Brambles Limited (BXB) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Brambles 2021 Investor Day. I am Raluca Chiriacescu, Vice President of Investor Relations at Brambles. We are delighted you are able to join us today. It goes without saying that we would have liked to give you this much anticipated strategic update in person. But as we all continue to deal with current restrictions, this is sadly not possible. Investor interaction is as important, if not more so than ever. So we're really pleased to provide you with this opportunity to hear directly from our global leadership team, albeit virtually. While our executives have prerecorded their presentations, you will still have the opportunity to ask them questions during our live Q&A sessions today and tomorrow. They will be joining direct from London, Madrid, Milan, Atlanta and Sydney to answer your questions. As you can see from this agenda, today is about the group's strategic overview before we deep dive into the regional perspectives tomorrow, including an update on our North American plastic pallet trials. Today, we will kick off with our CEO, Graham Chipchase; and CFO, Nessa O'Sullivan, who will outline now shaping our future transformation ambitions and the value this will create for shareholders. Our Chief Transformation Officer, Craig Jones, will then provide you with more details about our approach to transformation before handing over to our Chief Data and Digital Officer, Helen Lane, who will outline the key role digital will play in enabling transformation across our organization. Our Senior Vice President of Strategy and Innovation, Alasdair Hamblin, will describe how we are transforming the customer experience before handing over to our head of sustainability, JJ Freijo, to talk about the value of our world-leading sustainability credentials create for our customers. We will have a repeating format of 2 presentations today, followed by a joint Q&A session and a comfort break. [Operator Instructions] If you do need to step away from the live webcast at any time, you will be able to access this on demand within 12 hours using the same link. A couple of housekeeping matters before we start. If you want to change the relative size of the speaker and slide view on the webcast, please use the button at the bottom of your screen. In line with our usual practice of financial information, the currency is in U.S. dollars and growth rates are in constant currency unless otherwise stated. In terms of financial projections, they do not include the impact of potential outcomes from our North American plastic pallet trials, and all forward-looking statements are subject to our disclaimer outlined on Slide 5 of the presentation materials. So to get things started, I will now hand over to Graham and Nessa.

Hi, everyone. Really delighted to be here to talk about transforming Brambles and how we're going to drive a step change in value creation. Starting off with building very strong foundations. We've created a very resilient, agile and sustainable business model and that's shown really strong financial performance in fiscal '21 in extremely challenging environment. We're a winner in a fast-changing world. We've got global leadership reinforced during COVID with ongoing growth potential across all our market segments. We're a pioneer in sustainable supply chains, grounded in an inherently circular model. We're going to talk about a compelling investor proposition, mid-single-digit revenue growth with underlying profit leverage from fiscal '23, strong ROCI and high single-digit EPS growth leading to total value creation of more than 10% per annum. We're investing to accelerate transformation. So we're going to take a twin-track approach, transforming performance of the current business model and creating the Brambles of the future, better for both Brambles and our customers. And we're doing this with rigorous execution. There'll be detailed plans with broad engagement across the whole business, and I'll talk about that more later. This is something you've seen before. It's our purpose. Our purpose is to connect people with life's essentials every day. And it's driven from our sustainable circular model. It's core to what we do, who we are and what we aim to achieve. Our assets form the invisible backbone of the global supply chain. The world's biggest brands trust us with products that matter. And the scale and density of our network means we can be more agile and responsive to our customers' changing needs. Digitizing our physical network is going to enable us to have a more intelligent, efficient and sustainable supply chain. So talking to our circular, sustainable business model. We've talked about this quite a lot in the past. Our share and reuse model delivers value to all our key stakeholders. If I look at customers, we're enhancing operational efficiency, freeing up cash and resources, supporting their sustainability objectives, lowering the overall supply chain costs and we've been supporting customers through very difficult times over the last 18 months. And not always perfectly, but I think the depth and strength of our network has allowed us to keep our customers operating through very difficult times. On our employees, and I think this is a good time to mention, I am so proud of our employees. What they've done over the last 18 months in keeping supply chains operating, turning up to work every day has been truly exceptional. And in that period of time, we still manage to keep a focus on training and prioritizing safety. We've had great employee engagement through this period. And in terms of diversity and inclusion, over 30% of our management roles are held by women, and we have a target to get to 40% by 2025. For our shareholders, our sustainable growth has been driven by expansion of our core businesses, and we have returns well in excess of our cost of capital. We're generating cash to fund growth, innovation and dividends, and we're exposed to the defensive consumer staples sector, which I'll talk about a bit more later, but that gives us real resilience. In terms of the communities and the environment, our share and reuse model reduces environmental impact. We've been reducing our empty transport miles and calm dioxide emissions through customer collaboration for several years now. 100% of our lumber is from sustainable sources, and we're involved in strategic partnerships to reduce food waste and to help those most in need. Going on to our strategic priorities. Again, this is something that we've been focusing on for some time. Our goal is to strengthen our position as the global leader in platform pooling and insight-based solutions for fast-moving supply chains delivered through our circular share and reuse model. And our ambition is to transform our business and reinvent pooling for the supply chains of tomorrow. And you can see the chart, we're really focusing on 4 key areas, and we'll talk about this a lot more over the coming couple of days. So digital transformation, we're going to invest to transform information and digital insights into new sources of value. Focusing on the customer, we're looking at improving the customer experience through simpler processes, additional services and enhanced platform quality. Looking at business excellence, we're going to reinvent our organization, technology and processes to be simpler, more efficient and effective. And then asset efficiency and network productivity, clearly, you know we're a very capital-intensive business. So we have to improve asset and network productivity through automation, process standardization, which will enhance our efficiency and resilience. Talking of resilience, our customer base gives that resilience. We're primarily serving the consumer staple sectors. As you can see from the pie chart, the dark blue areas are those linked to consumer staples. It's nearly, today, 80% of the total turnover base. So there's -- very resilient in terms of good times and bad. We'll still have that underlying demand. And I know a lot of people are very concerned about where is the growth going to come in the future. So if you look on the right-hand side there, the bar chart, these are some major markets. And the white areas, white space in both centers of the world here, are areas where we feel there's still an opportunity to grow the business. So even in markets like North America and Europe, which I've seen as our more mature markets, we still have a significant space to convert whitewood users into port solution and sustain our mid-single-digit revenue growth for many years to come. If we look at the external environment, we are seeing an acceleration of some trends that have been there for some time. We have a continued uncertainty and volatility. Economies and societies are returning to a new normal. There's ongoing disruption to trade, and that's combined with cost inflation and shortage of labor and lumber for us in particular. There's an increased focus on sustainability and resilience. You see that in requirement for better tracking of goods, our chain of custody, demand for end-to-end visibility from supply chain participants and end consumers. We've seen an accelerated shift to online channels, to e-commerce now being established at 10% to 15% of FMCG sales in major markets. Retail is increasing their omnichannel capacity to meet demand, new types of distribution systems. And as a result of that, we're seeing investments in automation. We've got labor shortages, and inefficiency of existing supply chains for e-commerce are driving this accelerated investment in automation. Now that's good because it actually plays to our strengths, and our strategy is supported by these market trends. I'd like to take a little bit of time just talking about the past and the future in terms of what we've been doing. So for the last 4 or 5 years, we've been getting the foundations right. So if you look at fiscal '17 to '20, focusing the portfolio on the core business; improving the pricing and commercial terms in our contracts to better capture the true cost to serve; big focus on asset efficiency and working capital improvements, which have been driving positive free cash flow; investment in high-return supply chain projects, for example, automation and sawmills to deliver operating efficiencies and support growth; investment in sales tools and infrastructure to build a pipeline of new opportunities and supporting the growth profile and again, something we've not talked about much, but that's something we've done over the last couple of years is critically important; we've strengthened our global leading sustainability credentials and achieved what were very ambitious 2020 sustainability targets; and we launched the shaping our future program 1.5 years to 2 years ago, and again, we'll obviously talk a bit more about what -- where that's led us to now. But in fiscal '21, you could say that we were leveraging those foundations. Very strong performance and execution in unprecedented operating additions. I don't think we could have done that if we hadn't done all the work we've done between '17 and '20. Very disciplined price realization and the surcharges have reflected the increased cost to serve. We completed the 3-year U.S. automation and lumber programs on budget and delivering the benefits we expected. And we've spent some time developing proofs of concept for the next phase of value creation, which is very much what's shaping our future is about. We've also developed yet another set of ambitious 5-year sustainability targets for 2025, but we've already made great progress against that, and we are carbon neutral in our own operations already. We did that in June of this year. And then if we look at going forward, what we're really talking about now is accelerating the pace of change and transformation on the shaping our future program. And the result of that is we're going to take performance to the next level, and we'll talk about that more in the coming slides. I think, fundamentally, what we're trying to do here is to transform the business from a position of strength. We've built up that strength. Now we can transform the business. So if we look at this now, we're investing to accelerate transformation. And it's important to understand we've got a twin-track approach to this. We want to drive increased performance from the current business, and that allows us to increase investment to transform the business and create the business of the future. So if I look at the chart, the bottom 2 boxes, business excellence and asset efficiency and network productivity are really transforming the performance of the current business model, and that will drive the value for us to invest in the future. So if you look at increasing returns and funding, that goes into the top 2 boxes on digital transformation and customer value. That, in turn, will deliver further business opportunities and sources of growth in the future. So it is a circular model in all aspects. And underpinning that is it's going to strengthen our global leadership in sustainability. So that's what we're trying to do. So short-term optimization to invest in the long-term transformation. So if I talk a little bit about the first 2 of those boxes around optimizing and transforming the performance of the current business model, we're looking at delivering increased returns and funding investment in transformation and innovation. So on asset efficiency and network productivity, clearly, we're a capital-intensive business, and it's critical that we optimize this part of our business as best we can. And we've done a lot of work over the last few years to do that, but we still think there's plenty of runway ahead, and Nessa is going to talk about this in a lot more detail. But we're going to look at deploying new technologies and ways of working to increase productivity and sustainability, looking at our things like our collection engines, improving asset control and reducing the capital intensity of the business. We -- there is opportunity to standardize our processes and controls so that we can roll out best practice across the whole of Brambles. We're going to continue our plant and network automation journey. We've proven that we can do that with what we've done in the U.S. over the last few years, taking the technology from Europe. There's still more to go on that. And we want to remove waste from end-to-end supply chains by optimizing our networks with customers and suppliers. If we look on the business excellence side, again, there's a lot of work we can do to reinvent how we operate in terms of processes, technology and organization. We're going to look at things like improving our organizational efficiency through simplifying processes, building technical foundations to support our transformation. So including things like migrating to the cloud. We need to attract, retain and empower high-caliber people, and we need to develop some new capabilities. For example, around digital data analytics and around automation. Now on to the more transformational side, so building the Brambles of the future. If we look at digital, I don't want to steal any of Helen's thunder, and you'll hear more about this later. But we need to use data and analytics to unlock new sources of value for customers and Brambles. So Helen is going to go through this a lot more detail, but this is an acceleration of things we've been talking about to you for some time now over the last few years, using data-driven insights to create new customer solutions, creating a culture of data analytics and experimentation, collaborating with customers in new ways to digitize the supply chain. But doing the stuff that we know is at the forefront of what we need to do around deploying asset digitization to provide visibility into our asset pools and networks to get more efficiency out of our own business and looking at inefficiency in end-to-end supply chains so we can drive out value for both us and our customers. On the customer value side, again, I don't want to steal Alasdair's thunder, who will come later on, but we need to make Brambles the natural partner of choice for supply chain customers today and tomorrow. We are today, but I think we've talked a lot about customers do find it difficult to deal with us sometimes. We've got to make a change now to make that easier. We think we've got the tools and the information to do it. And I think the benefit of that is, of course, it will deepen the moat in terms of our competitive differentiation. So we're looking to enhance our platform and service quality, focusing on what's really important for our customers and differentiating versus competitors. We're going to do more collaboration with customers, but also we want to invest in our customer systems data and insights to guide our decisions. Sustainability. So I can't overemphasize the importance of this. We want to strengthen our position as a global leader in sustainable business and supply chains. COVID has accelerated transition to a more sustainable world. Customers, consumers and wider stakeholders are increasingly focused on the sustainability of goods and supply chains. And our circular model completely fits in with those needs and future business models as they're developing. They have all got an element of circularity. So as a world-class leader in ESG, Brambles is uniquely positioned. Our circular business model aligns financial, social and environmental value. We've set a very ambitious sustainability targets for 2025. Our sustainability report is out now, and you can see those targets. But we've already made excellent progress in year 1. Again, I don't want to steal JJ's thunder later on, but we've already become carbon-neutral company in our own operations. We've had our first upcycled plastic platform, and we're a top employer in 17 countries. And if I just show you the graph on the right there, the fundamental move now is to go from doing less harm to being positive, just pioneering regenerative supply chain. So being positive for the planet, positive for business and positive for the environment. I'd now like to talk about our investor value proposition. I think the key message here is that fiscal '22 is a year of increased investment to support sustained benefits delivery from fiscal '23 onwards. So if we start at the top of the chart, revenue growth, sales revenue growth in the mid-single digits from fiscal '22. So very much in line with what we've been said previously. We then anticipate underlying profit growth in the high single digits from fiscal '23. So sustained ULP leverage. That will then support EPS growth in the high single digits from fiscal '23. The profit growth then translates into free cash flow generation. We need to invest in the business and sustain the growth. So if you go to the left-hand side, you can see the box with growth. So cash flow has been used to fund organic growth and new business wins. But at the same time, we also want to fund the twin track transformation of optimizing the current business and reinvesting for transformation. So that's what's going to happen in the short to medium term. At the same time, we still want to fund the dividend. So the free cash flow is also going to the right-hand side there to support dividend yield of 2% to 3%, in line with our payout policy. So if you take the EPS growth in the high single digits, top right-hand corner, dividend yield, 2% to 3% bottom right-hand corner, sustaining that with a high ROCI in the high -- mid- to high teens then we get total value creation of 10% plus from fiscal '23. Now clearly, as we get through the investment phase in terms of cash, we should be generating even more cash. And in line with our previous commitments, we would always ensure that got back to shareholders in one form or another. So the total value creation would be higher than the 10% plus in that instance. So with that, I'd like to hand over to Nessa to talk in more details about the financials.

