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Good day, and thank you for standing by. Welcome to Metcash 2026 Full Year Results Briefing. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to your first speaker today, Mr. Doug Jones, Group CEO. Thank you. Please go ahead.

Thank you, operator, and good morning, everybody. Welcome to the Med Cash Limited FY '20 Full Year Results Presentation. As operator said, my name is Doug Jones, Group CEO and and I'm joined this morning in Sydney by Deepa Sita, Group CFO; Grant Ramage, Foods CEO; Kylie Wallbridge, Liquor CEO; Scott Marshall, CEO of the Total Tools & Hardware Group and for the first time, Daniel Jenkinson, Chief Growth Officer; as well as Steve Ash, EGM Investor Relations. Given we issued results prerelease in early May -- and given the final results are in line with those, I'm going to start today with a strategy update before I get to the results detail. Before I begin, though, I'd like to acknowledge the traditional custodians of the land on which we are meeting today. We're in Walla Medical Country, and I pay my respects to elders across country, past, present and emerging. I want to start with our investment thesis and a couple of comments there. If you step back, the investment case rests on a few simple points.

Firstly, we operate in large, growing essential markets. We hold leading positions in supplying independents and nonchain food, liquor and hardware businesses. We have unmatched supply chain and logistics capability and flexibility and we sit in the middle of the value chain as an indispensable link between suppliers and customers. So what does that matter? Because it's what drives resilient quality cash flows support steady shareholder returns and does so with moderate and controllable capital requirements. The message on this page is not that we are simply large. It's that our scale and platform translates into attractive economics. What supports that investment case is the Metcash system or platform we've built over time. There are 3 mutually reinforcing elements to this platform, scale, trusted capabilities and competitive networks. The scale is clear. But just as important as how those elements work together as the Metcash platform. We combine wholesale, retail, services and customer networks across food, liquor and hardware and tools. These capabilities reinforce each other and make the model stronger than any individual part would be on its own. This is what gives us a sustainable competitive advantage and creates room for incremental growth opportunities around the core. We operate across 3 large and attractive markets. And in each one, we've got a strong position in food and liquor, we're the leading supplier to independent retailers in essential categories. In hardware tools, we hold leading positions in key trade and professional segments supported by a growing retail network. Diversification is built in. We're not reliant on any single category or earnings stream. That gives the group both resilience in the short term and multiple avenues for growth over time.

Across the group, the operating model is consistent. And alongside our purpose, this is what links our pillars and is what sits behind the construction of the portfolio. We share the same core strategic objectives in each pillar, a scaled supply chain, strong supplier services, competitive networks and our diversified customer base. That consistency drives efficiency, supports margin resilience and allows capability to be leveraged across the group. This is not 3 separate business. It's 1 repeatable system driving performance at scale, and it's designed to help us deliver honest value by combining the benefits of scale with the agility and community connections of independent retailers. I want to be clear that we've got a long way to go and much to work on. We're not claiming perfection. And there's significant opportunities ahead of us in opening new stores, increasing our teamwork score and growing new channels by way of example. But there is clear progress on our core strategy. The business today is structurally stronger than it was a few years ago. First, competitiveness is improving. Pricing has strengthened across all pillars and the IGA network is more competitive than ever. We're going to talk about that in some detail. Second, the earnings mix is evolving with greater diversification with retail and food service and convenience now a larger part of the group. That matters because it reduces volatility, improves the overall quality of earnings and presents new growth options. And third, we're not strengthening -- sorry, we are strengthening the platform itself. We're not changing it. This is not cyclical. It's a structural shift in how the business is built and where the earnings come from. In hardware and tools, we've completed the merger, removed duplication and reset the business. We're progressing with a clear iron or return to mid-cycle economics where market conditions are weak, the disciplined work to make our own weather is still progressing, and it's being done ahead of the upturn as we try to recover faster than the market.

A big part of all of this is the technology platform. We're building a modern, AI-ready operating environment in partnership with Microsoft. The rollout is well progressed with the risen nearing completion in food and liquor. The benefits are already clear better inventory, improved service levels and stronger data capability. This is about improving how the business runs and lifting performance over time while lowering the cost and risk of future upgrades in development. Horizon is nearing completion and is currently in user acceptance testing phase. We're planning for the first of 2 final deployments in the last quarter of '26. If we're in a position to go ahead with the second deployment this year without assuming unreasonable risk, our cost guidance will remain unchanged. We'll continue to balance cost time, quality and risk in these final stages of the program. We haven't been sitting idly. We've been investing to extend our competitive advantages, and those investments are now clearly delivering. They're driving 3 outcomes: scaling our networks, improving efficiency and strengthening our ability to serve customers and suppliers. You can see that in total tools with strong network and earnings growth. You can see it in food service and convenience, which is scaled quickly and is now a more meaningful contributor. And you can see it operationally where productivity improvements are increasing capacity and supporting growth. These investments are improving performance today and making the business more scalable for the future. This is not just supporting earnings. It's building a stronger earnings profile that includes higher-margin businesses. Speaking of which, around the core, we're also building additional growth drivers, and they're contributing and importantly, they're scaling. In Retail Media, we've built a national network with meaningful revenue and strong momentum. I'm excited to share for the first time this morning, the news that we've recently signed a partnership agreement with QMS and the network, which will accelerate our growth by providing access to a much bigger pool of advertisers and to their scale network and sales teams. For their clients, it broadens the range of media available. The sorted B2B online products and service marketplaces Marketplace at $5.9 billion revenue is now a significant part of how we operate and engage with customers and supports the modernization of our core wholesale revenue stream. And in retail ownership, we've taken the first steps in food, deliberately building our capability and asset base in a disciplined way. We have big targets here, but we'll be guided by disciplined capital management frameworks that mean that each store or a group of stores must fit strategically as well as financially. The common theme is clear. These are margin accretive opportunities that broaden the earnings base.

I'll move into the group overview and step through the results in more detail. The key message here, as we go through the section is 1 of consistency, a resilient core a diversified portfolio and a business that continues to generate strong cash. At an operational level, the result is clear. Food and liquor again provided a stable base of earnings, performing well in a competitive and value-conscious consumer environment, and all this in the face of the continued decline in tobacco sales. Hardware and tools improved sales momentum through the year despite weak trade markets, reflecting targeted operational actions and the group maintained strong financial discipline. We kept tight control of costs, working capital and capital expenditure. We continue to execute the Metcash platform strategy, extending into more products and services while protecting and strengthening the core. The results reflect solid execution with the factors impacting performance understood and actively managed. The key material pressure in the results sits in hardware, and that's cyclical, which is why we're working hard to address it. The financials reflect all that. Revenue was $19.6 billion and grew 3.8%, excluding tobacco. EBITDA and EBIT both grew on a normalized basis and operating cash flow was strong at $558 million. The 3-year cash realization ratio remains at around 104%. Leverage is at the lower end of the range and dividends were maintained at around 70% payout. So the takeaway is resilient earnings strong cash conversion and balance sheet flexibility. Looking at the result by pillar, the portfolio is doing its job. Food and liquid did the heavy lifting and a tougher consumer environment once again. harder and tools revenue accelerated in the second half, but earnings still reflect weak trade markets with pressure in retail margins. The strength in food and liquor provides stability while hardware gives us upside when markets improve, and that's why the diversified portfolio matters. This is a new view. If you look at the business by revenue stream, you can see the same story in a different way. We introduced this view at the half year results, but now we show earnings as well as revenue, and we'll continue to disclose this in addition to the pillar view, which will remain our primary segmental analysis, dependable high-quality wholesale base remains the core earnings engine while higher growth and higher margin streams are broadening the shape of the business. It's important because it improves resilience today and expands earnings opportunities over time. And it also informs how the business should be viewed not as a single channel wholesaler, but as a more diversified platform.

I really want to bring this to life in this next slide. It shows the progression over time. We've maintained a stable wholesale base while building higher growth streams like foodservice and convenience and retail. The direction is consistent across both revenue streams and pillars. We're not replacing the core, we're building on it to improve diversification and earnings quality. Since FY '19, earnings from wholesale have grown by 35% but the proportion of the total earnings base has reduced from 91% to 76%. I also want to use this slide to get ahead of a likely question about the low growth in total earnings over the last few years. It's important to remember that since FY '21, we've lost $1.8 billion in tobacco sales. Our estimate of the single year earnings impact between then and now, from tobacco itself and the lost associated products to be around $25 million. So to be clear, that's $25 million lower earnings than we had in FY '21. During this period, the food pillar earnings have grown by 35%. The -- in the same period, as the hardware cycle has turned, hardware retail earnings are off by $30 million. What this means is we've offset at least $65 million of earnings by growing the rest of the business. These facts highlight the point that our core is larger and more profitable than it was. I'll now hand over to Deepa to take you through the financials. The headlines are straightforward, resilient earnings, strong cash generation and a disciplined approach to capital.

Thanks, Doug, and good morning, everyone. I'll build on Doug's overview by stepping through the group financials, focusing on the quality of earnings, the cash generation as well as how disciplined capital management continues to support both resilience as well as future growth. Starting with the financial overview slide. FY '26 reflects another year of resilient earnings, strong cash generation and balance sheet flexibility. Revenue for the year was approximately $19.6 billion, up 3.8% excluding tobacco, reflecting solid underlying momentum across the core businesses. At the earnings level, the business delivered growth, excluding strategy and integration costs, which are one-off in nature. Importantly, cash conversion continues to be a standout. The 3-year cash realization ratio is 104.2%, well above our target range, reflecting consistent working capital discipline with the 3-year measure providing the most meaningful view across the cycle. The balance sheet remains strong with leverage at 1x, which is at the lower end of our target range. The Board has declared a dividend -- a final dividend of $0.095 per share reflecting a moderate increase against the annual target payout ratio and have suspended the DRP. We have maintained a disciplined approach to capital allocation, moderating investment and prioritizing high return opportunities aligned to our framework. This reflects a consistent approach through the cycle, adjusting investment in line with conditions while maintaining a strong focus on the core business and sustainable returns. As a result, we have delivered strong free cash flow and preserved balance sheet flexibility. Overall, the group enters FY '27 from a position of growth and strength with high-quality earnings, strong cash generation and financial capacity to support both returns and growth.

Turning now to the capital management framework. This framework underpins our track record for strong cash generation, disciplined investment and consistent shareholder returns. While the framework has been refreshed to improve clarity, the underlying philosophy remains unchanged. At its core, it is focused on maximizing long-term shareholder value through disciplined capital allocation and delivering returns above the risk-adjusted cost of capital. The framework is anchored in cash generation with a target 3-year cash realization ratio of 80% to 90%. Supporting this is a clear and consistent approach to how we invest, both on 3 elements: clear capital allocation priorities, rigorous assessment of returns, cash generation and risk and strong governance, including Board oversight and post-investment reviews. With that foundation in place, capital is deployed in a clear and consistent sequence. First, investing in the core business, thereby maintaining and strengthening operations; second, maintaining financial strength and operating within our leverage range. Third, delivering consistent shareholder returns through a fully franked dividend aligned to our payout ratio; and finally, investing in growth and where appropriate, return surplus capital to shareholders. The sequencing is key. It ensures we invest from a position of strength, maintain balance sheet discipline and deliver sustainable returns with growth investment focused on strategic fit returns and execution.

Turning now to the FY '26 outcomes, which demonstrate this framework in action. Investment spend moderated to approximately $244 million with the prior year, including the Superior Foods acquisition. Leverage remained at the low end of the target range at around 1x, preserving sufficient financial flexibility. The total annual dividend declared amounted to $0.18 per share, reflecting a payout ratio of approximately 74% of underlying NPAT. The key dates for the dividend are provided in the appendix section of the deck. ROFE was approximately 20%, with the moderation reflecting the expected impact of recent acquisitions and investment in long-term capability as well as the softer earnings in hardware. The net debt remained well controlled over the period with levels broadly stable and consistent with our disciplined approach to capital management and target leverage settings. Overall, these outcomes demonstrate disciplined capital deployment, strong cash performance and retained capacity to support growth.

Turning to the P&L. Revenue and EBITDA remained stable supported by the strength and diversification of the portfolio. EBITDA before strategy and integration costs increased 3.5% to $774 million. Depreciation amortization increased year-on-year, driven by prior acquisitions and ongoing investments. The step-up was noted at the half, with the second half broadly in line with the first. Looking ahead, depreciation and amortization is expected to increase by a low double-digit percentage in FY '27 as Project Horizon and other assets come on stream. Notwithstanding the increased depreciation and amortization, EBIT before strategy and integration costs grew by 1.6% and underscores our continued emphasis on cost management as well as operational efficiency. Corporate costs are expected to be in the range of $20 million to $22 million per half in FY '27. This reflects ongoing investment in growth and capability initiatives as well as variable employee entitlement costs normalizing to target levels. Net finance costs were $123.7 million, in line with the prior guidance. Looking ahead, FY '27 net finance costs are expected to be between $130 million and $135 million, assuming a moderate increase in rates. The year-on-year change in underlying EPS at $0.245 a is largely attributable to the one-off strategy and integration costs, which are reflected within EBIT. Excluding these costs, underlying EPS is in line with the prior year.

Turning to the cash flow. Cash generation continues to be a key strength of the group. Operating cash flow increased to $558 million, supported by solid trading and continued focus on working capital. Investing cash flows reduced significantly, reflecting lower acquisition activity while capital expenditure remained well managed at $175 million. More broadly, capital has been actively managed with investment directed to high-return strategic initiatives and core platform capability while overall spend moderated following a period of elevated investment. This disciplined approach has been a key contributor to the strong free cash flow this year while supporting continued investment in the business. Looking ahead, FY '27 CapEx is expected to be approximately $150 million, excluding acquisitions and will continue to be assessed in line with the capital management framework. The Group retains a strong balance sheet flexibility and remains well within the parameters of the capital management framework. Working capital continues to be optimized with average working capital days improving to 12.7 days. Total funds employed increased in line with strategic investment priorities while net debt and equity positions remained well balanced. The increase in intangible assets reflect acquisition activities during the year, including goodwill arising from business combinations. In addition, ongoing investments in capitalized software continue to build our core platform capability, partially offset by normal amortization. Together, these investments are strengthening the platform and supporting sustainable growth over time.

Finally, on debt and funding. The group maintains a strong and well-balanced funding position with total committed facilities of $1.57 billion and approximately $967 million of undrawn capacity at year-end. Closing net debt was $616.6 million while the average net debt amounted to approximately $835 million, providing a more representative view of leverage through the year. Leverage remains well within the target range supporting continued financial flexibility. The weighted average cost of debt reduced to 5.2%, supported by active treasury management. We are currently progressing refinancing activities as part of the normal funding cycle with strong lender support reflecting confidence in the group's strategy and cash generation profile.

So in summary, the Group has delivered resilient earnings in a challenging environment. Cash generation remains strong and reliable and our disciplined capital management framework continues to support both returns and growth. Thank you. I'll now hand back to Doug.

Thanks, Deepa. Let's turn to the operating pillars now. And the focus from here forward is how the platform strategy and execution this year showed up in these results. Turning to food. The key message here is 1 of resilience, competitiveness and the benefits of that diversification strategy. Food again demonstrated why it's such a resilient and important part of our portfolio. Supermarkets remain competitive and highly contested grocery market and a diversification into foodservice and convenience continues to support growth and reduce our reliance on supermarkets and helps offset the impact of tobacco. In tobacco, we are seeing the early signs of improvement where enforcement has actually taken place and on the back of strategic actions we've taken, but I'll get there in a moment. These strategies and the resulting earnings mix shift is now clearly flowing through into the results. Food EBIT increased to $261.8 million, up 5.4% or 7% on a normalized basis. EBITDA grew by 8.5% to $374.8 million. EBIT margins improved to 2.5%, up 14 basis points, supported by a lower weighting of tobacco. This is high-quality earnings growth, supported by diversification, improved mix and disciplined execution and founded on the sustainable competitive advantages. The improvement in food earnings has occurred over a long period, demonstrating the resilience over time and reinforces that Metcash's core food business is a larger and better business than it was a few years ago. While tobacco remains a headwind in reported sales, it's not reflective of underlying performance. That impact is being offset in a few ways, including better tobacco procurement, the foodservice and convenience strategy and other growth streams. So while reported sales are affected, the earnings base is becoming more diversified and more resilient over time.

Let's turn to tobacco. The data shows a clear link between enforcement and our tobacco sales. as evidenced by the fact that Queensland was actually in growth in the second half. And our total sales were higher in the second half than in the first. You can see this in the channel graph. It's pleasing to see other states following Queens and lead but the reality is that much, much more work needs to be done. We're not standing still, though, as you'd expect. And in food service and convenience have established new distribution agreements with the 3 major tobacco suppliers and signed new contracts with BP and Ampol Together, these are worth around $170 million per year. Price competitiveness has improved materially across the IGA network. And that's a statement you've heard from us for a few years. And I'm really pleased to share the data and the facts behind it today. The price gap for large stores has narrowed to just 2.1% from 3.4% a year ago. And across the total network it's come down by 4 percentage points. I'll point out that this comparison includes all IGA stores from metro to regional, large to small. This improvement has been driven by a combination of factors and years of hard work, including supplier support, targeted promotional programs and improved retail execution and has been accompanied by a stronger focus on price perception. Importantly, the most competitive IGA stores are now close to parity in key markets. All of this supports both volumes and the health and competitiveness of the network. You've heard us say for a while that retail ownership is a key lever for the food business. and a structured plan strategy, not a shift away from independents. We're acquiring high-quality IGA supermarkets in a disciplined way. We've taken the first steps through the initial supermarket acquisitions announced this year. We've got ambitious targets, as I said earlier, and will be balanced by disciplined capital management using the refreshed capital management framework and investment discipline and governance that Deepa spoke about. Acquisitions must both meet strategic and financial hurdles. Store ownership enables faster rollout of initiatives such as loyalty, retail, media and e-commerce and provides exposure to retail margins strengthens alignment across the network and improves execution through hands-on operational insight. It also supports the network continuity by providing succession pathways for independent retailers. Over time, the strengthens competitiveness, improves execution and lifts earnings quality across the network. All of these improve our structural competitive advantages.

Turning to liquor. The business is stable and continues to take share. The variability this year is in margins, not demand. Liquid delivered sales growth and our independent networks continued to gain share. The model works the multichannel offering across retail and on-premise enabled by a unique combination of flexible supply chain and scale continues to capture demand. Earnings were softer year-on-year, reflecting margin pressure in the first half from lower volumes and muted inflation. As I mentioned at the half, both of these occurring at the same time has historically been very unusual. That pressure eased in the second half with margins recovering to historical trend levels. Volume on the back of share gains and new supply agreements were steady. The movement this year sits in the lower first half margin. Over time, the business has operated within a margin range of around 1.8% to 2.1%, and we expect it to continue to operate within that range across the cycle, although we do expect it to be at the lower end of the range in the first halves going forward. So our margin can move in the short term, underlying earnings range is stable. The strategy has delivered share growth in what has recently been a low-growth market, evidenced by consistent delivery of market share gains, with 570 basis points earned since FY '20. Continued share gain over multiple years is strong evidence of both competitiveness and the attractiveness of the independent convenience and localized offer. 6.7% revenue compound annual growth over 6 years has been supported by those share gains and by a positive mix which is really ALM growing in categories where growth matters most. And that, in turn, is independent retailers meeting the needs of their customers and their communities. These gains are not luck or chance. They reflect strong program design and execution, pricing competitiveness and the strength of the network. And just as in food, are founded on the Metcash platform advantages.

Let's turn to hardware and tools. Demand is holding up across the business, and we continue to perform well in our key markets. The earnings movement this year sits in hardware retail margins and sales momentum is improving and what remains a weak and uneven trade market. Revenue, including charge-through was $3.7 billion, up 4.3%, and we saw positive like-for-like growth across both hardware and tools with momentum improving into the second half. Market conditions remain uneven. Trade activity is soft and lumpy, particularly in Victoria and Tasmania, where we're more exposed while performance has been much stronger in other states, particularly Queensland and WA. The external environment remains challenging, but the business is taking action to improve its own performance through network strength, improved customer propositions and targeted interventions. Momentum is improving ahead of any broad recovery in end markets. On earnings, the outcome is below where we'd like it to be, and that reflects where we are in the trade cycle. Tools delivered earnings growth, reflecting the strength of the network and the model. Hardware, particularly retail, as I've said, remains under pressure due to weaker building activity and softer margins. Wholesale performance remains more stable, reinforcing the underlying resilience of the business and of that revenue model. So the variation in EBIT is cyclical, not structural. We are not waiting for the market to improve, however, we've reset the strategy and we're acting to improve retail margins and execution ahead of any recovery. Total Tools and Hardware Group has 2 revenue streams, hardware -- sorry, wholesale and retail. The wholesale base is relatively stable with steady margins and volume linked to network DIY volume. The retail component is more cyclical being directly exposed to housing activity. Note that when I say retail, I'm including distribution from our trade sites. Single dwelling commencements or residential building activity is a useful lead indicator for retail margins, as you can see in the graph. So when building activity slows, margins come under pressure and when activity recovers, we expect margins to move back. So while the wholesale base remains resilient, retail leverage to market condition introduces more variability and and that's why restoring retail margins matters and why we're taking action in retail now. I'd like to think of this slide as the control what we can control slide, like the idea of making our own weather and not waiting for it to change. We've reset the strategy with a clear focus on retail standards, leveraging our full network, supplier partnerships and trade customer experience. Each of these improve our competitive advantages and the early indicators are encouraging. It gives us confidence that we're improving the business ahead of the cycle turning. The current TTHG results sit below potential, and we continue to see this business operating at mid-cycle margins over time. So there's a clear upside in both market conditions and our own actions. This is a business with a resilient base and a cyclical upside. In hardware, wholesale provides a stable base with consistent margins that grow with volume across the network. Retail is more cyclical, driven by trade activity, mix and pricing. In tools, the franchise or model adds another layer of stability with income linked to network sales and benefiting from operating leverage. Tools retail margins are impacted by market conditions, sales mix, promotional mix as well as competitive pricing pressures.

Let's turn now to the trading update and outlook. Group sales for the first 7 weeks have been steady with May softer in food and liquor, but bouncing back well in June. In food service and convenience, we've cycled the Ample contract win, but we expect to see contribution from new tobacco contracts starting later this half. We expect food earnings to be impacted by approximately $10 million from the removal of the accelerated tobacco excise program. I want to spend a moment on this. Last year, you'll recall that we flagged $5 million, but this year, we improved the contribution, hence, the higher number. While we don't foresee much change in market conditions in hardware, it's pleasing to note the continued momentum in hardware and tools in both our sales and network like-for-like numbers. So in summary then, we remain well positioned with sustainable competitive advantages, clear strategies and healthy retail networks. Our balance sheet retains capacity and flexibility to support our plans and we'll continue to target delivery of resilient quality cash flows. Thank you. I'll now hand it back to the operator for questions.

[Operator Instructions] The first question comes from the line of Thomas Kierath from Baron Joe.

Just a question on the retail hardware margins. How are you kind of seeing that right at the moment? And how should we kind of think about that for 2017? Like I can see that there have been they've come down quite a lot in the second half. You got Slide 43, which is showing they're obviously well below kind of mid-cycle. But how are you kind of seeing them? Are they staying to bottom? Just to be interested in some commentary on that, please.

Tom, thanks for the question. Look, I mean that slide that you just referred to, I think you said 43. I mean that really -- I think it gives you everything you need. And I hope that it's well received. Obviously, we can't give you guidance as to when the market will return. But I think I said it probably 6 different times in the last half an hour and now, we're not waiting. We're taking action to improve our performance. So I'll point you to the restructuring that we spoke about when we did the May 11th preresults announcement, we told you that we were going to take out approximately $15 million of people costs weighted towards hardware. So that would be included in that. We're working very hard to restore those mid-cycle margins. But the reality is that we're not seeing a lot of improvement at a market level.

Great. And just secondly, really quickly, you're saying you had a weak May and a better June. Was there some sort of benefit you had in the FY '26 results from kind of pantry stocking? And is that part of the reason that May was a little softer and just thinking about lapping that in 12 months' time? .

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

Our next question comes from the line of Shaun Cousins from UBS.

Can you just discuss the long-term target to own 25% to 30% of IPA network revenue. This is on Slide 33. Maybe just how do you consider the shareholding in Metcash enriches that you have? And then does that give you a share of IGA network revenue already, and does that step up in CapEx to $40 million to $60 million per annum by fiscal '30. Does that help you get part of the way? Just curious around how you get to probably when you think you might be able to get to this 25% to 30% is an aspiration or in the sort of an expected sort of date when that could be achieved or some of the markets there, please? .

Shaun, thanks for the question. So firstly, no, we don't include that Ritchie's minority holding in that calculation. Just to be clear, that chart on whatever slide it was that we showed you indicates a steady progression of approximately 10 to 15 stores per year. And that would take us to the 25% to 30% in around 5 to 6 years. The reality, though, is that we would expect what will actually happen is that it will be much more lumpy than that chart shows depending on what we faced. And we'll assess every opportunity on its merits. So if a larger opportunity came before us, we'll assess it. But we are planning, as we've shown in that chart for a steady, disciplined clear progression.

Great. And my second question is just around your sort of one-off costs. I think there was $12.4 million in strategy and integration costs at '26 million. What's the outlook for those costs in '27, please?

So those are one-off, one-off means one-off. We won't repeat them. We may have some -- we've told you that we're going to have some restructuring costs already, but they are of a different nature. And the reality is, as I said, when we spoke to you guys in May, cost out and making sure that we invest people, time, resources in the right places is an ongoing discipline for us, not a once in a 5-year event. But no more strategy and integration costs called out in that way.

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

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

Our next question comes from the line of Craig Woolford from MST Mark.

So can you just clarify a bit more about that retail store ownership in supermarkets. In terms of the motivation at you'll be financially disciplined. But how do you take into consideration retailers that may want to close stores or retailers that may leave what a leader network or choose to leave the network. Are you thinking about some broader perspective there on the risk of reduced volumes through the net cash wholesaling business.

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

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

Okay. Because -- is there -- what we're seeing in the Metcash result today with some of the disclosure on Riches is just a bit of pressure on profitability for IGA retailers so that the concern I would have is that you're having to stump up on retailers that need to exit or we've chosen to give up on running their own business, which may not be the best .

Stores to acquire. .

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

Okay. Makes sense. Can you clarify the comments from deeper just on -- so depreciation and amortization will increase by double digits in FY '27. Just want to clarify that. And then, Doug, your point on the $10 million excise figure tobacco excise figure you're saying that will be $5 million in FY '27. Is that how I should interpret that? .

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

Thanks, Doug. Yes, the comment around depreciating amortization is low double-digit percentage growth in FY '27 versus '26.

Craig, the point I'm trying to make -- we're trying to make on the guidance we're giving you on the net effect on food earnings of the removal of the excise, accelerated excises that -- this time last year, we told you that we expected it to be $5 million. We actually did better than we did in FY '25 in FY '26. And so that gap while we assess the impact to be the same, the gap from FY '26 is $10 million. So the flip side of that coin is that there was a benefit in FY '26 as earnings from improved strategic procurement of tobacco. I don't know how to say it any more clearly than that. .

