Metcash Stock

Good afternoon, ladies and gentlemen. Thank you for coming along to the Annual General Meeting of Metcash. My name is Peter Birtles, and I'm the Chair of the Board of Metcash Limited. And on behalf of the Board I'd like to thank you for all coming along today and attending this meeting.

Before we commence, I'd like to acknowledge the traditional custodians of the lands where we are today and where we're all connecting from. I'm connecting in, because we are doing an online meeting, I'm connecting in from the land of the Gadigal people of the Eora Nation, and I pay my respects to Elders across country, past, present and emerging, and I extend that respect to any Aboriginal and Torres Strait Islander people here today. We certainly have a quorum present, so I now declare the Annual General Meeting open.

First thing that I'd like to do is to introduce your Board of Directors who are with me on the stage here today. And firstly, we have Doug Jones, who's our Chief Executive Officer and Executive Director. Next to Doug, we have Marina Go, who is the Chair of our People, Culture and Nomination Committee. And we have Margie Haseltine, who is the Chair of our Safety and Sustainability Committee; Mark Johnson, who is especially busy with us. He is the Chair of the Audit and Risk and Compliance Committee, but also the Technology Advisory Working Group.

And then we have Nicky Sparshott, who has recently joined the Board as a new Director, and therefore, under our constitution, will retire today and is offering herself up for election later in the meeting. And then we have Dave Whittle. And finally, we have Johanna O'Shea, who is our Company Secretary, and it is also Joanna's birthday today. She organized the meeting especially to be on her birthday.

As well as the members of the Board, we have members of our leadership team here with us, and we have our Group Chief Financial Officer, Deepa Sita, who's at the front here. And sitting with Deepa, we actually have our signing partner from Ernst & Young, who are the company's auditors, Katrina Zdrilic. Ms. Zdrilic will be available to answer any questions that shareholders might have concerning the conduct of the audit, the preparation and content of the auditor's report, the company's accounting policies and also the auditor's independence at the conclusion of the Group CEO's presentation. We welcome and thank Ms. Zdrilic for her attendance today.

Also, we have with us our Chief Executive Officer from our ALM, that's our Liquor business, Kylie Wallbridge; and our CEO from our Total Tools and Hardware Group, Scott Marshall. And we also have a number of other members of our group leadership team with us as well.

So at the meeting 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 2026. We'll then go on to consider the 4 resolutions that were outlined in the Notice of Meeting, which was lodged with the ASX and made available to all shareholders on the 7th of August 2026.

Moving on to talk about our voting instructions to help us run the meeting today. All resolutions will be put to a vote, and we have electronic headsets -- handsets, which we'll use to decide the votes by an instant poll. Once voting opens, the resolution text will appear, and it will bring up the voting options that are available to you. You do that by pressing the green square. You then press 1 if you're voting for the item, 2 to vote against, or 3 to abstain.

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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 the poll is closed, the results will be displayed on the screen, showing the combination of votes that were cast in the room and also all the proxies that were received prior to the meeting.

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So I will now turn to my formal address. I will provide you with an overview of how the company performed in the 2026 financial year as well as comment on other important matters, including our strategy, our Board changes, our approach to remuneration and to ESG. I'll then invite Doug Jones to talk in more detail about the company's operating performance as well as progress against our strategy. So let me begin with a look at the year-end review and a brief overview of our financial performance.

I'm pleased to share that the company delivered a resilient performance in the 2026 financial year, which reflects the strength of our diversified portfolio, disciplined execution and the advantages of our independent retail model. This was achieved in a year of mixed trading conditions, ongoing cost of living pressures and sector-specific challenges. Against that backdrop, the group continued to demonstrate the quality and resilience of its earnings and cash generation while continuing to advance its long-term strategic priorities.

The group delivered solid financial outcomes for the year. Group revenue increased to $19.6 billion, which was up by 0.7% and up by 3.8% if we exclude tobacco. Group EBIT was $503.7 million, up 1.6%, excluding the $12.4 million of strategy and integration costs. Operating cash flow remained strong at 558 million, which reflects the quality of earnings generated by our business and the focus on disciplined working capital management across the group and the inherent strength of our business.

Underlying profit after tax was $268.8 million and underlying earnings per share were $0.245. Total dividends for the year were $0.18 per share, fully franked, which was consistent with last year and modestly above the group's target payout ratio. The balance sheet remains strong with leverage of 1x at the low end of our target range. And this provides flexibility to support ongoing investment and shareholder returns.

Food delivered another year of strong performance, supported by improved competitiveness in our supermarkets and ongoing growth in both foodservice and convenience. The continued expansion of this business is also helping to further diversify the group's earnings base. In hardware and tools, the integration of the Total Tools and the Independent Hardware Group has created a stronger, more scaled platform across both trade and DIY. While market conditions remain challenging, the improved momentum in the second half reflects the benefits of this integration and targeted management initiatives.

The success of the tobacco mitigation strategy has helped the business offset at least $35 million of earnings from the loss of around $1.8 billion of tobacco sales since 2021, largely to illicit trade as well as lower earnings from the market downturn in hardware and tools. The results we delivered are underpinned by a clear strategic direction.

Our strategy remains centered on winning with independents. It leverages Metcash's unique combination of scale, differentiated capabilities and strong competitive networks. This model continues to underpin the group's resilience and positions the business to capture growth opportunities across large and essential markets.

The group continues to make meaningful progress in executing this strategy during the year. Importantly, the independent networks across food, liquor and hardware and tools remain healthy and competitive and continue to attract retailers and suppliers. It is the unique scale and capabilities of the Metcash model that ensure our customers are best placed to compete.