Thank you, Graham. In my presentation, I'm going to cover where we are now with our business and why we're well set up for transformation, the specifics around what the transformation program is expected to deliver and win and then what the shape of our financials will look like as we progress through the transformation from FY '22 to FY '25. Starting with where we are. In the period from 2018 to 2021, we improved the commercial terms across our businesses and, in particular, in our U.S. and Latin American businesses where we repriced our contracts to better reflect changes in the cost to serve. We added inflationary recovery mechanisms to our contracts in the U.S., and we materially improved asset controls in Latin America. We also invested in capacity and capability to support growth and deliver efficiencies. Taken together, all of these successful initiatives have made our business more resilient and agile than ever before. In the last 18 months, COVID, Brexit and other market disruptions, including pallet shortages, severely tested our businesses. We managed through demand volatility, changes in network dynamics and material inflationary pressures. And despite all of these challenges, we delivered strong results in FY '21, a real testament to the increased resilience and agility now built into our global businesses. Additionally, throughout this period, we've demonstrated a disciplined approach to capital allocation, successfully using the proceeds from exiting underperforming businesses to fund investments in high-returning U.S. automation and lumber projects. And following the successful sale of the IFCO business in FY '19, we paid down debt proportional to the size of that business and are progressively returning all of the balance of the proceeds to shareholders via our capital management program. This will recommence later this week and is expected to be completed by the end of FY '22. We also materially improved cash flow generation in the businesses, improving work capital management, delivering asset efficiencies and getting improved commercial terms with our customers in place. And despite the increased investments, we've maintained an exceptionally strong balance sheet. And importantly, at the same time, we've cemented Brambles position as a global leader in sustainability. We've been partnering with customers to deliver value for a broad range of stakeholders. We've driven increased diversity and inclusion, and we've achieved carbon-neutral status in our own operations and gain further global recognition for our environmental, social and governance leadership. FY '22 will be a year of investment in our transformation to enable delivery of ongoing sustainable benefits from FY '23 onwards. Transformation investments and the related benefits are factored into our value creation outlook and expected to increase value creation from FY '23 onwards. The annual shareholder value creation we expect to deliver from FY '23 of 10% plus is a material uplift from our 4-year historic run rate. It's driven by a combination of increased revenue and earnings growth, including margin expansion as well as dividend growth. FY '23 will also include a rollover EPS benefit of the capital management program, which is expected to be completed in FY '22. Group returns will remain strong despite increased investments with ROCI expected to be in the mid- to high-teens. The shape of the outlook that will be covered in this presentation excludes any impact across the FY '22 to '25 period of potential investments in plastic pallets, noting that we are currently conducting a trial in conjunction with Costco and some of our customers, and we're not yet in a position to make an investment decision. There will be a separate presentation on Day 2 covering the trial, investment decision criteria and likely implications of decisions relating to plastic pallets. Cash flow generation is expected to fund dividends and investments in our business and, in the medium to longer term, provide optionality to either accelerate growth investment for growth and our undertake capital management initiatives. Now looking more closely at the investments to enable delivery of these outcomes, which we have factored into our outlook financials. The key investments to support our change program include short-term transformation costs in FY '22 and '23 as well as ongoing investments in digital and supply chain initiatives. We expect short-term transformation P&L costs of approximately $50 million in FY '22 and $20 million in FY '23. These costs will be treated as normal operating costs and included in the underlying profit in FY '22 and '23, respectively. Short-term costs are not expected to continue beyond FY '23. The other key investments supporting transformation relate to digital and supply chain initiatives. The details of these investments are set out in the table, splitting to operating costs and capital investments. These investments support a range of benefits reflected in the financial outlook, which supports the 10% per annum shareholder value proposition. Looking at these 2 key areas of investment in turn. Digital investment will support our total transformation plan, both directly and as an enabler and will include investments in increased capability and data and digital technology, including asset digitization. A detailed presentation on digital and what these investments will cover will be presented by Helen Lane later on Day 1 of our Investor Day presentations. The other material part of our transformation investment is in supply chain initiatives with a combination of proven automation and supply chain projects as well as other new solutions to be deployed across our global businesses. I'll provide an overview of the key components of these investments as part of my presentation, and you'll get further insights from Craig Jones' presentation and from the regional leaders' presentations. We'll take a disciplined approach to investment plans. You'll note from the slide that the FY '24 and '25 investment columns are shaded. That's to highlight that the investments set out are the current estimates. However, the spend will be gated and subject to a review of project milestones, and that will inform investment spend and capital allocation in later years. Now that we've had a high level overview of the investments, we can move to the value drivers and benefits delivery. This slide sets out the weighting of the components of the underlying profit growth from FY '21 as a base year through to the end of FY '25. Revenue growth is expected to deliver 55% of the 4-year earnings growth with a further 40% of the growth coming from asset efficiency and network productivity with the remaining 5% expected to come from other organizational efficiencies and indirect savings. Each of the regional leaders' presentation will include more details on the key drivers of growth in their regions. Revenue is balanced, and it includes both volume and pricing growth. And volume growth includes both growth from existing and new customers, reflecting continued pooling industry market share expansion into what is currently on pool businesses and new business streams. Asset efficiency and network productivity include reductions in uncompensated losses and shorter cycle times as well as plant and logistics efficiencies and direct cost procurement initiatives. These initiatives will deliver benefits beyond the P&L, supporting CapEx savings, cash flow generation and delivering sustainability benefits. All regions, importantly, are contributing to the FY '21 to '25 earnings growth. This slide sets out the segment split of the FY '21 to FY '25 underlying profit growth. Looking at the blocks on the slide and moving from right to left, it should be noted that the central corporate investment enables and supports the delivery of the benefits shown across the regions moving across the slide to the left. The earnings growth across the operating regions broadly reflects their relative size of group revenue as well as specific identified opportunities in each of the regions. The earnings growth and benefits delivery is weighted to the Americas region, with material increases in earnings in both EMEA and APAC who are also contributing to the group earnings growth. Excluding the ongoing increase in corporate costs to support the transformation benefits, FY '25 corporate costs are expected to be broadly in line with FY '21. Turning now to look at the revenue. Revenue growth outlook of 5% to 7% reflects the balance of volume growth with existing customers net new business wins and value-based pricing to recover cost to serve increases. Over the past 4 years, pricing increases have reflected insights derived from data analytics, digital initiatives and sales force tools, enabling us to better align pricing and cost to serve. As we go forward, we'll be leveraging the tools we already have in place, and we'll be using more advanced data analytics and new technologies, including further use of digitized assets to support the delivery of value-based pricing. Net new business growth reflects expansion across all regions, with the pooling market share growth predominantly coming from growth of pool pallets into currently unpooled sections of the markets we operate in. Revenue growth is a key contributor to the earnings growth. Now addressing the profile of our underlying profit growth. If you look at the graphic on the left-hand side of the slide, you'll note that the uplift in our group underlying profit performance from FY '23 onwards with FY '22 being a year of investment and includes most of the short-term transformation costs. The 2 main drivers of the improvement in the earnings growth expected as we deliver on our transformation plan relate to the fundamental improvements in our business model put in place over the last 3 to 4 years, and they have made the business more agile and more resilient. The second part of this comes from the transformation program, which is key to us being able to deliver improved earnings from FY '23 onwards with increased benefits flowing from investments in FY '24 and '25. FY '23 underlying earnings includes the final year of short-term transformation cost, and we would expect to deliver underlying earnings leverage from FY '23 onwards. From FY '24 onwards, the expectation is that we will deliver high single-digit underlying profit growth and consistent operating leverage. The transformation investments in the network and asset productivity are key drivers of the benefits supporting this expected increased level of earnings growth. I'm now going to take you through the key initiatives we're investing in and what the expected related financial outcomes are starting with the network productivity. Network productivity benefits are driven by leveraging existing proven automation and other high return supply chain initiatives and taking this to new sites. The FY '19 to FY '21 supply chain investments have been highly successful, delivering material business benefits with returns of over 20% and delivering increased capability and capacity to our networks. The outcomes of these investments enabled the business to manage increased volatility and changes in network dynamics in FY '21 and also delivered improved lumber market access when supply tightened and drove efficient processing, which enabled improved yield on lumber sourced. We'll invest approximately $415 million in supply chain projects across FY '22 to '25, which are expected to deliver returns of circa 20% with a payback of 4 to 5 years. This includes approximately $235 million of investments in proven supply chain initiatives, including the implementation of existing automation technology and equipment across incremental sites and regions, and $60 million of investment in the progressive improvement in pallet durability to reduce damage rates. The planned improvement in damage rate builds on the 1 point of damage rate improvement delivered in each of the FY '20 and FY '21 years worth a cumulative $25 million in total across the 2 years. A further $120 million investment will be invested to increase the level of automation using new technologies across 70 plants in Europe and North America, delivering improved plant efficiency, quality and helping with the consistency of the pallets repaired. As we move now to look at asset efficiency, we'll use the next few slides to pull the total investment together, starting with pooling CapEx and then moving to non-pooling CapEx. On Slide 22, the graphic in this slide shows the asset efficiency metric, pooling CapEx spend expressed as a percentage of sales. The chart is presented on an accruals basis, consistent with how we report for the annual and half and full year reporting. As detailed at the full year results presentation in August, progress in asset efficiency in the U.S. market in FY '21 was impacted by major changes in market dynamics, with factors including volatility in demand, change network flows. Both of those reduced the overall pallet pool efficiency. We also had scarcity of transport and labor as well as some limitations to site access, which reduced the ability to collect pallets. Lumber supply constraints and inflation drove pallet scarcity and higher pallet prices, which also resulted in some stockpiling of pallets across the network and higher losses. In all other markets outside of the U.S., pallet losses were reduced during FY '21. Lumber inflation, however, across the group drove higher unit pallet prices impacting the FY '21 pooling CapEx to sales ratio by 3 points. Deferrals of pallet purchases in FY '21 due to lack of supply will add a further 3 points to the FY '22 pooling CapEx to sales ratio. It should be noted, however, that the FY '21 free cash flow was $341 million with the business generating sufficient cash flow in FY '21 to fund these pallet purchases, which will now occur in FY '22 due to the pallet supply constraints in FY '21. The underlying FY '21 CapEx to sales ratio compared to the 4 year FY '16 to '20 historic level of 19% was circa 21% in FY '21, being the 18% shown on the slide before lumber inflation and 3 points in the deferred pallet purchases reflected in the dark green area of the FY '22 bar on the chart. The higher loss rate in the U.S. and the challenged market dynamics are expected to persist in the U.S. during FY '22. Laura Nador, the CEO of our North American business, will provide further insights during her presentation. And looking forward, while pallet prices have decreased in the U.S. relative to the May 2021 peak pricing, they remain above historic averages, and the European business is now experiencing increased pallet prices. Hence, the inflation impact of circa 3 points included in the estimated FY '22 pooling CapEx to sales ratio, which includes 20% to 21% relating to FY '22 pallet purchases and a further 3 points of deferred pallet CapEx spend from FY '21. Improvement in the pooling CapEx to sales ratio is expected across FY '23 to '25 to deliver an FY '25 pooling CapEx to sales ratio of around 17%. This will be achieved by a wide range of initiatives, including leveraging group best practice initiatives, increased use of data analytics, the deployment of smaller vans enabling higher frequency pickups of pallets and supported by the deployment of digitized pallets. Commercial terms will also reflect increased pricing and compensations for higher loss lanes. The U.S. business will also be pioneering the use of advanced data analytics, coupled with AI and machine learning, to identify and anticipate risk of loss, inform resource allocation for recollections and follow-up actions and will also automate a number of processes to improve communications across the supply chain to drive asset efficiency by increasing pallet recoveries, reducing losses and implementing pricing better aligned to loss rates and overall cost to serve to recover costs, but also to drive changes in behavior and increasing asset accountability. Laura will talk more about this in her presentation. To complete the picture on capital investment, we'll now turn to non-pooling CapEx investment. So non-pooling CapEx investment will increase to around $250 million in FY '22. That will be driven by increased investment in supply chain automation, lumber and pallet durability initiatives as well as including investments in RPC washing equipment in Australia and the replacement of supply chain equipment in North America. The outlook is for the non-pooling CapEx from FY '22 to '25 of around USD 200 million annual spend to support both supply chain initiatives and IT and systems investments. A disciplined approach will be taken to capital allocation with gating and milestones in place, which will progressively inform our decisions on future capital allocations. We will continue to focus both on overall returns and cash flow generation. Over the last 3 years, we've improved cash flow in the business. Free cash flow in FY '21 of over $341 million, including timing benefits of $215 million relating to the deferred pallet purchases of $180 million and $35 million of tax timing benefits, both of which are expected to reverse in FY '22. This was highlighted to the market in August of the full year results. Excluding these timing benefits, the FY '21 free cash flow was over $126 million. Excluding the outflows in FY '22 related to the reversal of the timing benefits in FY '21, the FY '22 cash flow is expected to fully fund CapEx and dividend. Cash flow is also expected to fund dividends and CapEx in FY '23 and '24, with improvements in free cash flow expecting in FY '25 delivered by increased benefits of the transformation investments and other initiatives. Having covered where we are, what the transformation investments are and their related financial benefits, I'll summarize on the next 2 slides some outlook commentary on FY '22 and then FY '23 to '25. Turning to our FY '22 outlook. FY '22 is a year of investment in our transformation program. Revenue growth is expected to remain in the mid-single digits at 5% to 6%, in line with the investor value proposition outlined earlier in this presentation by Graham. Underlying profit growth is expected to grow 1% to 2%, reflecting transformation program costs, including short-term costs taken above the line and included in underlying earnings, changes to tax regimes in the U.K., U.S. and Spain are expected to drive an increase in the effective tax rate of around 1.5% in FY '22. This is our current view, noting we're yet to see what the final outcomes will be for the changes as yet to be announced in U.S. taxes. In terms of our dividend, our U.S. dollar payout ratio dividend policy is unchanged. FY '22 free cash flow generation, as previously stated, reflects the reversal of $215 million timing benefits fully funded by FY '21 free cash flow already banked. Excluding the reversal of these timing benefits in FY '22, the free cash flow is expected to fully fund CapEx, including transformation investments. This builds upon the consistent improvement in cash flow generations over the last 4 years. Now finally, looking at FY '23 to FY '25 expectations. Revenue growth is expected to be in the mid-single digits, driven by pricing and volume growth across all of our regions. The business expects to deliver operating leverage in FY '23 with underlying profit growth expected to be in the high single digits after expensing of transformation costs. From FY '24 onwards, the expectation is for the continuation of high single digits underlying profit growth in line with our updated investor value proposition. The FY '23 effective tax rate is expected to increase about 0.5 percentage point over FY '22 levels. And finally, our balance sheet metrics are expected to remain strong and in line with our investment-grade credit ratings. I'll now hand back to Graham, who's going to provide you with an overview of the transformation process and the sustainable value this will create.