I think just to clarify that in FY '27 because of the way the exercise is operating, there may not be that $10 million .

Correct. The government has removed the accelerated excise. So excise will move up now only by a watch and not buy an additional as has been happening for the last 3 years. .

Our next question comes from Ben Gilbert from Jarden.

Doug -- just as repeated online, new competitors across .

Grocery and hardware and liquor investing pretty aggressively behind it. You've got coal talking upwards of 20%. Obviously, funding is pushing pretty hard now as well. How do you position yourselves better to monetize this opportunity because if suddenly we're going to have a pit at the market online in a few years and project struck a bit more challenging, how do you put yourselves in the best position to capture this profitably while also supporting our members to do so? .

I know Grant wants to take this question. .

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

But do you need to do something more fundamental on a CapEx standpoint because your competitor set is obviously doing a lot -- you guys have got a great supply chain and a lot of single pixel capabilities. Do you need to lend into this more aggressively. So I'm just concerned that we look out 5 years and 20% of the market leads online and you're still playing rapid through DoorDash it's capped a little bit, particularly our profitably, you can actually do it.

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

Okay. And just final 1 for me. Just on the mid-cycle hardware margin aspiration of that sort of 3.5 to 4 -- 4 rather -- why isn't it higher? You've got your biggest competitor that's generating margins of sort of 3x that. I appreciate a bigger retail mix. But why wouldn't be aspiring for higher midsize margin, because I would have thought your vertical margins when you put your wholesale customers together with that would be well above 3 to 4, at least for the good operators.

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

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

The next question will come from the line of Bryan Raymond of JPMorgan. .

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

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

Right. Okay. And just to confirm then, the sort of 25% to 30% of the network that you're referring to, you're going to have a skew towards larger stores in that rather because the the sort of store numbers would take you longer than that. I mentioned before, 4 or 5 years -- or 5 or 6 years to get to that target. If you just do it on the 10 to 15 per annum. Obviously, if you look at your entire network, it would require more years than that. But -- is that a sales mix or a mix shift towards bigger stores .

Yes. Yes, absolutely. It's a -- that's a revenue number, not a stores number. .

Yes, yes. Yes. So higher revenue per store is what you acquire. Okay. And then just another 1 just quickly on food for me is just around the price gaps. Encouraging to see some pretty low price indices there, 101 and 102 for the larger stores. Could you help us understand how it's flowing through this sales growth for those respective networks? Because obviously, you've got pretty good value position sitting there. How are those stores performing versus the broader network? And are you seeing that -- so are you seeing better sales performance on the back of a better value position? .

I'll take one. from the beginning of the high compete program, we've seen the stores on that program growing at about double the rate. So extra specials is what you see as as a shopper. So bring about double the rate of the rest of the network. And from a wholesale point of view, about double that to about 4x. So they are outperforming. That's the first of our clustered approach to targeting activity to -- in that case, stores that are up against full competition in metro markets, but we see more opportunity to do it.

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

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

Our next question comes from the line of Caleb Wheatley from Macquarie. .

Dave and team. Just a follow-up question on the IGA price cut. Just can you a little bit for how thinking about I guess, the opportunity to continue to drive that down? And how do you think about sort of private label as a lever to continue to drive that up. But you kind of happy with that -- or do you think there's kind of more opportunity across the network place? .

I think as Doug said, when you consider the distribution of IGAs around the country from metro to ultra remote locations, you look at large stores, but also medium and really small stores. The progress we've made to get to that 106.4% [ gap ] is really quite impressive. I think to the point about can you continue -- well, that spread of stores and that mix of stores means that -- our focus is really more on getting credit from shoppers, so driving our price perception, really getting our messages home through campaigns. I can believable prices. Obviously, price match is well established. -- rather than thinking that we can continue to lower those prices forever. I think we're at the point where we're providing fantastic value locally in the larger stores, we're really close to parity. And of course, there's lots of other benefits that come from shopping, independent and shopping local.

Sure. And more specifically on the private flavor front. I appreciate the 390 upselling SKUs that you're calling out that how much more of a role do you see that playing.

I think the role for private label can be bigger, but it's going to come from more prominence, more distribution around the network. And I think, again, if you look at stores, that's where 1 of the things that we would look to do in the stores that we own is make sure that those things, private labels have the right level of positioning and prominence in the stores and reflecting what shoppers are expecting and the value that they're looking for.

Great. That's clear. This is just the second 1 might be for around Jet how do we think about the pathway for CapEx? I know that you've obviously guided number in '27, but it is quite a meaningful step down. You're still saying that $80 billion to $100 billion worth of sustaining CapEx -- do we think about it sort of renormalizing back up over time from '27?

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

Caleb, I would add that you must remember, we're getting towards the end of Horizon. We've done Jets Cross in South Australia as a mega DC. We've done Truganina in Victoria. I think I regularly flag that we'll continue to invest in the core of our wholesale business, and so we'll upgrade technology, et cetera. So it won't be 0 spend, but we expect it to be less lumpy at least for the next few years. And all of that plays into why we feel we're pretty comfortable with that approximately 150 level for the foreseeable future. .

Our next question will come from the line of Peter marks of Goldman Sachs.

Just 1 question for me on liquor. Slide 37 has got some good data there. It looks to me like the independents are winning market share from the major through providing better range, particularly in some of those niche categories. Is that how you're seeing things in the liquor market? And then if so, I guess, are you confident you can sort of hold on to that market share gains, you made versus the majors, given it looks to be driven by range rather than anything that's happening on the pricing side?

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

Yes. Thanks for the question, Peter. I think we're really pleased this year to have gained share again over the year, and particularly since October when we saw elevated levels of pricing activity in the market. So I think that gives great confidence and I hope to you also that the ongoing share gains at our ALM supplied independents have consistently realized over the past 6 years are actually resilient and repeatable even in light of elevated pricing activity. the independent channel in liquor is actually run through a series of very well organized and really sophisticated banner groups, which are investing really heavily in the shopper experience and make in the suppliers of understand the value of that and appreciate it. So it means that they're well positioned not just through range and the scale that ALM and Metcash provide, but in terms of that supply leverage and negotiation as well.

Our next question comes from Adrian Lemme of Citi.

And I just wanted to pick up on Craig's earlier question about the supermarket retailer margin. Can you confirm what degree the store wages of the independent retailers are linked to that, there were commission decision of the 4.7% increase in 2'7, please. .

The question -- sorry, you asked wagers? .

Yes. Just -- I know you guys don't have the direct impact there, but the independent retailers, like are there agreements with their store wagers tending to be linked so that they were commissioned? Or do they have, I don't know, their own store level 5 degrees. .

Yes. So Grant will comment. .

Yes. They will ultimately be linked to the General Retail award. And even if they are not, then those broader market-wide changes tend to flow through in the stratification of wages across the market. So yes, they will be feeling that. .

Okay. Okay. So I guess I'm just trying to square off obviously the top line in the bed challenge is a tough market at the moment. They've got growing costs. So I mean, -- are you seeing any requests from them the support? Or what are you trying to do to help them close.

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

Okay. And can I just ask another 1 just on the private label? Thank you for the extra disclosure. I noticed the growth rate was .

1.4% this year sort of down on where it was in 25 and 7.4%. Is that reflecting the price investment in terms of match the competitors? Or has there been a decline in volume growth.

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

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

Yes, it's low to mid-single digits. Thank you very much,.

Our next question comes from Richard Barwick of CLSA.

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

Richard, yes, I can answer both of those. So the first 1 about why has taken us so long my words not yours. As I've said a number of times facing this question is that as Grant alluded to, often when stores come available for sale, there's a lot of competition from other store owners, which we see as very healthy. It talks to the confidence that that store owners have in the network and the proposition that they're looking to invest. And we're not looking to drive up pricing and as I think we've all said maybe 10 times this morning, we have a very disciplined capital assessment process. So that would be the first 2 reasons.

In terms of your outline of the strategy, regional clustering, spot on, that is our strategy, and it's going to be really difficult for us to add real value or be really -- it's harder for us to be effective in far-flung individual stores. You've heard me talk about this as a replication of the hardware strategy. They have clusters of groups that have shared capabilities and common management structures, which allows us to leverage scale. So yes, we agree with that entirely.

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

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

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

Yes, Sean, no problem. So just to step you through the logic, it's 1.8 million -- billion with a of lost sales since FY '21 to FY '26. The earnings impact by estimate, including the lost sales of what we call associated products that would have otherwise been in the basket is approximately $25 million. So those -- that earnings would have been in FY '21, and they're not in the FY '26 earnings. So it's not a FY '25 to '26, it's FY '21. The other point I mentioned when I was talking about that was the impact on retail hardware earnings, which are off $30 million. You just have to look at our accounts and you'd see that -- and so the point I was making is that despite a $65 million earnings headwind, we've delivered consistent earnings growth. It's not to say that we want those earnings -- it's not to say that we're not working incredibly hard. But the point about the model is that they absorb those. And as a result, the core takeaway here is that the platform is essentially operating at a higher base. .

Our next question comes from Phillip Kimber of E&P Capital. .

Two questions. The first 1 was just a follow-up on that retail. -- strategy. You mentioned that it's taken a little while because you didn't want to effectively get into bidding wars with your customers, and your capital discipline. Is something changed on that front then in terms of you're now prepared to be a bit more aggressive and compete with your retail customers when these stores come up? Or did I sort of misunderstand that? .

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

Okay. And can I -- sorry -- and I'm sorry, because I know you tried to answer it with Craig, but I was getting confused on this $10 million excise impact. Is that -- I mean, just simplistically, I was interpreting that, that is a headwind for earnings in FY '27. If I do that right? Or is it actually a tailwind?

No, it's a headwind.

Yes, that's what I thought. .

Sorry, I just wanted to clarify that. .

Our next question comes from the line of Michael Simotas from Jefferies. .

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

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

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

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

Yes, absolutely right. Yes.

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

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

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

We have a follow-on questions from Thomas Kierath from Baron Joy.

Just a really quick 1 on the D&A guidance, the low double-digit increase. Is that based on the the $258 million of the right of use, which includes the right-of-use assets? Or is it on the, I guess, ex rides assets for $100 million, please?

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

Sorry. So it's -- the low double-digit increase is on the base of the 258.

Yes, yes. Yes. Yes.

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

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

Good day, and thank you for standing by. Welcome to Metcash 2026 Half Year Results Briefing. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Doug Jones, CEO. Please go ahead.

Thank you, operator, and good morning, and welcome to the Metcash Limited FY '26 Half Year Results Presentation. As noted, my name is Doug Jones, Group CEO. And I'm joined this morning in Sydney by Deepa Sita, Group CFO; Grant Ramage, Food CEO; Kylie Wallbridge, Liquor CEO; and Scott Marshall, CEO of the Total Tools and Hardware Group; as well as Steve Ashe, EGM, Investor Relations.

Before I go any further, you'll no doubt be aware that this morning, the ASX has a technical issue uploading certain documents to their public site. This affects all companies and not just us. We lodged all of our release statement, our financial report, our dividend declaration and our presentation this morning just before 9:00 a.m. All of those, except for the presentation, were released by the ASX on their site shortly thereafter. We have confirmed with the ASX that because all price-sensitive information is in the market, we may proceed with this call.

I'd like to begin by acknowledging the traditional custodians of the land from which we are all connecting today. I'm in Wallumedegal Country, and I pay my respects to elders across country, past, present and emerging.

As you know by now, our purpose guides our strategy and is an integral part of our culture. As I said at year-end, the contribution to communities by independent retailers across Australia is well documented and is something we're all proud of. The idea of making a meaningful difference in the communities our networks serve and operate in is part of our DNA.

At the same time, we're energized by the opportunity to win alongside independents. This is a great time to be in partnership with independents, and we recognize the advantaged strategic positioning that this provides to support sustainable and meaningful value creation for our shareholders, too. It's also a good time to reflect on our updated aspiration, purpose and values that encompasses the strong balanced partnership that we enjoy with independent retailers.

And on this basis, I'm pleased to share that our new purpose statement, winning with independents, is now live as well as our updated aspiration and values. We believe these reflect the nature of that partnership and our ambitious vision for the future. We continue to hold dear the belief that independents are worth fighting for, and we have developed in consultation with our engaged teams an updated set of values that underpin that aspiration.

Everything we do is focused on driving our flywheel. It remains the manifestation of our competitive advantages and of how we create value for independent customers, shareholders and suppliers, more and more of whom are selecting us as their route-to-market partner. Our flywheel is also the heart of the platform from which we can grow our services to independent businesses across Australia, and it forms the foundation from which we can move closer to the shopper and through the value chain.

These results are what I would call solid but behind our own expectations. But that simplistic view belies the many, many moving parts that make them up, including the trading conditions that you've heard about from many of our competitors. This year, we've maintained good momentum in the core of our business. And despite the challenging conditions, our independent networks remain healthy and confident.

And the strategies of each of our pillars is delivering the results that you'd expect in those markets. Food is now a highly diversified and resilient business and has again delivered strong earnings growth. Once again, Liquor has won market share. While the improvements in Hardware & Tools continues, and we are seeing sustained signs of market recovery. TTHG earnings, excluding once-off strategy and integration costs, were in line with last year.

Strong earnings and EBITDA leverage has been founded on disciplined operational and strategic execution as evidenced by our core operational metrics, those being delivery and logistics performance measures, which are high and trending in the right direction.

As you know, the tobacco decline has accelerated, fueled by emboldened illicit operators and even more changes to the regulations. That said, we are starting to see a ramp-up at state level in both practical legislation and enforcement. It's certainly too early to claim any sort of victory, but it's pleasing to see at last some concerted effort by state authorities.

In the face of all this, costs and working capital were well managed. And as I noted earlier, we're continuing to win new suppliers into the Metcash distribution networks.

I'm delighted to have delivered the first-ever cross-pillar consumer-facing program this year in Big Family, Big Prizes. Not only did this drive engagement with shoppers across our brands, it provided our suppliers a new campaign and trade marketing tool and galvanized our own team and network of independent retailers who are incredibly positive about being part of a network of over 3,000 family-founded stores. The family-founded concept with its associated logos and brand iconography is now firmly launched and available to support further executions.

In Horizon, I'm pleased to share that we've completed the core solution build phase, and we're now into testing with the first deployment of the solution scheduled for June next year and completion by the end of '26. We continue to balance carefully between cost, time, risk and quality, prioritizing the last of these.

As of right now, the Sorted platform on an annualized basis is almost a $4 billion B2B digital marketplace. This follows the migration of all ALM states, except New South Wales and Queensland onto the platform. Once those two states migrate in January next year, on an annualized basis, Sorted will be doing around $6 billion, representing over 30% of group revenue. This is a significant and material modernization and transformation of our wholesale business and one that offers exciting new growth opportunities.

At the same time as delivering on our core business priorities, we remain well positioned with attractive growth prospects. We've made good progress in integration of both Total Tools and Hardware Group as well as the Foodservice & Convenience business unit with a high-caliber TTHG leadership team already in place. The recovery in the building market remains an attractive opportunity that we are well placed to take advantage of. Our localized retail media build-out is on track.

In summary, we remain well positioned for continued structural growth within Food and Liquor, the essentials part of our portfolio and for the recovery we see coming in Tools and Hardware, the more cyclical part of our portfolio. And we have the balance sheet flexibility to pursue our growth plans.

As I noted a moment ago, there are many moving parts in our business. And to understand where we are in the journey requires we step back a moment and take a longer view. The reality is that this has been another period of disciplined execution and strategic progress. But it's also true that this operating discipline and focus on our core business imperatives, together with the strategic decisions taken over the last few years, have not only improved that core business but have put us in a position to take advantage of where we think the market will be in the next few years.

The improvement in the core is a few proof points, and I'd start with the improvement of 22% uplift in EBIT and 34% uplift in cash earnings using EBITDA as a proxy.

The Food pillar is a great example of a business that is of a higher quality at its core as well as being bigger and more diversified with more growth options. In the face of a massive and unprecedented decline in our largest category, earnings have grown consistently. This is down to both strong execution of core wholesale and logistics functions as well as the choices to diversify the business by not only improving the IGA value proposition and reducing reliance on tobacco, but at the same time, reinvesting in Campbells & Convenience to create the market leader in the petrol and convenience market and entering the foodservice market through Superior. The results of the consistent improvements in the core means that despite the most competitive grocery market in years, IGA itself is more competitive and relevant than ever. And at the same time, we are diversified and more resilient than ever.

I received many questions about liquor consumption patterns in my meetings with investors, and I respond the same way each time. The ALM channel strategy of a diverse balanced focus on our banner retail, contract and on-premise customers provides unmatched scale and a natural hedge. And our strategy of reinvesting in our flywheel to keep our customers competitive and improving the shopper value proposition means that today, our strategic advantage is as strong as ever. And this is why I believe there remains further growth potential.

The evidence of the network's competitiveness and relevance is in the market share gains. The addition of new customers to our networks and the choice by new suppliers to come into our DCs. The current earning headwinds are the result of margin and cost pressures in a competitive market where volume growth has to be earned.

The growth of the Hardware & Tools pillar has been delivered through a strategy that saw Metcash acquired Total Tools Holdings and then implement the plan, honed-in IHG of investing in retail alongside our independent partners. Though the tailwinds of the pandemic undoubtedly helped, Total Tools is now a $1.3 billion leader in a category ideally positioned to serve the tradie in a market that needs to build 1 million homes in the next 5 years.

While we're seeing early signs of market improvement, as I said in June, when we announced the formation of the Total Tools and Hardware Group, we're not waiting for the clouds to part. We're trying to make our own weather. The business is in better shape than ever and is ready for the uplift in market conditions that many believe is inevitable.

Project Horizon is moving forward with deliberate and concrete steps, and we have good plans in place to get it done. We're further modernizing and strengthening the core through the expansion of Sorted, which, as I said, by early '26, when the two final ALM states are migrated, will be one of the largest B2B marketplaces in the country, if not the largest. This should support growth in our core and adjacent markets and talks to our digital leadership in the B2B space.

Finally, the Metcash retail media network build-out continues on plan. We're installing assets at pace and steadily building the supporting tech stack and have already executed more than 270 campaigns.

Before leaving this slide, I also want to point to the improvements inside, which aren't always visible to the observer. Our operating discipline, our teamwork and our alignment are stronger than ever.

As I talk about our portfolio through the lens of sector participation, I want to again remind you of the strategy of steadily rebalancing the portfolio of revenue and value drivers. At year-end, I said that Metcash is often a misunderstood business and that assessing it as purely a wholesaler materially underestimates both the quality of the business and the opportunity. It's most helpful to understand the balance of the group as a wholesaler, retailer, distributor of food and liquor to the on-premise and out-of-home market and more recently as a franchisor. And secondly, through a deeper understanding of how the shape and balance has changed in recent years. And as you can see, continues to change.

In the first half of this year, the contribution to total revenue from wholesaling has continued to moderate and now stands at 72%, down from 74% last year. We continue to think about the idea of winning with independents through the lens of operating businesses alongside them. We've done this for a long time now in Hardware and Total Tools, and we've signaled our intent to do the same in Food and Liquor.

Each revenue model lets us tap into new markets and allows us to broaden our business goals beyond wholesaling. And as I said then, at the heart of our flywheel is our logistics capability. And at the heart of our business as a platform to support and win with independents is our wholesale business. But neither of those are the full extent of the Metcash Group nor of our ambition.

Turning to the financial overview. Excluding tobacco, sales grew by a pleasing 4.5% in the half and was still positive 0.4% even including tobacco to a total of $9.6 billion. As I noted earlier, EBITDA was strong, up 2% or 4.3% excluding the once-off integration and strategy costs, which we called out at the recent AGM, and which are included in underlying earnings. The group delivered $240.2 million of EBIT and $126.7 million of underlying earnings or $0.115 a share. Cash performance was again strong as headlined by the almost 60% increase in operating cash flows leading to debt leverage ratios at the lower end of the target range and underlying the strong balance sheet. The Board has declared a fully franked dividend of $0.085 per share.

Turning to the pillars now. It's pleasing to see revenue growth, excluding tobacco in all pillars, sustained in Food, excluding tobacco and in Liquor and accelerating in Hardware. Remember that Superior was included for just 5 months of last year. I noted the cash performance earlier, and it's good to note EBITDA up 2%. Excluding $8.3 million of once-off integration and strategy costs, group underlying EBIT for the half was up 1% and group EBITDA up 4.3%.

Before I talk to the Food slide, the key note among you will notice that there's less data and information and more focus on the core strategic points that we want to make on these slides. You can rest assure that all the data that we've always provided is available in the appendices at the end of the slide pack. As we did at year-end, we've also provided updates on important strategic initiatives, including Horizon, retail media and Sorted as well as further information on our ESG progress in these appendices. But back to Food now.

I really do want to highlight the continued competitiveness and relevance of the IGA offer. The market hasn't gotten easier, and competitive intensity has, if anything, increased. Despite that, our price competitiveness has continued to improve, and this has underpinned an improved rate of growth in the second quarter. The targeted Extra Specials promotional program, which is focused on large stores and which recently expanded from 75 to 95 stores is showing strong results. Average shelf prices across all 249 large IGA stores are now at or below the majors. I'm sure you'll appreciate the significance of this, more so in the current environment.

Both Campbells & Convenience and Superior continue to grow. In Campbells & Convenience, we're winning new customers and growing our business with existing customers. I described it as a reinvigorated business in the year-end results, and we're seeing continued evidence of this. This business is actually growing tobacco sales as the preferred route-to-market partner for tobacco suppliers. This is the manifestation of a desire to control what we can, not waiting for someone else to change our fortunes. The growth in Superior increased through the half in a highly competitive market, and I'm pleased to have won the Coffee Club contract, which started at the beginning of the second half.

Food earnings grew by 9.8% at the EBITDA level and 3.6% at the EBIT level. Higher depreciation and amortization is driven by the new DC in Truganina, as you would have seen in the second half of last year as well as the amortization of Superior customer contracts and right-of-use assets. EBIT growth was 6.1%, excluding strategy -- once-off strategy and integration costs. EBIT margins were up 10 basis points on the back of an improved product mix away from tobacco and an increased contribution from Foodservice & Convenience, even including those once-off costs.

The liquor market has been described as lumpy in the half with the weather in New South Wales not helping things and is also characterized by an increased retail competitive intensity that we had expected.

The IBA and ALM contract retail customers continue to deliver a competitive, relevant and convenient offer that differentiates them in the market and has allowed them to continue to take market share from their more formal competitors. It's pleasing that we've seen an acceleration of sales to on-premise customers, too.

There have been several key wins with our customers in this half in the renewal of the Liquor Stax contract and the conversion of the Redcape Group from contract to the IBA banner group, which are standouts, and reflect the confidence that those important partners have in our ability to help them win in the market.

In terms of key strategic initiatives, the Platinum growth program continues to deliver results, and we've recently completed the acquisition of Steve's Liquor Warehouse group, and these sales and earnings will be included from the second half. I spoke earlier about Sorted, which is now live across all ALM states, except New South Wales and Queensland, which will be transitioning in January next year.

Earnings are impacted by $1.5 million of once-off integration and strategy costs, flat sales volumes in a declining market, inflationary cost pressures not offset by volume growth, margin pressure and lower inflationary environment and D&A related to the Truganina DC and digital investments in our supply chain.

We're responding in all areas, including through disciplined cost and productivity programs, continued IBA growth, winning share of shopper wallets in the retail market and bringing more suppliers into the network. EBITDA as a proxy for cash earnings, excluding once-off costs, shows a very small decline and highlights the impact of the steps we've taken. I'm pleased with how the team has both managed costs and still gained share in challenging trading conditions.

During the half, we announced the merger of the Independent Hardware Group and Total Tools to form the Total Tools and Hardware Group. I'm pleased and grateful for the way in which our team members have continued to deliver for their customers through these changes. They've continued to operate with discipline and trade with hunger in difficult markets and times of change. In our business, we prize the ability to hustle, and these teams have certainly done this. As you can see, both Hardware and Total Tools are in growth, and this has accelerated in the second quarter.

It's pleasing to note that building supplies, builders' hardware and timber are categories that are now in growth and the Total Tools delivered growth in all three of their key models: franchise, exclusive brands and retail store sales. Earnings in the pillar are most impacted by trading conditions in Victoria, New South Wales and Tasmania.

Again, you'll be interested in what actions we've taken. We have a high-caliber leadership team in place and continue to refine our offer through range and pricing reviews in both Hardware & Tools to meet the needs of our core trade and professional customer in both businesses. Mitre 10's Low Prices Nailed Down promotional program is now well settled and delivering pleasing results. We've refocused our private and exclusive brands program, and we see more upside here. The cost-out programs that have been in place for a few years remain, and we continue to balance this with making sure we have the capacity to serve our customers.

We're also seeing that some of the improved market trends were sustained into the half, and I'm pleased that housing starts have now returned to growth at a national level with sustained strength in WA, South Australia and Queensland. The frame and truss pipeline is full in Queensland and building in other states.

EBITDA, excluding once-off costs, was up 2.5%, underpinned by the improved sales performance. I'm particularly pleased that excluding these once-off costs, the business returned to positive EBIT growth and leverage in the second quarter.

I'll now hand over to Deepa for her financial review.

Thank you, Doug, and good morning, everyone. I'll start by presenting a high-level overview of the financial performance for the first half.

Disciplined execution continues to drive strong cash generation and sustained profitability despite the ongoing market pressures. Maintaining robust operational and financial management remains central to the strategic framework, ensuring we are well positioned to adapt to changing external conditions.

The group's robust cash performance is evidenced by a 3-year rolling cash realization ratio of 106%. Given the timing and seasonal effects of period-end CRR results, the 3-year rolling measure remains the most meaningful indicator. While certain working capital timing differences are anticipated to reverse in the second half of the year, we project that the 3-year CRR will remain at the upper end of the previously guided range of 80% to 90% by year-end.

Balance sheet flexibility is maintained, with the debt leverage ratio positioned at the low end of the guided range of 1 to 1.75x. As Doug mentioned, the Board has declared a final dividend of $0.085 per share, reflecting a moderate increase against the annual target payout ratio. The dividend reinvestment plan remains in place with no discount applied. The ROFE at 20% reflects the short-term impact of business acquisitions, ongoing investment in long-term enablers as well as the softer earnings.

Turning to capital management. This half's outcome reflects a consistent and disciplined application of the capital management framework. The operating cash flow for the half amounted to $262 million, underpinned by effective cost control and diligent working capital management.

Capital expenditure and M&A investments amounted to $104 million with a portion allocated to the acquisition of Steve's Liquor. The remaining funds were allocated towards reinforcing core business operations and advancing key priorities, including technology upgrades, network expansion and growth initiatives. The year-on-year variance mainly reflects last year's $400 million investment in business acquisitions, most notably the purchase of Superior Foods.

The $126 million decrease in net debt primarily reflects robust operating cash flows and timing of investments as the business continues to evaluate potential investment opportunities.

The interim dividend of $0.085 per share reflects a payout ratio of approximately 74% underlying NPAT. The key dates for the dividend and DRP are provided in the appendix section of the presentation.

