Bapcor Limited (BAP) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Bapcor Half Year Results Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Darryl Abotomey. Thank you. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining Greg and myself for Bapcor's first half of the financial year 2020 results. The ASX released the financial accounts, and the presentation were lodged with the ASX this morning and are available on the Bapcor website. On behalf of all the team at Bapcor, and that's throughout our whole business, we'd like to present what is another record result. So turning -- for those who've got the presentation to Page 3, one of the things in the -- these results is the complication of the new lease accounting standard, which I'm sure everyone will agree adds significant value to shareholders and to readers. So everything I refer to will be on a basis that I can understand, which is the traditional reporting basis, even though in the results we do show the impact of AASB 16, but we'll -- all the comments are based on pro forma, excluding AASB 16, because it just confuses the picture. So with that, our pro forma results, you see that revenue, EBITDA, NPAT and EPS were all up. So we delivered, as I said before, another record result for Bapcor in revenue, in EBITDA and NPAT and earnings per share. So the highlights that sit behind that, and on Page 4, and we'll cover some of these in more detail when we get to the individual business segments. But at the top level, as I mentioned, record result in revenue, et cetera. There was an increase in revenue and EBITDA in every one of our business segments, which is a real positive. So it's as if every business segment contributed more than it did in the prior period, and it reflects the resilience of our business to general economic conditions. One of the highlights is that Burson same-store sales increased by more than 5%, so they've come back above what historical levels are, and also it was at a reasonable amount, above 5%. Our heavy commercial truck acquisition of Truckline is now in the business. We added 35 new company branch or store locations, and that excludes the Truckline acquisition of 22. So that we now have over 1,000 locations across our business. We do continue to invest in state-of-the-art systems, and we've invested in point of sale, warehouse management system, IT infrastructure, and those have all progressed well. And as per our strategy in the company, sales were up by 10%. Some of the challenges that we had in the period, gross margin, especially in Burson, and that's due to particular areas, and I'll cover those later, but competitive market and also promotional activity that went on. Currency, it -- the timing of passing through currency movements in the Specialist Wholesale Group has had a bit of an impact and some performance of some of our Specialist Wholesale business units, some of them are very heavily challenged at this point. The other thing I'd just make comment on because I think most tend to at the moment, bushfires grounded flights, not large excuses for us, although there was a minor impact in December on a number of the stores in our businesses. But it's not material in the overall results, and we don't call them out as being an impact. On Page 5, does the walk through profit and loss and key financial highlights. I won't go through these. I'll leave much of it to Greg, other than to say, you see that all those signs are positive and improvement, records. The one that I'd just point out is that the dividends were declared fully franked at $0.08 a share, an increase of 6.7%. And because we had the DRP operating during the year and employee share plan, the earnings per share is slightly below what the NPAT increase was so earnings per share increase of 4%. NPAT increased 5.1%, but the impact of the DRP and employee shares went through. If you look on Page 6, every KPI continues to improve and has every year and every half year since we IPO-ed in 2014. So Page 7 turns to the next level of detail, which is in the segment, shows the segment results. And you see there, as I mentioned, that every segment increased its revenue and its EBITDA. Both Trade and Bapcor New Zealand were challenged in margin, gross margin, the sales percentage, and I'll cover those in a little bit more detail in a short while. When you look at Page 8, it just shows the business segment contribution to the results, and we are very much a Trade-focused business. It shows the first half of 2020 was 83% Trade-focused business when you actually add in the Truckline acquisition. So an annualized figure of Truckline, that percentage goes up even higher. So we are very focused in that area. However, having said that, the Retail business remains very important to our business and the way it integrates across our network. Now talking about each of the individual business segments. So you'll see that the Burson business returned to same-store sales, probably higher than it's traditionally done. And there's a very big focus in that business on driving sales, and they also, as part of that, had a 6-month sales promotion. So the impact of that, the 6-month sales promotion and the focus on sales, whilst it drove top line substantially, there was a drop in gross margin percentage. It's the first drop we've had in 9 years in that business. But it's a trade-off between volume and margin, but it's -- and there are steps that have been taken to try and rebalance that with the price increase that went through in December -- at the end of December, early January in Trade. But both ourselves and our major competitor have put up prices in January. That seems to -- it appears at this stage to have stuck, and that's returned our gross margin percentage back to where we would want it to be. We may see a little bit of an impact on volume because of that, but that's okay. I think it'd be fair to say we probably overcorrected for competitive actions, but there's nothing like being really successful at what you do. Just sometimes has an unexpected consequence. Looking at the actual results. You see revenue for Trade was up 8.5%. EBITDA was still up. The important point, it was still up by nearly 2%. So I mentioned we had strong revenue growth. The promotion has been very successful. We added 3 new stores. So whilst it's slightly below the long-term target, the focus in that period has been on gaining market share or regaining market and driving the growth of same-store sales and the underlying business. Interesting point is the Equipment business, which we said we've been investing in, performed extremely well with its sales up 19%. Our online B2B has continued to increase, even though that sits around 20%, 21% of our overall sales in Trade. And I mentioned general selling price went through in 27th of December. It was about 3% for us, just over 3%, and that appears to be holding. And our competitor probably went a little bit higher than that. And I mentioned the challenges: gross margin due to competitive environment and promotional impact, and we have been very much focusing on customers and service and ranging and new store rollout slightly delayed. You see these fluctuations