Earnings Call: H2 2021

Aug 18, 2021

Thank you, and good morning, everyone. Stephen here. Welcome to our 2021 full year results announcement. Joining me on the call today is Leo Wickard, our CFO. Once again, We are presenting our results from a lockdown in Melbourne. It's hard to believe that it was only 2 months ago that we had our virtual strategy day year. Much has changed since then, most notably the emergence of the Delta COVID-nineteen strain, the release of a vaccination program, which will see the majority of Australians vaccinated by Christmas and the roadmap to normality, including migration. The good news is there is finally a light at the end of a 2 year tunnel. And I, along with many others at Coles and looking forward to 2022. During FY 'twenty one, we've experienced 11 COVID lockdowns. And again, I would like to acknowledge our team members, suppliers, community partners and the various governments for their resilience and support to secure our food supply chain and deliver a safe in store environment for our customers. With that, I'll move into the presentation for today. So Slide 1, I'd like to start by briefly talking about our vision, purpose and strategy, which was launched 2 years ago and designed to build trust with all stakeholders, our ecosystem, if you like, and grow long term shareholder value. Whilst we've made significant progress, we recognize the majority of our transformation and associated benefits are still to come, particularly those that relate to our automation projects with Vitron and Ocado. The operational highlight for the year was the improvement and acceleration of our e commerce business and omnichannel offer, which exceeded $2,000,000,000 across the group for the first time. We introduced more unique and innovative products, particularly through our own brand, rolled out new formats like Coles Local and Black and White Liquor and launched our new Together to 0 sustainability strategy in our quest to be Australia's most sustainable supermarket. Moving on to Slide 4. I will not go into this slide in too much detail as most of it will be covered later, but it serves as a reminder of where we have come from since our demerger in FY 2019. It is clear we're making real progress against each of our strategic pillars of inspire customers, smarter selling and win together. As we look to the future and increased investment and pace of change at Coles. You will see an increasingly differentiated omni channel offer around own brand, Ocado, team engagement and sustainability, supported by longer term supplier relationships and our smarter selling program. Moving on to Slide 5. With regards to the financial results for FY 2021, Total sales increased by 3.1 percent to $38,600,000,000 On a 2 year basis, headline sales increased by 10.2 percent, EBIT increased by 6.3 percent to 1,900,000,000 and we delivered operating leverage across all three segments of the business. Net profit after tax increased by 7.5% to just over $1,000,000,000 Smarter Selling continues at pace and delivered around about $300,000,000 Capital expenditure was pretty much as forecast 1,100,000,000 operating cash flow was $3,600,000,000 and strong cash realization of 106%, complementing a strong balance sheet for future growth with net debt of just $355,000,000 shareholders, I'm also pleased to report a fully franked dividend of $0.28 per share, taking the total dividend for FY 2021 to $0.61 a 600% increase sorry, a 6% increase compared to FY 2020 and totaling around $800,000,000 which will go to many millions of Australian shareholders either directly or indirectly Invested with Coles. With COVID-nineteen still a part of our lives, we've continued to focus on team member safety, mental health and well-being, including investments in technology and distribution centers and manual handling equipment in stores. I will now take you through some of the strategic highlights in more detail, starting with inspiring estimates. Moving on to Slide 6. We have made good progress against this pillar of our strategy by improving customer advocacy, Brackets NPS and delivering innovative and differentiated products for our customers. Our market share position has improved with the Q4 exit position restored to pre COVID-nineteen levels as shopping centers recovered and local shopping unwound. I will discuss this in more detail later. We made significant progress in building trust and loyalty with our customers, and we are now ranked as one of Australia's most trusted Consumer Brands in the Roy Morgan survey. We led the industry and removed door to door paper catalogs back in September last year, saving more than 260,000,000 printed catalogs to date. We also launched Coles and Co, which provides a far more personalized digital experience for our customers around recipes and promotions. As more consumers shifted towards purchasing online, e commerce sales grew by 52% for the year with Q4 growth of 62% and a penetration of 6%. I will go through some more detail on e commerce later. Sales are exclusive to Kohl's products, which includes Coles' own brand and exclusive proprietary brand products, grew by 5% with penetration now at 32%. 46 Coles Brands won awards during the year, and we made progress on our trusted and targeted value with 30% of our store layouts now tailored and an extra almost 500 products on everyday low prices. Our convenience offer is now available in more than 300 stores, providing a quick and easy solution for the many customers wanting high quality, ready to eat meals, many produced by our own facility in New South Wales. Finally, in liquor, e commerce sales grew by 79% for the year, and we enhanced our omnichannel capabilities in this space through the opening of 3 e commerce dark stores in Victoria, Queensland and Western Australia. Moving on to Slide 7. As I mentioned earlier, a key operational highlight for Coles was the step up in our e commerce capabilities. With millions of Australians currently in lockdown and through the 11 lockdowns we experienced in FY 2021, More and more of our customers are turning to Coles online to get their essential food and groceries. From a financial point of view, Q4 growth. 62% was supported by investments made in capacity and digital customer experience. E commerce penetration was 6% in the 4th quarter, and this has increased to 8% in the Q1 of FY 2022. In New South Wales. This now is in double digits. Customer metrics remain strong with NPS almost doubling over the year, Helped by Improvements in the Perfect Order Rate Delivered in Full and on Time. We know the importance of the omni channel customer. In the Q4, the omnichannel customer spent more than 2 times that of an in store only customer. A number of new services were also added during the year, including same day home delivery, now available in more than 300 stores and click and collect rapid in 90 minutes available in more than 400 stores. Our Coles Plus membership has seen a significant increase in paid members since the relaunch in February 2021. And we're working hard in the background on delivering Ocado, which has delivered a differentiated and leading home shopping experience for shoppers in the UK, France and Canada. Now moving on to our 2nd pillar, smarter selling, which is Slide 8. We achieved smarter selling benefits of approximately 300,000,000 despite the challenges presented by COVID-nineteen, which is helping drive operating leverage in the business. Some of the initiatives implemented join the year include data and technology led solutions supporting store operations, including our smarter forecasting tool. We implemented measures to reduce loss through the use of artificial intelligence to optimize markdowns, and we introduced loss prevention initiatives such as the installation of electric entry gates at the front of store. We also introduced new customer self-service solutions at the checkout, such as customer bagging benches and trolley assisted checkouts. This enabled greater customer choice and increases in team member productivity. During the year, we also commenced implementation of fresh produce easy ordering. This is the last of our categories that need this to happen and we'll make the business far more efficient in the future. We also saw construction progress significantly at the VITRON automated DCs in New South Wales and Queensland and at the Ocado CFCs in Melbourne and Sydney. Supporting an efficient and agile workforce, we launched our new people and payroll system called MyHub. MyHub replaced over 16 disparate people systems, providing a one stop shop for our team members. Finally, our tailored store strategy continued with 65 supermarket renewals completed during the year, including 10 format As, 36 formatsees and 4 CALLS locals, including the first one in Queensland. Moving on to Slide 9. Since the commencement of our smarter selling program, we've now delivered cumulative benefits in excess of $550,000,000 As you can see on this slide, the team have done a fantastic job in delivering sustainable savings, primarily in logistics, stock loss and waste, store remuneration, and then the split of the benefits of approximately 40% in GP and 60% in cost of doing business. Our plans are not changed, and we continue to target $1,000,000,000 in benefits by the end of FY 'twenty three. Moving on Slide 10, Win Together. 