The moderation of ROFE was expected and as mentioned, is primarily due to the short-term impact of business acquisitions, continued investment in long-term enablers such as technology and supply chain and a softer trading environment.

This slide provides an overview of the group's P&L performance and other key financial highlights. Revenue and EBITDA have remained steady, supported by a diversified business model. Excluding tobacco, revenue growth has been achieved across all pillars. EBITDA growth is reflective of solid underlying cash generation and operating leverage within the group.

The depreciation and amortization for the first half of FY '26 is in line with the second half of the prior year. The increase relative to the first half in the prior year reflects the addition of new assets such as the Truganina DC, which became operational mid-period in the prior year. Additional uplift also arose from the Superior Foods acquisition and new leases, noting that Superior Foods was only consolidated for 5 months in the first half of last year. As highlighted at the year-end, the finalization of the Superior Foods purchase price allocation in the second half of FY '25 also increased customer-related amortization.

Notwithstanding the increase in depreciation and amortization, EBIT before strategy and integration costs, reflects a modest year-on-year improvement and underscores the company's continued emphasis on cost management as well as operational efficiencies. The net finance cost for the half amounted to $60.1 million. The year-on-year increase is attributable to the timing of the Superior Foods acquisition during the first half of last year.

Looking ahead, we anticipate the higher average debt utilization in the second half, which will align with peak trading periods as well as planned investment activities. Assuming interest rates remain unchanged in the second half, we expect the full year finance cost to remain in line with previous guidance of between $120 million and $125 million. Significant items are of the same nature as those disclosed in the prior years and further details are available on the slide as well as in the financial report.

The year-on-year change in underlying EPS at $0.115 is largely attributable to the one-off integration and strategic costs, which are reflected within EBIT. Excluding these costs, underlying EPS is broadly in line with the prior year.

Strong operating cash flows, combined with considered capital investments reflect Metcash's disciplined approach to cash management, enabling ongoing expansion and growth while preserving the group's financial resilience. Capital expenditure continues to be carefully evaluated in line with our capital management framework. FY '26 capital expenditure, excluding acquisitions, is expected to remain in line with previous guidance of approximately $200 million. As in the prior years, we will provide future CapEx guidance at the year-end.

The group retains balance sheet flexibility and remains well within the parameters of its capital management framework. Net working capital closed at $430 million with the increase in inventory levels supported by favorable supplier funding ratios. The increase in inventory was primarily driven by the strategic uplift in tobacco stock, which is fully funded through accounts payable and supplier trade finance at no cost to Metcash. Average working capital days remained low at 13.2 days, reflecting our ongoing focus on working capital efficiency and performance.

Metcash maintains a healthy, well-balanced and carefully managed debt maturity profile with total facilities of $1.56 billion. Undrawn facilities of approximately $860 million provide the flexibility required to manage net working capital fluctuations throughout the year, both intra-month as well as seasonally. Closing net debt was approximately $600 million, resulting in a DLR of 1x, which is in line with our target range of 1 to 1.75x.

Given the fluctuation in net working capital throughout the year, closing net debt should not be viewed in isolation. Therefore, in line with previous reporting periods, we've again shared the average net debt position to offer a clearer picture of our financial leverage. The average net debt during the first half was approximately $800 million, remaining generally consistent with the preceding two periods -- reporting periods. This corresponds to a DLR of 1.32x.

The weighted average debt maturity is at 3.2 years. The facility maturities are strategically staggered within our syndicated structure, enhancing resilience throughout business cycles. The weighted average cost of debt is lower than the prior year, benefiting from the RBA interest rate cuts earlier this year. $295 million remains hedged at a favorable rate of 3.69%.

In conclusion, our balance sheet remains strong with leverage well within target parameters. Our cash-focused culture continues to deliver with operating cash outperforming expectations and working capital discipline remaining a hallmark of our approach.

I'll now hand back to Doug for the group trading update and outlook.

Thanks, Deepa. Growth momentum, excluding tobacco has continued into the second half of FY '26. We're seeing an uplift in growth rates across Supermarkets and Total Tools with broadly sustained performance in Foodservice & Convenience, Hardware and Liquor. In Supermarkets, the business has maintained its competitive edge despite heightened price competition. The increased growth rate observed in Q2 has continued, driven by our differentiated and localized offer as well as the success of the Extra Specials promotional program in large stores.

Strong growth continues in Campbells & Convenience, supported by investments in the Sorted order portal and distribution center upgrades. These initiatives underpin our leading position in the petrol and convenience market.

Notably, we've secured more large P&C customers as part of our tobacco mitigation strategy with the tobacco supply to BP commencing mid-December and representing approximately $60 million per annum.

In Superior, sales growth remains robust, buoyed by customer expansion, including the Coffee Club contract win, which began in late October and is valued around $55 million per year.

Liquor sales are flat to start the half, reflecting the effectiveness of the multichannel strategy in a challenging market. We've seen accelerated sales to on-premise customers while sales to IBA and contract customers in Australia reflect that more subdued market.

The Total Tools and Hardware Group sales growth has strengthened compared to the improved first half with Total Tools showing particularly strong underlying growth. This is attributed to improved operational performance and earlier start to Black Friday promotions and continued store growth.

In Hardware, growth has been sustained in the subdued market, thanks to strong execution. We're also seeing early signs of market recovery. The frame and truss pipeline, as I noted, remains at capacity in Queensland and is building in other states.

While this is only a 4-week period, the start to the second half has been pleasing, and we're planning for positive sales momentum for the remainder of the half. The business is well positioned due to an increased diversity and resilience and with a continued focus on disciplined execution of our strategy.

Before I hand to the operator, I do want to make a comment on Horizon, and I'm recognizing that we are in this unique situation of not all the appendices in your hands. There's been an immaterial increase in the total investment over the full life of the program and some savings that we've made in the last 18 months, which will be spent and invested over the next 12. But as I say, a very, very small, I'd call it, immaterial increase, which I think is a strong result.

All right. I'll now hand over to the operator, who will take questions.

[Operator Instructions] Our first question comes from Adrian Lemme from Citi.

Look, I had a question on Liquor. It's really good, obviously, to see share gains in what is a very tough market. Obviously, your competitors are trying to address their share losses, and it has gotten more competitive. Are you planning to support your retail partners to hold share? And if so, should we expect further margin decline, please?

Yes. Thanks, Adrian. I'll make a few comments, and then I'll invite Kylie to make some comments about the market and our plans. I think what you've seen, as I noted, is that the earnings pressure is fundamentally a function that you've seen in all of our competitors of a much lower inflation environment and flat volume in our business, which means that absorbing and offsetting CODB inflation is just that much more difficult. Absolutely, you've heard me say, and I think you're probably all sick of hearing me say that our flywheel is the most important thing for us and making sure that we keep our retailers competitive is how we keep that flywheel spinning.

That said, we haven't invested over and above in pricing for our retailers. Those are the programs that are in place. And so that margin compression is not because we're giving away more margin to them. It's because of the relationship between volume and inflation.

I'll invite Kylie to make a few comments about the market generally.

Yes. I will -- thank you for the question. And I would echo Doug's comments that our margin impact isn't as a result of upweighting increasing pricing activity in the market. In fact, our investment in our network is around improving that shopper proposition, the quality of that experience and the quality of those programs in partnership with our suppliers. We are the second largest customer for most of our suppliers. And in fact, in some categories, we're actually the #1 customer for the largest suppliers in the market. So that partnership without investing over and above in price and resulting in market share gains, I think, speaks to long-standing quality and the service proposition.

That's very helpful. If I may ask just a second question, just Doug, more broadly on the strategy costs that have been incurred this year, mostly in the first half. Can you just confirm you are not planning to incur those costs in '27? And now that the work has mostly been completed, what do you see as being the benefits of this investment, please?

Yes. So I'll make two points there. The first is that we told you that we were looking at $12 million for the year of integration and strategy costs. We've incurred $8.3 million in total, and so you can do the math. There will still be some in the second half. And I can confirm that we don't see any more coming in, in the following year. I do want to just reassure that the bulk of those costs are in integration costs.

Next, we have Craig Woolford from MST Marquee.

Just two questions, if I can. The first one, just on your Total Tools performance. It does look quite a strong period. I'm just wrestling with how you want us to interpret 9.8% versus, say, a trend of 3% to 4% in the first half '26. How much do you think is Black Friday? How much is an underlying consumer? What would you say about the competitive environment in the [ tools ] segment?

Yes, sure. I'll make a couple of comments and then invite Scott to add, hopefully, not correct. So we have had -- we're cycling new stores, and we've had a few more stores. Black Friday, when we talk about going early on Black Friday, that was our competitors who went early, and we responded. I'm really pleased and grateful for the way that the team responded quickly and with precision, and we're very comfortable with that.

It's very difficult, Craig, you'll know, to attribute how much of it is to a particular promotion. And just remember, it's 4 weeks. But certainly, I think that the underlying trend is strong, and we did point to a strong second quarter as well. Scott, do you want to add anything?

No, I think that's broadly right, Doug. And Craig, look, if you look at the growth for the half in total, we only added three stores. We're quite happy with the underlying performance. And we are working really hard with our customers. So where you've got our loyalty programs, we're very focused on our direct engagement with them and running the right promotions at the right time. So there's been a lot of work in resetting range and repositioning ourselves.

And you just talked -- right at the start of the presentation, Doug, you talked about the independents in healthy shape and also looking to be more involved in retail in Food and Liquor. What exactly does that mean? Is there any examples you can give us of what you've done or what you would like to do?

Yes. I mean I can be very specific about what it means is that -- and we've told you guys this before that we see ourselves owning retail stores in the future. We're very cautious about how we deploy that capital. We're not going to overpay. I mean the example -- obviously, I won't talk to any specific discussions or engagements that we've had. But other than that, that we've closed, which is Steve's Liquor Warehouse, $50-odd million of turnover and $3 million to $4 of EBIT, that's what it means, and we're in progress.

Next, we have David Errington from Bank of America.

Doug, just a quick clarification before I ask my questions. I've been asked -- an e-mail came through, and I must admit it's to Adrian's question about the recurrence of the restructuring costs in '27. You said that you wouldn't get an increase. Could you just clarify what you meant by that? In other words, will those restructuring costs of $10 million or so disappear? Or will they just stay flat into the foreseeable future? If you could just clarify that before I ask the next question, that would be great.

Yes. I'm sorry, I wasn't clear. They will disappear. We do not expect them to recur.

Right. Excellent. So that's a $10 million tailwind in '27. I think that was important to clear up, Doug.

Doug, one of the attractions of this result for me was the performance of Campbells & Convenience, the performance there. And I must admit, it's snuck under the radar for me. And if you could take a minute to go through some of your commentary in the release where you say the acceleration in growth continued to be underpinned by the business' new growth strategy, which has positioned it as the leading supplier in the sector, supplying all major petrol and convenience operators.

I mean it's a pretty big increase, like $50 million first half on first half sales growth. It's really quite meaningful now. So could you go into saying, what is it that you're doing differently now compared to what you were doing previously that's actually seeing some really chunky sales growth here? I mean Superior is doing very well. I get that, new contracts and whatnot. But this convenience business is sort of like crept up on me. And I must admit, if you could spend a couple of minutes elaborating what your new strategy has been and going forward, that would be wonderful.

Sure, Dave. That sneaks up on you, so I'm -- I don't know if that's a good thing or not. So yes, thanks, and thanks for calling it out. I'm going to invite Grant to make some comments. But just to remind you that we're still in the -- what is the word, annualizing the Ampol contract. But Grant is the leader of the business, and I'll invite him to talk about the strategy.

Thanks, Doug. Thanks, David, for your question. As you know, we commenced supplying Ampol in February. It ramped up through the course of February. So you've got 6 months now in the result of full supply. At the time we won that contract, which was over a year ago, we talked about around a $70 million annualized total. It looks like it's going to be a bit more than that, which we're pretty happy with.

And I think beyond that obvious upside is we are growing really well with most of our large customers in petrol and convenience. And why is that? Well, we've worked hard to be a partner to that industry. It's not a side gig for us. As a wholesaler, it's the main game.

So investing in our Sorted platform where many of them place their orders, investing in DCs, upgrading the DCs. Obviously, you're well aware of Truganina last year, but we're also upgrading in WA. We've been able to shift some volume around to support the Superior business, create capacity for them to grow. So moving QSR volume into Truganina, moving QSR volume into Canning Vale early in the year has created the capacity for wins like Coffee Club. And it's a good example of the benefits that we're getting of putting the businesses together as a new Foodservice & Convenience business.

So there's a number of factors, but really, it's being a great partner, and that's our aim. We've even won a couple of awards from our customers through the course of the half, which we're really happy with. But it's -- I believe that there's ongoing opportunity for us in that space.

Yes, that was where I was going. Is there more upside do you think? Or is there more wins out there for you in the near term?

Yes. Well, we're working with all of the big players in petrol and convenience now, but we're not supplying any of them with all of their needs. So there's a share of wallet opportunity that remains, and we're actively competing and participating in tender processes and looking to build on the wins that we've had. And obviously, the key to that is providing good service to our customers and good value. So yes, I think there is opportunity, but it's a competitive market as well. And we've had a few wins at the expense of competitors, and you don't expect them to stand still in the future.

Okay. And Doug, can I finish off, look, you mentioned Horizon. I remember at your Strategy Day, it got a lot of press. This would have been over a year ago now, I suppose. It got a lot of press. You seem to be on top of it now or it's coming -- and now we've got a line of sight, it's going to be coming on live in about a year. Are you confident that it's going to come on without much of a hitch? Or is it something that we as investors should keep at the back of our minds? It seemed to be on your comments, you're a little bit more comfortable now than what you might have been a year ago. But can you give us a bit of flavor as to where your feelings are toward this major project when it comes on?

Yes, sure. Thanks for the opportunity. There's a couple of things I'd say, and I'll start with the fact that, as I always say, it's a large and complex program. I do want to quote our CIO, Neil Whiteing, who always reminds us that the system will be tested. We just want to make sure it's by us and not by the users. And so we're very focused on making sure that what has been built is of a high quality.

We -- I said maybe a year, maybe it was 1.5 years ago. I think it was a year ago, I spoke about this idea of as we move through the program, we'll essentially buy down the risk. And what that means is that as you go through specific milestones, you kind of tuck those to bed and the risk diminishes. It doesn't go away.

The completion of the solution build was a significant milestone for us and one that was completed on time and actually well on budget, slightly better. I referenced some savings that we've had. And so all of that does -- it does give you confidence. But I want to be very clear, this is no means easy, and it's not yet done. So we are very focused. We're in the phase where the business is very engaged with the program, and they have their hands on it. And you can never really be sure what will come out of testing, but so far, so good. So yes, my confidence grows with each passing milestone.

Sorry, the one last thing I'd say is I think we've done a very good job. The team have done a very good job of managing the costs, what we call the burn rate. And that's why, as I pointed to the fact that the costs in the next 12 months are slightly higher than we showed, but that's because we've actually had a lower burn rate leading up to it as well as that small increase in the total overall spend. We have also engaged now with customers and suppliers to talk to them about our deployment plans. So stuff is very real for us.

It just seems a little bit more optimistic today than what it was about 12 months ago. And there's a line of sight for it now. So yes, that's why my question. Hopefully, it goes well. And good cash realization too, Deepa. That wasn't lost as well.

Next, we have Bryan Raymond from JPMorgan.

First one is just on this Extra Specials program that's in, I think, 75 going to 95 stores within the Food business, started during September. Just wondering if that is meaningful enough to move the dial for, say, the acceleration into the trading update over November. And then just the second part of that question is just how it's funded between supplier, wholesaler, retailer in general terms.

Bryan, thanks for the questions. Yes, I'll let Grant talk to the details of it. I do want to say, though, that the business is made up of many, many moving parts and an enormous amount of effort across many programs. And so as always, pinning results on one intervention is dangerous. But I'm confident Grant is going to tell you that it is making a difference.

Yes. Thanks, Doug. Thanks, Bryan, for the question. you're right. It started just after the AGM. We announced it there. We started with 75 stores. It's increased to 95 recently, and we think that will grow again in the new year. Obviously, the 95 stores that it's in today are 95 of our biggest stores, and therefore, their contribution to the overall network sales number is disproportionately high. So I can tell you that the program is delivering strong results to the retailers. They're getting roughly double the sales growth rate than the rest of the network, and it's good for us as a wholesaler as well and it's growing our wholesale sales, too.

So we see value in it. Obviously, it's about delivering great value to shoppers. The specials themselves are better than market pricing. And it's really good to put IGA in that light of really being very, very competitive. And it builds on our large group of stores where we've done exceptional work over the last few years in getting them to a really competitive position and where their shelf prices, as Doug called out earlier, are now below Coles and Woolworths in many cases.

In terms of how it's funded, like everything we do, it's a combination of supplier support. Suppliers continue to be supportive of independents, and they want independents to succeed. Our retailers, of course, invest margin in promotions to drive results. And Metcash also has invested in this through the course of the half. It's embedded within our results. We're very careful about our price investment. You see price match is the single biggest part of that. We always make some other investments around that, and it's within the bounds of normal for us. But it's very targeted investment, and I'm very pleased with the results.

Okay. That's fantastic. And then just second one for me is just on employee costs. I was a bit surprised, I just look at -- the sort of through the detail that we do have at this stage. It looked like about 8% employee cost growth over the period, sort of 2x sort of wage inflation. I understand there's lots of moving parts in the business, and I'm sure there's some JV contribution to that in stores that have converted and other elements. But it just seems like a very high number compared to your sales growth and compared to wage growth. So is there sort of a simple explanation, maybe one for Deepa, in terms of how that might have come through?

No. I mean we're a large and complex business, Bryan. So there isn't one simple explanation. The part of it is Superior. There's additional cost because we had an additional month as well as some of the other small acquisitions we've made. There is also a higher, what do you call it, accrual of short-term incentives than there was last year and natural CPI increases. I'm sure you'll be aware that certainly in the bargaining space, there's quite a lot of pressure. So there's a number of contributing factors.

Next comes from Shaun Cousins from UBS. Shaun Cousins from UBS.

Next, we have Caleb Wheatley from Macquarie.

Just a follow-up on the IGA network. It sounds like the Extra Specials is doing quite well. Can you just talk to where you're seeing average price index now across the network relative to the sector? Any comments you can make on other initiatives being considered to drive market share, please?

Yes, I can answer that, Caleb. The price index, we've never shared the exact number of the price index, but we've described over the last 5 years, continuous improvement. That continues to be the case in all channels, so small, large and medium-sized stores all continue to improve. What I'm particularly pleased about is year-on-year, our price index is flat. So in a market that's clearly become more competitive, we've held that position. And through programs like Extra Specials in particular stores, we've obviously improved the position.

So it's an ongoing process. It's the sum of many parts. So it's a combination of shelf prices, the promotional program that we run, and it's a weighted average measure of price paid looking backwards. So it compares the average price paid in IGA to price paid in the chains.

And then beyond that, other factors for performance in the network, obviously, store numbers, you can see we're continuing to open stores in our sweet spot, medium-sized stores, which is healthy. We also continue to move stores out of IGA and into other banners where they are unwilling or unable to meet the channel standards we set for IGA. We keep raising those standards along with working with retailers. And there are some stores that simply don't fit into the network anymore. And as they move out of IGA, they continue generally to be Metcash wholesale customers, but they do drop out of the Metcash -- the IGA market share [ rate. ] But we think that's better because having that strong cohort of very good execution stores is what allows us to work with suppliers to get additional investment in things like high-compete Extra Specials.

That's clear. And just a second one, if I could, just on margins in Hardware. I appreciate the comments, Doug, on the one-offs and those rolling out as we go into next year, but you've also noted retail margin pressures in the release. Just keen to understand what you're seeing on that retail margin pressure front and including the implications of some of the comments you made on Black Friday starting a bit earlier from your competitor set there as well, please?

Yes, sure, Caleb. Happy to comment on those. I think it's important, firstly, when you're talking about the Hardware business and we say retail, what we really mean they're trade distribution sites that we own in the main. And so they trade, they negotiate and make prices with their customers very often. And so that's where you're seeing that competitive intensity and margin pressure coming through. We're very comfortable that our teams are balancing that well. I know Scott and his team have got a huge focus on driving sustainable sales growth.

In Total Tools, the retail sales margins have been a little steadier. In terms of Black Friday, I think I've kind of said it all, it was the market that moved earlier than they have in the past. We were alive and waiting for it, and I think we responded very well. I know Scott and the team are comfortable. And let's see how we trade. Black Friday itself has just finished, but let's see how we trade in the next few weeks of the half.

Next, we have Ben from Jarden.

Just the first one, just on Hardware. Just keen to dig into a little bit in terms of the comments around seeing green shoots. Obviously, the Total Tools update was stronger. Could you talk to outside of Queensland, where the order book is obviously pretty full for frame and truss, how are you seeing the order book more broadly? Are you seeing lengthening of it? Are you seeing sort of some improving growth there?

And then also, Scott, just be interested in just that very strong like-for-like update for Total Tools in the first 4 weeks. Is there anything funny or unusual in that? Or do you think that's -- could be the beginning of a bit of a trend?

Ben, the line is not that great. So we're going to answer the question. But if we miss something, then please prompt us again. We can answer what we thought we heard.

Yes. Thanks, Ben. I appreciate it. Look, for us, your -- the first part of the question around Hardware and performance, I think we called out the differences by state. Where we are seeing greater challenges, definitely Victoria, Tas and then New South Wales. There -- if you look at the national approval starts, there is an uptick, which gives us some confidence, there's some green shoots there.

There is still those structural challenges around trades that are meaning completions are prolonged. But for us, we are trading, I think, well and out there hunting business, as Doug said, but the market is competitive. So if you want -- we don't normally give a split by market, but Victoria, where we have a higher share of our own network is a drag for us.

The other part of your question around Tools. And look, I think we've called out, it's a 4-week period. The half growth in the network has been strong. We're working hard to have the right promotions at the right time. We're really pleased with that month performance being really targeted with our customer engagement and having the right promotions. So again, it's a very short period. I wouldn't -- I don't think I can add more commentary than that.

And just a second question. The market's got a pretty material lift in the rate of margin expansion for Hardware into fiscal '27. And I appreciate we're sort of looking at the crystal ball here and we're not going to get guidance for '27. But could you just give us a bit of an understanding or feeling for how you feel that leverage can run through this business as the cycle turns? Because we haven't really seen an up cycle in the business in its current form. Do you think that the cost base is largely embedded with the business now, so improving top line should drive decent leverage through the P&L? If it's more trade driven, is it dilutive? Just could you give us a few sort of -- I suppose, sort of [ going forward, ] how you think about the margin construct as the cycle starts to tick up?

Ben, I'll take a crack at that. We obviously have to be cautious about any forward guidance, and I'm not going to do that because I just can't. But our plans and strategies are designed in such a way that as volume lifts, we're able to take advantage of that. I don't think it should be lost on anybody that while volume may be subdued and has been for a while now, cost inflation has continued to grow. It doesn't go away. And that is what we've been managing very carefully, and it's very, very difficult to offset it in a business that has relatively high fixed costs like particularly trade distribution businesses do. And so we've been working very, very hard to stay in one place.

The flip side, mathematically, should happen as well as volume lifts. Now we're very focused on making sure that we don't somehow feed into the volume pressures by taking out so many costs that we're unable to serve our customers, and it's a very live issue that the team manage on a site-by-site basis.

So I think that's the best we can give you now. I'd sum it up by saying our plans and strategies are designed to deliver leverage. And remember, I did say that if you take away the second quarter integration and strategy costs, we did achieve positive leverage in the second quarter. I mean it's only one quarter, but we did achieve it.

Next, we have Shaun Cousins from UBS.

Can you hear me now?

Yes, we got you loud and clear.

Yes. Apologies about before. Maybe just regarding the Food business. And I was just curious to understand how you're handling the contagion of the tobacco weakness since the 1st of July on the broader Food business? Do you think you can -- should we just see an annualization of what looks like sort of weaker sales growth? And I'm not sure -- just trying to work through your presentation materials, if you've provided what like-for-like is maybe on that second quarter period, but it looks sort of as there's been somewhat of a step down. So should we anticipate that the weakness that you've seen, say, since the 1st of July in that in Food that, that continues on? Or can you do better and actually improve that?

And maybe just further to IGA, just how do you think your price perception is relative to the price reductions that you've spoken about before in that -- in your leading stores?

Yes. I mean we don't generally give you quarter-by-quarter for everything, but we did call out that particularly talking about the Extra Specials program, actually Supermarkets growth recovered a bit in the second quarter. But I'll let Grant talk about the actions and initiatives we're taking to, I like your word, defend against the contagion.

Shaun, thanks for the question. As you say, since the beginning of July, we've seen a significant step-down in tobacco even from a declining market before that as more and more of the sales pushed into the illegal market. There's obviously a loss of tobacco sales on top of that, you lose the associated product sales, the products that would have been bought in the same transaction, and that is definitely a drag on the network, and we called that out as we see that, but the dropdown in July was a little bit more significant than we expected.

Our objective is to grow the whole store. We've been working very hard with retailers, both on a competitive front, which I think we've covered already. We see things like Chobani coming into our DCs through the course of the half. That is good not just for Metcash, but good for the network because Chobani in our distribution model means more stores getting more frequent deliveries, better in-stock position and a significant improvement in our competitive position there. There are other suppliers continuing to come in. So Monde Nissen with the rest of their products came in just at the end of -- the beginning of the second half. and there's more products like that in the pipeline.

We work hard on that competitive position. We've talked about the Extra Specials, but improving across all of the store network. How is it for -- how do people perceive that? That's a much harder thing to change. It takes time. But I think if we're doing the right things, we're calling out those Extra Specials, very active in digital marketing. We've really seen a shift of our marketing focus from printed [ walked ] catalogs increasingly to digital means, and that allows us to increase our reach and reach more people with that message. So it takes time to shift perception, but we are doing all the right things, and I'm confident that over time, that will continue to improve.

So I think you can expect that step-down in tobacco to continue for -- until it cycles out at the end of June. We are seeing some positive signs on enforcement, as Doug touched on earlier. And we continue to advocate for the network because we can see the impact that it has, particularly on our customers in the tobacco loss. So we've been very actively advocating for improved enforcement measures, and we're pleased to see some evidence of that happening now.

Great. And maybe just a question on -- within the Hardware division. Have you split out the Total Tools and IHG Hardware EBIT?

Shaun, we split out the -- no, we don't split out the EBIT. We split out the retail sales, as we said we would. And you'll see that in the appendix, so I'm just paging to it. So we'll give you sales between the two, and we'll split out owned stores and third-party sales, and then we give you total EBITDA and EBIT.

So you're no longer telling us what Total Tools and IHG EBIT is respectively?

No. And remember I told you that we weren't going to be able to do that because we have now started combining a number of functions. So I told you that at year-end.

Yes. Okay. Maybe just one quick question on disclosure going forward. You've spoken about a change to a different revenue model by way of sort of being a wholesaler, foodservice retailer, franchisor. Is there an intention to sort of maybe think about disclosing [indiscernible] earnings on that basis, just given that, that can help shift the way of thinking from the investment community if we have some earnings on that with some history, please?