over the years as we roll out new stores but certainly has not, and I assume when we get to the strategy, it does not change the target for our Trade business to get to in the 5-year plan and nor does it change that we, on an average, target 10 to 12 new stores per year. Turning to Bapcor New Zealand on Page 11. Bapcor New Zealand saw revenue go up by about 6%. Nearly all that revenue growth was to do with new stores and the stores that have been started last year. Now they did add 2 new greenfield stores, but the New Zealand economy, as most people would be aware, is very soft, and we didn't have underlying same-store sales growth. So it was pretty flat. We did increase some of the sales with major chains or major workshop chains, and that was balanced out with some of the other independents that reduced slightly. By the way, real positives, again, investing in the future, was a new 6,000 square meter warehouse open in Auckland in -- late in the 6 months, and that will now consolidate all our Specialist Wholesale and Equipment businesses into 1 location that's near Auckland Airport. And our own brand is up at nearly 32% in New Zealand, so they're doing extremely well in that area. Challenges there, I mentioned soft economy. There is some Specialist Wholesale businesses within our New Zealand business that have underperformed, and they are challenges, and they're very much being focused on to get their performance back to where it should be. Our Specialist Wholesale business on Page 12 delivered an extremely strong performance. So on the headline figures, it's up -- revenue and EBITDA is up 20%. That, in fairness, includes some degree of acquisition, so if you exclude the Don Kyatt, which is the light commercial truck business we acquired, if you exclude Truckline and Diesel Drive acquisitions, the revenue was still up nearly 7%, and EBITDA was up 5%. So it's still a very strong overall performance in that business. However, as we mentioned there now the challenges. Some of the business units within it are still underperforming, and they're being focused on. So whilst the business is traveling well, there's still areas that can improve dramatically. And we're focusing on some of those areas such as our 4-wheel drive business, AAD and our batteries businesses. They are going through very challenging circumstances, and they're being focused on heavily to improve. We did assess the acquisition of Truckline in December that adds the heavy commercial vehicles to us. And when we get to the strategy, you'll see that there's a significant upside in that business. And we added light commercial, 2 locations, during the 6-month period, so 1 being an acquisition and 1 being a greenfield. On to Retail. So the one that gets more attention than anything else in the business, despite it being the smallest -- one of our smallest parts of our business, retail revenue was up almost 2%, and earnings were up by more than that, so up at 3%. Interesting, and this has been the trend for some time. That our -- in the Autobarn side of it, the same-store sales was -- company-owned stores were up 1.5% and franchise stores were down about 1.6%. Part of the impact on the franchise stores as you see in challenges, is that we have some of our franchise stores are financially challenged, and thereby, we have some restrictions on -- so to protect our debt exposure, et cetera. And that does affect the sales through those stores. But we're working through those. Some of them, as you see, we added 9 stores that the company owned, the majority or a large part of our those came from franchise acquisitions, which are 5 of them. Some were very good franchises. Some were ones that were in some difficulties. So we're continuing to work through the strategy with Autobarn. We've -- now at 135 stores. However, some 56% of those are now company owned. So that's a big change over a 3-year period down from no company owned to having 75 company owned and 56% of the network. So we're getting close to being comfortable with that structure. A really positive one, our online sales doubled once again, mainly in click and collect. So it's getting foot traffic into the stores, and that's a real positive. We expect to see that continue to grow significantly as we go forward. Gross margin did improve. Our own brand sales were at 26.5%. EBITDA to sales increased, which is a nice thing to see given, over the recent years, you've seen the opposite trends, but this is the start of now getting it back. We have put in a new point-of-sale system, which I'll cover a little bit later. But it's now in 76 of the Autobarn stores, and we did have 5 new Autopro stores join the network. So that's a -- and again, that's a turnaround there, and we expect to see the Autopro network now start to expand a little bit more. Turning to Thailand, which is on Page 14. Whilst it's small in our overall business, we're asked regularly about it. So I thought we'd just cover it up front and say exactly where it stands and where we're headed. So we're very pleased with the progress in Thailand. It's -- it was a bit of a risk going into a new market overseas. We've taken it very carefully. We've been there about 18 months now. And we've now got 6 locations operating in Bangkok. One of those is a procurement office. In December -- so whilst it's an individual month, the first 4 stores actually, along with the head office cost over there, combined, achieved a positive contribution at EBITDA. That's a real, real milestone and probably quicker than we might have expected. So considering that we're in new market dynamics, we're bringing something different to the market. We're first to the market with a concept. It is actually progressing well. We've got good relationships established with significant workshop groups that want us to continue to expand to provide them the service, provide them the availability, et cetera and the ranges that we have. And the same with any start-up, you have -- so you've got some learnings and things you'll fine-tune over time. Some things went well. Some things didn't. So -- but we do believe that the market has got the potential to have at least 60 to 80 locations or more but noting that no decision has yet actually been made on it. So the challenges in Thailand, as we said, bedding down the processes and further develop people in the existing stores. The electronic catalog is actually this month in trial with mechanic groups, and that's both on tablet, on phone and on PC. So this is one of the first groups that will actually have all those capabilities, and it'll be the first in the market with anything like it. And the other thing is the staffing. It's always a challenge finding appropriate staff both -- not just Thailand, but particularly there given we're new in the market. But I have to say the current 70 people are amazing. They're very dedicated and passionate about the business, and they're really motivated to be very successful. So with that, I'll pass on to Greg to cover more details on the financials, and it will be, as you would well know, his last half year result with Bapcor that he'll reporting. So he's got a good one to report this time. As usual.