Recognizing the conditions in which we operate, a key priority is to optimize the performance of our existing businesses. And at the same time, we continue to invest in digital and data capabilities. This includes scaling the sorted business-to-business marketplace and the near completion of our Horizon ERP program.

We're also building a modern AI-ready operating environment in partnership with Microsoft and investing to make the business more scalable for the future, one that includes a stronger earnings profile and higher-margin businesses. These initiatives are designed to strengthen the core platform, improve operational efficiency and support future growth opportunities, including extending our offer into services such as retail media, loyalty and digital, which Doug will expand on a little bit further.

So turning now to our Board changes. We've continued to ensure the composition of the Board reflects the right skills, experience and diversity to support the company's strategy. As part of our focus on renewal, Helen Nash retired from the Board on the 31st of July 2026. Helen made a significant contribution over her 10-year tenure, providing strong financial expertise and governance across a broad range of matters. On behalf of the Board, I sincerely thank Helen for her dedication and service, and we wish her well for the future.

Also in July, we welcomed Nicky Sparshott to the Board as a Non-Executive Director. Nicky brings deep executive experience across retail, consumer goods and digital transformation in Australian and international markets. Her commercial perspective and customer focus further strengthened the Board's capabilities and are well aligned with Metcash's strategic priorities.

The Board remains focused on succession planning and maintaining an appropriate balance of experience, independence and diverse perspectives. So this brings me now to remuneration. The Board is committed to a remuneration framework that aligns executive reward with company performance and long-term shareholder value. The outcomes this year reflected performance in a challenging operating environment. Group earnings improved modestly, supported by a strong food result, continued growth in liquor and improved momentum in hardware and tools in the second half.

So against this backdrop, STI outcomes range from between 7.1% to 25.4% of the maximum opportunity, which the Board considers appropriate. Following a review of the remuneration framework, greater weighting was applied to long-term incentives with a corresponding reduction in short-term opportunity. This rebalancing strengthens alignment with shareholder outcomes and reinforces management focus on sustainable value creation.

The FY '24 long-term incentive award vested at 20.5%, reflecting moderate financial performance over the period and subdued shareholder returns, which were below threshold. Deferral arrangements for senior executives continue to align remuneration outcomes with longer-term performance with increased deferral applying this year to the group CFO. Non-Executive Director fees were unchanged in FY '26. Overall, the Board is satisfied that remuneration outcomes appropriately reflect company performance and remain aligned with the interest of shareholders.

I'd now like to turn to ESG. Metcash remains committed to responsible and sustainable business practices with ESG committed -- embedded in how we operate and create long-term value. The safety and well-being of our team members remains our highest priority. We delivered further improvement in safety outcomes in FY '26, while continuing to strengthen capability, proactive risk management and mental health support.

We also continue to progress diversity and inclusion, maintaining gender balance at a Board level and within the group leadership team, along with pay parity in line with WGEA reporting. In managing our environmental impact, the group achieved key milestones, including sourcing 100% renewable energy for our Australian operations and delivering a meaningful reduction in emissions. Pleasingly, we achieved our interim 2030 target ahead of schedule, alongside continued investment in our on-site renewable energy and efficiency.

We remain focused on reducing waste and improving circularity with initiatives supporting recycling and waste reduction across the broader network. Our progress is reflected in strong external ESG recognition, improved modern slavery ratings and enhanced disclosure through our sustainability report, which is aligned with the new sustainability accounting standards. We recognize that strong governance, a focus on people, environmental stewardship and community support remain fundamental to delivering sustainable long-term shareholder value.

Looking forward, while trading conditions are expected to remain challenging, Metcash enters the 2027 financial year in a position of strength. The group has a clear strategy, strong market positions and a resilient business model. The Board remains confident in the company's ability to deliver sustainable returns and long-term value for shareholders.

So in closing, I'd like to thank my fellow directors for their continued commitment and contribution during the year. And on behalf of the Board, I'd like to sincerely thank our management team led by Doug Jones, all team members across the business, all our independent retailers, our franchisees, our suppliers, and to our shareholders, thank you for your ongoing support and contribution. Thank you.

So I'll now hand over to Doug to give his presentation, which was also released to the ASX before this meeting.

Thank you, Peter, and good afternoon, everybody, in the room and online. I think you can go to the first slide. Thank you. I'd like to begin, as I always do, with a reconfirmation of our strategy, which -- of our purpose, I beg your pardon, which as Peter noted a few minutes ago, is also our strategy. The key note among you will notice that we have evolved our strategy from -- purpose from championing successful independence to winning alongside independents. And we feel that, that's appropriate as we pursue our aspiration of being the #1 partner, powering an unstoppable network of independent businesses across Australia.

Next slide. On the subject of competitive advantages, we have 3 core aspects to those, which together give us a unique and specifically advantaged competitive moat around our business. The first one is unmatched scale, which is manifested in the number of suppliers that we serve and customers that we serve each and every day. The thousands and thousands of bannered retail stores as well as nearly 100,000 and bannered stores.

Our trusted and differentiated retail capabilities sit on top of our logistics capabilities and alongside them and bring that unique scale to life every day. Alongside that and completing the Trio are our competitive networks, which are the banners and brands that we operate and which form the ultimate manifestation of our market offer. Next slide, please.

As we note, we've made clear progress against the strategy that we articulated in April 2024 at our Investor Day. These are focused in 3 key areas: Firstly, on scaling our networks; secondly, on improving our efficiencies; and third, on strengthening our networks. As you can see on the slide, there's been clear progress throughout. That said, we're not complacent. We know that there remains significant work to be done, and we're up for that. Next slide.

