the businesses, continue to try and do things more professionally, obviously get benefits out of the supply chain itself. And that's probably going to be, you know, leverage that more fully once that project is completed. So back in the next year into 2027.

Okay, and then final question just on refining margins. Can you provide any comments on sort of ultra-low sulphur gasoline upgrades, any benefits you're seeing, and your competitor or your peer has reported margins of $8 a barrel OX for January. Is that consistent with what you're seeing, or is ultra-low sulphur giving you a benefit?

We're still learning to run the machine. That's still very new. I think we're not getting the full benefit out of it yet, but obviously we've been operating it since November and we're certainly getting more familiar with it and refining how we operate that within the configuration of the whole refinery. So I wouldn't say that we're seeing significant benefit from it yet, but the potential is still there and certainly the market is pricing in low sulfur gasoline at anywhere from $1 to $1.50 a barrel. So that's the opportunity that we have, and we will realise that in time as we go forward. I think for January, it's been a challenging start to the year from a refining margin perspective. We haven't called out January. monthly refinery margin reporting because things can move around a lot over a quarter. So we'll certainly report back on the quarter. But, yeah, acknowledge it's been a difficult start to the year. Refining margins are below break-even for January. Encourage improving a bit into February. And I do think that will continue through the course of the year. I think January has been heavily impacted by a period of very strong production globally in quarter four. obviously very high attractive refining margins and good availability across the world. So the market's sort of absorbing all of that. But I think in the outlook ahead, I think we still see that it should be a reasonably constructive environment, albeit impacted a lot by what's happening geopolitically. But, you know, I think ultimately real focus for us is completing the review with government on the FSSP. It's really critical that that gets updated to reflect the support that's necessary to underpin refining operations. That's net in focus for us and that's probably more material right now for the current refining machine environments.

Okay. That's great. Thanks, Colt.

Thank you.

And our next question today comes from David Arrington at Bank of America. Please go ahead.

Morning, Scott. Scott, my question is, I suppose it's a fair bit of a topic today, the transition, if you like, of supply chain and systems. Now, I put my hand up. I underestimated how difficult this was going to be, and I think probably you guys have to put your hands up too and say that you probably underestimated how difficult it would be But where my question is, is slide 19 and listening to your answers, I'd like to think that we're past the worst, but I'm not sure we can say that with your transitions with supply chain, with your point of sale, with your ERP. Can you go into a little bit more detail as to what you need to be able to do this year so that hopefully then we've got clean air? And can you bring to life a little bit Because supply chain transition and managing the transition and managing the impact for the customer, I mean, they roll off the tongue really nicely, but all of us underestimate what actual work needs to go in before you can actually get a shot at this. Can you go into a bit of detail on slide 19, please, as just what you need to be able to do before we can get to the point where we can start factoring in the upside from this wonderful opportunity that you've got? Because it looks to me this transition is just crippling you in terms of being able to get your operations right so that you can actually get this offer in place.

I'll talk about the ERP transition. I'll let Jen talk about the supply chain because that's obviously front and centre for her at the moment. But certainly, look, I mean, standing up an ERP, even one that was ultimately, you know, modelled off the OTR, the ERP that was in place, was still a significant undertaking to get it done in the period of time that we had to do it, which was obviously a hard stop with the transitional services arrangements that we had with Coles expiring. And so that certainly, I mean, I think the team... did an amazing job pulling that together in such a quick time. Other companies I won't name, retail companies are still trying to disconnect themselves from previous owners with these sorts of systems. So on that front, I think we did a great job. And obviously with time pressure, it probably did impact... We had some teething issues with it, and I think probably the biggest one was just the visibility of management information necessary to run the business through that time. That was probably, I think, on reflection and looking back on it, was unexpected and more impactful than we probably anticipated. So obviously we've recovered from that. The systems are now all in place. we're still running two versions of it. We've got an ERP for OTR and an ERP for what it's really expressed, and we've still got work to do to bring those together into one instance. But that's now at our leisure. It's not schedule-driven. We can just do that methodically and work it through. Systems are stabilised. We're starting with getting information that we need to run the business well. That's just starting to reflect in the results that we're delivering. And the business, that's all stabilised. So I think... David, you can rest assured that that's behind us and now the focus is now on the next step, which is the standing up of supply chains and moving off the Coles product supply arrangements towards the end of this year. So that's one we have to get right. That has been pushed back by six months to give us the time. I think when we sat down and reassessed, we were up to, at the middle of the second half, one area that we really felt we needed to take more time. We talked with Coles and we've agreed an extension for six months to give us that time. So that should give us some comfort that we're not putting ourselves under the pressure where things can go wrong. But there's still a lot to do and I might just hand over to Jen to talk a bit more about that.

