Good morning and welcome to the JB Hi-Fi Group 2025 Half-Year Results Investor Conference Call. Today's call will commence with a short presentation from JB Hi-Fi's Group CEO, Terry Smart, Group COO, Nick Wells, and Group CFO, David Giansalvo. Following the presentation, we will open to questions from investors, and the call will conclude around 11:30 A.M. We welcome representatives of the media to this call, and as with previous calls, remind you we will only be taking questions from investors. Terry Smart is available for media comment after the call and can be reached on 03-8530-7454. I will now introduce and hand over to JB Hi-Fi's Group CEO, Terry Smart. Thank you. Thank you for joining us this morning, and as always, thanks for your interest in the business. We'll walk through the presentation as you've heard and then have some questions at the end. To start, we'll turn to slide four, the group model. You'll all be very familiar with this slide by now, and of course, the recent addition of E&S into that model as of September last year. If we just work down the left-hand side of the model, you know our brands, you know their purpose and their individual product offerings. And with the addition of E&S, it now gives us greater access to that premium home appliance categories. Also, you know the channels to market we have and our target customer base. Again, with the addition of E&S, this is helping to broaden this customer base and reach with access to builders, architects, and the large commercial customers, among others. Our value proposition, that is big brands, big range, and importantly, low prices, and the trust customers have in us to deliver this value is definitely supporting the sales growth in the half. Importantly, our passionate and knowledgeable staff. We know what is important to shoppers. They just want to de-risk their purchasing journey. To do this, they will turn to those they trust that will have a large range and therefore choice, those they have confidence the product will be in stock, and those they trust will give them the service and advice they're looking for. Very importantly, very importantly, I should say, the confidence in getting the right price. This is a reputation our brands have earned over many years, and finally, supporting our ability to do this is our four key competitive advantages, which I'll deal with on the next slide. Over to page, slide five. Again, you're going to know this very well, but maybe just important to highlight a few aspects. Firstly, scale. That is our ability to leverage our strong supplier relationships both globally and locally. We have a large, engaged, and diverse customer base, which gives us and the suppliers the ability to execute promotions and new product launches at scale, and our high-volume website traffic, which provides significant marketing opportunities. Secondly, low cost. It's that constant focus on productivity and minimizing unnecessary expenditure, and this efficiency that we get through this model allows us to maintain low price and drive value for our customers. Thirdly, multi-channel. Ultimately, this is about giving shoppers convenience and easy access to the brands. It gives customers a choice of how they wish to shop with us, be it stores, which are not only transactional, but they are destinations for discovery and advice and significant impulse purchase opportunities. Online, that's used for research and convenience when purchasing. And phone, chat, or video gives easy and convenient access to staff knowledge and advice along with price negotiability. And lastly, our people and culture. Knowledgeable and passionate team members provide exceptional customer service. And our ability to pivot the business quickly and adapt to any changing market conditions and our unrelenting focus on health and safety. Over to slide six. Our FY 2024 sustainability report outlines our commitment to having a positive impact on our people, our communities, and our environment. As set out in the report, we are committed to, for our people, we are committed to health, safety, and well-being of our people by creating and maintaining a safe and healthy workplace, and also fostering diversity and inclusion. For our communities, it's making a positive impact in our communities in which the team members live and work via our Helping Hands and our Doing Good workplace giving programs, and it's working with supplier partners to protect and further human rights, and for our environment, a commitment to Net Zero direct carbon emissions by 2030 and proactively reducing our waste consumption and improved sustainability of all packaging. Turning to page eight. While we'll talk through this in more detail as we move through the presentation, we are pleased to report strong sales and earnings for half-year 2025 in what continues to be a challenging trading environment combined with ongoing heightened competitor activity. Our focus remained on maximizing demand through always driving value for our customers and providing consistently high levels of customer service. Turning to page nine, this is the overall group performance. I'll take this as read as we'll cover off in more detail as we move through the presentation. Now on to divisional performance on page 10 and starting with JB Hi-Fi summary page. I will take this one as read as well as again we'll cover off in detail as we move to the next page, page 11. So JB Hi-Fi Australia, half-year performance. Total sales increased by 7.2% to AUD 3.88 billion, with comparable sales up 7.2%, driven by the continued demand for technology and consumer electronic products and supported by well-executed Black Friday and Boxing Day promotional periods. Some of the key growth categories for mobile phones, this continues to be a strong category for us, particularly in Apple. We continue to see strong unit growth in the category, albeit some decline in handset ASPs. Small appliances, the momentum in this category remains strong with products such as robotic vacs, stick vacs, and coffee continuing to perform well. We have also seen strong growth from the newly expanded personal care categories. Computers, it was pleasing to see computers in growth. New AI-enabled devices and MacBook performed well during the period. With televisions, the category returned to growth in the half. Customers continue to gravitate to large