Metcash Limited (MG9.F) Earnings Call Transcript

Good morning, ladies and gentlemen. I think we're going to get going. I expect we'll have a couple of people joining us late, so that's no problem. Just before I get started, just to let everybody know that we are recording today's session. So when it gets to Q&A time, if we can just ask you to use the microphone please, so that's the recording gets all the audio. And of course, I'd like to begin with an acknowledgment of country. I want to acknowledge and pay our respects to the Ghana people, the Traditional Custodians of the land on which we meet today, and pay my respects to Elders past, present and emerging. So my name is Doug Jones, I'm the group CEO. I've met many of you. For those that I haven't, I look forward to doing so in person. We've got a lot to get through today and over the course of tomorrow, and I'm really excited to be with you. Thank you for getting up early this morning and for traveling. I hope that your travel plans were not disrupted and not too difficult. As you can see on the slides in front of you, you'll hear from each of the pillar CEOs. You'll hear from me in terms of an overview and an introduction. And I'll speak about Horizon in a little bit more detail than we have in the past. Alistair will talk about our financial framework, and then I'll wrap it up towards the end of the day. We're going to do our best to wrap up at 5:00. The request is that we get through our slides in each section before we do questions. And certainly, because we're together tonight and tomorrow, there will be plenty of opportunity if we don't get to any of your questions. But as I said, I'm really looking forward to the engagements and thank you for being with us. So I've been in Australia for 9 months, and I've been in this role for 8 and a bit months. And through those 8 months, I've learned a few important things. I know what Ambo means. I know what server means, I know what it is to have a convo with your relo. And I know that if you put mates at the start of the sentence, it's a bad thing. And if you put it at the end of the sentence, then that's probably okay. What I've also gotten to learn about is the strength of the independent network in Australia. And it is quite remarkable to me the impact that the independent network, the family businesses, large and small, have on the communities that they serve and their contribution to the economy and to society in general. And it's relevant because when we think about our purpose, we are founded on our purpose of championing successful independents. And it's so much more than just something that we write on the bottom of our business cards and slides and put on the walls in our offices. It's very much at the core of our strategy. We are powered by our purpose, but our strategy is fueled by the relationships and the networks that we have in those independent businesses. We think it is a unique competitive advantage, financially, culturally and strategically. And I'll talk a little bit about that as we go through. We really do believe that local matters both for the communities that they serve, but also for the multigenerational businesses that operate the stores in our network. I'm not going to introduce everyone in our team. Certainly, you'll be familiar with the group's CEOs, with the pillar CEOs and our Chief Financial Officer. I want to welcome Simon Burton, who joined us a couple of months ago as Chief Strategy and Transformation Officer; Julie Hutton, who's not with us today, was appointed to the GLT and her remit expanded to include risk and compliance. And as of a week ago, Marij Kouwenhoven, who joined us as Chief Technology Officer. I'm sure you'll agree that the diversity of experience, capability and dare I say, gender will serve us well as we move forward. Sorry. A little mismatch between my computer and my slides. Thinking about the business, what I thought I would try and do today is spend less time providing an update, although I will do that to a degree, but I'll leave much of that to the CEOs, and I'll try and share some of my views and opinions on each one of our businesses and our group. So certainly, as we look to the Food business, there's no doubt that, to quote Rob Murray, "We're well on the journey from being well below good to good and onwards to great." And I think it's true that we're now in the position where we're working hard towards being a great business. We're fueled by the unique and differentiated proposition that our retailers are able to bring to life. And we're positioned as credible alternatives for our shoppers to the majors who have uniquely large market shares but fundamentally different operating models. In Hardware, we're a distant #2 to the incumbent DIY leader, but we have nearly twice as many stores, and we're well positioned to continue to fuel the growth agenda that we have. We have a leadership position in supporting small and medium builders, and we're fast growing in DIY. And that has allowed that business to move away from the reliance purely on trade and to be, dare I say, somewhat less exposed to the cyclical nature of the hardware market. The market leader has a big box strategy, and as I said, our clear leaders in DIY. And once again, like Food, we have a different operating model and offer a unique proposition. In Total Tools, we're the #1 in professional tools. And as Paul says, we aim to keep that position and fortify our leadership position. We have strong and credible competitors that are looking to take market share from us, and we take them seriously and plan to respond appropriately. We're jealous and proud of our #1 position, and we're going to maintain it. Total Tools is a vertically integrated business that has unique value drivers, and we'll talk about that in a few minutes. Liquor really is a juggernaut. As you've seen in the numbers that we shared today, continues to deliver incredible growth. As Chris said in the June update, we've added over $1 billion to the top line of that business in the last 24 months. And once again, it's a business that has made more defensive and less exposed to the cyclical nature of that sector by serving independent retail businesses, both in IBA and contract as well as on-premise. And as you've seen in the reopening of the on-premise trade over the last few months, the ALM business has benefited enormously. Our businesses are tied together by our shared and very important purpose that I've already spoken about. But they also share common operating models, which I'll talk about in some detail. They are not identical, but they are clear areas of overlap, which allow us to be better by being together. Metcash is not just a portfolio of investments. It is a business tied together by a common purpose and strategy with unique operating models that reinforce one another. By being part of Metcash, the independent pillars in our stable have the opportunity to access capital capabilities, resources and support that otherwise wouldn't be available to them at that cost, speed or level of capability. We intend to continue to grow. And if you take nothing away from my presentation today, I want you to know that we are a growth company and have clear plans to continue to grow as we have and to accelerate it, both organically through consolidation of fragmented markets and inorganically. I want to point out again that we have a portfolio of businesses that in Food and Liquor are generally, through the cycle, more defensive; in Hardware that are more exposed to the cyclical nature of those markets; and together, we think we provide a compelling investment proposition. There's no doubt that the success that has been delivered over the last few years is in large part, fueled by the MFuture programs. The core focus of MFuture is to improve the competitiveness and relevance of our retail networks. And we believe that the numbers that we've shared over the last few years demonstrates that by any metric, those initiatives are being effective. Our retailer financial health has never been as good as it is today. Our shopper -- our retailer confidence has never been as high as it is today. Our shoppers have recognized the unique value proposition that we offer across our formats. They've liked what they've seen, and they've stayed and dare I say, they've changed their habits. So to recap, we have healthy businesses with clear, effective strategies that are working. And the results speak for themselves. We feel we're well positioned to navigate higher inflation and higher degrees of uncertainty in the medium term. And one of the core elements of that confidence comes from the confidence that is being exhibited by our retailer partners. And there are thousands of them who have their own balance sheets and are looking to redeploy their own capital back into their businesses. We see that every day in all parts of our business. And of course, by the very supportive supplier relationships that we have. Suppliers have a choice as to how they get their products to market, particularly in the independent space. We recognize and respect that choice, and we know that we have to work harder to understand and deliver on that strategic imperatives. As I've said, we have an incredibly large network, much larger than it sometimes understood. I'm not going to go through all the numbers. But when you look at more than 10 million transactions with Australians and New Zealanders every week, you look at more than 4,000 supply partners and nearly 5,500 banned retail stores across the 3 sectors, that gives you a sense of the breadth. Also important to remember is the diversity of our portfolio. We have unique advantages that none of our competitors can match. We have over 12,000 on-premise ALM customers. And as Chris will tell you, we serve more than 90% of the independent on-premise liquor customers across this country and New Zealand. We have -- the network has significant impact in society, through employment, investment and community support throughout the country. I want to talk a little bit about what we call the Metcash flywheel. This is the way that we encapsulate what we believe are our unique competitive advantages. A flywheel, by definition, is that thing that when it spins faster, benefits all participants. At the very core of our flywheel are our logistics and wholesale capabilities. Those are not just sheds and trucks. They extend an end-to-end supply chain, from ranging, planning, engagement with suppliers, through sourcing, replenishment, storing, moving, managing the inventory, taking orders, picking orders and fulfilling to our customers. We are uniquely positioned in the Australian market to serve the independent network and have a significant competitive advantage in the space. As you've seen, we plan to continue to invest, to extend and protect that competitive advantage. Around that core are our capabilities to develop and the brands that we already have, the brands and formats that shoppers love because they meet their needs, both functional and emotional, and that independent businesses across Australia want to own and operate because they delivered to them opportunities for sustainable, family wealth generation across generations. Included in this layer are elements of e-commerce development, loyalty, the DSA and Sapphire programs and Chris' own liquor program, which is aptly named Ruby Renno's. And of course, wrapping all of that up, providing additional services beyond the nice-to-have for our retailers that support them in being competitive with the joined-up giants of this market. That is the third layer. And those services allow them to benefit from the scale that we bring together as Metcash and as a collective network. We are a dual-sided marketplace. We serve, as I've said, on the supply side, suppliers who have a choice as to how to take their products to market. When you become irrelevant to a supplier, they don't tell you, they just stop investing with you. The fact that much of the price competitiveness and improved relevance of our retail networks has been underpinned and funded by our suppliers tells you that they see value in that. But the independent network is supportive of their strategies and imperatives, and they're continuing to invest. On the demand side, a modern wholesaler goes way beyond moving boxes and delivering in full and on time. Modern wholesale is also about generating and capturing demand for our consumers. The ultimate pull-through is sales off the shelf or online, and we play a key role in those areas. As I've said, these comprise our key competitive advantages. To bring to life our flywheel, I've listed some of the initiatives here. I don't plan to go through all of them, and each one of the CEOs will touch on the same model. It helps us practically to organize the way that we invest, to ensure that the things that we're doing are focused on our core capabilities and competitive advantages and make sure that we don't do things for the sake of doing them that are not serving our target operating model and flywheel. It's one thing to have clarity around the value drivers and to have a strong purpose and underpinning strategy. It's completely another to understand the way that those manifest and drive value. I would categorize as probably the most common question and area that this group of people seek to understand is how does external and internal forces act on our business. And we've spent an enormous amount of time clarifying and making sure that we understand why, how and to what degree those value drivers impact each of the businesses. There are only so many of them at a material level. Volume is the most important and has the highest impact. We are, at heart and our core, as I've just described, a wholesaler. And remember, that doesn't just mean the physical -- the movement of physical goods, it also means providing access to our suppliers for ranges that we don't keep in our warehouse through 2P and 3P capabilities, through the auto charge-through and charge-through methodologies as well as our nascent online 3P capability. Price, of course, is a driver. But because we earn some of our wholesale income as a cents per carton moved, when price goes up, not all of that translates into additional value created. In each of the businesses, there's a slightly different mix. Product mix is fairly self-explanatory, and I won't spend too much time on it. But I have touched on customer mix. And certainly, in the case of liquor and hardware, the diversity of customers that we serve, the markets that we serve allows us to be more defensive in terms of the lower risk of our earnings through less exposure to a more concentrated area of the market. And we see that as being very important. We earn different amounts of value through serving different types of customers. The last couple I want to touch on are owned and exclusive brands, particularly in the areas of Food and Liquor where we have the opportunity to deliver unique value for both our retailers and our shoppers, and in Total Tools that have a very strong owned and exclusive brand program and drive real value for our retailers and shoppers. Many of their brands are considered at parity with the -- with some of the national brands in the areas that they operate in. And then finally, our retail mix. We've gone from less than 40 stores are owned or co-owned with JV partners over the 3 years ago -- over the last 3 years, more than 150 stores across IHG and Total Tools. This allows access to the retail elements of the value chain. It also allows us to innovate, test, learn and make change significantly faster. And finally, it allows us to provide an element of protection. As our independent retailers seek to exit and to sell their stores, we're able, in those 2 businesses, to participate. What's really interesting in Total Tools is that more and more we're seeing, as we find opportunities to put new stores down, that we may start that process thinking that it's going to have to be a company or a JV store. And ultimately, we find -- invariably, we find an independent that is looking to take control and ownership of that store, and we really like that. That's fantastic. We have growth mechanisms through company store, JV stores and independent stores. And if I haven't said it already this morning, I'll remind you that we have thousands of independent businesses whose imperatives are aligned to us and whose balance sheets are also behind our urgent strategic imperatives. So that then brings us to the strategy. All of this comes together. We have a clear aspiration to support both our retailer and their shopper by delivering unique value with a differentiated model founded on local ownership and operation. And we should never forget our suppliers because we serve both sides of the market. Making sure we stay relevant and effective for our supplier base will continue to fuel the growth that we've seen and plan to enjoy in the future. In terms of choices of where to play, there shouldn't be a surprise. We want to support independent businesses, and we do that through a combination of banner member and franchise businesses. We're in Australia and New Zealand, in Liquor and Food, Liquor and Hardware. We're much more than just a distributor, and we operate in multichannels. We went through providing growth and value for the shopper, our customer and our suppliers, as I've said, and that is underpinned by the key net cash enablers that I've spoken about which are wrapped up within our flywheel. And of course, made stronger through the relationships that we have with the various parts of our business and across pillar. As we then look at the pillar strategies, and I'll leave the detail to the CEOs, I'd like to point out that we have some very clear aspirations. Food, as they move from good to truly great, are leveraging the confidence that we have from our retailer network, our supplier support base as well as shoppers. And we are looking to gain market share by opening new stores and increasing our footprint. You would have noted over the last 24 months that our like-for-like sales growth has been very strong. It hasn't always translated into total growth because we haven't been opening space. Scott will tell you that as we start to move from shedding stores from the network into growing stores, we're looking to accelerate that. We're not seeing material shifts to value that one might have expected, if you read the press in Australia every day. We believe that we offer, in Food, differentiated value by being a house of brands and by offering a range of products that our customers use to make their own budget management decisions. Anecdotally, we hear often that shoppers are delighted to find this brand that they hadn't seen for a couple of years in the majors on our shelves. It serves our supply chain very well, I spoke about it at the June results presentation, that we have a wider diversity of suppliers. So when one of them isn't able to supply for whatever reason, we have another that is able to step in and make sure that our shoppers' needs are match and our retailers' shelves remain full. We've recommitted to the price match program last week. We launched the above-the-line campaign. And this fundamentally means that shoppers can shop the IGA network with a great deal of confidence knowing that they'll get everything that a local stands for and they won't pay more. Scott will talk about this in some more detail. I'm really excited because it's significant that this campaign and program has now been endorsed as mandatory by all states and the National Board. We've seen good growth in online. And our loyalty platform participation from retailers has grown strongly in the last few months. Fundamentally, and I'll talk about it when we talk about online, we operate marketplaces for our retailers to participate in to engage with and sell to their shoppers. We have hundreds of participating stores now. It also allows for our suppliers to invest through those self-same platforms in developing richer and more relevant relationships with their shoppers. In Hardware, the strategy can be summed up as an accelerated strategy. We are growing faster than most of our competitors in the DIY space, and we have a leadership position in serving the small and medium trade builder. Through the IHG and Total Tools combination of those JV and company-owned stores and independent member and franchise stores, we have significant roads towards continued growth -- runway towards continued growth. We also, in Hardware, have the opportunity to enter adjacent categories. Annette will talk about it in a whole of our strategy, and Paul will mention the success that they've had in that Garden category. They've taken a category that 3 years ago was basically not present in their business, and it is, today, over $100 million with aspirations to continue to grow at that rate and faster. The Total Tools and IHG platforms for doing that, entering into new product categories are really exciting and something that will continue to fuel our growth well into the future. In terms of the housing market, you would have seen in the deck, and Annette will talk about the outlook for the future. The forecast that we've included shows that housing starts will normalize over the next 2 to 3 years. We believe that, that level of normal or pre-COVID level will continue to support our continued growth, both organic and through the consolidation of that fragmented market, which has served us so well. But at the same time, the elevated level of renovation activity will also support our growth aspirations. Liquor really is a juggernaut. As I've said, the diversity of channel and customer groups has served us so well, as has the resilience of our supply chain and the agility of it. And fundamentally, that would not have been possible had Food and Liquor not share the supply chain. In the mega DCs, we house both food and liquor. What it's allowed that, together with our customer mix, enlarge the ALM business to stay open and operating at full speed through the various lockdowns. Some of our competitors had to wind down parts of their operation. And what we saw is that as on-premise started to open up in the first quarter of this calendar year, they were slow to get going, and we saw a significant match on them. All 3 pillars are resilient and robust in their supply chains. And as I've spoken about, they were served well by the supply chains that we've built. I sometimes get asked whether we should spend more money on automation, particularly in Food and Liquor. And my response is that we operate a supply chain that is fundamentally different to that, that is operated by a joined up retail business, where the supply chain essentially sets the beat -- the cadence and beat of the entire business and pushes product out. We serve independent retailers, and we serve largely at their pleasure. The investment, if we made it, would be much harder to generate the appropriate levels of returns. And we would fundamentally diminish our agility and capability to win market share when supply is disrupted. All of you would have seen Woolworths disclosing their outbound supply chain service levels, and I know Scott will talk about this. But it just excites me so much, I'm going to steal his thunder. But we, of course, as all their competitors would have done, we overlaid our own service levels against them. And much to our surprise, we were significantly better than them. Scott and his merch executives were very pleased to show that at the National Retail Council as our retailers complained about orders that didn't arrive and seeing Woolworths trucks traveling down the road. And that is fundamentally because our supply chain is more resilient, partly for the reasons I've explained, we have more suppliers, partly because our lower levels of automation mean, we're more flexible and partly because our retailers are able to source locally themselves. In terms of the trading update, I'll speak about that towards the end of the day. But certainly, the continued momentum that you're seeing in those numbers is really pleasing. And while Hardware and Liquor numbers were significantly higher than Foods, and we have seen a slight slowing in Food, I want to point out that, that was on the back of cycling what were extended nationwide and prolonged lockdowns. And we're now coming to the end of it. And I cannot tell you how excited I am not to have to be talking about hurdling lockdowns. And so I think by November, we'll be at that point. But we haven't seen the same level of slowdown in the areas that aren't cycling those lockdowns, which gives us great confidence. Fundamentally, this momentum has been fueled at its core by shopper support. They have continued to shop in our stores, and we've held on to or grown our volumes. In terms of our growth initiatives, these are aligned to our strategy and our flywheel operating model. And they serve and has our strategic imperatives very well. Loyalty and data of -- sorry, loyalty and e-commerce are linked. I'll speak about that in a moment as is Data and Horizon. But I want to just take a moment to talk about network optimization and development. We will more and more present ourselves as a joined up Metcash when engaging with landlords and developers. We see ourselves as presenting unique opportunities for co-investment. And we believe we should have a seat at the table when it comes to new developments, whether it's JV or owned stores or independent stores. We've continued to invest, and we'll continue to invest in our core competitive advantage that is our DC and logistics network. And you've seen some of that in the June results, and you'll get an update on that today from the CEOs. When I think about loyalty and e-commerce, for me, it's so much more than the transactionals that we generate and host with our customers, between our customers and their shoppers. These are the building blocks of an ecosystem for enhanced relationship building using modern digital tools with our shoppers and a platform for which our suppliers can invest for the same improved relationship. It's no secret that FMCG companies, in particular, are spending more and more of their money in digital engagement and less and less of it in traditional print media. And we need to make sure that we are relevant and supportive in these areas. And what I want to tell you is that we're not starting from nothing. We have areas of world-class excellence within our business. The Total Tools example that I will speak about, they're inside a program, 90% of their sales are insider members. That means they know those customers and they have a personal relationship with them. IHG has a unique suite of trade technology tools that Annette will talk about later today that are driving real value through technology and providing tools for our business customers to run better businesses and to spend more time on site and less time doing administration or in our stores. In Food, we now have over 300 stores on our loyalty program and more than 200 on our e-commerce program. And we continue to make strong strides every week. The bigger the participation, the better for everybody. As we think about leveraging data, it's so much more than just customer names, addresses and phone numbers. This is about bringing together the immense amount of data that we have across our business, both from the loyalty and e-commerce programs that I've just spoken about, but also with the thousands of independent businesses across Australia. As you can imagine, we're a B2B company, and we know everything about those customers. And so if you think that we don't have a customer management or customer loyalty program, we have the biggest B2B customer loyalty program in the country through those relationships. We have a way to go in terms of leveraging and driving value, and we intend to do so urgently. Horizon is a fundamental underpin for our data efforts. We are not effective in utilizing, provisioning, analyzing and driving value through our various data initiatives across the company, and we're addressing that. We've appointed an Executive GM of Data. We're about to point an EGM of e-commerce. And as I should have mentioned earlier, we've appointed an Executive General Manager of Supply Chain as well, who actually starts today, and I'm very excited about that. Of course, we're very focused on cybersecurity and data security. What we've all read about in the last few weeks is very sobering, and we take that responsibility incredibly seriously. I'll provide a few more details on Horizon. Suffice to say for now, the objectives of Horizon remain. The core objectives, which are resolved in multiple ERP issues and the fact that those are both complex, bespoke and end of life. The opportunity to simplify our business for lower cost and ease both for our people, for our suppliers and our customer, and to build a technology backbone from which we can grow as a modern wholesaler, remain the core objectives. Stage 1 status, we've launched Blue Yonder planning and replenishment in Food and -- Food and Liquor. And you'll remember in June, I spoke about the decision to bring that forward from next year into this so that we can bet it down and get into value creation mode faster. We recognize that the greatest opportunity and also the greatest risk remains within Food and Liquor. And so our focus on the deployment and launch phase will be in those 2 businesses. And we will delay the deployment of Hardware so that we can more appropriately manage risk and remain within our committed spend parameters. Hardware remains within scope of Phase 1, and we're committed to the D365 platform. We're reassessing the path to get there. Following Stage 1, we no longer talk about Stage 2. We will reembed the capability to deliver the value realization elements that will be brought to life through the installation of the D365 platform back into the businesses. That means whenever you will be pleased to know that we will recognize significantly less costs below the line as significant items, that we will be doing the programs in smaller chunks and that we will put back into the hands of our businesses, the opportunity to prioritize and deliver on those value opportunities. We remain very focused on cost, schedule and budget management. I want to talk briefly about reorganizing for growth. As we think about creating a net cash for the future, we have 2 core principles that we follow and the order is important. Firstly, to make sure that our pillars remain high performing and as close to their full potential as they can possibly be. We are a low-margin business, and we cannot afford slip-ups in any of our pillars. Secondly, to enable Metcash's strategy and growth initiatives. We have multiple areas of duplication, and we're addressing those across the business. Traditionally, we've been what you would call a very federated model. And I don't want you to take that as signaling that we're moving to a centralized model. What I want you to know is that we are looking to accelerate the growth ambitions of our pillars by investing once and leveraging across the businesses. I have lots of experience in getting this wrong, you can be sure of that, and of getting it right as well. And I know that the most important thing that we can do is to protect the operating agility of our pillars and to make sure that we meet the challenge of delivering for them services and support that are lower cost, better quality and faster than they would be able to achieve if they were on their own. That is the standard we set. When we say Metcash first, we talk about living those 2 principles. For guidance, this will be cost neutral. Other than ahead here or there, we won't invest in ahead of the curve, and this is not a cost-out program. As we've said a few times, the access to skills to help drive our business is a real challenge, and certainly, this will address that. We want to continue to be self-funded, and we will use a number of different models from shared services, centers of excellence, specialist corporate functions and business partner models. We will not fall into the big dump company trap of one-size-fits-all. As we talk about capital management, and I'll be brief because Alistair has got some details here, I would like to make sure that everyone in the room has a clear understanding of how I think about capital. We have significant growth opportunity, and we only have so much capital. We assess the opportunities before us with an eye to the sectors, the size of the prize, the relative risk, the delivery risk, the budget and schedule risk. We are focused on maximizing long-term shareholder value, and we manage at a strategic level first and with an eye to absolute total shareholder return. We have different hurdle rates for different types of investments, and that's not unique. That's healthy for any company of our size. The capital management model guides how we apply cash through the business. And you can see it on the right-hand side of the slide as we generate and utilize cash for stay in business for strategic growth and then for inorganic growth. We have a clear and repeatable process to manage and measure the results of our investments. Looking in some detail in the 3 core elements of capital management. Firstly, working capital. And if you'll indulge me, I want to spend a couple of minutes here. We are comprised of 3 pillars, 4 different businesses. Each of them have different working capital model cycles. First thing I'll tell you is that inventory is fully funded across all of our pillars. That means that we sell our stock -- sorry, that our accounts payable days are higher than our stock holdings. Because we sell to businesses, we sell on credit, and that additional AR balance takes us into the positive working capital cycle. But we are fully funded at an inventory level. Each of the pillars has a slightly different shape. And as we grow the retail part of our business, in hardware, you can imagine that we hold on to the inventory for longer. And so that has an average impact on our net working capital. Other things that impact our working capital are the seasonal -- the annual seasonal cycle, for obvious reasons, as well as the opportunity to take strategic positions, like any healthy wholesaler should do. We do. And the difference between a healthy and unhealthy wholesalers make all their money out of taking inventory positions. Healthy wholesalers put themselves in the right position, their customers in the right position as inflation spikes or as there are shortages in the market, so that we can supply the right products in sufficient quantities at the right cost. And of course, the opportunities that are presented by new product launches and shortages in the market. Finally, as we look to pay our small and medium suppliers, that does have a small impact on our payables days. Capital expenditure, I've spoken about. We invest on the basis of our variable hurdle rates. We have a clear and disciplined process. And Alistair will talk to you in more detail about that. From a funding perspective, which Alistair will also cover, we have a clear balance sheet, income statement or cash flow process to guide our guardrails, and we pay close attention to our funding metrics as well as, of course, the covenants with our funders. As we look to one of our core values, which is creating a sustainable future, we've made real progress in some important areas. We think about our impact in 3 areas: on the planet, on our people and in the communities. We've a long history in supporting local communities, and we're very proud of that. Our focus has increased significantly in 2020 on increasing the profile of sustainability within our organization. I chair an ESG counsel across the group, and at the bottom of the slide, you can see that our Board has indicated that we will be establishing a Sustainability and Risk Committee before the end of this financial year. We've got targets and commitments around emissions as well as the way that we report. And our ESG credentials have materially improved. Looking forward, we remain focused in the areas that I shared with you in June of this year. We're focused on the science-based targets, on renewables targets as well as reporting across the myriad of reporting standards and as the line will continue to evolve. Our labor standards within the extended supply chain will be reported at the end of this year in our updated modern slavery statement as well as, of course, supporting our independent retailers to forward their own ESG agendas by helping them with programs that allow them to manage and report in the key areas. As I think about the external environment, and I'm not an economist, but I do think about -- as we went into COVID, it was kind of a dip in sentiment and confidence, and we all lived through that, there's a great deal of uncertainty. Quite quickly, we realized, as a society and certainly in Metcash, that we could manage relatively well through that. Towards the end of 2021, there was around the world, a great deal of optimism, which I guess was dashed and, in the end, just postponed by the emergence of Omicron. And at the start of 2022, as I was taking the rounds in this role, the optimism was palpable. And then, of course, inflation and associated rising interest rates came along. And when I look at the numbers, the facts, and it's important to stay focused on the facts, spending remains elevated. It has started to go sideways, but at those higher levels. Confidence remains low, and you get this kind of crocodile jaw effect. My own personal reflection coming from where I've come from with incredibly high unemployment is that while Australia's unbelievable low unemployment rate does make it hard to find people to support and operate our businesses. For us, in the retail sector, it means that our shoppers fundamentally and practically all have full-time jobs. So for me, that's quite unique. And I have to remind the team that, that's actually something that should drive our optimism and should fuel our belief in our growth path forward. From when I arrived in December last year, to April, over 200,000 more Australians got full-time jobs, and that trend has continued. And that is a very healthy thing. So as I wrap up, we have ambitious plans. We believe we have the strategies and initiatives, and by any metric or any scoreboard, they are working. MFuture will continue to underpin those initiatives. Our core businesses are growing. They are well led with clear strategies, and we have the highest confidence levels from our retailers and incredible support from our suppliers whose own strategies and agendas are being supportive. Our interests well are being supported. Our interests are well aligned. We are leaning into the very real challenge of our legacy systems, and we've got a plan to digitize and build out a modern platform to engage our people, our customers and our shoppers. We continue to be focused and disciplined on delivering on our commitments in capital spend and shareholder returns. And of course, as I've said, we believe we have the right team, the right plan and the right momentum to continue to drive towards our ambitious goals. Thanks very much, everybody. I'm very happy to take questions. Remembering, if you could just use the microphone. And if it's a pillar specific question, I may, depending on what it is, I may kick it to one of the CEOs. You are fastest on the block. If you could just introduce yourself and go ahead.