1 of the key highlights in the latter part of the year was has been the launch of our sustainability strategy. And as a reminder, We are committed to net 0 by 2,050, 100% renewable electricity by the end of FY 'twenty five, reducing our Scope 1 and 2 emissions by 75% by the end of FY30 and diverting 85% of waste from landfill by FY 'twenty five. In terms of other highlights under the winter pillar, I said at the start. We've improved safety by 15.7% in the business, and I do feel that we have a safety embedded culture at Coles. We invested in team member mental health and well-being with the launch of monthly Manager Health Communications, and we continue to hold JEM Challenges, which is gratitude, empathy and mindfulness throughout the year for our team members. We supported diversity through increased gender balance with a 2.3% improvement in women in leadership positions, And we did this through a focus on developing female leaders, particularly in our store manager and technology teams. We were recognized as a leader in LGBTQI inclusion, winning for the first time a gold Workplace Equality Index Award. We're also improving the ways in which we work with our suppliers and recorded our highest ever engagement score in the 2021 Advantage Supplier Survey, which is the widest supplier survey in Australia. Working with our dairy farmers, we announced an extended direct milk sourcing model to Tasmania, and we further expanded the model in Victoria, New South Wales and South Australia to supply milk for Coles brand cheese, allowing more dairy farmer suppliers to enter longer term relationships with CURLs. Contributions to charity and community partners in FY 2021 included more than $6,700,000 for fight MND, a new record and 2,500,000 children's hospitals across Australia through the Curing Homesickness fundraising initiative with our Mumsource. Finally, we continue to focus and support team members and communities through COVID-nineteen lockdowns and natural disasters. This year, we saw bushfires and cyclones in Western Australia and floods in Queensland and New South Wales, as well as several derailments in WA as well. Moving on to Slide 11, which is our market share. We shared this slide with you on the Strategy Day, but we've updated it for Q4, which has our market share at 27.1. While we are not reporting our monthly market share, the Q4 exit market share has been restored to pre COVID-nineteen levels as we saw the performance of our shopping centers improve as the local shopping trend began to unwind. Of course, we expect more local shopping from the latest lockdown restrictions, particularly in New South Wales and Victoria, but it was pleasing to see that as restrictions did ease in the 4th quarter, our market share improved. Finally, on to our strategy tracker, as we do at every results presentation. This is the Coles strategy tracker, and I'm pleased to say that we remain on track for most of our metrics. As I've outlined today, we've made progress on safety, customer satisfaction, market share, sales densities, smarter selling efficiencies, profit growth and cash realization. Whilst we've improved team member engagement over the last 2 years, we did step back slightly this year, and this remains a focus for us in FY 2022. We will continue to report on our progress with the next scorecard update at our interim results in February. With that, I will now hand over to Leah, who will take you through the financial results in more detail. Leah? Thank you, Stephen, and good morning, everyone. It is nice to be speaking to you today again with a strong set of financial results for the year. I'm on Slide 14. You see that the group sales increased by 3.1 percent to 38.6 $1,000,000,000 And on a 2 year basis, we have grown group sales by 10.2%. Group EBITDA grew 5.4 percent $3,400,000,000 while group EBIT increased by 6.3 percent to $1,900,000,000 And pleasingly, we achieved operating leverage across all three segments during the year. Net profit after tax increased by 1.5 percent to $1,000,000,000 and the Board has determined a final dividend of $0.28 per share. This takes the total FY 'twenty one dividend to $0.61 per share, a 6% increase on FY 'twenty. Moving now to Slide 15. As I just mentioned, it is pleasing to report sales, revenue growth and strong EBIT growth across all segments. In supermarkets, sales increased by 2.6 percent despite cycling the significant pantry stocking events that occurred in March April of FY 2020, followed by the national lockdown. We have delivered strong 2 year growth at 9.6%. Sales were driven by elevated demand in Victoria during the lockdown in H1 as well as strategic initiatives that have resonated with our customers, successful value campaigns, including helping lower the cost of breakfast, Lunch and Dinner and the MasterChef Cookware and Knives campaign. Most pleasing is the growth we have achieved in e commerce of 52%. This e commerce growth was supported by the enhancements to the customer experience, additional home delivery and click and collect stores and the launch of same day home delivery, the Coles Plus subscription offer and Coles Rapids. Supermarkets EBIT increased 5.2 percent to $1,700,000,000 This was delivered through sales growth and approximately $300,000,000 of smarter selling benefits in addition to strategic sourcing initiatives, which have helped to offset the approximately $130,000,000 of COVID costs during the year. This has resulted in 13 basis points of expansion of EBIT margins of 5.0%. In liquor, sales increased by 6.6% and were very strong on a 2 year basis at 15.1%. E commerce sales growth of 79% was underpinned by the opening of 3 dark stores in Victoria, Queensland and WA during the year. Liquor EBIT grew by 19.6 percent to $165,000,000 with a 49 basis point expansion in the EBIT margin to 4.7 percent as the high proportion of fixed costs in the liquor cost base was fractionalized across the elevated demand driven by COVID-nineteen, particularly during the Victorian lockdown in H1. Express C store sales grew 7.7%, driven by growth in Food To Go, in particular coffee and cold drinks, with both of these categories benefiting from investments in new self serve coffee machines and fridges. Express EBIT grew 103 percent to $67,000,000 up from $33,000,000 last year despite the challenging fuel environment. And this was through a focus on C store sales and very disciplined cost control. The other segment recorded net cost of $61,000,000 for the year. Corporate costs were $83,000,000 as industry wide increases in insurance was seen and an increase in the workers' compensation provision was taken, reflecting claims experienced over the past 12 months. Earnings from property operations were $27,000,000 and Coles' 50% share of Flybuys net result was a $5,000,000 loss. Turning now to Slide 16. Operating cash flow, excluding interest and tax was $3,600,000,000 with strong cash realization of 106%. Higher provisions compared to last year are a result of higher employee entitlement provisions with less team members taking leave during COVID-nineteen as border closures have curtailed travel plans. There was also an increase in the workers' compensation provisions due to COVID-nineteen delaying access to medical treatment for some injuries. Turning now to Slide 17. Gross operating capital expenditure on a crude