Viva Energy Group Limited (VEA) Earnings Call Transcript

All right. Good afternoon, and thank you very much for joining my team to talk through the Strategic Update for Viva Energy. It's been 3 years since we gave the last strategy update. So well and truly overdue, and we've got a bit to talk about it and a new team to introduce as well. And I might just kick off there. Not so new is Denis Urtizberea, who will be familiar to many of you. Denis, of course, has been running our commercial business for the last 11 years pretty much and obviously, a key part of the whole company, but certainly, the results of that business has delivered consistently. Jen Gray, a long-standing member of the team as part of the Shell business and came across to Viva Energy, currently our Chief Strategy Officer. And obviously, prior to this, had looked after and led the retail business until Teresa arrived just recently. Natasha Cuthbert, our Chief People Officer, background in retail, used to work -- had spent time in Coles Group and Super Retail Group and has been our Chief People Officer for some time now and been a significant part to play in the development of the retail business over the last couple of years. Julian Doyle, our Chief Information Officer, extensive T&D background from banking, joined OTR as a CEO and has stepped up into the group role. Bill Patterson, again, a long-standing member of the Shell and Viva team, extensive background in refining, supply and trading and commercial, now leading our E&I business. Carolyn Pedic, Chief Financial Officer, comes from us from AGL, BHP and has been Chief Financial Officer for I think for the last 3 or 4 years. And of course, Teresa Rendo joined us very recently to lead the retail business, previously extensive background in Woolworths, BIG W, Premier Group, Myer and now very fortunate to have her leading a very exciting part of our growth strategy, which we'll talk to today. As the video pointed out, we run a business that's been part of Australia's fabric for a very long time, 125 years celebrated this year, obviously, previously Shell, the oldest oil company in Australia with its roots started in Clyde here in Sydney -- sorry, Gorbay here in Sydney and became Viva Energy, obviously, back in 2014. It's been remarkable the journey that we've been on as a company in terms of how we've changed and grown in that time. I think when we started with Shell transition from Shell to Viva that we probably sold represented about 25% of Australia's fuel demand. We now represent 30% of it. Now some of that has come from acquisitions, but a lot of it has come just from organic growth and success we've had in key markets, particularly in our commercial business. It's a quality business that we built up, led by and delivered by a very experienced team right across the company. Because of the legacy and the time that we've been operating here in Australia, we have a very extensive infrastructure position right around the country, which also supports that growth. We'll talk more about that today. And through the acquisition by Vitol, a long-standing relationship with our partner in the region to supply and support us with all of our imported fuels and crude into the country, which has been particularly critical during periods of critical geopolitical disruption that we've experienced over the last few years and certainly been the case during the course of this year. There's a high degree of integration between all our businesses. And obviously, probably, I think as a result of the infrastructure position we have, the customer base we have and the people that serve us across the country. I think we genuinely have a very superior position to most of the competitors that we compete with in the market and quite unique, particularly driven around the infrastructure and refining position that we have in Victoria. But within the group, there are 3 quite distinct businesses. The E&I business, which Bill leads, probably mostly known as the refining business, but what's probably less appreciated is a significant terminal infrastructure that sits around it. We operate about 25 out of 25 import terminals around the country, about 2.2 billion liters of storage. It's very significant and becoming much more important, largely driven by the outcomes that we've seen in the Middle East, huge focus now on energy security, of course, as you know. which revolves around obviously retaining refining capacity here in Australia, but also building out and building on the storage and infrastructure position that the country has and in our case, the position that we have right around the country. So a business that I think is much more appreciated for the infrastructure that sits within it. Commercial and Industrial, a very wide range of segments that we serve. We serve more segments and markets than any of our competitors, particularly driven by the range of unique products and services that we offer, but also the quality of the customer base that we have very deep relationships with commercial customers that go back decades in many cases. That's not -- that doesn't happen by luck. It happens by delivering quality services and delivering on what their expectations are day in, day out. And of course, an emerging convenience business as well that sort of formed out of a fuels retailing business that was the long history of the company, some significant steps that we've taken to acquire convenience capability and build on that. A lot has been done over the last couple of years, and we're certainly at a point now with Teresa's arrival to really take that business forward and deliver on our aspiration to really become a leading convenience and mobility retailer in Australia. Today, we -- as we reposition and reset the strategy going forward, we're really focused on 3 phases. So strengthen, which is what we've been doing for the last couple of years is strengthening the foundations of our business. Retail I just talked about, we've spent a lot of time consolidating and integrating the retail businesses that we've acquired. forming a unified retail business, both organizationally and with the platforms and systems that underpin it. In refining, it's really been a journey that's gone back from 2021 when the FSSP was originally designed to reset the performance of the refinery to be far more consistent in its returns, less volatile and set the business up for the long term in partnership with government. We've made some good progress on that in 2021. The FSSP, of course, was upgraded significantly earlier this year. And that business is now obviously in a phase focused on what happens beyond 2030, but much stronger position in partnership with government. And look, C&I has been the consistent deliver through all of that time. I think -- the work that Denis and the team have done to turn commercial from being probably the poorer performers within the group to being the leading performer in the group has been quite remarkable. A lot of hard work and building, I think, a very strong business in C&I. So now we're at a point of thinking about how do we -- of focusing on how do we unlock the potential of those businesses. That's our focus now for the next 3 years. Our strategy remains very much the same as what we set out in 2023. This is now all about delivery and building the potential that we see existing in our business. And obviously, for retail, that's a lot about how do we grow from here and achieve the aspiration that we set out in 2023. and really do become that leading convenience retailer for refining, it's about securing a new arrangement with government to continue to run the refinery through to 2030 and beyond to 2040. We transition how you think about that refining business from being a refinery to being much more an infrastructure-like asset within the group. And for C&I is continuing to build and continue to grow steadily the performance of that business. That leads a little bit into how to think about the investment opportunity for the group. When you buy stock in Viva Energy, you are certainly buying a set of high-quality assets that underpin the business. Obviously, the infrastructure I've spoken about before, the customer base that we serve, the people that support the company. I mean these are real assets, real people, real businesses that underpin Viva Energy. There is a near-term opportunity that comes next, which is the opportunity to really grow substantially underlying earnings within the business. That will come from delivering on the retail growth aspirations. It will come from securing a new arrangement with government to provide much more sustainable long-term returns within refining, and it will come from continuing to grow the commercial business. We believe that having delivered on all of those areas and delivered that higher quality earnings over the next 3 or 4 years, that should lead to a valuation rerate in the company. Turning a refinery from an operating asset into much more of an infrastructure-like asset is obviously a key change delivering on retail and delivering the promises on that and helping to really set out the quality of the retail earnings of the business will be a key valuation improvement. And then that will also lead, I think, to a better understanding and appreciation of the commercial earnings as well within the group. So it's kind of a 3-step process for us in terms of creating value for shareholders, building on the base that we have, delivering earnings growth over the next 3 years and then that leading to, I think, a truly appreciation of the valuation -- the value that's embedded within Viva Energy Group. So that's what you'll hear a lot about today from each of the 3 business leads. And I'll refer back to this as we go in terms of how they're going to contribute to this outcome. I'll certainly come back at the end and talk to you all a little bit more to wrap it up, and Carolyn will join me on that to talk about financial management and capital management as well. We split the day into 3 parts or the afternoon 3 parts. We'll kick off with Energy & Infrastructure and Commercial and Industrial. Those 2 businesses do go very much hand in hand. A lot of the products that get made at Geelong get sold through commercial and obviously, infrastructure that sits within E&I very much supports all the businesses, but particularly commercial. We'll then spend some time with Teresa talking about convenience and mobility, and then Carolyn and I will wrap it all up. We'll take Q&A after each of the sections. So please keep an note of your questions, we'll spend some time on that and then with that I'll pick up towards the end of the day. Now on your tables are some nom-noms. So if you get -- if you feel like you need some energy as we go, then feel free to help yourself to those. There are an example of our home brand products that we're selling through the retail network through the -- the whole retail network now. So yes, jump into those, and Teresa will give you a bit more color on those as we get to the retail section. All right. On that note, I'll hand over to Bill.