Yeah, so maybe I'll give you a little bit more colour in what our supply chain transformation looks like and Quite a large part of it's already been done. So as part of coming off the Coles TSA arrangements, we've already rolled out to the entire ready network a new order fulfillment module, Blue Yonder. So that will determine how we order all of our stock. Range alignment has happened across both the brands. So we now understand what offer we'll have in common across both OTR and our ready network. The team are in the process of closing out harmonisation of supplier terms, so being able to interact with our suppliers as a single entity rather than as two separate entities. That work's been largely completed. And what's happening now is the standing up of four distribution centres, all being run by third parties. So we have one in Victoria, which will come up during May, followed by one in Queensland, then one in New South Wales, and then one in WA. They're run by third party providers and those third party providers will also provide the logistics to site. I think it's worth noting that we already run this model in South Australia, so we have experience in running this type of model and we understand the sorts of returns we can achieve. but we don't underestimate the difficulty of this transition at a store level, which to Scott's point is why we have really taken the time to make sure we deliver this with excellence. So it is challenging, but we believe we can do it.

It seems then inherently sensible to push back the rollouts to the second half. is when I look at slide 18, Jen, the performance of the store uplift is fantastic. I mean, you look at your top 10 stores, you get a 32% uplift in ex-tobacco sales, you get a 60% uplift in petrol. I mean, that's an amazing... So it shows that the concept works. It just means that you just have to... So the excitement is there, but you've just got to get your act together on the back end. Is that a fair prognosis? And hopefully... not putting words into your mouth, if you work really hard through 26, 27 should be fantastically optimistic for the company. Is that a good way of looking at it, Scott? Should we get that far ahead of ourselves? Because that's what it sounds like to me. When I look at those charts, I mean, 32% uplift for your top 10 stores and 59% uplift in volume. That's phenomenally bullish.

Yeah, no, completely. I mean, the fuel uplift, I mean, please, again, This is January versus January. So that was the cleanest month period we had to compare because we did a lot of conversions late last year. And January is quite a month of fuel, right? And we weren't pushing pricing particularly hard in these conversion sites. So it's a genuine uplift in performance driven a lot through the upgrades to the store. So that is super encouraging. But... The reality is when you reflect on customer feedback and the impact, I mean, customers are turning up and we're not offering them flybys because we hadn't had their commercial arrangements in place with flybys to offer that. So that's been taken off them and that's a big component of the Old Express business. We've taken away machine coffee and given them barista coffee, which is, you know, a an important part of the offer, but it's a big change for customers to go through, and it doesn't suit everybody, so we have to recognise that. We've had the store shut for eight weeks, and fuel comes back quite quickly, but shop is always a bit harder because people change their patterns, so we've had to drag that back. And so if we can improve all those execution issues, imagine how much better it will do when we get to the next wave of conversions, right? Now, this is a bit why we're just taking a pause now to get those things right, and particularly five lives. I mean, that's just for the sake of a few months to get that implemented so that when customers do turn up after a conversion, that bit hasn't changed. So it's worth taking a pause to get that right and resetting and getting after it. So, yeah, 40, 60 conversions might sound low relative to what we've been saying, but it's kind of Yeah, so it's probably going to get done over about six months. So it's still a large conversion and program over that period. It includes new store openings as well. So there's still a lot of activity happening to take OTR across the rest of the country this year. Even with what looks like at the headline a lower level of conversion, it's actually still quite a lot given the way we're facing it.

I would just add that supply chain is critical to getting these stores up and running. Our stores in New South Wales are being supplied out of South Australia at the moment. So once we have that DC stood up in New South Wales, the efficiencies we remove from our offer are extraordinarily material.

Now, you've no idea how frustrating it is to go to a store that we've opened and

And it drives pirate wastage, obviously. If you're moving stuff from South Australia, you lose a few days of life while you do that. So it will make a material difference to the performance of those stores.

For some reason, people in New South Wales... For some reason, David, people in New South Wales don't like buying stuff that's made in South Australia and go figure that, so... Quite right too, Scott, quite right.

But I'm looking forward to 27. It should be a terrific year, so bring it on. Thank you.

Thank you. And our next question today comes from Brian Raymond at J.P. Morgan. Please go ahead.

Morning. Just to follow on from David's question actually around some of those uplifts you're saying, and not to be glass half empty here, but I'm just trying to look at sort of the top 20, the total of the 25 versus the top 10 questions. I just want to understand the other 15 that make up that 25. And, you know, if you take a simple average, it implies ex-tobacco sales are down mid-single digit, which doesn't make a whole lot of sense to me, or conversion, and then fuel volumes up about mid-single digit. So I just want to understand if you've found quite different experiences in the top 10 versus the rest, if there's learnings from the rest that you're applying going forward as well. or if my maths is not quite right because of some apples and oranges comparisons I might be making with the limited data we have.

