Thanks very much. Good afternoon and good morning everyone on the call, welcome to our 2021 half year result briefing. I'm joined here in Perth with a number of our leadership team, we have some others in Melbourne on the phone amongst our divisional managing directors. I'll provide an overview of the group's performance, following which Anthony will provide some more detail on the financials. The divisional managing directors will talk to their performance and the outlook of their respective businesses, I'll conclude with the outlook for the group, we'll move to Q&A. Just starting on slide four. The results for the first half were strong, as you know, we don't judge our success over such a short-term horizon. What pleases us about the results is that we're seeing the benefits from the three areas of strategic focus that I've been talking about in recent years, and we've continued to invest in these areas. These three areas relate to, number one, positioning our businesses and the portfolio for future growth, accelerating our data and digital capabilities, and then addressing areas of underperformance. This is all about providing a satisfactory return to our shareholders, which we define as a top quartile TSR over the long term. We believe it's only possible to achieve this over the long term if you provide support to your broader stakeholders, as set out on this slide, which is a slide you should be very familiar with by now. Moving to slide five. During the half, we continued to demonstrate this in a number of ways. For almost a year now, we've supported our team, our customers, and the community with paid pandemic leave, commitments to pay team members during lockdown periods, and additional community support. Our investment in data and digital over recent years positioned the group to respond well to rapid changes in customer preferences and to support more vulnerable customers through COVID. During calendar 2020, Wesfarmers businesses created almost 10,000 additional jobs. Over 800 new Aboriginal or Torres Strait Islander team members also joined our group, and we're well on the way to employment parity. Across the group, we continue to manage our businesses with carbon awareness, and that focus saw emissions reduced by 8% in the first half, which is pleasing progress towards our net zero target and aspirations. It's also worth noting yesterday's approval of the final investment decision for the Mount Holland lithium project. Ian Hansen will be able to talk more to this soon. Turning to slide six and our results for the half year. The group experienced strong retail sales growth of 19.2% in-store and online, and this is more than one and a half times overall market growth in Australian retail sales, excluding food. Total online sales, excluding Catch, were more than double last year, and including Catch, online sales of AUD 2 billion were recorded for the half. Reported net profit after tax was AUD 1.39 billion, and net profit after tax from continuing operations was AUD 1.41 billion, an increase of 25.5%. On dividends, our Directors have determined to pay a fully franked ordinary interim dividend of AUD 0.88 per share, an increase of 17%. Turning to slide seven. Bunnings, Kmart, and Officeworks delivered strong trading results for the half, reflecting their ability to adapt to changing customer preferences and provide a safe and trusted environment for customers and team members. Good progress was made to accelerate the growth of Kmart and improve the performance of Target. The simplification of Target's business and store conversion program is progressing well. On a combined basis, Kmart and Target delivered a record earnings result for the period. Chemicals, Energy and Fertilisers delivered a good operating performance, particularly having regard to the increase in supply from a competitor ammonium nitrate plant during the period. Industrial and Safety's results also benefited from an improved performance in Blackwoods. Finally on slide eight, the group has maintained its strong focus on generating an acceptable return on capital, with most of our divisions delivering an improved ROC. I'd like to thank our divisional managing directors, Mike Schneider, Ian Bailey, Sarah Hunter, Ian Hansen, and Tim Bult for their leadership that has delivered the results that we're discussing today. I'll now hand over to Anthony, who will walk through the group's balance sheet and cash flows for the half. Thanks, Rob. Good afternoon, everyone. I'll start on slide 11, which provides a summary of other business performance. In total, our other businesses and corporate overheads reported a loss of AUD 1 million for the half, which compared to a profit of AUD 72 million in the prior corresponding period. The key driver to the lower result is the reclassification of the group's remaining 4.9% shareholding in Coles as a financial asset. This reclassification means our result no longer includes a proportional share of Coles' net profit after tax. Instead, we only report dividends received during the period, which during the half was AUD 18 million. It's also worth noting that any movement in the value of our residual holding in Coles will be taken to equity and not reported through the profit and loss. The net reduction in the reported contribution from Coles of AUD 55 million, together with a lower contribution from the group's investment in Gresham, more than offset the benefit of higher property revaluations in BWP Trust, as well as the AUD 6 million reduction in our corporate overheads. Turning to working capital and cash flow on slide 12. Divisional operating cash flows increased 16.1% for the period, which was supported by strong divisional earnings growth. As highlighted at our full year results, lower working capital inflows during this half reflect the ongoing normalization of working capital positions across our retail businesses following the favorable but temporary movements which we recorded towards the end of the 2020 financial year. The working capital result also reflects the targeted investment in Kmart to increase stock weights in some categories, providing greater flexibility to accommodate demand fluctuations from COVID-19. We're pleased with the progress that was made in Kmart during the half to improve inventory availability, which supported stronger sales growth through the Christmas trading period. Our payables also remained elevated at the half, which reflected the continued build in inventory across the retail businesses to support the strong sales growth. We expect to see further normalization of our working capital position into the second half of the year. As a result of the lower working capital inflows, divisional cash generation was 111% for the half, which was slightly below our five-year average. At a group level, operating cash flows increased 4% and were impacted by the timing of tax installments, which were significantly higher during the half. As a result, the group's cash realization ratio finished at 102% for the half. Turning now to capital expenditure on slide 13. Gross capital expenditure was AUD 410 million for the half. This reflected continued investment in data and digital capabilities across all of our divisions, as well as the conversion of 19 Target stores to Kmart stores, but was offset by lower capital expenditure on new stores and refurbishments in Bunnings and across Kmart Group. Net capital expenditure for the half increased 17.4% to AUD 243 million due to reduced property activity, resulting in lower proceeds from Bunnings property disposals. For the 2021 financial year, we expect net capital expenditure for the group to be between AUD 650 million and AUD 800 million. This estimate reflects ongoing store network activity, our continued investment in data and digital projects, and capital expenditure associated with the Mount Holland lithium project following yesterday's announcement of our approval of FID on the project. Turning to balance sheet and debt management on Slide 14. The groups continued to retain a strong balance sheet with flexibility to support further investment in the group's businesses. At the end of the half, the group recorded a net cash position of AUD 871 million, reflecting the strong operating cash flow performance and the actions taken last year. During the half, the group recorded a AUD 9 million reduction in other finance costs due to lower average debt balances following the repayment of AUD 500 million in domestic bonds in November. Our weighted average cost of debt increased slightly to 4.38% due to a shift in the mix of debt towards our remaining European bonds. We continue to maintain our focus on managing our lease portfolio to balance network flexibility and security of tenure. Our average remaining lease tenure reduced to four point seven years during the half, supported by the store closures and conversions within Target. Our work to reposition the Target network has supported a 14% reduction in its lease liabilities since the 2020 financial year. Further detail on our lease portfolio is included on slide 47 of the presentation. Overall, we are pleased with the strength of our balance sheet, which provides flexibility to respond to the significant uncertainty associated with COVID-19, as well as to support the continued investment in the long-term growth of our businesses. To the extent that we have capital that is surplus to these requirements, we will look for opportunities over time to return it to shareholders in the most tax-effective manner. Turning now to dividends on slide 15. As Rob mentioned, the board determined to pay a fully franked interim dividend of AUD 0.88 per share, reflecting the strong net profit after tax result for the half. This dividend is consistent with our dividend policy, which seeks to maximize the value of franking credits to shareholders while having regard to current year earnings, credit metrics, and forecast cash flow requirements. The group will again provide shareholders with the option to participate in the dividend investment plan, and we expect that shares for the plan will again be purchased on market. With that, I'll now hand over to Mike Schneider. Thanks, Anthony. Hi, everyone. I'd like to start by acknowledging the incredible hard work from the Bunnings team and our suppliers in the face of considerable challenges last year. The team have worked tirelessly to keep everyone safe, responding to ever-changing regulations in different states and regions, and to keep our customers served and our stores stocked. Starting at slide 17 and looking first at our safety results. Our number one team measure, TRIFR, or total reportable injury frequency rate, continues to improve, down from 10.4 in the prior corresponding period. This is a pleasing result as we continue to progress towards our goal of ensuring that every one of our team members goes home safely every day. Operating revenue increased 24% to AUD 9 billion for the half, with earnings before tax increasing