Wesfarmers Ltd Old

Well hello everyone and welcome to our 2025 full year results briefing and today I'm joined in Perth with our divisional managing directors and our CFO Anthony Giannotti. I'll start with providing a summary of the group's performance for the year together with some comments on our strategic progress. Anthony will then talk through the financial results in more detail Then I'll provide some broader comments on the portfolio and the outlook for the group. And then our divisional managing directors, Anthony and I, would be happy to take any questions. So starting on slide four, a slide that will be familiar to most of you. Westfarmers primary objective is to deliver a satisfactory return to shareholders. And we define satisfactory as a top quartile total shareholder return over the long term. And we recognise that we can only achieve this if we continue to anticipate the needs of our customers, look after our team members, engage with suppliers in a fair and ethical manner, contribute positively to the communities in which we operate, take care of the environment and act with integrity and honesty. Now turning to slide five. This year, Westfarmers net profit after tax increased 14.4%, and excluding significant items, profit increased 3.8%. Trading conditions were challenging in the 2025 financial year, especially in the first half, as many customers and businesses continued to face cost of living and cost of doing business pressures. Our solid result in this environment highlights the quality of our businesses and teams, and it was pleasing to see our largest divisions, Bunnings and Kmart Group, continue to perform well. Our results reflect continued strong execution of growth and productivity initiatives. This has helped our businesses deliver greater value, service and convenience to customers at a time when many face cost pressures. And we finished the year with an expanded addressable market and more opportunities for growth and value creation. We also undertook a number of portfolio actions to improve returns to shareholders, and I'll talk about them in a minute. As a result of these portfolio actions, the board is proposing a capital management distribution of $1.50 per share subject to shareholder approval. Now while the form of the distribution is subject to an ATO ruling, this is expected to include a capital return of $1.10 per share and a fully franked special dividend of 40 cents. And together with our total dividend for the year of $2.06, this takes our distribution to shareholders for the year to $3.56 per share. Now turning to slide six, this provides some of the divisional highlights for the year. I won't talk to these because Anthony will cover divisional performance in a minute. So turning to slide seven, this slide sets out some of the recent portfolio actions and demonstrates the group's financial discipline and focus on shareholder returns. We want our capital allocated to businesses that have attractive prospects for shareholder returns. And I feel that we've made good progress on this front through the year. As noted earlier, the proposed capital management initiative has been made possible by select portfolio actions undertaken in recent years, including the sale of core gas for $770 million. As many of you know, this year, we also announced the wind down of Catch, which ceased trading in April. And this included the transfer of Catch's fulfillment centers to Kmart Group and select digital capabilities to our retail divisions. Now, this will improve earnings in 2026 as we have eliminated the Catch operating losses. And the move to next day delivery for much of Kmart and Targus East Coast operations will improve the customer experience of our online operations. And our broader understanding of marketplaces is also helping Kmart with the launch of a new curated marketplace in the first half of this financial year. During the last year, we also completed the divestment of Wesseff's LPG and LNG distribution businesses, completed small bolt-on acquisitions in Officeworks and Health. We announced the wind-up of the BPI property structure and announced the intention to internalise BWP Trust management rights and the extension and variation of Bunnings leases within BWP. And this transaction completed on the 1st of August and will deliver extended tenure and more flexible lease terms at key Bunnings sites. Turning to slide eight. This year, our focus on long-term value creation again enabled us to deliver better outcomes for our teams, customers, suppliers, communities and the environment. The group's total reportable injury frequency rate continued to improve from 11 to 9.5 at the end of the year, with Bunnings delivering a significant improvement in performance. During the year, we delivered a 9.3% reduction in the group's Scope 1 and Scope 2 market-based emissions. Bunnings and Officeworks have now achieved their 100% renewable energy targets, while Kmart Group is on track to achieve this by December 2025. And in a major step towards achieving WESF's decarbonisation goals, CSBP installed tertiary abatement catalysts in one of its three nitric acid plants, reducing nitrous oxide emissions by 98%. And planning is underway to install abatement technology in the remaining three plants. I'll now hand over to Anthony, who'll provide more detail on the financial performance, the group's balance sheet and cash flows.