Thanks, Scott. Yes, it's been quite a year in Energy and Infrastructure. We actually came into this year in a relatively low margin environment, thinking in Q1, we might be for the first time in a long time, dipping into the FSSP support. It certainly is what it felt like up until about the 28th of February. Obviously, things changed quite substantially and especially in my part of the business on that date and with the events kicking off in the Middle East. We also -- we sort of came into that global event in pretty good shape in terms of our ability to respond. And some of the themes that got us into that good spot are things that we're going to be continuing on through into the future. We had invested and not just invested, but also partnered with others to build our supply chain flexibility up since COVID. When I say partnered, we've made new entries into supply positions through third parties as well as investing in some of our own around the country. We've also invested in the refinery, modernizing control rooms and also investing in new production capability. Probably the most sort of visible of that was the delivery of the gasoline desulfurizing unit in the last quarter of last year. So we came into in pretty good shape, and that really positions us really well to both meet the challenges that were presented through that conflict and also take the opportunities that were presented. We played a critical role in supplying our customers very reliably. Our infrastructure positions around the country and our national footprint and our scale means that we can flexibly move things around. So some examples of where we did that. In Western Australia, we saw a significant demand surge on the back of the crisis in the Middle East, where there was significant panic buying, especially in agricultural markets. We were able to move ships around, get product to where it needed to be in ways that we wouldn't have been able to do in years prior just because we had invested and partnered to create supply capability. At the refinery, we saw jet fuel volumes globally collapse somewhat on the back of the Middle Eastern carriers stopping. We swung our production out of jet fuel and across to diesel to make sure we could meet the market needs. And that really put us in a very advantaged position while the markets were demanding a lot more diesel because of the panic buying that we were seeing. All these are capabilities that we had invested in over recent years. Since those -- that very pointy end of the events, we've really consistently spent a lot of time with government. And when I say a lot of time, I mean we've spent a lot of time with government. And when I say governments, I should say governments that we've certainly been working very closely and probably most closely with the federal government, but certainly, the state governments have all had their hand up, and we've been working really closely across the board. Through the crisis, we actually developed a lot or strengthened a lot of pre-existing relationships. So that's been another factor that we've seen through the course of this year. So this is all sort of in line with strengthening the base. Right now, in terms of the focus of the E&I team, we're still seeing very disruptive international markets, and we're still working really hard to make sure that our customers are covered, but also keeping our stakeholders, including government, very engaged in what's happening offshore and where the risks are. At the refinery, we're very focused on reliability and safety and especially on the back of the fire from earlier in the year. That's allowing us to continue to capture the refinery margins, which remain really very strong. and we're looking to make sure we're set up to continue to do that in the years to come. Behind the scenes, we're working really closely with government on the FSSP renewal. So as Scott alluded to, we concluded a refresh of the existing arrangements to reflect the change in cost base and some other parameters at the start of this year. That quickly moved into discussions about a longer-term arrangement or mechanism to allow us to confidently invest in our refinery going forward. We're right in the guts of those discussions at the moment. We're also working with the federal government on stockholding obligations and any opportunities that might come out of the sovereign reserve. Regardless of where we land with all these discussions with government, we'll stay disciplined and only invest where returns make sense. Australian fuel demand. I guess the key message from this chart is that fuel demands in Australia are and do expect to stay strong. We still see an overall really strong need for fuels in the Australian market, really led by distillates. So that's gasoline -- sorry, gas oil or diesel and kerosene, jet fuel, where we're seeing year-on-year growth. That growth, by the way, extends well before the COVID years, which are the starting dip there. The difficult grade, if you like, and this won't be a surprise to anyone, is gasoline, and that does present some challenges to us. Gasoline is obviously starting -- has been declining somewhat in recent years, and that's just starting to pick up a little bit more on the back of increased EV penetration. Probably is important to note, though, that the EV penetration increases do come with an increase in gasoline hybrid sales. So it's not just a straight drop for every one of those EVs sold. But it does present some challenges to us going forward in parts of the business like refining where we rely on gasoline sales. But the good news is diesel and jet markets remain strong. We're heavily invested in infrastructure and production capability in Geelong and around the country which sees that picture continue to be supported and valued. Australia is still importing around 80% of its liquid fuels needs. So from a refining point of view, there's still plenty of market to fill. Over to refining. Refining margins, as you'll all be very aware, have been stellar this year. We have seen some significant longer-term damage as well to assets and infrastructure around the world, which are indicating that we do expect the strong margin environment to remain a key factor in the year ahead and perhaps beyond that. The damage to assets in the Middle East and Russia have continued to support very high global margins, really driven by distillate cracks, again, diesel and jet fuel. Gasoline has also been strong, but has been very volatile. In fact, last week, we saw it come off quite substantially on the back of some news out of China on starting to export more than was expected. But just on Friday night, we saw that news out of China reverse somewhat as geo gasoline loaders were shown. So we are seeing, along with very strong outlook, we're seeing really significant volatility. The global oil inventories have drawn really substantially over the course of this year, and that really is contributing to the volatility. I know that makes a lot of people's lives difficult. It certainly does ours when we're trying to project earnings on a monthly basis. But the underlying tailwinds are there. Some of the reasons for that volatility are very promising from a refinery margin point of view. So in the near term, we're expecting and planning to continue to do really well out of our refining business. The longer term, and it won't surprise anyone who's invested for a while in anything to do with refining, the longer term is more uncertain. Certainly, the dynamics that we're seeing in the Australian market are also reflected in overseas markets when it comes to gasoline demand destruction. But at the same time, we are also seeing refineries. We have seen an ongoing trend of refinery retirement. Coming into this year, the last 15-year average has been around 100 million barrels a year taken out of refining capacity. Basis a 500,000 a year assumption, you can sort of see that the balance between refining capacity and product demands is sort of balancing out. That's a very straight line, as you can see going forward. That's never the way the markets work out. Indeed, we are expecting more volatility going forward. But the underlying trend of gasoline demand destruction will remain a challenge for us. On the other hand, and as we've seen this year, we've really -- geopolitical events can make a huge difference to where margins are and where the global supply and demand balances land. In this context, though, with all this uncertainty, it is really critical that we land on an arrangement with government that secures refining in the longer term in the country that does take into account the risks and the uncertainty that we take. To that end, this is a bit of an overview of where we are at the moment with the FSSP. As I said, we're in the guts of discussions at the moment. We did get a commitment earlier in this year for a revision to the existing arrangements, which have an option to run through to 2030, but we're very busy talking about what it would look like to have an arrangement which carries us through the better part of next decade. A key element of that will be how we work with government around some of the challenges that I just highlighted earlier as well as the risk to cost base of operating in Australia. There is a lot of enthusiasm for what we do, and that enthusiasm has never been greater than this year than or more apparent than this year on the back of events in the Middle East and other supply security challenges around the world. So we're optimistic that we're going to come up with an arrangement with government, which will see us continuing to refine. I've spoken a bit about refining, but it's probably worth pointing out that the site in Geelong is more than just a refinery. We call it an energy hub. It is so much more than just a refinery. The people who operate the place, the skills that they bring are the sorts of skills that are very applicable to new energies and other sovereign capability type activities. At the refinery at the moment, crude comes from as far away as the U.S. and Argentina and is nearby as Port Bonatthan and even the Otways by truck. We process it into products and use a network of pipelines. We supply gantries, and we supply a very available shipping berth to allow us to get that product, not just into Victoria, but also down to Tasmania across to South Australia and further afield. The refinery plays a very key role in maintaining a really highly skilled technical workforce, both in terms of trades and in terms of other technical capabilities. And the site and the workers who are in the site play a key role in Australia's sovereign manufacturing capability. It's the combination of people capability and physical infrastructure that takes decades to build and is not easily replicable. In fact, it's not really replicable at all. It's not just about the refinery. We obviously -- apart from the 1 million liters of -- billion liters, sorry, of storage that we have at the refinery, we've got over 1 billion liters of storage around the country, which allows us to get -- to connect international markets with our local customers. This is done through 25 import terminals around the country. We've got experience -- we've got significant experience bringing product from global markets into Australia, and we work really closely with our supply partners, Vitol in doing that. It also -- because it's a national footprint, as I said earlier, it gives us flexibility that others can't match to deal with demand changes, demand disruptions and allow us to take advantage of opportunities. Our people can use the whole network, this whole network to find solutions for our customers. Well-located tanks, terminals, pipelines just can't be created overnight. This is a network that you can't replicate. My note says that you can't replicate it easily. I just don't think you can replicate it at all. It's a really unique position. There's also -- there's a really big opportunity to generate better returns from these assets. The recent events have really seen energy security and supply security become absolutely front of mind for government. And to that end, they're pursuing a bunch of policies, which are really fit in really well with our existing infrastructure position. It doesn't just fit in with our infrastructure position, but it also fits in with our connection to markets. We can connect infrastructure with markets, and that is a real key strength that we've got as Viva. In terms of priorities for my part of the business, safe and reliable refining. As I said before, we're enjoying really strong refining margins. We are absolutely focused on delivering safe and reliable operations at Geelong as we go forward to make sure we maximize the capture. On the infrastructure side, this hard to replicate national infrastructure footprint, it's well positioned to benefit from an environment where supply security is increasingly valued. Both of these things provide an advantaged platform for connecting global energy markets with our local customers. But there's also a growing recognition of the critical role that our people, our assets and our supply chains play in energy security, sovereign capability and innovation. So under the right conditions, we are ready to do a whole lot more. And to that end, I'll just invite Denis up to the stage.