nearly 36% to AUD 1.27 billion. Excluding the property contribution, EBT increased 39%. Turning to slide 18. Total store sales growth of 25% was achieved during the half, with a store on store sales growth increasing by 28%, driven in part by the extended lockdown in metropolitan Melbourne stores over a number of months. Online penetration rose to 3.1%. All major trading regions performed strongly, the trading performance across all product categories showed strong growth, led by gardening and outdoor living products across barbecues, furniture, and lighting. Approximately AUD 16 million was invested in the half in additional cleaning, security, and personal protective equipment to operate safely in response to COVID-19. We also continued to pay our team in full during all COVID-related trading restrictions during the half. Return on capital increased to 76.6% as a result of strong earnings growth and continued disciplined capital management. Turning to slide 19. Despite the highly complex trading environment, we haven't skipped a beat in progressing our strategic agenda. We've continued to invest in our teams, the customer experience, along with service and digital innovation to drive growth throughout this period. To improve the customer experience, we continued to proactively lower prices across a wide range of categories and products. We also recruited over 6,000 additional team members across Australia and New Zealand to service higher demand, and I welcome these team members to the Bunnings family. With the help of our supplier partners, we further improved the ease of shopping for customers to reflect their shopping habits through product display upgrades and refreshed ranges, including garage organization and kitchen design. Further enhancements were made to the website experience through improved functionality and expansion of our online range. Customers continued to respond well to the convenience of the Product Finder app, which helps them research and find the products they need in-store, meaning they can get in and out of our stores more quickly. Customers also continued to enjoy the convenience of online ordering through our Click and Collect, contactless Drive and Collect, and Click and Deliver services. Continued strong support from suppliers assisted with good inventory management, particularly in light of high levels of demand. We also continued to strengthen our relationships with commercial customers through expanded product offerings, particularly in our supply and install offer for builders, which expanded to support NDIS and retirement living refurbishment, as well as current offers across kitchens, plasterboard, insulation, and staircases. We also introduced a number of initiatives to further improve service for our commercial customers. A successful trial of a new trade service desk format was completed, providing a dedicated service area that improves the customer transaction experience, and the second phase of this will be rolled out in the second half. Over 1 million transactions were completed through the PowerPass app over the last 12 months, and functionality continues to improve. The performance of Adelaide Tools was pleasing, and we are excited to be opening our newest format store in Parafield, South Australia. Our locally based Adelaide Tools team are doing a great job, and we anticipate more stores opening late in 2021. Turning to slide 20. Whilst the outlook remains uncertain, the home improvement and lifestyle sector is expected to continue to benefit from consumers spending more time in their homes. Sales and earnings growth is likely to moderate from March, particularly as we cycle the uplift from COVID-19 in the prior year and as government stimulus programs come to an end. Costs associated with operating safely and complying with government regulation in a COVID-19 environment will continue to be incurred for the foreseeable future. However, we are well-positioned for continued growth and are committed to investing for the long-term success of our business through continued digital innovation and capabilities, broadening commercial markets, and strengthening our in-store offer. We expect to open six stores in the second half, all of which are currently under construction. To finish, I'd again like to thank our teams and suppliers who've done an outstanding job in dealing with the ever-changing trading conditions over the half, minimizing disruption to trading and looking after our customers while keeping each other and the community safe. That's it from me, and I'll now hand over to Ian Bailey. Thanks, Mike, and hi, everyone. Kmart Group's focus during the pandemic is on being there for our customers, keeping our team members, customers, and community safe, and making the right decisions to set our business up for future success. I'm exceptionally proud of our team and the way they have performed through the uncertain times and very difficult operating conditions, and I'm very grateful and thankful to work with such a wonderful team. Overall, Kmart Group has been a net beneficiary of strong retail demand in the first half, with some categories benefiting from the shifting consumer preferences, while other categories have seen significant declines. Consumer shopping behavior has changed, with customers reducing the number of visits in-store but spending more with us per visit. The online channel has grown rapidly across all our brands, and we have also absorbed many incremental costs during this time. Importantly, each business has made significant progress on their longer-term strategic agendas. Now turning to slide 22. Safety is a key priority for Kmart Group, and we have made good progress, with the total recordable injury frequency rate decreasing 34%- 10.6% during the half. Kmart Group delivered revenue of AUD 5.4 billion, up 9% for the half. Including gross transaction value for Catch, Kmart Group revenue increased 12.4%, or over AUD 600 million for the half, demonstrating the Group's ability to grow incremental market share. Earnings before significant items grew by 38.4% on the prior year to AUD 487 million. Now turning to slide 23. Kmart's comparable sales increased 9.1% in the half, with home, toys, and active categories growing strongly. This translated into the strongest earnings half Kmart has delivered. Kmart started the financial year with an improving trend in product availability. As the half progressed, unprecedented disruptions in international shipping, combined with local port congestion, resulted in considerable delays for us and many other businesses. Kmart's scale and strong relationships have enabled us to minimize the impact to customers, demonstrated by improvement in our net promoter scores through the half. These disruptions are expected to persist into the second half, and we will continue to make incremental investments to support key product lines and leverage strategic relationships with our shipping partners. Target's comparable sales increased 13% in the half, driven by a combination of strong retail demand and the considerable work undertaken over the last two years on improving the core product ranges. Target's profitability also improved significantly in the half. As more customers chose to shop online than ever before, Kmart and Target reported record online penetration of 8.7% and 15.9% respectively. While this channel is profitable, we have significant opportunity to optimize our online operations, and we continue to invest in re-platforming Kmart's website to improve the customer experience. Turning now to slide 24. The strategic changes announced last year to grow Kmart and create a smaller and simpler Target are delivering strong results. The conversion of select Target stores to Kmart is progressing well, and the much larger Kmart store network is expected to unlock additional scale benefits to underpin Kmart's future growth. 19 Target stores were converted to Kmart during the half, including seven smaller format K Hub stores, with initial results well above expectations. We have also created over 860 net new roles in Kmart conversion stores, predominantly in regional communities. Solid progress was made in Target to simplify the business operations and overhead structure and prioritize online growth. In Kmart, we have continued to invest in key strategic initiatives to enhance the customer offer. This includes in-store RFID technology to enable a more efficient and agile operating model and greater stock visibility, and continued development of data and digital assets and capabilities. Turning now to slide 25. Catch's gross transaction value increased 95.6% in the prior period, with strong performance in both the in-stock and marketplace segments, as more customers shopped online and the product offering was expanded into new categories and brands. As per previous guidance, Catch's earnings performance reflects accelerated investment in warehouse automation, technology, marketing, and team capabilities necessary for the business to scale ahead of future top-line growth. Catch now ranges increasing numbers of Kmart and Target products and is expanding Click and Collect options across Kmart and Target stores. Turning to slide 26. As we have previously said, FY 2021 is a year of investment for Kmart Group as the foundations are laid for a significantly larger and more digitally enabled Kmart, a smaller but more profitable Target, and a rapidly growing Catch. These investments are focused on improving the customer experience both in-store and online, and on making the business a great place to shop that is simple to run and delivering better products at even lower prices. By using technology to leverage Kmart's strengths, its brand, ability to deliver lowest prices profitably, and leading product development capabilities, we see enormous potential to continue to grow this business. We expect to incur one-off costs or one-off non-operating costs of approximately AUD 90 million-AUD 110 million for the full year relating to Target store closures and conversions to Kmart. For Catch, we see great opportunity for continued growth in the online market, and we will continue to accelerate our investment in that business to fuel that. Thank you, and I'll now hand over to Sarah Hunter. Thanks, Ian. Hi, everyone. I'm pleased to be joining you today to report that Officeworks has continued to deliver strong sales and earnings growth during the half. Turning to the next slide. The safety, health, and wellbeing of our team members and customers remains a priority for Officeworks. We continue to adopt best practice safety and hygiene measures across our operations to ensure our team feel safe coming to work and our customers feel safe when shopping with us. From a financial perspective, revenue grew by 23.7% to AUD 1.5 billion. Earnings grew 22% to AUD 100 million, and return on capital increased to 23.4%. Turning to the next slide. Officeworks' ongoing focus on and continued investment in our every