Yes. Great. Thanks for that, Darryl, and good morning, everyone. I'll start looking at the P&L on Page 16, and it reflects the pro forma results, excluding the impact of AASB 16. And by the way, I hope everybody has had as much fun implementing this standard as us, and our best regards go to the Accounting Standards Board. As Darryl has mentioned, we've had good revenue growth of 10.4%, reflecting the good growth in each of the segments, and it includes revenue from acquisitions related to the Don Kyatt Group, Truckline and Diesel Drive. Gross margin percentage at the consolidated level was a little higher than last year despite seeing a decrease in GM percent in our Australian Trade and New Zealand businesses due to price competition. The improvement of [ today's 3% ] level was assisted by an increase in intercompany sales, improved gross margin in Retail largely due to wholesale sales and company-owned store performance. And also Specialist Wholesale increased its GM percent, aided by the inclusion of the truck business. As always, we continue to focus on margin management in areas that will assist to grow gross margins such as intercompany sourcing and other procurement optimization projects. The cost of doing percentage is higher during the period, reflecting the impact of growing the company store network in Retail, but also, we have invested in resources to assist with implementing our future strategy in areas such as IT, human resources and other support functions. Finance cost has decreased, reflecting lower market interest rates and also the impact of our refinance that was concluded in June 2019. All of this flowed through to pro forma NPAT, which was $45.3 million, up 5.1%. If you add the impact of AASB 16, this adds $0.3 million to NPAT, which will represent the run rate moving forward. Statutory NPAT was $45.2 million, below last year but note that last year's statutory net profit of $45.5 million included a gain of approximately $4 million from a deferred settlement, which we removed for pro forma reporting purposes last year. In the appendix, we've included further detail on the impact of AASB 16 as well as reconciliations for statutory profit to pro forma profit. On Page 17, of cash flows. We have presented the cash flow inclusive and exclusive of deployment delays for the 16 standard. So the traditionalists focus on the far right column. The key takeout from the cash flow is that cash generated, excluding the impact of acquisitions, is almost flat at negative $0.3 million. This is consistent with our profile that Bapcor can fund its regular store network expansion and CapEx program, pay its interest, taxes and dividends, and fund all this from cash flow generated from operations. Cash conversion at December '19 was 87.5%, vastly improved from the first half of last year, although timing issues around inventory purchases and customer receipts are more challenging around the Christmas period, and we expect the full year cash conversion to be close to 100%. Capital expenditure in the period, excluding new stores and acquisitions, was $13.9 million and included IT projects totaling $3.5 million for infrastructure, point of sale and warehouse management system and other major spend categories being motor vehicle spend at $4.8 million and $2.6 million for store refurbishments. Also on the cash flow, you can see that we spent $65 million on business acquisitions, which included $48 million on the acquisition of Truckline and Diesel Drive in December '19 as well as the first settlement of $15 million for the Don Kyatt Queensland Group. These acquisitions were fully debt funded. On Page 18, we go to the balance sheet, and you can see there that our closing net debt was $403 million compared to $336 million at June '19 with the increase in debt almost entirely due to the acquisitions mentioned. Due to the acquisitions being entirely debt funded and the upside of these acquisitions not yet being realized, our leverage ratio has increased from just below 2x to 2.3x. As the truck business grows profit, along with the remainder of the business, we expect that in the FY '21 financial year the leverage ratio will return more in line with historical levels. Inventory at the end of December was $374 million, an increase of $48 million due to the impact of acquisitions and new stores. Excluding the impact of expansion, on a like-for-like basis, inventory has decreased $3 million despite some inflation impact. Note, the change in accounting standard has resulted in the right-of-use asset of $145 million and lease liability of $158 million. The change in accounting standard has no impact on our loan covenants, of which we are well within. As Darryl mentioned, the fully franked dividend -- interim dividend has been declared at $0.08 per share with a record date of 18 February, and payment date is 13 March. And our DRP plan will continue. Back to you. Thanks, Darryl.