Thanks Rob and hello everyone. Slide 11 in our presentation provides details on the sales performance across each of our divisions for the year. I'll speak to sales and earnings performance on the next slide, but at an overall level we were pleased with the sales growth achieved in our retail businesses, with notable improvements in the momentum of sales growth in the second half across both Bunnings and Kmart Group. Our strong value credentials continue to resonate with consumers, which supported transaction and unit growth across all of our retail businesses. On slide 12, at a total level, divisional earnings increased 4.6% for the year, with the pleasing results in our retail divisions more than offsetting the impact of lower earnings in WESF, which was impacted by lower global commodity prices. Our retail businesses continued to execute well during the year and on a combined basis Bunnings, Kmart Group and Officeworks increased earnings by 5.2% with positive momentum into the second half with earnings growth increasing to 6.4%. I'll now step through the divisional results in a bit more detail. In Bunnings, sales growth of 3.3% was supported by its lowest price positioning, which underpinned growth in sales, transactions and units sold across both consumer and commercial segments. Consumer sales growth was supported by robust demand for home repair and necessity products, while range innovation and expansion attracted higher store visitation and drove strong sales growth in the tools, outdoor living, smart home and paint categories. Growth in commercial sales reflected resilient demand from trades, organisations and business customers, but partially offset by lower demand from builders, where we saw continued softness in residential building activity. This year Bunnings continued to invest in its network to support its omnichannel customer offering, which included rolling out its new tool shop to 175 stores, with the new format performing well. Bunnings' ongoing cost discipline and the execution of productivity initiatives continue to support investments in price, range and experience. Bunnings' earnings before property contributions of $2.34 billion represented an increase of 4% for the year. Kmart Group delivered earnings of just over a billion dollars for the year, an increase of 9.2%. Kmart Group's value credentials and world-class product development continue to resonate with customers. It was pleasing to see strong growth in Kmart's app utilisation, with active monthly app users doubling on the prior year to more than 1.3 million. The strong earnings growth reflected the solid sales performance as well as further productivity gains from the integration of Kmart and Target systems and processes and ongoing digitisation across stores, sourcing and supply chain. These productivity benefits mitigated the impact of ongoing cost of doing business inflation, which supported higher earnings growth in the second half of 12.6%. WSF's earnings declined 9.3% to just under $400 million for the year, impacted by increased losses in covalent and lower global commodity prices. In chemicals, earnings were broadly in line with the prior year, as lower ammonium earnings were offset by favourable ammonium nitrate recontracting outcomes. In clean heat, earnings were impacted by higher natural gas costs and lower LPG production volumes, which were partially offset by the impact of higher Saudi contract price. Fertilisers earnings increased on the prior year, supported by higher sales volumes, including from a strong end to the 2024 growing season. During the year, Covalent completed construction of the Kwinana lithium hydroxide refinery, and a key milestone was reached in July when first product at the refinery was achieved. Due to subdued market pricing and higher unit costs during production ramp-up, Wessef's lithium business contributed a loss of $59 million. Despite this loss, the business generated positive operating cash flow for the year. In Officeworks, sales increased 3.8% and earnings increased 1.9% to $212 million for the year. The result was supported by growth in key categories, including technology and print and create, partially offset by lower furniture sales and more subdued activity across business customers, which reflected the challenging economic conditions affecting SMEs. Earnings growth was also impacted by one-off costs associated with the closure of Sirconomy, as well as increased investment in price in response to elevated competitor activity. In industrial and safety, revenue declined 1.2%, reflecting the challenging economic conditions facing business customers across Australia and New Zealand. Earnings decreased 4.6% to $104 million, with the earnings result including $9 billion in restructuring costs across Blackwoods and Workwear Group that were largely recognised in the first half. The restructuring costs reflect actions to reset the operating model and cost base enabled by recent system investments to better position the businesses in a more challenging trading environment. The benefits of these actions started to materialise in the second half and excluding restructuring costs, earnings were at $113 million or 3.7% above the prior year. West Farmers Health continued to focus on its transformation program to accelerate growth and improve earnings. Earnings of $64 million included $18 million of amortisation expenses relating to business acquisitions. Excluding these costs, earnings increased 17.1% to $82 million. Priceline Pharmacy's headline network sales increased 11.9%, which includes both retail and dispensary sales. Priceline Pharmacy's retail sales were supported by network expansion, price reductions on key value lines, the launch of new and exclusive brands, and the ongoing contribution of Sister Club. MediAesthetics delivered profitable growth following the consolidation of its clinic network to create a more sustainable operating model, and digital health continued to perform well, underpinned by growth in services through instant scripts. The stronger performance of consumer was partially offset by the wholesale segment, which was affected by higher fulfilment costs and increased competitive intensity, despite higher sales from customer acquisitions and strong demand for high value drug categories. The wholesale segment continues to focus on executing productivity initiatives to mitigate higher supply chain costs and increase competition and is expected to benefit from investments to improve its customer proposition. Turning now to slide 13. Across our other businesses and corporate overheads, we reported a loss of $168 million, which was in line with the prior year. The group's share of profit from associates and joint ventures increased by $45 million to $64 million, primarily driven by favourable property revaluations in both BWP Trust and BPI. Group overheads were broadly in line with the prior year, while other corporate earnings decreased by $52 million. This decrease was primarily reflected in lower group insurance result and lower interest received. Other EBIT includes the continued development of the OnePass membership program, the group's customer and data insights capabilities through OneData, and investment associated with the recent launch of the group's new retail media network. Together, the investment associated with these initiatives was $63 million. The benefits from these investments continue to be realised through incremental sales and earnings in the divisional results. Before I move to the next slide, and as a reminder, I just wanted to note that separate from the result in the other segment, the group's statutory result includes the impact of significant items, which are detailed on slide 57 of the presentation. As previously disclosed and as Rob talked to, these items included the gain on the sale of core gas, the profit on the wind-up of the BPI property structure, and the one-off costs associated with the wind-up and the transition of catch. These items totaled $279 million on a pre-tax basis, with each being in line with the guidance we had previously provided to the market. I'll now turn to working capital and cash flow on slide 14. Divisional operating cash flows increased 2.3% for the year with divisional cash realisation at 100%. Divisional cash flow reflected disciplined networking capital management at Kmart Group and West Farmers Health, partially offset by networking capital investment in Bunnings to support higher customer demand and the rollout of the new tool shop format across the network. Overall, inventory remains in a healthy position with good stock availability across the retail divisions. At a group level, operating cash flows decreased 0.6% to $4.6 billion, with divisional cash flow growth offset by higher tax paid due to the timing of tax payments in the prior year. Free cash flows for the year increased 6.9% to $3.4 billion, supported by the divisional operating cash flow result and the cycling of the group's acquisitions of silk and instant scripts in the prior year. Moving to capital expenditure on slide 15. The group invested gross capex of $1.15 billion, which was 6.6% up on the prior year. This was primarily driven by higher spending on new stores and expansion projects in Bunnings. Proceeds from the sale of PP&E were higher for the period, reflecting increased property disposals within Bunnings, which resulted in net capital expenditure for the year increasing 5.3% to $1.1 billion. For the 2026 financial year, we have given net capital expense guidance in the range of one to $1.3 billion, which remains obviously subject to net property investments and the timing of project expenditures. It's worth noting this guidance does exclude any proceeds from the sale and leaseback of Bunnings properties following the previously announced wind-up of the BPI property structure in September 2025. The group has agreed to a sale and leaseback transaction for six of the 15 properties that are currently in the BPI property structure at a valuation of around $290 million. As noted, this amount is not included in the net capex guidance we've provided. We'll continue to look at sale and lease back opportunities for the remaining BPI properties through the year. Turning to balance sheet and debt management on slide 16. The strength of our balance sheet continues to provide the group with significant flexibility and the capacity to support our investment and to take advantage of value accretive opportunities as they arise. We continue to actively monitor the group's debt mix and manage exposure to variable interest rates. The average cost of funds for the year decreased from 3.9% to 3.8% and the weighted average debt term to maturity increased to five years following the successful $1.1 billion seven-year Euro bond issued in June this year. Other finance costs decreased 5.4% to $157 million. On a combined basis, other finance costs, including the component of interest that was capitalised, decreased 2.6% to $187 million. West Farmers retained significant headroom against key credit metrics and this year reduced its debt to EBITDA ratio, excluding significant items to 1.7 times. After adjusting for the proceeds from the sale of core gas, which completed on the 1st of July 2025, the ratio improves further to 1.6 times. The group retains considerable funding headroom and at the end of the financial year the group had available unused bank financing facilities of around $1.7 billion and this excludes the $770 million in cash that was received from the sale of Core Gas on the 1st of July. And finally, two shareholder distributions on slide 17. As Rob's already mentioned, the board has determined to pay a fully frank final dividend of $1.11 per share, bringing total dividends for the year to $2.06 per share. In addition to the final order of dividend, the directors have also recommended a capital management initiative under which shareholders will receive a distribution of $1.50 per share. The distribution is consistent with our focus on providing a satisfactory return to shareholders and will enable a more efficient capital structure while still maintaining balance sheet capacity to take advantage of value accretive opportunities as they arise. The proposal remains subject to a final ruling from the ATO, but is expected to comprise a capital component of $1.10 and a fully franked special dividend of 40 cents per share. The return also remains subject to shareholder approval at the group's AGM on 30 October, with payment expected on 4 December. In line with recent practice, we do intend to continue to purchase shares on market to satisfy any shares issued as part of our dividend investment plan. And with that, I'll now hand back to Rob to cover outlook.