I think the first thing I'd say is a lot of those sites were converted very late in 2025. So we opened, I think, 18 sites across December. I might be slightly overstating, but it was a material number. So we wouldn't consider a lot of those sites have reached maturity yet. so that the average will be being brought down as those sites come back. We did notice, just in regards to tobacco, that is one of the most heavily impacted categories when you close the store for conversion, and that's the hardest one to kind of get the growth back as customers create new habits or unfortunately find sources of illicit tobacco as well, we suspect. And one of the things we're looking at to kind of arrest that going forward is ways in which we can trade the stores through conversion, so by putting a drop-down shop on forecourts while we're doing those upgrades. And we think that will also have a material impact and help keep us in touch with our customers during the conversion process and keep their habits at our stores. I think across any network you're going to get variability of an offer and one of the things we're very focused on looking at the 2027 program is site selection. So not all stores have responded in the same way and we're getting better at picking the sites where the OTR offer will hit the ground running and thinking more about how the ready store traded prior to conversion and making sure that our offer is respectful of the customer base we've got and introduces more with OTR as well. So there are a lot of learnings and we're confident that if we take this period to reflect, get the rest of the offers in place, nail site selection, that we will see that average lift across stores.

Okay. And just on... I guess, you know, we're looking at a six-week period here as well, which could be prone to weather and fuel prices and other things that could be driving this. If we had sort of the rest of the fleet on that table, would you see anything unusual there? Like, is there any controls put on this sample that, you know, to adjust for what might be impacting sort of broader market conditions around ex-tobacco sales or fuel volumes? No.

No, this is straight performance. So we know through the back quarter of last year, we had worse weather. It's a terrible excuse, but weather really does impact beverage sales and ice sales and ice cream sales. So we had significantly poorer weather than year prior. So we do know that convenience was impacted versus year prior and plus our entire network. So we haven't put any of those controls across it. It's a straight comparison to the year prior for that site. So you will have some variation as we would see across the network as a whole.

Okay. And then just on tobacco, it's encouraging to see that stabilisation. I just wonder if that's consistent across states or if you're seeing... in tobacco in states where there's enforcement and still meaningful declines in those that haven't progressed as much around enforcement or is it pretty much across the board and it's other factors?

No, it's extraordinarily dependent on enforcement. So Queensland's a great example at the moment. They've run through a period of enforcement just prior to Christmas and we saw sales bounce back where enforcement has taken place around sites by more than 100% almost immediately. Typically what we're seeing is that decline over a 12 to 16 week period unless more enforcement takes place. So where enforcement happens, the result is immediate and it's material. So, you know, the variation in approach taking across states has a meaningful impact on our tobacco sales.

Okay, great. Final one is just a clarification, just around the leased asset impairment that you put through, that you discussed earlier. Just wondering if there's any impact we should be thinking about on gearing, leased DNA, leased interest, those sorts of measures going forward out of that?

Yeah, not really much of an impact to think about in terms of underlying earnings because predominantly the impact was of the right of use lease asset and in our underlying we don't include the depreciation of that right of use asset. There is a relatively small impairment on the plant equipment which would give a small benefit for depreciation going forward but otherwise no impact.

Okay, great. Thanks. Thank you. And our next question today comes from Tom Allen at UBS. Please go ahead.

Good morning, Scott, Carol and Jen, the broader team. Just slowing the planned road of OTR conversions for 26 feels like a necessary step just to focus on execution. And Scott, you commented that these conversions are back-ended. to the end of the second quarter. As you're leaning to the conversion program, how should we think about these conversion targets annually over the next couple of years as your execution of know-how matures?

Yeah, I think, Tom, we want to come back on that in the second half once we've had a bit more time to just work through the performance of the current set and the program this year and give Teresa a chance to get on board as well. on that a bit later, just focus on what's ahead. As I said before, I mean, the pace is actually, if you look at it over the period that we're going to be converting, is still quite high, right, because it's a compressed period this year. But obviously, really keen to see, improve our assumptions around the better uplifts that we'll get with some of the basics that are in place. I think, look, I didn't touch on it before, but just the other thing that's very much on our significant period of change for the retail organisation. We've got to get the supply chain landed well and a few other things we need to land this year. So we just need to give the team some space to get the priorities right. So a commercial programme and new store openings, they're quite intensive pieces of work, right, that take a lot of effort to get right. So we're just trying to pace ourselves a little bit more carefully this year and consolidate the learnings and then really regroup and And obviously, if the results continue to be there and continue to lift and translate into some superior earnings outcomes, then obviously we'll be incentivized to go harder in the years ahead. But something to revisit a bit in the second half.