It's Michael Simotas from Jefferies. I just wanted to pick up on the comments you made about consumer spend because you're absolutely right. Confidence globally is pretty weak. But generally, around the world, sales have held up pretty well, and it's something consumer-facing businesses are grappling with globally. To what extent are you planning across the business for a potential scenario where consumer spend may change quickly depending on where we go to from here? And whether that's trading down and looking for value or potentially a more abrupt change in demand for some of the more cyclically exposed businesses?

So I'll answer the last part first. In terms of the cyclicality of the businesses, Hardware, in particular, as I've said, our view is informed by the forecasts that we've shared with you. That said, we have weathered slowdowns, our network has weathered slowdowns in the past. And we feel confident that if we need to rightsize businesses or adjust course, we'll be able to do it fairly quickly. In terms of -- and I don't know if it's an Australian term, the flight to value. You guys asked me about it. But I think what you mean is people looking for cheaper products. We believe we offer that. As I've described, we offer a very wide range of products in our stores, including strong private label brands, category brand portfolios that serve in each category. But more importantly, we believe we have a unique value proposition. And the way that I think about value is a combination between perceived quality and perceived price. It's very important that you win the hearts and the minds of your consumers. And we believe that we deliver very high perceived quality. In Food, the DSA program is delivering on that commitment. I've spoken about range, and I've spoken about local. On the perception of price, we're working hard to change that. And Scott is going to show you a slide later on our actual price competitiveness. I spoke about it in June. Remember when I said, I think then where is 150 basis points improvement. We have continued to improve our price competitiveness. That is actual, and we're working hard on the perception of price. If we need to adjust, we feel relatively confident that we can because we have a relatively low installed cost and asset base because we don't own certainly outside of the 150 stores in hardware. We don't own the retail network. Together with our independent partners, we feel relatively confident that we have in the past and we can, again, weather that storm. But as I've said, Michael, we're not seeing that so-called shift to value. The largest that you might have been able to talk about was 3 or 4 months ago when we saw an increase in frozen fruit and veg against fresh. But quite frankly, that was the $12 lettuce crisis. And I don't know when you last bought a lettuce, but in my idea, it's down below $2 again.

Shaun Cousins, UBS. Just a question regarding the costs being now above the line in terms of as you particularly around you go through your horizon sort of cost savings, but moreover, this investment, does this impact you highlighted no net impact on the P&L perspective. Does this impact the pace of change and the number of initiatives that you embark on to achieve that outcome? Or have you found ways to do it better? I'm just curious how you create an environment where there's no impact on your P&L from an underlying perspective and you still get the same outcome that you hoped for.

So Shaun, thanks for the question. Firstly, just to be clear, that's moving from below to above this post Phase 1, okay? So I'm not indicating that, that will happen from now. It's founded significantly on a fundamentally different approach to Phase 1, which is a reset of the building. We're rebuilding the building. And as we, if it's a hotel or an office as we now knock it out each room, they are able to be executed in smaller increments and with much faster value realization. We, as a business, cannot afford to continue to have the same number of people, consultants, professional support in our business, no matter where you put it on the income statement. So we recognize that, and we'll adjust accordingly. Like anybody, I'll be slightly wrong because there will be a slight up and down, but it's not at material lump sum values.

Tom from Barrenjoey. Just a question on the Hardware business. You mentioned that it's cyclical. I think it's 60% or 70% of your CapEx is going into that business. So I guess the obvious question is, can you still grow the earnings in that business despite the macro outlook that you're kind of talking to there?