basis increased By $278,000,000 year on year to $1,100,000,000 in line with our previous guidance. Store renewal spend increased year on year with an increased weighting towards bigger schemes with more format A and B renewals done in FY 2021 compared to FY 2020. There was also an increased spend on conversion of existing stores to the Coles local format, 4 of which will launch in FY 2022. In FY 2021, we introduced a new program called rapid innovation rollout, which takes the best of innovation from Coles Local and Innovation Stores, Such as Taronga and Moonee Ponds and quickly rolls it out to large traders across the network without the need for a full renewal. This has included innovations such as mochi and fresh squeezed orange juice machines. We saw a step up in growth initiatives being known that we expect to drive top line sales. This included increased new store openings, a step up in the Ocado project costs and acceleration of our e commerce offer. Increased spend on efficiency projects Primarily reflects the ongoing commitment to the V Tron implementation, together with supporting our smarter selling program in store and DC network operational improvements. At the time that we announced the Vatron DCs, we indicated that the total capital spend to complete The 2 DCs in New South Wales and Queensland would be up to $950,000,000 We remain on track to deliver the 2 DCs within this amount. FY 'twenty two will be the peak capital spend for the project with approximately $290,000,000 of capital spent. By the end of FY 'twenty two, approximately $690,000,000 of the $950,000,000 will have been incurred or just over 70% of the way through the projected spend. This is why we have called out a step up in Vittron and Ocado project OpEx in FY 2022 as these projects get nearer completion and construction and development activities peak. As previously communicated, we expect one off project OpEx associated with Aviatron and Ocado projects to be up to $75,000,000 in FY 2022 and up to $160,000,000 in FY 2023. Finally, we reported a net outflow of property CapEx of $35,000,000 as acquisition and development activity exceeded divestments. The primary driver of this was a large number sorry, a number of larger developments, including Cobblebank in Victoria, Whiteman Edge in WA and Andagrove in Queensland, all of which are now open and trading with strong early results. I'm turning now to Slide 18. At the Strategy Day in June, we indicated that growth operating CapEx was expected to be up to $1,400,000,000 in FY 2022. We have a strong balance sheet with capacity to invest. Cost of debt remains very low, and we have opportunities available to us in our core business, which will deliver a strong return well in excess of WACC. The incremental investment will be directed to areas where we can take advantage of changing customer preferences that have emerged, including during COVID, Since we put our original plan in place in FY 2019 and enable us to build a business that will be on an even better strategic footing in a few These initiatives include initiatives in e commerce to take advantage of the COVID driven acceleration of online shopping, acceleration of our successful format trials, including the black and white format for Lickerland and Coles Local, which we will look to now start scale. Enhancements to the customer offer in response to changing customer preferences for increased convenience, health and cuisine experimentation and also building on the early success of the Best Buy program. And finally, smarter selling initiatives, session, such as the trolley assisted check out that we have trialed in FY 2021 in Taronga and Moonee Con with strong customer feedback and efficiency savings. Turning now to Slide 19. We continue to maintain a strong balance sheet To provide flexibility for future growth. At 27 June, we reported working capital of negative 1,200,000,000 capital employed of $11,100,000,000 and net assets of $2,800,000,000 We reported net debt of 3 $55,000,000 and our leverage ratio stepped down to 2.8x. Trade and other receivables reduced following the settlement of a one off property loan that's dated back to 2014. PPE increased as a result of investments in new stores, renewals and milestone payments The Vatron VC. We are exiting the year with a balance sheet that enables us to invest in the business as I outlined before. Turning now to Slide 20. We continue to take a disciplined approach to capital management. The total dividend for the year of AUD 0.61 per share represents a dividend payout ratio of 81%. During the year, Coles issued AUD 450,000,000 medium term notes, comprising AUD 300,000,000 10 year fixed rate notes and AUD 150,000,000,000 5 year floating rate notes. The proceeds of these notes were used to retire existing bank debt facilities. Weighted average debt maturity of drawn debt was 6.9 years as of 27 June with undrawn facilities totaling 2,400,000,000 We remain committed to extending our debt maturity profile over time and retaining investment grade credit ratings with S and P and Moody's. As I mentioned, our leverage ratio, a key measure for the credit rating agencies, stepped down to 2.8 times, further supporting ongoing flexibility for growth. I I'll now hand back to Stephen, who will make some concluding comments on the outlook before we get into Q and A. Thank you, Leah. So as you can probably see here, it's been a elevated 1st 7 weeks of Q1 with sales of 1% on a headline basis, cycling the hard lockdown of Victoria last year, of course, and 12% on a 2 year headline basis. As I said earlier, e commerce penetration is 8% in the quarter, showing strong growth and New South Wales well into double digits. In July, supermarkets incurred up to around $15,000,000 of COVID related costs, which is slightly up on where we were at the back end of FY 'twenty one. In liquor, sales in the 1st 7 weeks Q1 has remained strong, with headline growth flat and 19% on a 2 year headline basis. Investments in the customer offer and capability as part of liquor's refresh strategy will also increase across the year, including the liquor land renewal and new store program. In Express, Fuel volumes continue to be impacted by lockdowns with average weekly fuel volumes of 49,000,000 liters in the 1st 7 weeks. Obviously, we expect that to improve as lockdown eases. In the Q1, Express will be cycling elevated tobacco sales in the prior corresponding period as well as the impact of no increase in the tobacco excise in September 2021. In other, FY 'twenty two corporate costs are expected to be approximately $75,000,000 and property earnings are expected to be slightly below that achieved in FY 2021. Smart selling benefits are expected to exceed 200,000,000 and Coles expects to renew approximately 50 stores and open approximately 20 stores in FY 'twenty 2, subject, of course, to COVID-nineteen restrictions. F 'twenty two will be a significant financial year in capital and operating expenditure as a result of Coal's 2 major commitments announced in FY 2019 around delivering world class technology solutions to improve efficiencies and customer experiences. For the 2 VITRON sensors, Clorals expects total capital investment of $950,000,000 which is what we originally signed off, of which $290,000,000 will be incurred in FY 2022, along with increased levels of operating costs as Kearl's prepares for start up and double running of the Queensland facility in the first half of FY twenty twenty three. For the 2 Ocado CFCs, further project costs will be incurred as Coles as to commence operations during FY 'twenty three in Melbourne and FY 'twenty four in Sydney, subject again, of course, to COVID-nineteen restrictions. Kearl is expected to incur 1 off project operating costs of up to $75,000,000 in FY $160,000,000 $160,000,000 in 2023 across both programs as previously advised. The longer term operational, customer and financial benefits of these major technology investments will be reflected in the company's financial performance commencing in FY 'twenty four and beyond. As we talked about at our Strategy Day And Lee, as just mentioned, gross operating capital expenditure is expected to be up to $1,400,000,000 in FY 2022 as we invest in omni channel, fresh produce easy ordering, front end transformation, Coles Local and LiquorLand renewals and more new stores. There is