Thanks, Anthony. And I'll turn to slide 19. Now, while today is all about our results, at a time when the Australian government's reflecting on how to address lagging productivity, I feel it's important to emphasise the broader contribution made by Westfarmers. And as most of you on the call would understand, businesses like ours and other big businesses play a critical role in the prosperity of Australia. And when businesses like Westfarmers are successful, Australians benefit. We also operate in competitive markets against some very large multinational companies that benefit from structuring their operations and capabilities in other jurisdictions. We also operate in trade exposed areas where national competitiveness really matters. The recent economic reform round table highlighted opportunities to reduce the regulatory burden on businesses, encourage investment, fast track approval processes and better control government spending. And while a range of options were canvassed, any changes that increase the already high tax burden on Australian companies or apply new regulations or constraints that make it harder to compete will put many Australian jobs at risk and materially reduce living standards in the future. Now, at West Farmers, our investments are directed towards initiatives that drive productivity, accelerate growth and advance sustainability. And these investments support national prosperity and resilience more generally. And some examples of this. Probably one of the most significant investments that Westfarmers businesses make is in lower prices for millions of Australians. And this is well understood through the everyday low price policies of Bunnings, Kmart and Officeworks. We provide wages and career development for 109,000 Australian team members. we pay 1.5 billion in taxes to federal and state governments in Australia. And when we consider the payroll taxes and other taxes and charges, we actually pay closer to an effective tax rate of 38%. This year, we also proposed to distribute $4 billion to our shareholders. Now, these distributions support over 480,000 direct shareholders, the vast majority of which are Australian retail investors, and approximately 13 million Australians through their super accounts. So turning to slide 20, before I discuss the outlook, I just wanted to make three points on the positioning of the group's portfolio. First, our high-quality businesses provide us with a platform for long-term value creation through their unique mix of resilience and growth. Our retail divisions benefit from strong value credentials, broad customer appeal, omnichannel capabilities, and leading market positions. This provides resilience when customer demand is softer across the economy, while at the same time we remain leveraged to any improvement in demand from households and commercial customers. WESF is a critical supplier to key industries that support the Australian economy, such as iron ore, gold and agriculture, where Australia has a competitive advantage. Second, our businesses have a pipeline of long-term growth and efficiency opportunities, including initiatives to expand our addressable market, better leverage data, digital and AI capabilities. We're confident that our new and developing businesses, which currently make a minimal contribution to earnings, will realise significant potential over the next three to five years. This includes our health division and our lithium joint venture, which are exposed to strong demand fundamentals, and also obviously our new retail media business. And other new businesses such as Retail Media and ANCO Global provide new growth opportunities that haven't currently existed. Now, finally, the strength of the group's balance sheet supports continued investment across the portfolio and provides capacity to manage potential risks and opportunities that may arise. So turning to the outlook on slide 21, at a macro level, costs of doing business pressures are persisting in Australia, and they are weighing on business demand and investment, while geopolitical risks continue to add some uncertainty. Now, despite these challenges, the Australian economy remains resilient, supported by strong labour markets and moderating inflation, and this is contributing to a modest improvement in consumer demand. The recent easing of interest rates is expected to provide further relief for households and businesses, supporting consumer sentiment and business confidence. Going forward, our retail divisions are well positioned to grow their accessible markets and profitably grow their share of customer wallet supported by strong value credentials. Bunnings, Kmart Group and Officeworks remain focused on leveraging investments in their omnichannel assets and capabilities to drive sales and earnings. For the first eight weeks of the 2026 financial year, Bunnings' sales growth was stronger compared to the second half of the 2025 financial year, supported by its market-leading customer value proposition. Kmart Group's sales growth was broadly in line with the stronger sales growth experienced in the second half, and Officeworks maintained solid sales momentum with its sales growth broadly in line with the second half. Along with our joint venture partner, SQM, West Farmers remains focused on the covalent lithium product. And as I mentioned earlier, we were pleased to report that the covalent team achieved first product at the refinery in July 2025. For covalent, the 2026 financial year will be a transitional year with lithium hydroxide production expected to ramp up over the next 18 months. Overall, I'm really pleased with the progress made to strengthen our portfolio over the past year. Our businesses are now more productive, more efficient, and with more growth opportunities. Looking ahead, Westfarmers remains committed to strengthening our existing businesses, investing in emerging growth platforms that will shape the future of the portfolio and create long-term shareholder value. So with that, we're all now happy to take your questions.

We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. We do ask that you limit your questions to one per caller and that clarifying questions are concise. You may then rejoin the queue for any additional questions. Your first question comes from Adrian Lemme with Citi.

Please go ahead. Hi, Rob and Anthony and team. I had a question for Mike actually on Bunnings. Quite a strong trading update considering we've had such sharp wet weather here on the East Coast in the last month. With the Bunnings tool shop expansion, I think you were planning for $190 to be completed by June versus the $175 being reported. We've heard in the trade that you've been going back and making some further refinements to the initial stores that were done. and that, you know, the ones that have been rolled out, you're seeing very strong growth of maybe double digits in tool sales. So can you talk to the initial success of the format? Is that the kind of key delta in terms of the sales improvement they're seeing in findings overall? And how has the format been refined, please?