Thank you, Bill. Good afternoon, everyone, and welcome to the C&I section of our presentation today. For those unlucky who do not know C&I yet or for the ones of you who have a bit of a short memory, let me tell you a bit who we are, what we are doing. So what is C&I? And simplistic terms, we are the B2B face of the Viva Energy Group. But in reality, you can consider and contemplate C&I a bit different from different angles depending on who you are. If you're a customer, customer always comes first for us. So if you're a customer, we are a trusted partner that supports the economic backbone of Australia. If you are an investor, I guess you all are, you contemplate a value-led business that delivers stable, reliable, high-quality earnings. If you are Carolyn, our CFO, we are a consistent cash generator for the group and a cost and capital disciplined business that is not creating big concern in terms of credit risk and management. From a group perspective, C&I is a key transmission line between all the beautiful things that Bill has mentioned from supply and trading and facilities and the customers. And for our staff, we want B2B as a place to be. That's a bit of a concept we created a long time ago. That means that we want people with absolute passion to create solution for our customers through high-touch customer relationships. We want disciplined entrepreneurs who are always curious about new solutions and services. We like to start with a yes. I know some telecom companies have used that, but I think we were there first. So how does this translate? Just to echo what Scott was mentioning earlier, we operate across a broader range of sectors than any of our competitors in Australia, serving customers across essential parts of the Australian economy, mining, aviation, marine, oil and gas, agriculture, transport, manufacturing, construction, defense, just to name the main ones. Not only we are diversified in terms of sectors, but we also engaged in a number of subsegments in those sectors because not all of them are performing well at the same time. So we constantly want to build resilience through diversification of our business. We enjoy a large and diversified product portfolio with a great mix of traditional fuels. So for us in commercial, it's primarily diesel and jet. We only sell a bit of gasoline in our wholesale activity and with an impressive suite of specialties, including bitumen and Gong is the only manufacturer of bitumen in Australia, chemicals, hydrocarbon solvents. And again, Geelong is manufacturing these, marine fuels that are manufactured in Geelong as well. polymers, where Geelong is the only manufacturer of polypropylene in Australia, special military grade, again, manufactured in Geelong and lubricants that are not manufactured in Geelong. We are only the exclusive micro distributor for Shell in Australia. So we believe in sound strategy, actually pretty simple, but perfectly executed by the best people. We call it agile and represent a combination of aggregation of demand for commodities, growth through value creation for our customers, innovation, new solutions, new services, helping our customers in their energy transition journey. leadership, we want to be #1 or very, very strong #2 because in B2B, there is no money if you're not #1 or #2 and enablement, and this is our people strategy. So delivering this high-touch model would not be possible without a unique and robust infrastructure. I fully agree with Bill. I think we have an infrastructure and network that is not only difficult to replicate. I don't think it's not replicable in the way it is. Delivering this high-touch model as well will not be possible without a superior customer intimacy, and this is what we have been building years after years. And to that extent, it is costing me to say that, but getting a crisis time to time is helping us a lot in order to reset our relation with customers so that they value what does it mean to have a guarantee of security of supply and what it takes to pay a small premium to get this guarantee with us. And that creates stickiness. We love the long-term relationship with customers. We like to be integrating in their business to understand their needs and their future needs. And again, creating stickiness that ultimately will be difficult to replicate by any of our new competitors. You have on screen our clear agenda. There is not much revolution. This is what we have been doing for a number of years. And number one, which is an absolute obsession for commercial, strengthening the base. This is what we have done in the last few years. This is what we are doing today, and this is what we will continue to do. Growing the baseline is the essence of any successful B2B business. because most of our business is contracted, sometimes long-term contracted. And this is just by growing this baseline, keeping the customers you have gained and gaining a few others. This is how we are growing the business. Even more in -- obviously, in a period of the significant disruption and to that extent, this is what you can see and you can read on screen, leveraging our partnership with Vitol is absolutely critical. Guarantee of security of supply has been of paramount importance to customers in the last few months, but it is helping us as well, contemplating some long-term contract with customers derisking our business. Since last time we spoke in 2023, we have continued to grow our infrastructure network, and we have continued to grow our business. You just have a few examples here, in particular, with the introduction of our Marine business into the Brisbane envelope, very important. Queensland is growing. Olympics are coming. The cruise business is growing in Queensland. It's not the same in Melbourne. For the ones who are familiar with the Victorian economy, the Port of Membrane is not making it very easy for customers to operate. So we have seen a bit of a shift from Melbourne to Brisbane. So it has been very good for us to enter this new market. We've continued to expand our aviation presence. I cannot remember exactly what was the number last time we spoke in 2023, but I know now we are operating in more than 100 airports and air fields in Australia. That is quite unique, and nobody can claim having the same presence that we have today. We have created a new loops facility in the Pilbara. Some people would question that. Actually, we'll talk about that a bit later on. Mining continues to grow, in particular, in the eastern part of Pilbara. So not only this investment has enabled us to renew some very important contracts already in place in the Pilbara, but represent a nice platform for growth because this business is going to grow. So these are just a few examples of what we have done. And as -- to mentioned, in the next few years, we'll continue to unlock the potential of that business. We have grown massively, but there is still a lot of growth ahead of us. I think the 2 main things that can happen for commercial in the next few years, there will be a lot of changes, but 2 main changes. One is going to be about infrastructure and the introduction of new minimum stockholding obligations. And the second one, obviously, is the energy transition. Today, not many customers are talking about that. They were talking a lot in 2023. And I remember, I told you there was not a single meeting with customers without mentioning the energy transition. I cannot recall the last time I talked to a customer about that. We were talking about security of supply at the moment. But this agenda will come back. And we have a responsibility, obviously, being the -- probably the largest B2B business in Australia, but we have also an opportunity to accompany our customers in their transition. So these are the 2 fundamental changes. And to operate that, we need to continue to work on our supply chain capabilities, reinforcing our infrastructure, making it more efficient, more resilient. And that infrastructure certainly will serve us well in the next few years to continue to grow our business, but it's going to be absolutely key as well for the transition agenda because the reality, it's quite difficult to replace our product in the industry. Tomorrow, diesel will certainly decrease, but I think there is a common agreement now to see that diesel is not going to peak in the next 7 or 8 years. Some people believe that it's going to be even later on. And if there is any replacement, that's going to be renewable diesel to start with. We still need tanks. We still need pumps. We still need the same type of infrastructure. Same in aviation. The transition for aviation is certainly going to be towards sustainable aviation fuel that is still a fuel, that's still liquid. We still need to transport. We still need to haul stock in a tank. We need pumps. We need the same equipment to refuel the different planes across this impressive network of 100 operations across the country. So these are really the 2 main focus for us. We want to do that in a timely manner. We want to spend very wisely to get ready, but that creates a great opportunity for us. That's going to make it more difficult for anyone to contest our business. So that's an opportunity for us not to be missed. So strengthening the base, as always. And again, the next 3 years, the next 5 years, strengthening the base will always be our agenda and then getting ready for the future. So obviously, operating a very high-touch model can scare a number of people. I can say, well, are you focusing enough in what you're doing? Are you diversifying a bit too much? And obviously, operating a high-touch model can be very costly. So the good news is that actually that strategy is delivering results. And we have seen over the last 6 years, an impressive track record of performance for this business. In 2023, we set up a target of $500 million for that business. I cannot say too much. That would not be appropriate. But from the graph, you may see when it is going to happen and it can be very soon. More seriously, I think it's important that we are consolidating our business. We don't want to hit the $500 million target just 1 year. And this year has been obviously exceptional because of what Bill said, because we were ready and because we approach that period of high disruption following the events in the Middle East. We have certainly captured some value, and there will be some exceptional earnings this year that are not replicable. But overall, the business is growing, the baseline is growing. So what is important for us is to deliver this $500 million in a sustainable and reliable manner. This is what we said in 2023. It is coming a bit earlier, important for us as well to consolidate because in some aspects, sometimes we have grown maybe a bit too fast, and we need to consolidate to make sure that this is sustainable. The second part I would like to highlight here is that we are very proud, and this is a key pillar for the C&I business. We are very proud of the long-standing relationship we have with customers. This is how we operate. So you can read this bottom graph in different ways. The way I like to look at it is that 75% of our earnings are with our top 100 customers. And we want indeed, and we like to deal with blue-chip customers in their sectors. They are reliable, they are strong, and they are growing faster than any other business, and we want to be involved with them. And if you look at those 75% of earnings, those customers have been working with us on average for 20 years. So that is telling you about the loyalty and the sustainability of that business. If we continue to do things right, if we continue to deliver the right outcome for the customers, they will stay with us and we'll continue to extract more value out of their business. But what it means as well is that we have 25% of our earnings that are coming from new customers, and that is telling you about the dynamics of that business as well. So actually, if you consider the last 5 years, and a few of you have already asked me the question, so maybe to anticipate for some future questions. You can consider basically that 40% of our growth trajectory has been delivered through existing customers, developing new things for them. About 40%, 45% of our growth journey has been done through new customer gains. and about 15% has been done through selected acquisitions. And we have 3 main ones that we have done in the last few years. Liberty Rural, which is an exceptional business, absolutely key for regional Australia, a business that hopefully will be very, very busy in November with the harvest season. It has kicked off already in Western Australia, but it's coming. Liberty Rural is a great business. It gives us the footprint across the entire territory, in particular, in land. We have Skyfuel, which is very interesting specialty business in aviation, and that is giving us 2 things. The first thing Skyfuel was very, very good at helping the firefighting department during the fire seasons. but was operating mainly in New South Wales for this activity. And we are now expanding everywhere, and we make it an absolute specialty for Viva Energy to help firefighting departments. It offers as well a very nice platform for us to expand on the very small airfields where usually we operate through agents, and we want to have that under control, and we are now using Skyfuel as our new vehicle to expand our network in aviation. And the last one was direct haul, which was an acquisition that came through the OTR acquisition. great business that is enabling us to develop new offer, transport as an offer. And again, we are using it in a very selective manner and again, to get our business more sticky. For example, we have a large market share in the rail sector. And what is differentiating us from the rest of the pack is that we deliver end-to-end. We do the last-mile delivery as well. We are delivering direct into local. And we are doing that, for example, through direct haul. So this is a capability that definitely creates value for the customer. And again, it's helping us to participate to a bigger portion of the hydrocarbon value chain. We have now on screen a number of examples of infrastructure, I said how key infrastructure is for our business. We couldn't do everything that we are doing in commercial without this network that Bill has mentioned. And sometimes we're having discussion the other day. I was wondering sometimes whether we are a great sales and marketing business, and we have created a great sales marketing business that has a key pillar infrastructure or if we are becoming more and more an infrastructure business underpinned by a superior sales and marketing business. So you could say everyone could probably replicate those things. But let me share a small anecdote to demonstrate the high-touch model interaction. Early this year, before the craziness in the Middle East, there was a bit of a craziness in South Australia with 120 liters of rain and road closures and so on, and we have some customers who had some big trouble to get diesel. What we have done here, we have mobilized our supply chain, drawing on multiple hired carriers and across a number of terminals across the country to support with contingency plans to deliver diesel to their facility. It was not a plan A and plan B. It was a plan C, plan D, plan. We use Liberty Rural to use their expertise in local roads and their drivers. They know how to operate in those difficult environment. We use our aviation business mobilizing some customers and making available helicopters on standby to deliver fuel through fuel pods on site if required. We use as well Liberty Rural with empty barrels to create some temporary storage at customer place. We use Skyfuel to be ready to actually refuel those helicopters if we had to mobilize them. With our hydrocarbon solution, we prepare those pods, those fuel pods will be used to deliver fuel to the customer, and we have then a number of people working on that solution. So every single part of this chain could be replicable, but there is nobody in the market who could mobilize the entire chain as we are doing. And this is how we are creating value. Talking about the future, I think there are a lot of reasons to be confident because most of the sectors where we are playing are actually growing. Aviation is growing. There's a new hub, new international hub coming in Perth. Obviously, the new airport in Sydney. More regional airports want to become international. Not all of them will succeed, that's for sure, but at least a few of them will succeed. And there will be more FIFO as the resources business is growing, in particular in the Pilbara. -- resources, as I mentioned, a number of coming projects in the eastern part of the Pilbara. So diesel demand is going to grow. Road and construction, I don't know if any of you coming from Victoria, if you're riding a motorcycle in Victoria, good luck. I mean if you're in Victoria, nobody can contest the fact that our bitumen business is going to be great in the future. If we are just using enough bitumen to fill those pot holes, I think there is a nice growth for that business. Fuel resilience program, we have mentioned that a combined $8 billion between the Australian Fuel Security Reserve program and the defense program for fuel resilience and sovereign fuel capabilities. And as I mentioned before, energy transition that is coming. It's just a matter of time. It's not when it's not if, it's just when. So most of those sectors are growing. So we're going to grow with our customers. That is, I think, a fantastic platform for organic growth in the future. So to wrap up, I love that picture. And for the avoidance of doubt, this is not a new diversification for Viva Energy, not for commercial. We are not aiming at becoming a milk transport business. But I think it represents exactly who we are. We want to be where the customer need us with the right solution. So to wrap up and basically, I want to think of that presentation like a love letter to you to try to convince you to get engaged with us. So I'm going to try to give you a few reasons to engage with C&I in the future. We are attractive. Our business is doing well. You have seen the track record of performance. This business is solid. It has been built over the years, and we have every confidence that it will continue to perform this way. So we are attractive. The diversity of our business bring resilience. So in the love letter, I say you will never get bored with C&I. There is so much to do, so many different sectors. You don't like mining, you go to aviation. You don't like aviation, you go to marine. You want to be on a cruise, we can get you on a cruise. So come with us and we'll continue to deliver stable and sustainable quality earnings for that business. We'll continue to develop strategic relationship with our customers. We believe in that. We are loyal. This is what you should take. The sectors where we are playing are growing. So there is a nice future for us together. And we'll continue to work on our efficiencies and resilience. So it's probably not the most sexy part of our agenda with you, but we are reliable and we are hard working, and we are committed to our business. MSO and energy transition, again, are not threats. They are just new opportunities for us to differentiate. So all in all, I cannot promise a diamond ring, but I can promise that this business will continue to deliver some solid growth, and we are committed to deliver some GD plus growth in the future. And for the ones who are not convinced, I will be available for speed dating at the end of those presentations around drinks and canopy later on. Thank you very much.