no change to current guidance of net property capital expenditure of around or up to $100,000,000 either way. Thank you for listening. I will now hand back to the operator for Q and A. Thank you. Thank Our first question comes from Ross Curran of Macquarie. Please go ahead. Thanks, Stephen and Leo, and congratulations on a great result. Stephen, I was wondering if we might be able to drag out a little bit more detail on current trading, maybe state by state, And whether the extra capacity you've added online means that your market share this time around is not going to be as negatively impacted versus last time when we're in lockdown. Yes. Good morning, Ross, and thanks for the question. Current as we said in the statement, current trading is volatile by state, by day, by hour, and it's almost the biggest challenge we've got at the moment is keeping up with the changing sales profiles that we're experiencing. However, what I would say overall is was when a lockdown happens, we're seeing shorter, less spiky panic buying, which suggests that people are getting used to lockdowns. And then as we enter longer lockdowns and particularly the 5 kilometer rule, That's then when we see that real move to more e commerce and more local shopping. In terms of the store cohorts, we've seen perhaps not as significant yet amount of changes saw last time, but we have seen neighborhood stores increasing by double digits and we have seen shopping centers reducing by double digit. So the same sort of phenomenons as last time, but not yet quite as marked. The point about online is a good one. We're in a far better space this year than last year in terms of both capability and capacity. We'd still probably like more if we could, but The online business is in good shape. And it means that I think that for those competitors who don't have a strong online offer, then clearly they'll move this out to shoppers who want home deliveries or click and collect to the boot of the car. Is it too early to get a comment on Coles Plus and how that's worked? Yes, I think so. With all the background noise, I mean, it's been successful, but we've got grand plans. We want it to be a lot bigger than what it is today. But I think the focus for people is just on getting the shopping and whether that's the business car or at home. And that's what we're very focused on at the moment is just meeting the demand. Thank you. I'll leave it there. Thank you. Our next question is from David Errington of Bank of America. Good morning, Steve. Good morning, Leah. Probably, Leah, this is directed to you. Excuse me. If we could go to Slide 23, the Supermarkets result, where I was encouraged, and I think most people on the call will be, is your cost performance in the second half, new cost of doing business performance. I noticed in the first half, your cost of doing business was up 40 basis points, and in the full year, it was only up 22%. And on my math, the cost of doing business half on half actually declined. The gross margin though was a little bit not as strong, but I'm assuming that there's price deflation that's come back in here. But I was wondering, Leah, you normally give us a little bit more color as to what's happening in your cost line, what the moving parts are like with COVID costs spare because there's a lot of moving parts underlying costs, there's smarter selling, there's improvements in efficiencies, but there's also underlying cost inflation. Would you mind giving us a bit of a bit more of a detailed breakup as to what your cost performance was? And in particular, in the second half, it seems to be that you really did see some good cost performance in that second half as sales moderated. Hi, David. Yes, sure. So I might start with it on a full year perspective, and then we can talk about H2. So as you mentioned, in terms of the way I kind of think about The building blocks of this. We've got the underlying cost inflation on the cost base of last year, if you like, and that was Continue to be in the order of between 2.5% 3%. We then had increase CODB dollar cost from the variable cost of the incremental sales year on year. Now That is different for H2. Obviously, we had sales decline in the half. But at least for the full year, you've got a block there of variable costs. And that was slightly higher in terms of the rate for us than last year because we are seeing a higher online mix in that. And then offsetting that, you've obviously got your smarter selling benefits, Of which, we had around 300, approximately 360% of that went to the CODB line. And we also had lower COVID costs year on year. So in FY 2020, the COVID costs supermarkets. We're in the order of around 205 in FY 2021. They were around 130 About 75% of each of those numbers went to CODB. So that was a tailwind. And then offsetting those, we did continue to make some strategic investments with increases in the D and A, increases in marketing spend and some investments in digital from an OpEx perspective. So that's the key blocks from a full year perspective. If we talk about H2, The CODB rate for H2 in FY 2021 was actually broadly in line with the rate for FY 2020. And what you're seeing with the decline in terms of the CODB dollars is a 2.round2% decline in your CODB dollars, which just translates to you've also got a 2% decline in your sales. And so what you're really seeing there is that, that sort of variable cost of sales block that I usually talk about, that is just getting backed out of the OKH2 position. And that's pleasing because it means that it wasn't embedded that you actually could get those costs out when sales Which is pleasing because there was concern that those costs would be embedded. So that's got to be a pleasing outcome. Yes. I mean, they truly are variable, and we spend a lot of time using our advanced analytics tools to Get a lot of these measures right in the way that we do forecasting in store for REM and what we're expecting from sales and also Having something which is quite dynamic in the way that it responds to how we're seeing trends from the previous week and the previous day. That is something that we are able to quite successfully flex up and down based on the sales volume that we've got going through. And quickly just to follow-up, Leo, not taking up too much time. You mentioned 2.8% as your leverage, but you think it's a little bit under. What do you think would be appropriate for a company like Coles, that leverage ratio? Because you've got a strong balance sheet. Where do you think you could take it? So in other words, how much latency have you got to invest in some of these projects that you've got? We don't have a target leverage ratio per se. What we continue to be committed to is retaining solid investment credit rating. Now the leverage ratio has decreased this year. But as I kind of look forward over the next couple of years with the capital program that we have in place, I would expect both the net debt And that leverage ratio to move up, but still sitting below the levels that we were at when we first emerged. And I think that's why we feel that this capital incremental capital that we've announced It's a good decision for us because we can quite comfortably do it within the capital structure that we've got. Yes. Thank you, Leah. Thank you, Steve. Thank you. Our next question is from Ben Gilbert of Jarden. Please go ahead. Good morning, Stephen. So not to disagree, David, but I would have thought that the second half cost could have actually been up a bit more given that pretty much all of those 200 odd mill of COVID costs in fiscal 2020 would have formed in the second half. Could you give us an idea Maybe just set that split for first half, second half for COVID costs for this year. And then I know this is a really difficult question, but should we how we should be thinking about the run rate for Suede into fiscal 'twenty two, just around maybe what you're seeing around wages. That, obviously, $15,000,000 run rate, is that what we should think as we see these ongoing lockdowns looking forward, just a bit of color around how to think about fiscal 'twenty two. You're talking particularly about COVID costs, are you then, Airline. Yes. Just in second half 'twenty two, because I appreciate, obviously, the sales are down and you're cycling some strong numbers, but the margin was still