Thank you, Adrian, for the question. We're really pleased with the performance of the tool shop. I think one of the things that's been particularly successful has been the growth in the commercial side. So if you sort of think about our commercial strategy, you know, we focus on builders, organisations and trades. The work that we've done on the tool shop has really leant into that trades section of our commercial portfolio. And, you know, commercial brands like Makita and DeWalt have performed very, very well for us. in the new ranges that they've they've put into those stores the changes that we've made um that we've sort of gone back on have been very minor they've actually mostly been driven by increasing range and driving space intensity in the tool shop and that's been a really important you know driver for tool shop growth is the increased range and also the opportunity to take some of the automotive range out of the tool shop and create its own department elsewhere in the store which has been performing very well also we were just delayed you know really through some resourcing constraints internally to get to the full 190 but we're really pleased with the performance and i think by the end of october all tool shops will be completed we're also experimenting with some retail media opportunities in there as well with some screens going into a number of stores in the tool shop to understand if we can optimize the retail media But performance has been strong. It's certainly, you know, one of the contributing factors to our stronger trading performance. And I agree with you, the heavy downpours in Sydney and along the eastern seaboard have certainly been a challenge. But, you know, if I take a glass half full view to that, it does set us up for a strong spring. So we're really excited for the opportunity and geared to make the most of that in the weeks ahead as well.

Appreciate that, Colin-Mike. Thank you.

Your next question comes from Tom Carrath with Baron Joey. Please go ahead.

Morning, guys. Just got one on the health division. It's good to see the disclosure there on Priceline's network sales, 11.9. I think you added a bunch of stores or added them to the network, rather. I'd just be interested in if you could comment on kind of like-for-like or comp store growth in the consumer business there just so we can see what's, I guess, organic versus the store wins that you've had, please.

Sure. Thanks, Tom. Look, we're really pleased with the headline sales growth that we've had in Priceline Pharmacy. I think we've added more stores this year than we ever had before in terms of 31, but we've also closed quite a few as we've tidied up the network. In terms of the network growth strategy, most of them, the bulk of them sort of came on in Q4. So, you know, we're pleased with the growth. We think that we're holding our own and it's an important component sort of going forward. But as we put down new stores, we're trying to really make sure they're aligned with our core brand value proposition. So, yeah, pleased with the progress we've made.

And sorry, just to clarify, like, is it fair to assume that most of that 11.9 is comparable, like stores that were there in the network 12 months ago?

I think that's probably a fair assumption.

Yep, great. Thanks, Emily.

Your next question comes from Sean Cousins with UBS. Please go ahead.

Thanks. Good morning, WA. Just a question for Alex on Kmart. Just curious around the source of growth. Is it sort of new customers joining Kmart as they trade down? And is that offsetting, I guess, some maybe trading out by lower income customers? Or is the growth that you're getting skewed to existing customers shopping in more categories. And with that, could you maybe talk a little bit about, I think, how well your best customers are shopping? I think you've highlighted in the past, maybe 40% to 50% of categories are being shopped by your best customers. So there's still a lot of opportunity to get your already existing customers to shop more. So just curious on that, please.

Thanks Sean. In terms of the drivers during the year, we've served more customers than we ever have before. We're also seeing the transaction frequency of those customers continue to grow. And they are shopping more departments across the store, which is a really positive trend that we're seeing. We're seeing greater levels of digital engagement. So more of our customers are shopping across all of our channels. And we've also seen really strong engagement driven by the app. And our app users in particular, we're really pleased to see them shopping three times the average customer in store in addition to online as well. So really seeing positive growth across all of those metrics. I would say as we look forward, we see the opportunity to continue to grow share of wallet amongst existing customers through increased frequency items per basket and the percentage of customers departments shopped across the store. In terms of any other trends within that, we really did see growth across all affluence levels and across all demographics. The one I'd probably call out would be our under 30 customer cohort. The younger customers are growing with us to a greater rate than the overall, and that really points to the future strategic opportunity in terms of continuing to grow our customer lifetime value with the younger customer demographic.

And with that, maybe just looking forward, there's a degree to which customers have traded down and discovered sort of came up. How do you think about being positioned for possibly a more, a consumer that's in a better place? I was curious about the resilience of this sales that you've won and then how you can continue to sort of benefit from that and grow if the consumer is feeling a bit better about themselves in the future, please.

Yeah, we feel really well positioned. We've definitely acquired a significant number of new customers in the last couple of years. But what we are seeing is our ability to convert them into higher frequency and more departments is effective over time. So that engagement is growing. And if I step back from all of that, I think what we have seen over the long term is value is really important to customers across every single economic cycle. So we think we're really well positioned to continue to grow our share of wallet in Australia and New Zealand through any economic cycle as we move forward. Within our offer, we do have our opening price points, our one-up and our two-up, and we see that they provide extreme value to customers across that whole price spectrum. What we have been able to do through the uniqueness of the ENCO brand and our product development capabilities is continue to innovate the range, particularly at the two-up level. And we're now bringing products to market that are offering really extreme value to customers. And even during a period where consumer demand was more challenging, we've seen when we can offer really extreme value for good quality and good aesthetic, customers have been willing to trade up into those one-up and two-up price points really effectively. So we feel like we've got all of the ingredients in place through our ANCO product development and direct sourcing model to continue to grow our share of wallet with customers as we move forward.

Great, fantastic. Thanks, Alex.

Your next question comes from Michael Smotis with Jefferies. Please go ahead.

Good morning. Just wanted to pick up on a couple of the comments around investment and cost in the outlook statements for Kmart and Officeworks. So in Kmart, you've got investment in new tech capabilities, Plan C stores, online fulfillment centre, and then in Officeworks, investment in the ERP replacement and the omnichannel supply chain. How should we think about that cost as it comes through the P&L? Do you think you'll be able to mitigate that with other productivity benefits and operating leverage from sales growth? Or should we think about that as a sort of meaningful one-off investment in the coming years?

Thanks, Michael. There's really two components of the investment in the year ahead. there's the CAPEX component and the OPEX component. So we are now in the building phase for our next-gen omnichannel facility for New South Wales. I indicated at the strategy briefing day the total CAPEX for that would be around $200 million, and just under half of that will be incurred in this financial year, but that is CAPEX, to be really clear. In terms of our OPEX investment, we've continued to invest in digitising our operating model end-to-end for a number of years now, we are able to extract both short, medium and long-term benefits from that investment. So as we move forward, I would very much expect that our productivity plans that are in place continue to mitigate not just the OPEX investment that's in the plan, but also the persistent cost of doing business inflation that's within our plan. I guess beyond that, really focused in terms of the market and making sure that we continue to maintain our lowest price positioning. So that is absolutely critical. a priority as we move forward. But I think what we have demonstrated in the past is that where trading performance is strong, our ability to fractionalise the cost base is high as well. So there will be a level that's determined by the level of trade over the next year as well. On the Plan C Plus stores, we've got five currently trading. We're really pleased with the performance of those. We'd look to have 20 open by the end of this financial year, and that will be reflected in the CapEx as well.