Yes. We are thinking about how to do that. Your words are ringing in my ears from the last time we discussed this, and you made your point well.

As you've seen, we've given you some more information this time around. We need to think carefully about being very helpful and accurate in the way we attribute earnings. We won't be able to do it at the EBIT level because there's a whole lot of costs that are not attributable between them. But -- so not this time around, Shaun. I think you'll see some movements when we talk to the market in March at our Investor Day next year and at year-end.

Next, we have Phil Kimber from E&P Capital.

My first question is just on the Food business. You guys are doing a great job there, and you've talked about some sales momentum. Just trying to understand from your customers' perspective, with such a big fall in tobacco, is it having a more material impact on their profitability than it seems to be on your profitability? Or are they managing it well like you are?

Thanks, Phil. I'll take that. Yes, it undoubtedly is having a bigger impact on our customers' profitability. I think we've said consistently over the years that our margin on tobacco is considerably lower than non-tobacco, and that most of the profit made on tobacco is being made in the network. So you see that in other integrated retailers as well where they're calling out substantial drops in their tobacco income.

The challenge for us is to replace that value in our customers' P&L. So we've been supporting them to drive growth. So it's pleasing to see that at a department level, fresh is now bigger than tobacco for Metcash. And in retail, fresh is growing strongly. Fresh is the biggest driver of store choice.

Obviously, we talked about value a lot already, so I won't repeat that, but really focusing on getting the basics right across the store, macro space allocation, ranging, pricing, the promotional program that we run, high-quality service, high-quality fresh. All of those things help lift overall store performance, and they are the things that we've been working on for some time with retailers but really accelerated in this period because everybody has seen the challenge of tobacco, and it's really helping to galvanize the network around some initiatives to drive improvement in performance that will ultimately offset that tobacco challenge. And who knows, some of the tobacco business might come back.

Yes. And then my second one, just quickly was on -- I think on the call, it was mentioned that there was a strategic investment in tobacco. And I just wanted to understand that given you also said that sales took a step down from the recent change. Why would you be making a strategic investment in the inventory in tobacco? And is there a sort of one-off profit rebate benefit from that?

Phil, I'll take that one. So as a wholesaler, we're always taking positions. And what we do is make sure that we're taking those positions in a responsible way ahead of price increases. And you'll also recall that at year-end, we told you that we expected that the impact of the removal of the accelerated tobacco excise program will be around $5 million, we estimate. And that's part of our -- that buy-in ahead of increase is part of our strategies to manage that as well as all sorts of other things from retail media to all of the initiatives Grant spoke about. I just want to be clear, there's no profit recognized until the product is sold.

And then the last point I want to make is that this is done in consultation and in partnership with our tobacco suppliers. And I've spoken for a while now and so is Grant about our strategic partnership with them as their chosen preferred route to market. We do this every year. This is entirely normal, and there is nothing unusual about it.

Next, we have Michael Simotas from Jefferies.

First one for me on Food, just fleshing out some of the topics that have been covered a little bit. There's a line in the release that the Food retail market is the most competitive it has been in a number of years, and I think many would agree with that. Metcash has done a very good job of maintaining its underlying Food margin since the rebase about 10 years ago. And then there's been some benefit from mix shift away from tobacco, et cetera. Are you confident that you've got enough levers to pull and drivers to be able to continue to maintain margins on an underlying basis, notwithstanding the market continuing to become more competitive?

Michael, before Grant comments specifically within Food and the levers, everything I'll say is couched in we have plans and strategies designed to rather than we're going to. So please hear it that way. But at a high strategic level, we've spoken for a while now about the reduction in proportion of total Food sales from IGA and we've spoken about it being around 60%. And that's a function of us obviously selling to other Supermarket customers but also growing our Campbells & Convenience business and the entry into the foodservice market. So the expansion of margins that you've seen is in part because of the shift away from tobacco, but it's also a higher contribution to earnings from the now combined Foodservice & Convenience business.

I'll invite Grant to make some more specific comments.

Thanks, Michael. The short answer is, yes, I think we have the levers. Over the last few years, we've been carefully managing our costs to allow us to maintain a competitive position, our cost to serve our customers. We've invested in DCs. We've put new automation in new DCs like Truganina, continuing to invest in systems, not just the core ERP system, which is well publicized, but all the systems around that, that support better choices around ranging pricing promotions. All of that means that the efficiency of the work is good.

I've talked already about high-quality execution. That drives a really neat flywheel in Food and has been for the last 5 years of better execution, good supplier investment, better returns equals more good investment and more execution. And that's been working really nicely for us for a while and continues to be a driver of our competitive position and success there.

So I think we have got it. I mean it's an interesting market in that it's competitive. It's very competitive. But the investments that we've seen by others in the market, we've been able to keep track of and match and build programs with suppliers, with retailers that keep us in a competitive position. And as I've already referenced on our measure of price paid, it's equivalent to what it was a year ago. So we've held that position very well.

Michael, you've heard me say in the past that expanding wholesale margins is not always the way to grow profits. We focus on spinning the flywheel faster and growing wholesale profit dollars in that way. But as we -- both Grant and I have touched on, there are other strategies and other revenue streams and business models that have a higher margin that will -- if our plans are executed well and our strategies are successful, should support margin expansion.

Yes. I think you've done a very good job on that. The second question I've got is on Hardware. Look, I think the ingredients for a recovery have been in place for a little while, but it's taking time for this to come through and with the monetary policy backdrop potentially being a little bit less favorable as of the last few weeks. What do we need to see to get this business to really fire?

And maybe to give a little bit more comfort, can you talk about in markets like Queensland where you have seen pretty good demand, whether there has been more favorable pricing backdrop for some of the heavy building materials, frame and truss production, et cetera?

Yes. So what we really need to see, I mean, it's fairly simple is a material uplift in starts in actual activity. We need trades on site, and we need tradies confident and we need builders on site and building or renovating new homes. So that's pretty simple.

And what will happen is that activity will uplift, but you're not going to be able to gain pricing power, if you like, or expand through pricing power until capacity is used up. So there's still capacity in the market. And while that's there, people are -- us and our competitors are going to fight hard to utilize it. We're -- it's a bit right now, but we're very focused on making our own weather. We're not waiting for the market to improve. We've taken very specific actions, which I think I've outlined today and in the past that are designed to support our business.

And Michael, it's Scott. Nice to hear from you. And just as a build, I think we were asked a question earlier around leverage as well. Definitely, now is the time for us to ensure that we come out of this period strongly. So being really clear that we lead in trade and being set up and organized the right way for that. And then just how we localize our formats whether it be convenience or trade and our range and pricing policies around that. So we're very focused on our execution right now of our offer. And as Doug has said, doing what we can to come out of this strongly.

Next, we have Richard Barwick from CLSA.

Just a quick one, probably a question for Grant on IGA stores. I noticed that you opened 10 but closed 9 through this half, but you're planning to open 17 in the second half. Can you give us -- or do you have a view here as to what number of closures you'd also be expected in the second half? And then a little bit longer dated, how should we be thinking about a net number of IGA stores if we look into next year as well, please?

I don't have a number for anticipated closures in the second half. Sometimes these things happen quite quickly, and they're not planned, probably when I look at the reasons for those closures, sometimes it's competitors acquiring stores or sites. I think we're on the record in our calls for stronger action on mergers and reform in that space, and that's come now. So we'll be interested to see whether that actually benefits us in stopping the chains from some of their acquisitions of sites and stores.

Beyond that, we always have a bit of churn in the network. It's normal, particularly in small stores. They do open and close relatively frequently, larger stores less. We're pleased with our pipeline. We've got a really strong pipeline of store growth for the remainder of the year. And we -- the planning that goes into opening a store obviously means you've got good visibility to it coming forward. So we're confident in that number. And looking further out, confident in that number because we're really focused on stores in that sweet spot of around sort of 1,200, give or take, 300. So 900 to 1,500 is what we think of as the sweet spot for new stores.

Beyond that, as I mentioned, you do see stores moving out of the IGA brand in terms of net number of stores in the IGA brand, it's sitting just under 1,250 now. I think we'll probably have a few more that exit as we continue to drive standards up. There's a few final stores to do that with. I'm hopeful that you'll also see some stores coming back in where people have decided that they aren't able to be in IGA, they leave, but then they see the benefits of being in that brand, and they'll come back over time.

Okay. And then, I mean, you sort of touched on, I think, Grant, the -- I mean -- and maybe, Doug, this is a bigger one for you perhaps, but the ACCC has obviously changed some of its processes around acquisitions in terms of what's to be reported in the way that they go about it. Does that -- I mean are you hinting here that that's a positive impact for you in the sense of supermarkets, but I was also wondering if this might have been perhaps a bit of a negative for you in terms of your approach to bolt-on acquisitions, especially within Hardware? So I'd love to hear your thoughts there, please.

Yes. I mean I'm not a lawyer. So you can take what I say with that caveat. The changes that are coming in early next year are around the notification regime and the -- and being more proactive about that and getting preclearance from the ACCC. What the ACCC haven't done is reverse the onus of proof on the impact of the market, which is what we had hoped that they would do and have consistently asked for because very high market share businesses should be able to demonstrate that their actions are not contrary to good competition.

We will obviously -- as you say, we will be subject to the new notification rules, and we'll be ready to do that. That may add some time to everybody's process, and it may, therefore, involve costs. Anytime you've got legal teams on the clock, it could cost money. So I think we'll all have to wait and see. But we feel comfortable that with our market positioning, we have the right to be confident that we'll be able to get those through.

There's been a lot of activity towards the end of this year, as you can imagine, trying to get deals over the line across the market. So let's wait and see what happens next year.

Next, we have Tom Kierath from Barrenjoey.

Just a quick one. Can you just give us the Superior EBIT contribution? And then just an update on the synergies there, how you're tracking, please?

Tom, yes, you'll remember we said at year-end, just like in Hardware, we're not able to break it out specifically because we've merged so much of the business. So we've shown you the sales. We're on track with synergies. We feel comfortable that we'll meet the run rate of $14 million by the end of year 2, which will be around June next year.

I think what's important is the strategy of the Foodservice & Convenience -- sorry, the results of our Foodservice & Convenience strategy are bearing out, and we're very happy with the performance of that business. As Grant said, we've moved products between distribution sites. We've integrated teams. And so it's just not possible to give you an individual number, but at a total level, we're very pleased, and you should take confidence from that.

That concludes our Q&A session. I will now turn the conference back to Doug for closing remarks.

Thank you, operator. Thank you to the team. Thank you to all the listeners for your support and attention and for your questions. I also want to thank you for your patience on the call with the lack of the presentation. It's not our doing, and we're as frustrated as you are. We're liaising with the ASX. And as soon as we've got their clearance that we can distribute the presentation, we'll make it available on our website. As it stands right now, the Chief Compliance Officer of the ASX tells us that they're unable to give us estimated timing of when that issue will be resolved. So I can only apologize and thank you for your forbearance.

And with that, I will -- I'll be seeing most of you later in the week. Looking forward to your engagement. And I just want to thank you all again for your time and attention this morning.

Good afternoon, ladies and gentlemen. I'd like to thank you for coming out today on what is really not a very pleasant day. So we appreciate the fact that so many of you made the effort to get here. My name is Peter Birtles, I'm the Chair of Metcash Limited. And on behalf of the Board and management of the company, I extend a very warm welcome to you to today's 2025 Annual General Meeting.

Before we commence, I'd like to acknowledge the Traditional Custodians of the lands on which we are on today and from where we're all connecting. We have a number of people connecting in to the meeting today online. We're here on the lands of the Gadigal people from the Eora Nation. And I pay my respects to Elders across the country, past, present and emerging. And I extend that respect to Aboriginal and Torres Strait Island peoples here today.

We certainly have a quorum present, and so I now declare the general meeting open.

Firstly, I'd like to introduce the Board of Directors. On my right here, we have Doug Jones, who is the Group Chief Executive Officer; and also Executive Director. Now moving to our nonexecutive directors. We have Marina Go who joined the Board earlier this year and who retires by rotation under the company's constitution today and is offering herself for election. Then we have Margie Haseltine. Margie is the Chair of the People, Culture and Nomination Committee of the company. On my left, we have Mark Johnson. Mark is the Chair of our Technology Advisory Working Group, and Mark also retires by rotation under the constitution today and is offering himself for reelection later in the meeting. Next to Mark, we have Murray Jordan, who is the Chair of our Safety and Sustainability Committee. We did announce this morning that Murray has notified the Board of his intention after pretty much 10 years' service to retire from the Board at the end of October, and I'll say a few words about Murray later on in my address.

Next to Murray, we have Helen Nash. Helen is the Chair of our Audit, Risk and Compliance Committee, and Helen also retires by rotation under the constitution today and is offering herself for reelection. Next to Helen, we have David Whittle, and David is also a new director. And as a consequence, also retires by rotation under the constitution today, and he is also offering himself for election later in the meeting. And finally, we have our new Company Secretary, Johanna O'Shea.

As well as the Board, we have a number of members of the management team. And firstly, we have on the front row here, Deepa Sita, who is our Group Chief Financial Officer. And also sitting with Deepa is the signing partner for the company's 2025 audit, Ms. Katrina Zdrilic from our external auditor, EY. Ms. Zdrilic will be available to answer questions shareholders might have concerning the conduct of the audit, the preparation and the content of the auditor's report, the company's accounting policies and the auditor's independence at the conclusion of the Group CEO's presentation. We welcome and thank Ms. Zdrilic for her attendance today.

Also in attendance, we have the CEOs of our various operational pillars. First of all, we have a CEO of Metcash Food, Grant Ramage. Next to Grant, we have the CEO of our ALM Liquor business, Kylie Wallbridge. And we're pleased to welcome back to the organization, our CEO of the Total Tools and Hardware Group, Scott Marshall. There are a number of other members of the management team also here with us today, and I'd like to acknowledge them for their attendance and also for their huge efforts over the last 12 months.

Today, we will review the company's activities during the year and receive and consider the accounts and reports for the 12 months ended the 30th of April 2025. We'll then consider the 4 resolutions outlined in the Notice of Meeting, which was lodged with the ASX and made available to shareholders on the 8th of August 2025. These resolutions are going to be put to a vote, and using electronic handsets, will be decided on an instant poll.

Just to run through the instructions. Once voting opens, the resolution text will appear bringing up the voting options by pressing the green square on your handset and you'll be able to press 1 to vote for the item, 2 to vote against or 3 to abstain. To move on to the next item, you press the green square or return to the full list of items and press the red triangle. Your selection and the word Received will appear on screen confirming that your vote has been cast. If you wish to change your mind, simply select a new option by pressing 1, 2 or 3. Your original vote will be canceled, and your new selection will be counted.

Any appointed proxy who has been given discretion on how to vote should vote in the same manner. Any appointed proxy that has been directed to vote in a certain manner and has no discretionary votes to cast does not need to vote as those votes will automatically be counted in accordance with those directions.

Once a poll is closed, the results will be displayed on the screen showing the combination of votes that are cast in this room and proxies that were received before the meeting. If you do have any issues with your handset, please obtain assistance from one of the attendants.

If you're joining us today online and wish to ask a written question, select the messaging tab at the top of the Lumi platform. Type your question in the box towards the top of the page and press the arrow symbol to send. A copy of your submitted question, along with any written responses from our meeting team can be viewed by selecting My Messages.

To ask your question verbally, click the Request to Speak button in the broadcast window. The audio question interface will now display and you will be prompted to confirm your name and enter the topic of your question. Submit your details and select Join Queue to be connected. If prompted, select Allow in the pop-up to grant access to your microphone. Please note that while you can submit questions from now on, I will not address those questions until the relevant time in the meeting.

So with that, I'll now turn to my formal address. I'll provide you with an overview of how the company performed in financial year 2025 as well as comment on other important matters such as our strategic direction, our management and Board changes, our remuneration and our approach to ESG. I'll then invite Doug Jones to talk in more detail about the company's operating performance as well as to talk about progress on our key growth initiatives.

So let's look at the year-end review. Importantly, we made further progress towards our purpose of championing successful independence in support of the thriving local communities in which they operate. The independent networks we serve and operate alongside continue to be healthy, competitive and confident. The increased diversification and strength of the group was a driver of sales and earnings growth in the face of challenging conditions in all pillars, particularly in the Hardware pillar where trade activity remains subdued.

Operational highlights include the resilience of the Food pillar, where our supermarkets and Campbell's and Convenience businesses again delivered earnings growth despite continuation of the material decline in tobacco sales. And then in Liquor, the business outperformed the market and built on the market share gains of recent years.

Across the group, another highlight was a very strong cash performance, which is a reflection of the quality of the earnings generated by our businesses and the focus of management on working capital management across the group. While in Hardware, it was another challenging year due to the weak macro environment, there were some signs of improvement in the fourth quarter.

Touching briefly on the financials. Group revenue increased by 7.2% to $19.5 billion, which includes charge-through sales, while revenue was up by 8.9% to $17.3 billion, excluding charge-through sales. Group EBITDA increased by 8.6% to $747.8 million, and group EBIT increased by 2.3% to $507.8 million with growth in the Food pillar being partly offset by decreases in the Liquor and Hardware pillars and increased depreciation and amortization.

Reported profit after tax increased by 10% to $283.3 million, while underlying profit after tax declined by 2.4% to $275 million, which reflected lower earnings in the Hardware and Liquor pillars, increased finance costs and those higher depreciation and amortization charges.

Operating cash flow increased by 11.7% to $539 million with the 3-year rolling cash realization ratio being approximately 95%, which is above the company's guidance of between 75% to 85%. We have now, as a consequence, increased this guidance going forward to being between 80% and 90%.

Total dividends for the year were at $0.18 per share, fully franked, and slightly above the company's target payout ratio of approximately 70% of underlying profit after tax. Doug Jones will discuss the financial results and operating performance in more detail shortly.

Turning now to strategy. Our focus on further improving the competitiveness of our independent retail networks, together with ensuring we have a diversified and resilient platform, our businesses continues to be at the heart of our strategy. The year included organizational changes across the group to provide further strength and resilience, while also enhancing our position for capturing growth opportunities.

Amongst these was the merger of Superior Foods with our Campbell's and Convenience business to form the food service and convenience business. And in June, we announced the merger of our Independent Hardware Group with Total Tools Holdings to form the Total Tools and Hardware Group. While wholesale and logistics accounts for the largest proportion of Metcash's revenue and earnings, our growth strategy includes extending through the value chain and winning with our independents. This has already been delivering significant growth for us and provides a very large and exciting opportunity to invest in growing margins and future earnings. Doug will discuss this in more detail.

Turning now to management and Board changes. In November, we were pleased to announce that Scott Marshall was returning to Metcash as the CEO of our Independent Hardware Group. Scott joined us from the Reece Group where he was CEO of Australia and New Zealand. But prior to that, Scott spent 30 years with Metcash and had previously held the positions of the CEO of the Food pillar and CEO of the Liquor pillar. And also, so Scott's modest enough but he started off on the distribution center floor. So he's a real success story through Metcash, and we're certainly very pleased that he's rejoined us.

For a few months before Scott joined us, we had Geoff Harris serving as interim CEO of the Independent Hardware Group. And while we were finalizing the search process, I just wanted to acknowledge Geoff for his professionalism and leadership, which were vital during this period and deserving a recognition. And during this year, we announced that Scott had been appointed as CEO of the Total Tools and Hardware Group. This appointment recognizes his proven track record in developing quality teams, cultures and relationships, particularly with the independent sector to support their growth and success.

As a result of the merger, Richard Murray, who was in the position of Total Tools CEO, he left Metcash to pursue other opportunities, and I'd like to sincerely thank Richard for his commitment and efforts to further strengthen the business since joining us early in last year.

We've continued to renew the membership of the Board to ensure that we have the right mix of skills and experience. And this is important for both strong corporate governance but as importantly, for valuable and constructive contributions to the development and strategy and oversight of performance.

In November, we announced the appointment of David Whittle as a Nonexecutive Director. Dave is an experienced, ASX-listed Board Director and has a distinguished background in brand, data, technology, omnichannel retail and digital transformation.

We also had Marina Go join us in February. Marina is an experienced director of ASX-listed companies and brings a strong customer focus and understanding of independent retailing as well as a background in digital strategy. Both Dave and Marina are already proving to be great additions to the Board.

Today, we announced that Murray Jordan has decided to retire as a Director of Metcash at the end of October. Murray has been a Board member for almost 10 years and has brought valuable experience and insights to -- into the food, liquor and independent sectors as well as a very constructive and supportive approach to the Board, his colleagues and to the management team. Murray has served on a number of Board committees and is currently the Chair of the Company's Safety and Sustainability Committee and also a member of the People, Culture and Nomination Committee. And in those roles, he has certainly helped guide the important progress that's been made in these areas. On behalf of the Board, I'd certainly like to sincerely thank Murray for his dedication, support and important contribution to Metcash.

We're currently in the process of looking for a new director to add to the Board and are at a very advanced stage of our search process. So hopefully, we'll be able to provide an update shortly.

Turning now to remuneration. This year, the short-term incentive deferral percentage increased from 40% to 50% for the group CEO and from 33% to 40% for the group CFO. The deferral percentage for the group CFO will increase to 50% in FY '26. The year also included increasing the long-term incentive opportunity for the Group CEO from 90% of fixed remuneration to 105%. This is better aligned -- to ensure better alignment of the reward opportunity with the expectation of shareholders. And as we've announced in the Notice of Meeting, we are further increasing the allocation of long-term incentives in FY '26.

FY '25, STI awards for executives range from 0% to 29.5% of maximum. Market challenges in hardware, together with the stretch targets that were set in balanced scorecards, resulted in a number of the executive leadership team, including the group CEO and group CFO receiving no STI awards in FY '25. the FY '23 long-term incentive vested at 50% with performance against the average return on funds employed hurdle being at the maximum end of the range, while there was no vesting for the absolute total shareholder return hurdle.

Following a review of our remuneration framework in the year, the Board determined that a further shift of variable reward opportunities from STI to LTI was appropriate to drive long-term performance and better alignment with shareholder performance, and this is going to be implemented in FY '26.

Turning to ESG. It's been another year of good progress in this important area with meaningful improvements across our key areas of people, planet and community. Pleasingly, our efforts were reflected in further improvements in assessments by the Dow Jones Best-in-Class indices, the Carbon Disclosure Project. And for the first time, Metcash was included in Sustainalytics' ESG top-rated companies list. Highlights for the year included further reductions in our Scope 1 and Scope 2 emissions, ensuring we remain on track for meeting our aligned science-based targets. Advancements in our antislavery efforts and the quality of our Modern Slavery Statement as well as delivering our procedures and focus on diverting waste from landfill.

From a people perspective, we continue to maintain our gender equality target of 40:40:20 at the leadership level. Female representation in the executive team was 44%, and for nonexecutive directors, it was 43%. We also achieved a gender-neutral pay gap across the organization, and we're recognized for this by the Workplace Gender Equality Agency. We made good progress in our efforts to ensure a safe and supportive working environment for all Metcash employees. This included a further 4% improvement in our key safety measure of Total Reportable Injury Frequency Rate.

Our sustainability reporting continues to evolve, and this year, our reporting aligns with the Global Reporting Index, progressing from the prior 2 years where we reported with reference to the GRI. Should you be interested in learning more about what we are doing in this area, our full 2025 ESG report is now available on our website.

Looking forward, the organizational changes that we have made have strengthened and reshaped Metcash to support accelerated growth. And our focus on extending through the value chain provides significant opportunity for both revenue growth and margin expansion. Importantly, we have a high-quality and energized management team committed to the purpose of championing successful independence and creating value for our shareholders. The company remains well positioned with the plans, platform capabilities and diverse business portfolio for future growth.

In closing, I'd like to thank my fellow directors for their ongoing commitment and support in a year that included many pleasing performance highlights. And on behalf of the Board, I'd like to sincerely thank our people, our independent retailers, our franchisees, our suppliers, our member partners and shareholders for your continuing support and contributions.

I'll now hand over to Doug to give his presentation, which was also released to the ASX before the meeting and is available for review on the Metcash website. Thank you.

Thank you, Peter, and good afternoon, everybody. The company remains committed to empowering independent retailers and strengthening local communities. Our purpose shapes our strategy and our culture. It drives progress and creates lasting value for partners and shareholders. This year, we saw notable achievements supporting healthy confidence and competitive independent businesses.

The flywheel represents Metcash's core competitive strengths and the way we create value for independent retailers, suppliers and shareholders. This year, new supplier partnerships were secured, and our platform continues to expand services for independence and strengthen ties throughout the value chain.

The company delivered a year of growth and transformation, improving execution and building confidence for accelerated future growth. The food business strengthened by new acquisitions, showed resilience, while liquor gained market share. Despite challenges in building supplies, the company and its partners adapted well, and the tools market further stabilized. As the Chair noted, key organizational changes, leadership restructures and the successful supplier partnerships have positioned Metcash to accelerate growth and fulfill our ambitions.

I do want to spend a moment talking about diversity of revenue streams. I think Metcash is often misunderstood and judged superficially as a wholesaler, when in reality, it is an integrated wholesaler and scaled logistics operator, a banner owner, a large and growing retailer, a franchisor and most recently, a retail media owner. As each one of these revenue streams grows, the overall shape and balance of the business evolves. Resilience improves, addressable markets expand and the opportunities for further growth extend. This is not new. It's been happening for a number of years now.

It wouldn't be appropriate for me to talk about the confidence I have in our business without mentioning our independent partners and recognizing their health, their strong and differentiated competitive positioning and their own confidence.

As I said, Metcash is sometimes misunderstood. And what I mean by this is that thinking of it as purely a wholesaler materially underestimates both the quality of the business and the opportunity before us. I think this is best brought to life by firstly understanding the balance of the group as a wholesaler retailer, distributor of food and liquor to the on-premise market and out-of-home markets and more recently as a franchisor. And secondly, through a deeper understanding of how that shape and balance has changed in recent years.

For example, in FY '20, wholesale sales represented 81% of total revenue. Last year, this figure was 74%. While that's a reduction in the proportion of total revenue from wholesale, it belies the strong growth in total dollars of 21%, inclusive of tobacco. Retail, now $2.2 billion, is 11% of total revenue and has grown by 133% in this period. And food and liquor out-of-home is now a $3.2 billion business and represents 14% of total group revenue. Franchise income may be small in dollars but it's highest in margin. And in the future, retail media and additional services offer the prospect of healthy margins, and we continue to invest in growing these revenue streams.

We think about the idea of winning with independents in some part through the lens of operating businesses alongside them. We've done this for years now in hardware and tools, and we've signaled our intent to do the same in the food business. Thinking about this as moving closer to the customer and closer to the end transaction, allows us to articulate our strategy in a way that perhaps brings it to life more effectively. And what I hope is also being brought to life is the opportunity for further material growth that this continues to present.

The company's differentiated revenue streams, wholesale, retail and franchise, each offer unique benefits and financial, operational and cash flow characteristics as well as differentiated capital return and valuation metrics. Wholesale provides stable, resilient returns. Retail offers higher margins and leverages volume, and franchising strengthens the broader network and benefits both the company and its shareholders. Equally, each of these revenue models opens a new series of addressable markets. And thinking about our business beyond wholesaling allows us to widen our ambition within that larger total addressable market.