Yes. Thanks, Tom, for the question. And I'll invite Annette to come in and comment behind me, if she'd like to. But the short answer is we do believe that we can continue to grow the dollar earnings. Leverage -- operating leverage becomes more difficult when things slow down. But we certainly see opportunity for continued growth. One of the underlying drivers of operating leverage at a hardware level is the relationship between wholesale and retail parts of that business. We make more money in the retail part of the business. And that's normal. Wholesalers are more volume-focused. And retailers have a higher degree of price susceptibility, not to say that they don't have price and volume in both parts. So certainly, the intention is to continue to grow our own retail network. And in Total Tools, we've given quite specific guidance about that. And certainly, in Total Tools, we expect to continue to be able to drive value through our own private brand programs and in some other strategic efficiency programs like on sourcing our 3PL capabilities to the new IHG Ravenhall DC.

Ben from Jarden. Just interested in a border an exact level now when you're actually talking about your CapEx budgets. You talked a lot of opportunities. And I presume that each of the pillars CEO is probably trying to get more CapEx given the opportunities in the business at the moment. Do you -- one, how are you seeing the returns rank because it's similar to what you guys said a couple of years ago, which is sort of Hardware and then sort of in Liquor, so probably people second will fit have anything about it? And do you see scenarios we look forward now where you actually look to accelerate or lift your CapEx given the opportunities across the group?

Yes. Thanks for the question. So the Board is very clear that we assess opportunities. The Board and the leadership team are clear that we assess opportunities on a case-by-case basis. Your question was, do we see different returns across the pillars. I just want to check, if your question is, do we have different hurdle rates? As Alistair will tell you later, we've actually bought Foods hurdle rate down back in line with Liquor and Hardware. And that's a reflection of the improved health and belief in the business. And I think it's entirely appropriate. We have -- the hurdle rates are, in part, affected by the sector and the opportunity that's delivered, but more, the risk that's associated with the particular initiative, whether it's consumer acceptance or retailer acceptance, our ability to deliver it, et cetera. Your second question was, do we see scope for expanded CapEx? So we provided guidance, and you guys will all know that, that is elevated from historical levels. We have some pretty lumpy stuff in there, including, obviously, Horizon, our DC investments, which are, by nature, infrequent but large events. What I would say is that we continue to be guided at a guardrail level by the same parameters. And again, Alistair will talk about those. But we are very much on the lookout for value accretive investment opportunities and will continue to be. We have an eye towards the environment that we're currently in, but we fundamentally believe that the underlying trends inside our business remain valid. And that in the longer term, the external environment will normalize.

It's Craig Woolford from MST Marquee. Just wanted to get your perspective or philosophy on profit margin expansion. A lot of what you've unveiled is about growth, but both the Food and the Liquor divisions have had pretty much static margins over the last decade in environments that have been tough and environments that have been good. So there's not a lot of operating leverage evident in those 2 segments. But do you see EBIT margin expansion in Food and Liquor?

Yes. Thanks, Craig. Thanks for the question. So the -- we are fundamentally, particularly in Food and Liquor, a wholesale and the #1 -- wholesaler and the #1 value driver there is volume. What happens when the volume flywheel spins faster is that we are able to make sure that our retail networks remain competitive. And we have chosen to largely invest those operating leverage gains back into the health and sustainability of our network. And I think you would see that, that's paid off. We are not funding all of those price competitiveness improvements. Our suppliers are leaning in. But at its core, we will choose -- and I think I said this in response to your question at the year-end year results -- that at a principal level, we will look to grow volume and extend our competitive advantage. That said, naturally in a wholesale model, you do get some leverage. But the band, the highs and lows are significantly lower than they are in retail. Retailers and joined-up retailers spend more capital, they invest more, and they earn higher operating models, but they are more variable. We see our ability, as Metcash, to expand our combined operating margins, and we see this as a strategic strength through the portfolio of businesses. So we're very clear. When I look at the results of our business, I look at operating leverage [indiscernible] businesses and I look at portfolio leverage across our business. And it's -- I think it's obvious the way that, that plays out. And it can go the other way without indicating a fundamental problem. If Food and Liquor start to -- which have lower margins, as you know, start to outgrow then the average margins will come down. But as long as we're still balancing operating and portfolio leverage, I think we're behaving appropriately for a group structured the way we are.

Doug, it's Bryan Raymond...

We have now run out of time. So can we make this the last one? Is that okay? Go ahead, Bryan.

That's right. Yes. So Bryan of JPMorgan. Just on this localization trend of a lot of your competitors are hoping it unwinds, I think after a couple of years of benefit to you guys. The instant how you're seeing across all the pillars, how you're seeing customer behavior evolve given we're pretty much in a fact normal environment domestically. And how -- and probably more importantly, how is it impacting your planning around investment? Are you expecting any sort of step down in that local or return to normal, let's call it? Or do you think this is kind of normal for you guys as to how you see your sales run rate and therefore earnings going forward?

As I've said repeatedly, Bryan, we think that shoppers have fundamentally changed their habits. We're not naive. When I spoke about you losing relevance to your suppliers, it's the same thing with customers. When you become irrelevant to your customers, they don't post you a note and say, by the way, I was going to shop with you, I'm going somewhere else. They just don't come back. They first start to change their behaviors. And as I've said, certainly in Food and Liquor, we're not seeing a material shift in that behavior. We think that it's part local trend and convenience. I mean, if you look at the forecast certainly in the U.S., which is always a good market to look at, the forecast is for there to be fewer large destination stores and large format supermarkets and more convenience stores. We're well positioned for that trend. But also, what we have to offer is different to what it was 5 years ago at a fundamental level. So I think it would be unfair and inappropriate for me to characterize it as where we've only -- we're only benefiting from that trend, and we hope it continues. Of course, we hope it continues, but we think fundamentally, shoppers have now got a credible offer to those 2 large in food to the 2 majors. And certainly, in Liquor, and Chris is going to show you some adverts that underpin how we think about local, and we're really excited about it.

Richard Barwick from CLSA. The growth plans and these targets that you've got. If you're serious about these, are you committing to basically giving us some numbers? So I'm thinking about getting to #3 in grocery. Where are you today? What's the gap to Aldi? Will you be providing those sort of updates on a regular basis? So when you put these growth targets out there, how do we go about measuring those?

I know I should not put them out there. Thanks, Richard. Look, we probably won't be giving you guidance at a market share level or insights to the market share level because you get access to the same market share numbers that we do, and you know that they are wildly all over the place. Fundamentally, what does this mean for our behavior. We want to grow significantly faster than our competitors so that we take market share. And we will absolutely transparently provide you with updates on our progress. But any time I ever get asked about market share, the reality is that you could pick one and it's going to tell you a story that you want to look at. Fundamentally, you should look at the sales growth numbers because that's actually the driver. So we want to grow faster than our competitors, and we will -- you don't need me to update you when our competitors share those numbers, and I've noticed of late that I always give you updates. No, not at this stage. All right. So I'm now going to invite Scott to come up to this slide and give you an update.

Good afternoon, everyone. I was going to say good morning, but you've used all your questions up on Food. So thank you. I really appreciate you traveling down to spend the time with us, and we're very excited to share the progress of Food. I would just call out -- I'll point out that many of you have been on the journey with me in Food from when I first started, that was the reset that we had to do. And coming into this role, I think that the key elements I heard was we need to fix the relationships with our retailers. We have really great retailers out there, but there was a disconnect. And we need to improve our offer. We needed to execute, and I was hearing that not just from our investors, I was hearing it from our suppliers and also our retailers. So we knew there was an element of our retailer base that was holding us back. So we turned our minds to making some significant change. And building on the good things that were in the strategy and fundamentally simplifying. And that's the outcome of where we've got to today. And I'm actually really excited that we're in a position to continually grow this Food business for Metcash. See -- you know about us, we are the largest supplier to independent customers in the country, both through our banner group and our contracts. We have a very unique flexible, agile, capable supply chain, and we've proven that over the last 4 years. Our retailers are absolutely active in their communities in a way that others aspire to -- and we have a very diverse network. So between both regional and metro. I think that's one of the things that's often overlooked. We are very well located. Doug has talked a lot about the momentum and the growth. It's really important to call out that the changes we're making had our business in growth as a wholesale network and a retail network for 2 quarters pre-COVID. So we were seeing green shoots. Now yes, there's some amplification of those green shoots. But we've kept the change happening in our business so we can capture all of those. The shift to local was a global trend 7, 8 years ago. That's now being amplified and we're capitalizing on that. I think some of our competitors go to bed hoping, it was a one-off shift and it will go back. We're seeing it sustained. And I think the way Doug answered that question is absolutely right. We're confident that with the shoppers that have found are sustained. The other key call out I think is the health of our network. Our retailers are in a much better aligned position with Metcash to continue to grow. So I'll talk in more detail about our growth opportunities, but it is fundamentally about us resetting the model to make sure that we have the best format in each location to meet the shoppers' needs. So just our difference, and I've talked about this a lot over the last few years, but we are different. We get compared to our competitors in the market. Our model is different. Our offer is different. Our retailers are truly local in their communities, and they're active. They're seen as part of the community. It's -- again, our competitors aspire for that. As Metcash and as an integrated network with our retailers, although we're not integrated, but we're -- from a shopper's point of view, we are, we absolutely are the trusted partner to deliver the right offer by each location. What we've seen in the change with suppliers is significant. Suppliers are absolutely backing us in now to continue to grow. And I'll talk further about our supply chain, but I firmly believe it's a competitive advantage in this market. The other build on this, which is important, is how we work with our retailers. We've got working groups to ensure that we have the right ESG and sustained social responsible programs in our network that are purpose fit for our model. So we need to deliver consistency and breadth to shoppers, and they need to see that. We've commissioned a study with PwC, which is really important, and we'll be releasing it next month. And it's about the impact that IGA and our model has in local communities. A couple of key points that I'll call out today. We indirectly support over 100,000 jobs in local communities, Australia-wide. Our retailers support more than 34,000 local community organizations directly. We are grounded in the community. Local is in our DNA. Just we're updating our brands, our branding messaging to shoppers, and I'll give you a quick look at our new ad. [Presentation]

And that tag line means a lot, it's real and it can't be copied. It's authentic in what we do. So our network, I've touched on our footprint. We are absolutely -- we're very well situated both in our supply chain through our mega DCs, our Campbells' remote locations and also our footprint. We serve over 1,300 branded stores. And again, we're very well positioned, which is one of those things that has helped us over the last few years. The other key element to our model is serving our contract customers. So we have a portion of our business. And you know, we've announced we've re-signed the FoodWorks contract, and we're working with our other contract customers to continually grow. So we believe that there's still opportunities to grow organically in all of those spaces. Our supply chain is a competitive advantage. And Doug has stolen my thunder here, which he's allowed to being the boss. But we know that we've stacked up really well against our competitors over the last few years. The last 2 years, in particular, Woolworths have called out their outbound service levels and both times, we've been significantly better. And again, the dynamic piece of our supply chain is that we're serving our stores. So as we find gaps, we've got replacements. We've worked really closely with all of our retailers [ by state ] to ensure that we've helped them and that has also helped underpin the health of the network. So the Food strategy, the big reveal here, is it continues to evolve. It's not changing. It's the same strategy we're evolving and it's maturing. Key element is and what is important is, we're delivering what our shoppers want and need. We're delivering for our retailers, the services, tools and programs they need to supply -- to serve their shoppers better. And really excitingly, we're delivering for suppliers better than we ever have. And I'll talk a little bit in more detail around the price competitive piece. That's underpinned by an amazing team. Yes, we've got to focus on safety, but we have a highly engaged team in Food. I've got to tell you, in my career, it's the best team I've ever worked with. And we all have a higher purpose. We serve thousands of independent businesses right around this country. And in the current climate, others are talking about having this higher purpose. Again, we have it as part of our model. So we have an advantage. We're attracting great talent to our business at the moment because of not just what we do, but what we're achieving. Doug's talked about our business model. So absolutely at our core, we're a wholesale and logistics business. We're good at it, and I'll talk later about how we're going to continue to improve that -- absolutely attracting -- having attractive brands and formats is part of what the Food business has been doing over the last 4 years. Think about that whole element, that second piece of the flywheel is about us serving our shoppers better through our retail stores. And then the outer ring is absolutely about value-added services. We've got to continually improve those with our retailers, and I'll highlight some things through the presentation on how we're doing that. How we drive our value. Absolutely, the levers we pull, we are a volume business. We've got to manage the volume growth and the decline. The categories we're in and the customer mix and store formats means we have different levers to pull and different areas to play and grow. And then we're very clear on how we need to do that cost effectively through our supply chain and our CODB. That has pointed out, as through some of the questions, we are a low-margin business. We understand that. So to get into some detail, our MFuture initiatives are evolving. They're not changing. They're the right initiatives and they're working. They're driving growth in both retail and wholesale. Our retailers are currently making through the programs we're driving, making more margin and more dollars than they ever have through selling more while being more competitive in price. And that ultimately is creating shoppers stickiness. So if you look at the store upgrades, I'll focus in a little bit on each one of these sections I want to talk to, but it's really simple, improve the stores, get the format right, the right stores in the right location with the right ranges and programs to drive shoppers and have them returning to our network. We're absolutely -- we absolutely have now the right tools to grow in that digital space, which we'll talk to and supported by a supply chain. The other key element, I think, that you'll start to see come through is now that net growth of stores. We've come out of that declining or where we were in decline, we're shrinking our footprint. We're now in positive growth and working with our retailers, we're finding opportunities to lay down new footprint, which is a real exciting element. So store upgrades, our Diamond Store Accelerator program. We're halfway through the network. We have focused -- most importantly, we rank these opportunities from biggest opportunity down, and we're getting great uptake. We're targeting to do more than 100 of these per year to cycle through the rest of the network. And we believe that's the right number so that we do it well. The other element to add to that is we're starting to see stores come back for the second DSA. So this is about us with Network of the Future, applying the right offer by brand to the local market that will grow sales. We know that a DSA store outperforms a non-DSA store double digits. It's circa 15% and above. We're using retailer stories, data and facts to help share this, and I'm going to share a small video with you now. [Presentation]