Thank you, Michael. John from Officeworks. I think we've got two that you've mentioned, the ERP replacement and the Queensland Distribution Centre. Both the costs to the business this year that we didn't have last year, but there are productivity improvements every year that we're looking at to, I think, reduce those costs as we move forward. I'd look at both those two initiatives as drivers of leverage as we move forward in future years.

Okay, thank you. That's really helpful.

Your next question comes from David Errington with Bank of America. Please go ahead.

Morning, Rob. Morning, team. Rob, this question is probably directed to – well, it is directed to Mike Schneider. Hi, Mike. I want to address the issue of leverage following on from Mike's questions there. But, Mike, now I know you reinvest a lot back into your business. And I know you get asked this question about leverage, but it's really front of my mind now, going forward in the next two to three years, about the operating leverage of Bunnings, or at the moment, the relatively distinct lack of it. Can you call out some of the things, please? Because what I'm looking for is, you know, there's not a bigger fan in the world of this business, Bunnings, than me. But I'd like to see either, one, higher sales growth, or stronger leverage. I mean, when I look at Kmart, they're doing three and a half, kudos to Alex, three and a half percent sales and nine percent EBIT growth. But Bunnings is only about three and a half sales, four percent EBIT growth. So you're obviously reinvesting a lot, or it's just because we either want higher sales or higher leverage, because at the moment, three and four percent is just not getting the job done for us. So can you go into, please, some of the things that you're clearly reinvesting in? Obviously, I think you've called out price, and there's a few things you've called out, experience, range. Can you call that out, please, so that then that might give us a bit of confidence that your sales growth will be a lot stronger in the next couple of years than what it currently is? Now, I don't know if I've asked that question very well. Hopefully, you understand where I'm going with it. But at the moment, that lack of leverage is playing on not only my mind, but quite a few investors' minds. And for such a quality business, I'd either like to see higher sales or I'd like to see higher leverage. So if you could go into some of that investment, please, that'd be really appreciated.

Yeah, absolutely, David. And I think it's a really important question. And it's certainly something that occupies a lot of time now thinking at Bunnings, we're focused on. you know, absolute returns over the long term. And that's something that, you know, has been a really strong sort of, you know, tenet in all of my time in this role. And I think we've got an incredibly strong track record and a really deep commitment to continue to do that for all stakeholders, shareholders, customers, suppliers and team members. And I think, you know, we work hard to sort of strike that balance. And, you know, we've got a very strong and ambitious growth agenda and we've seen very strong results in what's not only a challenging consumer market, but a particularly challenging commercial market. And I definitely think that In terms of driving sales growth, recovery in the building sector will be something that I think Bunnings plays a really important role in and we're really geared to optimise that and we've been really pleased by the relative performance of the build as part of our commercial business in what has been a challenging market, certainly compared to some of the sort of competitor set that we come up against. But we've got very strong growth ambitions across energy, across automotive with sort of the second part of that automotive category expansion just about to commence, the third iteration of our pet categories, another one. And obviously space productivity is something that we spoke to quite a bit at around the two strategy days. But on the sort of productivity side, that is definitely something that we continue to stay really focused on. We've got opportunities across our transport, delivery and fulfilment capabilities and supply chain. with really distinct projects to deliver great outcomes across each of those. We're in the early stages now of the optimisation piece for our store rostering model, which will allow us to not only enhance the customer experience, but drive further productivity across our store network. And in our support function, we've now got the opportunity, because we're on the other side of some of the more significant investments we've made in the technology space, to start to optimise some of those, not only to improve the customer experience model, through online fulfillment as as one example but also through inventory management with our demand and replenishment capabilities we've invested in and you know on on price it is something that we are incredibly committed to you know in the financial year just finished we invested over 200 million dollars into price which i think It does demonstrate some of the productivity benefits that we're getting, but we are investing to make sure that our offer is compelling and it's a winning offer so that we continue to earn the right to be chosen by customers. So it really is, David, a full-court press across the growth ambition of the business, the productivity ambition, but also making sure that along the way the customer is front of mind for us.

Yeah, I think it's an important point you make that it is a very tough market and 3.5% in a really weak consumer is it. and weak building is probably a pretty good outcome, but two follow-up ones. When do you think we could start seeing some improvement in the building industry? And secondly, what would be the ideal outlook or the ideal thing for you in terms of sales to EBIT growth? Is it sales equaling EBIT growth but off a higher sales growth, or is it a little bit more leverage there? There's a little bit of a follow-up there, but if you could give us a bit of sugar on those two, that'd be great.

Yeah, well, look, I think you and I would be in violent agreement that if we could see stronger sales growth, it would be amazing. And we're working really hard to make sure that we optimise the opportunities we have, both for our consumer customer and our commercial customer. And, you know, to the point around recovery in the building sector, you know, we're really hopeful that we're seeing that, you know, later in this financial year. We see strong resilience in trade, as I talked to when I answered Adrian's question earlier around the tool shop, but also on the organisation part of the business. But the challenging environment on the commercial side has meant that we've been able to really drive efficiency in our commercial sales team, our manufacturing team, so that as that market swings around, we are really well placed to not only drive growth, but drive very profitable growth out of that sector. And on the leverage piece, you know, my view is there needs to be stronger leverage out of the Bunnings business. That's something that we've talked about as a team. It's something we talk about with Rob and Anthony, and we believe that we've got the the sort of tools in the toolkit, but also the strategies to be able to deliver on that, not only in this financial year, but in financial years to come as well.

Great answers. Thanks, Mike. Really appreciate it.

Thank you.

Your next question comes from Ben Gilbert with Jarden. Please go ahead.

Good afternoon, team. Sorry, Mike. I have a question for you. Just following a little bit from AeroAid, It feels that the Bunnings business is changing a little bit now in the sense that it's leaning a bit more into consumer focus. I appreciate it's always been from front to back of the house. But you look at a lot of the FMCG products you're putting in, which are obviously natural extensions. I'm just wondering, how does that then impact your view around needing to invest from a capital standpoint with respect to supply chain investments? capabilities around sort of next day, same day fulfillment, similar to what some of your peers offshore in Lowe's and Home Depot have done. So I understand you're doing a bit of work around it at the moment. And obviously CapEx last year was much lower to step up this year. Just wondering how you're thinking about that moving forward, because it feels like a massive opportunity for you and you're obviously killing it in pet and cleaning. And also, do you lean into that more? And if you do, do you need to put more CapEx in terms of systems, capabilities, supply chain, et cetera, into the business?