screen panels, but pleasingly, we also saw total unit volume growth. Cameras, another category, we included in this category products like drones and gimbals, which had strong results, along with traditional cameras, which are also performing well. Software sales, that's music, movie, and games, were 3.2% of total sales. Online sales increased by 16.4% to AUD 682.7 million or 17.6% of total sales. Gross profit increased 6.4% to AUD 846.4 million, with gross profit margin down 17 basis points to 21.8%, driven by a combination of sales mix and competitor activity. Cost of doing business was 11.8%, down 10 basis points, and in absolute terms grew 6.2% with disciplined cost control. Depreciation increased by 2.8%, with an increase in depreciation on right-of-use assets offset by decline in the depreciation of fixed assets. EBIT increased 7.5% to AUD 316.5 million, with EBIT margin up 2 basis points to 8.2%. On to JB Hi-Fi New Zealand on the following page. Again, with Australia, I'll take the summary page as read, as we'll talk about it in greater detail on page 13. For JB Hi-Fi New Zealand, total sales increased by 20% to NZD 202.5 million, with comparable sales up 6.9%. The key growth categories were mobile phones, similar to Australia. Apple results were strong, but also we saw solid results in other key brands. Computers remained a strong growth category, again with Apple and new AI devices performing well. Cameras saw growth across all sub-product groups. Audio results were driven by Apple and the solid results across our airport locations. Small appliances continue to grow, combined with strong results from personal care. Software sales, music, movie, and games were 5.3% of total sales. Online sales increased by 58.4% to NZD 32.4 million or 16% of total sales. Gross profit increased by 22.4% to NZD 34.5 million, with gross margin up 33 basis points to 17%. Cost of doing business was 13.8%, down 137 basis points, and in absolute terms grew 9.2%, with disciplined cost control helping to manage inflationary cost pressures and continued investment in new stores and strategic initiatives. EBITDA was NZD 6.5 million, up 155.5%. EBIT was NZD 2.2 million, up NZD 2.7 million. Underlying EBIT, adjusted for depreciation that would have been recognized if right-of-use assets and fixed assets had not been previously impaired, was NZD 0.8 million, up NZD 2.9 million. Now turning to page 14, The Good Guys. Again, I'll take the summary as read, as we'll talk about the detail on the next page on page 15. For The Good Guys, total sales increased by 9.2% to AUD 1.52 billion, with comparable sales up 8.8%. The key growth categories were floor care, with growth across robotic vacuums and hard floor cleaners. Visual, good unit growth resulting in increased sales across all panel sizes, in particular strong growth in larger panels. Portable appliances with strong growth in most sub-categories. Cooking, growth driven by induction cooktops along with inbuilt and upright ovens. Refrigeration, with growth in French door, side-by-side, and upright freezers. Online sales increased by 8.9% to AUD 233.3 million or 15.4% of total sales. Gross profit increased by 8% to AUD 351.1 million, with gross profit margin down 25 basis points to 23.1%, driven by ongoing competitor activity. Cost of doing business was 13.6%, up 1 basis point, and in absolute terms grew 9.3%, with an investment in store wages to support the important peak period trading periods. Depreciation increased by AUD 3.7 million, with an increase in both depreciation on right-of-use assets and depreciation on fixed assets. EBIT increased by 7.5% to AUD 99.5 million, with EBIT margin down 10 basis points to 6.5%. Turning to page 16, E&S performance. As you'll be aware, on the 2nd of September 2024, the group completed the acquisition of 75% of E&S. Total sales since ownership were up 7.6% to AUD 92.3 million, with comparable sales up 7.2%. Sales growth was driven by the commercial division. EBIT was AUD 1.9 million, in line with the group's expectation, with an EBIT margin of 2%. I'll now hand over to David to cover off the balance sheet cash flow. Thanks, Terry. On slide 18, the balance sheet and starting with inventory. Inventory was AUD 1.32 billion, up 13.5% or AUD 157 million year-on-year. When you exclude E&S, inventory was up 8.4% or AUD 98 million, in line with sales growth. Inventory turnover was down 9 basis points to 7.1 times. When you exclude E&S, inventory turnover was 7.3 times, which is up 10 basis points on the prior year. Payables were up 16% or AUD 161 million year-on-year. Excluding E&S, payables were up 14.2% or AUD 143 million. As strong Black Friday sales drove incremental buying in December to replenish inventory levels. On slide 19, we have some highlights on the cash flow statement. Operating cash flows and operating cash conversion continue to be strong. CapEx was AUD 38.7 million, up 5.9% or AUD 2.1 million year-on-year, with investment in the store portfolio, online, and strategic initiatives. Investing cash flows include the AUD 47.8 million cash consideration for the purchase of 75% of E&S, less AUD 6.8 million of cash balances that were acquired at completion. Dividends paid of AUD 200.1 million include the special dividend of AUD 0.80 per share or AUD 87.5 million that was paid in September. Net cash was AUD 555 million. In line with prior years, net cash at 31 December is seasonally high. On slide 20, capital management. The interim dividend is AUD 1.70 per share, fully franked, up AUD 0.12 per share or 7.6%, and represents 65% of NPAT. The record date for the interim dividend is the 21st of February, with payment to be made on the 7th of March. The group continues to maintain a strong balance sheet, and the board will continue to review the group's capital structure with a focus on maximizing returns to shareholders and maintaining balance sheet strength and flexibility. Handing back over to Terry for the January sales update. Thanks, Dave. Moving to slide 22 for January sales update. Sales update for the 1st of January 2025 to 31st January 2025. Total sales for JB Hi-Fi Australia was 7.4%, with comparable sales growth of 7.1%. Total sales growth for JB Hi-Fi New Zealand was 20.4%, with comparable sales growth of 10%. Total sales growth for The Good Guys was 6.4%, with comparable sales growth of 5.9%. And total sales growth for E&S was 