Thanks, Denis. We will open the floor to questions.

It's Michael Simotas from Jefferies. I've got 3 related questions for Bill. So I might ask them all in one go, if that's all right. Just wanted to understand what sort of structure you'd need to see from the SSP -- sorry, FSSP Phase 2 to commit to operating the refinery for the next decade, including replacing the alkylation unit. And related to that, what do the economics or what would the economics of Geelong look like without the alkylation unit in the current configuration at mid-cycle margins? And the point on gasoline demand at the current trajectory, at what point would you need to start coastal shipping gasoline?

Thanks for the questions. I think I'll start with the first one because it's easiest. We already do coastally ship some gasoline. But the inflection point where it gets difficult, we're sort of moving it into key import markets like Sydney and beyond sort of we think is around 35. But of course, who really knows, but that's kind of where the projections. It starts to get tight, yes, 35, 37. So that's that one. The mechanisms with government, so really, we need to be a bit careful about how we think of that. The government obviously are the ones that need to figure out a policy that works. And indeed, there's one that already exists. So that's already quite attractive. But -- so trying to sort of tell you how they should design a mechanism themselves is a little bit difficult. But what we are clear about is what we're going to need out of it. And over and above the existing arrangements where we do get some protection for low global margin environments, we will need a little bit more than just a cash breakeven type of arrangement. It needs to obviously cover the refinery, I guess, an investable proposition, which includes some element of a modest return on capital. And exactly how it looks will a little bit also depend on what the derisking looks like through those details. So quite a lot of detail to follow, and it's a little bit of a collaborative one with the government. And in terms of how the mechanism is actually designed, we really aren't -- I don't want to sort of front-run that given that the ball is kind of in their court on what is a mechanism that they think is most appropriate. Sorry, yes, the alkylation unit. So in terms of where we are at the moment, so we don't have an alkylation unit. we've sort of -- so we've -- it's got about a 10% impact on production. That impact sort of isn't even throughout the year in the hotter months in sort of summer months, it's a bit of a bigger impact than the winter months. It's more of an impact on gasoline than it is on distillates. So it sort of does vary a bit through the year, but I think that 10% is a pretty good guide at the moment. In terms of decisions about what comes next, there are a number of different technology and logistical options out there, but those decisions will be made when we have a little bit more certainty on the FSSP.

I think because there's a question online, we might limit it to one question per person, and we can come around.

It's Henry Meyer from JPMorgan. Maybe following on from the FSSP update. I assume that's contingent or the alkylation unit rather contingent on insurance recoveries. Are you in a position to share an update on when you might be able to quantify recoveries there split between losses and the Elk repair?

Yes. So we're currently working through the potential technology solutions and that the insurance does may inform how we look at that, including exactly what we replace it with. We are also covered for business impact as part of our policy. So we do expect some recoveries as we go forward. I don't know if Carolyn might update in a bit more detail when she does her session later on.