I'd now like to talk about the approach we're taking to the transformation. It's a rigorous approach. I know some of you have been comparing whether this approach is more like one of the previous transformations we've done or another one we've done. All I want to say is we've looked at what we've done before, and we try to learn lessons from them when we set out the approach we've taken to this transformation. And hopefully, that would be clear if you look at the chart on the right here. So we've had a broad-based involvement and mobilization through the company. And I think that was something that didn't happen in the past. It's very much top-down driven. So we've got a lot of people involved in the company, very good engagement around what we're trying to do, a lot of excitement around the opportunity to transform the business and improve the customer experience. We went through a detailed bottom-up planning process, which completed towards the end of fiscal '21, which gave us a multiyear plan based on concrete, granular quantified initiatives. So there's a real depth and richness to the plan to deliver the results. Another thing that we learned from the past was that people were being asked to work on programs and do their day jobs at the same time. So we've ensured we've got our best people on the project and that they are dedicated to the transformation. And so some of them listed below. So we've got the new Chief Transformation Officer, Craig, who will talk to you later on with a dedicated transformation office. A new role of Chief Digital and Data Officer, which is Helen, who will, again, talk to you later on. And Alasdair is going to lead the customer value initiative. But beyond that, the whole of the executive leadership team are sponsoring various work streams, and the ELT are leading this program. It's not led by me or me and Nessa, it's led by the whole executive leadership team. And I think that's a very powerful signal internally that this is something we're very committed to delivering. Similarly, another, I think, thing we've learned from the past is not having granular initiatives and milestones and objectives and targets fit for the transformation. So this transformation, we have transparency and accountability for results. There's a transformation scorecard, which I'll talk to you in a minute, which will monitor progress. And the outcomes from the transformation are embedded in management incentives, both individual incentives and shared incentives. So let me talk about the scorecard. No intention of walking you through this in detail. It's a bit of an eye chart. But like any good balanced scorecard is a combination of financial metrics and nonfinancial, short and long term, how to cover the breadth of the transformation. And you can see from the color circles, we also have metrics in there relating to ESG. And vertically, we have something covering digital, customer asset efficiency, network productivity, business excellence. So those 4 key pillars that I talked about earlier on as well as sustainability in ESG and, of course, very importantly, the financial outcomes. Again, I won't go through all of this, but there are some interesting ones within there. You can see, for example, the need to have a lot of people trained in digital expertise. There's a lot of work going around revenue growth in the second column, which is obviously key that we can continue to focus on that and product quality. We're launching customer optimization programs. We are looking at asset efficiency and network productivity. We're looking at the organization and how we can make it more efficient as well as looking at things like our diversity and inclusion targets. And we've got our environmental targets, which come into our 2025 objectives. And if you look at the financial side on the right-hand side, yeah, we've talked about this before in the value proposition, but also in Nessa's session about the revenue growth, mid-single digits, underlying profit leverage, free cash flow generation, ROCI in the high to mid-teens and EPS growth in the high single digits with the dividend yield of 2% to 3%. So putting that all together, top right-hand corner, you can see total value creation of 10% plus from fiscal '23. So this is very granular. This is -- there's a much more detailed version of this, which we will use internally to measure progress. But clearly, we are going to now use this as a way of reporting externally our progress on the transformation. Just to wrap up, if we look at what we've just talked about, both Nessa and I, we are transforming the business to drive a step change in value creation that we have created a more resilient, agile and sustainable business model setting us up for future success. We've talked about the improved commercial terms, profitability and asset productivity with a much more resilient and agile business model. We are in a very strong financial position with the balance sheet and profit leverage. CapEx and dividends, fully funded by cash flow. A more focused portfolio, divesting the underperforming businesses and the successful sale of IFCO. Global leadership in sustainability, delivering benefits for our customers, retailers, employees and shareholders. But I think much more importantly, a unique position to lead and assist customers in their circularity business models and the new business models of the future. A very strong financial performance in fiscal '21 despite a range of challenges, including COVID-19, Brexit and massive lumber inflation. And we're transforming the business to drive a step change in value creation with every region contributing to the value creation. So again, focusing on customer value, network and asset productivity, business excellence, digital is enabling the transformation across all those areas and global leadership in sustainability with 2025 goals, which will create regenerative supply chains for the future. With that, I'd like to hand over to the operator to manage questions and answers. Thank you very much.

[Operator Instructions] Your first question comes from Matt Ryan from Barrenjoey.

I just had a question with regards to the strategic priorities that you've sort of outlined on Page 10. I think similar to your comments, some of these look pretty similar to previous Investor Days that we've been to. And Graham, I think you just mentioned that you've learned some lessons from transformational programs that have been done in the past. So I was just hoping if you could share what you have learned and I guess how you're using that to change what you're doing moving forward.

Yes. So I think there are a few things. We obviously look back at the various programs. And I think one of the first thing was previous programs are very much top-down driven into the business without any consultation and buying from the business. So one of the reasons we've taken here a bit longer than perhaps we've done in the past, and we've been talking about shaping our future for some time now, was to make sure that we're able to get the buy-in and the feedback from the businesses on some of the bigger themes that we wanted to change in the company. So that's -- I think we've now got significant engagement throughout the business, which we've seen coming back through our employee engagement survey scores that people understand the strategy, they understand the transformation, but most importantly, they're really engaged with it and wants to change the company. So I think that's something that we didn't do the last time around, which I think has been a positive. The second thing was very much that people were being asked to get involved in the transformational projects, but also do their jobs at the same time. And we, very early on, said we want our best people. And for me, one of the signs that we were truly operating as an enterprise business, not just a collection of regional systems was when people are putting their very best people onto some of the initial project work we're doing. And now you can see we've got some great people heading up the various initiatives, but they are working on it full time. And I think that was something that's very important that people shows the commitment we're putting in towards changing the company and working on these different initiatives. And I think the other thing that also happened the last time people were working on the projects, and then all of a sudden they didn't have a job at the end. So we're very committed to making sure that this is a development program for people working on it as well as something that we obviously need to deliver as an initiative. I think the other thing then, which is -- comes very much down to what I was saying about the scorecard. The process that we've got involved in this time around is incredibly granular. And we've had some external help to do that, which I think, last time, we didn't do. In the past, the external help is very much driving the program. That is not the case this time around. We, the leadership team of Brambles, are driving this program, but the process is one that we've borrowed and it's incredibly granular. There's 1 version of the truth. People are operating through that process, and initiatives are being logged in the system and measured down to a very, very granular level. And I think that's what gives us a lot of confidence that whilst, yes, there is the sort of hockey stick that we may have seen in the past, we know what's driving it. We're monitoring it, and we think we're very confident that we can deliver it. And I think that is a completely different situation to some of the previous programs, the ones that Nessa and I had to look at when we first joined the company, which we can see there was a lot of intent, but there wasn't much delivery and process to deliver from intent to results. I think that's completely different this time around. So those for me are the main changes.

And just a question for the guidance for this year. Is there any reason to believe if you decided not to conduct this transformational program? Do you sort of think you'd meet your medium-term guidance that you've given in the past of sort of mid-single-digit revenue growth and operating leverage for this year?

So I think -- yes, I mean, number one, we're going to do this. This is not something where -- this is not a sort of we might do it, we may not. We need to do this because I think one of the things that's happened in the past is the company has been very focused on the short-term performance. And one of the things that we've been struggling with is we know there are some things we need to do to transform the business in the longer term, but that does require some investments. And it really is this extension of what's been going on with BXB Digital for 5 or 6 years. We've been testing different concepts. We know we need to digitize the company to get the benefits both for ourselves and for our customers, but that does take some investments. And I think the nice thing this time around is we know that we need to optimize the existing business to create enough value to fund the transformation for the future. FY '22 is a year of investment. I think Nessa has characterized it absolutely correctly. But from fiscal '23 onwards, we really believe that we can consistently deliver the leverage and consistently deliver improved cash flow. And I think that's something that is different because if you'd asked us, well, if we don't do this program, then I think we'd be going back to our previous guidance, which is, yes, we can do the leverage ERP over the cycle because we do struggle with inflation, and this is a way to try and get the -- to sort of build on the resilience of the business model we've built over the last few years and ensure that we absolutely are delivering leverage. But I think more importantly, we're now focusing on the EPS and the total value creation, and I think we're being fairly bold and ambitious. We're saying 10% plus each year from a value creation perspective, and that's something we haven't set before. So I think this is different, and I think it is more ambitious than the previous guidance.

Your next question comes from Anthony Moulder from Jefferies.

I'd start on the growth, if we can. A large proportion of this growth into the future is coming from revenue growth. Given that we see some market share has been lost in key markets, how are you attacking the growth to increase market share in key markets for chip?

Nessa?

Anthony, I think a couple of things to note. You're right that there is a balance of this 55%, as you saw sort of from Slide 23, sets out the sources of growth, which includes [Audio Gap] From our perspective, we've continued to grow our share. And the challenge, however, this year has been with the lack of pallets and pallet availability, which has been an issue across the entire market that we haven't added as much net new business because of the pallets, because we've chosen to allocate those and make sure that we supported our current customers. If you think, though, about what we did in the year and you look at the overall revenue growth for the year in FY '21, we still got really strong growth of 7%, and that's because COVID had a higher weighting towards at-home consumption. But I think you also need to say, well, what have we done underlying to actually get ourselves in a better position to unlock value for the future. And I think if you look particularly at Europe and Central and Eastern Europe and the growth that we've had over the last 18 months in Germany, that's a market that has historically been a real challenge for us to get a foothold in. Now with retailer approval, we're consistently getting some good growth there as well as across Central and Eastern Europe. And the other example that I draw about where we're setting ourselves up for higher growth in terms of that volume piece is, in Latin America, we had a business model that was fragile, and we couldn't get good returns from it. Now we've totally reinvented that business model, and you'll hear more about that from Paola in sort of Day 2 of this. But as a result of all that work, we're now kicking out a lot of good strong cash flow, and we're opening up new opportunities, and Paola will talk about that, and we see a lot more opportunity for growth in Latin America. And lastly, but I think also really, really importantly, we've really changed the dynamics in the U.S. market. We've been in terms of making sure that we're pricing according to cost to serve. And the references to what we've used from digital and data analytics have really helped us to tailor that pricing and repricing program. So I think there are 3 components of what sort of sets us up better in terms of revenue growth going forward and disciplines to be able to unlock that value.

Part of that pricing to change behavior, I guess, is how you're interacting with those NPDs. Is it -- how are you thinking about those NPDs? How do you close those down? And does that suggest that some of those customers that continue to ship NPDs are better off on a different platform?

Anthony, I think that's a really good question because, actually, for us, it's important we service our customers. So a lot of our customers will have different levels of flows, and they don't have the complexity of dealing with multiple platforms. However, if the cost to serve means that there's a really high loss rate going to a particular NPD, yes, you're right, we are working with those customers, and Laura can talk more about that tomorrow. But we are working with those customers to say, actually, there's a better platform for you. And in some cases, we're actually facilitating their access to whitewood to help them to do that because we say, look, the amount of money we're going to have to charge you to take a flow on our pool pallet is going to make it prohibitive for you. You're better off putting it in whitewood. In other cases, it's just the loss rate is a higher loss rate. And therefore, what we have to do is just charge a higher price, but we're still happy to service them in that lane so long as we charge the appropriate pricing for it. So I think it's a mixture of all of those. Flows to NPDs are necessarily bad flows so long as we charge the right price related to what the real cost to serve is.

Yes. Very good. And I guess the last time we heard targets from you both was back in London in 2018. Can you just talk to how you saw that U.S. margin profiling between FY '18, FY '21 and what you learned for these targets that you put out today, please?

Okay. So Anthony, when we first said -- I think a couple of things. So in FY '18, I think it's fair to say it was a very different world to where we are today. And certainly, we -- that was followed by a period of rapid inflation. And as we said at that time, it was going to take us 3 years to reprice our contracts and to get proper inflation recovery mechanisms in place. So for us, the inflation got worse through '19, so we went backwards. But if you look at the last 2 years, we have seen that margin expansion. And we had those dots on the charts that we showed every year from the ASX perspective where we showed how we were going to progress. I think we've been incredibly pleased with the outcomes from the automation program that not only has it delivered the financial benefits. But again, we never foresaw when we hit the targets that there was going to be a COVID, which meant that the network flows were totally changed. There's a whole lot of inefficiencies through the network. The fact that we invested ahead of the curve and got that extra capacity and flexibility into our network, not only did it deliver on the business case, but it's actually been a real enabler for us over the last 12 to 18 months to cope in this environment. And then we have this quite innovative approach to how we were going to manage lumber and lumber supplies and processing and take inefficiencies out. Partnering with 5 sawmills in the U.S. definitely allowed us to get access to lumber for longer. And our partnerships with them has meant not only have we actually also got more efficient with the yields that we get, we've improved the processes, reduced the transport miles to go to our service centers. All of those have been real support to the outcomes that we've got across the total business. So I think we feel good that we've had good margin improvements over the last years. And as you see from the plans and the weighting of the plans, we would expect to see more margin expansion from the U.S. business, albeit I think it's fair to say everybody is very much aware there's still a lot of uncertainties out there in the market. We still -- lumber is still scarce in terms of supplies, and therefore, pallets are still short in the U.S. So I would say we're still challenged in that market. I think we feel pleased that, over the last 2 years, we have banked margin improvements, and these plans do include targets for that business to continue to grow margins. But did we reach the full amount of the outcome that we'd wanted when we set the original target? No working behind that, but I think now gaining momentum from -- after recovering from a year. And this last year, I think, has been a real testament to all of those things that we put into the business, including surcharge recoveries, that enabled us to get a really strong FY '21 result from that business.

I think they're building on that a bit and...

[indiscernible]

And we feel a bit more confident about the numbers now going forward. I think less as characterized, they're absolutely right. It's a combination of us getting confidence in some of the things that we've been doing over the last couple of years operationally, but also we've spent some time over the last 18 months getting some external validation of some of the ideas we had around things like in technology around, for example, digital. So we've got that combination now of saying we're rolling out stuff that we're very comfortable with because we've proved it over the last couple of years. And we're now increasingly confident about some of the newer stuff, and that it will actually benefit the business in terms of asset productivity, for example, with more digitalization. So I think that's why we're more confident because it's a combination of 2 things, some of the lower risk, but you've done it. Other slightly higher risk, but we've got much more confidence in the outcome. And that's why I think we're sort of pretty confident about the numbers going forward.

Very good. And lastly, if I could, Graham, it's 5 years for yourself in January next year 2022. How much of this do you need to commit to the Board to deliver?