We share these stories with other retailers, and they're the best advocates for this program. And if you go back a few investor presentations, I talked about the capital that might have been required to reset the network. What we're seeing is retailers invest. This program works. We're really good now modeling a stores uplift in sales. And I think we're nearly bang on every time we do this now. So we can go in and confidently show a retailer the improvement that they'll get in their store and the investment required to get there and turn that store around. So I'd love some of the older stores to get that uplift, but it's just outstanding to see retailers leaning in and changing. So you had this example, that retailer is about to walk away [indiscernible] too hard, I can't compete. I've got a competitor in town, and it's completely turned the other way. And that's to me, bloody exciting. So store formats, just really important to call out and spend a moment on this. Our retailers have endorsed us. They're right behind it. They get it. They understand that one size doesn't fit all and that we need to tailor the offer to match shopper preferences. It's a huge competitive advantage that our model has over others. We're working really hard. The last few years slowed us a little bit in the transition because we're so focused on being at the front line serving shoppers but we're converting our model to the new brands very quickly. And we'll -- our goal is to finish that conversion within this financial -- within our financial year. So you know that what the store refurbs are about. What I do want to share, though, is why? Why are we doing this? I've talked to some of you before about this, but it was really important that we evolve our brand. Four years ago, the IGA brand was stretched too far. It really was siloed, and it was trying to be everything to everyone through one funnel of a promotional program. It wasn't achievable. So we actually did some research and looked at the different shopper missions and overlaid our store size. And it was really important that the shopper research come back and said that our shoppers love the brand, IGA. They know what it means local and community. So we were never going to walk away from that. What we came back with working with our retailers is a suite of brands that allow us to localize the offer even more than we did before within guardrails. So it's really clear when we're going to a store by size, format, what they need in each category to be part of that brand. And our retailers are having conversation with other retailers to help deliver this, which is a big shift. We believe we can then capture more shopper missions by store size. And most importantly, we can tailor the range and price offer to that store. So Supa Valu, our bigger box model. Many of you have seen it. We've now got 3 trial stores, and we are still in trial phase. All of those trials are exceeding our expectations. All 3 different offers. One was a conversion of a good store, one was a conversion of a poor performing store, and the other one was a store that was needed a complete refurb. So we're absolutely confident we're getting it right there, and we're going to look to do more Supa Valus as part of that trial. We have retailers lining up for these. They ring out saying, we love it. We're seeing the opportunity to run a low-cost value offer in our community. What we're not going to do is rush and put them down where they shouldn't be. So we'll be very obvious how we roll forward with that. IGA is still core to what we do. The majority of that model sits in that medium-sized store as IGA, and we've now got that offer right, and we stretched to the right there around Fine Food. And that's where our retailers can overlay expanded ranges and differentiation in the market. The other key element here is we're replacing our Express brand with IGA Local Grocer. I think the Express brand is damaged as -- not IGA, but as a concept in Australia, it means different -- something different to other markets around the world. So we believe that our small stores are a full-line supermarket that have -- offer a smaller range, but you can still come into our stores and do a full shop. And that's what we -- that's the journey we're on with Local Grocer. A fundamental key difference in our model because we knew we couldn't take everyone on the journey. We had some of those stores at the bottom -- in the bottom sort of 10% holding us back. We created a brand to the right there, Village Grocer, which is an alternate brand, designed so that we can still keep independents in business, but they don't necessarily wear the IGA badge. We know some of those stores were letting the side down and retailers actually -- this has helped us go faster to make some change. Nationally, I think we've got 19 stores sitting in that brand at the moment where we're debannering, and they're wearing their Village Grocer badge. It's a little less than we thought. What we are seeing is retailers saying, actually, what do I have to need to step up and stay in the brand. They're actually leaning in and working with the program to stay part of the network, which, again, just creates more opportunity for us. So fundamentally, in retail range and price is really critical. That's the biggest thing we've changed and I honestly believe that's the thing that's underpinned our growth and why shoppers have stayed sticky in our network. We've aligned our strategy here with our retailers. So we used to run more promotional. There was just more products on promotion. We have retail strategies through everyday low pricing programs, Price Match, our catalogs, our online digital marketing to shoppers. We're specific and measured in what we do as any good retailer should be. That includes how we price core range by brand and what we do around everyday pricing. That all supports us being the house of brands. And Doug talked about value. Value is not just about -- value is not cheap products. As a retailer, you have to offer value, which is around that perceived quality and price. I think we've stepped that up over the last few years, and that's fundamentally meant shoppers have stayed with us. So we get the right range by category through breadth and depth of range from private label right through the branded products, including those values. The value shopper hasn't gone anywhere. They didn't go anywhere in COVID. They still existed. But what they did was they came into our model and they saw that they could get their perception of value in our stores and they've stayed. We have a big opportunity to go harder in private label and do a better job. And we've got plans to do that, and we'll keep sharing those with you as we grow and expand on those plans. But the fundamental change in price here has driven supply support in our model. So I can tell you -- and you talk to our retailers and suppliers. We're seeing suppliers leaning to support our model more than we ever have because we're growing, and we're delivering them value for money in return. That's driving that investment. And then one of the reasons why we talk about our DCs and then talk about the expansion is, we need to grow our range. We need to grow our range and reduce costs for our retailers. And the more range we can put through our model and grow that team score, the more efficient and competitive we make our retailers, and they certainly joined up with that approach. So just building on this. Again, we've called out we're relaunching Price Match. We're not investing more in this program. Again, working with our retailers through our retailer working groups. We have principles and guardrails that says, where products need to sit. Ideally, we want to show value every day to shoppers on shelf. So Price Match is a specific tool to call out in smaller stores on just over 600 products that the blue tickets mean, you won't pay more when you're in our stores. We haven't had that announced in small stores before. We've now got that endorsed and it's right through our network. And it's live today. In our larger stores, 1,400 products, circa 1,400 products that are in our competitors are Price Matched. On top of that, what we do now with our [ Everyday Value ] program is we work with suppliers to say, you will sell more of your products by not just being on Price Match and promoting down but by going into an Everyday Low Pricing program that will support through marketing and ticketing in store, and we're seeing double-digit growth through that program. And suppliers leaning into support. So where we have to reset a price, we might invest short term in that, but it's certainly a longer-term investment from suppliers to make us competitive. So just a quick look at how that looks to our shoppers at the moment, and we're amplifying that through the next quarter leading into our busiest trading period. [Presentation]

Pretty simple. You'll see that a lot. And like I said, once you're in store, the overlays of the Everyday Value program just to driving repeat purchase. And fundamentally for me, this is just an entry to play as people are getting in stores, they're seeing the real value. So as we continue to improve our offer, we create that positive momentum. It's really simple. We lower our cost of goods to our retailers. That was the #1 thing retailers were saying that as I came into this role, help us reduce our cost of goods. We're getting suppliers to lean in as well to help lower the cost of goods on shelf to shoppers, which grow sales, and it creates that positive momentum. So the things I've called out already, and you'll see in the top right there around our improved retail offer, shopper experience and execution of that. That's the really important piece here. Our retailers are executing against the offer. And if they're not, they're at risk of not being in the brand. It's a big change, and it's something that you have to understand underpins where we sit and the strength and the confidence that we have in the model. That drives supply support and investment. And the bottom right there, we've called out the price competitive index. Now I'll put a time frame on there. I'm not putting a number, but what I would say to you is that the large [ Metro ] stores are broadly there. It's insignificant now the difference between us and our competitors in those. So we're showing retailers how to be competitive in those large [ Metro ] stores. In digital for us, that's about making sure that we have the right focus media network to deeply engage with our shoppers. We're on the journey. Our retailers in the last period have really understood the importance of this. Go back 3 years, not as much. So for us now, we need to move quickly in the right areas and invest modestly but appropriately. So the last 3 years is absolutely the shift in the market has created with our retailers a pool and a want for them to get into this space, particularly in e-commerce. So we're at over 220 stores and growing. We've got a pipeline of up to 400 stores to go into e-commerce with. We think we've got the right fit-for-purpose model here. So this isn't about us owning the last mile. That's about using a hybrid of Click N Collect and those delivery providers to do the last mile. We then, with the technology we've chosen, come in and one of the things that means we can't move as quick as we want to here, is we come into your store or our retailer stores and we overlay the range. So we lay out the range in the system. So their efficiency, the pick and packing store is built into the model. So they're not just aimlessly wandering aisles, like you've seen in some of the competitors. This is tailored and our retailers are seeing good uptick. I firmly believe, particularly once you get our metro areas, our offer here to Click N Collect will be the fastest-growing area in e-commerce. And in loyalty, loyalty has been a bit of a slow burn for us, but we're quickly getting traction. Again, our retailers need that platform to talk to shoppers. Our loyalty system sits above a retailer's existing loyalty system or it does the whole job for them. So again, working with our retailers, we're finding ways to connect and talk to shoppers, and we're building this out. So again, over 300 stores growing quickly, and I can tell you, our retailers are very keen for us to be successful jointly in this space. Quick commerce, rapid deliveries, we've seen a consistent uptake over the last 3 years of this. We've got around 420 stores in this space with a consistent offer through both UberEats and DoorDash. And it's working in those local markets. Our retailers are seeing this as complementary. If you talk about what might happen in value, I think this is a space as us as shoppers start to tighten our belts, I think this is a space where that shopper on those platforms will start to come back into store. So I don't necessarily think the retailers in these catchments will miss out on that shop. And then importantly for me, how we simplify and work with -- simplify our business and work with our retailers is a key plank. So the customer journey for us has to be frictionless. So this page is all about -- Sorted for us is a new platform. It's a digital marketplace where our retailers can now go on to and get their charge-through products. We now have the ability for suppliers to place more products on that platform. It creates a breadth of range and an ease of doing business that we haven't had before. It then integrates in stores. So under the old system, a retailer would have to go and manually place orders for their direct business. This is integrated so they can scan the product on the shelf, and we'll split the order in the back and let that order go through direct for that retailer. So we're really helping them take costs out of their business as well. And then the Retailer One Stop Shop, we're calling it ROSS. This is about us having 1 tool to communicate. It's a portal where retailers log on to, and it does everything for them from any training, news they need to know, placing orders or communicating with us. So Supply chain, and I could talk for a long time on this, but I won't because I want to leave time for questions. But we're constantly reviewing our supply chain for efficiencies. We need to help keep cost low and help our retailers be competitive. But this is an area where we can grow too. Our new DC that you'll see in Adelaide has helped us grow our range and our sales and in turn, taking costs out. So we are helping our combined model have a more effective route to market. We've announced the new DC in Victoria. That will be a fit-for-purpose facility, and it's really exciting because we are constrained on that site. We're constrained in both Food and Liquor in our range and how we operate. So that new site will not just unlock efficiencies that will unlock sales opportunities. And Doug talked about automation. So we will have modular automation. So in [indiscernible] we're talking about the right size modular automation single pick through [indiscernible] which will help both Food and Liquor through our contract customers and then with Layer Picking solutions to create efficiency where it makes sense. But we will still have flexibility baked into our offer. So CapEx, again, when you look at Network of the Future and digital, it's important to remind you and call out that it's us investing with our retailers. We haven't had to put all the capital up here to be successful. That's a learning for us over the last few years. We're calling out there a per annum number that we believe is the right number for us to have the right offer going forward in those spaces. And in particular, Network of the Future, most of that is around the rebrand, where we're fixing up the stores, both internally and externally with our retailers. It's not applying to the DSA numbers because we know that it's the retailers mostly investing in our store refurbs. And then in the supply chain, we're calling out the total investment by FY '25 that includes our upgrade and refurb that we're underway in Queensland, WA, we're planning the Northern Territory at our Victorian facility. I think we'll be positioned well in logistics going forward. So for me, and the exciting part around our growth is that we're doubling down on the [ magic in ] our model. Our retailers will execute better than anyone else. And I'll challenge anyone to show me -- take me globally and show me stores that are better than what we have in our model. I think they line up against any retailer in the world when we execute well. Our strategy is to keep building those relationships with our retailers, that better together was a theme at our expo. So we know the retailers that in any relationship, there's going to be some rub and rub creates, I think, in our model creates better outcomes. And for us to keep building on that will ultimately make our network stronger. So we have the right programs to build through our stores, range and price. The structural shift in shopper behavior, I think, will continue, and we'll capitalize on that as much as we can. We'll keep expanding our network so that the shoppers see that. I think that range and price isn't a point in time. This is continual for us. Any retailer has to constantly get their range and price right. And I think now we have set up structurally the programs with our retailers to do that. The digital acceleration I've talked about, I think engaging our shoppers and know them. We're behind the curve, but quickly catching up. Our supply chain will be right. So fundamentally, what that means is, we are well positioned to capitalize on the current growth and grow organically. Remembering, we still have half of our network to reset. So for me, internally, what we talk about with our retailers and our teams is for us to focus on being different because we are, we need to disrupt because we can and win share. So -- thank you, and happy to take any questions.

Ross Curran from Macquarie. Let's just start off with the DSA program, store upgrade program. Unlike the big competitors, you've got to bring your guys along a journey with you and see their willingness to invest -- in the capacity to invest, presumably both willingness and capacity to invest in new network are cyclical high points at the moment, the last couple of years have been pretty good, running a Grocer. So the question is one, why don't we accelerate the program, but why is the pace still fairly measured out to 2026. Wanting to just go [ Hammerton's ] right now and just upgrade as fast as you can.

Yes, Ross, You could be my boss or be on our Board, I think. For us, I think it's us doing it correctly. So we've got a pipeline of retailers and part of what you've talked about here is we do have to do a bit of a selling. We have to show them what it will do for their business. The video I showed you is a good example. They knew they needed to invest. They're just -- they couldn't get there. So what I would say is, we're serving the pipeline that we have, and it's more than 100 stores per year. And I think that is the right pace for us to do it well while we go back and refurb other stores. I don't think there's a big bang moment we could just go out and change the network. But we are also ranking these by opportunity and our teams in state do that consistently. So they go back and look at the next best opportunity, and we build that pipeline of retailers ready to go.

Shaun Cousins with UBS. Just a question on the slowing in the rate of Food sales that you're seeing now. Are you seeing that during COVID weaker stores actually did better because there was just a quest for inventory and consumers went wherever they could find. And are you seeing the slowing of sales more -- greater in those weaker stores and you're seeing the better stores in terms of large format or the ones that have invested in DSAs hold up better. And maybe just secondly, are you seeing new [ barons ] use an old term, emerge because at the moment, if we think about your major customers, it's Fred at Ritchies, it's the Romeo's. It's generally the sort of common names. Are you starting to see new [ barons ] in those places.

So a few questions, you've snuck into one. So I think just to talk about sales. So we're seeing this -- and I'll be pretty frankly, we're seeing consistency in our sales. So what we've just reported in our trading outlook, we're cycling those real significant lockdowns. So broadly holding volume is a good result. Look at markets like WA, which we've called out before, which was largely -- or the least affected from COVID, we're still seeing really strong performance. So I'm confident that the underlying things that we're fixing in our model that's driving that growth, not this magical shift. And the balance between regional and metro, we measure closely and it's significant. We're not seeing wild swings in any one area. So certainly, what I -- just to dive in on that, where shoppers came into some of those poor performing stores. What the feedback we're hearing from shoppers is that we'd improve the offer. So it's easier for them not to drive parts, they'll come back more often. And then -- sorry, the last bit of your question. Are there new [ barons ]? Look, expo is a good point in time for us to engage with our retailers. 60% of our network is made up of those single store operators and they're all looking for opportunities to grow. And so they're looking for -- to us for opportunities and to help find locations. And we need to go harder in that space. So I think the underlying thing there is the network is healthier and people are believing in it. And I think that's going to create good growth for us going forward. And sorry, the point there in the past is we probably relied on 1 or 2 people, we were not now. So question here.

Lisa Deng from Goldman Sachs. Just wanted to still get a little bit more of a tangible feel for how the MFuture program has increased our operating capabilities. Like can you talk about what the range was whenever 2019 to now. Can you talk about what our order fill rate is? How has that improved versus our own measurements? Have you -- can you talk about what the price gap is? Can you talk about what are some of the others? Like what's the key scorecards, like, can you give us just a little bit more tangible operational improvement versus what it has been and then what the aspirations are?

I'll answer that, but not -- I don't think I'll fill in all of the numbers in your spreadsheet for you. So for me, my #1 goal was to make retailers sustainable. So our team were very focused, first of all, to grow retailer margin sustainably. And that was while we improved pricing. So if you go back in time, it's important to remember the IGA network didn't have a core range linked to price. So we're running lots of promotions. Back in 2018, we implemented a core range linked to price. That gave us a base to build on, which and that's then measured around retailer competitiveness, which is when we really first started to benchmark ourselves against the competition around that price index scale. So we've shared with you that we're -- it's coming down. And I will share that when you look at Metro stores, they're more or less line priced. So the gap is between 0 and 2, which is negligible in a retail environment, particularly in the Food space. So on that one, on our -- the talk around our margin percentage, we know through some of the new DCs will create efficiencies that will both share, and will leverage up as well. But we are a low-margin business. I think the sins of the past where Metcash was making sort of 4.6%, I don't think anyone expects us to get back there. But is my job or my goal to grow that to return better value for shareholders? Yes, it is. But we've got to do it in a sustainable way. So hopefully, that helps. We're not giving guidance on that.

Bryan, JPMorgan. Just on the value point, coming forward -- going forward, it's clearly going to be a bigger focus for shoppers. Is that price perception. You've done a lot to address it. Just looking at the Price Match basket, and the private label business. Obviously, you're probably underindexed on private label and you've done a lot on the Price Match side. Can you give us any feel for penetration of those now and where you want to get to, if you don't want to give us actual numbers at least a rough magnitude because I think that's going to be absolutely critical over the next couple of years as shoppers obviously [indiscernible] pressure.