So to summarize then, at the center of our flywheel is our logistics capability. And at the heart of our business, as a platform to support and win with independents, is our wholesale business. But neither of those are the full extent of the Metcash Group, nor of our ambition.

Turning to the numbers. Highlights include strong revenue growth, as Peter pointed out, growth in both underlying group EBIT and reported profit after tax, a strong operating cash flow on the back of a pleasing cash realization ratio. And as you can see, the company has a strong balance sheet with good flexibility. Underlying earnings per share were $0.215, and the Board declared a full year dividend of $0.18, which includes a final dividend of $0.095.

Looking at the pillar results. It's pleasing to see strong revenue growth in all pillars, accelerating in Food and Liquor and steady in Hardware for the year. Superior is included in the Food results for 11 months of the year. I noted the cash performance earlier, and it's good to note the EBITDA growth of 8.6% with group EBIT up 2.3%.

I want to dwell a moment on tobacco and retail crime at this point. The effectiveness of the various law enforcement initiatives has been disappointing to say the least. Although there are some encouraging signs emerging recently with the adoption of landlord enforcement policies in Queensland and New South Wales. We're concerned that the tobacco black market is fueling the recent rise in violent retail crime, particularly in Victoria. Our independent retailers are grappling with this issue on a daily basis. They're currently lobbying state governments to introduce landlord enforcement regimes and stronger retail crime laws along with better enforcement. We believe the states must back these new laws with additional funding for enforcement.

To bring it home, in Victoria, in the last 10 months, 62 IGA stores in the Melbourne area have been targeted, 43 of those were attacks with -- which can be described as armed confrontations during trading hours with staff and customers present, most requiring counseling support afterwards. Some stores have now been forced to shut their doors after dark, only letting customers in after ID checks.

As noted, we continue to make strong progress on our ESG commitments, reflecting our deep focus on people, planet and community impact with a number of highlights, including female representation at 43% in the leadership team, 32% across the group and 44% of nonexecutive directors, and an average gender pay gap of less than 1%, demonstrating our commitment to equity. We've achieved our interim 2030 emissions target for FY '24 with a 3.3% reduction in total emissions, excluding Superior Foods, which was not in the baseline. And we've installed 7.8 megawatts of solar capacity across the network with a 22% increase in on-site renewable energy generation.

Since 2010, the IGA Community Chest has donated almost $43 million, including $2.6 million in the most recent financial year. Our ESG journey is evolving rapidly, and we remain committed to continuous improvement. With our 2040 net zero target and strong progress across key metrics, we're well positioned to lead responsibly and sustainably.

Turning now to the trading update. This is for the 18 weeks to the end of August this year. Sales growth has been achieved in all pillars, and we're excited to be launching our first ever cross-pillar consumer promotion in the second quarter of this year, bringing together the scale of more than 3,000 independent stores in a way that's never been done before. We continue to invest throughout our business to further strengthen the company and grow margins and future earnings. We anticipate that this will result in a total increase in corporate and development costs of around approximately $7 million, and there will be additional once-off strategy and integration costs in the pillars, as we've noted, in support of our reorganization and integration for future positioning. These are included in underlying earnings.

In Food, excluding tobacco, growth has been strong, particularly in food service and convenience. In supermarkets, the localized offer remains popular with customers, although tobacco regulations are starting to impact foot traffic. We continue to support our retailers transition away from tobacco with store renewals and increased focus on fresh foods. And targeted deep IGA promotional activity will begin this month. In food service and convenience, growth has been driven by new customers and ironically increased tobacco sales.

Superior Foods has begun expanding into liquor distribution for the shipping segment. In Liquor, independents continue to perform well on the back of customer preference for convenience, tailored range and great value. We've noted increased competitor promotions, particularly before the June reporting year-end, and we're pleased to see an increase in on-premise sales, while low inflation does limit strategic buying and earnings growth. The Steve's Liquor Warehouse Group acquisition is nearly complete and should settle within coming months.

In hardware, we've seen a continued trend of sales growth to start the year. In IHG, sales improvements in the fourth quarter of FY '25 has carried on into FY '26 with accelerating growth in both trade and DIY with strongest gains in builders' hardware, building suppliers, timber and doors. And the Frame & Truss pipeline -- thank you, the Frame & Truss pipeline is at capacity in Queensland and growing in the rest of the market, although there do remain margin pressures from increased competition.

In Total Tools, the retail margin recovery in the second half of the financial year has been maintained, and total network sales continue to grow, while cost of living pressures continue to affect demand from professional trades. In summary then, we've continued to focus on disciplined execution and challenging trading conditions. We continue to progress our core growth strategies, and our independent partners remain healthy and aligned.

I'd like to echo my thanks of the Chair to the Board, to my colleagues, to the people throughout our wonderful group and most importantly, to our independent partners. Thank you for your interest and support.

Thank you, Doug. So now turning to the formal items of business. The first item of business is to receive and consider the financial report of the company and the reports of the directors and auditor for the financial year ended 30th of April 2025. You will note that there is no requirement to vote on the reports.

The company's 2025 annual report was sent to shareholders who requested a hard copy and was made available on the company's website and the ASX Announcements platform. The 2025 annual report contains the statement of comprehensive income, the statement of financial position, the statement of cash flows and the reports of the directors and auditor.

These reports are now open for discussion. If you are a shareholder or a proxy, attorney or representative of a shareholder and wish to ask a question about the reports or any questions generally about the business, please raise your hand and an attendant will offer you a microphone. When invited, please introduce yourself to the meeting and ask your question. All questions should be directed to me as Chair in the first instance. Our Investor Relations team will also be monitoring the online facility for questions. An opportunity will also be given to shareholders to ask questions specific to each of the resolutions to be put to the meeting before voting on that resolution.

Hence, if you have a question regarding a specific resolution, please hold that question until the resolution is considered. So open up for any questions.

Ms. Natasha.

Thank you. Thank you, Peter, I'm Natasha Lee, a shareholder. I'd like to thank the Board for the very good result this year. I'm pleased that the share price and other underlying matters have such as earnings per share have increased nicely.

Overall, what you say that the Liquor sector pillar had outperformed the market, the revenues for Liquor and Hardware were down slightly or flat compared to last year. There was previously a sort of a switch between people buying more in stores and drinking at home. What's actually driving the liquor market? Is that continuing? And obviously, you're maintaining competition against the Coles and Woolworths liquor stores but...

Yes, I think -- I mean, there's a number of factors involved. And certainly, what we're seeing is that Metcash's liquor businesses are growing at a faster rate than the other participants in the market. I mean there is certainly changes in underlying consumption. So we're seeing that impacting all liquor businesses. I think as well, we saw a change in the dynamics of inflation. There's a lower inflation environment in the FY '25 year, and that presented less opportunity for growth through inflation in the value of products. So I think there's a number of factors in there. But most importantly, the business -- the Metcash business was growing at a faster rate than the competition.

Yes. Yes, that's good. The acquisition of the Superior Foods, obviously, you said there's some synergies have been bedded already. You sort of paid about 2.5x the net asset value of the goods. I suppose I'm asking what's the expected contribution to profit or at least EBITDA going forward from that acquisition? And possibly related to that, there's been a slight uptick in inventories, and I don't know whether that's partly related to the acquisition or other factors like a slower turnover of goods, can you dissect that for me?

Okay. So 2 questions in there. So just so I'm clear on your second question is about inventory across the whole group?

Yes. Yes. I wasn't able to dissect what components or where.

All right. So I mean, I'm not going to project out specific revenue and profit targets for Superior but certainly, it was an acquisition that we made with a view to the business in itself growing. The food services market is an attractive market and one in which we feel that Superior can gain market share over time. So we'd expect growth in the business. We also see opportunities to leverage the strength of Metcash to help the food services business and the fact that Metcash has a broader range of products available, provides an opportunity for the food services business to have a more compelling offer and there are opportunities to leverage the supply chains of both businesses for the benefit of the core food business and the food services business.

And there are synergies to be had in bringing those businesses together. And as I mentioned in my presentation, we announced that we've integrated the food services business with the Campbells' Convenience business, and we'll see some benefits that come from that. So we are very confident that we can get a good return on investment from the acquisition that we made.

In relation to inventory, I think you've sort of alluded to that. Certainly with the growth of the organization, the acquisitions that we made in the prior year with the acquisitions in Hardware, plus also the acquisition of Superior. So we had more inventory across the group. But as I also alluded to, we're very pleased that our working capital management was very strong, and that was a major factor in the very positive cash realization of the organization. So I'm very pleased with the working capital management across the group.

Yes, yes. I'm very happy with sort of the broad economics of your results. Just one more question on that for the time being. Yes, it's great that you've increased on-site renewables by 22%. I just wasn't sure how -- in terms of renewable energy, what -- the total mix, what percentage is coming from renewables? And what's sort of the time frame possibly to get to 100% or a much higher percentage in the future?

Yes. I might look for some assistance there in terms of -- I can't remember off the top of my head where we are. By 2000...

Later this year, we'll be 100% renewables.

Yes. So later this year, Steve, that was later this year?

Yes.

So later this year, we'll be at 100%.

Okay. No, that's great. I'll let someone else have a turn. I might have some questions later.

All right. Thank you. Natasha. Any other? Yes, there's one.

[indiscernible] Australian Shareholders Association. I'm holding 900,000 open votes today. I did want to ask you about the Project Horizon. It just seems to be drifting on a very long time. So we had expected to be finished at the end of 2025. And now we find it's not going to be completed until the end of 2026. And it seems to be costing a lot -- it seems to be costing a lot as it progresses.

Yes. So it's a very significant program in which we are replacing the -- effectively, the core ERP platform across our food and liquor businesses. And as that project has progressed, the scale and challenge of that project has become apparent. And probably now around 18 -- probably 2 years ago, the Board asked for a full review of the project. And at that point in time, there's a reassessment of the plan. The Board, along with management, considered really 4 key elements for the program. We talked about first of all, the importance of delivering benefits for the business benefits for our team and that was paramount. Then we talked about the risks associated with the program, and we talked about the costs of the program. And we said that, that was our second order of importance, those 2 items together.

And then the third area -- sorry, the fourth area was the question of how long it was going to take us to implement the program. And we said that, that was the area that we were most willing to trade off. So most importantly, we deliver the benefits. Second, that we control the costs and the risks. And then if that meant that we were going to take a little bit longer to achieve the outcomes, so be it. This is a long-term program. We look at putting in place an infrastructure that should serve the company over many years. So if it was going to take us a year or so longer to implement, we were comfortable with that.

And I think that's helped guide our control of the program. So really since that point in time that there hasn't been a significant change in the cost profile in terms of cost projections. We've seen a little bit of rollout in terms of time. The Board actually today had a full update on that program. Again, we're really seeing the program being very well controlled. Neil Whiteing is our CIO, and he has an overall custodianship of the program and is really doing a first-class job. So I think the program is in good shape, and we're comfortable with this progress.

And can I just ask what the payback period is for the entire project?

So what we said was that because the nature of this program is it's actually a platform and it's putting in place a platform that will enable Metcash to do many things in the future. So the program in itself, the business case was that we would offset the depreciation cost of the program with the benefits, and we're on track for that. So that's the way that we're viewing that is that effectively the benefits delivered from this component of the program offset the depreciation costs. It enables us to do a number of things going forward. It will present platform for Metcash to be better able to digitize the business, to do much more effective work in the areas of loyalty and data management and so on. So it's an important platform.

My name is David Jackson. My question is on the dividend. Why was it necessary not to pay the same amount at least as last year because it seems to me that the NPAT went up. And therefore, there was a better opportunity. I realized that it was outside of the ratios but it's very disappointing that in a time when the net profit is higher, it's necessary to reduce the dividend being paid to the shareholders?

So we base our assessment on the underlying net profit after tax. And as I mentioned, our policy is to pay at 70% of that underlying net profit after tax. We actually went slightly above that. So I think in terms of that context, we've got to manage a range of elements. We've got to consider the debt position of the business, the strategic opportunities, and we felt that, that was an appropriate position for the company.

My second question is on returning to inventories because the inventory has gone up 29%. That's a very substantial increase. Is there anything unusual in that? I mean, does it reflect the gross overstocking or anything like that?

No. So I think mentioned in response to Natasha's question, there's the impact of acquisitions that have come through and those businesses bring additional inventory into the balance sheet. So that's an impact. But if you look at the working capital management of the organization, it was very strong, and we delivered a very strong cash flow. So there is no problem with overstocking.

Richard Grant. I'd like to ask about the tobacco side of the business. You mentioned, I think, that it was reducing. But I'm just wondering where it's going in that illegal tobacco is a major threat. It limits the prices you can charge. It has risks to employees? What are you doing in that regard?

Yes. So I think as Doug highlighted, it is a significant issue, and it's an example of where public policy is really backfired. And effectively, a $7 billion -- $6 billion to $7 billion illegal tobacco industry has been allowed to create. So we've seen tobacco sales go from a highly regulated environment. And there are clearly controls over the merchandising of cigarettes in store, packaging and so on and controls over the sales to underaged people and so on. And what's happened is the growth of this illegal tobacco industry is circumventing all of that. And there's anecdotal evidence that we're seeing growth actually in tobacco consumption. So a lot of the stuff in terms of controls, the high taxes have -- really have backfired.

So we're working with our retail partners with the cigarette companies. We're working with government. And as Doug mentioned in his presentation, we're working to firstly see an increase in the policing of illegal tobacco but also regulations in terms of controls over the use of property for illegal tobacco stores. And there's legislation going through in Queensland at the moment to penalize landlord to allow the properties to be used for illegal tobacco. New South Wales government are looking at the same thing at the moment. So we're going to continue to work on those things to try and involve government in ensuring the appropriate regulation of what it really is an illegal industry.

Thank you. Natasha Lee, again. One thing I didn't mention is the text on your online report is a gray tone, which was the same as your overhead. For people of my age bracket, which is probably most of us in the room, could you do it in black ink, so it's a bit easier to read? It's a bit difficult having the gray tone.

And the question is, yes, I read about your localized digital media network. Can you just give a bit more context and overview from what that is about?

Doug, do you want to touch on that one?

Thank you for that question, Natasha. So our retail media network, as you correctly identified, is localized. We have a number of stages in the rollout of that media network, starting with in-store screens. We've said we'll get to 750 screens by the end of this financial year, and we're on track to do that. We've had really good take-up from our independent partners who are excited about it. And from our supplier base who are looking forward to advertising on it. Further phases will include digital media as well as in-store radio.

One of the unique attributes of our media network is the multi-sector nature of its food, liquor and hardware. And that's exciting for many suppliers, both those that we call endemic, who are part of our network today already, and nonendemic who may not be insurance company might be a good example of that or a bank, they will have the opportunity to advertise in a targeted way across many formats and in many locations throughout the country in independent stores in food, liquor and hardware.

So the advertising is tailored for the local community and so you're trying to assess what the kind of needs and wants are?

Yes, that's exactly right. We can tailor it almost to the screen, although I don't want to put too much pressure on my colleague because she'll be upset with me if I make too many promises on her behalf. But that's essentially the idea.

Any more questions from the room. Just at the front here. Elizabeth?

[indiscernible] if I may. It's about ESG. What contributed to the reduction in the Scope 1 and 2 emissions most of all?

So Steve, could you maybe come forward and just give us a bit of an update?

Combination of factors, Elizabeth. So we introduced more solar during the year, and also that we have a number of emissions reduction programs in place across the organization, particularly around our DCs. So that's where most of the gains were made.

Okay. Steve, are there any online questions regarding the financial report?

Yes, Chairman, there are 2. One on Retail Media, and then one from Stephen Mayne in relation to AI and also in relation to the power of the large tech companies.

First one is from Kevin Charles Daly. And he asks, what do you mean by an owner of retail media?

So I think that we're saying that we will be the owner of the network, the retail media Network. I'm sure if that's the question but that's -- we effectively own that network of retail media.

Second question from Stephen Mayne is: How many employees do we have? And is it likely to fall -- is that number likely to fall over the coming 12 months? With the rapid rollout of AI, which parts of our business and operations are the most prospective for AI productivity gains? And how energetically are we embracing those opportunities?

Also, the 6 most valuable U.S. big tech stocks, Microsoft, Apple, Amazon, Meta, Alphabet and NVIDEA are together worth more than $20 trillion, largely because they have enormous pricing power and are overcharging customers the world over. And what would we do if they suddenly put their prices up by 30%?

Yes. Okay. So we have around 11,500 team members across Metcash. There are a number of AI initiatives that are going on across the organization. And actually, in our annual results presentation, which is on the ASX on our website, you can see a slide in there that talks about AI -- present AI initiatives so that we're looking at AI initiatives in payment -- management payment reporting. We're looking at AI in the way in which our team can access information, and we're looking at AI in the areas of debtor management. So there are 3 particular areas that we're working on AI.

There's a number of other initiatives across the organization. We're not anticipating in the next 12 months that there will be a big impact on our team. I mean as we've alluded to, we've got a significant growth agenda as an organization. And I think one of the opportunities of AI is it potentially allows opportunity for redeployment into strategic opportunities. So we're certainly not anticipating a change there.

I think, Doug, the second part of the question was directed to you.

Thanks, Stephen, for the question about technology and our partnership with those large technology companies. I won't go into the finite detail of our spend but we have a very well-balanced spend curve among the large technology vendors and no 1 vendor accounts for more than 15% of our technology spend. So we have a good position there. We enjoy a particularly strong relationship with Microsoft being the partner on the Horizon program, and we've received significant support from them as we move through the program and in fact, our key partner when it comes to AI deployment and being the leading AI ERP platform at the moment, I think the selection of Microsoft as our ERP platform is paying dividends from that respect.

The hypothetical of a material price increase is difficult to respond to without much detail. But obviously, I would say that our success with Microsoft technology is important to them as well as it is to us. And so the business rationale for an unreasonable increase in costs would be low, but one that we would engage constructively and sensibly, and I would be confident that at the very highest levels of Microsoft, they would reciprocate that engagement.

Any further questions, Steve? No?

All right. So we'll now move to the next item of business. For this, we'll start to commence using the electronic handsets. So if you've not already done so, please insert your card into the slot at the top of the handset with the bar code at the bottom and facing towards you.

When voting opens, the voting options will appear on the handset. Once again, to vote for the resolution, press 1; to vote against, press 2; or if you wish to abstain from voting, press 3. Your selection and the word Received will appear on the screen confirming that your vote has been cast. However, if you do wish to change your mind, please select a new option by pressing 1, 2 or 3. Your original vote will be canceled, and your new selection will be counted. If you do have any issues with your handset, please obtain assistance from one of the attendants.

There will be time for shareholders to ask questions about each resolution. In the interest of time and to give a fair opportunity to all shareholders who wish to speak, we'd ask that you endeavor to keep your questions as succinct as possible. And I may, in the interest of time and fairness, limit an individual's questions to a maximum of 2.

So resolution 2. Resolution 2 is various resolutions to elect and reelect directors. Shareholders are asked to consider, and if thought fit, to pass the following resolutions concerning the directors as separate ordinary resolutions.

So firstly, Resolution 2a, which is a resolution to elect Mr. David Whittle as a Director. Shareholders are requested to consider the election of Mr. David Whittle as a Director of the company. Under the company's constitution, Dave retires by rotation at the conclusion of the meeting and being eligible, offers himself for election. Dave's profile is outlined in the explanatory memorandum, which is contained in the Notice of Meeting and also in the annual report.

Dave joined the Board in November 2024 and is a member of the Audit, Risk and Compliance Committee and a member of the Technology Advisory Working Group. The Board has concluded that David is an Independent Nonexecutive Director and unanimously supports his election.

I invite Dave to address the meeting in connection with this resolution today.

Thanks, Chairman. It's a privilege to offer myself as an independent -- for election as an Independent Nonexecutive Director of Metcash. Since joining the Board in November 2024, I've contributed through the Audit, Risk and Compliance Committee and also the Technology Advisory Working Group.

My background is in digital transformation, customer engagement and data-driven strategy, all areas that I'm sure you'll agree are critical to Metcash's future. As a founder and former CEO of Lexer, an AI data customer data platform for retailers, I've worked with hundreds of global brands to help them understand and engage their customers. Prior to that, I spent a decade for advertising group -- working for advertising group, M&C Saatchi where I led the growth of the digital business throughout Asia Pacific and the U.S. and ultimately spent 3 years as Group Managing Director of their Australian business.

I currently serve on the Board of Challenger Limited and Michael Hill International and Lexer Proprietary Limited. Prior to that, I served to the Board of Myer for 9 years.

Metcash has a tremendous opportunity to deepen its digital capabilities while staying true to its purpose of championing successful independence. If elected, I look forward to helping guide that journey with a focus on brand, technology, customer and strategic agility. Thank you.

Thank you, Dave. The resolution is now open for discussion, and I open the floor for any questions. As noted, all questions should be directed to me in the first instance.

Thank you, Peter. Natasha Lee, shareholder. Not a specific question for David. I'd just make the comment that the female representation on the Board is pretty good. You've made some progress as far as having other types of diversity on the Board. Noting that Murray Jordan is stepping down, I just urge you to continue on to ensure that a wider diverse Board is possible to better reflect the Australian community.

Yes. So I mean I think would say that we're very mindful of diversity and how important that is. I think one of the aspects that's very important is diversity of thinking and mindset perspective. And sometimes that's not necessarily apparent through the way we might look. But I think one of the real strengths of this Board is the diversity of thinking and perspective, and we certainly are going to look to continue that going forward.

Yes. Thank you. I'd like to say I wasn't criticizing it. You have -- I can see that you've made some effort.

Yes. Any other questions? Do we have any online questions, Steve?

Well, one detailed question. Connected -- from Stephen Mayne connected to Dave's time at Myer. Could Dave please outline his approach to independent directors standing up for good governance on behalf of independent shareholders? During his last 3 years on the Myer Board, control effectively passed to Solomon Lew, who owns -- only owns 26.8% of the company. Dave appeared to meekly retire at the Myer AGM last year in November without putting -- sorry, in 2024 without putting up a fight. Myer now has a 4-person Board, an Executive Chair and no clear majority of independent directors. Why did Dave agree to retire from Myer without first ensuring a clear majority of independent directors would remain in charge? Was it because Mr. Lew's interest voted against his reelection at Myer in 2021? Also, had Dave stayed on the Myer Board, does the Chair believe he would have been able to join our Board? Or would that have been a conflict of interest?

All right. So I'm not going to ask Dave to speak to those issues. I think we're here today to talk about the business of Metcash. And certainly, the Board did a full due diligence review of Dave before inviting him to join the Board. I think there are particular circumstances involved with Myer, which are not relevant to Metcash in terms of ownership, structure and so on. And certainly, what we've seen is that Dave brings a very robust perspective to the Board and is very focused on representing the interest of all shareholders. So I'm very comfortable with that.

In terms of the conflict, Metcash doesn't really compete with Myer but I mean, we were aware that it's part of Dave's plan -- sorry -- it was part of Dave's plan to step away from Myer as part of the recruitment process, so we're very comfortable with that.

No more questions, Chairman.

Thank you. So I now formally move the motion that Mr. David Whittle be elected as a Director of the company. I put the motion to a poll and open the poll. Please cast your vote using the electronic handsets now. To vote for the resolution to elect Mr. Whittle, please press 1; to vote against, press 2; or if you wish to abstain, press 3.

[Voting]

Yes. Okay. I can -- getting signal from the back that most of you have now voted. However, I'll keep the handsets open for a few more seconds to make sure we've captured all the votes.

I think the gentleman here is not running in to vote. Yes, he's got a handset. So we'll just allow the gentleman to cast his vote. All good. Thank you.

All right. I now declare the voting closed. The results will appear on the screen hopefully.

Okay. So we can see that strong support for Mr. Whittle. So I declare that the motion carried that Mr. David Whittle is elected as a Director of the company. Congratulations.

Okay. Let's move on to Resolution 2b, which is the resolution to elect Ms. Marina Go as a Director. Shareholders are requested to consider the election of Ms. Marina Go as a Director of the company. Under the company's constitution, Marina retires by rotation at the conclusion of this meeting, and being eligible, offers herself for election. Marina's profile is outlined in the explanatory memorandum contained in the Notice of Meeting and also in the Annual Report.

Marina joined the Board in February 2025, is a member of the People, Culture and Nomination Committee and a member of the Safety and Sustainability Committee. The Board has concluded that Marina is an Independent Nonexecutive Director and unanimously supports her election. I invite Marina to address the meeting in connection with the resolution.

Thank you, Peter. Good afternoon, everyone. It's an honor to offer myself for election as an Independent Nonexecutive Director for Metcash. As Peter has mentioned, I joined the Board in February 2025, and currently serve on the People, Culture and Nomination Committee and the Safety and Sustainability Committee.

My career began in journalism and evolved into leadership roles across media, retail, infrastructure, energy and governance. I've led digital transformation and innovation in media, served as CEO of Private Media, Country CEO of Hearst Australia and General Manager of Hearst-Bauer Media. I currently serve on the boards of Transurban, Southern Cross Austereo, Adore Beauty and the Australian Institute of Company Directors. I also Chair the Advisory Board of the National Foundation for Australia-China Relations and was a Nonexecutive Director of the 7-Eleven Board that realized significant value for its shareholders at exit 18 months ago.

I'm deeply committed to ethical governance, stakeholder engagement and sustainability. I believe that Metcash's commitment to independent retailing is more important than ever in today's evolving landscape. If elected, I look forward to further contributing my experience in customer strategy, digital innovation, reputational risk and inclusive leadership to support Metcash's ongoing success. Thank you.

Thank you, Marina. This resolution is now open for discussion. Again, I open the floor for any questions in relation to this resolution.

No questions from the floor. Steve, are there any questions?

No questions, Chairman.

No questions online. Excellent.

So I now formally move the motion that Ms. Marina Go is elected as a director of the company. I put the motion to a poll and open the poll. Please cast your vote using electronic handsets now. To vote for the resolution to elect Ms. Go, please press 1; to vote against, press 2; or if you wish to abstain, press 3.

[Voting]

I'm getting the signal from the back that we've had most of you responding. Just a few more seconds, just to make sure everyone's had the opportunity. Looking positive.

So I'll now declare the voting closed, and the results will appear on the screen.

Thank you. So I declare the motion carried that Ms. Marina Go is elected as a Director of the company. Congratulations.

Turning to Resolution 2c, which is a resolution to reelect myself as a director. As you are aware, in the Notice of Meeting, I'll be retiring from the Board in accordance with the requirements of the company's constitution, and will be offering myself for reelection. While this process is underway, I will hand the chair of the meeting over to Ms. Helen Nash, who is the Chair of our Audit, Risk and Compliance Committee.

But firstly, I'll just say a few words in connection with my proposed reelection. Certainly my privilege to offer myself for reelection as a director of Metcash. I first joined the Board in August 2019, and my fellow directors elected me as Chair in 2022. For most of my career, I have worked in the retail and consumer goods industries in both Australia and the United Kingdom. I have been fortunate to have held functional executive positions in a number of different areas, including finance, supply chain, human resources and information technology. And this culminated in my appointment as the CEO and Group Managing Director of the Super Retail Group for a period of 13 years during which time, the company successfully developed into one of Australia's leading retail businesses.