It's Rob Koh from Morgan Stanley. And my question is about the increased opportunities from your infrastructure that you have. Can you give us a sense if you're looking at deploying more capital into that? Or are there more kind of network benefits from the existing infrastructure like the case study that Denis mentioned? Because I guess, I mean, group ROA is about 5% and it kind of sounds like the ROIC for this business is also a lever for improvement in addition to the actual earnings, if that's the right way to think about it?

Yes. So with regards to our infrastructure position and the ways that we might improve it and the ways that they may -- that sort of may blend into some of the ambitions of government with regards to MSO and strategic fuel reserves. We're still in discussion with government about the details of how those programs will exactly look. And so there is some interplay between those programs and indeed the FSSP because of the treatment the refinery gets as part of that program that will kind of have to play out a little bit before we have enough information to specifically know where we'd be deploying capital. As I mentioned earlier, though, it's not just a capital gain. We've got a track record of also partnering to get access to both storage and new markets. And we'd certainly look to continue to pursue those opportunities. Because of the size of our supply chain and the complexity of it, we do have a lot of options on that front. And we're very confident that given the right conditions, we will be able to deploy capital where that's required in ways that provide the supply security benefit and dividend that stakeholders are after as well as improving our supply positions and reducing our cost base when it comes to cost of goods delivered to customers.

Uwan Minogue from Barrenjoey. Another one for you, Bill. Can you talk about what opportunities, if any, exist for capital investment at Geelong to boost diesel production in particular?

Yes, not in a lot of detail, but certainly, as we're looking through the technology options on the back of the alkylation unit fire, we are considering the product mix implications of various technologies and various options on that front. So no, but no in terms of specifics, but certainly, the overlay of the information that I presented earlier and Denis sort of doubled down on that, that diesel and indeed jet are both fuels that have got a very long tail going forward. That's definitely going to be on our minds.

Scott Ryall from Rymor. Bill, maybe you can just follow on to the last couple of questions, if that's all right. Can you just -- for the dummies in here like myself, just I get what you're saying about gasoline demand going down and the impacts on the product suite and mix that you're able to do. Can you be a bit more specific, though, that what is -- when you refer to the tipping point and things like that, what do you look at that really concerns you in terms of refining production? And then I guess, following on from that one, what is the flexibility around being able to change? And how long do you need before you're able to make that decision, please?

Yes, probably I shouldn't categorize it as a tipping point type concern. I guess as we look out sort of the middle of next decade and into that 2037 and beyond period, it's not so much the tipping point. It's just we have to go further afield to find markets for the gasoline. Now Australia is still importing the majority of the gasoline we consume. So the markets within Australia is still well placed to take up production. It's just more how that plays out from an economic point of view gets a little bit harder as we sort of head into that back end of next decade. So that's more the challenge that I'm talking about, so much more an economic one. In terms of how we and other refineries can change what they make and how they're configured to make more distillates. It's a challenge that exists around the world. In the case of our assets in Geelong, there are some things that we can do and consider, but there's also some pretty fixed sort of legacy positions, which are very hard to invest our way out of, if you like. So it's a challenge that we're sharing with government and discussing with them. I probably should also just add, though, that the diesel and jet fuel production from the refinery, obviously, as that scenario plays out, has a more and more economic home. So the total economics of what we're up to are still relatively balanced, but the challenge is around the gasoline.

Craig Woolford from MST Marquee. One for Denis. Just on the capital investment going forward for this business. Can you just clarify something about strengthening the supply chain resilience? Is that capital investment that you can talk through? And there was that contribution you talked about around acquisitions that had helped earnings. Do you see acquisitions a part of the earnings growth going forward?

The first part is very much linked to what Bill was mentioning. Again, the minimum stock obligations means that there will be a requirement to create additional storage for business. At the same time, we need to continue to maintain our existing infrastructure. This is where we need to be absolutely disciplined. And Carolyn is reminding me of this every day, if not twice a day. This is what I mean by getting more resilient, more efficiencies as well in the way we do things. And we have started, for example, this year, different type of preventive maintenance to actually making sure we get our maintenance numbers under control. In terms of acquisition, this is not the top priority for us because we believe we have enough in terms of growth and pretty much like we have done in the last 5 years, if there was an outstanding opportunity that would really add to our business, delivering superior return in a very short period of time, we would certainly consider that. But we are not as active on that. We have a lot to do. As I said, I think we have enough of organic growth in front of us. So this is our priority. This said, we don't want to be stupid. If there is something, we will certainly look at that. And I think this is what we have done pretty well in the last 5 years. We have done some pretty small acquisitions, but they were really making sense in terms of strategic complement and delivery of short-term returns. But we are not actively, actively looking for something to add to commercial. We believe there are other priorities.

Operator, I believe there's a question from Gordon Ramsay.

Can you hear me okay?

Yes.

Sorry, Denis, this is a question for Bill. Bill, you mentioned that you -- the alkylation units had a 10% impact on refinery production. I'm assuming you're importing alkylate. Can you give me an idea of what that's costing each year? I'm assuming you're importing it to boost your octane rating. And just confirm also that you're going to continue to do that until you sorted out the FSSP. So can you give me an estimate on timing for the FSSP as well?

It's yes and a no to that question. So yes, we're importing alkylate. But no, it's not really driven by our octane balances most of the time. We debottlenecked the reformer at the refinery some years ago, and we've got a relatively good octane balance without the alkylation plant for most of our production suite. So we're really just importing it on the margins for the production of some specialty products. That said, through summer, we will blend a little bit from an octane point of view, but it's not a really a big factor at this point. In terms of what it looks like following investment in whatever is next. It really does depend on what that investment is. So it's -- yes, it's not a huge volume of alkylate that we're bringing in, and it's not -- it's only for Octane around the margins.

Great. If there's no other questions on the floor.

It's Henry Meyer again. Denis, you look like you'll probably comfortably exceed the $500 million target this year, obviously, with some supply chain benefits. Are there any other seasonal swings this year that would prevent you from repeating that in '27 and '28?

I didn't say comfortably, right? I just say we would probably hit the target this year. I want to keep that very strategic. The reality in our business, every single year, there are headwinds. And every single year, there are new opportunities, and they are very, very difficult to anticipate. As Bill mentioned earlier, this year, we could not anticipate that for almost 3 months, we would lose 3 of our 5 top customers in aviation because they were not flying. Despite that, we have continued to perform because other sectors have performed extremely well. For example, resources has grown much faster this year. Marine is a bit constrained at the moment because of not only the Straight of Hormuz, but also the Suez Canal, which means that a lot of ships are going around Africa, and they are not bunkering in Australia. But other parts of the business are performing always better. As I said, we build resilience of our business through diversification, and we want to get this 500 million mark as a repeatable and a very sustainable mark for us and then continue to grow for GDP plus. So I think today, we are not talking about the budget for next year. I think overall, over a period of time, you would see our earnings continuing to grow. You have seen last year, we delivered pretty much an equal performance compared to 2024 because we had a bit of consolidation to do and because the Marine business was a bit suffering. So yes, we mentioned, I think, in the H1 result discussion that there was about, yes, $50 million, $55 million of additional benefit that we had this year that will not replicate next year. But we believe all in all, our baseline continues to grow.

Thank you. Well, that's at 2:20. So we might have a 15-minute break, and we'll see back here at 2:35.