Thanks, Scott. Just on leverage, so your target seemed to reduce leverage from three times to two times by the end of 27, but you've called out that the target assumes improved market conditions and capital management initiatives taking effect. I mean, improved market conditions could be a very broad brush, so can you help please clarify the top three or four items that you're looking for specifically in regard to your reference to improved market conditions really driving that stronger leverage position?

Yeah, sure. Thanks, Tom. it's important for us to lower our debt, but the most important thing is to grow earnings. And so in terms of that, improved market conditions include across the board. So obviously there's the refinery, which is important, but also not forgetting that the FSSP phase one will underpin our earnings. So we need to learn that, obviously, as soon as we can. So that'll be really important. The other factor, of course, is everything that Jen got and talked about with retail, making sure that we're growing earnings there as well. So they're really, really critical. We've also called out, which we haven't discussed a whole lot yet, is the sale of surplus land. So we're looking at the surplus land there. It's no regret. You don't sell land and lose earnings like you might if you sell a business. So that's what we're looking at as well. So we've maintained... We've put this target out of total net debt to EBITDA, gearing target of towards two times by end of FY27 at the half-year, so we're maintaining that.

OK, thanks, Carolyn. Maybe just the last one from me is just noting this non-cash impairment of retail sites of $555 million. It's a big step up from the impairment recognised at the half. understand that that's only an accounting treatment, reflection of the probable amount compared to the carry value at the point in time, not necessarily reflecting the expected lower profitability. But can you just clarify why the impairment grew so much relative to the first half, given that convenience and mobility earnings has improved and so too the macro outlook, unless your view on future earnings has softened?

Yeah, no, thanks, Tom. I mean, our future view, our earnings outlook, our view on future earnings hasn't softened. Really the difference between H1 and H2 is that when we did the impairment in H1, our outlook for the rest of FY25 was different to where we landed and then we've taken essentially FY25 and then grown it by some, they're all disclosed in the financial statements, a very, very modest growth rate increase. So no impediment to any of the and then obviously discounting it by a relatively high discount rate. So it is mechanical, but it's essentially starting from that 1.25 base.

Okay.

Thanks, Cheryl. Thank you. And our next question comes from Craig Wolford at MST Marquis. Please go ahead.

Well, hi, Scott and team. The first question, Just around that supply chain transition, I've got two parts to this question. The first part is on one of your slides you hint at I guess some transitional cost impacts. Is there a figure or a way we can dimension that and then the second one is more of a medium term opportunity in terms of choosing to go with your own supply chain with third party Is there going to be a step change in the number of SKUs you can hold or the speed of delivery that will give ongoing benefits?

Maybe I'll answer your second question first. Yes, there's an opportunity to hold a different range of SKUs or a larger range of SKUs. We hold quite a large range at the moment. across the OTR offer, which is quite large. Where we really see the opportunity though is bringing in new products or more of our exclusive brands. So we've got a number in the stores already. We see that as a material opportunity for us to grow. and indeed to replace the loss of the Coles Home brand, which was quite a successful part of the previously Coles Express offer. The speed to market we can achieve in terms of bringing those brands on is material as well. So I think there's a lot of opportunity in that space. 2026 is a transition year. We will be running, as we stand up those... those distribution centres and the new supply chain across the course of the year will be transitioning off the product supply agreement with Coles. So for a period of time, there will be some duplication of supply costs. That's structured as a combination of a fixed fee and a product-based fee. as we don't lift the product, that cost will obviously be removed, but there is a fixed fee component. However, the improvement we'll receive from suppliers will help offset that.

Yeah. The other bit, Craig, I think, is what James said, is just range alignment as well between Express and OTCR. The offer in store will still be somewhat presented differently, clearly, but the What we can do to get alignment just consolidates our buying position with suppliers and obviously that brings efficiencies and margin improvements as well once it's implemented.

I think the other thing to remember about is it will reduce the inventory hold at store whilst we will have obviously hold inventory at warehouses that will reduce your inventory hold at store and should also improve your wastage as you send out just-in-time fulfillment to stores, which will be enabled through beyond your new order fulfillment. So it brings quite a lot of advantage to us beyond being able to control our range more effectively.

Understood. That's really helpful. Just two other quick ones. Firstly, just on that flybys, Is that just about the systems enablement under the OTR system and Banner, or is there a cost associated with offering flybys, OTRs, sites?

So the original arrangement with flybys didn't extend to OTR. We've negotiated an extension to OTR with flybys, so that negotiation was concluded and executed last year. There is an IT enablement piece for the OTR POS to be able to deliver the suite of loyalty offers associated with flybys. And there is a cost associated with that. But, you know, that's one of the ways we could show loyalty and give the customer choice in how they choose to receive loyalty through OTR.