As we then turn our attention to the results for the year that ended in April earlier this year, the headline is that the FY '26 result was delivered on a base of solid execution with the pressures understood and managed. The key metrics of revenue of $19.6 billion, up 3.8%, excluding tobacco and growth in normalized EBIT and EBITDA as well as strong operating cash flow of $558 million tell the story.

Our financial strength comes through in our 3-year cash realization ratio of 104%, and our leverage at the low end of the range and dividends maintained at a 70% payout ratio. The key takeaway is that our earnings were resilient through the year, we did a great job of converting cash, and our balance sheet provides us significant flexibility. Next slide.

Looking then at the portfolio, you can see each element of that portfolio doing its job. Food and liquor provides the stable earnings base. In a competitive and value-conscious environment, the earnings were maintained despite, as the Chair noted, a significant decline in tobacco sales over a multiyear period. Hardware and tools maintained their sales momentum and it improved through the year despite weak trade markets. We're pleased to say that we're seeing the results of our targeted actions delivering fruit.

There was strong discipline in costs, in working capital management and in the tight control of capital expenditure. Our platform extension into products and services both protects and strengthens our core as well as providing us new revenue opportunities and margin growth potential. This matters because as food and liquor provide the stability and hardware, the upside when the cycle turns, our diversified portfolio supports that resilience.

On the next slide, you can see what we call the revenue stream view. We introduced this at the half year. And at the end of the year, we now include earnings. Wholesale remains our core earnings engine and our growth and higher-margin streams broaden our resilience and generate new opportunity. For investors, this evidence of the transition to the diversified platform, not a single channel wholesaler should give you confidence.

The proof points are the significant growth in wholesale earnings, up more than 1/3 in the period, while the share of total earnings has reduced from 91% to 76%. This is in the context of that $1.8 billion decline in tobacco sales since FY '21. The estimated earnings drag is around $30 million. And at the same time, hardware retail earnings were down around $30 million. So the business has offset at least $55 million through a stronger and larger and more profitable core.

I must acknowledge that this includes acquired businesses, which required capital to be invested, and we're now focused on delivering returns on those investments. As we turn to ESG and to make some of the points that the Chair noted already, we're very pleased with our progress against 3 key focus areas: planet, people, and our impact in the community.

It's noteworthy that we've maintained our 89th percentile ranking in the Dow Jones Sustainability Index for the third year in a row, and we have achieved an A rating in the Monash Modern Slavery rating as well as, as Peter noted, met 100% of our baseline energy needs from renewable sources in the year. And in the future, we're targeting this for all of our sites.

I want to turn to Horizon for a moment. This core large and very complex IT project continues to show steady progress. We've already gone live with the customer master modules, and so a significant element of the solution are already live and in use. The full financial system has been used for more than a year now. And now, with -- along with the customer master shows that a significant part of the technology platform is up and running.

We're planning to launch the Release 1, which is Western Australia and our national support office later in this quarter. There are 2 important things to note here. We've made the prudent decision to settle Release 1 through the peak trading period and to delay the Release 2 into the first quarter of 2027. I flagged that this was an option at the results presentation in June.

And the second is that we've extended the scope to take advantage of the AI-ready fabric platform within the Microsoft technology stack. This wasn't available until recently and certainly not at the inception of the program. And it allows for the retirement of legacy technology platforms and generates attractive returns.

On the next slide, we turn to the trading update. As you can see, sales have continued in growth across all pillars. We flagged that the first half earnings will be impacted by an adverse Superior sales mix, the removal of the accelerated tobacco excise increase, which we told you about in June, and persistent food and liquor cost inflation.

These cost inflation from elevated pressures are being offset to some degree by our cost-out programs, which are on track. And in the second half, we have plans to continue to reduce the impact in food and liquor and to continue to support the hardware momentum.

In food, supermarket sales are resilient in a highly competitive trading environment. And while in supermarkets, tobacco is still negative, it is improving fast. And there's a direct correlation between the performance of tobacco with the strength of enforcement in that particular state. In foodservice and convenience, corporate account growth has been offset by the decline and the continued margin pressure in the street business as well as moderated growth in QSR and our shipping business. In petrol and convenience, we're pleased that we've had a number of contract wins with sales improvement flowing through and a large amount of that through tobacco.

First half earnings will be impacted by that accelerated tobacco excise cessation, which is $10 million for the full year, weighted towards the first half, adverse food service and convenience sales mix, ongoing cost inflation above sales growth. In liquor, we've continued to take market share through the ALM supplied independence. This is within the context of a market that is characterized by subdued demand and elevated competitive intensity.

Pillar earnings, like foods will be impacted by ongoing cost inflation above sales growth rates. In hardware and tools, we've had pleasing continuation of the sales momentum. Although market uncertainty does continue to impact the outlook for the sector, we've made good progress on the strategy of returning the business to mid-cycle margins.

As I conclude then, I'd like to iterate the Chair's thanks both to my colleagues, to the Board, to the thousands of team members in our business, to the independents who partner with us and trust us with their business every day and of course, to our shareholders. Thank you.

Thank you, Doug. So let's now turn to the formal items of business. Item 1 is the financial report. So the item is to receive and consider the financial report of the company and the report of the directors and auditor for the financial year ended 30th of April 2026. You will note that there is no requirement to vote on the reports.

The company's 2026 annual report was sent to shareholders who requested a hard copy and was also made available on the company's website and the ASX market announcement platform. The 2026 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 the auditor, along with our first sustainability report, which was prepared in accordance with the Corporations Act 2001 and the AASB S2 climate-related disclosures.

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 questions. All questions should be directed to me as the Chair in the first instance.