Yes, it's a great call out. And that's one of the things that gives me confidence, helps me sleep at night. So our retailers have got right behind Price Match because they're understanding this perception to value. We need to show that we're in the game. We've got our retailers now mandating and allocating our value private label range in all stores. So we've got a small essentials basket as part of that, that has to be in every store. We've never had that before. So private label in our range was always like you choose as a retailer, and some of them have built their own ranges. We've now got our retailer working group saying it must be our range. We've got to get scale, which will also drive better value for us and our retailers ultimately shoppers. But the fact that we've now got the retailers mandating that and locking in those ranges gives me a lot of confidence in growth. So our penetration on private label, the way we measure it, would be just under 5%. So again, I don't want to call out a number, but there's a huge opportunity for us going forward. And just to underline again on this value shopper, I really do think, yes, the Australian supermarket before I was in it, I think, the sector got called a little bit by value entrants. I think the sector has done a better job to show what value or to deliver value to shoppers, and we're certainly doing our part in that piece. So I do think there was this years ago, the shift to just value. But I think, particularly in the last period, shoppers are seeing value across the sector in a different way, and it's not just price.

You spoke a little bit about space. When you look at your own plans as well as the plans from your smaller and bigger retail customers, how much space do you think you can add to the IGA network over the next few years?

So Mike, we'll probably have to take that on notice because it's something we're working through now. We absolutely want to be more aggressive in how we look at that. What I can say is that we've got opportunities with many retailers. And we're now planned. We're organized in a way where we're sitting down with our retailers by state to understand the forward outlook. That's why we're saying we're not shrinking, now we're in growth, and we called that out in our last full year announcement, and we're forecasting to grow our footprint this year as well. Absolutely, do we want to do more of that? Yes.

Maybe just to sort of follow up and ask in a different way. The major chains for a while now have been putting space on the ground about in line with population growth. [ Aldi ] has been doing quite a bit more than that to get to where you want to get to. How much do you need to accelerate space growth? Or do you think you can get to where you want to get to with the existing network, and that would just be cream on top?

My honest view, it will be a hybrid of both. So I think we need to go a little bit faster in some areas. But we've got to deal with our retailers. We need to find ways to help them go faster. We're different, though. We don't go and lay down footprint years in advance and hope it will be profitable. Our guys are looking to invest for growth from the start. And I think we've now got some proof points where we can do that. So I kind of say watch this space as well.

Craig from MST. I just wanted to ask a question kind of talk to that, just around getting to #3 from #4. Is teamwork score a part of that and what are the issues you might use to drive that? And then secondly, are there other productivity initiatives of the DSA program?

Yes. So absolutely, you hit the nail on the head. Teamwork score is a piece of that. Through our DCs, being able to expand our range, both in direct and indirect deliveries is part of that. We're seeing suppliers wanting to put because remember, we have reset our relationships with suppliers through our trading terms. So we're seeing suppliers coming and partnering for us in supply, and we've had some big supply or some decent-sized suppliers shift their volume from direct and other people into our model. So we think that the more we can do that, the more beneficial is to our network. And then through other programs, I mean, DSA, it's like whole of store now. Back in the day, it was really about refurbing that store. Now DSA does tie in with Network of the Future. So it's the right brand and offer for that demographic. And I think we'll see more and more opportunities emerge out of that. And some of the categories that we're seeing great growth in, I think Doug touched on around, perishable and frozen, which is where we've historically underindexed. So certainly, the business case for those new DCs include us growing our range and sales.

These other alternative revenue or margin opportunities that retailers globally looking at. So things like media talked about underindexing in Fresh and [ make produce ] particularly where you've sort of been in and out over the past few years. Are you thinking about some of these opportunities in terms of monetizing things like digital media and monetizing loyalty and pushing it back into the areas like [ produce and make ]. There's opportunities to move down, how healthy the network is?

Yes, good question. I think that digital media part, we need to have our digital media right to grow our sales and grow our sales as a network. So the way some retailers are shifting to purely digital, we'll move there over time as appropriate, but it's not about monetizing that platform. It's about driving sales and activity, right? And suppliers will invest more deeply when you can go direct to a shopper. So we've got to get our plans right there. And then shifting into other areas like we're there, we're working, we've plans by state in how we grow appropriately in Fresh and support our network while leveraging one of the biggest [ franchises ] where our retailers support them and support their local suppliers, farmers and suppliers. So probably because we're over time, Steve, 1 or 2 more?

Phil Kimber from Evans & Partners. Just your thoughts on owning retail in the Food division. I know historically what the answer has been, but things have changed with the Hardware business. And then, I guess, adjacent to that, potentially, there's a put option out there of a decent size chain that may end up being owned by Metcash. What would your thoughts be if that happened?

Yes, so again, good question. I think at our full year results, Doug was asked the question and said, would we? I think appropriately, we would. We've learned a lot from our Hardware colleagues in how they've run retail and the benefits it's added to their business. We would naturally do that in a way. I think we said we don't own a network. But if it can help accelerate our plans and deliver greater growth, absolutely, you should. On top of that, there's a put option out there and have we done the work to be ready if that came to us. Short answer is yes, we'd absolutely be ready. We don't want to go and compete with our retailers. So as a -- if we were in retail with that put option, we would look to work with our existing network to ensure that we have, again, have the right footprint out there to grow collectively. [Break]

All right. We'll kick off the afternoon session. Welcome back from lunch, everybody. For those that I haven't had the opportunity to meet, my name is Annette Welsh, CEO of the Hardware, IHG pillar. And there's a few of us representing Hardware here today. Obviously, my colleague, Paul Dumbrell, from Total Tools, but we've also got [ Andrew Tomi ], who leads and helps Paul and I on our strategy. So Andrew is with us and feel free to give him all the difficult questions. For those of you from Sydney and Melbourne, I hope and your families are safe and well in terms of the torrential rain and floods. Our thoughts are certainly with our members who are really suffering through it in those locations. So hopefully, we get to enjoy the next couple of days in Adelaide, bit of warm and dry and you get home safe and sound and your families are good. So I'm going to lead off with just a couple of slides that cover the total Hardware pillars and then I'll focus on independent hardware group and leave Paul to share with you the story and the progress and opportunities left within Total Tools. So for the last 2 years, you and many of our consumers focus of every day has really moved from the CBDs and the inner cities and the cafes to the family home. And our homes certainly now command more share of wallet than they probably ever have. Consumers have found there in DIYer, they're gardener. They have spent time looking at ways to renovate the family home and also to build a new home, which was part of the government incentives back in 2020. Certainly, we, in the Hardware pillar of being the beneficiary of that change. We've continued to make some very good strategic decisions and investments that deliver for our consumers. Our strength, as you are familiar with, is in trade, and we have a competitive DIY offer, topped off by some very high standards from our local knowledgeable and experienced teams. We've got digital capabilities that enrich our consumers' experience. And our team are continuing their track record in successful acquisitions and the delivery of synergies. We have a wonderful heritage in championing independents and ensuring our everlasting strong partnerships with our suppliers for now over 60 years. And together with IHG and Total Tools, we have a business delivering $4.4 billion worth of network sales, which is really that like-for-like against our closest competitor from over 730 stores across the country, with a large percentage of those being regionally based. So on to the IHG network. And under the IHG banners, we support the largest network of hardware stores across the country. With strength, as I've just said, in those regional locations, our store numbers are holding and our square meters are growing as members and IHG reinvest for the future. We are also benefiting now from new entrepreneurs joining the group, something we haven't seen for some time. And they are providing that succession plan opportunity for members who may want to retire and ensuring that we're still providing that local hardware offer in those smaller towns. We have a number of Frame & Truss facilities across the country, which is building out a whole of house strategy. And in 2020, we completed, what you are very familiar with, as our consolidation of our distribution center network from 7 DCs down to 3. And we have also made some significant investments in ensuring those DCs are best fit for future growth by investing in brand-new sites in Queensland and recently -- more recently, in Victoria. We opened Ravenhall just over 6 weeks ago. This is a slide that often gets questions, so I'll run through with you again. Our focus is on the addressable market of hardware and building products, and we should see that there is capacity for us still to grow within this market. We remain focused on where our strength is, and that's on consolidating the trade market. It's still a fragmented market, and we want to continue our success in providing the perfect home for family businesses with a trade heritage that it absolutely matches the one that we have. You may see on the slide a couple of dots that we've added to the Mitre 10 bubble very recently such as 5 Star Timber are both acquisitions to the joint venture and company-owned store network, but it's also great to see our strengthening wholesale relationships with [ Bianco ] which is actually a strong South Australian building company who've aligned with us from a wholesale perspective. DIY is absolutely an important segment. You know that of our model and where we are, by some measure, the only significant alternative to Bunnings. What we see, and I think you can see from the bottom left-hand side, we see that there is a market for us to take advantage of, and that is operating DIY-focused formats under the home hardware banner in their local communities. In that top left-hand side of the chart, you'll see where we've mapped out the specialist markets. You're really familiar with the changes that happened in the professional tools side of the industry. What's also interesting is over some time, we have been looking and seeing where the opportunities were perhaps in the paint specialist market, but that itself as an opportunity has now closed to us as all of the paint specialist retail is now under the ownership of the suppliers, both international and Australian made, which is the home of Haymes brand itself. So the last 2 years have significant -- delivered a significant growth, and we are extremely determined that this will not just be retained, but actually that we have the opportunity to grow. Our strengths, combined with the execution of our strategies have made a complete and different significant step for the consumers, and they are staying with us. Their connection with us and their commitment to the local store is obvious, I think, in our numbers. We've improved the quality of our stores. We've provided shopper-led range and competitive prices that keep adjusting to the consumers' demands as they themselves change. We have strengthened our heritage in the trade part of the business. And we have enabled our consumers to link to our brands at any time, in any place, whether it's through the bricks and mortar or through our digital solutions. We are absolutely well placed to continue to support our members with their growth and to take advantage of the consumers' investments that they're still doing in their homes. And we see that continuing for some time, and I'll touch on that in a while. In terms of our initiatives, it's just really a brief update because we've given you this over time. Our initiatives always follow a disciplined and focused investment strategy to drive growth. We are expanding ways we serve our consumers and whilst enabling our members and our suppliers to continue to grow alongside us. Our investments have been targeted. They are in our logistics capability. They are in the delivery of our Sapphire stores and in our digital innovation. And all of them individually are returning. When you combine them as one, they are delivering that growth that I showed you a few slides ago. As both Doug and Scott have spoken to, the core of our business is as a wholesaler. We are providing the low -- the optimum low-cost and efficient wholesale and logistical capabilities for our members and for our suppliers. We have built brands and formats that consumers now recognize. They work for them, and they work for the local communities that those members work in. We're building an improved network of quality stores through Sapphire and our 2-brand strategy. And those offers provide our consumers with choice, choice in the market. We continue to make really good decisions in our view, that will add value to our members now and into the future. And we're delivering solutions that, again, as I said before, meet the changing consumer demands that come to us. We have a breadth of value drivers. Volume being the key, but combined with category mix, channel mix, customer mix, right the way through the ability for us to ride the economic cycles that you and we are seeing in the market. One that is specific to the hardware division and you've asked questions about already, and I'm sure many to come, is our retail sales and our company-owned store and joint venture portfolio. This has absolutely provided us with value. It enables us to walk in the shoes of our members. It enables us to provide them with insights of how we experience there every day. We use the model to test and trial our initiatives. And once they're proven, they provide us the opportunity to expand those at scale right the way through the network. We continue to deliver committed scale to suppliers through this same model. A value that our suppliers really put right at the front of our relationship with them. And that value also then flows right the way through to the scale and volume and value that we provide those suppliers for the entire membership of our network. Our strategy, it hasn't changed. It's remained very similar. What it does is adjust to the demand of the consumer. We are ensuring that we drive good strategic choices and our investment return. We are consumer-driven. We have a disciplined approach to our strategy, and we build on the foundations and the heritage that are within our organization. Part of our strategy. Four years ago, we looked at the brands that we had, and we committed to a 2-brand strategy. We were determined that we would leave no one behind. We will bring every member with us. And it took us a little bit better time just to make sure that, that confidence in our membership with this strategy was there. And as you can see, I think, from this slide now is we've made excellent progress, and we are well on our way to delivering the 2024 target. And in all likelihood, we'll probably get there earlier. It was on the basis of this that we now had the confidence to relaunch the Mitre 10 brand. And so we did so in May of this year. It was fair to remind consumers that they have a choice and it comes -- the fact that, that choice is amazing. It's a hardware store. It's a hardware brand that cares more and we're the one that knows more. We have local connection and we have a little bit of personality. We invested in that relaunch and some of the results are very pleasing to see. Our core aim was to really grow the share of voice and one of the things we wanted to take advantage of is growing that share of voice and linking it to our sponsorship of the block, which I know all of you are watching at the moment to see how -- [ Brisbane ] properties can sell for over $4 million. So the results are promising in our brand relaunch but in particular, the one I wanted to point out was actually the example of the direct web traffic. Normally, on a brand relaunch, you would expect to see 50% growth in the traffic of direct web entries from consumers. Our numbers at this moment in time are exceeding 90%, which gives us some confidence that this really has hit the mark. In case you missed the ads, here's one of them. [Presentation]

Okay. So to the change in -- whether it's sales or ownership, I won't speak to brand because we've just done that. And for over 3 years, we've actually had very small movements in whether it be our DIY and trade mix or a corporate and independent mix, the small movement in DIY and trade between FY '19 and FY '22, I think, points to the retention of the DIY consumer. With all the news and all the growth in the trade market, we would have expected this number to be higher as a percentage from a trade proportion, probably closer to that 67%. What we are, however, seeing is our ability to retain those DIY customers and for those DIY customers to keep spending with us. And what that's done is retain that balance between trade and DIY that you see here. In terms of corporate and independent mix, we now have 122 company-owned stores and joint venture -- company owned and joint venture stores. And this strategy was always there to protect and grow the network. But again, the balance of this mix, which you, I'm sure would have expected to be higher on the proportion of corporate has balanced in the fact that this movement is small because of the investment of independents. We have independents joining our wholesale model with the confidence they see that it delivers for them both on scale and value add. And they themselves as wholesalers are growing, adding more stores and more square meters to their own portfolio. I'm sure every single person in this room has a view on the market outlook. Every single day, the newspapers share with us their opinion, some more pessimistic than others. I will try and provide you with our view of what's happening in the market. And hopefully, it aligns to some of yours or give you the information that may help. The left-hand side chart is probably where I'll start. It's the housing starts. And what it clearly shows is the impact of the government stimulus in 2021 where you can see that the starts went really from the normalized average of about 115 to 120 and it jumped up to 141 and then back to 132 and 121. The one thing I want to stress to you all is that is housing starts, and those starts are needed to be done to actually take advantage of the government stimulus package. In terms of what this means for us, well, about 141,000, et cetera, is absolutely our pipeline. And to be honest with you, it has been one that is impossible to keep up with from a completion, a build through to completions, perspective for a number of reasons. Firstly, supply could not meet up with demand. Secondly, COVID lockdowns meant that we could not build at the rate we wanted. Thirdly and also still existing today is weather. It is way too wet and was way too wet in many states, particularly New South Wales and Queensland to enable us to get on site and our builders to build. And finally, something that I think will be with us for some time to come. If any of you are building or renovating on either trade in any way, shape or form, it is impossible at this moment in time to find one that is not already booked up for probably the next 12 to 18 months. So what do we see? We see this as giving us a strong pipeline for the future. We know that the housing starts will rebalance to the 10-year normalized levels of probably 110,000 to 115,000. And as that happens over time, the demand versus supply will rebalance itself. And at that point, when we perhaps get to the 99,000 that you see on the chart, there may be an element of migration coming into the country that again will stimulate the model. The renovation market looks a little bit more optimistic, and that's a good thing. And a lot of it is about time being spent at home and renovating the house for working from home. It's forecasted to remain elevated, and we actually think this is probably potentially even underrated particularly as the unfortunate fires and floods and the impact of that will hit these numbers, and that renovation work will need to be done. So there's probably even more uplift to come. Our diversified portfolio of end consumers, certainly, in our view, enables us to limit the exposure to these cyclical industry cycles. And we have proven expertise in having done this over many a year before. We know and we have proven that we compete in DIY against the best, and we have taken advantage of that renovation growth, and we'll continue to do so. We have a very strong reputation with our builders, and we have a strong reputation and strong relationships with them. Maybe at this moment, I might talk a little bit to build a viability, something that has been significant in the market, and you have read and seen. There is no question that builders have and are under pressure from a viability perspective. Small and medium builders, however, have got to the point where they have built those properties where they may well have lost money and are now at the point where going forward, their numbers will look more profitable than they have over the course of the last 18 months. So we have confidence in the builders that we deal with, will remain viable and we'll be able to complete the bills that are in their books, which is a great news for the homeowners who have builds with them. So to our growth initiatives. We have 3 key growth initiatives: network growth, key to us is moving, as many of you have been with us on the journey; 10 years ago, 11 years ago, when I started in the business, we were a defensive network business, holding on to what we could from our major competitors and the entry of masters into the market. We were fortunate in the fact that we got through that and were able to stabilize the business. Our opportunity now with the network is to go on what I call the offensive and that's not to be rude, it's just to grow. We have the opportunity to grow both in our fragmented market and organically, and I'll get on to that in just a moment. You're familiar with build trade and DIY in terms of our initiatives, and there's an update that I'll give you over the course of the next few slides. So to network growth. As I said, it's -- this is our time. This is our opportunity. We now have data, we have insights, and we have a fantastic team led actually by Andrew that enables us to determine where the gaps are in the market and what the best offer and the best format for that market is. We're really fortunate that our model absolutely also enables us to determine who is the right owner for that model. And in that local format, our first offer is always to our independents. But what we have is the ability, if they themselves as existing members or even brand new members to our network. If this opportunity as a gap is not for them, then we have the ability to still put that footprint down to the joint venture of the company and store network. A really good example of this is we haven't just used Gatton for some random reason. We did the network mapping. We knew there was a gap and an opportunity in Gatton. We had a -- we have an independent member in Plainland, Queensland. And he and his son, Steve and Lincoln Rule took that opportunity and opened their brand-new site in Gatton less than 6 months ago. In addition to that, we are now opening greenfield sites. You may or may not be familiar with the fact that there are new suburbs opening in the Sunshine Coast, Aurora and North Lakes and we will have 2 greenfield sites opening in each of those or 1 in each of those. So 2 greenfield sites while opening those 2 suburbs, 1 in November this year and the next in January. However, I think the winning Quinella, if I was to look at it, is probably the example that I'm about to show you in a video, which is Atkinson's down in WA. Rather than me tell you the story, let's -- I'll let Greg do it for me. [Presentation]