So I didn't quite catch the last bit about, but I'm assuming...

How much do you need to commit to the Board going forward.

Yes, my commitment. So there are 2 ways of answering that question, and I've said this previously. I am very, very happy to stay for as long as the Board want me to stay. And I would hope the Board would let me to stay to see this through as we go through the transformation. But this transformation is not just a 3- or 4-year thing. It will go on because the idea is we should be continually coming up with new ideas to help transform the business, have a hopper, if you like. So there's always something going on. Since on the assumption, I won't be able to work forever. At some point, I won't be doing it. But my intent and my desire is to stay for a significant period of time to see this through. But the other way of looking at it is life is life, and it's the Board's decision and stuff happens. And if I were to leave or couldn't carry on, I think the most important thing, I said it right upfront when we're talking about the process, this is not my process. This is not Nessa's process. This is the ELTs process. So if anything happens to us, then the business can transform itself because the ELT, who are a large number of people, and the buying we've got from people beneath ELT about the enthusiasm and the need to do this is very deep and ingrained. So it will carry on regardless of whether I'm here or not. And I think that's strength as well as perhaps doesn't help me particularly, but I think that's the right way to look at it. It's not about how long I'm here for. I would love to stay and see this through, but that's a question for the Board, not for me.

Your next question comes from Jakob Cakarnis from Jarden Australia.

Can I just get some understanding about the motivation to provide these long-term value targets now and why you think the last 4 years are the best basis through a comparison for those value creation targets. Just note, in last 4 years, obviously, as you just said, Nessa, were impacted by those inflation headwinds that you saw and also some execution issues.

Yes. I think there are a couple of things. And perhaps if I start off, and Nessa can add some stuff to it as well. I mean, I think the motivation is very straightforward. We've been talking for some time about BXB Digital, and we've been talking for a little bit of time as well about shaping our future. And quite rightly, I think we've been getting some challenges about where is the value going to come from both of those things. And we spent some time -- and I think the reason shaping our future has taken a bit of time is we want to not repeat the mistakes of the past in terms of large transformation programs. And with BXB Digital, we knew there was value. We were pretty confident about the technology we've been building within BXB Digital, but we wanted to test out some proofs of concept and we wanted to get some external validation on the technology, both of which we've done over the last 18 months or so. So I think it comes at the right time now. I think it's also good that we've just had 12 months where, as Nessa said, the work we've been doing around making the business model more resilient, we've been able to prove that in the last 12 months because of being able to produce a set of results that we did for fiscal '21 in an incredibly difficult operating environment. You put all that together and say, now we can have confidence that we've got the nuts and hoops of the business, right? It's a resilient business model, which we can rely on to create enough value to fund the investment we need to make over the next 12 to 18 months to create that newer business, that transform business where we're putting into practice and rolling out some of these technologies and ideas that we've been testing for the last 18 months. I think that's why the timing is what it is. It's a combination of fortune and planning in reality. Nessa, anything you want to add to that?

Well, I think it was also important that we invested a lot in supply chain and capability. And we were coming to the end of that program, which we finished the first phase, if you like, of the sites in the U.S. And I think, quite rightly, the market was saying to us, so what's next? And given that, that was a piece of the growth, it was also the opportunity for us to set out and to make sure we have a good pipeline that says, that's now embedded in the base, that's giving us more capacity and capability. But recognizing that if we want to get the momentum and continue to be more agile, that we also need to have the next phase in the pipeline. And we want to set milestones. So the market understood what we're investing in and why we're investing in it. And I think we have to recognize none of us know what the new normal is going to be post-COVID about how things settle down. But we have recognized through this the value of having agility in our network and getting to the next phase of doing that and making sure we've got value-based pricing that reflects that and that we're thinking about the future, all of that. The world has just changed a lot more quickly. So for us to do more of the same just didn't make sense in that context. I would see those as being other key factors that led us to say, okay, now let's get the granular plans. Let's set it out to the market, and let's be clear about what we're going to invest, what we expect to get out of it and set a scorecard so that everybody is aware of what we're doing and how we're going to look at the performance against that as we progress through the plans.

And then just moving to BXB Digital. From what you've disclosed, it looks like between FY '17 and FY '21, that's around $75 million of investment. FY '22 in the single year, that's going to step up to 40%. And then it looks like the outlook is -- once you pass through those gates closer to $100 to $200 million moving forward. Can you just let us know why this is accelerating, whether customers are seeing value from this investment or whether it's just an internal focus at the moment, and then what the potential upside is for shareholders as you move through the program?

Yes. So we don't want to steal Helen's thunder. So let's hope she will answer some of his questions when she's done her section. I think it's important, I mean, in terms of just explaining the scale of the increase. So we always said that, once we were happy with the technology, we would need to roll it out. Obviously, it's clearly to get the benefits of the data capture to give you the better insights to run both our business better and provide some value to customers. We would need to digitize more of the asset pool. So that is why there's an element of increase in capital expenditure. One of the reasons. It's not all about digital. There are other things we're investing in as well, which will obviously cover as we go through the next day or two. But that fundamentally is the reason. And again, just to highlight the point, it's not just about customers, it's also about our own efficiency. So a lot of the investment is stuff that we know is already giving us value in terms of helping us improve asset efficiency, which we will get that benefit sooner. And then we're building on with some of the benefits for customers, but Helen will cover that when she comes to her session.

Just one more point I'd like to add to that. If you look at our Slide 22, we deliberately shaded the outer years in terms of the capital investment. So we are going to be very disciplined about the investment we put in. So the outcomes from what we do in the earlier years will actually inform what we invest in the later years and where we allocate that. So it's not -- you'll see that there is a progressive ramp-up of the spend, and that's dependent on the outcomes and us delivering against the milestones that will inform what we do. So I think it's important to note that we've set out as we see it happening. But obviously, we'll adapt, depending on what the outcomes are and to be subject to the normal commercial reviews you'd expect of investments from year-to-year.

So just one final one. Does that have the same ROCI targets for return, the BXB Digital spend as the rest of the business? Or is it slightly different given the internal phasing?

Well, I think you have to look at it, and we've been -- we've, I guess, been a pain through the presentation to say, look, we see digital and the investments in technology to be underlying practically all of the initiatives that they're either directly impacted or they're enabled by this spend. So it's really hard to separate out the specific pieces. I mean if you were to say, even if I took the example that we were spending about on average, if you sort of went back about $20 million a year on BXB Digital, you'd say, how would we say we got value from that historically. Well, a lot of the ways that we actually work out the pricing strategies, for instance, in the U.S. was based on getting further insights into flows in that market. So that's just one example of where we've got it. And we've got another really good example, and David is going to talk tomorrow in the Irish market, where we ended up making changes that we've got some additional pricing through that as well, identifying our cost to serve. So I don't think we can pull out the individual pieces and say, here's the related return. But we do have the granular plans, and we do have a process where we've linked what is dependent and what to deliver on an outcome. That will evolve over time depending on which pieces are more successful relative to others. Great. Thank you very much. I'll [indiscernible] I will move to the next session, but Graham and Nessa will be available throughout the event to take your Q&A as well as at the end. So we'll now move on to the next session of presentations.

Thank you, everyone. Our next 2 presentations will be from Craig Jones and Helen Lane. Craig Jones is our Chief Transformation Officer, and he will take you through our Shaping Our Future program. Craig joined Brambles in December 2017 and was appointed to his current role in July 2021 to deliver our transformation program. Craig was previously Vice President of CHEP India, Middle East, Turkey and Africa. Craig is based in our Dubai office, but is joining us from London today. I will now hand over to Craig.

Thanks, Raluca. As Graham mentioned earlier, the world has encountered unchartered territory in the past 18 months. And although we have not successfully navigated this, as evidenced by the FY '21 results and just reiterated by Nessa, it's now the time that we should be ready to transform our business so that we can continually deliver adding value to you and your investment portfolio. We've been asking ourselves important questions over the past year or so. Questions such as how can we determine better outcomes for our transformation? How do we ensure we continue to deliver great value from existing opportunities? And what is the best way to leverage the excellent work already undertaken, accelerating benefits into the future? So today, I will introduce you to our transformation, touching on specific elements that will allow you to build the confidence that the execution has been well thought through and that we have the rigor, the innovation and plans to deliver, in turn, growing our business to deliver the results Nessa alluded to earlier, ultimately, returning value to our investors and increasing the value of your investment portfolio. The key elements of our transformation show how this is an acceleration of our current activity and not creating it from scratch. Therefore, allowing us to build on recent successes as well as incorporate in learnings along the way. I will also aim to give you comfort on our execution abilities as we build capability muscle across the enterprise. I'll also take some time to introduce our scorecard that Graham spoke to earlier, a scorecard that will demonstrate our commitment and focus on delivering in the key areas of transformation. And with digital, customer experience and sustainability being covered in more detail later by Helen, Alasdair and JJ, I will take the opportunity to introduce in-depth some other aspects of the scorecard, but our core competencies of our business and will continue to drive value within our transformation. So let's get into the detail. The twin-track approach we have adopted really builds on the excellent progress we've made over the past 18 months and allows us to accelerate our ambitions and plans to deliver faster and stronger results. And with the recent set of the dedicated transformation office, we will assure, enable and drive the program. We will assure the governance, the regular prioritization to derisk the portfolio and maximize transformational outcomes. We will enable effective change delivery by building transformation capabilities across the enterprise, fostering company-wide shared ownership and learnings. And we will drive best practice adoption, sustaining delivery of enterprise-wide initiatives. This will ensure we'll remain consistent and strong in execution. And that will be evidence across our business results and ensure additive value to shareholders. We've already delivered significant value over the business in the last 18 months, with broader enterprise-wide learnings and delivery across the 4 key strategic areas that form the cornerstones of our transformation. For example, significant automation program covering 100 sites with over half of these in the U.S. Our customer experience initiatives, such as the estimated time of arrival notifications and processes to make simpler for smaller customers. And in the asset efficiency area, we've taken learnings from one-off illumination projects. First conducted in the U.S. back in FY '19 and made them into repeatable tools for the use across other markets. These programs will continue to add value through FY '22 and beyond. As a recent business unit president, I was heavily engaged with the formulation of the plans as firmly embedded in the business, to deliver on our long-term commitment over the planned years. We've engaged over 600 of our employees in the past months, empowered them to build via a bottom-up process in excess of 1,000 initiatives that form an overall portfolio plan owned and sponsored by our executive leaders. The case for change has really been felt throughout our business. And with a highly engaged team and a rigor to the approach, we are confident in delivery of the outcomes. Earlier in the day, Graham introduced a scorecard, a tool that will track our transformation, ensuring we deliver across a balance of metrics, both financial and nonfinancial, leading and lagging in nature. It's not my intention to take you through the individual metrics or the -- my new share of the scorecard today. The purpose is to demonstrate our commitment to the transformation program and focus areas across the main strategic themes. Underpinning the metrics are hundreds of initiatives and thousands of milestones that will, over the course of the plan, deliver direct value or enable value to be delivered. And in some cases, it's a combination of both. We will see later on in my presentation, as well in the presentations that follow, examples of how delivery will be executed as well as the magnitude of the program to drive the outcomes included within the scorecard. An example to note under asset efficiency, we call out 3 points reduction in pooling CapEx over sales across the plan. And with the rule of thumb that 1 point variance is equal to a circa $50 million of cash impact. This is a significant cash improvement. We have a strong and ambitious balance of measures that facilitate our twin-track approach on operating more efficiently, delivering increased returns whilst investing to deliver a real transformational change in the company. I will go into more detail on network productivity, asset efficiency and business excellence, link in some of the programs that will support delivery on the metrics and bring the value that is key to you and your shareholders. Later on, Helen, Alasdair and JJ will talk more about digital, customer and sustainability, respectively. And so you build to get a solid degree of comfort on activity, enabling the delivery of these metrics. Our intention is to use the scorecard as we report to the markets. And so you will have strong visibility on progress along the transformation journey. And with that, I would like to take a further look into how we are accelerating delivery, starting with network productivity. As explained earlier, an acceleration of current activity that underpins our strategic intent is a major focus of this transformation. And it will be remiss of me to look into the future without giving some insights on recent monumental activity in our own supply chain, an activity that has successfully delivered the outcomes across our network. We have invested in excess of $300 million over the past 3 years, heavily focused in our efforts in automation, delivering automated solutions to over 100 sites and over half of these in North America with the rest spread across our enterprise. We've rolled out technologies and processes that give us exceptional results, adding capacities of 20% and 30%, respectively, on repair and inspection abilities. The discipline to deliver on time and in line with our investment criteria has been a major success over the past few years, and the proof of delivery gives us the confidence on future programs as our automation ambitions continue. We have built up a track record of implementing solid automation programs and, since 2019, delivery of automation across 100 sites in our whole network. And continued investment will deliver further value across the plan. As well as continue to roll out our current automation in the next phase of sites, I wanted to introduce to you a very exciting program of combining and optimizing some of our automated activities into a single repair cell within our network. We're excited about the opportunities this will deliver. And to bring this to life, I would like to share a video of the operation in practice. After the video, I will highlight how this will be implemented across our business. [Presentation]

So this is an integration of our automated technologies and a massive step towards a touchless plant. The benefits have been reflected in our pilot programs during FY '21, and we will now embark on an aggressive rollout to more than 70 of our plants across the network, focusing heavily on the U.S. and Europe. Our work does not stop with automation. Across our transport network, we have a healthy pipeline of activity. And while we continue to drive value optimization and utilization of our rates, technology to assist us in route deliveries, we will be using some new tools also to further optimize our route planning as well as tighter customer collaborations resulting in less miles and relocations. All of this returns value to Brambles and, ultimately, you as our shareholder. The durability program goes from strength to strength, and there's no pun intended in that comment. Over the past 2 years, we've delivered 200 basis points of improvement globally, which equates to roughly $25 million of incremental profit. On the scorecard, we've called out a further 75 basis points year-on-year reduction until FY '25. And this is underpinned by a range of initiatives across the network that will ensure we optimize durability of our platforms. Some examples can be seen on the slides, such as optimizing platform mix and new composite blocks, utilizing otherwise waste material from our sawmills in South Africa. In summary, the network productivity focus is currently underpinned by circa 300 individual initiatives and epitomizes the essence of the transformation program, taking learnings from prior rollouts, continually shaping and adding incremental value as well as introducing new technologies, as in the video example of the automated repair cell. There's also a derisk element to this portfolio as we become less reliant on resources outside of our control, whether that be raw materials, trucks or scarcity of people. Within our asset efficiency strategic theme, our goal is to reduce capital intensity across the business. And we have built an enterprise-wide ecosystem to facilitate this plan. At the core, this utilizes data and digital technology to systematically improve our asset efficiency and a suite of solutions that circle the core that like a toolbox for adoption in markets as applicable. Using combinations of such tools have proven hugely successful in some of our more challenging markets over the past few years. And with an even more sophisticated use of our data, we are confident on reducing our capital intensity and realizing the ambitious metrics we've included within the scorecard. You'll hear more tomorrow from our regional presidents of some of these in action and seeing how they will impact our business going forward. Within our business excellence program, we've taken steps to improve process, utilizing robotic process automation across our finance and HR functions. On top of the 125 processes already converted in finance, we will convert a further 100 across our plan period. The past 18 months has forced us to find new ways to collaborate in this virtual world that we live in. And our use of connect smart tools has made a healthy impact, not only to our T&E costs but also reducing travel time. We've invested in a new global CRM tool, enabling 3,000 users across 55 countries better insights into the customer experience. And by the end of FY '22, we will have fully enabled cloud services across our major platforms. Across our organization, we have and will continue to break down silos, and our spans and layers work has allowed greater empowerment and speed of execution. Our commitment to a safer workplace backed up by a rigorous plan to deliver a 25% improvement in our injury frequency rate. All these commitments are strengthening our business and enabling a stronger and healthier workplace deliver our plans. In summary, our twin-tracked approach to transformation drives increased performance and resilience in our current operations and also increases our ability to invest in the Brambles of the future. The transformation agenda underpins our 4 key strategic themes, and the strength and confidence of delivery is enhanced with executive ownership, extensive empowerment within the organization and rigorous cadence to assure we deliver. This provides a truly exciting opportunity for us in Brambles. And more importantly, our customers and shareholders to unlock and return unrivaled value. Thank you. I would now like to pass over to Raluca.