But it's not necessarily an incremental cost.

Right, so you might be swapping it out because you would have had a cost incurred under the Ready banner anyway.

Yes, yes, or within the OCR offer, there are ways that customers choose to receive their loyalty at the moment. They may choose to swap or change their loan receipt fly-by points instead.

Yeah. What happens to the petrol discounts that are available under the Ready Express? Who funds that?

They're only available at Rennie Express. We haven't sought to extend that into the OTA network.

It's a much less smaller part of the loyalty program now than it used to be.

And with the introduction of ScanPumpSafe, we have customers, you know, we have our own digital assets that allow customers to receive under-canopy discounts as well across both brands.

My last one, just an accounting one. Sorry again to go on this box asset. Is it ultimately a higher discount rate on the lease products? book that you have because essentially the right of use asset should be the net present value of those leases. Just trying to understand why it's changed by that amount.

Yeah, so I mean the discount rate is higher and you're right. We put the leases onto our balance sheet at our incremental borrowing rate. So that is different. That's just a requirement in any case. But really the key driver is As I said before, the FY25 earnings are definitely like a low point in our earnings cycle and that's the basis of which we have, as I said, with pretty modest growth rates, grown the earnings and discounted them with a relatively high discount rate. Thanks, Caroline. And obviously, as I mentioned before, but none of the exciting initiatives that I'm looking forward to in 2027, of course, are baked into that baseline because they're just about to live again.

Thank you. And our next question today comes from Henry Meyer with Goldman Sachs. Please go ahead.

Thanks, all. Inconvenience has been a lot of moving parts over the years, so I'm hoping you could just simply step through what savings have been delivered in 2025. And ideally, if you could quantify the moving pieces in 26 that are within your control, like the supply chain duplication costs, please.

Yeah, so in 25, I think that, again, another reason to use the second half, and we've called it out in the bridge in the section on acquisition synergies to try and identify the synergies and cost downs that come from bringing the businesses together. So we sort of said... At the first half, we expect it to deliver $50 million worth of synergies in the second half. And you can see on the bridge on the left-hand side, it's got $30 million of cross-downs in the second half. There's $34 million of fuel synergies, but that incorporates, obviously, some of the benefit of the full half benefit of the full acquisition of Liberty as well. Now, there's work we've done in all the other sort of trading areas around supplier benefits and so on, and that gets a bit lost in the general wash of trading ups and downs generally, but certainly just having a lower combustible cost base and improved fuel ration by taking control of the fuel supply chain to the OTR business in South Australia is some material uplift and sustainable going forward as well. At that half, we also talked about benefits since 26 related to supply chain benefits. Obviously, we're pushing back the supply chain, the standing up of the independent supply chain by six months. That's going to be more back into this year, into 2027 now. But that's still a real upside that we see coming in the year ahead.

Okay, thanks, Scott. Yeah, it does. Thank you. And just a quick follow-up on the commentary on the sale of surplus land, Carolyn. Just any extra detail you could share there. Is that retail or distribution sites and any ballpark value that you could be looking at?

Yeah. Maybe I can talk to that. I mean, I think we've obviously got a significant infrastructure position around the country, quite big land holdings that... are associated with those positions that I think now that we're confident around what footprint we need from an infrastructure perspective, the land around those facilities can be safely divested on without impacting our operations in any way. And the reality is that there's some positions in some markets that are highly valuable. So it's not like we just thought of this. We've been working on assess the value of those lands. In fact, Jane did a lot of that work as she slipped up to supply chain before she stepped into the retail role. So we're quite advanced on it. The reality is it will take some time to progress the subdivisions that are necessary to separate the land from the operating facilities and then divest. But that will progress that in earnest over the next, certainly over the rest of the next couple of years to try and move that forward. because it's obviously, it's liberation of value that we can attain without impacting our operations or our forward strategies in any way whatsoever. So definitely a good opportunity to bring down debt.

Excellent.

Thank you. Thank you. And our next question comes from Rob Poe at MS. Please go ahead.

Yeah, good afternoon. Sorry, but I would like to just ask one more question about the impairments. I do take on board all the comments you've made about the cash flow analysis. Is that impairment that you've now taken also including site decommissioning and restoration costs? I know your provisions haven't really moved, so I'm assuming yes.

Yeah, the impairment really encapsulates all costs associated with any particular site and anything forward-looking that we know about at this point in time. So yeah, site decommissioning is part of the cost of the site.