off a lot, Sorry, not a lot, but a reasonable amount. And you obviously those COVID costs will have all weighted towards second half of the PCT. So I just thought CIB might have actually been off a little bit more. Yes. Well, in terms of the split of the COVID costs, I mean, at the half, we disclosed that the COVID costs for H1 were about 105. And so there was only about 25 in H2. Q2. But what we have seen, obviously, is we have put those strategic investments in, which is where we've seen the offset against that tailwind. And again, that was in the key areas of the D and A ticked up, the marketing spend ticked up and we had some additional OpEx that went into the digital space. And we do, yes, we feel that they've all been good investments in terms of setting us up for some good momentum going into this new year. So from a COVID cost perspective on the look forward, we had about 15,000,000 July. And what I would probably say is the situation has somewhat escalated Since July, we've much harder lockdown in Vic and New South Wales, Not showing much improvement in terms of numbers and more LGA has been affected. So my expectation would be from COVID cost perspective, we might expect that number to go up a little bit on a per month basis, but it is very dependent on The situation and the number of lockdowns in the number of states that are affected at any one time. Did you want to build on that, Sven? Yes. Thanks, Leah. Morning, Ben. Just a couple of examples as to why the COVID costs have increased. One is, we are required to be at the front door in a number of areas now, making sure that customers are aware that they need to check-in. And what we have got is also an increasing number of our team members that we Pay For when they're isolating and those are discussions that we're having as a supermarket task force now with the various authorities because the way it's worked so far is we've improved QR code testing or check-in rates. The health authorities are now able to identify very quickly where people have been. And of course, it's highly likely that they've been to a supermarket, given that's the only place you can go other than the park. But in some authorities, they have been demanding that if a customer has been in the store, that the whole shift isolates, which is different by authority, but it's clearly something that is not backed up by evidence. And so what we're trying to do now is to sort of move to a situation where, obviously, those in close contact isolate if a customer comes ZYN, and that will help operations, particularly in New South Wales, where a large number of team members across the industry have been impacted by that impost, so to speak. But what we're trying to do is just make sure that everyone understands that supermarkets are a very safe place to be. That's helpful. And just final one for me. Just on inflation, there's obviously some pretty clear cost pressures coming through from your supply base across freight, packaging, soft commodities. Just interested in how you're thinking about the inflation outlook over the next 6 to 12 months. There seems to be a growing expectation out there that we're going to see some pretty widespread price increases coming through in calendar year 'twenty two, obviously, you're backed up by cost pressures. How are you thinking about that? And should we think that the base of inflation is more normal as we move into fiscal 2022 because obviously I think you brought prior promotions back towards the end of Q4 in the PCP. Yes. Thanks, Ben. I guess a couple of things. I think we did call out a couple of quarters ago that we thought deflation had maxed out. And we are seeing a number of different things out there in the marketplace. Clearly, meat is still elevated and particularly beef. We are seeing better prices in a number of other areas or lower prices, so to speak, or more supply in produce and so on after relatively good season compared to prior years. We are seeing sort of steady promotional intensity throughout or certainly the back end of FY 2021, which was up year on year because of reduced availability in the prior year with all that went on then. And we are beginning to see an increased number of suppliers approaching us for cost price increases in the grocery space, which is very aligned to either increased shipping costs, and we're aware of what's going on in the container space or to specific raw ingredients or commodities. So certainly on the package side, I think we'll see some inflation coming through. One thing to certainly watch out for is that the tobacco increase, which normally takes place in September and has been double digit for quite some time. That's not happening this year. And one of the things that has happened more recently is that tobacco as a percentage of our sales is reducing. And if there's no excise this year, then that could reduce inflation in the opposite direction. Thanks, Doug. Okay. Thanks. Our next question is from Grant Dalidari of Credit Suisse. Wondering whether you could comment on the performance of some of the renewal stores with a renewal group of stores overall and what your plans are in terms of number of renewals in the coming year versus FY 'twenty one? Okay. Thanks, Grant. We monitor all of our CapEx. I think as we said in the Strategy Day, we have A lot of focus on what investment or what return on investment we're getting from all of our CapEx that's been delivered and the return that we're getting on new stores and renewal is good. We've got a fair number of projects in train. I think we've got about 30 total projects across the group now that being impacted by the current construction delays in New South Wales and Victoria, where obviously, limited capacity on-site and so on. So We've got to accept that this year that there might be some delays. So it's difficult to be precise. But overall, we are looking at around 50 renewals in FY 2022. As we've said, the focus in supermarkets or the skew in focus in supermarkets is towards more local activity, both new stores and renewals. And then in liquor, the focus is very much on the rollout the black and white program, which again is performing very well. There are 1 or 2 circumstances where it's not performing so well. So areas where that we've called out before, areas where there's been tourists, CBDs, where we've done activity in those areas. As you'd expect, we're not quite getting the return not getting the return we would like, full stop. But we expect that as things normalize in 2022, they will come back. And there's a slightly different mix in the 50 this year, Grant. So in the year just gone, we did 65, but 36 of those were format Cs, which as you would appreciate, there tend to be a smaller renewal, which is faster to do. As we move into FY 'twenty two, we are looking to do more of the sort of format A and format fee renewals in that mix versus the format fees. Okay. And just secondly, I've sort of noticed on some of our work that your pricing performance relative to Woolworths seems to have improved through the half, well, certainly since April. Is that been something you deliberately you've been targeting? Or is it just a matter of sort of the consistent execution of the everyday low price strategies that you've had. So I guess just interest in that. And I wonder whether Woolworths run a lot of specials, particularly we've noticed every 2nd week, there's a lift in specials. I don't know whether you sort of noticed that impacting all volumes from the High Low program. Just interested in any comments around that and pricing generally? Yes. Thanks, Graeme. I think at the half year, we talked about pricing, and we said that we felt we were in a good space on the various price indices. We've, I think, sort of launched several 100 price reductions, down downs since then. Obviously, we've got a continuous program of how we want to improve value for customers, but the sort of biggest program is continues to be the own brand. And the fact is that own brand tends to be more permanently low price. And we believe we've got the best owned brand offer in the marketplace. And so that it's not just a case of the what is the price indices on like for like products, It's also the fact that the mix is different and therefore the price paid by customers is better too. And do you notice any impact