Okay. We might actually start. And how fun for me to follow the Frenchman who has just written you all a love letter. Although he didn't give you the diamond ring, what I can say to you is with Denis' results, you certainly feel that you have been rewarded in some way. But I don't have a great accent like Denis has, but what we do have is quite a significant bit of unlock across retail and convenience that I'm happy to share with you today. So I'm Teresa. I have been with Viva for 14 weeks this week. And we spent quite a bit of time digging under the skin of what is retail and convenience and building a strategy, which we've already started to seed with the team, and we have a really few very purposeful things that will make a real difference to our business in the next few years. So convenience and mobility, as I see it, is a high-frequency retail platform with national scale, leading brands, prime locations and to be said, meaningful latent value. Today, I will outline how we are protecting the strength of fuel, which brings customers onto our forecourt and into our stores, lifting the productivity of the existing network and unlocking stronger convenience earnings through disciplined execution. Our 3-year horizon combines near-term execution with disciplined growth to unlock the full value of our multi-brand platform. This is not just about OTR. In the near term, we have strengthened the base by establishing an integrated organization, a common retail platform, aligned loyalty programs and a national convenience supply chain serving all of our brands. Over the next 3 years, we will unlock the potential by matching format to capital in a disciplined way by site, by catchment, by scaling the customer, ranging, supply chain and margin initiatives that are already proving effective in just a few short weeks. Beyond 3 years, there's a lot of strategic unlock beyond that. We will selectively accelerate new earnings and attractive catchments, mobility corridors and targeted EV charging or mobility offers where demand support investment. As it relates to EV, we are not about a plug count. We will actually invest and very meaningfully where the customer is and where the data signals that, that investment should take place. So our strategic discipline is really clear, the right proposition, the right operating model and the right capital investment by site or initiative. But let me first start with the market, which should actually give you confidence that there is a market worth investing in. The convenience market offers attractive structural growth, a richer category mix and meaningful share of occasion headroom. Since 2017, industry sales, excluding tobacco, have grown year-on-year, but the mix has changed, and I'm not sure that we've kept up with that mix change, which presents us a real opportunity. Food and beverage sales have increased 1.8x from $3.7 billion to over $6 billion in sales. That richer category mix and expanded industry gross profit pool should give us 6.3 percentage points improvement in our margin. Sales, excluding tobacco, have increased by $2.8 billion since 2017, and tobacco now has stabilized, which we're really pleased about. We've lost about $100 million in EBITDA in the last few years due to illicit trade. That stabilization means that we are back in growth, which is really pleasing, primarily driven by Queensland and WA where state governments have actually taken a much forceful hand in management of illicit tobacco. At the same time, though, service stations only capture 14% of convenience sales versus the majors in Woolies and Coles and Algae that capture 25% -- it requires reassessment of what is convenience and what is the value equation. I do not believe that convenience in this modern day is just a small supermarket where you actually pay higher price for products on shelf. So the opportunity is not to create demand, but to capture and convert more of the demand that is already passing our sites. To give you some idea of how many Australians pass our sites, 80% of Australians live within 5 minutes of one of our locations. Not many retailers and not many businesses can say that. So what we need to do is have a differentiator and point of difference that gets them to turn left. And as it comes to fuel, fuel is really important because fuel actually attracts 3.5 million customers per week on to our sites. Our conversion rate sits around 20% into shop. So if we can get that to 25%, which doesn't seem unreasonable, that's a significant growth potential within shop. So fuel provides a resilient earnings base and high-frequency customer anchor. Industry retail fuel volumes have remained broadly stable at around 22 billion to 25 billion liters. Industry retail margins have grown from $0.13 to $0.18, meaning that it's been able to cover costs and has stabilized. While retail petrol volumes have declined 1.7% a year since 2015 as vehicles become a little bit more energy efficient, diesel still remains really resilient and demand still remains really resilient. Our objective is to sustain profitable fuel earnings and increasingly convert the high-frequency visits into convenience spending. And as you look at the 2023 update that Viva provided 3 years ago, the strategy actually is broadly unchanged, but the execution is different. It is sharper. It is more selective and it's more returns led. Since 2023, we have acquired Express, OTR and the remaining 50% of Liberty Convenience. And we've established a national supply chain. We have opened 30 new stores. We've built a pipeline of approximately 40 to 50 new stores. And we have also progressively converted 100 sites on track to unattended. We will have 25 sites converted in this half with a further 50 to 75 planned in our budget next year. What has changed, though, is the provision of the execution. Customer preferences have shifted. Capital costs are higher than we should have spent. Capability sets the pace of delivery, and we've had some gaps as it relates to that. Site economics vary considerably by catchment and format, and it means that it is not a one-size-fits-all convenience approach. Our experience, though, also shows that above-store integration could unlock synergies quickly, while customer-facing brand changes require extra care and time. 3 years ago, we spoke to you about converting OTR in as many stores as we can. It's really hard to get brand consideration set outside of a market where that brand is not recognized. So what you'll hear today is a strategy that's not about OTR. It's actually about all of our brands and the role that they play across our convenience network of just under 1,000 sites. So it's not a change of ambition, but it is a more targeted return-led pathway to achieving it. We've got 5 practical areas of focus that translate our strategy into measurable shop earnings growth. Team and customer obsession is, first and foremost, the most critical one. If you don't have the right team and you're not obsessing about the customer, then your strategy is never going to be right. It strengthens capability. It deepens our relationships through service, loyalty and digital engagement. Curation of offer is the lowest hanging fruit that we have currently to improve our results. It ensures that every product and service earns its place in-store and on the forecourt. Retail excellence is another key unlock, enabling us to make faster decisions and a more consistent store experience. An efficient supply chain, which is already starting to yield results, improves margin capture, availability and speed to market. Network precision, which we've spoken about a lot in the last 3 years, matches the right format to the right location in a capital-efficient way. What you'll hear today is not one strategy, but many that will run in parallel to deliver the growth potential of this business. The priorities though, are underpinned by financial discipline, trusted data and strong team capability. We will measure progress through operating and financial outcomes, not just activity that we do. For those that I've spoken to up until this point, we have spoken a lot about a unified business, and I gave you some examples in our one-on-ones just a few months ago. But this really does unlock scale. The unified retail business converts scale into faster decisions, lower duplication and more consistent execution. We now have one accountable retail team, one unified data pool, a common scorecard and one view of performance across all brands. It supports faster and clearer decisions, and it gets the team on track to the growth potential that we have ahead of us. Most importantly, though, it gives our stores a consistent operating model, range and promotional calendar. It supports a pathway where integration is now moving from structural completion to operational benefit. In the very simplest of terms and the way to think about this is as we acquired Express and OTR, we had 2 buying teams. that had 2 people leading the same category, which meant suppliers were dealing with 2 buyers negotiating different costs with different margins and different trading terms. So we actually never until recently started the journey to unlock the potential of putting those businesses together and actually working with suppliers in one way with one unit volume that actually unlocks cost upside in our favor. Our supply chain is almost rolled out. As at the end of this month, we will exit the Coles TSA, and we will have WA live. We will then look early in the new year at our South Australian DC that is currently servicing all OTRs, including those that exist outside of SA. That's an absolute nonsense. So if we have a site in Melbourne, it makes far more sense for that site to be serviced from our Melbourne 3PL. So that work will be done early in the new year. The integrated supply chain is already improving unit economics, speed, availability and execution control. Direct supplier relationships have improved, a national distribution network of demand planning and control of stock movement and availability. Our inventory is in far better shape than it has been in a number of years. At the half year, we've improved inventory by $300 million. We've taken tens of millions out of that in the last 3 months, and that will improve further in the next 6 months. The proof points are already emerging. -- more than 7 fewer distribution points that go into each store every single week. That means 7 less deliveries. That takes labor out of our stores. It means they're not having to work stock onto the floor as frequently as they used to. It means that new product lead time has reduced from more than 12 weeks to under 4 weeks. For perspective, I don't think NPD or new product delivery is new when you're delivering it 12 weeks after the rest of the market did. That's actually now called old product, and you actually don't get any uplift or recognition for that new line. The value though really comes from lower cost of goods, faster product innovation, improved availability and significant administration savings at lower execution risk. But the real important thing that you should be really energized by is how we're looking at the customer in a different way. Changing customer missions expand our opportunity across food, digital engagement, health and future mobility. Digital-first customers expect easy payment, loyalty and relevant offers. Loyalty, though, has changed, and it's not just about points anymore that convert. It's actually about what you bring them into and the experience that you give them. So time poor households want quality meals, coffee, grab-and-go solutions. Mobility is broadening across fuel, EV, rideshare, fleets. And over time, we expect those driverless cars to finally hit Australia, and we believe that New South Wales will be first. For anyone that's visited L.A., it's a bit scary to see all those cars driving around with not a driver in them. And let me tell you, when you compare that to what's happening locally and you think of things like Uber, it's a lot cheaper when you don't have a driver in the car and you actually can just order that and get dropped off within 10 minutes at about 2/3 of the price. But it also means that, therefore, generations are changing. So we over-index in the mature customer or boomer generation, but we under-index in Gen Z. They're getting their license 5 to 6 years later than we all did. We all saw it as -- well, I can talk to myself at 54. By the way, you're probably a lot younger. But I got my license straight away. I saw it as freedom. -- whereas the generation Z, they're happy to take public transport or alternative modes. They stay home for a lot longer. 