For my sins, I'm also a chartered accountant. I've now had 15 years of experience as a Nonexecutive Director of publicly listed, privately owned and not-for-profit organizations. In addition to my role at Metcash, I am the Chair of Universal Store Holdings, which is a publicly listed youth fashion retailer and product developer, and I am the Director of APG & Co., which is a privately owned fashion retailer.

I, therefore, feel that I bring a range of skills and experiences to support the growth and development of Metcash, including governance, strategy development and implementation, understanding of the retail and consumer goods industries, organizational development and transformation and operations and performance management. But most importantly, I am passionate about the important role that thriving independently owned businesses play in providing choice for Australian and New Zealand consumers and in contributing to the local communities in which they operate. A successful Metcash enables a more successful independent business sector, and it is a privilege to serve as a director of the company with such a significant purpose.

The company has developed strongly over the last 6 years while successfully navigating the challenges of the COVID-19 pandemic and the more recent downturn in consumer confidence and building activity. However, there is much more to be done for Metcash to meet its potential and to become a great business, and I am excited by the opportunity to contribute to the next phase of development. Thank you.

Helen?

Thank you, Peter. Good afternoon, ladies and gentlemen. Peter's profile is outlined in the explanatory memorandum contained in the Notice of Meeting and also in the Annual Report. Peter is the Chair of Metcash. Along with Board meetings, he attends meetings of the Audit Risk and Compliance Committee, the People and Culture and Nomination Committee and the Technology Advisory Working Group.

The Board has concluded that Peter is an Independent nonexecutive director and unanimously supports his election.

The resolution is now open for discussion. Are there any questions from the floor?

Natasha.

Thank you. Natasha Lee. Not a question, just saying. I've been happy with your performance, Peter, so you have my vote, support. Thank you very much.

Thanks, Natasha. Are there any other questions in the room? No. Steve, are there any questions online?

No questions online, Helen.

Okay. I now formally move that the motion that Mr. Peter Birtles be reelected as a Director of the company, and I put the motion to a poll and open the poll. Please cast your vote using the electronic handsets now. To vote for the resolution to reelect Mr. Birtles, please press 1; to vote against, press 2; and if you wish to abstain, press 3.

[Voting]

Has everyone managed to do that? I can see on the monitor in front of me that most of you have now voted. I'll just keep the handsets open for a couple more seconds to ensure we capture all of your responses.

I now declare the voting closed. The result will appear behind me on the screen.

There we go. Great result. I declare the motion carried that Mr. Peter Birtles is reelected as a director of the company, and I'll now hand the meeting back to Peter. Congratulations.

Thank you, Helen, and thank you, ladies and gentlemen, for your support. I thought I was going to get the afternoon off but apparently not. Now more important things to do.

So actually role reversal now. And Resolution 2d is a resolution to reelect Ms. Helen Nash as a director. So shareholders are requested to consider the reelection of Ms. Helen Nash as a director of the company. Under the company's constitution, Helen retires by rotation at the conclusion of this meeting and being eligible offers herself for reelection.

Helen's profile is outlined in the explanatory memorandum contained in the Notice of Meeting and also in the Annual Report. Helen joined the Board in October 2015 and is Chair of the Audit Risk and Compliance Committee and a member of the People Culture and Nomination Committee.

So I just mentioned, I think as we outlined in the Notice of Meeting that Helen is coming up to 10 years of service to the Board. And the Board considered that quite carefully. But as you've seen from this meeting, there has been a significant amount of Board renewal at Metcash over the last few years. And with Murray stepping away from the Board, we're losing some significant experience. And the Board felt that Helen really brings value in many ways to the Board. But one of the areas that she brings is the experience that she's had as a director of the company as it's evolved and grown over the last 10 years but also her experience as a former chair of the People, Remuneration and Culture Committee and the current chair of the Audit, Risk and Compliance Committee.

And we felt that it was very important that the Board retains that experience for certainly the next few years. And the Board requested that Helen put herself forward for reelection, which she was -- she was fortunately happy to do so. And so the Board strongly supports Helen being reelected as a Director.

Helen, I invite you to address the meeting in connection with the resolution.

Thank you, Peter, and good afternoon again, ladies and gentlemen. I am very pleased to offer myself for reelection as an Independent Nonexecutive Director of Metcash. As Peter said, I have been on the Board since 2015. I currently chair the Audit, Risk and Compliance Committee, and I served -- and I still serve on the People, Culture and Nomination Committee.

My executive career spans consumer goods, media and quick service restaurants including my time as Chief Operating Officer of McDonald's Australia, where I led strategy, operations, marketing and technology. I bring a strong commercial and consumer-focused perspective to the Board informed by over 20 years in brand and marketing roles. I currently serve on the boards of Ampol, and I chair Inghams Group.

Over the past decade, I have seen Metcash grow and evolve, and I've been very proud to contribute to its performance and oversight. I firmly believe in the need for a healthy independent business in Australia, and therefore, the vital role that Metcash plays in supporting countless Australian families run their independent stores.

I remain committed to Metcash's evolving strategy and governance. And if reelected, I look forward to continuing to support the company's long-term success and community impact. Thank you.

Thank you, Helen. So this resolution is now open for discussion. Are there any questions from the floor in relation to this resolution? No.

Steve, are there any questions online?

No online questions.

Excellent. So I will now formally put the motion to the meeting that Ms. Helen Nash be reelected as a Director of the company. I put the motion to a poll and open the poll. Please cast your vote using the electronic handsets now. To vote for, press 1; to vote against, press 2; or if you wish to abstain, please press 3.

[Voting]

I can see that the majority of votes have been cast. Just a few final seconds. Okay. I'll now declare the voting closed. The results will appear on the screen.

I am very pleased to declare that the motion is carried that Ms. Helen Nash be reelected as a director of the company. Congratulations, Nash.

Okay. And finally, to our trouble maker. Mr. Mark Johnson.

Thank you for that, Chairman.

Certainly, a bringer of strong diversity to the Board. Shareholders are requested to consider the reelection of Mr. Mark Johnson as a Director of the company. Under the company's constitution, Mark retires by rotation at the conclusion of this meeting, and being eligible, offers himself for reelection.

Mark's profile is outlined in the explanatory memorandum contained in the Notice of Meeting and also in the Annual Report. Mark joined the Board in August 2022 and is Chair of the Technology Advisory Working Group and also a member of the Audit, Risk and Compliance Committee. The Board has concluded that Mark is an Independent Nonexecutive Director and unanimously supports his reelection. I invite Mark to address the meeting in connection with the resolution. Mark?

Well, many thanks, Peter, and good afternoon, ladies and gentlemen. It's my pleasure to say a few words this afternoon in support of my reelection. Metcash is a great company, playing an important role in our local communities, and it will be a distinct privilege to continue to serve you. I've spent the last 12 years or so serving on the boards of listed mutual and private companies in a range of industries. Today, I serve on other boards, which offer very relevant experience, including Goodman Group, SGH, Aurecon and Sydney Airport. My previous Board experience includes Boral, Westfield, Coca-Cola Amatil and HSBC Bank Australia, among others.

My director career followed some 30 years in professional services, which culminated in a period as the CEO and Deputy Chairman for Asia of PwC. Through this part of my career, in addition to leading a $2 billion business with over 7,000 staff, I served large clients in accounting, audit, risk and control, mergers and acquisitions, due diligence, legal support and other services. Many of my clients operated in the retail and FMCG sectors.

Through my various roles, I have been actively involved in several of Australia's major corporate transactions, in business and technology transformations, in business simplification and standardization, in major capital expenditure and property purchases and related value creation in emerging supply chain, digital and data strategies and focused on collaborative approaches to working with customers to build mutual success.

I am very confident these skills and experience have contributed to the important deliberations of the Metcash Board over the last few years, and I believe I'm well placed to contribute to the important strategies and plans we have in place to make this company even greater in the next 3 years.

I'd be very grateful for your support today, and thank you for the opportunity to speak this afternoon. Thank you. Back to you, Chair.

Thanks, Mark. Are there any questions in relation to this resolution? No questions from the floor.

Steve, are there any questions online?

No questions online.

Excellent. So I'll now formally put the motion that Mr. Mark Johnson be reelected as a Director of the company. I put the motion to a poll and open the poll. Please cast your votes using electronic handsets now. Press 1 to vote for; press 2 to vote against; or if you wish to abstain, press 3.

[Voting]

Okay. We're getting quicker. It's good. So just in a few seconds. Good. I'll now call the motion closed. The results will appear on the screen.

Excellent. So I'm pleased to be able to declare that the motion has been carried that Mr. Mark Johnson is reelected as a director of the company. Congratulations, Mark.

So now turning to Resolution 3, which is the resolution to adopt the remuneration report. The remuneration report forms part of the directors' report of the company for the financial year. It is set out on Pages 38 to 56 of the 2025 Annual Report. Please note that the vote on this resolution is advisory only and does not bind the directors or the company.

The resolution is now open for discussion. Are there any questions in relation to this resolution? No questions from the floor.

Steve, are there any online questions?

Yes, from Stephen Mayne. And his first question: Did any of the 5 main proxy advisers, ACSI, Ownership Matters, Glass Lewis, ISS and the ASA, recommend a vote against any of today's resolutions?

The answer is no. The recommendations will fall.

Second question is: Will we continue with our excellent practice of disclosing the poll results, including the headcount data as well as the normal share metrics? Will we do that again this year like we did last year?

Yes, we will.

And the last question is in relation to disclosing the proxy position before when we lodge with the Chairman's address and the presentation. He notes that we didn't do it this year. Is there a reason for not doing it? He believes it's becoming more common practice to do that and will we do it going forward?

So I think we'll certainly consider it. I can see that it is becoming more common. So we'll certainly have a look at that going forward.

No more questions?

Thank you. Okay. I now formally move the motion that the remuneration report be adopted. I put the motion to a poll and open the poll using the handsets, please cast your vote now. To vote for the resolution, please press 1; to vote against, press 2; or if you wish to abstain, press 3.

[Voting]

I'll just keep the voting open for the last few seconds, last opportunity. Okay. I think we're good. So I'll declare the voting close. The results will appear on the screen.

Thank you. I declare the motion carried and the remuneration report has been adopted.

Finally, to resolution #4, which is to approve a grant of performance rights to Mr. Doug Jones, the Group CEO. Shareholder approval is sought to grant performance rights to the Group CEO for his financial year 2025 long-term incentive award. If shareholders approve the grant to Mr. Jones, he will be granted 772,870 performance rights. This number has been determined by dividing Mr. Jones' long-term incentive opportunity of $2,450,000 by $3.17 being the volume weighted average price of the company's shares traded on the ASX over the 20 trading days ended the 30th of April 2025, which is the last trading day before the start of the company's 2026 financial year.

Mr. Jones' LTI opportunity is 140% of his fixed remuneration as at the 30th of April 2025. The award will be subject to 2 performance conditions that will be tested over a 3-year performance period, running from the 1st of May 2025 to the 30th of April 2028. Half of the performance rights will be subject to an Absolute Total Shareholder Return Hurdle. The remaining half of the performance rights will be subject to an adjusted earnings per share hurdle with a return on funds employed gate opener. Further detail about the award of these performance rights to Mr. Jones and each of these performance conditions is set out in the explanatory memorandum accompanying the Notice of Meeting.

The resolution is now open for discussion. Are there any questions in relation to this resolution? No questions from the floor?

Mr. Ashe, are there any questions online?

No questions on this resolution. Just to let you know, one more question has come in relation to Murray, wanting to ask Murray question. That's the last question coming through.

Okay. Well, let's just finish this item of business and then we can come back to that. Thank you, Steve.

So please now I put the motion to the poll using your handsets. Please cast your vote now. To vote for the resolution, press 1; to vote against, press 2; or if you wish to abstain, vote 3.

[Voting]

Just a few seconds. Thank you, everybody. I declare the voting closed. The results will appear on the screen.

I declare that the motion to grant performance rights to Mr. Jones is carried. Thank you.

So we will, Steve, take that question to Murray.

The question is from Stephen Mayne. And he would like to thank Murray for his 9 years of service to the Board. And he says, it's always helpful for investors to have access to some exit perspectives from retiring independent directors. And he asked Murray, could you please comment on what he regards as the best 2 decisions made during his time on the Board. And does he have any regrets? Also, why is he going 11 months before the expiry of his 3-year term given that at the mandate in 2023, he received a whopping 99.35% mandate.

Murray, you want to answer this one?

Thanks, Peter. And thanks, Stephen, for the question. Firstly, turning to tenure. This is a hard organization to leave. It's a great organization with a very strong purpose. But 10 years, almost 10 years, that's a pretty good knock. So I don't think anyone would deny that. So I'm very comfortable with what we, as a team, have done in nearly a decade.

In terms of the other question, in terms of regrets. Personally, I don't have regrets. I try and do the best that I can with the team that I work with. So it's always a team approach but I feel very proud to work with very good people delivering a very good result. I don't have regrets.

In terms of what I'm most proud of. Ten years ago, the share price had a [ 1 in it, ] now it's got a [ 4 in it. ] So that's got to be good progress if we're looking at the numbers. But that doesn't do it justice in terms of what this organization has done in the decade. And one of those things would be the strengthened relationship with owner operators, our independents. They are often the most important part of the fabric of communities around this country, and we get to support them doing what they do well. So I'd say that has really strengthened in my time and I come from a background of supporting and working with owner operators. So I and the team are very proud of that.

The second one would be leadership. Because at the end of the day, it is all about people, and there's this lovely Maori saying, he tangata, he tangata, he tangata, which translates to: It's always the people, the people, the people. So when I look at leadership amongst our independents and you've seen many of our retailers in the present and they are often asked for comment, very, very strong and do a wonderful job. But to the support center leadership, a couple of key decisions, Doug Jones as our leader and his predecessor, Jeff Adams, would be 2 of the key decisions and the executive around that. I believe in terms of the pillar CEOs who are sitting right in front of me, it's certainly the strongest that this organization has ever had. So I'm incredibly proud of the people that we have assembled.

So hopefully, that answers Stephen's question. And so nice to have the last word. I didn't think I'd be having one. Thank you.

This is a very good way to finish the meeting. So thank you, Murray. And again, thank you for your tremendous service to the company. But as a human and the way in which we've worked with everybody, we're going to miss you.

So this concludes the formal business of the meeting. I thank you for your attendance, particularly given what a horrible day it was, and thank you for your ongoing support of Metcash.

I now declare the meeting closed. You should find some bags in the foyer with products from our private label brands, and we invite shareholders to take one bag each on your way out. Thank you.

Good day, and thank you for standing by. Welcome to Metcash 2025 Full Year Results Briefing. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Metcash CEO, Doug Jones. Please go ahead.

Thank you, operator, and good morning, everybody, and welcome to the Metcash Limited FY '25 Full Year Results Presentation. As the operator said, my name is Doug Jones, Group CEO. And I'm joined this morning in Melbourne by Deepa Sita, Group CFO; Grant Ramage, Food CEO; Kylie Wallbridge, Liquor CEO; Scott Marshall, CEO of IHG and soon to be CEO of Total Tools and Hardware Group; and Steve Ashe, Executive General Manager of Investor Relations.

I'd like to begin by acknowledging the traditional custodians of the land on which we're all connecting from. This morning, I'm on the land of the Bunurong people of the Kulin nation, and I pay my respects to elders across country, past, present and emerging.

As you know, we're proud of the purpose of championing successful independents in support to thriving local community -- communities, and it guides our strategy and is an integral part of our culture. Our contribution to communities across Australia is well documented and something we're proud of. The idea of making a meaningful difference in the communities our networks serve and operate in as part of our DNA.

At the same time, we're energized by the opportunity to win alongside independents. This is a good time to be in partnership with independents in this country right now, and we recognize the privileged strategic positioning that this provides to support sustainable and meaningful value creation for our shareholders, too.

This year, we've made real progress towards our purpose. Our independent retail partners are healthy, competitive and confident. As the leading wholesaler and service provider to independent businesses in Australia, the flywheel is the manifestation of our competitive advantage and how we create value for independent customers and for shareholders. And of course, also for suppliers. It's exciting this year to have been selected by Chobani and by Lion as their route-to-market partner into the independent space. And more on that in a moment.

Our flywheel is also the heart of the platform from which we can grow our services to independent businesses across the country, and it forms the foundation from which we can move closer to the shopper and through the value chain.

I thought I'd just take a moment to share my thoughts on the year that's just gone by. And while it wasn't an easy one, I'm incredibly proud of the way the business has delivered. This has been a year of growth and transformation, incredible execution and growing confidence in the future that sets us up for accelerated growth. The food business is a materially larger and better quality business now, not just because of the addition of Superior, I think you've seen another year of the evidence of its resilience. Likewise, Liquor is a high-quality, well-managed business and the delivery of material market share gains for the third year in a row is evidence of this.

It's been a tough couple of years for anyone in the building supply sector, and this is well documented, but I'm proud of the way the business and our network of member partners have managed, and I'm encouraged by some of the signs that we're starting to see and confidence in our ability to take advantage of those. We've bedded down all the acquisitions and our synergy programs are on track. We'll discuss performance in more detail shortly, but I want you to know that we remain confident that they are all quality businesses with material upside into the future.

You've heard me say that we've got 2 sets of customers at Metcash, independent retailers and suppliers. And we've had a number of material supplier wins this year that evidence the trust that they have in us and our value to their businesses. It's all about the results though today. And while we've missed our own targets, the growth in profits and importantly, the quality of those earnings, as evidenced in the cash flow performance, is really pleasing.

You also heard me beat the execution drum in the past. And it's not just about operational execution, but about strategic discipline, too. I feel we've had another good year of cost and working capital management, and under Deepa's leadership, this has really accelerated and broadened throughout the organization.

But the food team have been able to, once again, grow earnings in the face of their largest category suffering multiyear double-digit declines deserves the highest recognition. A year ago, the tools market was in turmoil, and I'm pleased that, that's settled down and we restored margins and held them into the new year.

Building, fitting out, moving into commissioning and opening a new mega distribution center is a massive undertaking. And I'm pleased and grateful for the work that's been done by our colleagues who led each phase of this project. Most importantly, customers and suppliers were unimpacted through the move and are now enjoying the benefits and service from the new facility, and they tell us that.

All of this sets us up to be confident about the future and our ability to accelerate the growth. On this slide, I've noted some of the things that underpin my confidence. In the last 18 months, we've done a lot of work and implemented organizational changes to strengthen and reshape the business throughout the group. In addition to the large mergers in food and hardware, we've restructured the leadership of ALM and many parts of the rest of the business, including finance, P&C, legal and several other group support functions. This is evidence of our ambition and of our willingness to make the changes required to fulfill that ambition.

I do want to talk for a moment about this idea of the diversity of our revenue streams. I think personally that Metcash is a fundamentally misunderstood business, often judged superficially as a pure wholesaler. When in reality, it's an integrated wholesaler and scaled logistics operator, a banner owner, a large and growing retailer, a franchisor and most recently, a retail media owner. As each one of these revenue streams grows, the overall shape and balance of the business evolves. Resilience improves, addressable markets expand and the opportunity for further growth extends. This is not new. It's been happening for a number of years now.

Finally, it wouldn't be appropriate for me to talk about the confidence I have in our business without mentioning our independent partners and recognizing their health, their strong and differentiated competitive positioning and their own confidence.

I said just then, and only a little tongue in cheek, that Metcash is a misunderstood business. And what I mean by that is the thinking of it as purely a wholesaler materially underestimates both the quality of the business and the opportunity before us. I think this is best brought to life by, firstly, understanding the balance of the group as a wholesaler, a retailer, distributor of food and liquor to the on-premise and out-of-home market and as a franchisor. And secondly, through a deeper understanding of how the shape and balance has changed in recent years. So for example, in FY '20, wholesale revenue represented 81% of total revenue. Last year, this figure was 74% of total revenue. While that's a reduction in the proportion of total revenue from wholesale, it belies the strong growth in total dollars of 21%, which, remember, is inclusive of tobacco, mind you.

Retail, now at $2.2 billion, is 11% of total revenue and has grown by 133% in the same period. And food and liquor out-of-home is now a $3.2 billion business and represents 14% of the total group revenue. Franchise income may be small in dollars, but it's highest in margin. And in the future, retail media and additional services offer the prospect of healthy margins, and our plans are aimed at growing these revenue streams.

We think about this idea of winning with independents in some part through the lens of operating businesses alongside them. We've done this for years now in hardware and total tools, and we've signaled our intent to do the same in the food business. Thinking about this is moving closer to the customer and closer to the end transaction allows us to articulate our strategy in a way that perhaps brings it to life more effectively. And what I hope is also bringing board to life is the opportunity for material further growth that this continues to present.

Each of these functional revenue streams have their own financial, operational and cash flow characteristics as well as differentiated capital structures and return metrics. As a wholesaler to thousands of stores, we're deeply connected to our customers, particularly those who are members of our bannered networks and who use our brands in their stores and intrinsically reliant on one another. While wholesale EBIT margins may be at the lower end of the spectrum, the returns and cash flows are of a high quality, being predictable, reliable and resilient. And wholesale return metrics and return on capital metrics are strong, too, and that's evidenced, in part, by the food ROFE metrics.

Retailing presents the opportunity for improved margins, which can and do leverage with volume as we know and have a different capital investment framework. In addition, ownership of stores alongside our independent partners makes our network stronger. We've proven this already in IHG and Total Tools. Franchising allows us to invest in the network as a whole and to share directly in the returns from that investment. This is good for the network and good for shareholders.

Equally, each of these revenue models opens a new series of addressable markets. And thinking about our business beyond wholesaling allows us to widen our ambition within that larger total addressable market.

So I'll leave you with this final thought on the slide then. At the heart of our flywheel is our logistics capability. And at the heart of our business as a platform to support and win with independents is our wholesale business, but neither of these are the full extent of the Metcash group or of our ambition.

Turning now to the financial overview. I won't talk to the slide in great detail, but some highlights for me include the strong revenue growth and growth in both underlying group EBIT and reported profit after tax. The very strong operating cash flow on the back of a pleasing cash realization ratio stands out, too. Deepa will talk about this in some detail, but I just want to remind you of the H1-H2 variability and that a focus on the 3-year CRR is more appropriate than the half results or even the full single year metric.

You'll note that we've increased our target range for the 3-year cash realization ratio to 80% to 90% over that 3-year period. As you can see, the company has a strong balance sheet with good flexibility. Underlying earnings per share were $0.215, and the Board has declared a full year dividend of $0.18, which includes a final dividend of $0.095. This equates to just above 70% of underlying profit after tax payout ratio. I do want to point out that the group EBIT includes $7.7 million of restructuring costs taken above the line.

Looking at the pillar results, it's pleasing to see the strong revenue growth in all pillars. And this is accelerating in Food and Liquor and steady in Hardware. As you know, Superior is included in the Food results for 11 months of the year. I noted the cash performance earlier, and it's good to see EBITDA, which we're sharing with you for the first time, up a healthy 8.6% and group EBIT up 2.3%.

In Food, independents have maintained share in difficult trading conditions where competition continues to be intense. The differentiated value offer from our independents continues to resonate with shoppers with foot traffic steady and volume continuing to grow in the face of moderating inflation. As noted before, assessing the performance of the food business is best done on an exclusive of tobacco basis.

I'm pleased to report store growth on a net basis of positive 9, and this is primarily of the medium-sized so-called sweet spot stores as Grant describes them. As you can see, the tobacco decline has accelerated, and I'll talk more about this in a moment.

In Campbells and Convenience, this really is a reinvigorated business and one that's delivering growth, particularly in the petrol and convenience channel. Following the Ampol win, which went live in February, we're now the leading supplier to the sector and partnering with all major petrol and convenience brands.

Superior sales have grown at 4.6% over the 11 months, and we've recently renewed major contracts worth around $240 million per annum, representing approximately 20% of total turnover, and this evidences the trust that major customers have in Superior.

Competitive intensity in the independent or so-called street sector remains, and this has put pressure on margins. And I spoke about this at the half 2. And I'll come back to Campbells and Superior in a moment.

Total food earnings were $248.4 million, which is a growth of 18.2% and include $2.5 million of restructuring costs and delivered an improvement in EBIT margins of 14 basis points, supported by a mix shift away from tobacco and a contribution from Superior. As I've said, this is indeed now a larger, more diversified and more resilient business.

I said I'd comment a little bit on tobacco, and I want to dwell here for a moment. The effectiveness of the various law enforcement initiatives has been disappointing to say the least, although there are some encouraging signs emerging recently. That said, we're a leading participant in the sector, and we believe it's incumbent on us not to look to others for a change in fortunes. We have been, and we will continue to, take control of what we can control and influence in the interests of our shareholders and our customers.

Our strategy is clear, and I'm sure you'd agree that we now have a strong track record of managing the impact of the decline exceptionally well. This is best highlighted by the consistent earnings growth in supermarkets and Campbells and Convenience over the last few years despite a 40% decline in tobacco sales since the peak in 2021. To put that in dollars, we now sell approximately $1.3 billion less tobacco than we did at that peak, but earnings are still well up in that period. Tobacco now represents just 17% of total food sales.

In the spirit of making our own weather, our strategies are evolving and are founded on growing our customer numbers and our sales as a key distributor for all tobacco suppliers, winning profitable market share, restructuring our commercials and initiating a number of supply chain initiatives to make us more efficient and to enable us to take advantage of the strength of our leading position in this market.

Finally, you'll be aware that the accelerated excise program comes to an end next year, and we wanted to provide some detail and some reassurance of our ability to navigate this as we've done in the past. We anticipate the net EBIT impact to be less than $5 million in FY '27, and we have a high confidence in the continuation of our successful mitigation strategies.

Turning to Liquor. I really don't think it's fully appreciated just how well the Metcash Liquor business has performed over the last few years. And this statement is underpinned by -- sorry, this confidence is underpinned by the continued shopper preference for convenience format and the quality of the differentiated independent offer, and it's further supported by the preponderance in our network of the convenience format liquor stores that offer incredible value across locally curated ranges located in multiple, easy-to-access places. As you can see, the growth accelerated in the second half and supported continued market share gains, which I'll outline shortly.

The outperformance by independents has been led by our IBA network, underpinned by the focus on execution in store and partnerships with key suppliers. Today's exciting announcement of the acquisition of Steve's Liquor Warehouse from Tony Leon and his partners is a further step in this growth story. This is an 8-store group in Victoria and Tasmania and will deliver around $3.5 million of earnings. While small, it's immediately EPS accretive.

Talking about growth. The Lion distribution agreement in South Australia is worth around $100 million per year in turnover and has delivered results in excess of their and our own expectations.

To give you a sense of the scale of what's involved. In the first week, the team moved the same number of kegs we'd normally do in a year. And most pleasing of all was that, that was done without a single safety incident. The benefit extends to our customers who get one delivery, one invoice and aligned terms, and they have been consistently telling us how pleased they are.

They also extend to ALM, where the benefit is beyond just the line volume and has supported our winning new customers who buy across the range, and you'll be pleased to see -- to hear that we see further opportunities like this one.