from the high low, because they do up their specials every 2nd week? Have you noticed any volume impact from that? Look at a category level or a product level, there will certainly be some degree of impact, which is why there's so many promotions still in Australia. What we've said is that over time, we will reduce promotional intensity and focus more on everyday low price, and that'll be done in conjunction with the rollout of the own brand program, but it's still fair to say that if you take a Coca Cola 24 pack, most, the vast majority of the volume goes through when it's at 40% half or half price rather than full price. Okay. Yes, well, terrific set of results, but thanks for the opportunity. Thank you. Thanks, Rob. Our next question is from Tom Keirett of Berenjery. Please go ahead. Good morning. Just want to get a sense on that packaged inflation. Like how material could that be? I mean, what are the types of asks that the suppliers are looking call on the price rises. Welcome back, Tom. Good to be back, Steve. The levels of price increases, I'll talk about averages rather than the extremes. But according to the team, the levels are similar to with those we've seen in the past on average, but we're just seeing more of them. And it is very but it is very volatile by category and product depending on which country it comes from. Obviously, 90% of what we sell is Australian, but they rely on some of those products rely on either packaging from overseas or commodities from overseas in Australia, again, mostly Australian. But so it's an average of averages. I wouldn't I'm personally not getting excited by it all. And as I say, one of the biggest swings will be in tobacco, which isn't going to be there this year. So it will certainly increase, but I don't think it will get back to some of the higher numbers we've seen in the past. Yes. Okay. Interesting. And just the second one was just on the tobacco excise that you pointed out there. I noticed you mentioned that in the convenience business will have an impact. Just be interested, will it have a profit impact on the wider group across supermarkets and convenience. I know that people in the industry have kind of gained that with buying ahead of the excise and making stock profits. Is that something that we should think about as that exhaust kind of doesn't happen this year? Yes, I mean, it will certainly have an impact and certainly a bit more so in Express than in convenience sorry, in supermarkets, but it's certainly not as material for us as it would be for some of the other players in the market and really what we're trying to do is to make sure that the service in our biggest traders is good. So that's where we're focused the efforts for now. But It does seem that the biggest issue in tobacco is the fact that the social smoking at work has obviously come to a grinding halt. And it doesn't appear to be happening as much at home. And it will be interesting to see in 2022 whether any of that's restored or not or whether the cost of cigarettes and the health messaging and the staying at home as caused a step shift in the number of smokers in Australia. Yes. Great. Thanks very much. Our next question is from Michael Simotis of Jefferies. The first one from me, if I could just pick up on that point on cost of doing business again, please. So just thinking about 2.5% to 3% underlying inflation, plus some additional variable cost from whatever sales growth can be picked out, offset by smarter selling savings. Are you confident that you can maintain your CODB margin? Or are you going to have to continue to extract gross margin expansion to maintain profitability at the EBIT level with a fairly modest underlying sales growth. Well, I think the best thing we would say is we are still focused on both of the lines, GP and CODB, in terms of improvement. So from a GP perspective, there's substantial smarter selling initiatives underway that are focused on supply chain and loss to improve that. And then we also have our strategic sourcing initiatives on top of that, Which go to that line. So this is not a taking the eye off the ball on the GB by any stretch of the And then on the CODB, I think what I would say at the moment is the environment is quite uncertain because of COVID. We are cycling strong sales growth from last year, and you only have to look at the numbers that we've given you in the outlook statement for Sousa's of 1% year on year and 12% 2% year on year to just see how strong it was last year. But The other uncertainty that we have on top of what's going to happen with the sales situation, which is heavily driven by how much elevated demand we get because areas are in lockdown is then also the COVID costs. And As Stephen said, that has a high degree of uncertainty around it at the moment in terms of what we are required to do for each of the health departments in each of the states. And what we will be working to do is to optimize that the best we can and to continue to drive the smarter selling program, which will help to offset it. Okay. All right. Thank you. And then second question from me is on e commerce. Obviously, everyone's capacity constrained at the moment. I mean, a lot of the feedback suggests that delivery slot lead times are a lot further out for Coles than what they are for Woolworths. But to what extent do you think the amount of capacity you have Online is holding you back relative to the major competitor compared to what consumer demand is on an underlying basis. And maybe just a comment on what that sort of looks like now during intense COVID period versus the Q4, which was a bit cleaner. Thanks, Michael. We've throughout the whole 12 months, we continue to invest in capacity and where we think the gaps exist, we'll continue to do so. I'm not sure about the fact. I don't know where you're getting your facts from on how far ahead people are booked for. We do our own research on that and We're seeing something different, but it will differ store by store and day by day. We've still got home delivery in some areas can be in hard lockdown areas, home delivery, there can be a wait. In most cases, It's a much better situation on click and collect to the boot of car. We've seen a relatively stable mix throughout where it's still sixty-forty or around about sixty-forty throughout the year in terms of delivery and click and collect. And as I said before, about 8% on average has increased through the quarter as the lockdowns increase and also we're seeing New South Wales at the top of the table as you'd expect, well into double digit sales penetration. So we should all recognize that there will be a drop off at the end of all this and that what we're trying to build here is a long term sustainable business. Kohl's has been around for more than 100 years. I expect our online business to be around for more than 100 years, and we're near the start of it and the end. And there's a lot of focus on our end now going on to what range we put into Ocado and how we make that make sure that that's the best hand delivery service for anybody in Sydney and Melbourne. But we'll continue to put capacity in where there is demand. But these lockdowns create quite massive surges for everybody, and I wouldn't get too focused on individual competitors. I'd sort of be looking at the market overall, which is relative to the market overall. Coles has a very good offer. All right. Thank you. Thanks. Our next question comes from Craig Woolfard of MST Marquee. Please go ahead. Good morning, Stephen and Leah. Morning. Hi, Craig. Hi, how are you? I just wanted to ask a question around online and maybe around profitability. Firstly, I'd be interested in Any comments about how profitability trended in FY 'twenty one without the lockdowns? And What do lockdowns do for online profitability? There's obviously a lot more scale or volume, but does profitability improve? Yes, we're certainly seeing some scale benefits on a number of fronts. Clearly, the more demand in a street, the lower the cost per drop. We have got to the stage now where as we've moved to car parks. So we've got 500 click and collect operating in car parks now. Where those facilities exist. You have more of a dedicated operation than you would have done on the customer service desk in the past and clearly the busier they are, the more profitable it