8.1%, with comparable sales growth of 7.5%. We are pleased with that momentum that we continue to see into January, but we do remain cautious given the uncertainty in the retail market and the continued competitor activity we're seeing. Over to page 24, the group focus areas. Again, some of this will be familiar to you, but I'll just pick out a few of the key highlights as we move through rather than read it all. Some of the key focus areas: retail execution and value promotion. We just need to drive value and stay highly focused on driving value to the customers. We need to enhance visual merchandising to ensure we have a real engaging in-store shopping experience, and we need to improve conversion rate. That's making the most of that existing traffic we have coming into the store, all of which we're focusing on. Multichannel growth: new stores. We continue to look for the opportunities for new stores. Expand the membership program. We need to continue to leverage JB Hi-Fi Perks membership program, which is now sitting at about 2.1 million, and we've got to continue to grow that base. Marketplace: that's capitalizing on the significant JB Hi-Fi web traffic and to enable us to drive additional sales, and New Zealand, with New Zealand, its two focus areas is drive gross profit margin improvement. That's about leveraging the growing scale that we have in that market. New store openings, targeting five new stores in FY 2025. Two were opened in the first half. We want to develop the commercial sales in New Zealand, and we want to continue to invest in people and systems, and that's to support the ongoing growth. Over the page to 25, commercial sales, expand a customer base, continue to grow our active customer base across corporate, government, and education sectors. Leverage the new AI device opportunity, potential for AI-enabled device tech upgrades. We want to integrate with retail, and that's integrating with retail, focusing on business customer lead generation and enhancing delivery experiences through the stores. Supply chain optimization, and the focus area is enhanced delivery options. We need to continue to create best-in-class delivery experiences for our customers. We want to enhance our system, constant review of the system, including the launch of a new transport management system. Optimize inventory flow, improve inventory flow during peak periods to enhance stock availability and ensure the safety of the teams. And streamline bulky purchase flow, improve the flow of bulky products into regional stores to maximize stock position and ensure safety of the teams. And finally, E&S, we want to focus on the basics. We were integrating, it's an integration, focus on integration of the business within the group, ensuring that we maintain the E&S high levels of customer service. Leverage, we want to leverage the group, that's maximize the available synergies and review systems and processes. Where appropriate, align systems and processes with the group to facilitate future growth. Over to investment checklist. Again, you'll know this very well by now, so I won't be covering that off, but thank you, and we can now go to questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tom Kierath with Barrenjoey. Morning, guys. Just a question on the comments you make around increased competitive intensity. Can you maybe just talk to whether you're having to fund a bit more promotion and then in which categories you're noticing that increased competition come through? Yeah, we call it increased, but it's probably more maintained competitive activity that we're really seeing out there. Yes, you can see that in that gross margin. We do talk about the fact that gross margin down slightly in both brands. So that's really coming from those investments on the floor that the staff need to make to close deals. We're seeing it across the board, to be fair, but definitely in categories like computers is very, very competitive. Yep. Yep. Cool. Then the second one, business is obviously trading really strongly, and there's talk around the market that we're going to have a rate cut or two or three this year. How do you see that potentially impacting the business? I know you guys aren't macro forecasters, but just based on, I guess, your history and learnings over the past, how do you think that will impact the business? Look, I guess it just becomes a positive for retail in general, and if it's positive out there and consumer sentiment improves, then hopefully that continues to be good for us. Great. Thanks, Terry. Your next question comes from Michael Simotas with Jefferies. Morning, everyone. Can I follow on gross margin, please? And I noticed, Terry, JB's always known for price and value, but you seem to emphasize it a little bit more in today's presentation than usual. And if I look at your focus areas slide, driving value is now the first point on the list. I think six months ago it was more like fourth or fifth on the list. Is the dynamic changing, and are you willing to give up a little bit more gross margin to continue to drive the very strong sales momentum that you've got at the moment? It's always been number one internally on our list. We're very, very focused on top-line growth, and to get top-line growth, we're very focused on ensuring that we get price right. So, I mean, look, it's an interesting observation. I must admit I didn't think of it myself like that. In reflection, it hasn't really been something that's increased. It's just that we're seeing a lot more competitive activity. Therefore, we're talking about it a little bit more, but it's just something we think about every single day and have for the last 25 years. And Michael, what do you see at the moment? Customers are clearly searching for value at the moment, and so we're just making sure we're really doubling down on proving that value to customers at the moment. Yep. Yep. No, that makes sense. I guess related to that, some of the industry feedback we've had is that sales are really being concentrated around promotional periods. I noticed that in your category across both JB and The Good Guys and a couple of your competitors as well, Boxing Day sales started the week before Christmas, for example. Do you think JB's leading the market on that, or is the whole market moving at the same time and you just need to respond? Yeah, I think it's more that the