channel proposition allowed the business to respond quickly to changes in customer behavior during the half. Online sales penetration increased to 37.1%, driven by periods of particularly strong online sales growth when access to stores was restricted. Sales growth was supported by strong demand for technology and furniture products, and customers also responded positively to our Christmas offer with our STEM, early learning, and art and craft ranges proving particularly popular for gifting. Strong earnings growth of 22% was delivered despite gross margin compression as a result of changes in sales mix and continued investment in price. COVID-19 restrictions adversely impacted sales in higher margin categories, such as Print and Copy and office supplies. The significant growth in online sales did require some additional resourcing to support peak demand, resulting in higher fulfillment costs. Turning to the next slide. Despite the changing circumstances surrounding COVID-19, we continue to invest for the long term to deliver our strategy. The safety, health, and wellbeing of our team members remains paramount, and there is always more to do in this space to ensure that our team go home safely every day. The mental health of our team was a particular priority, and we supported them by investing in a number of initiatives, and very importantly, offering pay and work certainty during the COVID lockdowns. We launched our Diversity and Belonging program, we've made significant progress in Indigenous team member employment. We also expanded our analytics capability with the launch of phase I of the Officeworks Data and Analytics platform, our range has continued to evolve to meet changes in customer demand. For example, expanding our cleaning and hygiene range to enable small businesses to continue to operate safely and launching our new exclusive art brand, [Born]. Over a period when our communities really needed support, we contributed over AUD 3 million to local groups and our national partners. Good progress was also made to reduce emissions. Investment in our supply chain capacity across every channel enabled greater flexibility to manage COVID restrictions and customer demand. We continued to invest in growing our business. We upgraded store layouts, opened two new stores, made enhancements to our mobile app, online checkout, and delivery options for customers. Our new Geeks2U subscription service continues to grow to complement our technology offer. We also made significant investment in re-platforming and building a new integrated website for our Print, Copy & Create business, which will deliver a materially improved experience for customers. Turning to the next slide. While the outlook is uncertain, Officeworks remains well-positioned for the future. We are expecting sales and earnings growth to moderate from March as we begin to cycle the initial sales impact of COVID-19. We will drive long-term growth by investing in our team, the customer experience across every channel, enhancing capacity of our supply chain, and improving productivity through use of technology. We will continue to invest in opportunities to grow our core business, as well as expanding into adjacent areas in B2B and in education. I would like to take this opportunity to recognize and thank the amazing Officeworks team for delivering yet another half of positive progress under extremely challenging circumstances. Thank you, and I'll pass over to Ian Hansen. Thanks, Sarah, hello, everyone. Overall, WesCEF has continued operations and supported customers across the chemical, energy, and fertilizer industries we serve without significant impacts from COVID-19. I'd like to acknowledge the great contribution of all our team members in achieving this, and I'm very pleased that during this ongoing phase of disruption, we've maintained our good safety performance. Turning to Slide 33. You can see that each of our business segments experienced a decline in revenue, with earnings impacted as a result. Overall, this decline was less than expected, given this is the first reporting half when the competing Burrup plant has been in operation, coupled with lower and volatile energy prices throughout the half relative to the prior corresponding period and reduced fertilizer volumes due to the late season in 2019 that was not experienced in 2020. We have been pleased with the resilience of the business and its strong return on capital. Turning to Slide 34. As you're aware, Wesfarmers, together with joint venture partner SQM, announced the final investment decision for the Mount Holland lithium project. The project establishes a new growth opportunity and market sector for WesCEF. It aligns with our strategy of investing in adjacent markets and identifying new opportunities where we can utilize our core capabilities in project development, sustainable chemical processing, and product distribution. WesCEF has successfully built chemical processing plants and moved into new markets over its history with process plants to produce various acids, chlor- alkali, sodium cyanide, ammonia, ammonium nitrate, and AN emulsion plants, just to name a few. This project is a key focus area for myself and the senior leadership team at WesCEF, and we continue to provide all necessary support to the Covalent joint venture to ensure sound project execution. The announcement follows the completion of the updated definitive feasibility study, which is the culmination of 12 months work and has provided the joint venture partners with greater certainty on the project's engineering design and cost. Importantly, we've also optimized the project to increase the annual production capacity to 50,000 tons per annum, with Wesfarmers' share being 25,000 tons of battery-quality lithium hydroxide per year at full production. Turning to Slide 35. I will now address the performance of each of the business units. The chemicals portfolio generally faced positive customer demand fundamentals with buoyant commodity prices and the industry avoiding significant COVID production interruptions. The strong ammonium nitrate demand from the iron ore sector was offset by increased supply from the competing Burrup plant, which impacted the sales result. Ammonia earnings were marginally down on the prior period due to the planned two-week shutdown of our plant. The cyanide business has seen export volumes and spot pricing negatively impact by COVID-related mine disruptions in several export markets. Furthermore, some increased cost pressures were experienced within chemicals due to short-term supply chain issues related to COVID. Now to the energy segment. The Kleenheat LPG business experienced a volatile period reflecting global energy markets. Earnings from LPG were down slightly on the corresponding period, with higher export sales offset by a lower average Saudi CP, the international indicator price. The natural gas retailing business continued to grow its residential customer base in Western Australia. The LNG business increased earnings slightly due to improved margins and volumes. To fertilizers. While not as material as the second half due to seasonality, fertilizer earnings declined on the prior corresponding period due to a drier end of season in calendar year 2020 compared to the late rains and therefore higher fertilizer sales in the same prior year period. The business is benefiting from a newly commissioned liquid storage facility in Kwinana and has continued to invest in data and digital capabilities to enhance its service activities and customer experience. Turning to Slide 36. In terms of outlook for the businesses, within the chemicals portfolio, the demand for ammonium nitrate is expected to remain stable. The ongoing disruptions to some offshore mining jurisdictions is likely to continue and could impact cyanide export demand in the short term. In the longer term, we still expect growing demand from the gold sector, and the team are investigating opportunities to expand production capacity. The Kleenheat LPG business will likely benefit in FY 2022 from the imminent closure of the BP refinery in Kwinana, resulting in reduced LPG production capacity in Western Australia. This will see an increase in Kleenheat's domestic sales volumes of LPG and a corresponding reduction in exports. The remaining energy businesses are expected to be stable. With respect to fertilizers, the recent 2020 Western Australian harvest was above average, which will assist grower sentiment. However, second half earnings will remain dependent upon the timing and extent of the seasonal break in autumn and may be impacted by increased competitive pressures in the Western Australian fertilizer market. Thank you, and I'll hand over to Tim Bult. Thanks, Ian. Before I begin, I'd like to commend the hard work done by all the teams in the industrial and safety businesses over the past six months of activity, particularly following on from the challenging times we faced in the second half of the last financial year. As our teams navigated this into the first half of this year, the challenging operating environment continued. Our businesses did a great job of continuing to support our customers in response to COVID-19 during the period through sourcing of critical products, ensuring critical oxygen supply to hospital groups, and providing additional risk consulting services. Turning to the half year results on slide 38, Industrial and Safety's earnings grew from AUD 22 million- AUD 37 million before the payroll remediation costs that were incurred in the prior year. The earnings performance was primarily driven by Blackwoods, which was in line with our expectations. Safety remains a key priority for us. The total reportable injury frequency rate increased slightly to 4.5 in this half. That was a stable result given the current operating environment. In relation to the specific performance of businesses within Industrial and Safety on Slide 39, I'll start with Blackwoods. Revenues grew in Blackwoods due to continued growth from strategic customers and strong demand for critical products in the first quarter, including respiratory, cleaning, and hygiene products. This was partially offset by weakness in some coal mining, oil and gas, and manufacturing sectors. Investment to date to improve Blackwoods' operational execution supported the reliable supply of products despite COVID-19-related shipping disruptions, and this was a strong achievement by the team. Earnings increased from the higher sales and cost improvement initiatives, partially offset by continued investment in customer service and digital capabilities, including the enterprise resource planning or ERP system. Turning to Workwear Group, earnings were in line with the prior year, with lower revenue from uniforms as a result of the impact of COVID-19 on some customer segments, including airlines, retail, and hospitality. Pleasingly, these were offset by higher revenues from the industrial workwear brands, including KingGee