It's a great question. Thank you, Ben. I think our commitment to seeing the business strike a really good balance between consumer and commercial is still our aspiration. Commercial is now a higher penetration into overall earnings. I think we're up to about 37% of our sales coming from commercial. And as the market improves, we look to, as I said to David, want to continue to optimise that opportunity. I think what we've been able to demonstrate with automotive and tools, you know, these are sort of core categories, not only for the consumer customer, but the commercial customer and demonstrating those credentials. And, you know, we've got strong ambitions in energy, which I think plays heavily into sort of the electrical market, home automation, home electrification, you know, they're all very trade focused. We've got some really great opportunities in plumbing as well, where we see some really strong positioning as we transition into lead-free categories for tapware and those sorts of things. So we definitely don't have a skew one way or another. I think one of the things that Bunnings can sometimes be a bit guilty of is probably not calling out some of the things that we do and deliver that just exist because we've got around to fixing them. So same-day and next-day delivery is now a core part of our offer. I think it's really helping to support the growth we've seen in our one-pass engagement, but also, you know, the double-digit growth we continue to see in digital. And we've just opened our second fulfilment centre in Queensland. So in Wacol, we've got our second fulfillment center up and running and we've got ambitions for other markets as well. So I think we're well equipped to sort of deliver on those things, but we definitely understand the sort of ranging lens of front gate to back fence that we've long had and the ability to participate both for the consumer and commercial customer in that remains really strong. So for us, we want to win as many customers as we can, both across the consumer

segment but the commercial segment but it's absolutely focused on things that you know build maintain and repair you know homes and office buildings just following up on that just just the consumer aspect how big is marketplace for you guys now is it approaching sort of half a billion dollar business and do you make the decision to work with alex where there are opportunities to cross pollinate you know alex is launching one in a couple of months

Well, I think, you know, where things make sense across the group, I think we're open to collaboration. We've seen that with OnePass. We're having similar conversations around retail media. So, you know, where things make sense, then we do. And where we need to compete with one another, we do as well. And I think that's what, you know, really makes West Pharma such a strong business at a group level. Our marketplace is performing exceptionally well for us. We've been, you know, delighted with... um you know tens of thousands of products that customers can access through the website i think we're uniquely positioned to optimize the incredible volume of traffic that goes through the bunnings websites to drive that offer to customers we launched our services marketplace recently which is connecting trade customers with consumers to help them and we think that that's going to be a great opportunity going forward so It's still not at a materiality point, but certainly when we look at the market and then look at our performance, we're pretty satisfied with the growth and the contribution that Marketplace is making.

It's hundreds of millions of dollars now?

I'm not going to give that away because it's just, in the scheme of the Bunnings business, it's not as substantial, but the growth on it is spectacular. Appreciate it.

Thank you. Your next question comes from Brian Raymond with J.T. Morgan. Please go ahead.

Good morning over there in WA. Mine's changing tack slightly to Mount Holland. You've kind of come through construction and commissioning. You've got first product. You've also got still out there the potential to expand production, a doubling capacity mining concentrator. How does that decision get impacted by current losses and current prices and the reasonably subdued backdrop there. And I know your JV partners got a transaction underway, could increase their focus on Covalent a bit. And yeah, just interested if you are looking at that, how capital intensive that could be and what that could mean for CapEx, please.

Yeah, sure. Thank you. Good questions. I think just step through the order of priorities for us within the lithium venture, and that'll help answer the question. So the mine and concentrator really got up and running December 2023. And so over that period of time, we've been focused on just trying to achieve nameplate capacity at the mine and concentrator. You can see Last year, we did 145,000 tonnes for our share. Our outlook is now somewhere between 160,000 and 180,000. We have seen, in the last couple of months, we've actually been able to achieve nameplate capacity. And so really, for us, it's around getting the consistency. You've been able to do that month in, month out and get the plant stable. That will be the best objective there. Then over to the refinery, we've just achieved first product. And as Rob outlined, it's a circa 18 month journey now for us to ramp up the refinery. Really, those two objectives at the mine and the refinery will be our main and primary focus at the moment, which will help us drive down unit costs and kind of compete in this current lithium pricing environment. We haven't slowed down the work behind the scenes on the expansion opportunity, so one of the biggest issues in the overall timetable for that is getting environmental approvals and doing the upfront engineering work on what style of concentrator and what new technology we'd want to put into that decision if we were to go ahead. So that work is continuing and really they will be the key outcomes on determining when we can make a decision alongside looking at the price and outlook for lithium. So we're not really there yet. but the decision's still available for us to make. And I think that will be an important and probably the best return for us rather than looking at other opportunities in the lithium industry.

Right. So just to confirm, is it very dependent on near-term pricing or is it more dependent on the cost of... actually achieving the expansion itself in terms of capex? What are the key swing factors for you? Once you get through this 18-month period, it sounds like it's not near term, but how would you think about that?

I think for us, we want to have confidence, first and foremost, that the lithium refinery ramp-up journey is going well and you can see the unit costs coming down on that integrated operation. You then have confidence to consider, well, what are the longer-term opportunities for capex? for Mount Holland and the refinery, so that's important. And having that confidence, you'll also see the unit costs of the integrated operation coming down. So we're probably less focused on, you know, making predictions around future prices and more concerned around where Mount Holland as an integrated producer will sit on the cost curve.

OK, very helpful. Thank you.

Your next question comes from Craig Wolford with MST Marquee. Please go ahead.

Good morning, Rob and team. I'm going to attempt an accounting type question related to Bunnings and the whole BPI. I did notice that DNA actually dropped in Bunnings in 25 on 24. It's only a small drop, but a bit of a surprise. Will that continue? Is there any other implications we should be mindful about around the BPI transaction and what it might mean to the actual Bunnings DNA profile given lease accounting?

Yeah, thanks, Craig. I'll try that question. So firstly, there's probably a couple of things. As you know, there's the BWP transaction as well, where we reset effectively 63 properties in the Bunnings portfolio. And of course, that, as you know, with the accounting standard, that will bring forward some depreciation expense related to the right of use assets. So you'll probably see a little bit of a hit next year because that extends the minimum lease terms on most of those leases, which is a positive from an operating point of view, but it has a bit of a financial impact in the short term. So you'll see a bit from that. On BPI, less of an issue because obviously we're doing the sale and we will enter into a sale and lease back around the end of September towards October on five of those six properties. One of the properties will settle a little bit later because there's some development work that has to go on on one of the properties. So that'll settle a little bit later. The rest of the properties in BPI, the other nine, will actually come onto the balance sheet once the structure is wound up at the end of September, and they'll sit on Bunnings' balance sheet until such time as we enter into a sale and leaseback transaction on those. So obviously that will have less depreciation impact because I'll sit on there from a capital point of view, but the depreciation from right of use asset will increase once we enter into a sale and lease back on those properties. We don't have timing around that, but as I said earlier, we will kind of monitor the market and look at opportunities to enter into sale and lease back opportunities for those remaining nine properties through the year.