whole market is moving. It's a small industry, and people talk about when promotions may be or may be not starting. We just want to ensure that we're not out of step with any of our competitors where we can and where we know it. No, it's more around just making sure we're meeting the market. Got it. Okay. Thank you. Your next question comes from Lisa Deng with Goldman Sachs. Hi, Terry. Congratulations on a strong set of results. I just wanted to follow on with the seasonality or the concentration of sales around certain periods as well. So looking at our, I guess, promotional calendars into the second quarter and potentially even into January, has any of this shifted compared to 2024? And then also, how are we thinking around the first, sorry, the third quarter sort of seasonality between the different months? Because if we look in the 2024 third quarter, like January was strong, but then for JB Australia, February and March was actually weaker. So are we kind of expecting similar in sort of quarter trends? Look, I think if you think of our planning process, our planning process starts by ensuring that we are comping the promotions we ran the previous year. So that's the starting point for it. And then we overlay any additional supplier promotions that they may run. There's not necessarily an increase in promotional activity coming. So I can't really think that there's any real change. I mean, we've in February, we've got 28 days in February this year, back to normal versus 29 last year. So that's something that we'll probably want to ramp up some promotional activity just to try and ensure we can comp that. But apart from that, it will be pretty much what we've run in previous years. Got it. Thank you. And then another one to do with the recent Aussie dollar weakness. How will that sort of affect our cost of goods sold or from our inventory costing perspective looking forward, please? Yeah. We're starting to get talk from suppliers coming through about price rises. Mainly, that's coming through as it typically does with the HA, the home appliance suppliers, because of that big and bulky product. So we are getting some feedback. No one has actually gone yet or called out exactly how much the prices may go up. I think the thing to remember, of course, we buy locally like all our competitors do. So we're all buying from the same supplier. We're all the whole market will go up if that is the case, if they do decide to raise their prices. Nothing is yet, but plenty of talk that they'll need to. Got it. Thank you. Your next question comes from Adrian Lemme with Citi. Hi, good morning, team. Look, just my first question was about robot vacuums. I mean, some of the data we've seen seems very strong in terms of growth rates, but I think household penetration is still quite low at maybe 10%-15%, well below, say, dishwashers. So where do you think you can take this category over the longer term? And just noting also, it seems at the moment it's kind of complementary to stick vacuums, which you noted are also growing well. Definitely become it fits into that tech space that is very much the sweet spot for JB a nd The Good Guys, it's really performing well. To say we're forecasting it out, what we are doing is merchandising it so that it's giving much more prominence in the store to make sure that if it does continue to grow at the rates that it is, and we agree that there's probably some good growth ahead, we just want to make sure that we are seen as that destination for that category. Yeah, that sounds very sensible. Thanks, Terry. And look, just the question I had too on E&S. I understand it's still early days and you're focusing on the basics, but has your thinking on rollout opportunities across the country evolved yet? And when might we expect to hear a bit more about that, please? Yeah. What we're just focused on at the moment, I don't think it's changed in real long term, but what we are doing is, as we mentioned there, is really just trying to make sure that we've got the systems and processes and the business integrated so that we can start rolling out in an interstate, if you will. But we haven't got that. We haven't got a solid plan on that yet. There will be a few stores that will open in Victoria. They're very easy to add into the brand. But it's more now about just getting those systems and processes right, which sets us up so we can then really start making good informed decisions on where we wish to open outside of Victoria. That's great. Thank you, Terry. Your next question comes from Shaun Cousins with UBS. Good morning. My question's just back on gross margin. So one of the features of your commentary was the mix impact. Could you talk a bit about how much of that was, say, category mix and then also mixed to brands? Apple seemed to be quite an area of strength for you, but Apple's well noted as being a high-velocity item that tends to generate lower gross margins. And so the impact on the gross margin compression, was it sort of, say, 50/50 mix and funding more of the discount? And then when you look at that mix, is it category or supplier, please? Yeah, I think your assumption there is fairly accurate on how we look at it. It is probably like that. It is probably 50/50. And look, the great thing is we're seeing some really good growth and market share gains in some of that lower margin tech category. So we've just got to keep pushing hard in that. We think there's really good growth opportunity still there. So consequence of that is a little bit of mix that it's the sales that we need. But yeah, look, when we work it out, it's probably 50/50. Yep. And within that, just the idea of the increased promotions, is that just responding to the consumer that wants a deal, or is it also an indication of the larger retailers seeking to sort of gain market share at this time because you can, dare I say, sort of flex your muscles somewhat around the scale advantages that you enjoy? And so hence, you might have competitors that are less able to compete in the future. So it could be a positive for you. Yeah. Look, this is really driven by, I mean, promotionally, it's very similar. And a lot of that is this on-floor piece when a customer is standing in front of a salesperson and we just, "We need to take the deal." They might have got a price down the road from a competitor. We just take the deal. So that's