and Hard Yakka, together with operating efficiencies within the business. Coregas' earnings increased on the prior year due to the higher demand from industrial and healthcare customers, reflecting investment in the product offerings in these segments in recent years. The business also benefited from improved material sourcing costs, which was a good outcome. Turning to the outlook for Industrial and Safety on Slide 40, market conditions are expected to remain uncertain and challenging for the remainder of this financial year. Blackwoods continues to focus on improving its customer value proposition. The business will build on improvements to its core operational capabilities, including through progressing the implementation of the ERP system. Customer demand in Workwear Group will continue to be impacted by COVID-19. The business continues to focus on growth from key brands, cost improvement initiatives, and continued investment in its digital offering. Customer demand in Coregas is expected to remain stable, with continued strength in healthcare and industrial segments offset somewhat by weakness in other sectors and ongoing competitive pressures. Thank you. I'll now pass back to Rob. Thanks, Tim. Turning to Slide 41 and the outlook for the group. Economic conditions in Australia have recovered strongly, and the outlook is now more positive. Sales across the group's retail businesses have continued to remain strong through January and February, with some impact from government-mandated trading restrictions. It is apparent that we need to learn to operate in a COVID-safe way for some time to come because there continues to be risks and uncertainties, particularly as we seek to contain the virus and with the risk of future lockdowns. Effective and well-coordinated COVID management in areas such as hotel quarantine, test, track, and trace capabilities, and adopting more measured and sophisticated approaches to outbreaks will help to reduce the enormous harm on families and businesses from hard lockdowns and will ultimately support the economic recovery. Australia is in a unique position to manage the challenges of COVID-19, and it's important we focus on longer-term strategies that will sustain our future prosperity. Consumers spending more time at home and working from home while other restrictions persist is likely to support higher demand for some of our group's businesses. The group will continue to invest in our digital offer to meet the changing needs of customers while also improving operating efficiencies and always managing our businesses for the long term. Regarding the Mount Holland project, we're excited about the opportunities with this project. This is a very long-term project and one where Wesfarmers and our partner, SQM, bring some very specialist and highly complementary expertise and experience. The group's portfolio of cash-generative businesses with leading market positions remains well-positioned to deliver satisfactory returns over the long term. That brings us to the end of the briefing. We'd now be very happy to take your questions. We will now begin that question- and- answer session. Once again, if you did wish to ask a question, just please press star one on your telephone and wait for your name to be announced. If at any time you need to cancel your request, it's just by pressing the pound or the hash key. Your first question today comes from Michael Simotas from Jefferies. Please ask your question, Michael. Good morning and afternoon, everyone. My first question is on capital allocation and in particular, how you're thinking about the balance sheet at the moment, and maybe a comment on the interim dividend that's been declared because the payout ratio looks like it is a little bit at the lighter end, notwithstanding the very strong earnings and cash generation. How you're balancing the opportunity to invest in existing businesses, invest in new businesses, and return capital to shareholders. Thanks, Michael. I'll take that question. Firstly, as I think we mentioned, it's a really good time to be sitting on a strong balance sheet at the moment given the uncertainty around COVID, and we see that playing out obviously with the recent lockdown. I think it's a good environment to have a strong balance sheet in. We continue to invest in our existing businesses. As you know, our philosophy is very much about getting franking credits back to shareholders. We're not sitting on surplus franking credits, and that's because we've managed to pay those back to shareholders as we've earned them over the years. We will continue to look at capital management opportunities as we go forward. I think at the moment we are comfortable with sitting on a strong balance sheet which allows us to invest in our existing businesses. Sorry, in terms of the interim dividend, you're right that the AUD 0.88 probably represents a slightly lower payout ratio. As you know, our interim payout ratio is always lower than our full-year payout ratio. We haven't moved away from our full-year payout ratio range. The current interim represents about a 72% payout ratio. Typically, we're between that and about 75%. We have seen a shift a bit in earnings pattern across the halves, so that's impacted that decision slightly. It doesn't change our approach to dividends over the longer term. Okay. Yeah, that's helpful color. Thank you. Then just a second question from me on the retail businesses. A lot of retailers have demonstrated significant margin expansion as you have. Some of that's been operating leverage and some of it's been gross margin expansion as a result of the very strong demand. You've given us some very useful commentary on margins for Officeworks. I was just hoping you could give a little bit of qualitative color on gross margin performance across the other retail businesses, please. Yeah, Michael, it's Rob here. Look, I'll answer it at a high level and each of our retail MDs can provide a bit more color. Look, I think there are a few things. It's important to understand the differences in each of our businesses. If you take a business like Officeworks, as Sarah was saying, there was a very significant change in sales mix, such that the impact of COVID on Officeworks was that some of the higher margin products such as print and copy, we saw a decline in demand. Some of the lower margin products, particularly on the technology side, we saw very strong demand. If you contrast that to, say, Kmart and Target, them selling more product at full price and less discount and clearance is clearly going to give a gross margin benefit. On the Bunnings side, Bunnings being an everyday low price retailer and being deeply committed to keeping low prices as all of our businesses are, I should say, you wouldn't expect such an increase in gross margin. Indeed, it's not how we focus on the businesses. The other point I'd say is that the objective of all of our businesses and the group is not simply to ask the question of how much operating leverage and how much profit can we make in a six-month period. As I said, and as our MDs have said, we've continued to invest heavily. We've invest heavily in our team, heavily in COVID safe practices, continue to invest heavily in setting our businesses up for the future. We're quite pleased with the extent of leverage that we achieved, but we're also pleased with the foundation that we've set for the future. Hi, Michael, it's Mike Schneider here. I'll just add to that, pretty much as Rob said. For us, as I said in my sort of opening remarks, for us, we've been continuing to invest in price as an EDLP retailer. It is something we are fixated on in terms of delivering for customers. Yeah, for us, it's been more about leverage than margin. Ian Bailey here. Michael, just a few points from Kmart Group side of things. I think it's obviously margins have been positive for the reasons which Rob called out, where we've had less clearance in the mix. There's also a cost story in there too on the way through. Obviously we've been converting Targets to Kmart. Those conversions sort of deliver greater sales density and greater sales in those stores. Of course, that translates true to the bottom line, particularly as you get the fractionalization of the fixed cost of the Kmart business. Of course, within Target, last year we actually had quite high clearance levels. We had an unusually low margin number and obviously benefit this year with the stronger margin at full price. Equally, we've done a substantial reduction in cost in that business as well, which has been a contributor to the result. It's a combination of margin and costs in Kmart and Target. Okay, great. Thank you. Your next question comes from Shaun Cousins from JP Morgan. Please ask your question, Shaun. Thanks. Good afternoon. Just a question, hopefully for Mike, that you could answer just regarding Bunnings. Can you talk a little bit about what was stronger in terms of the contributor to revenue growth, whether it was DIY or trade, and whether or not you've seen the DIY market become a bit larger than what you had anticipated previously? How are you thinking about trade into calendar 2021, calendar 2022, cycling the strong trading that you've got, but also how you're positioned for a renovation or a housing investment cycle there? Hopefully, some answers in there, please. Hi, Shaun. Yeah, look, I think we've sort of talked for quite a while about the fact that we sort of, because we can see the trade customers through PowerPass, that sort of 35/65 split of revenue is continuing, and both have seen a good lift in volumes across the period. There's no doubt in my mind that Australians and New Zealanders have fallen back in love with doing things around the home. Some of that will have been out of necessity, and some of it is very much about staying occupied, particularly if you think about Melbourne and the better part of three months of being locked down. It was very much a case of seeing people stay really active at home. I think that on the trade side, there's certainly a lot of activity both on new starts and on alt and adds when you think about what's going on with housing churn. There's a lot of interest in that. We're really well-positioned. We've been working really hard over the last 12 months to improve the capability of the trade team. We've got a new Trade Chief Operating Officer, Ben McIntosh, who joined us last year, and a number of new leaders across the three categories of Bunnings Trade, which is really helping us focus on sales and relationship management alongside the technological developments, the improvements in PowerPass. It's great to see so many trades and small businesses using the app. It increases convenience and speed and time in store. Also a lot of really good work on product innovation and the in-store experience. I think the new trade service desk that I touched on earlier creates a much better experience for the tradies when they're in store and on the way