Great. Okay, thank you. Now just in the CAPEX guidance, if I go back to last year's presentation, the CAPEX outlook for this year included, say, like $250 to $300 of sustaining and the rest for growth and then a lot of the on-the-run rollout to be landlord funded. Is that funding mix still broadly consistent or are there any changes you'd like to highlight?

Yeah, I guess the split between sustaining and growth is still consistent. relevant, so that guidance is relevant and obviously where we talked about between $350 and $450 million, so we're looking at the bottom to the midpoint of the range. Yeah, maybe I can start and add in. So we do have some landlord funded sites. We've found that that's been a useful model for us where we're doing quite material redevelopment of sites. It's probably not as well suited to conversions, you know, small conversion works, but it's absolutely something we are exploring with landlords as we do those large-scale redevelopments. Our Glassnough Mountain sites would be an example of one that's underway at the moment.

OK, great. Thanks, Ms Gray. While we have you, can I maybe ask for your views, if any, on the daily price cap coming in in Victoria? Is that something that you're ready for or do you anticipate any impact from that this year?

We are ready for it. All of our systems are up and working already. Do we expect an impact from it? I think it's going to be very interesting. The main thing that will be interesting is how the market cycles because you can only post a maximum price for the day and you then cycle down from that price. That will be a function of the market, but I guess we'll need to wait and see how that plays out, but it'll certainly bring a period of change for the market as we get used to that new dynamic. But we're ready to go.

All right, sounds good. Final question from me. You have your new head of retail joining you, I guess, in July after... hopefully some high-quality holidays. Can you give us a sense of how much into the detail she is and if there's, you know, just how you're thinking about her introduction?

Yeah, I mean, she's... I'm obviously really looking forward to her joining and she's also excited about joining as well. I would say that, you know, it's... it's in good hands with Jen, things are progressing regardless of when Teresa joins, so it'll be a pretty seamless transition and Jen will stay connected with the business as well through the rest of the year and continue to work with Teresa and help drive forward the agenda with as much focus as we can. So I think it will be seamless and it's running well. Yeah, Teresa's already you know, certainly spending some time with Jim where she can recognise that she still has a job, so she's still got responsibilities for the company she's working for. But more around just getting to understand the business a bit better and some of the people we're just helping to think about, you know, priorities and when she does finally join. But I think we have to respect the fact she's still in employment at the current time. So, yeah. not too much wrong interest yet.

And I think we're both very focused on ensuring it's a seamless transition and that we've got as much alignment ahead of her start as possible so as not to disrupt the business as she comes in.

Yeah, great. Sounds good. All the best with it. Thank you.

And our next question comes from Adam Martin at EMP. Please go ahead.

Yeah, good afternoon, Scott, Caroline, Jennifer. I suppose just back on slide 18, obviously good metrics there in terms of revenue uplift, but, you know, we haven't got any sort of cost data. Just be, you know, any sort of thoughts on the return metrics yet? I'm thinking sort of EBITDA uplift versus CapEx. Any metrics you've got around any of that, please?

Yeah, look, I mean, I hope I'm not saying anything worse than that. I think there's a few things to touch on, I think. Conversion capex is obviously higher than we had anticipated right at the very beginning. I think we had always sort of figured it would be about a million dollars and it's turning out to be actually, you know, somewhere, but I think, you know, we said one and a half, but some of the, certainly the average is a little bit lower than that. But as we sort of touched on in the pack here, there's a lot of catch-up capital that we, even if we were continuing to run the express offer, that we would have to be spending. There's been a period of, underinvestment for a long period of time that we don't have to catch up on so the way I get comfortable a bit with the conversion capex is that we are also upgrading facilities that need to be upgraded particularly on forecourts where we just have not invested to reflect the current market and the current grade requirements fuel and convenience outlets. So that's the problem. That's not to say we can't do things better and we can't get the cost down and that's certainly a key focus as well with the learnings we've had from the stores that we've done. Do we need to do as extensively as we're currently doing it to achieve the same outcome in a slightly more cost effective way that obviously allows us to do more sites with the same money. I think that's a sensible thing for us to be going after and that will all help to The second part I would touch on is that we've got some really impressive sales uplifts coming through. The earnings are lagging those sales uplifts so we're not seeing the same uplift in earnings and that's a bit reflective of higher get customers familiar with the offer. So there's a bit around that that we have to, that's just part of the maturity of stores, but I think there's also areas in perhaps the Canada year, Jen, where we think we can do that better as well, according to the returns.