really what that's returning. And we've said this in the past. It feels like it's just returning to a little bit more normal sort of environment that we would have been used to pre-COVID of this real aggressive on-floor discounting, or I shouldn't say real aggressive. This on-floor discounting that we're seeing now, which is impacting the gross margin. Great. And my second question is just maybe one for David. Your D&A grew below in both JB Australia, I think it grew at 2.8%. CODB grew at 6.2%. The Good Guys' D&A grew 3.7% versus 9.3%. Can you just sort of amplify the reasons that sort of occurred, and then maybe how we should think a bit about D&A for the second half, depreciation and amortization proving to be more difficult to forecast these days? So if you could help with that, please. Yep. Thanks, Shaun. So there's a few things playing out within depreciation. So there's a bit of timing there with when stores roll off. And then in addition to that, you've got SaaS accounting change, which means items that were previously capitalized within IT are probably more likely to run through CODB these days, particularly when you think about Shopify as an online platform and a shift to more cloud-based IT infrastructure. So it's a bit of combination of those things. In terms of expectations, I wouldn't expect it to be as material as what you've seen there from a good decline. Fantastic. Thank you, David. Thank you, Terry. Your next question comes from Josephine Ford with BofA. Thanks, Terry, Nick, and David. My question's on The Good Guys. You've delivered a very strong sales result, especially in the second quarter. Just interested to know whether that's market share gains or you're seeing category growth, particularly in floor care. And then secondly, on the gross margin, I think you've historically guided that that should fade back to 22%, but it's held up very strong around 23%. Just interested in your comments there and particularly what you mentioned about the competitive activity for The Good Guys. Thanks. You're maybe touching on that last one first. Yeah, look, I have to say the team are doing a great job keeping gross margin up where it is. And I think that's something we'd like to continue to see. We'll have to just see how it does play out with competitor activity. But they're definitely leveraging that scale they've got to help improve the gross margin. So doing a really good job in that. And potentially, that is something they can continue to maintain. As far as growth, what we did see, especially into the last quarter, sorry, the second quarter, and that lead up to Christmas for The Good Guys, it's consistently been seeing really good growth in home appliances. And the feedback is, and I think we've got to be cautious with it, but the feedback is we are seeing some market share gains. I'm always a little bit nervous to say that we are, but we are told at times that we are gaining some market share in that. So that remained fairly good growth over the half. What changed into the second quarter was we saw some really good growth come back into the consumer electronics categories, especially TV. And so seeing TV grow helped the overall sales profile of that business into that second quarter and the key promotional periods. Thanks very much. Your next question comes from Caleb Wheatley with Macquarie. Good morning, Terry, David, and Nick. My first question, just to understand if you can provide some additional color on underlying consumer trends, just given how strong those comp sales numbers continue to be. I know you've pulled out some key categories, but just keen to understand if there's a trend around particular product features or is there a particular customer type that's really driving that? What are you sort of seeing from an underlying basis that's driving those sales? Yeah, I think it's going to be a hard one to give you a lot of color. I still come back to the categories that we sell. It just comes back to those tech categories of phones, the computers. We are seeing computers getting back into some growth there, which is really positive after coming off a fairly tough few years. So computers seems to be returning. And maybe that is a little bit of what we're talking about, this replacement cycle and the amount of devices that went in during COVID, now starting to be replaced. Of course, the AI-enabled devices are in there, which will be helping to assist that. But it's really those it's just the categories we're in. Consumers just want the latest. And if there's a deal to be had there, then they will do it. And we've seen that with the likes of Apple and MacBook when they go on promotion. We really see some good uptick in volume. And then on the other side, we talk about this all the time. The Good Guys, we're very much focused on the replacer customer. And unfortunately, for consumers, products still break down regardless of what the economic conditions are. So people are still replacing, but they just want confidence on value. And that's where both brands resonate really well. And obviously, in the HA space, The Good Guys resonate really well. But people will get value if they come to The Good Guys. That's great. Thank you. And then my second question, just on broader EBIT margins. So they've been maintained, conscious of your comments around what's happening at the gross profit margin line. But just keen to hear your thoughts on initiatives on managing CODB and maintaining margins at EBIT level and any color you can provide on the outlook of CODB as we think about the second half of 2025. In terms of CODB, we haven't changed the way that we run the business. And that's fundamentally that we try and manage the cost in line with the sales. And so you can see that in the first half result. When the sales are there, we believe in giving customers good service and good customer experience. So we put wages in when the sales are there. If the sales aren't there, then we need to find ways to manage the cost in line with the sales base. And so we look forward. Yeah, there's no change from our perspective. We'll just continue to manage costs in line with sales. Gross margin, Terry touched on how we're thinking about The Good Guys previously. And in JB, we've always said that gross margin is around 22%. That does move around a little bit with mix and other things, sort of 50/50. But fundamentally, at