through. Obviously, during periods of lockdown, we're fortunate that the business can be open for the trade to do emergency repairs and things like that. Obviously, that's been a benefit during the first half. Yeah, we've got a really positive outlook for what we can do in trade in terms of improving the way we go to market and the quality of the service offer, and I think that'll benefit us in increased sales. To be clear, you didn't see any divergence in the growth rates between trade and DIY. They both grew at the same amount and trade stayed at 35%. Is that what you're saying there? Yeah, pretty much. Okay, perfect. No, that's helpful. My second question is probably just for Ian. Can you maybe sort of provide us a little bit of detail around what are you seeing from the Target conversions in terms of broadly what have been the ranges of sales uplifts in that generally Kmart stores generate much greater sales than a Target store, and they're obviously also more profitable. Can you share any financial metrics around how these conversions are progressing, please? Yeah, sure. I think the first thing, Shaun, they're very early days, so I'll put that caveat on there. So far, the performance of the stores have been stronger than expected. Now, when we look at the economics of the stores, it's very much a rational financial assessment. We'll assess the costs of establishing the new Kmart, so that includes the cost of closing the Target, that includes the cost of the fit out and so on, and match that against obviously the incremental revenues that we get post that. That then gives us a sales profile for those stores. We're consistently overachieving against that sales profile that we have within those business cases. I say very early days. In the case of the K Hubs, which is a small format, we're seeing very strong growth in those relative to their historical levels as Target countries. The reaction we're getting from customers in the communities where we've opened has been incredibly strong. Can't really give you any numbers. I think even if I did, I'm not sure how useful they'll be because of the stage of the life cycle we are with those. I would say the early indications give us a lot of confidence for what's coming in the second half. Great. Thanks, Ian. Your next question comes from Grant Saligari from Credit Suisse. Please ask your question, Grant. Good afternoon. Thank you. Sorry for the delay. Ian, could I just continue perhaps just on Target, specifically, so the repositioned Target formats? Obviously, incredibly hard to judge, I guess, underlying performance given the period we've been through. Are there any other proof points that you could point to in terms of where you've got the cost position to where sales might have been in some of the more stable ranges that could support progress in the turnaround of that Target business? Yeah, it's a good question, Grant. I think a couple of things. We've analyzed the performance in many ways, trying to isolate out the net benefits of COVID is not a simple equation. Obviously, some categories have seen really strong performance, other categories have seen the opposite. If you look at both Kmart and Target, we would sort of class ourselves in the middle of the retail market of benefiting in some and not in others. Clearly, with a net benefit position, I should hasten to add. When we look within the categories, I'd say the work we've been doing around quality and style at an affordable price, I think is starting to get traction. I say I think because it's so hard to isolate that out from the environment that we're in. When we look at rates of sale of the products that we would say are delivering on our brand proposition, we're seeing those rates of sale being higher than some of the other products. We've also been in-filling the range where we felt like we were missing products within categories that were at more at the basic end, and they have performed well. We feel like that is a real number that's going to continue to stay with us. When you look at the underlying health of the merchandise offer, I would say good progress, but none of us are declaring that we're at the destination at this point, and we have more to do. Sure. As we go through the second half, though, what we do have is we have a continuation of the closures and conversions to Kmart, and we have a continuation of the reduction in the cost base of Target. Both of those things are working well. The closures are generally performing well up to the point of closure, which is one of the reasons why the one-off costs are reducing from what we initially predicted. The cost base is very much on track for where we wanted it to be. I think by the time you end this half, we're going to have a very different Target, which is smaller than it was historically, and it is very focused around quality, style, and affordable price. I feel like we've made a good start on that journey of getting to a sustainable level of performance. I don't think any of us are declaring victory just yet. Sure. I appreciate that. If I could ask one other question, perhaps of Tim, just in Industrial and Safety, which has been the other repositioning and restructuring task. Are there any proof points that you can talk to with that business? I mean, it's obviously pleasing to see the profit going up in the half, which is the first time in a while we've seen that. In terms of the cost base of that business, you mentioned the ERP system is sort of approaching, I guess, the final implementation phase. I'd be just interested in where that business is at in terms of progress with its turnaround. Thanks, Grant. I'm guessing you're referring primarily to Blackwoods in that case, but correct me if that's not the case. Look, I think there has been some good progress with the team, led by Rachael McVitty, around cost management, and the business has certainly become more efficient. We've seen some good growth in sales, as I outlined, notwithstanding the difficult operating environment we're in. It's a really mixed bag because some customers have performed very strongly and the business has had some good success with its major strategic customers in terms of growth. We've had really reduced demand. Not losing customers, I might say, but reduced demand from some customers that are in heavily affected segments, whether COVID's affected their operation or it's reduced their price of their products and therefore their level of activity. We've also had some benefit from, which may not be lasting, around hygiene-related products that have, I guess, resulted from the impact of COVID-19. In aggregate, COVID-19's not been good for the business, but there has been some offset, as I say, in relation to those products. It's very early days. If we look at the division at the moment, its return on capital's improved from 3.4% last year to 5.4%, but that's in no way satisfactory and we've got a long way to go. We're building some early momentum, but it's very early days. In relation to the ERP, both the team within Blackwoods, and with the support of our new implementation partner, have done an enormous amount of work. They're very well advanced. The build process of the new system is complete, and we're deep into data migration and user acceptance testing. It's a very complex project with us approaching quarter of a million SKUs. We're well advanced, but still with quite a bit of work to do, and it's an important investment, clearly, for the business and very much part of the focus for us going forward. Yeah. All right. Thank you. That's helpful. Your next question comes from Andrew McLennan from Goldman Sachs. Please ask your question, Andrew. Thank you. Good morning and afternoon, everyone. Anthony, I completely agree it's a good time to have a strong balance sheet with the uncertainty around COVID, et c. I think even after paying for the Kidman development, you're going to have AUD 4 billion-AUD 5 billion of capital in excess of the A- credit rating. I think I saw you're paying fees on AUD 2 billion of undrawn banking facilities. It doesn't appear that you're sitting on that kind of balance sheet position from a conservatism perspective. I imagine you'd be paying that down, et c, if you didn't have plans for that capital. What are you guys waiting for? I mean, obviously, it's an expensive market at the moment, but you previously said you'd return excess capital to shareholders if there was no other purpose for it. I'm just wondering how we can overcome this balance sheet issue at the moment. Yeah. Thanks, Andrew. Look, there's no doubt, we've clearly got a strong balance sheet. We're not hiding behind that fact, and we're sitting on net cash. I think the reality is, though, as we've always said, and I think we've got a history of doing this, is getting capital back to shareholders when we don't have a need for it. The reality also is that we are still in a COVID environment and it's still a level of uncertainty, and we continue to see that on a daily basis. I also, as I mentioned before around our franking credit position, we want to be able to do this if we're looking at giving capital back to shareholders, we want to be able to do it in a tax effective way. We're not sitting on a meaningful balance of franking credits that would allow us to pay out a very large special dividend. We need to look at other forms of capital management, if that's appropriate at a point in time. There are other means of doing that. They will require shareholder approval. We'll need to consider how that plays out in the future. I think, there's no doubt, it's a great time to be having a strong balance sheet. Take the point that from an efficiency point of view, we're paying a small cost for that at the moment, but in the context of where we sit, and the growth opportunities that we're looking at, we think that's in the best interest of shareholders. Okay. One for you, Rob. I think in terms of the outlook statements from Wesfarmers, I've always thought that your comments have been very balanced. This time around, it's clear that the view is certainly more optimistic. I'd note that for most of your retail businesses, you're talking around the outlook as so that growth would moderate and certainly given the very high base, that's not surprising. It doesn't sound as though you're at all anticipating profitability to go backwards. Can you just confirm if that's an over-interpretation of how you've been explaining the outlook for the retail businesses, please? Well, Andrew, I'm certainly not giving any forecasts on profitability. You'll recall back in August, I was very cautious. That was at a stage where we were facing very extended lockdowns and an enormous amount of uncertainty with COVID. We're still working through government stimulus response and so forth. Where we sit now, clearly the data shows that the economy has bounced back very strongly. I guess my statements are just a statement of fact that we've seen unemployment reduce, jobs have come