Our Investor Relations team will also be monitoring the online facility for questions. So an opportunity will be given to shareholders, both present in person or attending via the online facility to ask questions specific to each resolution to be put to the meeting before voting on the resolution.

So if you do have a question in relation to a specific resolution, please hold that question until that resolution is considered.

So I'll open the floor for any questions. Natasha?

Thank you, Mr. Chair. I'm Natasha Lee, shareholder. Firstly, I'd like to thank the Board for their solid result, although the share price is a little bit in a doldrum, so we can't really do much about that. You will be aware that the dividend payment was a little bit late for some of us. There was a bit of a hiccup there.

So the first question concerns the price gap for your large store price gap for food. On Page 15, you said it's 1.2%, but on Page 25, you've got it as 2.1%. I think the number is being transposed here. So I was just wondering what is the correct gap? And is this relating to wholesale or retail prices?

So it is the measurement of retail prices against the competition. In terms of the number, Doug?

Natasha, thank you for the question. I believe -- but I will take it on notice and confirm for you. I believe the difference is the different baskets, whether it's the high compete extra special stores, which have a lower price gap than all large stores. But I will confirm that for you. Those numbers are correct.

Right. Okay. It was just a little bit confusing in a way. But in any way, it's...

I mean I think what's important to recognize there is just the progress that we've had in that area. It's been a continued focus over a number of years, and we've seen that price gap really reduce over time. So our retailers are in a much better position now to compete than they were a few years ago.

Yes. I've noticed that. And I think that's throughout the supermarket retailers, there is a degree of price matching or near price matching, which you're reflecting there. As far as the Middle East war, you said there's been supply chain disruptions. Are they in particular areas? And what has been the impact of that?

There have been limited supply chain interruptions as a result of that. I think that the impact on our business was muted. We spoke about it in our results announcement and the pre-results announcement. The biggest direct impact, and I think all Australians felt it, was through the increase in fuel prices.

And we managed that very carefully with our independent retailers as well as with our suppliers. We're fortunate that there were no major product disruptions, although we did take some considered positions on inventory ahead of what we perceive to be areas of specific risk. In the end, we've sold through all of that inventory, and I'm pleased to say that it's largely normalized.

Okay. That's good. Yes. I haven't heard of any sort of major disruptions like toilet paper being sold out and things like that. So how are you monitoring the changing socioeconomic preferences in the liquor sector to identify the growth sectors? And to what degree is sort of use of AI and monitoring of purchasing through loyalty cards and the like being applied?

Yes. Well, what we can say is that the focus on consumer behavior across the whole organization is something that has a lot of focus. And within the liquor sector generally, we're seeing changes in consumption patterns. We're seeing changes in preferences. We are seeing a move towards convenience and lower volume purchasing, which is actually a positive for Metcash's liquor business being more of a convenience-focused business, suiting the independents within that.

And I'm sure Kylie can talk much more knowledgeably than I can in terms of the category changes, but we are seeing a focus much more on that immediate solution rather than necessarily buying in bulk.

Yes, because there are generational preferences.

And so you could see things like ready-to-drink solutions being much more popular amongst the younger generation.

And just the final question in this area about sustainability. You're moving towards hybrid and electric vehicles. And also congratulations on your other achievements, not that I've looked at, but there wasn't really any detail about your vehicle fleet. So what percentage of the fleet is hybrid or electric? And what is the time frame to achieve 100%?

We don't operate directly that many vehicles in our own fleet, Tasha. We work mainly in partnership with large and small transportation contractors who -- many of them have different strategies on their EV conversions. I don't know what that figure is. As always, we'll need to balance the cost of ultimately moving the products against the impact in the environment, the sustainability of the assets that we use. And of course, we measure all of that through our -- primarily through our Scope 3 emissions.

My name is [ James Stuart ]. It's a bit of a political question. Coalition policy, I believe, is to reduce tobacco excise to around about 20% of that, which it is at the moment. First, would that make lawful retailers of tobacco cost competitive with the unlawful trade that we now have at the moment? Firstly.

Secondly, what are the lumpiness -- what are the lumpinesses that we get as far as law enforcement goes? Because I live in Queensland. In Townsville, for example, the unlawful trade of tobacco is discrete. All the smokers know where to go. You go to Cairns and you can walk into a shop in the Main Street of Cairns and buy brightly colored packets of cigarettes for the s***** ones at $10 and the good ones at $20.

Can we be cost competitive if the coalition do what they say they're going to do and reduce the tobacco excise to 20% of what it is at the moment and combine that with a bit of law enforcement for the Cairns. Can we be cost competitive?

I mean this is -- that side of it is a very complex area, and there's a number of, I suppose, competing priorities because the health lobby have got a perspective, the treasury have got a perspective. I think there's plenty for the coalition to do if they were going to progress that. I think all we can do is operate as best we can within the environment that we're presented with. And the focus of the current government is that enforcement is the way to go. I mean that's the kind of approach.

And what we are seeing is different levels of enforcement. Actually, in Queensland as a whole, we'd have to say that Queensland has led the way in terms of enforcement. And what we've seen is that in relation to our tobacco business, there has been a stronger recovery of tobacco as we've seen those enforcement actions being put into place across Queensland.

Clearly, as you're demonstrating, it's not uniform at this point. But we are now starting to see those enforcement actions in New South Wales. We've seen the change in Premier in Victoria showing a greater interest in more action on tobacco. So we're hopeful that we will see that there. And as we've shown in the trading update this morning, you've started to see tobacco come back. So enforcement is starting to work and have an impact.

I just have to say it's extraordinarily variable.