is. And then There's less traffic around as well, which is helpful. And then the other thing is that as the scale grows and obviously, we're at $2,000,000,000 now as the scale, which is bigger than some bricks and mortar competitors in the marketplace. As that scale grows, supplier income increases as well. So yes, as scale increases and during lockdowns, profitability has improved. It's not at the level of the SIP market overall, but it is improved year on year. Maybe it's a question for Leo. Like is that part of the cost inflation, the mix of sales towards online in fiscal 2021? Yes. I mean, it is definitely the case that online is a higher cost channel for us. And as we've sort of said in the past, We are on a journey at the moment to get to a place where we are ambivalent about the channel that the customer cheeses from a cost perspective, but we are still on that journey. So when I talked about that component of CODB, which is The variable cost of the additional sales, that is at a higher rate this year than it was last year because We are seeing a higher proportion of the sales come through in online. But I mean, I think Definitely, the lockdowns improve the profitability for online because of the scale benefits that we get And the fact that we can do higher drop rates with delivery because it's not as many cars on the road that the vans have to navigate. And as David said, you've just got really good capacity utilization at most of your sites. Stuart, thanks. Leah, just on the Slide 18 had that summary of the incremental CapEx, And you gave examples across those categories. Is it fair to say that the majority of the extra roughly $400,000,000 of CapEx Is allocated to those items. So there wasn't any other you've mentioned. Vitron is on track and Ocado, I assume, from What you'd originally published around the CapEx there is on track. So that $400,000,000 relates to these examples that you provided. Yes. The reason we pulled them out is because that is where the incremental CapEx is going. And I think you'll see from this that a lot of this is taking advantage of opportunities, which have become available to us in the last 12 to 24 months. So as a result of our trialing initiatives, which we now have more confidence around going to scale with it. It's about changing customer behaviors that we want to double down on and really make sure that we're taking advantage of those opportunities. Yes. I guess the thing that I'm wrestling with is just whether that CapEx, how much that fades beyond FY 'twenty two. Obviously, there's Vikram and Ocado. We'll taper off, but some of these initiatives, I'm sure there'll be other initiatives that drive omnichannel or digital investment going forward. Yes. And I think that's right. You start on the journey of these. We're obviously not going to roll out the whole of the Coles Locals or the whole of the black and white liquor land in 1 year. So they will be multiyear programs of work for us. It's why we indicated at the Strategy Day from an FY2023 CapEx perspective, we would expect it to be somewhere between what we've spend in FY 2021 and the FY 2022 number, sort of in that range, which, again, is reflective of the fact that these programs will continue on. Great. Thanks, Leo. Thanks, Steve. Thank you. Our next question is from Shaun Cousins of UBS. Please go ahead. Thanks. Good morning. Just a question maybe on current trading. Can you talk a little bit about your availability and in stock position? I'm just curious around how exposure site stores are being impacted with staff having to isolate and it may be a little trickier to get new staff into that store and even replenishes in there. Just what's your broader availability at present? Has it been impacted negatively by lockdowns? Yes. Good morning, Sean, and welcome back to you, too. It's a lot of movement, indeed. We've missed it at Strasserie Day. The yes, look, it's mixed, mix. And it's mixed for a number of reasons. One is the one I talked about a little bit earlier, which is, we're actually Coles is quite good at budgeting on a weekly basis. In fact, I'd say it's very good. But one of the and a lot of that's down to the smarter forecasting we've talked about and all the stuff that goes on. But the sort of variability we're seeing by hour and by day is very difficult to forecast at the moment and a lot of it is just based around the latest news release or the latest health department warning, which is difficult to plug into your systems. But there's a lot of those little short spiky things going on. What we've also got, as you've alluded to and I talked about a little bit earlier is, Most supermarket operators in New South Wales would have a large number of team members in isolation, not because supermarkets are unsafe, but because of health department rules around going into isolation and so on, if there's being a case and so on. So that's another thing that's impacting. And then obviously, consumers or customers in those postcodes. The number of customers isolating in New South Wales at the moment is enormous in various shapes and sizes. And then we've got the supply chain side of things. We recently had to close our Cheffresh operation, which was formerly JUUL, which is in New South Wales. And that was out for 2 weeks. It's back on track now and getting back up to speed, but that's also happening in our supply base. And again, everyone's operating segregated bubbles, but 1 person on a bubble and the shifts out and then that compromises the facility. So when you add all of those various things, which is consumer demand changing, customers and team members in isolation, suppliers down and out for periods at a time. It's very difficult to guarantee availability. What I would say is that overall, the availability is in a good space and it's in a much better space than when we first entered lockdown. So always can be improved. But when I look at where our customer metrics are at the moment, they're in a very good space. And I think during crisis, customers give you a bit of credit for not having everything, but having something, and that's what the team has continued to focus on. Structure. And maybe just the second point, and dare I say, this is a question I might have liked to ask at the Strategy Day. But just sustainability is a key theme from Coles. I'm just curious about how you see this as a point of difference in that I don't think it's a thing that Woolworths aren't pursuing either. Is it something where you see it as a point of difference that will drive incremental sales from competitors? Or is it going to be a little bit like being competitive on price where both Woolworths and Coles are going to be there or thereabouts on price. And it's just each of them have their own sustainability attributes, but it's not going to be one where one supermarket is sustainable and the other is not. I'm just curious how you see this. Will it drive incremental sales? Or is it just going something like price where you're generally have to be in the game, the sustainability like you have to be in the game of price competition, please. Yes, it's a great question. Thanks, Sean. We said all along, we want to be the most sustainable supermarket and It's not because it sounded like a good thing to do. It's because at one level, for all AFX companies, certainly in the top 100, sustainability is going to be a license to operate and we're increasingly seeing that investment is following people who are sustainable and increasingly there's concerns around companies that are not doing sustainable things and who's funding them. And so we're seeing more questions from shareholders. We're seeing more questions from customers and seeing more questions from our team members on sustainability. So There's one level, which is it's a license to operate. But if you stand back from the market, and again, it's a bit like offline, and I look at the food. I don't look at the food market as one competitor. I look at the food market as a market that's got thousands and thousands of competitors across the nation and a very diverse and diversifying customer base that's changing faster than ever before. And so all our data says that customers are becoming more interested in sustainability and that they will for their feet if they see someone doing something better that they like. And we think