back, savings rates are a lot higher, consumer spending and confidence has improved. My comments are also with the caveat that risks and uncertainties remain, and as Anthony said as well, the virus is changing month on month with various mutations. We have snap lockdowns week on week- Yeah. ...that are not anticipated, and we read about them and hear about them in the media. We can't just ignore those things. They do represent risks. I think we've got a lot to be pleased about and optimistic about in Australia in particular, but we shouldn't lose sight of those risks. I think what we've also demonstrated through our performance in 2020 is that our portfolio of businesses and our teams have been able to adapt and respond really effectively. We've gained a lot more confidence in our capacity to manage this volatility and uncertainty and still deliver a good outcome. Yes, we do feel more optimistic, but we shouldn't ignore the fact that there are still risks that remain. Okay. Thank you very much. Your next question comes from David Errington from the Bank of America. Please ask your question, David. Thank you. Thank you, operator. Rob, can I ask you this question? It's very broad. Maybe Ian Hansen can follow in as well. Why is investing in lithium, and I understand EVs, but can you give us a bit of an update why you think that is a really good investment for Wesfarmers, given you've spent, what, AUD 780 million acquiring Kidman, then you're putting in another AUD 950 for your 50% stake. Now, I understand EV demand is strong, but can you give us a bit of an overview why you think this is a great investment for Wesfarmers in the long term, please? Given it's likely to dilute returns for at least four or five years because they are very long duration and they are pretty capital intensive, and there is a lot of supply coming onto the market. Yeah. David, I'll touch on that and then Ian can talk more. There isn't a lot of supply coming onto the market, particularly in lithium hydroxide. I think if I take a step back, as you know, the way that our WesCEF division has grown over the years is by making significant investments of capital with a long-term view. Often those investments are to support new industry opportunities that have arisen, and where Western Australia possesses some unique points of competitive advantage. You can look at that with the growth of WesCEF over the years, be it around the growth of its fertilizer, LPG business, the multiple expansions of ammonium nitrate, the move into sodium cyanide, the recent move with a motion. Lithium is a unique situation that we, globally, there are some of the highest quality hard rock reserves here in Western Australia. The chemical process for converting concentrate to lithium hydroxide has a number of very similar processes that lend itself to a lot of the expertise we have in Kwinana in chemical processing. Partnering with a world-class operator, a very experienced group like SQM, we think is a great opportunity to leverage some unique capabilities and assets that reside here in Western Australia, create a new growth platform for WesCEF consistent with how we've grown WesCEF over the years. There's still a lot to do. Just to be really clear, this has nothing at all to do about Wesfarmers speculating on lithium mining or commodity prices. It's not about that at all. It's about building one of the best lithium hydroxide refineries with a global leader in that process, SQM, and we are very confident in the future demand for that product. I might hand over, Ian can add to some of the detail on the project. Yeah. Hi, David. Thanks. Hi, Ian. I think you have to look at it from the perspective that the Mount Holland deposit is very high grade relative to other deposits around the world. You add to that the fact that Western Australia is a mining jurisdiction, so we're used to mining here in Western Australia, and we have the infrastructure and the labor to support the mining. Then on top of that, you've got the growth demand in the EV thematic. If you look at the projected growth or demand requirements for lithium hydroxide in electric vehicles going forward, there's a big disconnect between forecast demand requirements and current supply capability. We see the combination of that very high-grade lithium deposit, our ability to execute projects in Western Australia together with our chemical processing capability to refine the concentrate that will come from that mine into lithium hydroxide, working with our joint venture partner, SQM, who are experienced in the downstream processing of lithium and also the marketing of lithium. It's just an opportunity that we see is there for Western Australian lithium to become a major supplier into the growing battery electric vehicle market. When you explain it like that, it sounds pretty compelling. You're basically saying probably 2025, 2026, we'll start seeing some returns coming through and then hopefully a very good long-term investment going forward. That's generally the theme, is it? That's correct, David. I think we'd expect to be cash flow positive around FY 2025 and thereafter good returns. David, just final point. You've got a good track record, Ian, so yeah. Yeah, David. Very well. We acknowledge that it's a big project, it's a long-term project, not without risks. In the scheme of things, it represents around or just under 3% of our equity value. These are not the kind of things that we'd want to go out and make 5- 10 different bets on. In the context of the overall Wesfarmers portfolio, given the capability and track record of our WesCEF team, we think it's an investment that should be good for shareholders longer term. Absolutely. This will be under Ian Hansen's influence and he'll be the one controlling it. Is that right? Well, that's right. He's got a great track record. He's the one in control? That's right. I guess, Ian also has a very good team around him, and we've had the benefit of being able to second a number of our most senior engineers from Ian's team into the Covalent JV. The Head, the Project Director or CEO of Covalent is actually one of our most experienced development engineers. Okay. Sounds great. Thanks, Rob. Second question, if I may. On Kmart, I remember talking in our last couple of calls where, and Ian, I think, was talking about basically Kmart business wasn't really set up well because of COVID. This very big surge in demand caused a lot of inventory problems that you weren't really able to eradicate in the short term. Ian, can you give a bit of an update as to where you're at with that? I mean, the profit performance seems to be very, very positive. Are you on top of those issues, and are we getting back to more normality where Kmart is generating the strong profitability that it was before COVID? The short answer is yes, David. The story, though, continues to be an evolving one. The last time we had a conversation, I think it was the end of the full-year result. Of course, we'd just come off the back of predicting demand to reduce when, of course, demand increased, and that left us with empty shelves as we all remember. Then on that conversation, there was a question around, well, how confident are we going forward? In that moment in time, we had a lot of inventory on the water and landing, and we were seeing significant improvements in our net promoter score. That number was in the 20s back in July. By the time we hit September, it was back in the high 30s, low 40s, which is where we would normally sit. That gave us confidence we were back on track. The new news which hit us after that point was the international shipping and the port congestion, which came through, which has now been, I think, quite well-publicized externally. That is causing issues around the speed of getting product from Asia to Australia and New Zealand. Our delivery from our suppliers in Asia is at absolutely standard levels. We've still got orders of magnitude of north of 95% delivery and full on time for our freight forwarders, so that's very much historical norms. The time it takes to get from the freight forwarder into our distribution centers in Australia has extended, and it is erratic. That erratic nature occurs probably more frequently in New South Wales and in Melbourne than it does in W.A. and Queensland, if you're looking at Australia. We've compensated for that by putting more stock into the system. When you hear language of investment in inventory, that's how we've compensated for it. Yeah. The next thing we've done is we're working very closely with our shipping partners. We are one of the biggest, if not the biggest importer of products into Australia. We have very significant contracts with our shipping partners, which gives us priority when there is scarcity of shipping availability, which is what's been happening. We feel like we're quite well-placed. We have a number of effectively temporary measures in whilst we remain in the pandemic. Our product availability is pretty solid at the moment, and we have a lot of inventory that's on the water and coming. At this point, I feel like I'm in a pretty good place. I guess as we go through COVID, what we keep seeing is there's new topics and new issues have emerged as we've gone through the pandemic. At the moment, we feel like we're across all the ones that are transparent to us, but I guess there's always the potential of something new coming along. Yeah. It sounds like you're on top of the issues a bit now. Thank you, Ian. Thank you, Rob. Thank you, Ian, as well. Thank you very much. Thanks. Okay. We have another question from Ben Gilbert from Jarden. Please ask your question, Ben. Good afternoon, all. I just had a question on Bunnings, if I could, and I just wanted to go back to the leverage point. Appreciate, I think you continue to invest in price, but EBITDA was up pretty much in line with revenue. Even if you make the rental adjustment, looks like you sort of grew it about 1.3x. It just suggests that there wasn't a lot of fixed cost leverage through the business. I suppose my question there is, do you think that you over-invested or pulled projects forward and maybe put them into OpEx because you had the opportunity to, given the strength? Is it dilution from online? I'm just trying to understand, because I would have thought you'd probably be comparable with JBs, which still managed to grow it 2x, even with the gross margin decline. Yeah, Ben, we certainly don't compare ourselves to other businesses. We focus on what's right for Bunnings. What's really important is to sort of look at the fact that with a top line growth in the mid-20s and a bottom line growth close to 40% when you back out property, we're happy with the leverage position. Certainly investing in price. Nothing of note that we've sort of pulled forward or done differently, but we are very much just focused on that long-term performance, and that's what we sort of have stuck to through and through. To that point, does it mean that there's not