David Wilkinson, shareholder. The 52-week high for Metcash shares was $4.06. Today, they're trading at $2.93, which is roughly a 26%, 27% drop in the value. I'd like to get your thoughts on that. And when we might expect some sort of a turnaround in the share price that it may start to increase in value.

Yes. So I think we share your general disappointment with the share price. And our view is that the shares price is not representative of the inherent value of this company. So it's our responsibility as a Board and as a management team to build the confidence that shareholders will get to a much more representative value.

There are things that we are doing in terms of the performance of the business, as we've outlined, we've got a strong strategy that's going to drive growth. We're looking at how we manage the capital allocations across the organization.

One thing that we would say is the company has consistently actually demonstrated very good management of cash, and that's allowed us to maintain strong dividend levels. And of course, that's a key part as well, is maintaining those dividends. So yes, we're focused on growth, but we're also focused on cash capital and ensuring that we continue to deliver good dividend growth as well as share price growth.

Well, in relation to that, why do you think that the market doesn't pick up on that then? Why do you think that they disagree with that stance as it were?

Yes. I mean it's an area that I obviously spend time with some of the major investment groups out there and as do other members of the Board and management. I think there are a number of factors. I think the reality is that the company's earnings have been flat for the last 3 years. And so the market is looking for the company to deliver growth in earnings.

When you look at some of the external issues that we face, such as the tobacco issue, we'd say our actual underlying earnings have improved. So as we work through, we feel there is momentum there, and we just need to translate that through to the bottom line.

I think there is some question marks over our competitiveness in the market versus the big giants that we operate against, whether that's Coles and Woolies in food or Bunnings in hardware. And so being able to demonstrate that our retailers can compete effectively in that market, which with that earlier discussion that we had around pricing continuing to work on that, allowing our retailers to be competitive to demonstrate that. I think that's important.

So I think it's about earnings growth. It's about capital discipline, and it's about giving confidence in our market position.

My name is Patricia Beal, and I'm here as a monitor from the Australian Shareholders' Association with proxies from 41 members whom they want to express through me today. Firstly, you've done pretty well in a competitive market, I guess, and well done for that to hold your position and not be any worse off.

But it's not a year, I guess, in which one would aim to get a huge profit or else there would be screens from share -- from customers, et cetera, and inquiry from somebody else, I suspect, or else the customers would just not come back.

But anyway, I noticed one item recently, Woolworths were -- I think it was, were refusing to buy bananas from Coffs Harbour. And therefore, the farmers couldn't sell them locally to Woolworths and they couldn't -- people in Coffs Harbour couldn't buy locally grown bananas. I presume you optimize your logistics a bit better than that and can offer locally grown goods, as I know you do in general to customers.

Yes. Well, certainly, a key part of our model is buying locally as well as nationally. And Doug, anything you wanted to.

Yes, absolutely. That is the strong point and the -- and it talks a little bit to the earlier question about serving local communities by recognizing the trends, whether it's in alcohol or preference for local bananas, our network is well set and designed to do exactly that.

Excellent. Yes. One question I had was about the skills matrix of the Board because we are well aware as long-term shareholders that the company is run by the management under the oversight of the Board. And when Board members come up for reelection, we want to examine their qualifications and also the qualifications of the current Board to see that you get a good balance of skills, et cetera.

And many companies certainly have the Board skills matrix within the annual report, whereas you've only chosen to put it at this stage in the corporate governance report, which is a separate item released separately to the market and available through the company or the ASX or whatever. But we were thinking that it would be more convenient in the annual report.

And the description of the skills is very vague about 3 levels of competency or otherwise for a number of headings for primary skill, if you consider yourself knowledgeable, and lesser Level 2 skills and then Level 3 skills. And there's a couple of the items that had very little, if any, primary skills in that area. I know you mentioned continuing education for the Board, and we would like to think that, that might be happening for -- so that the improvement might be there in future years.

So I mean we'll take on board your comment in terms of potential inclusion in the annual report. I suppose our view is all of that information is released at the same time, the corporate governance statement is released at the same time as the annual report. So that information is out there and available.

Certainly, my observation of our description of the categories, I don't see that as particularly different to other companies. I think there is a reasonable amount of information. But again, we'll take on board your observation as to how we describe that.

You and I had the opportunity to have a conversation a couple of weeks ago. And I think realistically, can a company end up in a position where you have expertise amongst your Board on every single matter, I think that's a challenge. And there are some areas where a Board will naturally supplement the skills that it has by taking on external advice by people who are experts.

The role of a director is comprehensive, and we need to be able to contribute to discussions about strategy, about governance, about financial issues, IT, marketing, whatever it may be. So there's a lot of things that we need to be considering. And in some areas, you might get somebody that's an expert but actually is not able necessarily to contribute more broadly to other discussions.

And for example, I think the areas that you've highlighted would be stakeholder community engagement, I think, is an area that we've said that no one on the Board is an expert in. Our view is we can supplement the Board there. But when we look at people who perhaps have that background, are they able to contribute more broadly to all of the things that come across the Board table? That's where it starts to be more questionable.

And I don't think it's effective to have a Board that has people that can only contribute in 1 area, or maybe 1 or 2 areas. It doesn't make an effective Board. So I think we are very comfortable. And what we actually have effectively done in that table is it's almost in priority order. And you can see that in the areas that are most important, we have the highest levels of strength across the Board.

And just a minor question perhaps. I noticed during the year, that the number of employees went up very significantly from 11,000-odd to nearly 14,000. And was that an increase commensurate with the number of shops that increased or whatever?