Yeah, I think we've spoken about supply chain at length. That will be a huge enabler to growing our earnings. A number of these stores have also transitioned from not a 24-hour operation to the ITR, we never close model, so additional labour costs associated with that. As we get the the customers and the penetration of sites in the market, actually being able to do above-the-line marketing of that offer and telling people what OTR is and what it stands for, we see is incredibly important as well. So I think there are There is no one thing that will help us see the returns we want out of these stores. It's an array of things. It's wastage. It's labour. It's energy costs. It's more cost-effective conversion. And it's an education piece with customers about what that offer is. And I think as we get all of those things working together and kind of in sync, that's where we'll see the real earnings uplift. So that's what we're focused on.

Okay, thank you. Just a follow-up, are you seeing sort of better returns to the new stores that have been opened or the Ready Express conversions? You know, they're starting out early, but just any initial signs there, please?

They're very different beasts. Reopening a store which has a customer base and an established traffic flow and catchment is very different to opening an NTI. Typically, we're seeing a – I mean, it depends store by store, of course, but typically you would see a conversion reach maturity ahead of an NTI. An NTI, sorry, a new industry, a new store, can be, you know, six to 18 months to reach maturity. We would hope that with these stores, we would be seeing that within, you know, three months, maybe a little longer, depending on the store. And as we get better at doing conversions without closing stores, we should see that improve as well. Yeah, so they're quite different.

Okay, thanks for the call. That's great.

Thank you. And our next question comes from Gordon Ramsey at RBC Capital Markets. Please go ahead.

Well, thank you very much. Just on your store, new stores and conversions, are we looking at similar numbers in FY26 to what you delivered in FY25? In other words, three-quarters of the new OGR stores will be conversions. Is that a good kind of basis to look at what you're doing going forward?

I would say you'll probably have a different mix. We have an active pipeline of new stores. But new stores don't always arrive on schedule and they're a lot less predictable than a conversion. So, you know, when you're waiting for development applications or doing major earthworks, you can get quite a lot of movement in new stores. I think you'll see a mix of new and conversions this year.

And just a question on, I think, Scott, you were talking about aligning the digital... loyalty and digital offers across both Ready Express and OTR platforms. Have we still got two platforms running? I think you said that earlier. And isn't there an urgency to go to one platform? And is that required to, for instance, move to flybys at OTR in the second quarter of FY26?

Yeah, we can. Not necessarily. I think we know we can move align the customer-facing offer without having to align the back office, the back end systems at the same time. So the priority is to get the customer-facing offers aligned because it's quite confusing for customers, right? Particularly, come to Barclay New South Wales, we started rolling out OTRs and replacing Express and it's very confusing if customers come in and their whole loyalty experience with us is completely different and they Whilst the stores are different, I understand that, but the brand, the fuel brand is the same and they associate a lot of it with the Shell brand as well. So removing all that clutter and confusion is the priority at the moment, Gordon. And I think, as I sort of also touched on earlier, we're in a state now where the work we do at the back end doesn't have to be so schedule-driven. We can just do that at our own pace and without disrupting the organisation. So I think you can think about them as two different things.

I understand what you're saying, but I think from a cost viewpoint, aren't you duplicating costs?

Yeah, absolutely. It's certainly going to be very beneficial when we get to one system, no doubt. So that's actually something we want to get to as soon as we can, but at the right pace.

I think the last discussion, last question from me with the previous CEO of Consumer Mobility was that there was no change to the EBIT.target, I think by around 2028 of $500 million. Have you updated that guidance or made any comments on it?

No, we haven't updated that yet, Gordon. We will certainly come back to that. I think what I have said previously, which is probably still true, is that the opportunity is still there. I still feel very confident about the opportunity, albeit You have to adjust that for the impact of tobacco because it's obviously been a known material impact that is with us for now. Whether that is recoverable in time with more enforcement remains to be seen. So that's certainly one thing that has changed. The other thing that's changed is just probably the timeline that most certainly the timeline is different than what we set out a couple of years ago when we started this journey but I still believe in the potential for this business and we're starting to see some really good green sheets coming through in terms of the early conversion activity which demonstrates the opportunity yeah we've got some headwinds that we didn't anticipate when we started which we've got to address and overcome but this is still a The offer that we have at the moment outside OTR is pretty unsophisticated and our customers are responding well to an upgrade of the offer. I would say too that the OTR offer now is three or four years old from when we started, so there's still room for that, even with that offer, to extend it and expand it further into new categories. It remains a really exciting opportunity for the company. That target still sits there. It just might be a bit further out than what we anticipated. Okay, thanks, Scott.

Thank you. And our next question comes from Scott Rowe with WeWork Equity Research. Please go ahead.