Just continuing on our growth initiatives. You are mostly familiar with our Sapphire program. We started this program over 8 years ago now. We did 10 stores a year. This year, we'll complete 40 weather willing. And that queue of independents to jointly reinvest in their business and deliver growth and a best store in town has not let up from the day we started this program, and we're thrilled that it just keeps going. Build trade, largest part of our business, the area with our strong heritage. You've heard us -- you've heard me certainly talk about our Whole of House strategy for a few years. And we still have that same desire to grow the end-to-end offer to our builders every day from that 35% to 50%, and we absolutely know we can get there because we already have builders buying in excess of 50% of their entire build through our stores. It pretty much is a slow burn though, what we need to be able to do it effectively and with good action is to ensure that we have the right data in place. So we tested and trialed this through our company-owned store and joint venture network. And actually, we have some very good results, which are on the next page. In FY '22, we took 260 targeted builders. They were our low end. 21% of House is really what we thought we had from the CRM that tells us what they buy and more importantly, what they don't buy from us. We targeted them, our trade account managers built exceptional relationships with them. And despite the fact it was exceptionally hard to get hold of any inventory and convert builders from their original home store, these guys were able to actually convert 21% to 36%. It is about making sure that we've got that breadth of offer that Doug touched on right at the very beginning. And our Frame & Truss operation is key to doing that as is right the way through to the other end of the whole of the build, and that is making sure that we've got that design 10, either showroom or online offer available to each of our builders. Jarrod Spearman, who is our GM of the Keith and Banner business, you'll meet him tomorrow. We wanted to take you to Footers, which is our newest acquisition of Frame & Truss. It's a little bit too far out. So instead, we thought we'd bring it to you here. [Presentation]

Tomorrow we will take you to that store and do the classic trade, which is get in, get out, get on with it because Marin's got to get you to an airport, but we'll take you on the bus and we'll take you through the trade store. You know and I've spoken about it before, builders they live very busy lives. And certainly, what they're looking to do is stay on the tools as long as possible. And that's our job. Our job with our trade technology is to make sure that they stay on site where time is money. Our job is to organize the disorganized builder. And again, this is where our technology differs from others. Our intent is to retain the builder, ensure we add value to them and at the same time, add value to the member that takes advantage of these tools. And each one of our members is doing so every day by adding these tools to their model to ensure that they can keep their builders as sticky as possible. In DIY, we've had a shopper-led range option for a long time, and it is continuing to deliver those positive consumer experiences. Everything we do now is based on scan sales, not wholesale sales. It's shopper-led, it's not supplier-led and therefore adds value to the consumer. We continue to work and look to those opportunities where we have differentiation, key examples are Weber, Stihl, and more recently, Kings Camping and other alternate offers that our local members have that suit their local communities. You heard about the marine products that Greg stores at Atkinson's. Our DC continues to provide the offer that is right for members whatever their size; small, medium and large, and is the only one that is available to an independent network across Australia. And we will continue to focus on where those emerging categories are, garden has been significant and remains so. But our opportunities in kitchen, bathroom and laundry are sizable as it really speaks to the high-value service offer that independents can provide. The other element is outdoor living with all of the homes and the time spent in the home and working from home, outdoor living, whether it's barbecue, outdoor furniture or Power Garden, as Paul will referred to, is certainly an area of growth. In our digital solutions for DIY, we see consumer demand and support for the success of this model that we're providing. The growth means that we've got the right solution and we continue to see growth even in a lockdown position. Mainly, obviously, in the states that were not in lockdown, particularly Queensland, South Australia and WA are continuing to grow in this market. It's got a high adoption by all our members and the other opportunities we're seeing is how we can connect with Paul and his team of total tools and their success in this arena with us combining those 2 teams and ensuring that we're driving the opportunities for the consumer across both. And Paul, I know we'll talk to that in the next couple of minutes. For a low-cost operation, we focus our attention here on how we drive more consumer-driven solutions that add value and ensure that we are delivering value for money in the investments that we provide. Coming to a close. We have investment plans in place to support those growth initiatives. We are fortunate that we have the capital funded and supported by Alistair and Doug and the Board. And our plan is to continue to grow the network, but now not just through that fragmented acquisition model, also now through organic growth for our members and for ourselves and using the Sapphire program to do so. We'll continue to build trade and invest in those convenient sites for the builder and the technology that enables them to stay on site, where time is money. And we will absolutely grow the DIY consumer having retained them from that pandemic model and then continuing to love what they see and the offer that the local independent provides. So finally, to summarize, we are very focused on our growth plans. We want to grow the #2 position that we have in the hardware market with trade remaining our strength. We will champion independents every single day of the week, and we'll continue the investments, Sapphire to make the best stores in town, digital solutions to ensure a consumer can trade with us anywhere, anytime, any place. We'll build on the Whole of House and ensure that we've got the data and the insights to ensure that our members can do the same. Yes, the economic indicators suggest there are headwinds but I hope you think, as we do, that we are very well placed, both with our proven track record, but also with our mix and the opportunities of the pipeline ahead to ensure that we manage these cycles profitably. Thank you.

Time for some questions.

It's Lisa from Goldman. Just wanted to dig a little deeper into DIY. And thank you for your slides, I think, on 14, 15. But I think maybe they are referring more to trade with new starts and renovation. Can we talk about what really drives DIY? And if price, housing prices have a factor to play? And then second part of that question is how have we -- in terms of loyalty, that $1.2 million we talked about, is that -- can you give us a split between the DIY versus trade and how that's moved over the last 2 years?

So maybe I'll start with the easy one, which is the second. The $1.2 million is all DIY. We don't -- we see our loyalty in trade about our account customers. So all about our account customers, so we measure them on an account basis. We don't see that as separate. So however, it is an opportunity for us but all DIY $1.2 million. Your second question was really about how do we see the DIY growth and where do we get that growth from? A number of factors, I think, are driving our DIY growth; one, as we've talked about, the pandemic shift and retaining the customer; secondly, actually, the sea change in the tree change of movement of population has seen consumers move to towns where we are stronger than we are in CBD sites. Our Mitre regional mix is very skewed towards the regions. The third factor I'd probably call is the fact that actually we have for some time, enjoyed a very -- the ability to provide our members the opportunity to be very competitive. And our online offer shows that. So if you remember, a customer goes online and compares our pricing to that of our nearest competitor, they will be delighted by the fact that they can see as a price match and that runs right the way through to our store model.

How does DIY [Technical Difficulty] housing prices?

Well, it's a great question. In my opinion, there is enough and there is currently a significant amount of disposable income. The DIY customer is the person working from home. They want -- they're spending more time at home. They're traveling internationally. They're probably traveling -- spending a little bit less time in restaurants and cafes, et cetera. So they're putting that money in our view and spending more, as I said, right at the headline there. We think the amount of money spent from the share of wallet is being spent on the home, and that's mainly DIY.

[Technical Difficulty] compare to '21 strategy, it has not increased? Why.

No. mainly because we've cleaned it up to be honest. And what I mean by that is in that $1.2 million back in '21, what we had was a number of DIY loyalty customers that really haven't traded with us for a long time. So what we've done is we've cleaned that up and made these much stronger and active customers. Yes.

Tom from Barrenjoey. I've just got a couple of questions on the CapEx. I think it's Slide 24. I don't know if someone can bring that up, good. I think it's like $46 million to $56 million of CapEx you're spending a year. I just wanted to know how much of that is buying stakes in retailers or like a profit stream where you get like an automatic uplift in the profitability? And then how much is, I guess, more kind of maintenance?

Yes. So referring obviously to that retail network, $20 million to $30 million, I think, is probably where we should target that answer. That is not stay in business CapEx for the retail joint venture company-owned stores. That is acquisitions. And in terms acquisitions or investments, probably is a better way to put that. And that is threefold; one, I think, is us investing in our retailers already within the network that may want to retire. And a good example of that would be [indiscernible] in Tasmania. We've recently acquired that business and taken that into the [ Clenette's ]joint venture. In that element, we already have this wholesale. What we get is the gain of the retail and any uplift that comes from that. Of the $20 million to $30 million, I would suggest that's probably about 40%, depends -- it varies per year. I don't have an exact number, and the other would be acquisitions from clear independents in that fragmented market.

And what sort of multiple do you pay? So if you spend $25 million, what is that kind of uplift?

I'm looking over to my guiding lights in public relations and finance to see whether I'm allowed to answer your question.

[Technical Difficulty] improve the overall performance.

So what is the low end of the multiples?

But that's liken the uplift that you should get every year in that business from that -- the extra profit you get there?

Yes. I still don't think we're going to answer your question.

It's Bryan Raymond from JPMorgan. Just on the inventory availability and inflation trends and how the market is behaving at the moment in terms of rationality with your major competitor? Like are you seeing any improvement in availability? And is that flowing through to less inflation? And you're seeing costs being passed on pretty rationally there.

Yes, really happy to answer that one. It's a great question. Certainly, we are seeing significant improvement in the availability of inventory, particularly in where we were this time last year from a timber and building supplies. There are still pockets of challenges, particularly windows and insulation to name a couple of examples. And as those have been with us for some time on the timber journey, as demand and supply comes back into balance, then pricing stays more stable. And we've certainly seen a slowdown in price inflation in the last quarter.

Can you put any numbers around that in terms of like what it's from and to?

Yes. So I would say, at this moment, we're talking low teens in trade.

Come down to low teens.

It's come down to low teens in trade, and it was fairly sizable prior to that. So low teens in trade. And I would say pretty stable in our DIY inflations to high single digits. But no, we don't anticipate too much change in the DIY inflation, but we do see probably continuing leveling in that inflation. I'm probably just in trouble now giving you an outlook that I should not have done. I'm learning the, what I can and can't say things still.

You can say everything.

Yes. No, I know I'm in trouble. Here we go.

It's Michael from Jefferies. Given the success of the Mitre 10 brand and how much of investments going into marketing and developing that brand, how are you thinking about the Home Timber & Hardware brand going forward? Do you need it if you sort of think a long way into the future? And will you continue to invest in that brand over the short-to-medium term?

So maybe just to put into context, one of the decisions that we made as we move from 4 to 2 was where we would invest our money. And we were very clear with the membership that pretty much 95% of our marketing investment in brand would go into the Mitre 10 brand. And so that's what we've done. And therefore, the Home brand isn't heavy in terms of our own capital and our investment to support that brand. The members are very happy with that. They're really comfortable with what we've done from a Home member perspective. So for certainly the foreseeable future, I don't see any change to that. And we'll retain all of our focus and investment on the Mitre 10 brand.

And why is that? Is it because the Home members don't want to leave their brand? Or is it more to do with site overlap or something like that.

So I think it's a combination of a couple of things, Michael. One, it's a great brand. It's been around a long time, and it's got good heritage. So it's recognized. The number of people who came up to me and asking about the [ dogelogs ] is, quite frankly, bizarre, but they love them. And so why would we move away from that. The Home members are very passionate about that brand as we expect them to be. We still have coexist locations probably about 35 to 40 of them. So we're conscious of that. And this does provide an offer that is really very welcome. So that's our current plan.

Good. Sort of following on a little bit from Mike's question, just why do you position yourselves as the other hardware still for Mitre 10? Because your [ picture is saying ] that you go to Bunnings or us. And just when you sort of look at the data, where do you think you're winning share in the Mitre 10 space at the moment. Where do you think you're winning it? And do you think you're [indiscernible] yourself just trying to compare yourself to Bunnings indirectly via that tagline.

I think we do have to recognize the market size and the brand recognition of our major competitor. And to some degree, the view that hardware or going to a hardware store [indiscernible] one thing. Our view is that cheekily we wanted to provide choice. We wanted to ensure that everybody recognized that there was a different option. And that's where we -- through our market research, we've got a very clear view that, that was a good way to do that. So we're confident that it's delivered some results. We enjoy the personality that it's given us. And it's something that actually we can use, I think, quite well to differentiate ourselves from our competitor as we go through and build more ads, particularly online, where we can be quite dynamic with it.

So if you look at obviously Total Tools and I know we're talking about Total Tools next but -- when you look at things like [indiscernible] and these sorts of business, obviously falling into that portfolio, are those the sorts of businesses you would be comfortable looking to bring into the independent hardware group portfolio now given that sort of Mitre 10 is being positioned sort of the retail price to get Total Tools [indiscernible] you will trade. Is this how we think about the evolution of the intended outlook growth?

I think it's not a bad way to have a look at it, particularly with that Whole of House model. We're really wanting to ensure as broad as we can, it provides us a profitable return on investment that, that Whole of House model is there for that exact reason, from foundation to fit out. And so we will look at opportunities that fall within that, that are able to provide us good returns and add value to the build around our member.

Sean Cousins, UBS. Just a question on Frame & Truss. Do all of your Frame & Truss operations nationally look like the video you've shown us? And how do you manage the execution risk in that business because we understand labor, health and safety, it's a little trickier than what you do otherwise. I'm just curious around how you manage that risk, particularly given how important it is to the start of that program of the whole of house.

Yes. No. Sadly, they're not all exactly the same. That as Jarrod suggested 3 years in the making and had some good investments. We have got good Frame & Truss operations across this country, but they're not all like that. Yes, they have some capital intensity, but the upside opportunity and the return on those investments when you add the downside and the upside together to give us that opportunity for Whole of House is a good return. We're really clear that safety is key. We have touchwood a strong safety record. But every single day, we get up and to be honest with this one thing kicks me and our teams awake at night. We are dealing with some machinery that can be very dangerous and moving heavy equipment. So a big focus for us. We've got a good TRIFR record that equals our competitors despite the fact that we're [ heavier ] in that trade market. So the right decision for us to be strategic in that Frame & Truss operation, and we will invest wisely to ensure that they stay safe and return -- provide returns for us. And I am getting the windup -- so my apologies, I'm here all afternoon and tonight, so feel free to catch up over there. Thank you. Sorry, I should introduce Paul Dumbrell. My apologies, Paul, welcome. Paul Dumbrell, Total Tools.