I mean thank you for raising that. It was a very astute observation by you. And it actually relates -- it's an internal systems thing in a way in that we're trying to bring more activities together and do them once across the organization. And effectively, what that figure represents is the number of employees that are paid through the central Metcash payroll team. And that number has increased because we brought people in from other parts of the organization into the Metcash payroll system.

Interestingly, if you look at the cost of wages across the organization, the increase is nothing like that. So it's just a reflection of more people being paid centrally through the Metcash system. It's actually not a real increase in headcount across the organization.

Okay. Any further questions? Questions from online, I think, yes?

Yes. We just have one question online from Mr. Stephen Mayne on consumer confidence and interest rates. He says, Alan Kohler put up a series of graphs on ABC News last night and then declared everybody is miserable.

Firstly, are we sensing a notable deterioration in consumer sentiment? Are house prices falling contributing the most to this decline? And secondly, what is our view on the perception that interest rates could rise again based on what we see with inflationary pressures, would the Chair be surprised if interest rates are lifted again in order to tame inflation?

So it is -- I mean, as we've said, I think we've used the word challenging environment. That's the situation that we're in. I mean what we continue to see is that our end consumer and recognize that Metcash's business predominantly is to sell to independent retailers who then sell to the consumer. And what we're seeing through our network is that end consumer is more cautious and conservative, being more careful with their spending.

That results in changes in basket sizes, changes in the makeup of a basket, and we're seeing mix changes in products. So the consumer is certainly much more price aware, much more careful with their spending and you're seeing a more promotional environment, I think, across retail as a consequence of that. And we're participating in that. We need to be competitive. We need to respond to that environment.

I mean I'd say having worked in retail in Australia for a long time now, I mean, I don't see that this is the worst that I've seen. I think that you're not seeing the spectra of significant job losses that potentially have been there at other times, which perhaps have had more of a dramatic impact. And when you look at the actual level of retail spending, it hasn't been as subdued as potentially some would think. So there's still opportunity out there, and it's about competing and winning in your market.

As for interest rates, I mean, clearly, if I put my retailer hat on, I would prefer that there wasn't a further increase in interest rates, and you could argue that with what's happening in housing, that would be detrimental. And it's our job to control inflation. So that would be my general comments. Thank you. Any further questions? Okay. I will move on.

So we'll now move on to the next item of business for which we will commence using the electronic handsets. So just a quick recap. If you've not already done so, please insert your card into the slot at the top of the handset with the barcode at the bottom and facing towards you. When voting opens, the voting options will appear on the handset screen once again, to vote for, vote -- press 1, to vote against, press 2; or if you wish to abstain, press 3.

Your selection and the word received will appear on the screen confirming 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. If you have any issues, then one of the assistants should help you.

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, we would ask you that you keep your questions as succinct as possible.

So moving to Resolution 2, which is the resolution to elect a director. Shareholders are requested to consider the election of Ms. Nicky Sparshott as a Director of the company. Under the company's constitution, Nicky retires by rotation at the conclusion of this meeting and being eligible, offers herself for election. Nicky's profile is outlined in the explanatory memorandum contained in the Notice of Meeting.

Nicky joined the Board in July 2026 and is a member of the Audit, Risk and Compliance Committee and a member of the People, Culture and Nomination Committee. Since joining the company, already in the first 2 months, Nicky has made a significant contribution. So the Board has concluded that Nicky is an independent Non-Executive Director and unanimously supports her election. I'm going to invite Nicky to address the meeting to say a few words in connection with this resolution.

Thank you, Peter. Hello, everybody. Firstly, I should say it's an absolute privilege to be able to offer myself for election as an Independent Non-Executive Director of Metcash. Throughout my career working with brands and retailers and consumers, I've always admired the work that Metcash does, the absolute obsession this company has in enabling independent businesses and the role that those independent businesses play in the communities that they serve, and it's a purpose that I'm incredibly passionate about.

As Peter said, I joined the Board in July. And over that time, I've had the opportunity to spend some time with my fellow Board members, with the management team and of course, to spend some time out in the field, in stores with our independent retailers. And I have to say it's only made me even more convinced and deepen my respect for this organization.

So by way of just a little bit of background to myself, over the last 30 years, I've spent most of my time in consumer goods and in retail. I've worked with companies like Procter & Gamble, the Coca-Cola Company and Unilever in Australia and also across international markets and most recently, have held a number of different CEO roles, so Global CEO of T2 Tea, which maybe some of you have tried, the CEO of Unilever for Australia and New Zealand. And my most recent executive role was as Global Chief of Transformation for Unilever.

And across all of those experiences, I've largely focused on building brands and marketing of those brands, end-to-end supply chain and wholesale distribution and leading for growth and transformation. And they're the kind of experiences that if I am elected today, I would certainly look forward to bringing into Metcash.

Aside from the advisory company that I have -- that I now lead, I also sit on a number of other boards as a Non-Executive Director, and I chair the Industry Advisory Group for the University of Technology.

Look, I'll just end by saying I think that Metcash has such an incredible purpose and a really important one in Australia and a really clear strategy against which to deliver. And if I am elected today, then I very much look forward to using my experience to help further that ambition, shore up independent retailing in this country and, of course, create long-term value creation for all of our shareholders. So thank you for your time today.

Thank you, Nicky. So this resolution is now open for discussion. As noticed, all questions should be initially directed to me as Chair. Are there any questions from the floor? Are there any questions online?

Just one online from Mr. Stephen Mayne. Could new Director, Nicky Sparshott and the Chair comment on the recruitment process that led to her appointment to the Board? Which recruitment firm assisted with the process? Did the full Board interview any other candidates? And did Nicky know any of our directors or key management personnel before engaging with the recruitment process?