Hi, thank you very much, Scott. I was hoping to send you mine to your energy portfolio and give some of the other guys a rest. Thanks, Scott. You've made two comments on that in the outlook, one related to the FSSP on the refining business and also the resilient earnings sort of CNI business. So I was hoping to just ask on those. In terms of the phase one of the FSSP review, I wonder, could you just – talk to what are the discussions focused on. Is it looking back and whether your returns have been adequate or whether it's the change in your cost base going forward and therefore the ability to earn an adequate return on capital for investments and does it impact on your view on what you're doing on renewable fuels, which you've mentioned a couple of times. And then on the CNI business side, I'm just wondering what – resilience obviously doesn't give any direction. It's the first year that it's gone backwards for a while. You mentioned in your press release a few of the investments that you've made in the last little while around new extensions of your network. So I wonder if you could just comment on the outlook for those with those extensions in your network in mind, please.

The FSSP, which was negotiated with the Federal Government back in 2021, the principles of that was always to ensure there was a safety net. That ensured that we earned a margin that offset the operating costs of running the business and that the ongoing sustained capital to run, you know, general maintenance of capital required to run the business as well. So that from a cash perspective, we would be always, you know, have a safe net which has protected us to be break-even essentially on a cash basis moving forward. Now, of course, you know, the workings of that would be from quarter to quarter might be different, but on average, that was the outcome. Since that point in time, obviously, costs have moved up more more quickly and higher than we had anticipated, just driven by inflation. We have had additional costs imposed on us that weren't there at the time, particularly around safeguard mechanism, for example, and cost of construction. Partly inflation, partly doing business in Australia has been heavily elevated as well, and that's obviously been reflected in the most of the gasoline projects. So all those things have meant that the Trump safety net And that's the basis of the review that's currently underway under Phase 1 of the FSSP with the Federal Government and the one that we expect an answer on in the very near future. Phase 2 is really looking at what is necessary to sustain refining beyond the current FSSP, which ends in 2030. So what would it take for refining to run into the next decade, essentially? and that will assess the elements that are implicit in Phase 1 as well, but also, I guess, beyond that, what's necessary to sustain not just the plant as it sits today, but sustain greater capital as well going forward and invest in these facilities for the longer-term future, and then clearly that takes you into the renewable space and what investment would make sense in refining to support lower carbon fuel production and when you're into growth capital then what the FSSP Phase 2 review needs to assist. So what's the logical return on capital to actually encourage our company to invest in those sorts of projects. So that's a more comprehensive overview that has started but it's probably going to move forward in earnest once Phase 1 has been completed so that's a bit more for the future but Certainly something we anticipate to complain to the Federal Government before the end of this year and obviously important for the long-term outlook for our refinery in Geelong. Lots of reasons why that should be a win-win outcome for both the company and the government, so we're going into that with a lot of confidence, but obviously that's all ahead of us. Commercial obviously continues to have a very stable and viable return now for for a number of years, doing extremely well because we sort of talk in the pack. We're already built on our infrastructure position and our relationships with customers. The sorts of investments we've made in the last year, moving into the marine market in Brisbane, extending our aviation network, because we're just trying to build on our strengths and our capability. of our growth over the course of the last 12 months. There's always a bit of, you know, you have to invest before you see the returns and so that's the case last year. Those investments were made predominantly in the second half of last year and the returns are more for the year ahead. So that's a bit of a feature in the result that we've printed for 2025. So I think we're expecting commercial to still be reliable consistent reformer and contribute significantly to the buildings of the group. It's a great business, it's underpinned by privileged infrastructure around the country which we want to continue to build on and protect. Given where we are and given what's in front of us with retail, it will be mostly focused on organic, sensible organic type investments as we've made in the last 12 months.

Yep. Okay, great. Thank you. That's all I had.

Thank you. There are no further questions at this time. I'd like to now hand back to Mr. Wyatt for closing remarks.

Look, I'm conscious of time. We're five minutes over, so I'll keep it really brief, but obviously it's been great to finish the year with a really strong half and front behind us. As I've touched on earlier, it's a half that is reflective of moving forward and we're pleased with how we have finished the year. We're looking forward confidently to the year ahead to build on that, finish off the last remaining piece of major transition work ahead of us and obviously move forward with the conversion program and enter into 27 with some really continued runs on the board and confidence about where we're heading within convenience. Commercials, I just touched on another reliable, consistent year ahead. And refining, yeah, a bit of a critical year for refining sector generally. Both refineries are really dependent on a review of the FSS pay. But I think beyond that, I think we still look forward to quite a constructive refining management environment throughout the end of the decade. And we're in a position now with our 5 billion major maintenance cycle behind us to really take good advantages back with a clean run over the next four years to produce well, minimize capital spend in that part of our business, and more broadly across the group, stay focused on capital discipline and strengthen the balance sheet. So a lot to do, but we know what we need to do, and we're looking forward to getting on with it in 26. Thanks for joining us, and thanks for the support.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.