70% of the income that they do earn is discretionary because mom and dad are still paying their bills. I can tell you that as a mother of 3 triplets who live in Kuji and I still paid their bills. So our approach is very different because this generation is very different. But what we need to do is make sure that we are servicing them all and that we understand them all. Our approach is quality over quantity, fewer, better sites in catchments and corridors with proven traffic, suitable dwell time in an environment where you want to dwell and available grid capacity for EV. Every investment must have clear hurdles. Generational change must be considered in how we range. Baby boomers are still an important part of our current wallet, but Gen Z is the emerging wallet. Health and wellness has also changed. I'm sure we're all reading about GLP-1, which has now been approved in Australia and will be on the market early next year. If we look at the U.S., 1 in 5 U.S. citizens are on GLP-1. That means food changes and how you consume it changes. We're still talking about high protein in Australia. But for those customers on GLP-1, it's about high fiber. So we need to start looking at that and thinking about how we range and start to range for that future in mind. Our national network, food and coffee capability, loyalty platforms and trusted local brands position us for these missions and for every stop that any generation could have. And as we look at loyalty, we've got so many customers we can reach, but we haven't unlocked that potential just yet. We've now rolled out flybuys to all of our stores, including OTR, which means we have one primary loyalty program. And that engagement platform creates substantial opportunity from F '27 onwards to lift identification, personalization and customer value. Across the OTR app and Flybuys, we now reach 4.7 million unique addressable customers, active addressable customers. Currently, 29% of total sales are identified by a member, but we know that 80% of our customers have a Flybuys card. A Flybuys member who scans their card spends 58% more than a non-identifiable member. So we're not asking to get to the dizzying heights of Woolies or Myer an 80% scan rate, but we should be able to get to 40%, and that's our target for the next few years that the team have identified. The opportunity is to uniquely identify these visits to personalize value that our promos are not a one-size fits all and a spray and pray. It means that we know what you buy from our sites. We know what coffee you drink. We know what you're buying from our fridges, what you're buying from our shelves, and it means that we can start to tailor our offers to you on a personal level. The opportunity to personalize and convert fuel frequency into food and convenience spend is a significant opportunity. The customer insights also allows us to simplify and optimize and enhance the range based on what we know about the people that shop with us. The customer insights data though that we've shared also helps us anticipate what we believe they will buy. Our approach as the range exists today is threefold: simplify by removing the lines that are not serving our customers, our teams or our shareholders, optimize where there is high substitution lines and make sure that we put that volume into one supplier and unlock on the cost base and then enhance through our own brands where it makes sense and create innovation through new products. It is not a blunt instrument that is a range reduction program. It's a disciplined productivity approach designed to improve relevance, increase margin, better working capital and exceptional execution. When you look at this slide, you might see the red, which is 27% of our range does not serve us at all. That is 27% of the range in 16 weeks in full stock did not sell a single unit. I look at the slide and go, how exciting is that? Because that's a whole heap of working capital that we unlock immediately. That's a whole heap of space that we can pivot to something that will do far better returns for us. So the current range, it is true, does contain clear productivity headroom that can be released, reduce waste and create space for growth. As at August 2026, when we pulled this data, 27% of the convenience range, as I said, was underperforming. And 18%, we believe, has substitution opportunity. What I mean by that is if you are coming to a convenience store for toothpaste, you probably don't need 4 brands and 4 or 5 options in each brand. You're probably just going to buy one brand and get the toothpaste because you've run out. So we just need to be really smart about what's on the shelf, get that volume all into one supplier and as I said, unlock on the cost line through volume. What's more exciting for me, though, is what it creates in terms of new opportunity. So I'm really pleased to share that in 14 weeks, the team has done an exceptional job. And although I'm lucky enough to stand in front of you today, the team have really come and risen to the challenge. This is Brighton. Brighton is an 80-day store in South Australia, where we did this analysis very early on. We removed 800 lines. Over the first 12 weeks, we reduced waste by 42%. We lifted gross margin dollars by 17%, and we improved gross margin as a percentage by 500 basis points. Sales increased by 4% -- you can imagine as I stand in front of a team and I say to them, your range is unproductive. They're like, if you don't have the range trees, we're actually going to lose sales. It does the opposite. We reduced the gondolas, which meant our team at the counter could actually see their entire store, which meant theft came down. Waste came down because we took out 800 redundant lines that weren't selling anyway and sales increased because we've made it simpler for the customer to shop. We've now tested this in a further few stores. Our approach on everything is try one store, get some results, roll it out to a further 3 to 5, see if those results hold. And if they do, we accelerate and we run. We want to accelerate and run. So all the 80 base stores will be rolled out in this half. And then those categories that we have assessed, we will actually then start to do from January, February onwards into all other stores. But let me take you through the dairy case. This is where better grading and substitution can materially reduce waste while creating more productive category offer. Our dairy accounts for about 20% of our store convenience waste. Waste should sit between 2.5% to 4% in any retailer. 2.5% usually is carried by great sales. That's where Woolies and Coles generally will be. But we sit closer to 6%. That's a ping. That means a lot of stuff just going in the bin or actually getting donated to farms, et cetera, because it's not selling before the used by date. So -- because dairy actually accounts for 20% of the waste in our retail business, it was the first category that we looked at in isolation. The work we did removed 106 items from the product range. It actually introduced 18 new lines -- and what we did is we replaced the gunzola at the top -- or the fridge, the top shelf with point of sale. The reason we did that because if you give a buyer -- and I'm an next buyer, by the way. So if you give a buyer space, they will fill it. If you take the space away, it means the macro micro space is no longer available to them to fill. So we filled it with point of sale, which meant that they couldn't fill those shelves anymore, and we use it for excess in peak time. The principle is selective. It's really focus -- sorry, let me just get my space back. The trial -- I'm sorry, reduced -- it is selective in terms of what we took out. It reduced category waste by 27% and the new dairy planogram because I'm impatient, is now being rolled out in all stores this month to make sure that we fully realize that between now and Christmas and into next year. So by mid-November, so by next week, all stores will have a new planogram in place and rolled out and the markdown of the old lines would have taken place. So it does contribute to a broader target of about $20 million in annualized reduced waste. There should be a little bit more than that, but $20 million is what we have set the team on track for, for FY '27. It creates a stronger base for future macro and microeconomic space optimization and it includes higher productivity for innovation. And then there becomes what can we own brands. So own brands in a convenience retailer really only makes sense where you have the volume to justify the direct purchase. So selective own brand and direct sourcing opportunities convert our scale into compelling gross profit. The 3 examples we have will all be rolled out by the end of this year. You have some of them in your bags, I understand. And they represent just in 3 items, an annualized profit of $5.1 million upside. It is not a broad private label substitution of range. It acts where the customer relevance is clear and the volume justifies it. If you actually look at these lines, the most exciting one is the new tech range, which I didn't think tech sold that well in convenience. It does because I've learned that a lot of people forget their charges when they travel and do forget their cords as well. But this is 20% higher in first margin than what the previous range was or 2,000 basis points. Every one of these are delivering and have maintained for those first 2 that have rolled out, the third one is in rollout now. They've maintained their unit volume at much higher margins. That's a good story for us. The story that we still need to take a journey on though is what does innovation look like, and that will be drawn back to the customer insights that I shared previously. And then we go to the network. And if you knew how many times this slide changed to the first slide to where it is now, that is very purposeful. Almost every question I've received since I've been in role from externals is about the network because that's what we focused our 2023 plan on. So the reason we put it here is because the network, although very important, is just one part of the plan that runs in parallel with many others. I can tell you the greatest unlock sits in the shop and what we range within it and the services we provide within it. But we do have a high-quality network that no one else has. As I said, 80% of Australians do live within 5% -- 5 minutes, sorry, of one of our sites. It contains embedded value that's yet to be unlocked to its full potential. The Prime network is around 500 stores. This is a network where fuel is really good and shop is really good. The OTR brand matches really well to the Prime network. The rollout and conversion of the OTR brand into that network will be very meaningfully and assessed from F '28 onwards. So although we do have some conversions planned for next year, our focus actually is new-to-industry sites. And we're being very purposeful about that because new-to-industry is sales and GP that we don't currently have in locations where the customer exists and we don't. Conversions, we've got a whole heap that we need to get right inside the box through ranging before we actually push out any more. So it's a really good example where CapEx will actually be aligned to where the opportunity is. Our core sites compromise of 300 or so sites. These are sites that are really good in fuel and okay in shop. The potential is to lift shop, and we should be moving them -- I can't see which way are you looking? We should be moving them whatever direction Prime is, that's where we should be moving them to. So we will move as many of these core sites into Prime as we can or we will realize them for the traffic that they do have on the fuel set in the fuel forecourt and convert that into store. And then we have around 100 sites, which are really good value fuel sites. They are terrible shop sites, and we say that really openly. They do not convert. In fact, if you look at most of these -- most of the P&L in these 100 sites, the shop doesn't make money. They are the sites that are primed for unattended. What this segmentation gives us is clear capital allocation. to invest in prime, to optimize the core and to simplify the bottom 100 sites that are fuel first. It's not about conversion performance. It's about a whole of business opportunity as it relates to format. We have not considered and matched each of our sites to the communities they serve and the catchment that exists in the way that we should have. From F '27, we've got a very different plan in what we're rolling out. But it's not that different from 2023. It's just the sites have changed and what we're doing with them has changed, but they will return far more meaningfully than the conversion first program that we've done up until this point. So far, we have rolled out 8 unattended sites across our various brands. We have 25 that will be completed, including the 8 by second week of December. And just, I placed a further 50 into next year's budget, but Scott has increased it to 75 because the results are very promising. The format actually attracts a very different customer. It is a fuel-led value customer. What we have seen is where a site in OTR already exists 5 minutes down the road, we have not lost any share. The mission is different. It has surprised us in who actually is showing up to these sites. It is moms who actually don't want to get out of the car because it's a pain in the backside to get your kids out of the car and don't want to go into shop. It is a value customer where their wallet and their discretionary spend is suffering a little bit more than most. And funny enough, it's a Gen Z customer who just wants to fill up and go. And they might buy something from the vending machine or pick up a parcel in the parcel delivery lockers that exist within the format. Each conversion is costing us about $300,000 to $350,000 to convert. The labor in these stores is $200,000 to $230,000. It pays back quickly. Although we have 100 sites planned, I want to be really transparent that most of these sites are sites that currently do not make money on the shop P&L. We have picked the best sites first because we wanted to prove that they work. They do. But we know as we work through the 100 sites, there will be some that do not perform and do not see the volume uplift in fuel that's between 3 and 4x in some of the sites we converted so far as we work through that list, which means the decision will remain the same at end of lease on some of these sites, which is we will not renew. But we're giving them a running chance to make sure that where we can, we convert them into a format that actually does produce the right results for shareholders. So the pipeline builds on the value already embedded in the network and unlocks further value through disciplined format and capital choices. The strategic shifts that we've outlined are designed to unlock more of that existing value by applying the right format, operating model and capital intensity to each site. As I said, over time, we plan to transition 100 fuel-led sites to the unattended format. We have an OTR growth pipeline of about 40 to 50 new NTIs, new-to-industry sites, and we will look at converting those prime sites to OTR in time, but it will not be the first priority as we look at the network strategy. You should be really encouraged by what retail and convenience can deliver in the next few years. We have latent value. The latent value sits in the shop. The shop and ranging can transition quite quickly. The scorecard has 4 key pillars that we plan to deliver. The first is total convenience sales. We have underdelivered versus the market, and we believe that we should achieve 2% to 3% above CPI. That is not a stretch as we start to look at some of the items that we have in trial currently and that will be rolled out in F '27. Our convenience gross margin is well under where it should be at about 37.9%. We should exceed 40% in gross margin just through better ranging and less waste coming through our stores. Our waste is a poly as an industry benchmark. Our fuel gross profit margin was sit in line with CPI has remained resilient as we've gone through the last number of years. So you should be confident from what you've seen in our reporting that it should be in line with CPI. And our operating overheads and costs should move from 67%, excluding leases to under 63%. Now Scott also challenged me on this number, just so you know, but that is a big improvement from where we've been, which means as you look at convenience and retail today, -- we've probably got a little way to go. But what you should be encouraged by is every bit of that trial actually is a quick turnaround solution. When I say quick, we should start to see those benefits in the next 6 months, and we should start to really leapfrog from them in the next 3 years. That's convenience and retail. So I'm happy to take any questions, Joe.