So just on the actual reduction in FY25 on DNA, was that the listing side or was it the PP&E side that had that?

Well, it's probably a combination of both, but I don't think it's overly material. It probably is more to do with depreciation of shorter term assets like technology. A lot of the technology spend, as you probably know, is now moving to OPEX. So it's moving away from CAPEX and depreciation into OPEX spend. And so that's probably what you're seeing.

And does rent, does the actual, let's put AAC 16 to one side, when you're doing these sales and lease back and the BWP transaction, is rent higher, the actual rent to sales ratio that you're incurring going to be higher?

No, so you won't, obviously they're all subject to their own negotiations, but you're not going to see any significant shift in rent expense. Thanks, Anthony. Thanks.

Your next question comes from Richard Barwick. What's CLE say? Please go ahead.

Hi, Rob and team. I've actually got a question for Alex on Kmart, please. I'm going to take the reverse tack to Arrow on Bunnings. With earnings growth was obviously well ahead, Alex, of sales growth. Can you just... But, I mean, the sales growth wasn't that significant. So can you just talk through... The drivers there, I was wondering if you're actually seeing some mix effect or if there's any particular cost out that you can talk to. And then just looking further ahead, assuming sales growth did remain around the 3% levels, what's the runway for this like a repeat performance where earnings can outpace revenue growth?

Thanks, Richard. I think the three big factors in terms of the result for the year, which we've covered, there's one that is in the base, and that is the benefit of the Kmart and the Target integration. So we got a full year benefit of that in FY25. That is now in the base. It will not be repeated as we go forward. Outside of that, we have had good productivity plans across our entire business. That's through the digitisation of our stores and our supply chain but just generally good cost control and just continued focus on continuous improvement as far as our productivity goes across the board and the last one would be the fractionalization of the cost base so we saw that strengthen in the second half as the trading performance of the business um strengthened i think as we move forward We've clearly had now two years in a row of very strong margin expansion. I would not expect that to repeat in the short term as we move forward. And that is because some of those big initiatives like the Kmart and Target integration are now in the base. We do have persistent cost of doing business inflation and we have continued investment in our strategic programs. But I feel that we also have really good productivity plans in place to mitigate those impacts as we move forward. And then again, just reiterating the importance of lowest prices for our business, we will always focus on that as an absolute priority and ensure that we have a very agile pricing response to make sure that we retain our lowest price position in the market. So I think to summarise all of that, a benefit that's in the base that won't be repeated going forward, but ongoing productivity that should ensure that we get good earnings growth in line with sales growth as we move forward.

So just to pick up on that last point, so earnings growth in line with sales growth. So are you saying that in terms of an effective bottom line margin, then FY25's the top?

No, what I'm saying is I wouldn't expect the rate of expansion to be what it has been in the last two years because it's been very significant in the last two years. I think difficult to say where it would land. I think to the extent we get stronger top line growth, our ability to fractionalise fixed cost base, we've demonstrated that's good. And so that would result in further margin expansion as we move forward. Equally, it's a very competitive dynamic market. We need to remain agile in our pricing. And if we need to respond... to maintain our lowest price positioning, we'll continue to do so.

Just to sort of attach on to that one, I know it's been very clear in the text saying that ANCO Global is still immaterial for Kmart, but you're also talking about that as an opportunity in FY26. How far away are you from being able to call that out and saying actually it is making a difference and Again, how do you think about that in terms of the earnings growth relative to the sales growth profile?

Yeah, ANCO Global, we still feel really encouraged about the long-term potential of that. We're focused on it as a strategy. It's a business that's very much in start-up phase still and an important strategic priority for us. We don't expect it to have a material impact on either sales or earnings in F26, but we will continue to pursue the two parts of the business model, so continued expansion of the store networks in the Philippines is a priority there. The three stores we now have are performing well from a sales per square metre perspective, and we see a really good opportunity to expand there over time. And equally, we've shipped first orders to our key B2B partners. The sell-through on those products has been positive, but very early days still and not a material contributor to FY26. However, important strategically that we continue to focus on developing both of those capabilities for the long-term growth potential of the business outside of Australia and New Zealand.

Okay, that's excellent. Thanks, Alex.

The next question comes from AJ Maraswamy with Macquarie. Please go ahead.

Hi, team. Thanks for taking the question. Just a question around health. So you talked to new and exclusive launches coming through in the business. Are there any learnings that you've been able to take from the Bunnings business and Kmart business, given how well you've done there in exclusive brands and any implications to margins there as well?

Yeah, thanks, AJ. Through our retail businesses, a couple of things. So bringing new and exclusive brands has always been core to the Priceline proposition. So it really resonates well with customers. So whether it's through Priceline or through Atomica, we've really been bringing new skincare and beauty brands to the market. In a similar way to both Bunnings and Kmart, private label is also a key part of our strategy. So expanding private label obviously comes with sort of better margins and gives us a lot more flexibility around the consumer offer. So that's definitely been growing, but will be a significant part of the business going forward. And we continue to sort of think about the sort of, I suppose, the category expansion opportunities within our business as well. Thank you.

Your next question comes from Phil Kimber with ENP Capital. Please go ahead.

Hi, guys. Sorry, I had some tech issues. So if someone's already asked this, I can ask another one. But on the WES-CEF business, ex-Lithium, it's always a bit tricky because ammonia is prices globally, there's sort of lag effects and I think there's rising gas contract roll-overs. How should we think about ex-Lithium, the earnings for that business in FY26? I mean, can they keep growing or are we potentially going to step backwards a little bit?

Yeah, thanks, Phil. It's Aaron here. I think it's obviously hard for us to sit here and predict the commodity prices going forward for the year ahead. But it's clear that the start of FY26, ammonia is, for example, remains pretty subdued. We are dealing with higher gas input costs. lot of those are on sort of rolling three to five year agreements so we don't get a kind of a sudden impact to the business but it is a high input cost environment and you know the key commodities for us being ammonia prices saudi cp price has sort of remained you know pretty subdued at the moment We have had a benefit in the past of some of the ammonium nitrate recontracting. So us and the other key suppliers in the industry, that market has tightened and we've benefited from that. I wouldn't say in FY26 we're likely to get another benefit from that AN recontracting cycle. That's probably more an opportunity in FY27. So does that help sort of provide a bit of shape there?