Okay. So I mean, yes, we -- I mean, as an organization, we go through a process of working with a recruiter. I don't know that we necessarily need to disclose which recruiter that we work with, but it's a highly credentialed and capable recruitment firm that we work with, well known in the marketplace and that does a lot of very good work with different boards on the recruitment.

And as a Board, we set out the criteria that we were looking for, referencing back to that discussion that we had earlier around the skills matrix. We considered and recognized that Helen Nash was planning to step away from the Board. We recognize the skills that Helen brought to the Board and experiences, so what we'd be losing.

And we recognize that given the nature of Metcash's business being a wholesale, retail organization, a brand business, that having somebody that had very strong and extensive experience in those areas was going to be really valuable, recognizing and as Nicky has just outlined, you can see that her profile is very appropriate for working with Metcash and contributing to Metcash.

So she was one of a number of potential directors that certainly I interviewed and along the way, other members of the Board were involved with me in the initial screening, and then all members of the Board and actually members of the management team met with Nicky prior to appointment. We are very comfortable with Nicky being the clear standout candidate that we met through that process. So we're very pleased to have Nicky on board.

So I think that covers it. I don't know, Nicky whether there's anything else that you wanted to just add, but I think that probably covers that.

No further questions. Thanks, Chair.

Thank you. Okay. So if there are no further questions, I now formally move the motion that Ms. Nicky Sparshott be elected as a director of the company. I now 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 Ms. Sparshott, please press 1. To vote against, press 2 or if you wish to abstain, press 3.

[Voting]

Just got one problem at the back. All good. We will see the outcomes, I think. So I declare the voting closed, and I think the results should appear on the screen. So we can see that a strongly carried motion. So I declare the motion carried that Ms. Nicky Sparshott is elected as a director of the company. Congratulations, Nicky.

So I now move to our next resolution, Resolution 3, which is 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 35 to 53 of the 2026 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. Do we have any questions on the floor? Natasha?

Thank you, Mr. Chair. Natasha Lee again. I noticed that there was a comment that the ROFE gatekeeper had been changed because it may potentially incentivize investment in modernizing fully depreciated legacy assets. Can you give a bit of information around that? I know that there's only 2 elements which are considered as far as the long-term incentives being ROFE and ATSR.

I suppose part of my concern is that if you've got fully depreciated assets, is that potentially producing sort of false economy or a drag on productivity because you're extending the life of it and potentially the risk similar to what Telstra recently faced? So what sort of assets are we talking about in this category of your legacy assets?

So I suppose just to clarify and confirm, what we are saying is that going forward. So from 2026 forward, the LTI scheme changes so that the 2 hurdles within the -- or the 2 target areas within the scheme are EPS growth and absolute total shareholder return. Those are our 2 key targets, and we have a range of outcomes for those 2 areas.

What we had previously, we had something called a ROFE gate opener and the company needed to achieve a certain level of ROFE for those other 2 targets to open up. That introduced a level of complexity compared to other schemes that are out there in the marketplace. But also, I think there's a few factors involved.

And one of my messages earlier on in this meeting was that capital discipline is going to be a real key focus area. And that means at this point in time that there's going to be a significant focus on working capital because when we look at the capital makeup of the organization, working capital is a significant part of the capital basis. And the Board has determined that moving the focus on ROFE into the short-term incentive scheme is an appropriate step.

So return on funds employed is going into the short-term incentive scheme and will represent about 14% of the potential earnings available under the short-term investment scheme. And we're going to be measuring that return on funds on a monthly basis, and that will really ensure that we've got the appropriate discipline on capital management. So we think that's appropriate.

And that's probably the primary driver of that decision. Yes, there's also the potential issue that, in terms of the company probably going back a number of years, had underinvested in some of its technology and what we're seeing with programs like Horizon and some of our other investments in -- we've got a bit of catch-up activity, and we're making that. We are making those important investment decisions to ensure that we've got the right technology platform in place. So we're doing that.

Yes. Okay. Yes. But the -- yes, it's good that you've got the capital management discipline, and that would be expected. I suppose on the other side of that is the expected returns from that capital investment as far as the risk management that the wheels don't fall off somewhere because you haven't either invested enough in the right technology. So there is a degree of balancing. So being constrained wise, it needs to be prioritized against the risks involved.

Yes, absolutely. And that's why you are seeing that investment in technology.

Good afternoon again, Peter. It's Patricia Beal again for the record from the Shareholders' Association. I must say that we were pleased to see the changes that have taken place in the rem, the awarding and the conditions and we think it is much more appropriate that the long-term incentives be a good measure over the long term, and we're thinking of shareholders who usually hold their shares for the long term. So increasing the proportion of rewards that is done like that, I think, is an excellent measure. And so we have much pleasure in voting for [indiscernible].

Thank you very much. We appreciate that. Thank you for your support. Any further questions? Question online? Yes.

Yes. Just one from Stephen Mayne. Which of the proxy advisers covered us this year? And did any recommend a vote against any of today's resolutions, including this remuneration report item? If so, what reasons did they give? And did this translate into any material protest votes? Also, I wouldn't need to ask this question if you disclose the proxy votes earlier to the ASX. As I have asked for at previous AGMs, can you please answer why you don't do this?

Okay. So in terms of the first part of the question, we are followed or reported on by the major proxy groups. So ISS, CGI and Ownership Matters, and also ACSI. All of those groups reported on the company and had in favor recommendations on all resolutions, including the remuneration report. So we were certainly pleased in that position.

In terms of the proxy -- presenting the proxy positions, I think we'll take that on notice and consider that as something that we can do in the future. Okay. No further questions?