a key metric level, continue to maintain the business the same way we have always done. That's great. Thank you very much for your time. Your next question comes from Ben Gilbert with Jarden. Good morning, Terry and team. Just looking forward, just keen on how you're thinking about the next six months or so. I'm not looking for sales guidance, but it feels, Terry, you've sort of given, you're expecting some price increases coming through in appliances. It sounds like it's kicked into Q2, which presumably a big chunk of that's replacement cycle as well as some ASP early from AI. It feels that you're sort of your run rate that you're sitting at, plus you're obviously coming through some easy comps, the market could considerably growing mid-to-high singles at least over the next six to 12 months. Just interested in sort of your thinking, how you guys are putting together the market, how you guys are thinking about ordering, because it feels that maybe we're starting to really kick into a pretty solid period of top-line growth for the market based on some of the trends and what you're talking about with pricing, etc. Yeah, I think one thing though that we are very conscious of is that this second half, we're cycling a better half last year. So if you broke the first half, second half up, first half last year was a bit softer, and it started to improve this time last year. So I think, underlie, we've got to just remember that, that we're cycling, I say, more challenging comps. I appreciate some of The Good Guys might have been slightly negative comps, but it wasn't quite as bad as it was in the first half. So that also means that it's a little bit more going to be a little bit more challenging into this period. All we can do, whether there's price increases, who knows? There's just a lot we don't understand yet, whether it's going to be price increases, whether it's going to be rate drop, interest rate drops. We've just got to stay focused on just driving value and continuing to just drive that promotional activity to make sure that the brands are just the only choice that the customers will consider. That's all we can do. I'm sorry. I know that doesn't answer your question on the detail, how we think about it, but we, like you, probably are a little bit unsure exactly how it's going to play out. That makes sense. That makes sense. Maybe you can just ask about telcos specifically. Telcos have been an absolute cracker category for you over the last few years. It's probably what is your biggest category than JB's now. You must be obviously getting to a pretty decent level in terms of penetration, in terms of the accounts you've driven telco. Obviously, when you switch, it's where you make your nice margin in particular. Are you seeing any signs that you're starting to peak out in telco or seeing an increased competitor activity, particularly as Optus tries to regain a bit of momentum? Just given, obviously, how important a category it is for you, is that a risk that that slows, or are you feeling more confident that sort of IT and other categories can pick up the slack as we look forward? Yeah, we still feel we've got some good opportunity in the telco, in the hardware space, selling the boxes, if you will. It's relatively lower market share than it may be for some of our other categories. So we do think there's some upside that we can continue to push into. And we're doing that by giving it more space in stores, better merchandising in stores, really trying to stay focused on it as a category of opportunity. So we think there is still opportunity there, definitely in telco. That's great. Now just final one to sneak in is just around capital management. So you did one last year. You've got a very strong cash position looking like you'll probably end the year again. How are you sort of feeling in terms of M&A opportunities versus willingness to decide to return capital again? Thanks, Ben. I think to note that the December position is seasonally high, as we always say. And I guess it's an uncertain retail environment. So we're comfortable with the flexibility that the strong balance sheet provides at the moment. Over the last year, as you know, we've put our capital to work with the E&S acquisition and then also returned capital to shareholders through the AUD 88 million special dividend. So I think we'll just continue to monitor it and focus on either returning the capital to shareholders while also maintaining that balance sheet strength and flexibility. Great. Thanks, guys. Appreciate it. Your next question comes from Bryan Raymond with JP Morgan. Morning. Just back on the cost side, just interested in the wages comments you've made so far on the call. Particularly in Good Guys, just wanted to understand how much of the increase in wages that you've sort of called out is coming from a low base last year and sort of normalising store wages versus tactically adding wages to maximise the sales opportunity that was clearly there given the strength in sales that you saw. I'd just be interested if there's a structural step up that we should be thinking about going forward or if it's really just sales dependent. Thanks. Yeah, look, and we actually did make the comment, maybe it was more on the road last year when we're going round. We just felt that The Good Guys went a little bit tight on wages leading into peak last year, into those key promotional periods. So they didn't take it. We felt there was an opportunity to take more advantage of the customers that were in the store at the time. So it's more around that peak promotional period, and we would see we'd do the same again next year. It's not necessarily a step change in any way, just a point in time. Right. Yeah, okay. But where you're at now, you're obviously comfortable with. You've obviously been able to execute on the sales line. So the current level of wages you've got in store, now you're happy with? Yeah, yeah. I mean, we've definitely, we're comfortable now, yes. We are. Okay, great. Then just maybe a broader comment just on the sales line. We've seen obviously fantastic sales momentum this period in what's otherwise a reasonably challenging environment for a lot of retailers. How important do you think innovation is and the pace of innovation within these categories in order to maintain a higher cadence of sales growth? This is innovation coming