Thank you, Craig. Our next speaker is Helen Lane, our Digital and Data Officer. Helen joined Brambles in 2003. During her time at Brambles, she has held several leadership roles across finance, commercial logistics, asset productivity and retail. Helen was appointed Vice President of CHEP Northern Europe in December 2016, and since 2019 has led the digital strategy across the group. Helen is based in our Manchester office and will be joining us from London today. [Presentation]

Every pallet can tell a story. Brambles revolutionized the way products move in the 1950s, turning the supply chain into what it is today. We are preparing for the next revolution. The humble pallet will not simply hold space for its users. It's becoming an active participant in this new data-driven dynamic supply chain. But what does this mean? Which problems is this solving? What value is this bringing to us and to our customers? And how are we doing this? There is so much I would like to share. But in the 20 minutes we have, I will ensure that we cover what our ambitions are, why we are excited by this opportunity and how we plan to ensure we capture the value we know is out there. There are trillions of dollars of inefficiencies that could be eliminated by digitizing global supply chains. Brambles helps to move more goods to more people in more places than any other organization, giving us greater visibility into operations and supply chains than anyone else on the planet. We have already removed significant waste on supply chains and proven that we can bring thousands of other players together for a greater good. This combination means that we not only have the opportunity, but as global sustainability leaders, potentially even an obligation to do that again. We have built the means to turn our extensive visibility into data. Analytics on that data will give us insights to solve a number of significant challenges, challenges from product loss to lost sales for us and our customers. This will enable us to once again change the way the world moves goods using information to power smarter, more sustainable supply chains. Reassuringly, we are already on the path to deliver this vision. We recognized early the potential of digital and the need to disrupt ourselves even from a position of strength. We have made our physical assets smart. Through the establishment of the BXB Digital in 2016, we've designed and built our very own proprietary autonomous tracking device, which we call the [ Ultra ]. This created new-to-market capability to track where our pallets are at key moments in time. We can read those smart assets through our industry-leading software platform known as BRIX. Put simply, BRIX turns the massive amounts of data collected from the device pings and converts to information we can interpret and use such as locations, movements and dwell times. Having this set us apart. Finally, we have proven scalable value for a set of diagnostic tools that we use to identify and solve root causes of inefficiencies. The value we've generated from the investment in BXB Digital has not only more than paid for itself, but we now have proof points that give us confidence in our ambition and our further digital investment. We have proven this capability can improve ours and our customers' businesses, including our ability to improve asset productivity and our pricing strategy in markets such as North America. We have proven we can scale. For example, taking a 2018 field diagnostic proof of concept to 10 markets now where we're delivering significant asset productivity benefits. We have proven that using our existing data from the comfort of our own desks, we can find and fix root causes of waste. And we have proven that moving our technology hub closer to the business, we can build digital solutions faster, tightly focused on the business problems we're trying to solve. This has enabled a big shift from generating data to generating the insight that we can capture value from. We are clear, aligned and committed to delivering an organizational transformation that is better for Brambles, better for customers and ultimately, better for our planet. Our formula for success is that by creating efficiencies that are better for Brambles and our customers, we will create a supply chain that is better for the planet. To do this, we will need to invest in 2 key enablers which will put data at the heart of our business. Better for Brambles can be achieved near term by using data and analytics to improve the productivity of our assets, understand customers' true cost to serve to help enable value-based pricing, and to optimize our supply chain through better forecasting and planning. Better for customers is firstly about removing the need for our customers to think about pallets at all. We will use data to automate processes and predict challenges so we can get ahead and enable a frictionless customer experience. Where we do want our customers to think about Brambles is as a partner who can help them solve key problems and remove waste from their own supply chains. So our second step is to use the same data analytics capabilities we developed to deliver a better Brambles, to then shine the light on our customers' supply chains. This will allow us to provide insights and develop new products and services that address key industry problems for our customers of today and our consumer of tomorrow. We plan to repeat a proven unique model of our past, connecting customers and removing significant waste, setting new standards for supply chains. To do this, we've recommitted to digital, and we are investing in 2 key enablers: data culture and capability and smart assets. We are investing in data capability and culture to ensure that we can turn our data into insights and solve big shared problems for us and for our customers. And we are continuing to invest in smart assets to ensure we create an ever-richer source of unique data to reach the next horizon of opportunity. Digital and data will run through all of our transformation initiatives across the business and support the delivery of the financial outcomes and future commitments that you heard about from Nessa earlier today. I will now talk through the 2 areas of value in more detail, starting with our digital product portfolio to give a sense of the breadth of our digitally enabled products. Then I will share specific examples of how we're building and utilizing these products to deliver value. So here, you can see all the different areas we're working on across the breadth of the portfolio and the different stages of maturity of the digital products from being in discovery phase to being ready to scale. The intention here is not to go through them one by one, but just to give a sense of the balanced portfolio between better for Brambles and better for customers and the mix of different approaches we have to deliver value in these areas. I will now share some more detailed examples under the ambition of building a better Brambles, specifically in asset productivity. There are 3 things that our extensive and successful work in asset productivity has proven. One, we already have rich untapped. We've not always had the tools or expertise to read it in a systematic way. We can now find out a lot from behind the comfort of our own desks. This means we can be wise about where we send our resources, whether that's tracks or people. Two, we therefore only need sophisticated tracking devices for the darkest parts of our supply chain. But when we do shine the light on those areas, the data is fast, visible and undeniable, supercharging business decisions. And three, the capability we have built and proven here does not only apply to asset productivity, but can be used to improve other areas of our business, such as pricing and supply chain and keep these problems from our customers. You'll hear more about this in the regional presentations tomorrow, but I just want to share 2 examples of many. Firstly, an example from our Latin American market, where we have halved pallet losses in 18 months through a combination of insights on desktop data analytics, supplemented with targeted field diagnostics using around 1,000 digitized assets to fill any gaps in visibility. Essentially, we use a combination of the products on the left-hand side of the slide to deliver insights, and then enabled our teams to read and interpret the data to take action. This resulted in a significantly improved collection engine being established for small retail locations and improved communication with our customers, too, via chatbots to predict and plan when best to send vehicles. The Latin American market has now increased cash flow generation by approximately $70 million as a result of the actions driven by insights from data analytics and digital technology. Another example of where we've establish a new capability is in our Irish market. Here we deployed and tracked around 5,000 digitized assets in a notoriously dark area of our supply chain to solve a long-standing asset productivity challenge. This resulted in successfully recovering or receiving compensation for around 500,000 previously invisible pallet flows. Notably, this information has helped us to accelerate a change in model for the Irish market, where they've now implemented a whole new charging mechanism across their customer base, resulting in a 10% uplift in top line revenue. You'll hear more of this story tomorrow from David Cuenca. Looking forward, our priority is to scale what we've already created. For example, creating 2 products, detect and health that uses our existing data, will be scaled globally in combination with targeted field diagnostics that use digitized assets to augment our existing data only where we need it the most. In the near term, our efforts for asset productivity will primarily focus on our North American business, where we see one of the bigger opportunities. And you'll hear more of that from Laura Nador tomorrow. Importantly, over the next year, we will also see a significant shift from descriptive to predictive analytics, including 2 new products in the asset productivity suite named spots and predicts. These all incorporate machine learning and predictive analytics using our own data and new data, such as satellite imagery, to predict where assets may be at greater risk and then invoke action before losses even happen. So how are we building our success in asset productivity using the capabilities used to create a better Brambles that is also better for customers. As I mentioned, we don't want our customers to have to think about pallets at all. We want our interactions to be effortless. A lot of our customers' needs are predictable. We believe that the data analytics tools we are building can help to predict and automate customer interactions, saving time for our customers' people and our people. The examples you can see on the left will do just that. However, we do want customers to think about it in a new way, as a data partner to help them solve challenges in their own supply chains, just as we have proven we can do for ourselves. In providing this insight and service, we will create new revenue streams for our business. We are exploring how we can apply the same capabilities testing on ourselves to our customers, and we're starting to experience real pull. We are currently developing a supply chain diagnostics products with a consumer goods client, exploring how our unique smart asset and analytics capability can reduce their product shrinkage, and also how we can help a global OEM to optimize their inventory management. Looking forward, the opportunity we can look -- we can unlock through our unique data and insights is huge. DHL estimates $1.9 trillion of waste exists. This is the value we want to help our customers to address. So that was the what. But investing in the how matters for long term change. I will now share the portfolio of activity that sits beneath our 2 key enablers of data culture and capability and smart assets. Similar to our value product portfolio, we have an enabled product portfolio. And again, I don't intend to walk you through each of these now, but these are the products we will invest in to ensure we can generate the value we know is there. These products are essentially the capabilities that we need to build to ensure we can capitalize on the opportunity we see for Brambles. I will now share how these fit together to enable value capture. As I mentioned earlier, we've built a significant organizational muscle through our investments in BXB Digital to effectively digitize our assets and generate increased visibility of where they flow. In order to extract maximum value from the visibility we gained from smart assets, we need to strengthen our data analytics muscle. This diagram represents how we're scaling our data analytics capability using data from multiple sources, we think [ leaves ] our existing data sources, data from digitized assets and selected third-party data that we can combine, model and manage through the data life cycle. We then analyze using new environments and tooling to generate solutions. This is at the heart of our digital transformation strategy. I've made this sound simple, I hope. But for this plan to work, we need to invest in laying the right foundations in both how we build our smart asset, as you see here, but also and crucially, how we build the culture and capability needed to extract and grow the value. When we say data culture and capability, there are 3 initial areas of focus. These 3 areas are important because whilst we can have the richest data set, unless we have a systematic way to store or manage and distribute it, with people who are skilled enough to interpret it and then use it, we can still fail in our ambition. Firstly, building the right data infrastructure. Having ready access to our data is at the heart of our ability to deliver against our key value-driving priorities. Having customer-by-customer information at our fingertips allows us to understand and segment the most appropriate proposition and charging mechanism or to improve our supply chain visibility and build optimization tools. To do this, we need to build and maintain what we call a Brambles data hub, essentially a scalable easy-to-access data platform for the organization. This moves us away from multiple data hubs and sources of data scattered across the organization, which can be expensive, inefficient and difficult to maintain. The Brambles data hub is not only scalable, but live today in critical areas like asset productivity, and we are supporting use cases across our business quickly. Another key shift in our infrastructure is transitioning our services to cloud platforms. Through this, we will have a more cost-efficient, scalable services with performance optimization and security at the core. Moving to the second block. The common aspect from the delivery of any of our benefits is talent. We need experts in data and change who know how to reengineer processes, build analytics processes and importantly, work with the business and customers to capture value. We have consolidated our digital talent, including BXB Digital, into a center of excellence to work closer with the business. Finally, as a data interpretation happens at the front line, we are investing in organization-wide data literacy. Leading by example, we will train around 100 of the leaders in the company on data analytics by the end of the year, before then extending to other users across the organization. This literacy work will ensure that every one of our leaders and key users is equipped to spot and surface opportunities in our business, from data analytics, to understand how to use and work with use cases development, and critically, their role in driving value capture from the insights that we service. I will now talk to how we build our smart asset and the key principles we are working in order to maximize returns. When we talk about big data, we think about the 5 Vs: velocity, how fast the data is generated, collected and distributed; the volume of data; the variety of data that can be pulled together to create insight; and the veracity, how accurate the data. We are cracking the code to find the optimum data combination to a unlock the fifth V, value. And as you can see on left, we've made significant progress in various methods of data capture. The analogy I like to use is that there are several ways to illuminate the supply chain. And just like a skateboard, car and airplane, all take you from A to B, you choose different methods to different requirements. You don't need an airplane to travel to the local shops, just like we don't need a fully autonomous tracking device to solve a straightforward business challenge or for use cases where volume of data is more important than velocity. Let's take a closer look at some of the different methods we're using and combining. Our experience tells us that layering together different technologies and methodologies can optimize return. What this layering can mean is that we can take the unrivaled data we already have. And can then lay on top of that, higher volume of data by serializing our assets. This serial number is a unique asset identification code to help understand an individual assets' journey and its story. These low-cost, low technology solutions, such as QR codes, RFID or Bluetooth, can be deployed across a high proportion of our stock. The next layer is where the more sophisticated technology comes in. Technologies such as our autonomous [ Ultra ] devices, which I mentioned earlier. We may sometimes blend these with Bluetooth low-energy devices, too, in what we call a hub-and-spoke model to gain more coverage. We can deploy this technology in 1 of 2 ways. One, as a targeted diagnostic like the Irish example I gave, where we shine a light on portions of the supply chain where we already suspect we might have asset productivity problems. Or the other way, we can use this layer is as a continuous sample scan, always having all representative part of our network tracked, so we can be continuously spotting trends and getting ahead of problems. There are 2 very important things to note here. Ultimately, our investment in smart assets has been managed in an agile manner. We have proven this mix of tech and methods in smaller markets before taking the technology to one of our largest markets, with the ambition to scale beyond as we build confidence in the right balance to optimize the economics for this new wave of insight. And whilst striving with technology is important, what is most important is building our capability and reading, interpreting and acting on the data that it brings. I will now share a selection of the achievements in FY '21, how we are building on them to deliver further value at FY '22 and our plans to scale further in FY '23. It's worth noting again that we follow an agile approach to ensure disciplined capital allocation. We will reserve any significant investment only for products in areas where we have proven value delivery. So I won't go through this in detail, but I will highlight a few points. Firstly, everything here is part of our broader transformation. The numbers you have seen from Graham and Nessa, have fully costed in digital. Here's one of our major levers for change. The pace, in fact, of value increased in FY '21 and will continue to increase, and we are scaling based on successful results. For example, desktop analytics on our existing data will be live in 14 markets by FY '23. Targeted field diagnostics using digitized assets will be live in 30 markets by FY '23. In the U.K., we have already digitized of our pool with autonomous devices. And we'll continue to digitize up to 1% of the Canadian and U.K. pools this year. This will give perpetual real-time data feed and insights, which will be of rethinking pricing and asset productivity in these markets. We are now also building a number of customer solutions that will serve known problems for customers and reduce their effort. We are piloting this year, ready to scale in FY '23. In FY '22, we will also have started to digitize an entire open pallet pool, to confirm the optimum technology mix for full pool digitization. Lastly, our FY '23 plans may well adapt based on what we learned this year. Whilst we are committed and confident in the outcomes we will achieve, we were also confident that, the path to get there will inevitably change as we build on our learnings, course correct, and ultimately, follow the best routes of value for Brambles and our customers. I would like to leave you with a few key messages. Firstly, shaping our future a business transformation enabled by digital. Data now be at the heart of our organization, and we've built the proof points that will give us reason to believe. Secondly, it's not all about digitizing assets. That will help, but there's so much more we can do with the data we already have. The key is what you do with the insights to create business value, and to do that, we need to build our data analytics muscle. Thirdly, we are uniquely positioned to achieve this mission. Our scale gives us unique visibility into the vast amounts of waste that exists in global supply chains. And our model here at Brambles has always eliminated waste throughout the supply chain. We are excited to be pioneering the next phase of smarter, more sustainable supply chains. Thank you.