Thanks, Greg. And I'm sure you'll take a nice deep breath now that it's the last half year result you have to report. So now an update on our strategy and targets, which we have recently revised based on our detailed strategic plan that the company has just finished. So I'm looking on Page 20, a little chart that we have out there. We make this very public, no secret to what our targets are, et cetera. The one thing has changed is we're now -- our vision is that Asia Pacific's a leading provider of vehicle parts, accessories, equipment, service and solutions. So we're the only group that can actually provide on-road -- for all on-road vehicles -- for each segment of on-road vehicles, parts. So just walking through this, and I'm assuming that most people will know it from history, but the Trade business target prior to this update was 230 stores. It's now 240. And I'll just emphasize, these are 5-year strategy targets, and this takes us through to 2025. New Zealand hasn't changed with 75-store target, and you see we currently got 72, probably a little bit conservative because I expect that they'll exceed that. Specialist Wholesale, we've actually split out our Specialist Wholesale just for clarity purposes, commercial vehicles because we see it being a very substantial segment in its own right. So the target for -- excluding commercial vehicles remains about $600 million in Specialist Wholesale in Australia and about $50 million in New Zealand. The new one is commercial vehicles. So we expect the light commercial vehicles, so that's the vehicles under 20 tonne. We've currently got 16 locations. Our target in 5 years is to have 40 and to increase the turnover there from $55 million to $120 million. In the heavy -- the truck part services, so this is the Truckline acquisition, of which we've already added one location toward in Dubbo and there's some more coming, is to get to a target of 50 and roughly a turnover in 5 years of seeing that at $220 million. So you'll see a $350 million business, but that segment, we believe, is about a $2 billion segment so still a lot of opportunity to grow. On the Retail, no significant changes there from the previous targets. We've slightly reduced the Opposite Lock eventual target from where it was, but it's still not a material part of the business. Service, no change from previously in that area. And Thailand, as most people have picked up, we're saying we expect it to be more than 80 locations. I think the $100 million might be a bit light, but at this point, without further detailed information, that's where we're pegging it. So you'll see that, that's quite a substantial business and will take us probably to be well over the $2 billion revenue mark and potentially $2.4 billion, $2.5 billion in 5 years' time. So what underpins our strategy? If you look at Slide 21, there's no change to our -- the logic that we use with consistent, specific and measurable targets. And just to emphasize, we've got significant growth to come. So -- and we focus on growing sales with organic, with footprint. The margin enhancement, there's a number of areas of initiatives that we continue to drive there. But we're always looking at operating efficiencies, which I'll talk a little bit more about our DC evolution plan, with our network plan is -- and looking at some consolidation there as well over the longer term. So I'm always looking to consolidate and optimize and be the most efficient in the industry. And we're always on the lookout for strategic acquisitions and expansion that fit with our core strategy and that are fairly priced. So anything that's overpriced or not a good business, we're not interested in. So -- and we continue to invest to ensure we're operating appropriate systems, et cetera. So if you look at Slide 22, the strategic initiatives, then these are ones that are underway. So our warehouse management system, we've now implemented a Tier 1 system, which is Manhattan. That was implemented in Nunawading in January, so last month, and it will go -- and is performing successfully. So that's a DC -- a 20,000 square meter DC that never had the warehouse management system in it. So we expect to see significant improvements. And it will be the system that goes into the new Tullamarine DC. So we're getting at all -- any issues debugged and make sure it operates appropriately for us beforehand. The warehouse evolution program, I'll cover shortly. The point-of-sale system -- new point-of-sale retail system replacing a 20- or 30-year-old legacy system is state-of-the-art point of sale. It's implemented in the Autobarn business and to be completed by May. Majority of company stores already done, and they're working through the franchise network now. Technology infrastructure, we did a substantial investment in what you might call the base hardware and systems to make sure they're suitable in today's