from the OEMs, of course, in terms of the product features. The AI cycle has been talked about a lot in computing and mobile, but I'm sure it's broader than that from a category mix. Is that something that we should expect to continue to play out? Are you seeing a faster pace of innovation, or do you think this is more cyclical in terms of the benefit you've seen over the past 12 months? Yeah, look, it's a good question. I probably need to think a little bit more about it. But, are we seeing? It feels like maybe post-COVID, there was a bit of a lull of some innovation coming into the categories. That definitely has ramped up over the last few years. So I don't know. I would think at the moment, it's just more what we are seeing is just what we've seen in the last few years, and that's just incremental improvement in products, and AI is one of those features that's now starting to come through and should add some benefit into the future. I'm not sure it's adding a hell of a lot today, but it's definitely one that will continue to drive some benefits into the future. Okay, great. Thanks. Your next question comes from Craig Woolford with MST Marquee. Good morning, Terry and team. Just my first question, if I could, around the acceleration in sales despite some macro headwinds. It was a great first half 2025, so you're looking at flat comps back in second half 2024 and 7% or 8% for first half 2025. Can you just give us a bit of an attribution of how much of that improvement might have been additional transactions versus the ASP of those transactions going up? Some of it sounds like the mix towards televisions, big screens, and that might have helped the sales line. Yeah. Look, there is a combination of both going on in there. At a total level, there was a slight increase in ASP. Individual categories, not necessarily the case, but that mix which you're getting at. But, we definitely saw volume increase. We saw that volume increase during those key promotional events. I mean, significant. People, again, we've said it, everyone says it. People are really reacting to promotional events. Black Friday this year just seems to, again, show that people absolutely get what it is here in Australia, and it's becoming a really entrenched event. Right. Okay. The greater majority was transaction count, which is quite pleasing about the consumer backdrop. The second one relates to promotional events and discounting. A lot of questions on gross margin on the call. Can I ask more of a numeric question? In second half 2024 for JB Hi-Fi Australia, gross margins were 22.4%. The half just gone, it was 21.8%. So that's like 60 basis points or so lower in this first half 2025 than the second half 2024. I would anticipate there's some seasonality, but if I look at history pre-COVID, it was a bit more skewed positively in the first half compared with the second half. How should we think about what a typical second half gross margin is for JB Hi-Fi Australia, given it looks quite healthy from second half 2024? Again, without giving guidance, Craig, I take your point. It looks like a pretty healthy gross margin to cycle in the second half. And so we'll be working pretty hard to try and cycle that gross margin. Intuitively, should gross margins be higher in the second half because we now have such a big Black Friday and other promotional events? Just generally, not for second half '25, but if we think about the seasonality of gross margins, would you expect a typical second half to be higher than the first half? Not particularly. Again, you come back to ordinarily, we'd be very focused on making sure our promotional activity is supplier funded. To the points we've made throughout the call, it's pretty competitive at the moment. And even when there is supplier funding for promotions, other retailers are going below that promotional funding price. So that's what's creating the challenge for us at the moment. Got it. Thanks, Nick. Thanks, Terry. Your next question comes from Phil Kimber with E&P Capital. Hey, guys. Two questions. The first one is just around, say, E&S and the commercial business in terms of what you're seeing from a pipeline point of view. Everyone's been talking about a housing construction market that's been a bit subdued. Have you seen some signs of life from those two businesses? I'd say still we're obviously very Victorian-focused at the moment, and it's been tough commercial construction in Victoria for a while. I suppose we're starting to cycle that. Yeah, you are seeing some signs of life there. The E&S commercial team are actually, and they're also doing a good job of winning work in the ACT as well, which is the other state where we are currently. So yeah, reasonably optimistic on the written business in the commercial division in E&S at the moment. All right. And in one of the key focus areas in supply chain optimization, it talks about a new transport management system that you're launching. Can you just remind us about that and what you're looking to achieve with that? Yeah, that's a tool that we use to help route our deliveries from both our HDCs and from our stores. We've trialed it in South Australia at the moment. We're looking to roll it out across the other states in the next few months, so it's how we route and schedule our deliveries and then how we give the customer visibility and tracking over their order and their deliveries, so it's a good tool and it'll be a really significant improvement in customer experience. So it's only for product that you've got going through a DC, so big, bulky product, because I thought most of your product was getting delivered to store. It is predictable. In terms of where it will have the most impact, it will be for our HDC, so big and bulky. And that is significant because if you think about anything that's large screen TV, any sort of big box white goods, they come out of those home delivery centers. It will move to what we call our bypass product, but that will still go through the existing carriers, Australia Post and Team Global Express. Great. And can I sneak one last one in? Sorry, it's a bit micro level. But in the accounts, there's a P&L which breaks out at the group level, certain expense categories, one of which is called occupancy expenses, and it went from AUD 167 last year to AUD 171 this year. So it didn't really grow much. But then I look in your divisional P&L and your rent D&A or your lease D&A and interest went up, much more sensible sort of numbers. So just wondering why that line at the group level wouldn't have grown much. Is it that the, I don't know what you call them, the occupancy type expenses, so non-rent payments to shopping centers and the like, you're making big savings on? Yeah, Phil. So within that occupancy line item would typically be security costs. And what we've done is sort of transition the stores out of what you'd have typically as a front-of-house security guard into our own staff that would be front-of-house greeters. And so it's a bit of a classification point then. So then that cost would have previously seen a security cost in occupancy, which is now more likely to be in sales and marketing as our wages. Great. So it's just a reallocation. Correct. Perfect. Thanks, guys. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Chami Ratnapala with Bell Potter Securities. Hi, good morning, Terry, David, and Nick. Congratulations on the result, and thanks for taking my question. In the interest of time, may I quickly go into the ASPs? I think there were a few questions asked about the ASPs, and you talked about the handset side of it. Just on computers, with those newer AI products and the higher price points, was there any benefit to the ASPs in that category, or has discounting sort of weighed over here? No, we definitely did see some benefit from the, I'd say, the AI or Copilot+ PCs. There was some benefit into that whole mix from an ASP perspective. So it's grown the ASP in that category and I have to say, and this is, we've got a good opportunity coming into the future. Today, those devices, the AI-enabled devices, have just got a long battery life, like 20 hours of battery life, and a really super fast processor on them and they've got AI capability. So if you're buying one, you're future-proofing yourself to a degree, but you're getting a really, really good machine and that's why people are buying them at the moment. As AI becomes a little bit more mainstream, we'll start to really see, and some use cases really become compelling. We'll really see some good growth coming out of that category. But the ASP is definitely benefiting that category. The other part of it is we're seeing a lot of promotional activity coming out of Apple and Apple run what they call demand generation, and they take it out to the market. W e participate in that and see some discounting on Apple Mac product. We've seen some really good results come out of that as well. Perfect. Thanks for that, Terry. And the next one is on net store openings. For Australia, there has not been any quantitative guidance given for second half. Sorry for being short-termism here, but is the environment tougher, or is it part of your overall FY 2025 plan anyway now that two executed in the first half? What's driving? So look, we don't typically give guidance around store openings, but now we're still planning on opening stores. Yeah, we'd expect subject to site availability and handover happening on time, but we expect a couple of stores to come through in the second half in Australia. Perfect. Okay. Thank you for that. If I can squeeze in one more question, just on New Zealand, January trading update. Seems to be have further ramped up slightly. I know the comps are pretty weak. But is it purely comp here or anything to call out in terms of green shoots? No, I think it's cycling a weak comp in the prior year, and it's definitely still very tough in New Zealand. I think the New Zealand team are doing a really good job in a tough market. Perfect. Thanks for that, Nick. Thanks, team. Your next question comes from Lisa Deng with Goldman Sachs. Hi, thanks for taking the follow-up. Just two follow-ups. One is on New Zealand. It's already in slight profitability, and just given the strong balance sheet that we have, will we consider moving faster than the five stores potentially that we're indicating as an investment opportunity? Look, in New Zealand, we made money in the first half. Obviously, we don't like it. We will not make money in the second half. So for the full year, we would expect not to make money. So in terms of investment, no, we're comfortable with the pace of investment in New Zealand. It's a small team, and there's only so much we can achieve. And so we're comfortable with that three to five stores a year is the right level of investment given the capacity we've got at the moment. Cool. Second one is ancillary revenue streams. I think we've talked about the marketplace. And also previously, maybe JB Perks reaching two million, you might think about retail media. How are we thinking about these two streams to scale in the next few years? Yeah. I mean, marketplace, we've rolled that out. We're taking a cautious approach to marketplace, and we want to stay close to the core. We want the experience when somebody comes to buy a product from us, from marketplace, to feel not off core from JB. It's got to be really on core and that's what we're just spending a lot of time focused on that. So we're probably moving slower, deliberately, just to ensure that it's the right customer experience. But it is performing well. It's behind where we thought because we were hoping to add some more product, but we've deliberately slowed it down. But those products are on there actually moving along really well at the moment. So that's performing well and retail media, yeah. I mean, look, we are definitely doing work on retail media. We've talked to a lot of people. We're getting a lot of advice. We really just got to start working with suppliers and understanding what the opportunity will be. If you think of retail media for something like a Best Buy, it's all sponsored ads on their website. I'm not sure that's us. We want to keep everything authentic. That's why customers come to us. So we've got to do a bit of work to ensure that however we approach this, the value that we can give suppliers fits in with the brand. And that's just what we're working through at the moment. Got it. Very helpful. Thank you. There are no further questions at this time. I will now hand back for closing remarks. Thank you. Thank you again, everyone, for your interest. We really appreciate it. Thanks for the questions. And no doubt, we'll see many of you out on the road in the coming days. So thank you.