Thank you, Annette. And that's and appreciate everyone coming this afternoon and look forward to talking all things Total Tools. As Annette introduced Paul Dumbrell, being the CEO of the Total Tools business for the last 4 years, and it is my second time within the Metcash family as well, so good to be back as well. So let's talk to Total Tools. As Mark outlined at the last Investor Day, Total Tools remains at its #1 position in the professional tools sector, and it's really driven its growth over the last 10 years, and we'll talk about its track record of growth as well. It's growth driven by not only our network store growth, but also a strong underlying like-for-like growth, consistent growth over many years and through many different cycles as well. We are a franchise model, but I'll prefer you to think about us as a vertically integrated retailer. We'll talk later about our structural advantages of a business, 1 ERP system as well, which really enables us to think and act like a vertically integrated retailer but with the benefits of being local and having franchisees across the business as well. More recently, we have opened a retail network similar to the joint venture network that Annette spoke about earlier. And it's absolutely a key strategy to drive growth within our business, not only our network growth, but also to give succession planning opportunities for retailers across the country as well. Naturally, there's a capital investment required in owning and running a retail network, which we'll touch on later as well. We have a digital ecosystem, which is absolutely a competitive advantage for our business, and it's absolutely led by the ability of our vertical integration through loyalty, digital, e-commerce, data insights, and essentially managed tech stack on behalf of all of our 101 franchisees, and that's underpinned by 1 ERP or 1 point-of-sale system. So our teams have full line of sight across every single store across Australia across every single customer that shops within our network as well, leading us to an absolute strong position within our marketplace as well. We'll talk a little bit here about the successful track record because that certainly underpins our belief of our future growth across the business as well. There's been a number of step changes of performance across the business over the last 10 years, but call out sort of 3 key segments of our business as well. Back in 2014, the launch of our digital program or e-commerce across the 14- to 17-year period, we grew the network circa 90% in network turnover. We grew our stores by a similar amount, nearly 90% as well. And more importantly, we grew our Insider loyalty program, one of the key strengths in assets of the Total Tools business from 54% penetration to near 78% of our total sales driven through our loyalty program as well. From '17 to '20, we doubled the turnover. The retail network turnover across the business, with only adding 30 new stores -- 30% new stores to the network as well. Our Insider penetration grew from 78% to 89%, and our online or digital e-commerce sales grew from 0.6% to circa 9% of our network sales as well. Then came the COVID period. We started from a high base, 80 stores and across the 2 and a bit years across the COVID period, we grew our network sales, our franchisee network sales by in excess of 50% and added 25% of new stores to the network as well. We're able to consolidate the Insider penetration and holding that at 89% of our sales and really growing our e-commerce business as well, consolidating and continuing to see growth over and above the lockdowns we experienced over the last 2 years in a number of states. Underpinning that, we've established the JV strategy or owning our own retail network, we'll touch on later today with over 38 stores -- with 38 stores across our JV and company owned network in less than 2 years. Metcash joined Total Tools as a partner 25 months ago now. So in some aspects, it feels like 4 or 5 years, we've been on the journey together. That's absolutely been a fruitful relationship for not only Metcash, but also the Total Tools business, our franchisees and also the Total Tools shareholders as well. In that time, Metcash also acquired a further 15% of the business to support our accelerated growth programs. that we saw ahead of us over the coming years. And we are now at in excess of 100 stores with retail turnover of north of $1 billion. So if we talk about the Total Tools store, let's talk about the customer. We call them the end user. It's a person, the trades person who makes money from using that tools every single day. 55% of our business is through plumbers, electricians and carpenters and 80% of our business is on cash. So not in the folding type, which Alistair might get a little bit nervous about, but not on account, if you put it that way as well. So a highly cash-generative business for our franchisees. As we said, we've got 101 stores, $1 billion worth of turnover. We have an exceptional digital ecosystem across the business, 89% of our total sales through Insider program and in excess of 9% of our retail sales through our e-commerce platform as well. We have a strong leading position with many of our suppliers across the country as well. We have some multinational brands, we see Total Tools in conjunction with IHG as one of the fastest-growing partners within this region as well. We have a strong and profitable franchise network. We have our average store turnover of our like-for-like stores of in excess of $11 million pointing out the last Investor Day we did, that was circa $8 million, highlighting the strong growth of our network over the last 2 or 3 years. We talked about a customer obsession. Some people might roll their eyes and that's a unique name. But everything we do is all about with the focus of our end user. It's all about how to ensure we give them the right tool at the right price at the right time in the right location, certainly putting our point of difference across the business as well. As we said, we're a vertically integrated retailer and very simplistically, we empower our teams in our stores with all the information and the knowledge they need. For instance, our customer obsession is measured by NPS. So we have an extremely strong NPS program in place, an 80% NPS score across all the 101 stores across Australia and we are taking customer feedback every single day across every single store all year round. Certainly, reiterating our point of view, it's all about the end user and ensuring that they have the right level of experience in all of our stores. We talked about the store a little bit more broadly. We spoke about our customer service focus. The focus is everything in we do. We ensure that our teams are trained effectively. We partner with our franchisees to ensure that they have the tools and knowledge that they need to ensure that they deliver our strategy at a store level as well. Our store formats continue to evolve. As shoppers continue to change and the thematics of industry changes as well, so with emerging categories, continue to challenge us to see how we can sweat our assets harder and partner with our retailers. A couple of years ago, we talked about our Generation 2 upgrade. As you can see on the right-hand side of the screen, more known as our [indiscernible] program. It's pretty simple. Our last was yellow, now it is black. And what that is, is a really enticing retail environment as well. So we blend ourselves between a warehousing environment but also with a retail focus to ensure our customers have a really strong customer experience. In our view, that's a very big point of difference against some of our competitors as well. As we sit here today, we only have 14 stores to go on our Generation 2 upgrade as we -- a number of years ago, there was 20 or 30 stores to go. So there's certainly a commitment and a belief with our retail network of the success of the Generation 2 upgrade as well and that's a circa investment of $400,000 to $500,000. So not insignificant investment for our retailers, but what the evidence shows is that they're actually behind that investment and seeing strong returns by going that way. Our network has continued to expand in square meters. Two years ago, we sat here and we talked about our average store size being 1,250 meters. We're sitting here today, and that's now 1,500 square meters, and we're seeing that continue to grow. Some of our competitors have a different strategy in larger formats. We're very comfortable with our network growth and our target size, being physically responsible with our retailers, and I'll touch on that in a second about our measurement of sales per square meter. Our $11 million average sales across stores has bookings of circa $5 million to in excess of $25 million across the country. So certainly a wide range of network performance across the country. At the last Investor Day, Mark spoke about our average sales per square meter being $6,600. That's now grown to $8,300 per square meter across our retail network. So whilst we continue to grow the average store size, we're continuing to see that leverage within each store as well, driving a strong financial return to our retailers as well. We talk about competitors, we talk about price; price once was a key differentiator in the business, now it's a [ high change ] factor in our model, and we absolutely have a low-price guarantee across our network as well. We changed hundreds of prices every single day. We scrape thousands of products per day and it is absolutely a key point of difference to that our customers have trust in the price when they come and shop with us in store. We manage our pricing essentially for all the 101 retailers. When we change the price, it's automatically changed across the country. So there's price trust in our model as well. When we go to our [indiscernible] you'll see some of the insights and the changes that we're making to our in-store execution as well to ensure that, that remains a competitive advantage for us moving forward. In terms of the network, there's significant growth opportunities as we look forward over the coming years. Looking backwards, we've opened up 20 stores in the 25 months since Metcash partnership, 11 stores last year and our metro and regional split has remained consistent at 60% metro, 40% regional, even though we've opened 20 stores across the country. So giving a lot of confidence as we grow our stores, whether it's metro or regional, the mix of business continues to drive, and we have consistent levels of performance across both our metro and regional stores as well. The key point, people might ask I'll get ahead of the curve is as competitors enter the market and Sydney Tools and others open more stores, our stores that we've opened over the last 2 to 3 years are continuing to meet or exceed our ramp-up or our maturity phase of our business and expectations as well, and that is significantly above where they were pre COVID as well. So we have utmost trust and belief in our model that we're driving the right levels of returns and engaging with our customers in the new PMAs as we open them across the country. In terms of our suppliers, and I'll touch on 2 points here, not only our national brand suppliers but also our exclusive brands program. Private label has been a key point in a number of the presentations from Scott and Annette and Doug earlier today, and I'll continue to talk about that as well. We are a large supplier -- a large partner with a number of our suppliers within Australia, and we are 1 of the fastest-growing businesses in a lot of their stables as well. So the support that we're getting, the strategic partnerships that we are able to set up with our supply partners are extremely strong and have served us well over the last 10 years, and we see them just continue to serve us well over the next 10 years as well. If you talk about the concentration, it's quite different to a number of the other businesses within Metcash. Our top 5 suppliers are 65% of our sales, our top 10 suppliers are 72% of our sales. So very much aligning to enable us to have really strong and strategic relationships with our suppliers and leveraging our data and our digital ecosystem to ensure that we are aligning to not only our strategies, but also aligning to our supplier strategies that there is a win-win across the value chain as we move forward. If you talk about exclusive brands, exclusive brands is actually our third largest supplier. So within that 10 -- our top 10, exclusive brands is actually the third largest across all of our brands. What makes that really exciting is we have in excess of 10 different brands. We segment our business based on category and we develop personas and brand identities for each of those brands, which are suited to the individual end user who uses those brands. What the key point of difference is that our Total Tools Exclusive Brands doesn't fundamentally operate in the power tool segment as well. So circa 40% of our business is associated with power tools, which our Exclusive Brands programs generally don't play in that space as well. So whilst it's only a reasonable number at 12% as we outlined at last year's Investor Day, it's quite a meaningful number in terms of the available penetration that we have in our business as well. In terms of the competitor set, certainly, a growing space, a competitive space. Over the last 10 years, it's continued to be competitive space -- as we sit here today, there are fundamentally going to be 3 key national players who are running bricks-and-mortar retail outlets. Total Tools being the market leader, Sydney Tools who are continuing to grow their network at circa 65 stores now and the Adelaide Tools rebranded TKD business owned by Bunnings and Wesfarmers as well. I guess the key question that gets asked of me a lot is where does the volume come from? If you look at the professional tools sector, some 10 years ago, we were only $175 million worth of turnover, now in excess of $1 billion, our other competitors seeing strong growth as well. The business is not only coming as a direct conflict across the 2 businesses. That's actually the smallest part of where the growth comes from. The key growth comes from independents or key specialist businesses, which are segment specialists. So whether or not mowing shops, whether or not specialist automotive businesses or power tool specialists, who don't offer the wide range of the convenience factor that we and a number of our competitors offer today, that's absolutely driving our growth and gives us more confidence into the future that as the market will go through its typical variations in demand that we have a strong ability to continue to grow our network and take a market share of the broader sector. No doubt, Wesfarmers is a very strong business, a very strong balance sheet and absolutely can obviously run very fast. 11 stores today, focused mainly in WA as their new brand. They've rebranded their South Australian stores, and they are opening up their first store in Queensland later this year as they come and combat the East Coast of Australia. We are confident we've got a really strong operating model, we deliver strong financial returns to our franchisees and our retailers. We absolutely have the first-mover advantage, not only in the metro, but also regional areas, but also with our digital ecosystem as well. We have extremely strong and strategically aligned supply partnerships across all of our key suppliers as well. We have an obsession with our customer. Every decision we make every single day is with the end user in mind to ensure that we're making the right decision for our end users to ensure that we make their lives easier every day. And more importantly, we have a franchise and retailer network who are continuing to reinvest, continuing to reinvest every single day. We had our national conference a couple of weeks ago in Queensland. And what we took out of that was more stores, more franchisees wanting to open up more stores more quickly, serving it in a way to have a better trust and confidence in the network ahead of us as well. In terms of the drivers of strong growth over the last couple of years and probably this is more so over the last 5 years as well. We continue to grow our network not only from a like-for-like perspective but also growing our square meters. Our networks continue to expand. We've got 1 retailer who has relocated his store 3 times in 7 years for him to keep up with the demand of his business in the regional town. We've got our retail network that we have invested significant capital across the business with our joint ventures and company-owned network, and we are on track to deliver in excess of 50% of our profits through our own retail network as well. There's been range expansion across the country. There's been emerging categories, Doug touched on outdoor-powered equipment before, we'll hear Greg from our [indiscernible] franchisee tomorrow and joint venture partner talk about [ OPE ] within the store. The category fundamentally didn't exist for Total Tools a number of years ago, and that will be a key meaningful part of our business as we go forward as well. And then touched on the macro trends driving the hardware sector. Total Tools is aligned, but somewhat different. We are more linked to a [ reserved ] renovation market, we're certainly not linked as much to the housing construction starts with renovations, infrastructure and the small maintenance part of the business is certainly where we are linked and leveraging our Insider database as well. We've touched on the digital ecosystem, our Insider loyalty program growing from 50% penetration to an excess of 89% giving us the insight and the confidence to trial new formats, trial new ranges and engage with our customers in a meaningful way that we make a difference in their lives as well. In terms of the vision and mission of Total Tools, every day delivering the right range of tools and advice to customers are built in the future. Brand essence is Every Tool, Every Trade, you'll walk into the [indiscernible] store tomorrow and some of our customers call it tool heaven. You walk into a store, 1,000 or 2,000 square meters, $2 million or $3 million worth of tools. It's like a candy store for trades person. Our strategy is underpinned by 5 real key pillars of growth. We've talked about our network growth, not only growing our store footprint in square meters, but also growing our commercial B2B aspect of our business, which certainly hasn't been a key focus for us over a number of years, but it's absolutely where we're seeing a significant growth opportunity over the next couple of years. We talk about user level range or customer focus, customer-focused ranging, ensuring that we have the right range at the right price in the right location is really the key, leveraging our insights across the country to ensure that our retailers have the right range within their own store. Building the ultimate customer experience is a key pillar and focus of our business and a key link of what we spoke with our retailers last couple of weeks ago at the conference as well. It's through the digital ecosystem, it's through our customer value proposition, and it's also involved our in-store experience that our customers experience as well. And Greg from [indiscernible] tomorrow will talk about that, considering he just completed his upgrade to Generation 2 over the last 3 or 4 months. So he's got first-hand experience of what these customers are saying to him about the improved experience. Our retail network, our joint venture and company-owned network is absolutely a key pillar of our growth and a meaningful contribution to the business now and continuing to grow into the future and working smarter. One of the benefits of having a vertically integrated retail network is the insights that we have on all of our franchise retail partners. We take ownership of the end-to-end profit and loss. We focus on driving efficiency within their business and leveraging our insights to give them the tools to make their business more profitable and continuing to drive sustainable growth across the business. If in terms what both Annette and Scott and Doug spoke about earlier, certainly, the core capability of Metcash across its wholesale and logistics distribution and strategies as well. We're excited to talk to our retailers over the last 6 months that the Total Tools exclusive brands program will be leveraging investment that net and the IHG team have in the Ravenhall DC in Australia. So absolutely leveraging the key knowledge and experience of the broader Metcash business. In terms of the attractive model, I think Total Tools is very clear that they've built an attractive model which is replicable and consistent to be able to deliver sustainable growth for our retailers. We have 1 ERP system, which enables really lifetime decision-making and key opportunities to leverage that with our support of our retailers. We have a focus on our customer engagement end user focus through our loyalty, e-commerce, CRM, NPS and also training and development, leveraging the point of difference that we want to have against our competitors as well. And then the third point is the ability to deliver all those key programs as well. One of the benefits of owning your own retail network is the ability to test and learn aspects of the delivery of the CDP or new initiatives within the business. And our retailers look at us, and now we can say to them that we're actually spending our money, learning and developing our retail models as well, which gives them utmost trust and respect that they are leveraging and continuing to do what we do as well. In terms of the value drivers of our business, very simple for our business, absolutely a volume-driven business, driving network sales across our whole franchise network. As a typical franchisor, we get the benefit of a royalty off the top line as well as we are leveraging our wholesale businesses and support services to our retailers as well. We've continued with the range expansion, category expansion, driving our exclusive brands program over many, many years, and that's a key point of difference for us as a business. It's a heritage of Total Tools, exclusive brands, and it's one of the things that we are very proud about our delivery of our EB strategies as well. We've got our retail network, our investment in capital into our JV stores as well as our company stores continues to show strong growth, and we're delivering strong returns for the capital that we've invested across that segment of the business. CODB, we'll continue to drive efficiency in the business. You'll see there some of the initiatives that we're bringing into the store to drive efficiency within our business as well. We had 1 ERP, key insights, benchmarking, labor efficiencies, marketing efficiencies that we look across the whole business, and we ensure that we give the right tools to our retailers to ensure that they drive sustainable, profitable growth across the whole of the country. Customer mix, we've spoken about commercial being a key opportunity for our growth of our business. Some of our competitors are extremely strong in that sector, and it's 1 aspect of our business that we're continuing to invest in driving market share growth across the country, and we see that as a key pillar of our growth across the country over the next 5 years as well and continuing to evolve our formats. Total Tools once was a one-size-fits-all model, what we're now learning and experiencing and developing across the country is a wide-ranging model. We're opening stores at 500 square meters in areas. We're opening stores in excess of 3,000 square meters in some areas as well as we tailored the range and the PMA demand to ensure we have the right size store in the right location with the right retailer driving the right financial return across each of those stores. If you talk about growing the network, so we talk about the key initiatives across the business, talk about growing the network, and you might see quite a large reduction in capital invested in this part of that pillar. We had outlined here $20-plus million in terms of the growing network over 18 months ago at the last Investor Day. The confidence of our retail network has continued to see that they're opening up more and more stores across the country, and I'll touch on that soon as well. In terms of our customer experience and the in-store engagement, we need to continue to leverage our ecosystem of digital, accelerate our learnings and insights to ensure that we're making the right decisions to support our customers. We talk about our customer end user focus. We've talked about NPS, how do we ensure we give our retailers the right opportunity to leverage and ensure that our customers remain sticky with us. In terms of the customer value proposition, we've been doing a lot of work over the last 12 months on this. Understanding not only how we -- why we win today and how we win today, but how are we going to win to the future. How our customers are changing, what we need to do to change our model to ensure that we're relevant and remain ahead of the pack in terms of the in-store experience across the network as well. You might call out -- we talk about digital and loyalty and the key point of difference of that in the business and is setting at a modest level of capital investment associated with that. We are focused on internalizing all the capability within our business. So we have a large internal team who focuses on our digital and loyalty programs as well. So we believe it's prudent that we continue down that pathway and we continue to leverage the benefits of that strategy as well. We talked about JV conversions, and I'll touch on that a little bit later on, but also the synergies. We talked about the core synergies at the last Investor Day, circa $5 million over 3 years, and that's on track to be delivered in line with expectations, but we are turning our mind now to more of the growth synergies, how we can leverage both the IHG business and the Total Tools business to ensure we continue to see significant growth across both of our businesses. We talked about network growth over a long period of time. Certainly, you'll agree with me, it's a consistent and long-standing track record of driving growth within the professional tool sector. Why, some might ask. We have a lot of confidence in where we've come from. And we have more confidence as we move forward now for the key pillars of our growth. We have independent franchisees with our joint venture program. We have our company-owned program, which is there primarily to ensure that we have network growth and we're continuing to fuel the pipeline of new stores moving forward. And now we've got the IHG co-located sites as well. I shared earlier with net that one of our independent franchisees within Total Tools rang me last week and said, he is just forming a joint venture with an independent Mitre 10 store to open up a store together in a regional area. How exciting is that to ensure that both networks working together and partnering together to serve the end user more effectively. In terms of the network, we actually today have more demand for stores from existing franchisees and new franchisees than what we actually have stores available today. Further enabling us to sort of slow down our capital investment in company-owned stores as we continue to try to accelerate our network growth and into more regional areas and filling the holes where our network currently doesn't exist. Over the next 8 weeks, we'll open up 6 new stores across 4 different states. And you can see there we've upgraded our network growth opportunities from 150 stores to 170 stores into the future as well, serving a long pipeline of opportunity and growth. And certainly, it's a belief of our retailers as they continue to show confidence in the model as we move forward. As we spoke on there, we have outlined 4 co-located stores across the country, which we've opened over the last 14 to 15 months there in metro and regional areas. They've got different formats. We have got DIY trades to DIY and Total Tools stores. We've got trade Mitre 10 stores and Total Tools stores as well. So we're continuing to share our learnings and continuing to articulate what success looks like into the future. But the early phases of these stores, both sales and profit across those stores are quite strong. We're looking forward to continuing to see and prove that concept out into the future. And 2 of the 6 stores I just spoke about earlier, which are going to open up in the next 8 weeks are actually co-located or joint sites as well, which is really exciting to continue on that journey. In terms of our digital ecosystem, in terms of customer engagement, digital, e-commerce and loyalty, we have an end-to-end user view -- end-to-end view of our user with 1 tech stack across all aspects of our businesses, we understand how they're shopping in store, how they're shopping online, they're interacting with us on social media and how they're interacting with us on their mobile as well. All that -- all allows us to drive hyper personalization to them and ensuring that the data they give us, we're using it for good and giving them the opportunity to make their lives more efficient. Our digital e-commerce platform, 2014, 0.1% of our business to now in excess of 9% of our business as well. And we're continuing to see growth opportunities as we leverage the insights that we're driving from our end users across the business as well. In terms of the insider loyalty program, we've talked about it a number of times, but it's at the jewel in the Total Tools crown. We've added 500,000 new members across the insider program since the last Investor Day, further showing that our customers are our end users agree with what we've been talked about today. Personalization is all about making our end users more efficient in their daily lives. How do we use the information they provide us and how do we ensure that we curate and recommend the right tools at the right time that they're looking to buy. Our gold memberships like all loyalty programs are extremely strong, circa 40% of our business is through our gold platform. Customers who shop in excess of -- will spend in excess of $2,500 a year with us, and they're shopping with us in excess of 9x per annum. Our silver members are shopping with us in excess of 4x. So very loyal and trusted customer cohort there. The confidence in our program and the loyalty insights has enabled us over the last couple of years to completely change our marketing mix as we go to market as well. Moving away from typical traditional catalogs, et cetera, to more personalized tactical promotions and that our competitors find it harder to match and focus on what we are doing. Our customers are saying, we're doing a good job. We think we're doing a good job and more recently, SAP also awarded us the best brand CRM and customer engagement program in Australia and New Zealand as well. So a big call out to our team and one of the great opportunities is working with IHG is we're able to share the insights and the best practice across both our businesses as well. In terms of the JV program, it's a key point of difference and the key reason why the Total Tools shareholders chose Metcash as a partner that a long track record of developing and growing our joint ventures and that's absolutely the insights and the knowledge that Annette and her team have absolutely helped us on that journey over the last 18 months. From no JVs 2 years ago to 30 JVs in less than 2 years since the last Investor Day, well circa 22% of our retail network was with -- throughout our JV network. Now that's in excess of 45% of our network retail sales. We have put in calls in place with all of our JVs. So generally range 3 or 4 years after we purchased those stores. What's more exciting about the confidence and the belief of the direction we're going within the network is our JV partners are now looking to extend their put options so they can stay within the business and continue to reinvest and grow the business alongside us, which is great to see. Of the 6 stores we spoke about that we're opening up over the next couple of months, 3 of those stores are actually joint venture stores, that's new JV partners who are opening up new square meters on the ground, once again, showing that there's a lot of confidence within the sector of Total Tools. If we guide the JV acquisitions, we see 8 to 12 JV acquisitions per annum over the next couple of years. And we certainly have done a number of more -- over the first 2 years as we consolidate and look to partner with the best stores in town. Our strategy is all about picking the best stores in town, stores and JV partners who are aligned to our growth and want to continue to see network growth opportunities within our business. That's the criteria of our joint venture program. Circa 50, we're targeting circa 50% of network stores being in our JV and company-owned program over the next couple of years. And one of the key things in that last yellow box at the bottom of the slide is our founding TT shareholders are continuing to reinvest. The initial tranche of purchase from Metcash when Metcash acquired 70% of the shares in Total Tools Holdings in excess of 50% of the proceeds of capital that went to the Total Tools shareholders actually was reinvested by the Total Tools shareholders in opening up more stores, refurbing the network and continuing to invest. So no better way to show the confidence of the Total Tools network from the existing team within the business. If you talk about synergies, I spoke earlier about the core synergies, $5 million over 3 years. They are delivered and we're continuing to see those continue to grow. I think the next focus, as we talked about in terms of the synergies, I think Mark and Annette articulated this at the time. These are the very different synergy profile to the Home Timber & Hardware business where there's fundamentally 2 businesses who operated very similarly. Both IHG and Total Tools have a number of crossovers, but fundamentally the businesses are differing operating models. The next focus of our synergies are all of that growth. We've talked about our network growth or colocation optimization. We talked about the colocated stores. What's more exciting as we go into some more regional areas in the future, there might be sites where both Home Timber & Hardware and Total Tools aren't there yet. But as a joint model, a co-located model, we're not yet to make those sites viable, increasing our opportunities to grow our network over many, many years. We've talked about the ecosystem, the digital ecosystem as well. It's great to see the opportunities across both the IHG team and the Total Tools team of us sharing resources. The head of loyalty of cross Total Tools now is the head of loyalty across IHG and Total Tools, sharing that best practice and insights and the customer crossover that we're making the right decisions for our customers into the future. Supply chain, if you ask our retailers, this is the most exciting synergy which net cash and IHG and Total Tools is going to deliver to our members, which is the onshoring of our exclusive brands program to Australia as well, and that's on track for calendar year 2023 as well as the nontrade benefits. I guess one of the benefits of Metcash, $17 billion turnover, 4,000-plus independent family-owned businesses across Australia is the scale that Metcash provides and the benefits it can provide to its retailers or our retailers as well. And our members and our franchisees have absolutely benefited significantly from some of the benefits and the opportunities and programs and net cash offer, all of its retailers as well. So wrapping up before we know that take a few questions, I think, hopefully, we've demonstrated today that Total Tools had a long-standing track record of delivering on ambitious growth plans, and we have utmost confidence of our future ahead. We actually need to fortify our #1 position within the industry, and we believe we've got the plans and strategies in place to ensure that we do that. We need to drive network growth, expand our own retail network, expand our franchisees' benefits and driving CODB efficiencies for all of our retailers to ensure that they drive sustainable profit growth. We have an end user focus or our customer obsession that we certainly work with our supplier partners and aligning to ensure that we're front and center of every decision that they make with new products, emerging categories, which continue to drive growth and categories, which might not exist today but we'll absolutely drive meaningful parts of our business into the future. We have our digital ecosystem led by our loyalty program, which we believe is well class and something that we continue to invest and drive benefits from as well as synergies within IHG. I think across the business we've got strong plans. We look forward to the years ahead. And now I'll throw open to questions.