Yeah, yeah. I guess it's always a hard business to try and forecast, so I just wanted to understand. Because, I mean, if you go back over time, I think it's sat around that 400 to 450, and it's sort of back in that range now, X lithium. I'm just trying to understand, you know, maybe it sort of stays in that sort of range depending on what. ammonium nitrate pricing does rather than, you know, we have had periods where you've had some quite material step-ups in that business.

Yeah, the upside in the business really comes from, other than the commodity prices, is when we can expand the key manufacturing plants. So we've flagged there that the sodium cyanide plant will be shut down for the early part of calendar 26 to go through the first stage of an expansion. When we come out of the end of that expansion phase, we're looking at an extra 30%. uh production volume in in cyanide obviously selling into a really strong uh gold market globally at the moment so i look forward to that we've got the ability to expand three of our nitric acid plants we've kicked off the the first one that'll be an incremental circa 40 000 tons of of an coming out of that first plant expansion and then we can do that for the remaining two plants after that. So that will really provide us the longer-term growth in the business.

Perfect. Thank you for going through that.

Your next question comes from Craig Wilford with MST Marquis. Please go ahead.

Yeah, hi. I just wanted to get a perspective on the New Zealand market. We've been hearing from a lot of different companies, some green shoots, not consistent, but I noticed in your accounts the sales for West Farmers New Zealand went I know that's largely Kmart and Bunnings, but you would like a perspective on that market?

Yeah, I might start, Craig, and then hand over to Alex. But it's certainly a challenging market in New Zealand. But, you know, we've been really pleased with what we've been able to deliver from a market share point of view over there. We've had to compete pretty strongly with not only... couple of our sort of peers, but also, you know, in the broader sort of mass merchant area, particularly with the warehouse group. So, you know, it's just a challenging one. But, you know, they've really accelerated some of the monetary policy changes in the last sort of six months. And, you know, some of the settings with the way the government are thinking about business and housing are positive. So, you know, I think that, you know, our outlook for the year ahead is for a noticeably stronger performance in our New Zealand business.

From a Kmart perspective, we definitely saw improvement over FY25 in New Zealand, and the second half was considerably stronger than the first half, and we've seen some encouraging results going into the start of this financial year. So a challenging year overall, but on an improving trajectory is how it summarised Kmart.

Thank you.

Your next question comes from Brian Raymond with JP Morgan. Please go ahead.

Thanks for taking the follow-up. Just again on Kmart margins, the CAT CFCs have been repurposed and just interested in the degree to which that's played a role in the margin expansion in FY25 or if this is predominantly an FY26 issue depending on the phasing, et cetera. If you could give us some colour around how meaningful that transition was to your numbers this year or if that's coming next year. Thanks.

Thanks, Brian. So we're still in the ramp up phase of the CFCs. Pleasingly, they're now fulfilling over 70% of the volumes in New South Wales and Victoria. The biggest benefit has been to customers in terms of improving our speed of delivery and being able to get to next day as a standard proposition. We've also seen much improved inventory integrity as a result of the consolidation of the stock, which is opening up sales and availability to customers. So that's been a real positive. It has not been a material contributor to productivity, nor will it be a material contributor to productivity in this financial year. As I said, we're learning a lot in the ramp-up phase and the level of complexity around the inbounding of inventory and managing a centralised pot of inventory. All of that is a new capability to us. It's something I'd see as being a contributor to productivity over time. But in the next 12 months, we're really focused around utilisation of the sites and extracting the customer benefits that are available while continuing to get more productive outcomes from the two facilities.

Great. And just to confirm there, Alex, when you say productivity, are you referring to like EBT margins or are you referring more to inventory and other things?

I'm referring to the unit cost of fulfilling our online orders.

Yeah. Okay. That's clear. Thanks.

Your next question comes from Ben Gilbert with Jarden. Please go ahead.

Thanks for taking that question. Rob, I thought I might ask you a bit of a big picture one. We've had The polls on Woolies, Amanda sort of said the market's still tough. Leah's talking to Green Shoots. I suppose you're sort of the three biggest employers. I was looking for you sort of the decider in terms of how do you view the consumer at the moment? Do you think we're starting to see Green Shoots? And I suppose you're feeling much more optimistic as we head into Christmas?

Ben, as we said in the Outlook comment earlier, We have seen a bit of a pickup, a modest pickup. So we are more positive about the consumer outlook than we were six months ago. There's definitely some improvement there, but it's still early days. The caveat to that is we shouldn't forget that cost of doing business is still a challenge. And you probably picked up a bit of a theme that we have over one and a half million B2B customers across the group, whether it's Officeworks, Bunnings, Blackwoods and even Kmart has a number of B2B customers and B2B demand is still pretty soft and that's reflected by the cost of doing business pressures that many Australian businesses and New Zealand businesses are facing. But on the consumer side at least, we are seeing some positive trends and hopefully with a bit more a bit more relief on the interest rate side, if we can see inflation remain under control, then I think there's more upside to come.

And how does that factor in, Rob, your view around M&A? Because I appreciate you've obviously just done the capital return, but you've obviously got core gas and you've got some proceeds from the burning stores. Should we signal that given you're doing a larger capital return in core gas that there's potentially nothing sort of imminent from an M&A standpoint? And at this point of the cycle, if things are going to start improving, we're moving further into an easing cycle. Does that put a bit more urgency in your view to look at M&A or not?

Well, first thing I'd say that the decision around capital return, special dividend is totally independent of how we think about acquisitions. So we've got a really strong balance sheet. We've got access to debt equity capital. So the decisions on whether or not we would invest fundamentally different decision making process to should we invest Should we give tax effective returns back to our shareholders? And on the look on the M&A side, we continue to be cautious, but opportunistic. We look at a lot of opportunities. We tend not to get too overexcited with short term movements in consumer demand. Because at the end of the day, if we're investing, we're investing for the long term. So whether it's on the industrial side, on the retail side, it really comes down to taking a longer term perspective on demand. So look, I wouldn't say the changes in the consumer or market environment have increased or decreased our appetite for M&A. We'll continue to be very disciplined and prudent around any M&A that relates to an acquisition.

Thank you. There are no further questions at this time.

Okay. Thanks, everyone, for your questions and dialling in. And if you have any further questions, please contact Dan and the team. All the very best.