Right. So I now formally move the motion that the remuneration report be adopted. I now put the motion to a poll and open the poll. Using the handsets, please cast your vote now. So to vote for, 1, to vote against, press 2; and if you wish to abstain, press 3. We'll keep the handsets open for a few more seconds. We've got one more behind you.

[Voting]

Has that worked for you? Okay. So I'll declare the voting closed. So the result will appear on the screen. Again, strong in favor. So I declare the motion carried and that the remuneration report has been adopted.

So our fourth resolution is to approve a grant of performance rights to Mr. Doug Jones, our Group CEO as part of his 2027 long-term incentive award. If shareholders approve the grant to Mr. Jones, he will be granted 886,986 performance rights. This number has been determined by dividing Mr. Jones' long-term incentive opportunity with the value of 2,590,000 by $2.92, which was the volume-weighted average price of the company's shares traded on the ASX over the 20 days ended the 30th of April 2026, which was the last trading day before the start of the company's 2027 financial year.

Mr. Jones' long-term incentive opportunity is 140% of his fixed remuneration and will be tested over a 3-year performance period from the 1st of May 2026 to the 30th of April 2029. This award is subject to 2 equally weighted performance measures. 50% of the performance rights are subject to an absolute total shareholder return hurdle, which measures growth in shareholder value through share price appreciation and dividends over the performance period.

And the remaining 50% are subject to an adjusted earnings per share growth hurdle, which measures the company's ability to deliver sustainable earnings growth over the period. Following a review of the remuneration framework, the return on funds employed gate opener that previously applied has been removed. The Board considers that absolute TSR and adjusted EPS measures continue to provide an appropriate focus on long-term shareholder value and earnings growth.

And in relation to the question that I had earlier as to driving the share price, we can see that we are aligning the long-term incentive arrangements of the company through looking for share price growth and earnings growth, which we see as key factors there. Further details about the award performance rights to Mr. Jones and each of these conditions is set out in the explanatory notes accompanying the notice of meeting.

The resolution is now open for discussion. Any questions on this resolution? Okay. No questions on the floor. Any questions online?

Okay. So we'll move to the voting. I normally -- I now formally move that the grant of 886,986 performance rights to the Group CEO, Mr. Doug Jones, be approved. Put the motion to a poll and open the poll. Using the handsets, please cast your vote now. Press 1 to vote for, 2 against and 3 to abstain.

[Voting]

Okay. So I declare the voting closed and the report -- the results will now appear on the screen. Again, strongly vote for. Thank you. I declare the motion to grant performance rights to Mr. Jones carried.

And finally, to Resolution #5, which is a special resolution to approve the giving of financial assistance under Section 260b(2) of the Corporations Act. This resolution is proposed to enable the company and its subsidiaries to comply with the group's existing financing arrangements by causing 2 companies that have recently become wholly owned members of the Metcash Group, which are the Total Tools Launceston Proprietary Limited and Tasmania Hardware Proprietary Limited to become guarantors under those arrangements alongside other group entities.

Briefly, the Metcash Group uses its financing arrangements in connection with the acquisition of the remaining interest in those businesses. As a consequence, if those businesses become guarantors of the group's financing arrangements, the guarantee and related transactions may be regarded under the Corporations Act as providing financial assistance in connection with the acquisition of shares in those companies.

So the Corporations Act, therefore, requires approval from both the shareholders of those companies and the shareholders of Metcash as a listed holding company. Approval of this resolution will allow these companies to accede to the group's existing guarantee and financing framework, helping ensure ongoing compliance with its term of the group's debt facilities and maintaining continued access to funding and other financial accommodation available to the Metcash Group.

A more comprehensive explanation of the resolution and the reasons for it is set out in the explanatory notice with the Notice of Meeting. The Board considers the resolution being the best interest of the company and unanimously recommends that shareholders vote in favor of it. The Board's recommendation reflects the fact that the resolution supports the group's ongoing financing arrangements and compliance with those arrangements.

This resolution is a special resolution, which means that at least 75% of votes cast on the resolution must be cast in favor for the resolution to be passed.

The resolution is now open for discussion.

Patricia Beal again from the Shareholders' Association. I don't recall seeing any resolutions similar to that in the last few years. I wonder have the -- what has changed, the Corporations Act? Or is it some different way of financing that you're now using?

So I'm actually surprised that you haven't seen it because I've seen it and been involved with it in other companies as well. And it is something that I've seen over a number of years. I mean it's an administrative process in effect. So effectively, it's typical of an organization that has many subsidiary companies, that all of those subsidiaries become part of an overall debt financing arrangement.

And as part -- and to be able to be part of that arrangement, each company becomes a guarantor. So effectively guarantors its assets against security for that financing arrangement. What that allows us to do is to have everybody managed efficiently all as part of one arrangement. So that's quite a common thing, not just in Metcash. I mean it's something Metcash has been doing for a number of years, but I see it in a number of other companies, and I'm sure that my fellow directors who sat on different companies will have seen it. So it isn't unusual. It's something that happens.

Okay. Any other questions? No questions online. So I now formally move that the motion be approved. I put the motion to a poll and open the poll. Please use the handsets to vote for, press 1, to vote against, press 2; or if you wish to abstain, press 3.

[Voting]

Okay. Thank you. I'll now declare the voting closed, and the results will appear on the screen. So we can see that we've certainly achieved the 75% of votes were cast in favor of the resolution. So I declare the motion carried.

So this concludes the formal business of the meeting. I thank you again for coming in today and your ongoing interest and support of Metcash. I declare the meeting closed. We invite you to join us for afternoon tea immediately following the meeting. You'll also find some bags in the foyer with products from our private label range. So we invite you to take a bag with you as you leave. Thank you.

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.