Yes, so I know there were a lot of -- still some questions on the line after Graham and Nessa's session. Just confirming, they will be available at the end Q&A. So if we could try and focus the questions to the presenters of the sessions over the next 2 sessions, that would be great.

Starting off with a question from the webcast for you, Craig. It's from Hugh Cameron at Equity Trustees. How much more is there to go in automation?

Great. Thanks. Good question. I'll refer to Slide 27 in the deck and also Slide 42, where 27 spells out the value of the investment. And with Slide 42, talking about a little bit of the program. As you know, we've heavily invested in automation over the past few years, both in terms of the U.S. and in Europe. And we will continue evolving that automation in those plants that haven't been automated as yet. In the video specifically, singles out the automation that is our primary focus over the next few years, but it's not the only one that we're doing, but will be the one that will deliver the biggest value to us as well. So the automation program is very healthy. We're continuing to see how this evolves with the firm plans that we have ahead of us.

Thank you, Craig, and we'll now go to the operator for the Q&A on the phone.

[Operator Instructions] Your next question comes from Scott Ryall from Rimor Equity Research.

This is a question for Helen, please. Helen, you mentioned -- I'll get you quite wrong, but you said you only need to send intelligent assets or digitized assets down the dark areas of your supply chain. How do you control where your assets go once they leave -- once you drop them off at a customer place? And the second part of my question is, have you identified -- all -- everything I've heard here is to do with asset efficiency and really good things like that, but have you identified any use cases where a customer is prepared to pay more for such a service, please?

Okay. Thanks, Scott. So 2 parts to the question there. So the first part, which is around smart assets and actually how do we direct them to where we might have challenges. So as I mentioned, there's 2 ways that we can really deploy our smart assets or the more sophisticated most layers of technology. The first is the diagnostics, and that is as you say, where we do know or suspect that we have challenges in our supply chain already. So what we can do is inject those through those channels or networks or areas of the supply chain, and therefore, have a look at what we think those challenges are and then spot the challenges as we go through. So that's where it's really targeted, and we target those into channels. But yes, you're right. After that, those pallets will go where they go, which is actually then part of what we call our continuous diagnostic, where we're continuously reading data from those pallets to see where they go afterwards. I know you can't control that element, but we're continuously taking learnings. The second part of your question was around the focus on customer solutions. So what we're focusing on at the moment is how we use digital technology to optimize our business and how we build those skills and capabilities to do it. But we do know that some of the capabilities that we are building to solve problems for ourselves can actually be identified for our customers' challenges where they have similar challenges in terms of control of their own product suite and supply chain. So we're starting to experience some pull from customers to help us shine a light on their supply chain, and we're working with a FMCG customer at the moment on supply chain diagnostics for them. So using the same tools, the same data analytics and using our BRIX capability, developed via the BXB D to help them with that. But we're early stages in terms of building those customer solutions, I'd say.

Your next question will come from Owen Birrell from RBC.

Just a quick question. Looking at the projected digital spend, including that guided component. Firstly, can I just ask, is there any additional spend beyond that to digitize assets that would effectively be in the pool in CapEx? Or is all the CapEx that you project to spend on digitization over that period of time captured in that table? That's the first question. The second one is really, what percentage of the pool needs to be digitized to unlock a lot of the opportunities that you're talking about? And that spend up to the end of '25, including that gain of CapEx, what percentage of the pool is that actually [ due to ]?

So first question, it's fully costed in, in the numbers that you saw from Nessa, so there's no additional spend on top of that from a CapEx point of view. And second question, in terms of percentage of the pool. That's a really crucial question. So we have hypotheses on what we think that will need to be. And by the end of FY '23, for example, in the U.K. pool, we'll have 0.3% of the pool digitized. And so we're working through what would be a statistically significant amount of the pool to be digitized in order to extract the value. So we want to work from the use case basis first. So what business problem are we solving? And therefore, how much data do you need to be enough to do that rather than starting off with how much of the pool should we digitize. So it is a crucial question. It's exactly what we're trying to figure out when we're working through these layering of technologies. And as I mentioned earlier, our hypothesis is that a base level of low-cost, high-volume data capture through stabilization, which is supplemented with smart assets, will be the best way to maximize that kind of total cost of ownership. But that's exactly what we're working through.

It sounds like that spend is very localized in very target market and target opportunities. Is there -- I mean you mentioned Canada and the U.K., and then you said 2 regions that the bulk of that spend is going to be directed to. Or is the spend more broadly spread across Europe and the U.S., for example?

So when we talk about the targeted diagnostics to help solve for asset productivity problems, so when we are instrumenting our pallets with devices to help us solve for that, that is a global solution. We were live across 20 countries in the last financial year. So you'll have seen on that map, on the asset productivity slide, just that, that is a global solution that we're rolling out everywhere to solve for those problems. When we think about how we're testing for smart pallets and exactly your question around what is the optimum percentage penetration in a pool, we are focusing in a small accelerated market over the next year, where we start to figure out actually how do we operationalize this from a technology point of view. And then moving to more mature markets, like the U.K. and Canada, where we know that we can get the value capture from the data that we generate. So in the -- by the end of FY '23, we'll have around 200,000 smart pallets running in the U.K. and Canada as 2 key markets that we think can be indicator markets for us across the globe.

Your next question comes from Paul Butler from Credit Suisse.

I've got a question for Craig. I was just wondering I -- is the data in the scorecard going to be published, so available for investors to see? And do you -- when -- how is that going to work? When can we expect that?

Yes. Thank you for that. Absolutely, the intention is for us to introduce the scorecard today, really is a level of our confidence about the delivery of the program. So we will be using the scorecard internally to report, but also on a periodic basis, to report to the markets on progress. It's not about wait until the end of the program. But really, as we go through the stages, we will be reporting on progress through there. And you can see in the scorecard that some of the metrics are due for maturity in FY '22, all the way through to FY '25. So it will be a really good indicator of how we're progressing.

Your next question comes from Sam Seow from Citi.

Just thinking about execution. I was interested in the color you provided on Slide 27 on the supply chain spend. Am I reading it right that you're saying over half the spend in 2025 is on technology that's already proven and should be lower execution risk?

Yes. So, Seow, I'll just jump in there. So if yes, if you look to Slide 27, that's why we sort of wanted to split up of the $400 million, to give you a sense that actually, 2 quarters of that, is from concepts that we've already proven that we're going to spread across to more sites and use in other places. And part of that is, as we've proven it and being able to understand more about the returns, we've identified more sites. And also highlighting, though, that we're not just reliant on what we did before. There's also a stream new innovation coming through, and that's why we split it into the 2 buckets so that you could see those pieces. And I think it's fair to characterize where it's proven and we understand it and have experience. That would be lower risk relative to the other newer technology. Although that has gone through a series of proof points already to give us some level of confidence.

Great. Great. And I guess then on the digital spend, is it an easy way to split the percentage of what you think is relatively proven and lower risk versus the spend that you think is more subject to gateways?

Yes. From a digital perspective, I'd say what is proven already is a lot of the technology. So some of the technology that we're thinking about, particularly the lower-cost technology, QR codes, RFID, Bluetooth, these are proven and established technologies, as is our own proprietary [ Ultra ] device. What we're testing is the utility really is actually how we derive business value from technology. And I think where we can have confidence is that in those proof of values, I mean I called out a couple of examples in LatAm and Ireland, where we can have confidence is in those proof of values. Where we'll be putting in those investment stage cases as we go further and further penetration on digitization. So we'll have those stage gates in place to make sure we are taking the learnings we expected to take, and we are proving the value that we expected to prove.

Your next question comes from the line of Jakob Cakarnis from Jarden Australia.

Just one for Helen quickly. The confidence to roll this out in the U.K. and Canada, what's made those markets particularly appealing? Obviously, there's a duplicate pool running in Canada, and you've got Brexit issues in the U.K. And then just on the asset control. Is it a little bit unusual that you guys are embarking on a digital investment when they're both seemingly very high loss rates in the U.S. in the second half of '21?

So first off, the question why U.K. and Canada. We look at various market attributes. So where can we get bang for bucks, so where have we got challenges we can solve for. But also the ease of implementation. So in the U.K., where we have the 1210 pallet, that's quite a discrete market for that pallet, so it doesn't flow in as many directions as some of our other pallet types. That was one the reasons for choosing that market, so that it's discrete nature, the fact we are in Ireland here as well. And Canada, again, because as you mentioned the 2 pools, we can select one of pools and make it easier to implement, easier to capture data. So that was 2 of the reasons that we chose those markets, but we also have some good mature customer relationships there. Your second question was on the U.S. asset productivity, and therefore, why are we investing in digital. Well, we've done a lot of work in the U.S. already, and you'll hear more from Laura Nador on this tomorrow. We've already been -- we've trialed -- the first asset diagnostic was actually in the U.S. business, as Nessa mentioned earlier, in 2018. We've been doing lots of desktop analytics to improve asset productivity there. And as I mentioned earlier, the majority of our focus in asset productivity in the next year from a digital and data analytics point of view, will be on supporting the U.S. business.

Might just add, Helen, that it is fair to say that because of what we're seeing in the U.S. -- so the U.S. has been particularly challenged with the lumber inflation and a whole load of change in dynamics. And as you noted, we had higher loss rates, which in every other market, we reduced loss rates. And so I think you're right to question what are we doing in that market. And Laura is going to talk about -- there are some initiatives that we're actually pioneering there that we're going to be rolling out in the U.S. that we think, we then will have use cases for other markets as well. So I think it would be quite interesting on that section when you listen to that. And definitely, there are sort of a range of shorter-term things that they're doing that are nondigital-related, which is relating to more pickups. It's changing in pricing, changing the pattern of pickups, et cetera. So it will be a combination of the 2, but there are some initiatives now that will be specifically pioneered in the U.S. in response to those outcomes.

[ To add to that ] Nessa, when we refer to Slide 43 around the asset efficiency ecosystem, you'll hear more from Laura as well as Paola tomorrow around the use of this. So it's not only about the digital, but the real use of data within our asset efficiency. So it's important that we recognize it's not only digital.

Next question from Anthony Moulder from Jefferies.

Just a quick question for Helen. I appreciate you've got to walk before you run. But if the ultimate goal is build the tracking technology and increase in penetration, and the way I think about that is, can you absolve customers from loss which would -- I would think, drive a lot of penetration in key markets. Is that the holy grail of where you get to for digital?

Holy grail. Thanks, Anthony. So I think the ultimate aim is to generate more data. So I know I talked to those 5 Vs, but that volume of data is important to us. But clearly, from an economic point of view, we have to find ways of layering that technology on top of each other to get the maximum total cost of ownership. So yes, the ultimate goal is to get as much data as we can to solve for the problems. But as I said earlier, it's not about getting to 100% penetration of our pool, it's about getting to the right level to give us the right outputs that can then drive the right actions in the business and obviously then to help improve the customer experience, which you'll hear about from Alasdair shortly, so we'll talk here about actually how we use data and digital to take away pain points for our customers and reduce some of that burden of doing business with us, and you'll hear more about that from Alasdair shortly.

We have one question on the webcast from Chad Andrew Slater for Helen. If some customers have higher prices to reflect the higher cost to serve with digitization, would we expect to reward customers with lower prices as a result of the insights?

Yes. I think we've proven that having greater visibility of our flows can enable us to have -- make better commercial decisions so we can have better conversations with customers. And we can also enable value-based pricing that allows that cost-to-serve pricing. So we have proven that already, and we have proven then that we can charge channels based on their activity, so we can start to see average dwell -- so accurate -- sorry, not average, accurate dwell times, cycle times and even damage rate as the pallets come back. So we can actually start to see the accurate customer cost to serve per channel and therefore, have a pricing strategy that reflects that cost to serve. And that needs to be a holistic pricing strategy. And again, you'll hear more about that from the regional presidents tomorrow about how they will be implementing those into their various markets.

Thank you, Helen. There don't appear to be any more questions on the phone. So we will take this opportunity to have a 5-minute break before going to our next session. So we will be back on at 20 past the hour. Thank you. [Break]

Welcome back, everyone. Our next speaker is Alasdair Hamblin, Senior Vice President of Strategy and Innovation. Alasdair joined Brambles in March 2018 and has recently taken the lead for customer experience transformation to improve customer value. Alasdair is based in our London office and joins us from here today. I will now hand over to Alasdair.