I often speak about the multichannel approach in liquor and the diversification of our strategy between on-premise, contract customers and IBA bannered customers, and this continues to support the growth and resilience of this pillar.

We're grateful for the partnerships we enjoy with our contract customers, who themselves represent the best of local convenient value for shoppers, and we remain committed to and appreciative of these partnerships. While it's never ideal to go backwards in profits, the discerning analysis will reveal that this is an exceptional performance relative to the market in the face of materially lower wholesale price inflation, which impacts margin expansion opportunities.

I said I'd talk about liquor market share. And I wanted to share some of the facts with you. Since FY '22, the ALM total share of the packaged liquor market has increased by 2.7% to 31.1% and notably has been achieved across all categories. And this is evidence of that virtuous cycle in action, improve delivery for suppliers through better execution of agreed programs, leading to further support and investment from them. And it also reflects the strength of the convenience format as well as the execution of our independent partners. This all underpins my enthusiasm for and confidence in the business.

Turning now to Hardware. The fact that this is a difficult market right now is well documented and understood. And I noted earlier, the challenges of operating in the building supplies, hardware and professional tools markets. That said, we have a quality group of businesses, stores and independent partners. And while the focus is on profit growth as it should be, it shouldn't be lost on anyone that this is a large group that delivers material profits and EBIT margins well above 5% even at this point in the cycle.

I want to call out and recognize the strong execution in cost, inventory and margin management. Pillar sales were up 2.4%. While trade activity remains subdued, there has been some improvement in Q4 and into the current year. The decline in charge-through sales is because those categories are primarily trade based, but it's great to see that timber and building supplies in growth in the first 7 weeks of this financial year.

From an earnings perspective, you should note the EBITDA result, which essentially represents cash earnings and are broadly flat with depreciation and amortization relating primarily to acquisitions. While total pillar earnings were down, there is earnings momentum in both businesses, with Total Tools returning to earnings growth in the second half of this year as we foreshadowed in December.

In IHG, the impact of deleverage following lower volumes on retail and trade site margins and earnings has been discussed extensively and continued in the latter half of the year. That said, I do want to point out again, the strong cash earnings result using EBITDA as a proxy. As building supplies inflation continues to moderate, we're seeing an improving trend in IHG, particularly in the last quarter.

Trade is where the pressure is most concentrated with DIY holding up pretty well. As I noted earlier, the IHG earnings performance was stronger in the second half, and this is evidenced in the improved EBIT margin. Wholesale margins were very slightly up and retail gross margins were stable through the year. But as I've said, lower trade volumes does have a material deleveraging effect on our own sites, which are primarily trade sites.

Equally, in Total Tools, lower trade activity and lower trade confidence and spending has had an impact on volumes. That said, franchise fee and other revenue grew while a small decline in our JV retail stores is partly caused by the disposal of 2 of those stores this year. It's really pleasing to see the exclusive brand growth and a vindication of the decision 2 years ago to move the consolidation facility into the Ravenhall DC. This also provides a strong platform for the continued merging of the IHG and Total Tools supply chains to benefit both networks through lower costs, wider ranges and shorter lead times. You should note, too, the strong commercial sales and online growth trends. These are now multiyear trends.

Looking now at earnings in Total Tools. As I've said before, I think the best way to understand it is to look at the EBIT relative to total network sales, and you can see the improvement from the first to the second half. The divestments I spoke about a moment ago had a $2.4 million impact on Total Tools earnings. And as you can see, the impact of lower volume on the JV earnings as that deleverage happens. It's pleasing to see the material improvements in exclusive brand earnings on the back of that strong growth I referenced a moment ago. As we noted in December, the decline in EBIT margins at store level reflects the margin pressure experienced in the first half.

As you know, a few months ago, we merged Superior with Campbells and Convenience to form the Metcash Foodservice and Convenience business unit. This was done to support the acceleration of a number of value-creation initiatives, including bringing the merchandise team together, integrating the supply chains and presenting a more aligned offer to our customers. Craig Phillips will be the CEO of that business and we're confident that that's the right way to launch what we expect to be a very exciting venture.

In the second half of the year, as I noted, we re-signed around $240 million worth of major contracts, which represents approximately 20% of the total Superior turnover. Superior also recently won the Star Hotel Group contract worth between $15 million and $20 million a year.

You may recall that we identified between $30 million and $40 million worth of additional CapEx at the time of the Superior acquisition. I'm pleased to update that the $10 million we had earmarked for spending this year has not been required and that we are revising downwards the guidance of that $10 million to $15 million a year to $5 million this year and next. And this is evidence of the quality of the business.

As I noted in the first half, the competitive intensity and customer pressure for efficiencies and lower costs in the independent or street business has increased with consequential pressure on margins, the value of which is around $1.8 million. This has been more than offset by better-than-expected synergy realization. A bit like tobacco, we're acutely aware that it is our responsibility to control what we can, irrespective of market conditions. As you can see, there's been a lot of work done to position this quality business for accelerated growth.

A reconciliation of Superior's earnings is available in the appendix, and I draw your attention to the customer contract's amortization that arises as a noncash cost following the finalization of the purchase price accounting, which was flagged in the first half presentation.

In Hardware, Bianco is performing exceptionally well, while Alpine is feeling the effect of lower volumes in the very difficult residential construction market in Victoria, particularly acute in Metro Melbourne. And synergy realization for both businesses is on track.

Before I hand over to Deepa, I wanted to point out a few new slides in the appendix to the pack. In addition to the now familiar Total Tools' earnings analysis and the Total Tools' put option summary, we've shared how we're thinking about helping investors understand the merged hardware business and the new Foodservice and Convenience business unit by outlining in detail the proposed disclosure. In particular, we anticipate sharing improved detail on the retail businesses within Hardware and Total Tools. As we merge them, we'll bring the supply chains together, and this means there will be a single TTH Group wholesale result. And forming shared leadership and other shared group capability means that the allocation of costs between the entities is not useful.

We look forward to engaging with the market on this. And while I'm sure investors and analysts will agree that this is a meaningful improvement, I have no doubt we'll get some feedback during the week.

We've also provided updates on a few key strategic initiatives, including ESG, where we continue to improve our impact and our credentials on retail media, where we're making really good progress; and on Sorted, which is now an established, scaled and leading digital B2B marketplace used by thousands of customers across supermarkets and Campbells and Convenience on a daily basis. And I'm excited about the next step in the rapid growth of this platform, which will be the transition of the ALM business onto it in the first quarter of this year.

We also provided an update on Horizon, where we continue to make steady progress. There's no change to the cost guidance with targeted finalization in the last quarter of the calendar year 2026. And finally, we've included some of how we're thinking beyond Horizon.

Our partnership with Microsoft and the decision to use Microsoft technology at the core of our tech stack has put us in an advantaged position in building momentum with the use of AI. We have several use cases already delivering value and a growing number in the hopper. And we're receiving strong support and real investment from Microsoft, and we're confident that this relationship will stand us in good stead as we finalize Horizon and leverage the investment for growth and value creation.

And on that note, I'd now like to hand over to Group CFO, Deepa Sita, to present the financials.

Thank you, Doug, and good morning, everyone. Building on Doug's update, I'm pleased to provide an overview of Metcash's financial performance for the year. Despite challenging conditions, Metcash delivered a strong profit performance, achieving a 10.1% increase on prior year. This was largely driven by 8.9% revenue growth, which was supported by acquisitions. The acquisition synergy realization ended ahead of market guidance while cost initiatives also exceeded the annualized savings target by 60%.

The year-on-year increase in finance costs was largely driven by acquisitions, which were funded through a combination of debt and equity. The finance costs were also affected by the impact of new leases, most notably the Truganina DC. The underlying EPS is reported at $0.251 per share which includes the impact of the equity raise.

Disciplined execution drove the strong cash performance, which has resulted in a 3-year rolling CRR of 94.7%. On the back of the sustained performance, we've lifted the 3-year CRR guidance to a range of 80% to 90%.

As we've highlighted before, working capital fluctuates through the year and intra month. Because of this, we expect the 6-month CRR at H1 FY '26 to come in slightly lower. This is consistent with prior periods and reinforces why we continue to focus on the 3-year CRR as the more appropriate measure. As Doug mentioned, the Board has declared a final dividend of $0.095 per share, reflecting a moderate increase against the annual target payout ratio. The DRP will also remain in place with no discount.

So the FY '25 outcomes outlined on the right-hand side of this slide reflect a consistent and disciplined application of the capital management framework. The key highlights for the year include a 11.6% increase in operating cash flow to $539 million, supported by stronger EBITDA. Metcash closed the year with a DLR of 0.96x, which was comfortably within the guided range. The business also invested $552 million in M&A and capital initiatives focus on strengthening the core and advancing strategic growth.

As previously flagged, the net debt increased year-on-year, primarily due to the Superior Foods acquisition as well as increased ownership in Total Tool stores. You may recall that the prior year closing balance included an amount of $354 million from the equity raise. And this was only utilized in the beginning of FY '25 to fund a significant portion of the Superior acquisition.

The total annual dividend declared amounts to $0.18 per share, reflecting a payout ratio of approximately 72% of underlying NPAT. The key dates for the dividend and DRP are provided in the appendix section of the deck. The ROFE of 23% is reflective of the short-term impact of recent acquisitions, continued investment in long-term enablers such as technology as well as new DCs as well as the softer earnings in Hardware.

So this slide provides an overview of the P&L performance and other key financial highlights. The group delivered revenue growth across all pillars and is underpinned by a diversified portfolio and overall business resilience. The EBITDA grew 8.6% to approximately $748 million. This was led by a strong momentum in the Food pillar, which was supported by the Superior acquisition. The result also reflects disciplined cost control and continued focus on operational efficiency across the business.

The underlying EBIT increased 2.3% to approximately $508 million, again, largely driven by the Food pillar. The result was partly offset by a softer performance in Liquor and Hardware. The EBIT result also reflects a higher depreciation and amortization charge largely linked to the recent M&A and the commissioning of the new distribution center in Truganina.

The net finance cost for the year is reported at $122.4 million and is in line with the guidance. Looking ahead, the FY '26 net finance cost is expected to remain between $120 million and $125 million, and this is assuming a broad offset between a moderate easing in the interest rates and higher average debt utilization.

The significant items are of the same nature as disclosed in prior years, along with the gain from the reversal of a previously impaired loan to Dramet as disclosed in H1. Further details are available on the slide and in the financial report.

As I said before, the underlying EPS at $0.251 per share was primarily impacted by increased finance costs and the equity raise and this was partly offset by higher EBIT.

In terms of capital expenditure, excluding acquisitions, that came in below guidance, reflecting a considered approach to investments in a challenging market. Some of this variance relates to network investments and is primarily due to timing delays with Metcash continuing to evaluate growth opportunities.

In the Hardware pillar, leadership changes during the year also contributed to some delays as well as a reprioritization of spend. The updated guidance for FY '26 CapEx has been set at $200 million reflecting current planning as well as investment priorities.

The put option resets for Total Tool JV stores were carried out both in FY '24 and FY '25 as part of the continued investment in the network. That said though, the significant year-on-year variance is primarily due to the $101 million payment in FY '24 to acquire the final 15% stake in Total Tools Holdings.

So Metcash retains the balance sheet flexibility and remains well within the parameters of the capital management framework. The net working capital closed at approximately $457 million, with the increase in inventory levels supported by favorable supply funding ratios. The increase in inventory was primarily driven by the Superior acquisition as well as a deliberate uplift in tobacco stock ahead of the regulatory packaging change. This position supported by favorable supplier funding terms allowed Metcash to create value in partnership with key suppliers and ensure continuity of supply to customers during a period of uncertainty.

The average working capital days improved by 1.2 days, and optimizing working capital remains a key priority, and the business continues to actively explore further opportunities to strengthen the financial resilience and unlock further value. The intangible assets have increased to $1.45 billion, and this is primarily due to the Superior Foods acquisition. As Doug mentioned, the purchase price allocation for Superior has been completed in H2, contributing to the increase in the customer contract amortization charge during the year.

Metcash has a healthy, well-balanced and carefully managed debt maturity profile with total facilities of $1.57 billion at year-end. The undrawn facilities totaled $889 million, highlighting the strength and flexibility of the balance sheet to support both day-to-day requirements as well as strategic priorities. The closing net debt ended the year at $577 million.

And given the fluctuation in net working capital throughout the year, closing net debt should not be viewed in isolation. Therefore, in line with the H1 results, we've again shared the average net debt position to offer a clearer picture of the financial leverage. For FY '25, the average net debt was approximately $805 million with a DLR of 1.33x, again, well within the target range of 1 to 1.75x. The weighted average debt maturity has increased to approximately 3.3 years following the refinance of both 5- and 7-year syndicated facilities during the year.

The weighted average cost of debt remains broadly in line with the prior year. While the cash rates have begun to ease, the recent rate cuts occurred late in the financial year and haven't yet flowed through the seasonal debt peaks. $295 million remains hedged at a favorable rate of 3.8%.

And on that note, I'll now hand back over to Doug.

Thanks, Deepa. I think this slide talks largely for itself so I'll keep my comments fairly brief. It's really good to see continued momentum in Food and Liquor. I do want to point out that we're showing ex tobacco sales here, and we've shown tobacco itself separately. In liquor, the market was soft in May and we've actually experienced continued outperformance and share growth.

I'm pleased that in IHG, we've seen a continuation of the trajectory that was established in the last quarter with a number of so-called green shoots, including growth in timber and building supplies as well as growing frame and truss pipelines. And I'm particularly pleased with the recovery of the Total Tools margins, which have held into this year.

In summary then, we're confident we're well positioned across all of our pillars. We've got clear plans, strong leadership and healthy independent networks.

I'll now hand over to the operator who will take us through questions.

[Operator Instructions] Our first question comes from the line of Caleb Wheatley from Macquarie Group.

My first question, just going back to the CapEx guide into '26. It seems like it's a fairly material reduction from the $240 million that was being called out at the Strategy Day, and I appreciate your comments on some timing delays. Could you please talk to what's driven the reduction in FY '26? And how we should think about the pathway from here, given some of those timing shifts into the medium term?

Yes. Caleb, thanks for the question. I think it's fundamentally a reevaluation of the opportunities in front of us and really implementation of a disciplined and clear approach to capital allocation. Remembering that, as Deepa said, a number of the -- sorry, a number of opportunities that were anticipated this year didn't materialize. And I think that, that's reflective of our willingness to hold the line on the returns metrics. And so we've reassessed that $240 million, and we believe that $200 million is the appropriate number. We're very confident that, that's appropriate. And if -- as we've always said, if there are material other investment opportunities, we'd update the market accordingly.

Yes. And I think, Caleb, also maybe just to reaffirm Doug's comment around the superior CapEx, which has also been reduced.

Okay. Got it. That's clear. And then second question, if I could. Just on the Hardware business and margins within that business more particularly, if I take the half-on-half movements and appreciate there's going to be some seasonality, et cetera, but between the first half and the second half of the year, it looks like there was about 40 basis points worth of margin improvement. And if I remember correctly, 6 months or so ago, you were saying that there was maybe some more limited opportunity on the cost side, just given their focus on service. Just keen for maybe more color on, I guess, the EBIT margin movement half-on-half and where that's come from, just given the materiality of that movement?

Yes, sure. No problem. So you're right to obviously point out that there's some seasonal impact there, and so that helps. But as I said a number of times, the result of the cost-out programs that the -- particularly the IHG team have executed and delivered is remarkable. I gave you some of the statistics around that in the call in October last year and at the half. And so certainly, that's paying off as well as a renewed focus on the top line and really driving a culture of sales back into the business.

I know Scott wants to tell you how excited he is about the future, so I'm going to give him an opportunity too.

Thanks, Doug. Thanks, Caleb. It's actually great to be back at Metcash. And the opportunity that we have in Hardware is exciting. I think, as Doug pointed to, the team had done a really good job resetting cost base. But coming in and challenging some of the thinking, I think we've decided to get a bit closer to the customers and drive some growth initiatives. And they're pretty simple in how we go to market with our trade activity and also DIY and home improvement. And we're starting to see some traction within that.

Caleb, just Deepa has reminded me of something. I answered your question in the context of IHG. Obviously, if you included Total Tools, in the first half, we had the material impact of the pricing dislocation. But I assume your question was about IHG.

Okay. No, I appreciate that. And I guess, in terms of that broader program, is there much more runway from here given the materiality of the move?

Can you just be specific what do you mean by the broader program?

Sorry, in terms of the cost out that you mentioned, obviously, a big delta that came through in the most recent half. Just on a go-forward basis, how much more scope there is opportunity there.

Yes. Look, I'm pretty confident we're running what is a very, very lean business right now, and further opportunities are limited. I think I said this when we spoke a month or 2 weeks ago about the merger. We want to make sure that as volumes lift, we're ready to take advantage of that, and further cost cutting would probably put the business at risk.

Our next question comes from Shaun Cousins, UBS.

Just a question regarding the restructuring costs taken above the line, the $7.7 million. Can you just sort of walk through how that's split across the divisions? You've called out, I think there's $2.5 million in sort of Food, you've got $0.3 million in Liquor, Hardware has got $0.4 million. You've got some other amounts sort of there as well in terms of the supermarket inquiry costs, Dramet. Is the residual in corporate? And maybe -- so if you can maybe possibly help us walk through how you built the $7.7 million, and should we anticipate effectively then the fiscal '26 start to the year without those $7.7 million in that there should not be any of those restructuring costs in that year, please?

Shaun, thanks for the question. Deepa will give you the details. I do want to point out that I think it's a sign of a healthy business that continues to look at the way that it's structured and refocuses on those areas that are strategically more relevant or value creating. So obviously, we did this to generate value. I don't expect that we would have the scale -- that scale going forward. But I think that there will always be some restructuring that's happening. Deepa?

Thanks, Doug. So the split of the $7.7 million, we've got $2.9 million in Food. We've got $300,000 in Liquor, $1.3 million in total Hardware and $3.3 million in Corporate.

Great. And then we also think about you got the benefits there of the Dramet gain on sale as well in your reported earnings as well.

Yes, so that's $3.2 million in Food.

Yes. Yes. Perfect. Okay. That's fantastic. And I guess my second question is just around Total Tools. What's driving the like-for-like sales to be down again in the first 7 weeks cycling negative comps? And I'm curious around how much of this is the industry? How much of this is Total Tools? And how this sluggish sales momentum impacts the plans towards store growth, particularly towards that 170 target, please?

Yes. So it's a combination of factors. There is -- you've heard me say for 2 years now, there's 3 things going on in the tools market. And I'm at the risk of repeating myself, there's the one-off dislocation of pricing, which we're largely through. There's general competitive intensity in the sense of more competitors. And then there's deeper promotions for longer. So the latter 2 persist. But I think that the primary driver really is confidence of trades and their visibility to work going forward. And we would expect that, that won't materially lift until the work starts to manifest. So while it's obviously good to see pipelines filling and housing construction approvals going up, that construction needs to start happening. I pointed previously to we saw and continue to see an increase in tradies repairing tools as opposed to buying new ones. So I think it's a balance between those 2 things, Shaun.

And the confidence then around the 170 sort of target, is that something that you still believe is on track and this is just a temporary sort of sluggish trading environment?

Yes, we do. We're committed to continuing to roll out stores that are complementary to the network. It's always -- you always risk when you declare a kind of a broader program that the assessment is you're chasing a number. And I just want to assure you, we're not chasing a number. Every single store that gets put down is properly evaluated. It goes through the appropriate assessments and that continues and is done in the context of the current and anticipated operating environment. But I think broadly, we remain very confident that there are healthy opportunities for continued store growth in the network.

[Operator Instructions] Next, we have David Errington from Bank of America.

Doug, I've got 2 questions on what looks to be very impressive numbers. You must be very pleased with the performance of the group, the way it's going at the moment. My first question is following on, I suppose, from Caleb and Scott's answers, where you've very pleasingly got good EBITDA performance in Hardware, which obviously cash performance, which means that you've worked your costs really well. You've executed very strongly. And I remember you saying, some builders were saying it's one of the worst building cycles they've seen in 40 years or so, certainly in Victoria.

On the flip side, we're starting to see some green shoots. I mean, you've called them out, others have called them out. We're starting to see green shoots. How is your business positioned? You touched on it. Scott touched on it. You touched on it, but you didn't want to go too hard in costs, but you went hard in discretionary costs. So can you call out, can you give us some examples of where you may need to put some costs back in to meet your volume growth? But where, in the past, say, 6 or 12 months, you've used this downturn to actually improve the underlying Hardware business so that the leverage that we can expect should be more manifest, if you like, in the next 12 to 18 months.

I'm trying to get an understanding as to how you've improved the underlying hardware business. Scott touched on it. I know he's only early days back. But if you can give us some examples as to how you've improved the underlying business so that we can expect stronger leverage once the market starts to turn and volumes start to pick up.

Sure. Thanks for the question, David. So firstly, what I'd say is that you remember, we're operating in an environment that is fairly inflationary when it comes to costs, particularly in Victoria, where we are today, where there was a material increase in land and property-related costs as well as people costs. So we called that out probably 18 months ago for the first time. And so we're offsetting a number of those. Unfortunately, those are kind of sustained and continued. And so the really good execution has been in the face of that.

The most obvious 2 places where we've adjusted costs has been in terms of people, and that needs to be done really carefully in this environment. It's not like a simple retail business where you can bring people on and off on a casual basis who don't have -- who don't need, say, trade experience, whether it's in the trade sites in IHG or in Total Tools. And the second area has been in property where we have managed to reduce some of our costs.

I think it's a balancing act that Scott and his management team are going to need to lean into as they further in additional capacity to meet the demand, they need to do it in a way that continues to deliver the leverage that we expect. Scott?

Yes. Thanks, Doug. And just some basic things. I think the team have done really well. Doug's talked about the people cost. We've just got more focused in how we go to market. So greater sales activity online. And I'll give you a really simple example. We were running via monthly online digital catalogs. We're doing that monthly. We're getting in front of customers more in the right way.

If you talk about runway, I think the other thing I think that gives me a lot of confidence, the team are really focused around range and our competitive position, and we're getting more targeted by location. So I feel like that's a good reset. We'll continually have the right focus on costs and managing our costs as we build. So obviously, there's a deleverage impact in tough times. We all want to see the leverage in good times.

Yes. Yes. No, it looks pretty promising. My second question, Doug, is I was really pleased on the Convenience side and Superior Foods. It was very helpful, Slide 33, but I'd like some explanations, please. Because I'd like you to explain, what's this $1.8 million incremental customer contract amortization and the $4.5 million incremental depreciation and amortization? Because when you strip that out, it looks like the actual cash earnings of Superior was up around 6.5%, which is very, very pleasing in my view, but you seem to have hit yourself pretty hard with these incremental depreciation charges. So if Deepa could explain that.

And also if you could give a bit more color on these great contract wins that you're making. Is that a function of pricing that you're going harder? Or is it a function that you've got more capability that you've improved capability, whether it be the new DC because the Lion contract looks to be very good. They've won another couple of contracts there. So if you could give a bit more color on that side of the business because that to me was a very positive performance this year.

Thanks, Dave. You've served it up. I'll do my best to smash it and then Deepa will volley back on the amortization. So firstly, on the contract wins. So I mentioned a number of $240-odd million. So I'm certainly not -- well, I'm not going to go into the details of which customers those are for what I hope are obvious reasons. What that speaks to is the long-standing and very healthy relationships that Superior has built and continues to enjoy with their customers and the fact that they have re-signed for a number of years is really pleasing.

To be honest with you, it's not necessarily on the back of the supply chain things that we've done yet. That's still to come. Well, certainly, that's our expectation. And we sometimes look each other in the eye and say, okay, if we're going to win X business, we do need to operate as a joined-up network, and that puts some pressure on us, but we're up for that. Grant, did you want to add any comments there?

Yes. All I would add is that in WA, we moved the QSR volume from Superior into our Mega DC earlier than expected. We saw opportunity in costs in doing that. But we're also creating capacity in the Superior sites for them to go after these new customers and win them. So as Doug says, we're feeling pretty good about the future opportunities to win. As we put the businesses together into the combined Foodservice and Convenience business, we think that, along with our colleagues in Liquor who service the on-premise, we're building a really compelling proposition for customers. And we're going to be really, really well placed to win for them and with them. I think when you look at the Ampol numbers, they started bidding in, in February. Obviously, there's a significant amount of that to continue to be annualized this year. And we're servicing all of those customers and looking to increase our share of their business.

Deepa?

Cool. Thank you. So David, thanks for that question. I must be honest, I feel like I have a Master's degree in PPA with the crazy accountants around me. So effectively, what's happened is you'll recall at H1, we called out the goodwill -- provisional goodwill calculation for the Superior acquisition amounting to about $334 million. What we've had to do then, subject to the finalization of the PPA accounting, which we've got a 12-month window to get complete. And after many onerous discussions, like I said, with the accountants as well as with our auditors, we've now completed the split of that intangible asset between goodwill customer contracts, which is subject to amortization and then you have something called non-branding -- non-amortizing brand assets. So it's the split of the goodwill that has resulted in an allocation to customer contracts, which is then subject to the amortization. And the completion of that has now resulted in a total amortization for customer contracts of $2.9 million for FY '25.

The one thing I just want to remind everybody is that the FY '25 results only has 47 weeks in it. And when you annualize that for FY '26, that number is going to climb to $3.2 million. The reason also why we talk about an increment is the original Superior business did have customer amortization. So the actual increment in FY '25 was $1.8 million over what was originally amortized in the Superior business. So hopefully, that explains it at a very high level, but happy to take more questions.

I just think that the underlying business is performing very well. So thank you for your answers.

Absolutely. And then just a reminder that this has got a noncash impact, but like I said, crazy accountants.

Our next question comes from Bryan Raymond from JPMorgan.

Just on Total Tools. I want to come back to that one. Just in terms of the operating deleverage in the JV stores. I think you mentioned in the remarks a couple of JV stores were closed during the period and that drove part of the decline there, the 1.4% in sales, link those 2 correctly. And then just trying to understand the linkage to the negative 21% earnings move. Given you're cycling that competitive period as well in terms of pricing, I would have thought you bounce back a little bit better than that, but just trying to understand the moving parts of that operating deleverage in Total Tools.

Yes, sure. So on stores, there was one store closed in the network during the year, but it's -- that was a franchise store -- sorry, I'm being told, 2 stores closed during the year and then 2 that were sold during the year. So the latter 2 have an impact on earnings, particularly.

Yes, I mean your qualitative assessment that we should have bounced back, we can take you through the math, if you like. But you do see material deleverage in a business that has very high gross margins and high fixed costs relative to its sales. It's the nature of the income statement. So I'm comfortable that the work that's been done to offset that through cost management is appropriate.

As I said in response to the earlier question about IHG, you have to be very careful in Total Tools not to take out too many costs. There are only really people costs that you can take out. And our team members are experienced professionals serving professionals inside of that business, and you really don't want to take too many people out.

Definitely, yes. No, I understand the continuity of service that's required there. Just on -- just my second one, just on D&A. I'm just trying to understand the sort of obviously a meaningful step-up and I understand there's been some DC and obviously acquisition impacts there. Maybe one for Deepa, just thinking -- looking forward, is that sort of level $240 million, $250 million type range a decent go-forward level? Or is there a further step up required as we annualize through some of those elements?