Thanks, Teresa. We will open the floor now. Michael first.

Michael Simotas from Jefferies. Thanks very much for that presentation. I really enjoyed it. And there's clearly a lot of opportunity. Looking at it through that lens, I just want to understand how conservative your scorecard is. If I sort of look at what it implies bottom up, it does imply what I think is double-digit earnings growth out to 2030. But it would still, on my numbers, leave you a little bit below where consensus is if we look out that far and below what I think industry average economics are. So given the opportunities and they all make a lot of sense, how much conservatism is baked in?

So I said a different way, Michael, and you could have had that conversation out there with me. So the truth is, is it conservative? Yes, but we're in a tough economic environment, too, right? So discretionary spend, albeit we've got fuel in our forecourt is under significant pressure. You're seeing that across the board. My approach to these things is always underpromise, overdeliver. And what we've got there is targets the team believe in and the team have placed into budget for next year and onwards. And I much prefer to keep delivering and overdelivering to your expectations and let you down.

Teresa, Craig Woolford from MST. On a similar vein, the gross margin target of 40%, like where you -- there's been a bit of a reset of gross margins because of waste, but what you've just talked through around waste opportunities and then the mix of sales, whether it be beverages and the opportunity there or private label, is it greater than 40% that's 45% -- or is it greater than 40%, that's 401% -- just trying to get a feel for how you're looking at that gross margin outlook given what you've talked through, which sounds pretty upbeat.

Yes. No, it is. And look, it will be somewhere -- I don't think it's 40.1% because that would be, in my books disappointing. It will be somewhere between 40% and 45%. And it really depends on where the mix goes. Food on the go is actually on the rise, and it's very rich margin, by the way, but also higher weight because it's fresh or fresher. -- than ambient shelf products. So it will sit somewhere between 400 and 450. -- remembering that as we go through each of these categories, we have a little bit of work to do to clear residual stock that we already own. So in the dairy case, it did cost us around $100,000 to be completely transparent to clear the stock that we were no longer going forward with. So we do need to sort of cycle through each category between now and the end of half 1 to also clear the dead stock, which is aging. Fortunately, for us, we have got promos between now and Christmas that's trying to clear as much as we can in those categories. But it won't be 40.1% is what I can commit to you.

Rob Koh from Morgan Stanley. It was really cool to hear you talking about the Gen Z and the other changes like GLP-1 coming through. Do you have any perspective on the ability of an app to dial in automatically to the browser comparison sites and then direct people to the cheapest petrol without any human intervention like a gentic price comparison. Do you have any perspective on whether your loyalty offerings and all of that would offset that?

So in an app that we own because that already exists. So there is -- obviously, customers can see what the price of fuel is by site, by location.

But there's humans, they have to look at it. And I guess the future is that their car will tell them or even take them to the cheapest available petrol. So that's the new development that's coming.

Yes. So I would agree. I think -- let me talk about app generally, if I may. So our app, it's pretty raw. It was ahead of its time when it was first launched. It doesn't get the engagement that I would be used to seeing in an app. So you're right. What are the things that are meaningful for a customer as they use and engage with an app and how do we serve them differently. I come from a very different part of retail. And I was sharing with our marketing team just last week because we have done a few meaningful things that have made small differences that are quite exciting. I said to them, for anyone that's been over in the U.S. and gone to their department store, Bloomingdale's, Bloomingdale's has an amazing app that actually can tell where you are. As you walk past Bloomingdale's, and I kid you knock, it happened to me in New York. It says, "Hey, Teresa, do you not miss us?" It actually can read my social and the type of personality that I have, and it feeds me in the way that I would expect someone to speak to me. It might say to my husband who's a stock broker, by the way, so a little bit more stray 180. It might speak to him a lot nicer and with a lot less flat. But As, it is a new movement. People do want to be served data that is useful to them. And ours has a little way to go. So we do actually have some work that we're doing with Julian in the next 12 months around our app. But the first starting point will be how good is the data because the data is rubbish, the app is rubbish. And we're doing a little bit of work with Julian at the moment just to make sure our data is the quality that a good app can actually work from. What I would say to you, though, is that the emerging generation uses apps very differently from probably what you and I would. We want data that feeds us. They want experiences and fun on the way through. So we do need to balance what that looks like by generation. So I think I've answered your question around it that way. It would be amazing. We just have to get the data right first, though.

Teresa, it's Henry Myer from JPMorgan. Hoping you can expand on a couple of variables that aren't included in the scorecard, one being leases you've kind of touched on Second, correct me if I'm wrong, but SMGB. -- can you quantify maybe how you expect to handle lease escalation over the next 3 years? Maybe out of the 100 sites that you could potentially end if lease expires, what that size of the price could be? And SMGB, is that excluded from the variables you put in the scorecard and expectations for performance there over 3 years?

Yes. So let me start with SMG base. We've got about 219 sites or so that are SMGB. We will close and we've been open with the team, and we've already closed a number of them. We will close some that just aren't in the right catchment or location. But some of them are really good sites. So -- and tobacco and tobacco wholesale, whether you like it or not, it is a category. And that's how I think of things. It's a category whether you choose to partake or not. So although tobacco is a big part of SMGB, the reality is gifting, we will make about 40% of our gifting sales in the next 6 weeks. So it actually functions like a general merchandise business. But the gifting offer probably isn't where it needs to be. So very similar to the convenience business, we're looking at SMGB and what is it in our portfolio? What does it stand for? What does the brand stand for? Is it more gift box less tobacco? Is it stays as it is? So the -- what I would tell you, though, is the SMG business has a lot of aged stock. And our focus between now and the end of December will be to remove as much of that aged stock as we can through promo. So we're taking a lot of activity in that business right now, and it should move from about $26 million in stock to less than $10 in the next few weeks. In the background, we're working with marketing to get some customer insights as to what customers think of that brand. So that is within that scorecard as you see it at the moment. And then as it pertains to leases, we have a number of landlords and quite a long tail, but there's 3 main landlords that we have within our portfolio of leases and the structure of those leases are very different. So it's hard to quantify kind of where they'll go. But on average, it's about a 3% annualized increase.