Thanks, Raluca. Good morning and good afternoon. With my strategy and innovation role, I've been closely involved in our drive to transform Brambles through shaping our future. And central to that is how we create more value for customers and more value for Brambles by transforming our customers' experience of working with us. That has been the core element from the start, and I've recently taken direct responsibility for leading this across Brambles. Let me start with a basic question. Why is transforming the customer experience so important? After all, Brambles has an unparalleled track record of creating value for our customers over many decades. Customers choose us because of the economic and sustainability benefits that we bring, and this has never been truer than during the turbulent events for the past 18 months. And yet, we know we can do more, much more. Customers tell us that we could be simpler to deal with, that we could enhance the quality of our products and services and that we could play an even stronger role as a partner across entire supply chains, and we're listening. We've set ourselves clear goals for transforming the customer experience, which you can see on the right-hand side of the page. First, making it easy for customers to choose and to stay with Brambles. That means making the whole experience simple and focus on value for our customers. Second, ensuring that Brambles is the natural partner of choice as customers grow their businesses and as they respond to changing market needs such as the rapid growth of e-commerce and automation. And third, unlocking new sources of collaboration, working together with existing customers and new partners to create digital and digitally enabled -- sustainable and digitally enabled supply chains. This will create new value for customers and open new growth opportunities for Brambles, and underpinning all of this is the fundamental belief that this is not a zero-sum game. By making the experience better for our customers, we create more value for them and more value for our shareholders. By strengthening our relationships with our customers, we strengthen Brambles position as the global leader in our industry. Now this all needs to start with a clear understanding of what customers experience when working with us. Over the past year, we've invested significant time and effort in mapping customers' journeys with us and understanding how we best support them in delivering their business goals. Let me start by giving you a direct sense of what we hear from them. First, what we hear about the day-to-day experience. You see here a selection of the views we get from customers around the world. We're pleased to hear positive feedback about the support that customers receive from our staff, and that is a great tribute to the dedication and the professionalism of our people, particularly over the last 1.5 years. At the bottom of the page, you'll see a flavor of the feedback we received about opportunities to improve. Managing the flows of pooled assets can involve a lot of work, and our customers want to make the process as simple as possible. Looking at requests from across our customer base, we see a number of common themes, which you see highlighted. Simpler processes for the management of pooled assets; no surprises about flows or balances; consistent quality, both of physical products and in the delivery of services; and swift resolution of any issues that do arise. We've used customer feedback and customer journey maps to identify opportunities to improve the day-to-day experience. And I'll talk to you in a moment about the projects we have underway. But first, let's also get a sense of what we hear about the wider role that we play in customer supply chains. Here's the feedback we recently had from 2 large food companies, and we're grateful for them for providing this feedback. You'll see the consistent theme here. The request for Brambles to help tackle productivity challenges across entire supply chains through increased visibility of what's happening and new ways of joint working between different parties. And it's striking to me that the opportunities seen by customers are in the same areas as we see them. On the left-hand side of the page, challenging us to increase supply chain visibility, to reduce administrative costs and to create new value. And on the right-hand side of the page, challenging us to use our position to drive action across multiple supply chain participants to improve end-to-end performance. In other words, there was a clear pull from our customers and retail partners for us to expand the scope of collaboration, and we are responding. We've set a clear ambition for our customer experience to guide our actions. At the top of the page, you'll see our North Star framed in terms of what this means for our customers, how our people deliver it and what we can do together. Brambles exists to support our customers with the services and the insights they need to grow their businesses. That's what we do. That's why we're here. Customers' experience of dealing with us day-to-day should be simple and effortless, which means equipping our people with the tools and capabilities to deliver this. And by collaborating with our customers, we unlock the potential of smarter and more sustainable supply chains. That North Star is supported by 3 pillars, responding directly to the themes from customer feedback and customer journey maps. First, effortless customer experience, making Brambles easy to choose, easy to do business with and easy to stay with. Managing hundreds of millions of pooled assets is a complex task, but that does not mean it has to be complicated for the end user. Ultimately, we don't want customers to have to think about pallets or containers, just about their need to move goods. Second, making Brambles the natural partner of choice for customers today and tomorrow. That means enhancing our product and service standards and working with customers to make their businesses more successful. As they think about creating extra value in their supply chains, we want Brambles to be the first people they speak to. And third, collaborating to create a sustainable and digitally enabled supply chains for the future. That means working with existing customers and with new partners. It means moving beyond physical products to deal in data and insights. And it opens up new spaces for all of us. We believe Brambles has an unrivaled position to reinvent the way goods move, but we won't do it alone. By improving our day-to-day interactions with our customers, we do more today and unlock opportunities for tomorrow. Now that's a great ambition, but how are we delivering it? The good news is we're already well underway. We have a comprehensive plan in place covering each of the 3 pillars just discussed. And also as you see at the bottom of the page, the enablers required to support this through enhanced customer systems and channels and enhanced customer insights. These actions are linked to our wider transformation program for Brambles, particularly to our initiatives around digital and sustainability. Let me give you a sense of the actions we have underway. As part of the effortless customer experience pillar, we're taking a systematic approach to improving how customers deal with us day-to-day. For example, we can make it much easier for customers to work with Brambles by simplifying the onboarding process. So their accounts are set up rapidly and accurately from the start. And by accepting credit cards so they can be up and running quickly with less paperwork. Once our customers are set up, we can simplify daily and weekly account management through tools like predictive ordering and enhanced logistics tracking. These reduce the time and the effort that customers need to spend monitoring asset flows and balances. We've already piloted these initiatives in FY '21 and are rolling them out more broadly this year. Looking further ahead, the digital tools that Helen described a few minutes ago would allow us to streamline interactions even further. With serialized and tracked assets, we expect to be able to automate many of today's processes, making interactions even simpler. Under the second pillar, partner of choice, we are undertaking detailed work to understand the requirements of evolving supply chains, especially as the level of automated goods handling increases and patterns of flow change in response to the growth of e-commerce. We're already implementing multiyear plans to enhance the quality of our physical platforms in major markets, and we'll refine that further based on additional insights in the coming months. As the industry leader, we will set the standard for the industry in terms of product and service quality. The third pillar is tied to our strategic ambition, to create smart and sustainable supply chains. We're doing that in collaboration with our customers and new partners to create new sources of value for customers, for Brambles and for wider society. Under our Zero Waste World program, we've been collaborating with customers in recent years to remove waste and transport miles from their supply chains. Now we're going further to move from 0 impact to net positive impact, making supply chains regenerative. JJ will talk more about this in a few minutes. And Helen has already described some of the ways we can use our enhanced digital and data tools to create new ways of working with customers. That will include new solutions and service models, opening the door to new customer segments beyond our traditional base. Just as important are the enablers that underpin this, which you can see in the lower half of the page. We're investing to upgrade our customer systems and channels. We've already implemented a new CRM system and overhauled the way we manage our online content. That allows us to deal with customers better and more consistently around the world as well as being more efficient for our commercial teams. During FY '22, we will deliver a series of improvements to the myCHEP platform that customers use to manage their accounts. We're also enhancing our customer data and insights. During the course of FY '21, we doubled the number of respondents in our customer feedback surveys and embedded the results in management incentives. By creating detailed maps of customer journeys, we have focused our actions on the points that will create the greatest improvement. This has guided us on what to do first. In FY '22, we're investing further in tools and data to quantify the impact of improvements in customer experience. We want to be able to measure how it drives value for customers and for Brambles. And by doing that, we can make the value equation very tangible. We can make clear decisions about where and how to focus based on hard numbers. Looking further ahead, we want to make that forward-looking so we can predict how different actions will translate to value and target investments accordingly. Now if you put that all together, we have a comprehensive ambition and program of actions grounded in customer insights. We are rethinking our entire service model through the lens of customer experience. So what should customers expect to see differently as a result? The answer will vary according to different roles and personas and customer organizations. Customers managing day-to-day interactions with Brambles will see streamlined processes and tools. We will use automation and prediction to remove repetitive tasks and to identify any issues early so they can be resolved. They can expect less manual activity and more time to focus on business outcomes. Customers with executive responsibility for leading operations and supply chains will see enhanced product and service delivery and increased collaboration between their teams and ours. They can expect Brambles to play an even more active role as a partner across manufacturers and retailers to improve the overall performance of their supply chains. And beyond these groups, Brambles has more to offer in areas where we've historically had less interaction. We will help our customers respond to rising expectations for sustainability, working with them to build regenerative supply chains and assuring their sustainability credentials and practice. We will build industry-leading digital and data capabilities and can work directly with customers' own digital teams. And we have an unparalleled set of information about the movement of goods around supply chains. That can provide data for many users. For example, to customer's product management and category management teams. Across these different groups, customers can expect to see a step-change in their experience of working with us, both in terms of daily interactions and strategic partnerships. Now that's the external angle. This also requires shifts to the way we work internally. We know that our people are passionate about delivering value to customers. Our mission is to give them the tools and the capabilities to do that even better. I'd like to highlight 3 aspects of that. First, quantifying the value of the customer experience. Brambles is a very data-driven organization. We make decisions based on facts. By quantifying the value of customer experience to customers and to Brambles, we will ensure that we have hard numbers to drive choices on where to allocate resources. Second, putting customer insights at the heart of decisions. We have customer metrics embedded in our objectives and scorecards, and we're investing to enhance the breadth and depth of customer insights. We want Brambles to be a leader among B2B companies in the way we develop and use those insights. Third, and perhaps the most importantly, empowering and inspiring our people to deliver an enhanced service to our customers. That means equipping them to take decisions and to resolve issues swiftly if they do arise. It also means letting them know how their actions benefit customers. We can use customer insight technologies to give our people line of sight to how their actions translate to value for customers. We know from our employee surveys how important and inspiring that is for them. So this is an internal shift enabled by tools and processes, but it's also a cultural evolution to take a customer perspective on everything that we do. Now I've talked a lot about value, value for customers and value for Brambles. But how will we create value? And how will we measure it? Better value for customers is driven by enabling them to run their businesses more efficiently and sustainably. It means less time managing their day-to-day interactions with us and more focused on driving the economic and sustainability performance of their supply chains. Better value for Brambles is about underpinning continued profitable growth, increasing our competitive differentiation, reducing our cost to serve and making Brambles an even attractive place to work for people who are passionate about helping customers and doing good for the planet. To track our progress, we're looking at performance from a number of different angles with both input and output indicators. These are shown on the right-hand side of the page and are embedded in the strategic scorecard that Graham and Craig have already introduced. Customer experience has often been measured narrowly in terms of what customers say through mechanisms such as NPS or customer satisfaction surveys. These are important, and we will continue to use them. We've set ourselves goals to expand our NPS survey and improve our scores every year. But to balance that, we will also track what customers do on the basis of actions speak louder than words. We will look at our net volume growth with existing and new customers to see if the value we create is reflected in customers' decisions. And we've set ourselves targets to increase the use of electronic service channels, which will allow us to deliver the effortless customer experience. We will continue to measure the quality of how we deliver through metrics of product and service quality. We've set ourselves a clear target to improve quality as measured by defects per million. And as a forward-looking measure of how we are partnering to reinvent supply chains, we are tracking the number and scope of collaborations with customers on sustainability. Together, these metrics balance perceptions and hard facts across leading and lagging indicators, all to create a relentless focus on what drives value for customers and for Brambles. We will be tracking and reporting progress regularly as part of the overall strategic scorecard. So to conclude, transforming the customer experience is a critical part of creating the future Brambles. We've set clear goals for the transformation, which create value for customers and for Brambles; an effortless customer experience to reduce costs and effort for both of us; being the partner of choice to improve end-to-end supply chain performance for both of us; and collaborating to create sustainable future supply chains for all of us. This will reinforce Brambles' position as the global leader in pooled supply chain solutions and insights. Stronger customer relationships drive better business performance today and unlock more opportunities for growth tomorrow. This further increases our differentiation against competitors, and this is all founded on the principle that a better customer experience is better for customers and better for Brambles. I will now hand back to Raluca.

Thanks, Alasdair. Our final presentation today is from JJ Freijo, Vice President and Head of Sustainability. JJ joined Brambles in 2005 before being appointed as Head of Sustainability in 2015. Starting in the Planning Department, he has been involved in Brambles' sustainability agenda since 2010. He is responsible for the definition and implementation of our global sustainability strategy. JJ is based in our Madrid office and joining us from there today. I will now hand over to JJ.