Yes, I think just in response to the depreciation, again, just a reminder that the depreciation increase is coming through from the acquisition, Superior, which is only in our results for 11 months, so you would need to annualize the impact of that. And then Truganina also was only went live or operationalized during the year. So we'll have the -- and that was actually went live in August. Therefore, you've got to consider the annualization impact of that as well. So I guess, in a nutshell, you should expect an uplift in the depreciation in FY '26.

Is it possible to give us any help? Would that be on just annualizing up? Or is it sort of towards $300 million? Is that a fair assumption or...

I think you can kind of plan on low double-digit percentage increase.

[Operator Instructions] Next, we have Adrian Lemme from Citi.

Encouraging to see the improved frame and truss demand. Do you expect this to translate to better overall performance of Hardware more generally in the second half of '26 given the lag? Or is this more of a FY '27 story please?

Adrian, look, we're obviously encouraged that the pipeline is starting to look a little bit better, and without giving any guidance, I think it's logical that, that higher set of volumes leads to more business, not only for our frame and truss plants, but as we follow the whole of our strategy for the rest of the build-out, and it's up to us to take advantage of that and make sure that those customers that are buying frames and truss from us also buy everything else as we move through the 5 stages of build. So yes, I mean, I think the short answer is we expect so. I'm not going to or able to give you specific guidance on it.

No worries. And can I just revisit a question I tried asking a couple of weeks ago on the Bunnings expanded tool shop? I'm just trying to understand how material this might be in terms of whether it might offset some of the cyclical improvement you see in hardware? And whether you see any potential impacts on Total Tools, please?

Yes. Look, it's difficult to assess the impact at too granular level. But any time there's competitive -- new competitors in the market or your competitors do something, it has the potential to have an effect. The team have done a pretty thorough job of understanding their strategy and making sure that we adjust accordingly where required or continuing to deliver our differentiated customer value proposition, which is really founded on, as I said earlier, professionals serving professionals. And we're very comfortable. Like I just can't give you an impact of what any of our individual competitors are doing because it's not -- you're not able to do that.

No worries. And just to be clear, obviously, you've got some stores that are trading nearer Bunnings that might have had a tool shop upgrade. So you're not seeing any impact yet.

Not at a material level, though.

[Operator Instructions] Next, we have Tom Kierath from Barrenjoey.

Just one on the Food business. I noticed you've grown your Food earnings ex Superior with tobacco down about 20. tobacco is now, I think, tracking down about 30. How are you kind of feeling about the impact of tobacco in '26 on the Food earnings?

Tom, it's Grant. Look, I think you've seen over time now, we've been able to manage the decline of tobacco. It is a very challenging tobacco market, particularly for our customers who have greater exposure to the profit impact of declining tobacco sales into other integrated retailers in the market. Where we see opportunity to continue to mitigate in the way we have been doing, we've picked up some petrol and convenience customers in the short term as the industry goes through some packaging changes and we continue to work hard with suppliers and see opportunities to partner to them to keep growing our share of the legal market. Obviously, we're hopeful in more regulatory action to an enforcement action to stamp out illicit, but we're not betting and relying on that. We are continuing to focus on our own business. I think we've shown over time our ability to manage that decline, as Doug pointed out in his opening statement.

Yes. Great. And then just a second one. You picked up Lion and Chobani in the most recent period. Are there other contracts out there that you're looking at? Or can you pick up other suppliers and put their volumes through your ships, do you think?

Yes. I mean, Tom, that's what we do. As I said, we have 2 groups of customers, one on the demand side and one on the supply side. That's what all of the teams do on a daily basis is trying to win more business, and we do that by being relevant and effective for them. They've got choices, they can go around us. And I want to give Kylie an opportunity just maybe to give some more color to the way that Lion have responded and how pleased they are with what we've done with them.

Tom, thanks for the question. We have a fantastic range of services that we partner with our suppliers on in Liquor and an advantaged position as a really strong #2. Yet the opportunities still exist in that Liquor is a category where there are a number of significant suppliers that still maintain a direct route to market in some geographies. We have been partnering with both those suppliers over many years, and we have quite a strong position of being the route-to-market partner, and it does vary by geography. South Australia was an amazing opportunity for us to partner with Lion and provide a really strong route-to-market offering there, which -- where we started in February. And whilst there hasn't been very many months, it's absolutely delivering for them and for us and most importantly, for our shared customers who are reporting nothing but positive feedback from that and seeing value in it as well as in the efficiency that it offers. So I think it's safe to say that there are partners that we're working with to extend that model into other sites.

Tom, it's Grant. If I could just add a couple of things on Chobani. Chobani entered the DCs right in the last few days of the year, so lots of upside of that in this year. Chobani joined that Metcash system after quite a lot of discussion and conversation over the years is they would be the biggest remaining supplier outside of the system. So smaller ones from here, but they really joined on the back of other successful integration work we've done, and they're really happy with our results so far. So we're really pleased that they've got access to our increased distribution and also building strong programs now to make sure that Chobani's really competitive in the independents, and we can pick up some sales there.

Our next question comes from Richard Barwick from CLSA.

I've got a question on the Superior Foods contracts as well. You mentioned that it's about 20% of sales being recontracted. Is that a normal level, Doug? As in should we be expecting about 20% per year, i.e., they're probably 5-year contracts?

Richard, it's a good question, but no, I don't think so because those were some pretty big customers. Those 3 customers were in the top 5 of their customers, which just naturally don't renew that often. So no, you shouldn't expect that. But as they come up, they get renewed. So no, I mean...

I guess where I was going with, Doug, is how much is at risk every year?

I can't give you a specific number just because I don't know it and I'd have to come back to you. But there is -- I think we talked about this at the time of acquisition. The nature of the industry is such that there actually aren't that many long-term customer contracts in place. And so there are a large number of customers that have sort of de facto contracts because they've been working with us.

I do want to point though to the upside. We see a significant, I'll call it, pipeline at the top of the funnel in the hundreds of millions of potential. How many of those we can close remains to be seen. But as I said, when we bought the business, together, the big -- the top 3 players are only 30% of this market. It's a highly fragmented market. And so it's not like we're trading customers among the big 3. We're winning off and competing with a wide variety of customers -- sorry, of suppliers in the industry.

Okay. And the last one for me has been a query. The DRP, obviously, still in place. So I understand, once you take into account your average level of debt across the year, the leverage ratio is not quite as attractive. I think it goes from that 1 up to 1.3, but still within the range, what's the expectation around DRP? Like when can that be removed?

Well, I mean, it's at 0 discount now. So practically, it's not really very much in force. And we saw very low take-up at the last dividend because we had 0 discount. So practically, it's no longer there. I think for simplicity sake, the Board preferred to keep it in place in case they wanted to reactivate the discount.

As you've pointed out, our balance sheet has sufficient flexibility for our current plans. We feel pretty good about it. I think you've seen us working really hard on our cash generation across the business and investment discipline, and we intend to continue that.

Okay. And just a quick one if I can sneak on tobacco. I mean, you talked about the drag on sales or how much it's been down since when it peaked. Are you willing to give a little bit more color around the earnings impact over the same time frame because I think doing so would allow us to just, I think, put in the context of the performance of this underlying Food business.

It's always difficult to break it out specifically. So we've always told you that we make very, very low EBIT margins from tobacco in part something that we need to have. It's a competitive advantage for us. We do have opportunity to make some margin win ahead of the excise increases, which happened to us a year, not dissimilar to liquor. We don't disclose that specifically purely because it's not something that you can ring fence. We invest a large portion of that back into the network and into competitive, making sure that our network stays competitive. And as much as I say to you don't -- you need to assess our sales performance ex tobacco, our earnings performance is inclusive of that. And I wouldn't -- I don't think there's a lot of value in trying to break it out, to be honest.

Our next question comes from Ben Gilbert from Jarden.

Just first one for me, it's still on Liquor. Just how are we thinking about the margin trends? Like it's obviously low-margin business, has always been pretty steady around 2 second half rate of margin decline accelerated. Is that just around the Lion contract? And how do we think about that outlook for margins or anything else playing into that?

Ben, thanks for your question. It's nice to have some focus on Liquor. As you know, I get excited about this business because I think it's an exciting opportunity, and we're really strong, and the team is in great shape. We -- primarily as a wholesaler, we need to keep our retailers competitive, and we do prioritize volume through the network and you've seen us doing that. The platinum program really has delivered value for us through increased sales through the network at steady margins. But certainly, this morning's announcement of the acquisition of Steve's Liquor, that's margin accretive. And as we balance our customer strategy between IBA contract and on-premise, and as we move further through the value chain, we do see opportunities for margin expansion, but we need to execute on those. Kylie, did you want to add?

I'll just make a couple of comments. Thanks, Ben. I think those of you who follow the sector and Liquor, in particular, will recognize these pressures that have come from a combination of mix shift post pandemic. A little bit of a shift towards beer, which you may have noticed on our market share slide. We've outperformed in all categories in terms of share growth, but obviously, the return to beer has also benefited our network and our revenue, although the mix of margin across category does vary slightly. So there's a little bit of a driver there.

The other factor, of course, is that we have had lower wholesale inflation in the year, coming off a couple of years of quite strong inflationary numbers. And I'm sure you well know, both wholesalers and retailers well, as part of normal practice, maximize buying opportunities where they present. And Liquor is a little like tobacco and that it has structural increases built in at excise twice a year.

So we obviously saw that coming. That wasn't unexpected, and we're really pleased with the way that we've mitigated that considerably in the year. And obviously, we're very focused on ensuring that, that margin is preserved and ultimately expanded and which is where the mix of portfolio that we have across our customer base, but also the services we supply both suppliers as a route to market, but our banner groups continue to improve and continue to attract increased supplier investment to continue that share gain.

Ben, just the last point, and I made it in my remarks. If you look at the results of competitors that share the results, you'll see actually more significant margin compression there, which I think, despite the fact that we're actually a wholesaler with lower margins and more reliance on that -- those margin expansion opportunities talks to how well the business has performed, and it's supported in no small part by the share growth.

Superior, would Superior go into Liquor? Or is Superior won contract? Obviously, you had the opportunity [indiscernible] within Superior but a lot of feedback in the trade suggest that, that would be quite an attractive bolt-on or is Superior can do more on the Liquor side?

You said will Superior go into liquor, did you mean Liquor going to Superior?

Sales, I think Liquor in Superior.

Yes. So I'm not sure what the question is.

Will Superior sell...

Within Superior Foods.

Go, Ben.

Superior Foods distributing Liquor products, given the reach that you've got, is that kind of things gives an opportunity to do that?

Yes. Sorry, I misunderstood. There is absolutely an opportunity. So yes, we're working on that. Grant?

Yes, Superior is picking up licenses at the moment in order to facilitate that. As I said before, we will work closely with Kylie and her team to show up as often as we can together with a full suite of service and product offerings for customers.

[Operator Instructions] Next, we have Michael Simotas from Jefferies.

Could I follow on, on Total Tools, please, from one of the earlier questions. Can you talk about whether you're seeing much geographic variability in that business? And the reason I ask is it seems like some other players in the market that might have slightly different geographic exposure to you are performing quite a bit better than that sort of minus 2.7% like-for-like. So any comments you can make on that? And just generally, whether you think you are keeping up with the market in tools at the moment?

Yes. Sure. Thanks for the question. No problem. We are seeing underperformance, as you would expect in Victoria, particularly as I referenced in Metro Melbourne, stronger in Queensland and WA. And I think that that's true in IHG as well. We do believe we're keeping up with the market in short. Scott, anything else you'd add?

No. The suppliers are certainly telling us we're keeping pace. I think it's a key call out to talk about the drag Victoria's had on both businesses.

Michael, so I do want to say -- I said it in the context of Hardware and tobacco. We're conscious that we need to be doing things to manage our own destiny. And certainly, you've seen us recently announced a significant merger in the Tools and Hardware business, and that's certainly part of it. We're not sitting around waiting for the market to improve.

Yes. Yes. Okay. And the comments you made around sustained retail margin improvement in tools, obviously, we're lapping the period where there's some pretty -- there was some fairly irrational pricing. When you talk about retail margins, are you talking gross margins? Or are you talking operating margins?

I'm talking gross margins, which ultimately talks to the competitive intensity. What happens at operating margins is as volume comes off, you have the leverage and deleveraging effect. So I'm talking about gross margins.

Okay. And then I mean we can have a go at some maths, but are you flat on EBIT margin? Or are you down given that sales deleverage?

No, we down. I think we disclosed that. So we're down in our sites. We call them the JV sites because remember, all of our ownership of stores is through JVs. So we're down. We've given you those numbers, and that's that deleverage.

Yes. And I guess I'm talking more about the trading update because that's where the comment is around the sustained recovery of retail margin. So should I just assume that that's a similar trend to what you saw in the second half for EBIT margin?

No, obviously, I don't give you earnings updates for the beginning of the year so I'm not going to do it.

Thank you. It looks -- I'll leave it to the operator, I believe there are more questions.

Doug, yes, there is no more questions.

All right. Well, thank you, everybody. We, as always, appreciate your interest and support for our company. We look forward to engaging with many of you through the course of the week. And I -- all that remains is for me to close the call and wish you a good day. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.

Good day, and thank you for standing by. Welcome to Metcash Hardware Pillar and FY '25 Earnings Update. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Metcash CEO, Doug Jones. Please go ahead.

Thank you, operator, and morning, everybody. I hope you had a long -- good long weekend. And as operator said, my name is Doug Jones, Group CEO of Metcash. Thanks for joining us at short notice.

As you would have seen this morning, we announced that we're merging our Hardware businesses, being the Independent Hardware Group and Total Tools Holdings to form the Total Tools and Hardware Group. The group will be led by Scott Marshall, who's currently CEO of IHG, and the merger will be effective from the 1st of July. This is an exciting announcement for us and one that's about delivering growth, structural and operational simplification and strategic clarity, and it further strengthens the competitive positions of our tools and hardware retail networks.

The briefing this morning will go through the rationale for this and provide you with an opportunity to ask some questions. We've also given you guidance on our FY '25 earnings based on our unaudited financial statements, and these shouldn't result in any surprises. Audited financial results will be released on Monday, 23rd of June. And I'm sure that you'll appreciate and understand that I won't be going into more detail today about the results of performance. So let's turn our attention to the Hardware business.

As you know well, we've got really strong market positions in both IHG and Total Tools. I've watched the developments of both businesses over the last few years and have reached the conclusion that there's an opportunity to create a more streamlined business with better growth prospects by executing on this merger. And while it's been a strategic option for some time, we're confident that this is the appropriate time as the market conditions look set to improve at some point.

While our strong market positions continue to be an advantage for us, we're always looking for opportunities to further grow market share and strengthen the retail networks. And this is particularly important in the context of the current macro conditions. We're well positioned with best-in-class portfolio of hardware and professional tools assets. In Mitre 10, Total Tools and Home Hardware, we have 3 of the most well-recognized hardware and tools brands in the Australian market. The merger of these businesses presents an obvious but exciting strategic opportunity, and now is the right time to consolidate these into one larger, more dynamic organization that's aligned to the needs of our customers and our suppliers.

Merging the business also aligns with our aim of having one leading scale hardware business serving the trade and the DIY home improvement sectors. And it positions us with a clear operating model alongside food and liquor, which allows all our businesses to be uniquely and better placed to work with our independent members and franchisees and importantly, to better support the communities that they serve. This provides a platform for growth through strategic alignment, shared data and insights, scale benefits, the leveraging of shared customer bases and property opportunities as well as through operational simplification. More specifically, we see opportunity in that shared customer base through strategic procurement, offering greater scale and more aligned merchandise teams, making us easier to do business with for our suppliers; a more capable leadership team with broader scope and larger remit, focusing on an aligned and clear strategy for the group, delivering improved capital deployment for growth opportunities.

I know you want to know about cost savings, and we anticipate these to be muted in the short term. This merger is about building effectiveness and capability to support growth rather than a short-term focus on cost savings. Having said that, as you would expect, we do see some efficiency gains as we move through the merger process.

We expect the merger to result in widespread benefits for our key partners with the independent Hardware members and Total Tools franchisees being placed with even stronger competitive positions and greater operational simplicity. For our suppliers, we expect they'll benefit from greater demand through the consolidation and network growth. For shoppers, we'll be maintaining clear and distinct brand identity across the portfolio with no changes to our key Mitre 10 Home Hardware and Total Tools brands. Shoppers will benefit from an increasingly competitive offer in each of our retail stores. We do see opportunities in private label innovation and sourcing across the group.

That said, we intend to refocus on the core essence of each of these brands, respecting their differences and extending the differentiated customer value propositions of each. There will be no blurring of these value propositions. In summary then, the move is on strategy, supports our strong growth aspirations and delivers significant benefits for ourselves, our key partners and shoppers.

Turning now to leadership. We're fortunate to have had 2 strong leaders in Scott Marshall and Richard Murray. Scott has an unmatched leadership record in the independent space, having successfully led both liquor and food through periods of transformation and growth and is the ideal candidate to lead the Total Tools and Hardware Group as we look to accelerate our growth. I'd like to thank Richard for his leadership of Total Tools over the last 1.5 years in difficult market conditions. He's built a capable team and installed strong process and retail capability into Total Tools, which has been strengthened under his leadership and is well positioned to continue its growth trajectory. I want to thank Richard for his professional and constructive engagement throughout this process and wish him well in his future endeavors.

Finally, you might be wondering why we chose to make this announcement now instead of waiting for our results in 2 weeks. Having watched the development of the 2 businesses and assessing the market, I felt and the Board agreed that getting a good start to the merger is important. We have a lot to cover at our results, and our focus will be on engaging with the market on the results and providing a strategy update. And doing this now allows us to create some space and time for us to focus on the merger today to prepare our teams and to ensure a smooth transition.

As you can see from the results update, there are no surprises. I'm looking forward to engaging with you all on June 23 to unpack them further and to provide an update on our strategic progress.

I'll now hand over to questions.

[Operator Instructions] Our first question comes from the line of Michael Simotas from Jefferies.

First question from me is just on procurement. Could you give us a sense of how much common product there is across the Total Tools business and the IHG business and whether you'd expect product assortment to change to reflect more overlap post the merger and just to what extent you were consolidating buying terms already?

Michael, thanks for the question. So I'm not going to share specifics of the overlap at a product level, but what I will say is that there's significant overlap at a supplier level. We weren't fully operationalizing the, what did you ask, the combination of our terms. So we had done a harmonization process a couple of years ago, but we feel there's an opportunity for us to have a more strategic and joined up conversation with our suppliers.

I made the point that our customer value propositions in each one of the brands won't change. In fact, if anything, we'll deepen the differentiation of -- and the underlying core essence of each of those brands, which means that, naturally, this is not about having an 80% common range. In fact, if anything, I would say that we're going to be much crisper and much sharper around ranges. We want to have a more strategic engagement and relationship with our suppliers. And certainly, we'll be looking at them to recognize the value of that.

Okay. That's helpful. And then just another quick one if I can squeeze it in. There are some comments in the release that this makes the business more resilient in the current difficult environment, and you're expecting the environment to improve. Have you seen any sort of signs of stabilization or perhaps green shoots of improvement across either hardware or total tools? I mean some of the industry feedback we've had suggest that the tools market has perhaps improved a little bit off a pretty tough base. Any comments there would be really helpful.

Yes. I mean I want to be careful because I don't really want to get into too much detail about the performance. But what I'll say at a market level, Michael, is that I'd say it's steadier than it's been around the state. You do see some green shoots, and we can talk about those in a little bit more detail in a couple of weeks. Certainly, the start of this year with weather events, and the timing of Easter and Anzac Day does make it difficult to assess fully. You guys will be across that, and we'll unpack that a little bit further in a couple of weeks.

Our next question comes from the line of Craig Woolford from MST.

Can I just ask a question about the, I guess, the physical supply chain and the overlap? Like does it change -- does this merger change anything around either product flow or how the physical distribution centers and product flow works between Total Tools and the other IHG business?

Craig, yes, thanks for your question. I mean this is -- it really is an exciting merger that we're announcing. And certainly, our logistics setup and strategy does present an opportunity to push harder and generate more value. So you'll be aware that, what was it, 18 months ago, we onshored the consolidation facility out of China, and we put it into Ravenhall in Victoria. And that's gone really well.

I think I've spoken about it at all the results since then. It's materially improved the speed of our supply chain and the flexibility of it for the Total Tools guys, and they're very happy about it, and we intend to push harder in that area, including looking at things like local supply as well as consumables. So those are areas that we absolutely have in our target list to drive value. I can sit here and tell you it's exciting, but I'm really looking forward to showing you some real benefits in coming months and years.

And do you mind just elaborating on the -- what you meant by property opportunities?

Yes. So our store development and store growth plans are well known, particularly in Total Tools. It's also well known that we've had some good success in some of our co-located stores, and so that's what I'm talking about. I'm talking about site growth.

Next, we have Ben Gilbert from Jarden.

Doug, just clear what's actually happening. So this -- effectively now you're going to collapse all the systems and supply chain capabilities and sourcing and Total Tools is going to come another pillar sitting underneath the IHG group. Is that how we think about it? Because obviously before, there's still quite a lot of collaborations I understood around colocations, et cetera. But just effectively, are you going to put the -- another banner sitting next to Home Hardware, Mitre 10, et cetera, and systems, supply chain, everything all gets collapsed into one?

Ben, yes, I wouldn't -- I really like the term collapse, and this is about strengthening both of them by bringing them together. And no, it's not Total Tools falling in under IHG. This is a merger between IHG and Total Tools, hence, the new name. So IHG will essentially cease to exist as an entity and Total Trade and Hardware Group will replace it -- sorry, Total Tools and Hardware Group, I misspoke, will replace that.

And you mentioned systems, and I do want to be very clear on this. We are going to be very deliberate about the way that we build out our technology strategy, and we are not -- we have not considered nor are we about to merge the systems of the businesses. Our focus right now is on identifying the core strategic value creation opportunities, setting up our teams to capture those and making sure that we continue to support our customers and their shoppers well. We run 2 separate systems for finance and merchandise being the most relevant disciplines, and we anticipate that we'll have brand-focused teams running, brand-focused systems doing those for the medium term.

So just in terms of the...

Sorry, before you ask me because I'm going to anticipate another question, we are not going to be increasing our CapEx guidance for technology as a result of this.

Okay. So I suppose how I'm thinking about it is that we've obviously spoken a lot around on this call, a lot in the past around how the -- Metcash arguably isn't valued based on sum of the parts in terms of what it could be, and I'm just wondering what level of risk this merger is at a time where, as you guys have talked to, the cycle is going to turn and hopefully, we can sort of see the earnings power of this group. Are you then going to be trying to do a complicated merger that could potentially curtail that from? What you're saying is you see this as relatively low risk in the sense there's not whole push around system consolidation, et cetera, et cetera. It's more just getting a clearer focus under one group where you can allocate accordingly and focus on colocations or those sorts of things.

That's exactly right. Thank you for the opening to talk about that. We are very [ alive ] to the distraction risk and the operational risk that getting this wrong would introduce, and there's been an enormous amount of thinking and planning that's gone into this. And we are, number one, looking to manage that risk. In fact, the opposite's to take advantage of the opportunities that we see in front of us, and so we are not going to distract the business with months and months of integration, particularly in systems, as I've said.

Next, we have Adrian Lemme from Citi.

Look, there's a bit happening in hardware, obviously, with this merger and Bunnings expanding their tool shop at the moment. So I just wanted to see if you had any views on how that expanded tool shop may impact Metcash's Hardware Group and if you're seeing any initial signs where it's been rolled out in a store close to a Total Tools or a Mitre 10, please.

Adrian, yes, thanks for the question. I'm going to take a pass on that one. I'll deal with it when we talk about our results if you don't mind.

Next, we have Caleb Wheatley from Macquarie.

Just one question for me. Just following up on the cost management side. It sounds like this is a big opportunity for yourselves. Appreciate the earlier comments on the physical supply chain. But can you provide any additional color on where the opportunities might be more broadly on that cost side? Any color on how we should think about, I guess, the materiality of that as the merger is complete?

Yes, Caleb, thanks. No problem. I mean, I think that when it comes to how you should think about cost outs, it's going to be, in the short and medium term, relatively small in comparison to the size of the joint entity and relative to the opportunity that's in front of us to grow. Like I said, we're very clear that this is not about reducing head count. If anything, we're actually going to make sure that we create opportunity to invest in areas that we think we can grow faster and that can underpin our growth. So just one example might be private label. We see that as a material growth opportunity, and so we'll be investing in that.

I do hope that we've earned the right to be able to say that you should be confident that we will continue to run all of our operations in a very cost-mindful way. You've seen what we've done across all of the pillars and in corporate as well. We're generating efficiencies all the time so that we can either put those to the bottom line or invest in capabilities. But I don't want you to see this as a cost out-led endeavor. This is -- like I don't have a better word for exciting, but I'm going to say it again. For me, this is day 1 of a new era of growth in this tools and hardware group. We see significant opportunity to entrench and grow our market shares and to set ourselves up for long-term success in the tools and hardware sector.

Great. That's clear. And appreciate your comments that we shouldn't be expecting a huge amount in the sort of short to medium term. But any feel at this point in terms of, I guess, the process from here? Like is it a 1- to 2-year period in the background where this stuff is being integrated or still too early to call?

It's probably too early to call. I mean, as I think I said in response to maybe Tom or Ben's question, our immediate focus on -- right now is on settling down our teams. I mean that's one of the reasons that we chose to do this outside of results. I'm actually in Melbourne right now. I'm sitting in the Total Tools offices with Scott, and we've spent the morning engaging with the leadership teams of both businesses and with our various retailer councils on the phone with core suppliers. That is our short-term focus, and that's definitely going to be Scott's short-term focus.

From there, he'll move into resetting of his senior leadership team. And we're excited about putting in place structures that actually allow us to have very, very capable and experienced executives around that leadership table. And then that team will move further into the design work down below that. But the reason that I've been a little cautious and guided you to be a bit cautious on cost is because we don't want to distract the business. And to Adrian's question, I think it was a moment ago, that's a risk, and we don't want to allow that to happen. And so that's why we'll largely end up with, particularly in merchandise and operations, brand-focused teams continuing to run those businesses.

So that's the medium-term plan. And then I would say we're into BAU, and Scott and his team will be running the business. And like any of the executives will tell you, we're always asking about how we're going to be more efficient and how we're going to build the low-cost moat around our business.

I see no further questions at this time. I would now like to hand the conference back to Doug for closing remarks.

Thanks, operator, and thanks, everybody, for joining at short notice. We always appreciate your interest and support. And to summarize, as I've said, this is an on-strategy move that we're making today that underpins our aspirations for growth and capability build. We're optimistic about the future. We recognize the risks in front of us, but we're confident that we have the right capabilities and plans to manage those risks and to take advantage of the opportunities.

With that, I'll sign off and look forward to talking to you and seeing many of you in a couple of weeks' time. Thank you.

Thank you. This concludes today's conference call. You may now disconnect. Thank you for participating.