really any leverage ex rent and depreciation in the business? It's all variable cost? There's certainly leverage inside of P&L, but throughout the half, there have been increases in some labor costs in some markets. If you think about Victoria, what was it? Close to three months, 50 stores having to sort of service their consumer base fully online. It's not going to be a material impact in and of itself, but there's a number of things through there. In terms of what we can do with cost going forward, there is always going to be opportunity for improvement and there's going to be opportunity to reap the benefits of some of the investments we've been making into digital over time. I'm confident in the long run, we'll continue to deliver really solid results, both top and bottom line. Okay. That's helpful. And just final one from me, just to Anthony. Just interested in understanding, appreciate you've got a lot of hedging books you'll see across all the different businesses, but particularly for retail and within the DDS or within Kmart Group, and to a lesser extent, Bunnings and Officeworks, just how the hedge book looks over the next six to 12 months. And I suppose what I'm getting at is, as you start to get sort of the 15-odd tailwind from the Aussie into fiscal 2022, what sort of impact do you envisage that having on margins? You're right, Ben. We've got a hedging policy in place across the Kmart Group. What we tend to do is we have a higher hedging rate in shorter term, so three months, we hedge out just past 12 months, that declines over that period. We're less about trying to guess what currency's going to do, because that's very difficult. I think it's more about providing some certainty for our buyers around pricing. That means that we'll miss some of that improvement as the currency strengthens, some of that will flow through. Generally, look, just roughly, we probably have about 50% hedged 12 months out. That should give you a bit of an indication. Okay. That's helpful. Thanks, guys. Your next question comes from Richard Barwick from CLSA. Please ask your question, Richard. Okay. Thanks. First one for Anthony. Just with the Mount Holland CapEx, the AUD 950, how much of that's going to fall into FY 2021? You talked about some of the longer dated or the first acquisitions that you have to make. Then how do we think about the allocation across FY 2022 and FY 2023? Yeah. Richard, I think we have flagged that the CapEx estimate we've given for the current year includes a bit in relation to Kidman. I would say that sub AUD 100 million in the current year. Outside of that, I'm not going to give detailed plans on the CapEx spend, but there will be CapEx spend that then extends between FY 2022 to FY 2024, fairly evenly split, I would say, across those three years, with probably a little bit more towards the front end. Okay. A question for Mike on Bunnings, and look probably more generally on the retail business as well. Man, if there's one message that's come through pretty clearly today, it is the expectation that come March, sales are going to moderate. That shouldn't be a surprise to anybody. How are you thinking about that? What do you do to prepare for it? Do you have to do anything differently? When you think back to last March, the sales came without much warning and came thick and fast, so you had to adapt on the fly. At least this time around, you actually got some time to prepare to how do you perhaps mitigate cycling such a huge spike? Yeah. It's a good question, Richard, certainly has occupied our thoughts. I think one of the things that we've been cautious on all the way through in our own internal thinking and forecasting has been around what happens if something changes. That doesn't just have to be cycling strong growth. It could've been further lockdowns or disruption. We've seen small bursts of that already this half in a few jurisdictions. The team has done a lot of really good planning. I think one of the advantages for our type of retail business and in the home sector is going to be that, at least until there's widespread vaccine rollout, there's going to be an apprehension to travel domestically, and you certainly can't travel internationally. People being at home, the housing market being strong, interest rates being historically low, we think the attributes of the market for home improvement are positive. I think also from an inventory point of view, one of the things that I'm particularly proud of, both of the Bunnings team, but also our extended Bunnings team, which is our supplier base, has been the flexibility in accelerating stock into the business, but also a lot of those products don't have the sort of sharp seasonality that other retail businesses face into. We've got the opportunity, if sales, for example, in barbecues were to come off, and they'll come off anyway because summer kind of comes to an end, it is not the same sort of fashion or change in that product. We can sell products through over a longer period of time. We might end up with a little bit more stock than we want short-term. I think the other piece is we've got good flexibility in the way that we roster and resource our stores. We'll continue to invest in service, continue to invest in keeping our team and customers and community safe. We do have the ability to sort of flex that up and down as we need. I think one of the thing we're really just focused on is do the basic things right, do them really, really well. Make sure we've got stock availability, make sure that the website performance is where we want it to be, and we've got things in play that will see that improve in the months ahead. Really just continue to invest in the customer experience so customers are choosing Bunnings. They trust when they come in that they're safe. They trust when they come in, they're getting the value proposition they're looking for because we do think that that interest in doing things around the home is going to continue for some time to come. I might leave it at that because it's probably not my place to comment on other areas of retail, but Sarah or Ian might want to add to that. Yeah. Look, I think it's a great question. Certainly from an Officeworks perspective, as Mike said, I think across all the Wesfarmers businesses, retail businesses putting safety first, ensuring our team feel safe to come to work and our customers feel safe to shop with us continues to be a priority because we have to deal with the ambiguity of this virus and what that means in terms of trading and operating environments. As we look ahead, I think that safety-first focus as a priority, also the agility that we've really discovered within our team and our processes and systems, I think is a huge opportunity for us as a business as we start to not just cope with the growth that we've had, but actually accelerate from there going forward. The third point I'd make is just from a leadership perspective, we've been very focused, as I know the other businesses have. An d I said today, are not losing sight of the long term and making sure we're making those right investment decisions for the long term to capture the growth into the future and as customers' expectations change and shift and what we need to support them to work, learn from home or in the office or to keep their business running safely, absolutely, we can support them, and help them make bigger things happen. For us, not being caught in the crisis, albeit acknowledging the agility that we have to operate with, but still being really focused on the long term and making those right decisions for our customers and for our team. Sarah, can I jump in there? Just given your business, you talked about the different categories that were impacted. Yeah. I mean, again, from a response point of view, as this evolves, then some categories are going to be on decline and some will come roaring back. How quickly can you respond to that in terms of dialing up your communication or your focus or whatever to maximize the benefits from whatever category switch occurs? Look, I think we've proven in the last 10, 11 months how quickly we can respond. I gave the example of cleaning and hygiene in the presentation. We started selling, we had an idea from our team early on in the pandemic around the sneeze guards or the sneeze screens at the checkout. We were looking for options for our own team. Actually, the store manager at [Target] store said to us, "Well, why? We've got small business customers coming in asking us, hairdressers, beauticians, can they get them? Can they buy them?" Within a week, from a local Melbourne supplier, we were selling them. I think it's an absolute credit to our merch team and our supply chain team and our stores, because the ideas come from them. The agility with which we've been able to pivot the range to really capture those opportunities. Of course, there are some things that are on the decline and that's not new news for us. We've been dealing with categories that have been growing and categories that have been declining, like every retailer has for many, many moons. We will move as quickly as we can to close down on some of those areas and open up on the new ones. We've done that recently in technology. Actually, in the first half, we relaid our entire technology section across every store in the fleet to open up on new lines that are really in demand with work from home and gaming, and really enable a better experience for customers and better availability. Closing down on lines where we weren't seeing the same traction. I feel very confident in our ability to move our range to meet and capture customer changes and changes in customer trends. Thank you. I think I cut you off, Ian, when you were about to make a comment. Yeah. I think we've covered it pretty well, Richard. I guess we're trying to get the pandemic settings right operationally, so that we stay very present and then accelerate the strategic agenda. That's the balance we're grappling with. All right. Thank you very much. Your next question comes from Aryan from UBS. Please ask your question. All right. First one from me, just around Catch Group. Can you just share a bit around what your plans are, medium to longer term, any aspirations, and how you're tackling fulfillment within the Kmart Group, please? Yeah, sure. Well, our aspirations is to continue to grow and be a very significant player in this space. Of course, with the benefit of COVID, we've seen extraordinary growth in that business in the last 12 months. We're building our capability, as we've called out within the results. We've certainly accelerated some of the capability areas within the business, which gives us the ability to fuel future growth, which we think is obviously very important, because we'd hate to be in a position where the demand's there, but we're unable to capitalize on that. On the fulfillment side, we had considerable capacity within our facilities that we have within Melbourne and Catch, but of