environment and today's world, so from cyberattacks, from hacking, from all those areas. We now have a system that we believe is robust and reasonably well protected, and that's now been completed. Not that technology and what we invest in -- infrastructure in the IT side is ever complete because we're always upgrading, we're always adding, things are always being reinvested, but the major project that we did is now well and truly implemented. One of our strategies, category leadership and brand management and the first category, air conditioner, has been complete, and there are a number of others underway. So -- and I mentioned about future acquisitions. So the Board has just this week approved formally a new Melbourne DC, and this is the start of our warehouse consolidation. So it'll be -- it's a 50,000 square meter warehouse at Tullamarine, it'll be the most efficient distribution center in the industry. And that's the way you'd expect it to be because it'll be state of the art. It will include the goods to person technology, and it'll have substantial capacity. So we've got future plans in Australia and connecting to the global supply chain using this. There's a little chart on the slide that shows the investment. I'll just mention capital is largely -- it's exactly that, capital. So it's -- the biggest part of that's the goods to person system, but it's also wrapping and all the things you'd expect. We will not own the building. It's a build to suit, so it's a lease. That is at Melbourne Airport, so it's on the airport corporation. The -- we've got transition costs in there that include allowances for lease tails. It includes some asset write-offs. It includes allowance for relocations and redundancy with employees, the staff where they're impacted. And it's an incentive that we get, and then we expect over the 18 months from the time it's implemented to see inventory reduction of around $8 million because we've got a lot of duplicated inventory across all the warehouses in Victoria currently. So net-net, once all that's done, it's about a $35 million investment. We expect to see our cost reduced by about $10 million a year. And the simple return on investment is a very simple one. It's not to just gather a cash flows or any of that. It's just north of 20%, and we think that'll be a good investment. But it's not just the return that we're after. It's to be the most efficient, to have the best range available to our customers, to have it all available in one place. That's what we want to be able to, so we should see other benefits apart from what is factored into that. We expect the warehouse to be completed with the GTP at the end of calendar year -- or this calendar year and to start some of the transition of some of our businesses early '21. And then it'll take some time after that to get all the businesses transitioning to it. There's a little illustration for those that like illustrations on Page 24 of what a goods to person system is. Once it's built, you're welcome to come and have a look at it. So it'll be a nice little show piece for us. So I mean just going to turn to Page 26 for our outlook, which is probably what most people are interested in because the history has passed. It's the future that's more important. And in January, we've seen a continuation of solid same-store sales, continue particularly in the Trade business, both Australia and reasonable in New Zealand and that the margin from the price increases in Trade in Australia is holding. So we're reasonably comfortable that our sales and revenue are looking pretty much okay. So consistent with what we've said before, we're forecasting for the full year our pro forma net profit after tax to increase by middle single-digit percentages compared to the prior year. This is all pre-AASB 16 because the AASB 16 into this year, it's actually been appreciably higher. So you'll see a record result -- full year result in revenue, earnings and earnings per share. But I could say what else would you expect from Bapcor, but that's -- that -- we will deliver that. And as I said earlier, the addition of the commercial Truckline business, we do not expect it to increase our earnings any significant amount this year, but the team has been working on initiatives and ways to improve performance. And it is looking extremely, extremely positive next year. So FY '21, we expect to achieve at least a 15% return on investment, and the team there, I think, will blow that out of the water as time goes on. So it's a -- we've already added some additional branches to it. There's a lot of initiatives in the procurement area, in intercompany sourcing, et cetera, and it's looking pretty good. So with that, I thank everyone for listening, those that made it through the entire 35 minutes that that's taken. And operator, we'll open up for questions, and hopefully, you'll get some answers.