we've got a plan that will differentiators over time. We've done some things historically, which differentiate us over time. We believe we've got the most sustainable meat supply chain in terms of animal husbandry, for example, and we'll continue to promote those things and we'll continue to do new things. But when you stand back from the market overall, we'll be doing things that a lot of Those thousands of competitors that we compete with won't be able to do because a lot of them require significant investment and those are some of the investments that we're making now either on our own or with our partners. So the VITRAN is a good example where we're partnering now with the landlords to put the solar panels on the roofs and everything else. We've had our 1st solar panel farms come on stream, and we're well on the way to achieving our renewable targets. So these things are expensive, but the return on them is getting better all the time, but we think we will be differentiated in sustainability and not just from an environmental point of view, but who we partner with and the way we behave in the community. Fantastic. Thank you, Steve. Thanks. Our next question is from Thor Kimber of E&P. Just a question. Obviously, the Ocado infrastructure is still a little while away. But I mean, they are also offering a number of other solutions, in particular around click and collect in front of I guess front of store or front of online store solutions. Are they things that you are also using in this interim period before the DCs are built? Or are you waiting to do that as sort of step 1 and then these other initiatives might come after that? Sorry, Phil. It was a little bit muffled. Was the question will click and collect be part of the Ocado offering? No, sorry. Hopefully, this is a bit clearer. Just Ocado has a number of different offers apart from, as you know, the big CFCs. So I was just wondering if In the interim, before your big CFCs are operational, will you be using some of the products around click and collect or in terms of the front end online system? Or are you waiting for the CFCs to be built and then maybe those sorts of initiatives from Ocado will be utilized. Yes. The focus is on building the CFCs. What we're planning to do this year is to launch 1 app. So for the first time in Kohl's history, we will have effectively what's on our website today and what's on another website, which is our Coles online website. They'll come together for the first time in an app before Christmas and then next year that will happen on the web as well and that will unite to lots of 2,000,000 plus customers for the first time, which will improve our sales. What we are doing with Ocado is we're looking at what else they're doing around the world, and they're making a lot of progress in the UK, in particular, on things like Zoom, which is the convenience Ocado offer. And obviously, they're making a lot of progress on robotics as well. So we're staying close to what they're doing with everybody around the world. And I think their aspiration is very much to stay as the leader in online automation in the same way that You know, Vitron would regard themselves as the leader in case pick DC automation. So I think that's certainly the ongoing conversation with them. Thanks. And just a housekeeping one on market share slide. As you know, your quarters, some of them are 14 weeks, some are 13, and the dates don't exactly line up with the ABS. Have you sort of adjusted it for that? I couldn't quite get the numbers to agree. I get the same shape. I just get a slightly different number. So I just wanted to check whether you're sort of lining your weekly sales up with the ABS data to account for the fact that your quarters are slightly different to their timing. Yes. We make sure that we are aligning like with like with like, if that's what you're saying. Obviously, it doesn't make much difference whether it's a 12, 13 or 14 week quarter from a share point of view, but we understand what periods are which and China line as best we can. Okay, cool. Thank you. Okay, thanks. Our next question is from Scott Ryall of Raimo Equity Research. Stephen, my questions are extensions on a couple that have been asked already. In the e commerce side, I'll just confirm, you mentioned the sixty-forty split. The 60% is I just want to clarify whether that's click and collect or delivery, please? Sixty it's broadly sixty-forty home delivery. 60% is home delivery? Yes. Okay, great. And then just in terms of this is a wish list. You obviously, you've invested as fast as you Possibly could. But as and I certainly haven't noticed any difference in your availability on online ordering relative to your big competitor. But what would you have liked to have had over the last 12 months? If you could have satisfied more e commerce demand. Where would it have been, please? I don't like to have had Ocado. Yes. Yes. Okay. So on delivery, you would have liked That is the opposite. So Yes. Ocado is the best in the world at home delivery. And We ordered at a time when they were receiving multiple orders. And unfortunately, I think we signed the contract for Ricardo in March 2019 from memory. And Unfortunately, we ended up being customer number 7 in the queue. And For various reasons, it's just taken this long to get the buildings on the ground. But we're nearer the end of bit now than the beginning, and it's moved from being a signature on a piece of paper into 2 great looking buildings in Sydney and Melbourne, and we're looking forward to getting them and thinking about what the extended range in those CFCs, it's going to be. Okay, great. And then just Scott, just before you go on, it's great to hear that you're experiencing good levels of availability because our experience is Oh, no, no, no. I didn't say good. Recent thoughts is comparable. Well, our experience in terms of our data would say that you are correct. Yes. No, I think it's pretty tough to get an online order at the moment, and I don't look too far from Michael. So it's Yes. Anyway, but in terms of Liam, maybe just while you've got the floor, the CapEx question that a few people have asked, can you just confirm, I don't want to number so much as you've given some helpful numbers in terms of '22 CapEx for both Vitron and Ocado. Can you just confirm though? You mentioned the peak year So Vitron, clearly, because you start opening facilities. But how much do these ones expect to go down? Just those projects themselves in 'twenty three, Is it a meaningful step down relative to what you've got in 'twenty two for those projects, please? Yes. So on VITRON, I mentioned In my speaking notes to the presentation that our expected spend is up to the €950,000,000 At the end of this year, we will have spent around $690,000,000 of that $950,000,000 So if you took what's left, You kind of want to spread that out probably across 2 years intensively and a little bit less in the 3rd year. So You'll see that actually what is left is probably even, I think, less than what we're spending this year. So in terms of that V Tron profile. This year is definitely the peak. Yes. On the Ocado And then first Ocado, yes. Yes. On the Ocado, obviously, this is a far less capital intensive project for us. So it doesn't have the peaks and troughs from that sort of materiality perspective that we would see from V Tron. And so I think there's a small uptick next year, but it's not it's nowhere near the sort of materiality that we would be talking about with Natron. So you can sort of more or less, I think, assume that that sort of is more or less sort of consistent year to year over the next couple. Okay. Very helpful. Thank you. That's all I had. Thank you. There are no further questions at this time. I'd like to hand the call back to Mr. Kane for closing comments. Thank you. Thanks for the questions, everyone, and no doubt you'll be in contact with the IR team later in the day. As I said before, I'm optimistic about what Australia will look like in the second half and hopefully a much greater return to normality. Obviously, our concern at the moment is just making sure that we remain safe and that our team members and customers remain safe and that we continue to deliver on year 3 of our strategy. So that's really all I wanted to say today. And thank you for your time. Take care, everyone.