It's Ross Curran from Macquarie. Thanks for giving us that detail around the sales per store back to the [ 990 ]. So this is your second slide that you had up. Just wondering, are you able to give us a feel for what the profitability per store look like through a cycle?

First question. I thought you give me the last question. One, we don't guide to our retailer profitability. What I can say is that our network is extremely robust, I think, evidenced by a significant amount of capital reinvestment from our franchisees into opening up new stores. It's probably the biggest fitness test in any franchise business, retailers wanting to reinvest again and again. So the answer is no. I can't answer your question.

Shaun Cousins, UBS. Talk a little bit about the demand drivers for tool purchases. You've highlighted you're more generally more levered to renovation and refurbishment activity there that we think about some of the new drivers such as cordless products and then the life cycle of tools that these trades sort of use the importance of tax time selling. I'm just curious around how we sort of think about what is the natural demand and maybe how has demand been accelerated because of activity or new innovation on the product side and then hence, what could come if that innovation pipeline moderates?

Sure. I think once again, 3 questions in one, but it's all good. I'll have a crack at all 3. I think if you think about the battery platform, I guess, one of our key suppliers, it's called cutting a cord, and I think that's one of the key growth drivers of the business, not only is the category evolution, and there are more corded power tools, which are becoming cordless through battery technology and advancements in technology, which enables trade to use those tools as a battery platform. So that's naturally going to underpin a strong growth as I say, cutting the cord continues to drive growth. Who would have ever thought trades would be fashionable now that you can -- wouldn't be caught on the trade side if you don't have the latest Milwaukee tool or the latest Makita tool because it's absolutely a fashion element of our business as customers want to ensure that they have the most -- the latest tool at the right time and it's driving efficiency. And we've got to remember our end users, which are our trades, they're billing hours. Fundamentally, our role is to ensure that we can get doing their job more efficiently, which enables them to make more money across the network as well. I think if you talk about the seasonality of the business, which is another part of the question, no doubt, tax time is a key driver of our business. I think whilst that is across many of those small to medium businesses and managing their tax at that time of the year, I think we've evolved ourselves and our marketing to ensure that we're driving consistent demand. And over the last 5 years, certainly, the seasonality remains in our business, but it's certainly not as pronounced as the ones was as we've grown our marketing platform as well with the confidence of our loyalty program. We're moving away from the more traditional media means into that digital targeted activity as well.

Lisa from Goldman. I wanted to ask about sort of the resilience of the Total Tools business. So if we look at in terms of higher percentage coming from our JV and corporate stores. How -- what's the margin profile difference of that versus the franchise stores? And then secondly, in terms of the loyalty program, we talked about the 3 segments, what is that split roughly between the bronze, silver and gold. And then very finally, I think if we think about -- actually, that's it.

Well, talking about our retail network, as we said, we have partnered with a number of our larger stores. As we segment and the benefit of having 1 ERP, we have absolute insights across all of our 101 stores and the profitability of that network. Our JV in our company-owned stores and our franchise stores compete fairly and equally across all those aspects. And whilst the larger stores have some structural benefits of high sales per square meter, there's no step change across our independent franchisees versus our JV and company-owned stores as well. In terms of the loyalty program, as I called out, our goal numbers are 40% of our total sales across the business, and we were not going to articulate any more than that.

It's Michael Simotas from Jefferies. Can you talk a little bit about the pricing and promotion model in the category? So how much of discount relative to RRPs funded by suppliers versus retailer-funded promotion versus in-store negotiation? And you've been in the business a long time. What's that sort of discount relative to RRP running at the moment and over the last 2 or 3 years versus what it has been in the past?

So firstly, in terms of the promotional schedule, I think I've touched on the evolution of our own model and we've changed significantly over the last 12 months. So moving away from a more traditional marketing platform, 12 catalogs and the typical direct mail, et cetera, as well. So we have moved from 12 to 4, we've reinvested that money into targeted promotions, really, I guess, segmenting our customer base to what they need. We've moved from 20 promotions to 40 to 50 promotions per year, but that's because on a targeted basis. So it's on a store-by-store, state-by-state. So it's a significantly more targeted than I guess the blunt force instrument, like the catalog program. In terms of the promotional funding, the large majority of our promotions are supply funded. In terms of you'll see a number of our competitors as well as us having key power tool. If we more talk about power tools, 20% off is the fundamental of the discount that the whole market is offered. All the retailers offer a similar promotional platform, which is supported by our manufacturers. So that's funded. And then local level can either be funded by supplier or our local stores as well. Once again, we -- if you take our COVID, because I think COVID to 1 side, in terms of pre-COVID to where we are today, it's not dissimilar to where it is today. Yes, we have some state-based competitors and other national chains who are targeted at points in time, they would argue that we are as targeted in other points of the time. So we aren't seeing -- we're not in the marketing war or price war, if that's, I guess, what you're trying to ask the question of. No, said, it's broadly consistent. If you take COVID out of it, because I think there are some natural changes within COVID, which weren't BAU. And we are, we believe, consistent to where we are previously.