[Operator Instructions] Your first question is from Matthew Nicholas.

Just a few for me. Just on -- firstly on the corporate, the unallocated line, I think in the first half, there's a meaningful jump year-on-year. Can we just get some color around that?

Yes, Matt. Yes, as I sort of mentioned through my spiel there, that we have invested in certain areas of the business to support our programs moving forward. So one of the areas there is certainly IT with the number of projects we've got going on. We're also looking at future systems development and what we can do there to support the business and be more, I suppose, more current and progressive in our IT programs. We've invested in HR, so our people development and our safety type of areas. So they're probably the main 2 sort of support functions. But also, there's been some increases just in some general areas. So one is insurance. We saw quite an increase there year-on-year and some of the corporate governance sort of things we're doing in areas such as internal audit, ESG sort of practices. So all those combined add up to that type of increase. I think moving forward, we probably won't be quite double what that number's showing, a little bit less than that, but certainly, it's going to be higher than what we've seen previously.

And just one on Trucklines and just trying to marry that with what you're saying in the outlook statement. If you look at just the back of the accounts in terms of business combinations, I think on a pro forma basis, that business made I think is a little bit more than 1.2 or 1.3 of NPAT in the first half. Just some color around the logic as to why it won't contribute in the second half or maybe some costs that are being added in there.

Just it clarify that, Matt, it didn't actually contribute to our profit in the first half at all. That's saying that if it had been in the business for the first half that that's what it would have potentially contributed based on its historic run rate. With -- as is always the case with some acquisitions, there are a number of things we're doing. For example, I just approved some wage increases because we knew that people hadn't been given wage changes for about 3 years or so. And there are other -- what I'll call the early stages initiation costs that we expect will keep it pretty flat over the 6 months. We knew that when we did the business case, hence why we said from day 1 that we didn't expect it to materially contribute this year. However, having said that -- and we haven't built anything -- no substance into our go forward. Having said that, we would expect it to potentially start to contribute a little bit earlier, but we just can't -- how long that takes inventory to flow through and some of the other benefits that we just can't really predict that yet given that we've only had it about 60 days, and we're working through some of the items there. But there is some cost restructures and catch-ups almost that we just felt we need to do to be fair to the people that work in the business, and we want to see them drive it. And that's what we're making sure that they've got the incentive to do so.

Right. And just a final one, the normal China supply chain question, which I suspect everyone's getting. Could we just get some color -- I'm sure you've done a bit of work on this in the last couple of weeks as to, I suppose, how much stock you've got, what contingency plans are in place in the event of further disruption?

Yes, we've got a working group that's working through it, the trucking shipments, et cetera, et cetera. But given the amount of inventory we carry, we don't -- at this point in time, we don't see any significant or material impact. But if it was to drag on, then, yes, there would potentially be an impact, but we're also working through one of the alternative sources, et cetera, because it's not -- and people think that was just out of China, it actually isn't, because what's happening is that all the ocean freight and air freight has been disrupted so that even if it's not coming out of China, it still got disruption. So we're working pretty close to monitor it. We don't believe it's likely to have much impact this year, but if it does drag on and we can't replace or replenish the inventory, then it's into next year that, that would be a bit of a problem. Yes, some people could also argue it's probably an opportunity to make sure that we don't overly discount things in selling them because they might become a bit like [ instinct ]. So we could look at it either way.

Your next question is from Josephine Atkinson (sic) [ Josephine Little ] from Morgans.

Ah, new name, cool.

Not sure how that happened. Just if we look at the Trade margin...

You got married, Jo?