course, with the growth that we've had, we've started to utilize that capacity quite quickly. We will be looking at how do we expand the capacity that we have to fulfill our online orders. We will look where it makes sense to leverage group volumes so that we can optimize the efficiency of those facilities. That's very much work in progress at this point. Perfect. Just following on from Ben's question on the FX piece. Obviously there's a lot of talk around freight rates or spot freight rates being up significantly. How do we think about the dynamic as your hedges roll off in FY 2022, the dynamic between higher freight rates versus currency benefits? Should we think they'd sort of roughly cancel each other out? Is there one bigger than the other, please? Yeah. It depends what happens with FX. I'm not trying to be funny about it, but it's just so difficult to predict, of course. If the foreign exchange sits where it is and continues to sit there, then that's a really material benefit, and I'm sure you can do the math on the size of the prize if that occurs. As Anthony calls out, we have considerable forward hedges. That'll take a while for that to flow all the way through to the bottom line in our business. Then we run average weighted cost on our inventory. Of course, that's the second delay in that arriving. Clearly there's a benefit there. On the international freight, I think you've got to look at that very much on a business-by-business basis. We import a lot of products, so therefore we spend a lot of time with our freight companies and our international shipping companies, and we have long-term contracts in place which will secure the historical rates. As our volumes have increased and as the cubes increase with the nature of product we're selling during this period of time, then we need excess capacity, and of course, we need to negotiate that, and that is at higher rates. We still have, obviously, commercial leverage when we go through those processes. I don't think we're as exposed as some, but the numbers are still significant. The last piece I'd say is there's also movement in raw materials, so that's the other one just to factor into the calculation. We're starting to see a cyclic movement in raw material prices where things like cotton are starting to move up again, pretty much in line with their normal cycle. There's a few dynamics in play that are out there. As to how that will all play out into final margin is very hard to predict. That's perfect. Thanks, guys. Your next question comes from Bryan Raymond from Citi. Please ask your question, Bryan. Thank you. My first question's just on the gross margin benefit you got through the Kmart Group. Interested if there's anything in that that you would consider to be sustainable. Something that beyond mix or just market-wide reductions in promotions, that we could look to maybe some margin enhancement on, say, a two to three-year view, or if it's just purely the cycle. Happy to sort of take it that way as well. Bryan, I think there's a few dimensions going on. Obviously, full price sales has been a contributing factor that we've had, with demand being so high, the products are selling at rapid rates, which is just resulting in a lower mix of clearance in the two businesses. You would say at some point that will normalize back to a normal level of clearance, of course. If you look at Target, our historical levels of clearance have been too high. As we make progress in the product offer that we have, continue to focus around the core proposition that we've described. I think there's reason to believe we should return to the more recent historical levels of clearance that we've seen in that business. I think there's an opportunity ongoing within Target in particular. The second piece is the mix that we've seen within the businesses has been a shift towards general merchandise on average. Not solely, because there have been categories like sport that have gone well. You have got a negative margin influence that's currently sitting in the numbers, which is the shift towards the toy categories and general merchandise categories, away from clothing, which historically runs at a higher margin. Of course, when we do return to a more normal environment, post the pandemic, then of course we'd expect some of those apparel categories to rebound, which would be a positive influence on margin as well. I think there is reason to believe some of that will be sustainable over time. Trying to unpack exactly how much is not a simple question, however. Sure. No, I appreciate that color, though. Probably sticking with Kmart very well. I am just interested in your comment earlier that you are profitable online. I always thought that would be a challenge for discount department stores, given low ASP and basket sizes. Perhaps you could just help me understand the sort of drivers of that. One, around what sort of basket size do you typically have online versus in-store? Is all the product picked in store, or are you sending any out of the Catch warehouse or anywhere else? What you assume around incrementality of sales. I think that's a key assumption for a lot of retailers, whether the cannibalization is in store. Hopefully you can help on some of those metrics. Yeah. I think you covered numerous topics in there, depending upon which accounting methodology you come up with, you've probably got 10 different answers on the way through. When do you start factoring? Is it marginally accretive? If you fully load it, how does it play out? What's the relativity versus retail? To what extent would those sales have occurred anyway in store had you not had online? I don't think anyone's really cracked the code on having the perfect analysis. The way that we've looked at it historically is we've looked at it as in addition to the store sales. We pick from store in both Kmart and Target. We are looking at, as the volumes continue to grow, to pick some outside of store as well, Target's already begun doing that from some of its distribution centers, but at pretty small scale. Of course, when we pick from store, it's very much a marginal cost basis. Even when we load in some allocations for the store footprint, allocations for the office and some of those other elements, we're still getting a positive contribution from both businesses from online. Now we see there's, and I think I touched on it briefly in my commentary, the businesses have grown very rapidly in online in the last period of time. Of course, we're not as efficient as we could be with that in-store picking. The net result and how that manifests itself is split shipping. We end up having to fulfill products from multiple stores. If you go to, well, why do the economics work when your prices are low? The basket size online is much, much higher than it is in store. That gives us the ability to put multiple items in the basket and then pick those in one hit and deliver them in one hit. Of course, when we get to split shipments, that starts to dilute those economics, and that's where we see some upside going forward. Okay. That's fantastic. My very last one is just around the small format tools offer for Bunnings, the Adelaide Tools. I'm just interested in how, there's a store rolling out in Adelaide, how the economics look at that, and are you going to run with the Adelaide Tools banner with this, or is it going to be a hybrid Bunnings-type banner? Can you just give a bit more color around what you're expecting there in terms of store rollout? Yeah. Look, it's still very early days on Adelaide Tools. Adelaide Tools will be the brand in South Australia. It's got good brand awareness and a fantastic family business history in that community. Once it moves outside of South Australia, we'll have a different branding proposition. It won't be Bunnings at all. This is very much in line with our strategy of trying to bring competition and customer value into sectors where we've got very low penetration. Industrial tools is one of those. The Parafield store, which will open in about six weeks or so, it's really bringing some of our current thinking and sort of global research around specialist tool businesses to life. Once we've sort of proved that up, we've got plans in a couple of different markets to get going. For the sake of not educating our competitors, we'll keep our powder dry on when and where they'll be for now. All right. Great. Thanks, Mike. We have one more question from Phil Kimber from Evans and Partners. Please ask your question, Phil. Hi, guys. You gave some good online penetration numbers for the various retail businesses. Can I ask if there's much difference in the exit online penetration rates to the ones that are quoted there, which are obviously averaged over half? Mike, do you want to kick off on that? I don't really have anything on that. I'll have to come back to you, Phil. That's a good question, but one I don't have an immediate answer to. Let me come back to you after this. Sorry. Actually, Mike, I can comment directionally. Yeah, as you would expect, Phil, that we experienced peak levels of online penetration, particularly through the Melbourne lockdowns, 111 days where you couldn't physically go in, as a consumer, couldn't go into many of our stores. We saw peak levels there. In all of our businesses, we exited the half at lower levels. I'd say, the variance wasn't as great in Officeworks, given it represents a much larger part of online is a much larger component of overall sales. It was a modest decrease. Target and Kmart, although down, not as much as Bunnings. Rob, if I can just add on Kmart and Target. Obviously December, which is the end of the half, always slows up for online because of getting products delivered in time for Christmas. It doesn't pick up as quickly as you come out the other side of Christmas as it would in physical retail. That's a contributor. This year it was exacerbated by a slower than average delivery time. Customers were quite wary of ordering too close to Christmas. I think that contributed to that outcome. I think Rob summarized it quite nicely. There was a peak, not surprisingly, during lockdowns. That normalizes again once you come out of the lockdown and there's a bit of stability. Of course, that normalization is still substantially higher than we were prior to COVID. Yeah. Sorry, Phil. It's Mike here. Ours has come back at the end of December to about 2%. Yeah, similar to what the others said, certainly the spike, particularly in metropolitan Melbourne. We were getting, in those 50 stores, up to 30,000 orders a day, which is amazing what the team could do. It's certainly cycled back to that sort of 2% mark. Great. Thanks, guys. That's all I had. Okay, there are no further questions at this time. Okay. Thank you all very much. Thanks for your time. If any further questions, please give Simon and the team a call. That concludes our conference for today. Once again, thank you all for participating today, but you may now all disconnect.