Thank you, Raluca, and hello, everyone. My name is JJ Freijo, and I have the privilege to be the Head of Sustainability at Brambles, one of the most sustainable companies in the world. In these sessions, you will hear about sustainability in most of the presentations, but we thought it was important to have a dedicated time to know more about our sustainability program. Today, we would like to share with you 3 important messages. First, Brambles is a recognized world-class leader in sustainability, and we will learn why. Second, we are using this leading position to create actual tangible value for our business. And third, we have a plan to still be leaders for years to come. But before we go into that, let me give you some context. Sustainability has never been more important. We have seen how it has gone from being a nice to have to a critical item in everyone's agenda. Citizens, consumers, [Technical Difficulty] financial markets and, of course, businesses. United Nations has called these the decade of action for the sustainable development goals. We only have 10 years to achieve them. COVID-19 has accelerated the importance of sustainability, and we see that the recovery plans around the globe are linked with sustainability actions. We also see that climate change and decarbonization are the center of many political plans, and they will be the driving forces that will transform the industry. More and more companies, including our customers are adopting very ambitious sustainability targets. This is a challenge for all companies, but it's also a unique opportunity for those that will have a leading role in our sustainability future. Brambles is one of those companies. For us, sustainability is not a world of risk, it is a world of opportunity. So let's start with the first message: we are leaders in sustainability. This is not our personal opinion. It will be too biased. It is the message that we are receiving from the most reputable external organizations who continually rated us in their top positions. Some examples. Barron's, The Wall Street Journal Magazine, recently named us the second most sustainable company globally, what a privilege. MSCI, an important index for investors, has rated us with a AAA rating for many years. Last year, we entered the Corporate Knights' list for the most sustainable companies in the world as #18. These are just a few of our recognitions, and we have many more. But why is that? The fundamental reason is our circular business model. Also, that we have a program to make this sustainable business model even more sustainable, and we have always delivered in our commitments. We recently achieved our 2020 target as it was published last year. So let's look at our business model in more detail. At Brambles, we operate a pure circular business model. Our pallets, crates and containers move across the supply chain, and we make sure that they are reused over and over and over again. We are one of the few companies that operates a circular business model successfully and globally. And every single time one of our platforms is reused, we are reducing carbon, reducing waste and the need for natural resources. And remember, this is important. Reuse is very high in the environmental hierarchy. It's better than recycling. This is critical to remember. Reuse is better than recycling. And because of this, we can help our customers. You can see on the screen the significant environmental impacts that we create in our customers' supply chain every year. It's also important to remember that our circular business model is material agnostic. Of course, we want sustainable materials for our platforms, and we have very clear targets there. But the main driver for our environmental advantages is the reutilization. I frequently get this question, what is more sustainable, timber or plastic? And my answer is always reuse. But also, the beauty of our business model is that financial and environmental incentives are not incomplete. Things like recovering more pallets, shorter transportation distances, pallet durability and many others that you will see during the presentations these days are good, both for the P&L and for the environment, because, ultimately, they mean more circularity. This is who we are as a company, not only a sustainable company but also a leader in sustainability, which is great. But what we are doing with all this? How are we creating business value for all our stakeholders through sustainability? Let's start with customers. Most of our customers have their own sustainability targets, very ambitious targets, and they are seeking help from their suppliers. For them, sustainability has become a decision-making factor when choosing a supplier. Different customers have different needs, and we have developed a value proposition that fits all of them. This is our sustainability customer value proposition. Let's start by looking at the bottom here, talking about risk mitigations. Some customers just don't want to introduce risk in their supply chain. That's all they want. And our credential and achievements ensure that. For example, timber. All our timber that they use in their supply chains come from certified sustainable sources, 100%. They will never get into trouble because of the material, something that competitor systems cannot always offer. But that is the minimum a supplier should do, not to introduce risk in your customer supply chain. We can do more. We can also provide out-of-the-box automatic environmental benefits. When you work with Brambles, our circular business model produces environmental benefits that our customers can use for their own sustainability targets, CO2, waste and natural resources reductions. We held them with their public commitments. And finally, the third step in the value proposition, the sky's the limit, innovation and collaboration. Because of our strong position in the whole supply chain, we can sit together and innovate, unlocking efficiency in their operations. We have created a program that is called Zero Waste World to foster this collaboration. This is our value proposition in theory, but let me give you some examples of how this customer value proposition works in action. Sustainability has been critical to win and renew the largest contracts we had in the last years. As one of our largest customers said, sustainability was top of the agenda in the negotiations and a key differentiator for choosing CHEP. And as one of our commercial leaders always says, sustainability is no longer the cherry on the cake. It is 1/3 of the cake. You can see here a certificate delivered to an important retailer. [Technical Difficulty] certificates demonstrate environmental savings in their supply chains so they can use it for their own targets. The numbers in the certificate come from a scientific peer-reviewed life cycle analysis. Another example, collaboration. Using the power of our network and our digital capabilities, we can optimize transport routes and avoid wasteful and useless empty miles. Today, more than 30% of the miles that are driven in the world are driven empty. So imagine the impact that we can have. And finally, working together with our customers, with thought leaders, we can sit and create the supply chain of the future. These are just 3 examples on how we are creating commercial value. I'm not surprised, we have many more. In the last year, we have delivered hundreds of certificates and collaborated with over 290 customers to improve their supply chains. And our customers appreciate it and actually use it for their sustainability plans and for their own credentials. The examples that you see on the screen are just a sample of our sustainability collaboration as shown in the media. But the most exciting thing here is there are messages from our customers. Now CHEP. Talking about CHEP. It's our customers acknowledging what we are doing for them. Brambles has become a sustainability credential for the industry. But this is not all. We are creating value for other stakeholders, too. Let's talk about employees, governments and investors. Let's start with employees. Sustainability is helping to attract and retain talent, not only at junior level. People wants to work for a company with a purpose, and we offer the opportunity to develop a professional career and do the right thing. Our [ agent ] teams know this very well. And when putting together the employee value proposition for digital or supply chain or for our commercial teams, sustainability is the common denominator for all of them. And once they join the company, our employees proudly said that they work for one of the most sustainable companies in the world to their family, to their friends, to their colleagues and on their public profiles, as you can see there. We are also working with governments to build legislation that will facilitate the implementation of circular models. As leaders in the circular economy, we have the experience. We can advise some fundamental issues such as asset recovery or legal title recognition. And our voice is heard and has been reflected in the legislation. And for investors, we believe we provide you with the opportunity to invest in a company which is aligned with your stakeholder values [Technical Difficulty] financials and also securing a positive environmental and social impact. So we are leaders in sustainability, and we are using it to create business value. What about the future? The world is moving fast, and we need to be ready for the challenge. Last year, we successfully completed our 2020 target. And rather than being complacent, we decided that we needed a different level of ambition, a higher level of inspiration. Today, our vision is to pioneer our regenerative supply chain. But what does this mean? Aiming for 0, reducing the negative impact is no longer enough. We want to have a net positive impact on businesses, societies and the whole planet. Until now, supply chains have worked consuming natural resources and producing waste. We want to reverse this and create a supply chain that operates by consuming existing ways and producing natural resources. Exciting, isn't it? With this idea in mind, with regeneration as our North Star, and after having a dialogue with more than 100 internal and external stakeholders, we built a series of tangible targets for 2025. Let's have a look at them. I encourage you to go to our recently published sustainability review and explore the targets. Let me share some examples now. Last year, we reached 0 deforestation through our timber certification program. Now we want to go beyond that and not only regrow every tree that is used. We will grow an extra tree, capturing carbon, increasing timber availability and the forest mass in the planet as well. Next is regeneration. After achieving zero waste landfill in our service centers, we want to take care of other existing waste, using it as input material and creating closed loop products. For carbon emissions, we committed to a 1.5 degrees future, the highest level of ambition in the Paris agreement. By 2025, we also aim to have at least 40% of management roles held by women and doubling the female employees in our planned roles. As the leaders in the circular economy, we will go beyond our 4 walls and inspire 1 million people to become change-makers in the circular economy. Regeneration. It is an inspiring but challenging idea. But our program is not just about inspiration. It is about reelection. We are proud to announce that 1 year after we launched it, we already have tangible progress and outcomes. This is a great example. We recently launched our first upcycle platform made up of existing plastic waste, the Q+, transforming post-consumer plastic waste into a durable, reusable platform. It is fully recyclable at the end of its life, and we also made it certified carbon-neutral by investing in afforestation carbon-neutral capturing projects. It is a perfect example of a closed-loop product with the highest environmental credentials. We also have achieved carbon neutrality for our own operations, Scope 1 and Scope 2, after years of hard work, reducing our own emissions and offsetting the remaining ones with carbon sequestration projects. This is a great achievement, and we are very proud of it. But we know that the real challenge is in the supply chain emissions, and we are committed to reduce them according to the 1.5 degrees science-based target. And more achievements on year 1. We started afforestation projects in more than 10 countries. We have defined how to measure circularity, working together with the 2 leading organizations in the area, the Ellen MacArthur Foundation and the World Business Council for Sustainable Development. We are taking care of our people, and we were awarded as a top employer in 17 countries and across 4 regions. And this is just the beginning. Welcome to the regenerative revolution. Sustainability is naturally integrated in our business, and you will hear more about it in the rest of the presentations. It is part of who we are. Today, I wanted to share with you our vision and our passion and assure you that in Brambles you will find a recognized world leader in sustainability; a company able to help a whole industry with their sustainability programs; a regenerative vision that is ambitious, inspiring, but also achievable; tangible outcomes year-on-year. Ultimately, we are a company prepared to thrive in the transition to a low-carbon economy while creating value for all our stakeholders and building the sustainable supply chain the world needs. Thanks. And with that, I will now hand over to the operator for Q&A.

[Operator Instructions] Your next question comes from Scott Ryall from Rimor Equity Research.

I just got 1 for JJ. More than 90% of your emissions come from Scope 3, which I think you've put in your most recent report. So can you just detail a little bit more about what you're doing to drive Scope 3 emissions down, please?

Sure. Of course, thanks for the question. Yes, we completed recently the reductions for the Scope -- well, we continued reducing our Scope 1 and 2 emissions. And recently, we completed the gap offsetting the rest. So we are now carbon-neutral company for our own operations. The real challenge, as I said, is in the Scope 3, and that's why the question is very good. Every company today is having big problems for that because the majority of the emissions happen in our supply chain. In our case, the 2 main drivers for emissions are subcontracted service centers and subcontracted transportation. For subcontracted service centers, we have a plan to replicate and propagate the best practices that we have been using in our service centers for years that were very successful, reducing our own emissions. Then for transportation, we have already started with some of the things that you have seen in other presentations today; transport collaboration, reducing transportation routes, transport efficiency. Many of the things that you will see in shaping our future and that you see in the scorecard in the column are planned or are built to reduce our transportation distances. All that reduces CO2 emission as well. But that will not be enough. The reality, and we have to be honest, is that today, we don't have a plan. We don't have all the solutions to achieve the 1.5 degrees targets from the Paris Agreement. We don't have the solutions, and the industry doesn't have the solution. So we expect that everyone is going to work together in the future to find new technologies, to develop new collaboration initiatives, et cetera, to do that. So the thing is that we have started already reducing the transport emissions, but we still need to work together, as I said, with governments, with customers and with transport providers to continue looking for solutions to achieve this 1.5 degrees target that is extremely challenging for our industry.

Your next question comes from Anthony Moulder from Jefferies.

JJ, if I can start with you. Obviously, the reuse model is common across some of your competitors. I'm just interested as to how you think Brambles compares to some of the competitors on what they're doing in sustainability. And a follow-up to that is whether or not you're at the point now that you're starting to see customers switching provider based on the differential in sustainability outcomes.

Okay. So Brambles is leading the way in sustainability. I think we need to recognize that because that is the feedback that we are having from external institutions and from customers as well. And so we are leading the way. And now our competitors are starting to talk and starting to have targets like the ones we had 5 years ago when we were starting leveraging circular economy credentials, when we were starting talking about sustainable materials. As a leading company and as a leader in sustainability, that's why we chose to go now for something much more ambitious and regenerative in supply chain. That frankly puts us miles away from many of our competitors in terms of ambition, but also in terms of outcomes. And also, our -- the customers that are on -- that are more ambitious, also they are going in this direction of regeneration. So guess what, when they want to push forward their programs, they talk with us because we have a similar level of ambition and a similar track record of delivering there. So I think that -- but this is all right. This will continue. I'm sure in 3 or 4 years, our competitors will have caught up, and then we will need to have even more ambitious targets for the future. So for -- you have to say that this never stops because we are in a continuous improvement of the sustainability credentials of the whole industry. And the second part of your question, I didn't quite get it because the sound was not very good. Sorry about that.

It goes to whether or not customers are actually switching given a higher focus on sustainability, whether or not you've seen customers move for that as an outcome.

Yes. Customers are [indiscernible] and this is a revolution. This is changing by the day. In the past, it was only the big customers with global presence and huge sustainability programs that actually were focusing strongly on sustainability. Now I will say that, that has accelerated, and we offer them the opportunity to help. I will say that each one of our big accounts have supply chain objectives, therefore, they need to count on their suppliers to achieve them. They desperately need the needs of their suppliers to achieve. That is for the big customers, and that is happening today. The meaning of the small customers, also they want to be part of this game. They want to be sustainable companies, and sometimes they don't have the resources. They don't have the programs, or they don't have the experience. And this is where we, as an experienced company, can give them something to start, experts in circular economy, reusable [indiscernible]. We make them part of the circular economy. So we see that the commercial value is increasing by the day, and the interactions that our commercial teams having with customers on sustainability, again, this is increasing continuously. And we, as the sustainability team within the company, are training and giving our commercial teams the tools to have the right dialogue or to have the right credentials or to have the right conversations with the customers to help them with their targets.

Your next question comes from Owen Birrell from RBC.

I've got questions for both Alasdair and JJ. Let me start with the questions for Alasdair. I was just wondering, it looks like there's a lot of change in that customer platform that's occurring in a very short period of time. Can you give us a sense of what percentage of that short-term transformation OpEx of around about $70 million over the next 2 years is going into this customer transformation platform? And you said that it will give you a major competitive advantage against your rivals. And I'm just wondering where does -- where do you see BXB currently or Brambles currently sitting relative to its competitors today?

Thanks, Owen. I'd say in terms of the mix, the customer experience transformation is twin track very much like the whole transformation. So there's a lot of things that we're already doing, and I talked about some of the things we've already piloted, and we're rolling out more broadly in FY '22 and then the things that we'll do more in the future. So there's a mix of things there. The direct expense of what we're doing in CX is not that great. What it will do is it will direct our investments in things like quality and investments in product and service quality for the future. So that's -- in terms of the mix of things, it's a real portfolio, which is I think what I sort of laid out on the page. And in terms of differentiation, if you look at our NPS scores, for example, they're good. The feedback we get is -- it's good. And for most customers, I think we're seen as higher quality in our competitors, but we've seen the advantage and ability to go even further here and say that if we can do some of the things we've talked about such as predictive ordering, proactive account health, that actually differentiates us by getting to a point where our customers see us sort of level of service from us that they just simply won't get from the competition.

Yes. I guess what I'm asking is, is anybody -- any of your rivals currently doing that throughout Europe or North America?

I mean you have to talk to our rivals about what they're doing specifically, but I think what -- the feedback we get from the customers who've been involved in the pilots, for example, is this is incredibly helpful to them. And they want to see more of it, and we will be well ahead of our competition if we do these things.

That's excellent. And just a question for JJ. Really, that regenerative example, the Wheeled Q+, I think, is really a good example of, I guess, how you can take -- put these products into -- in more of a circular economy. Look, I'm just wondering if you can give me a sense on how far advanced are you in creating a recycled and recyclable plastic pallet. And how far away are we from something like that actually being commercial?

Well, the example that you saw is a real one. It's a quarter pallet -- wheeled quarter pallet that is a real one. That is a product that is already there. So could we do something similar for all our plastic products? The reality as of today, no, but we are working on that. But I want to make that very clear that what I showed, that is not just an idea, it's something that is already available. And now we have challenges to build a full pallet made of plastic -- of recycled plastic and like availability of material, the fire regulations in some regions. But the most important thing is the durability. I think if we build a plastic pallet that is made of recycled or upcycled plastic without the durability, therefore, the number of uses is reduced, that's not a good thing from the environmental perspective. The main thing where all the -- where the most environmental advantages in our business come is from the reuse model. So we need to find a material that is available, that is -- that has the right quality, that is complying with the fire regulations, but also that it doesn't impact the durability of the product. And that is the challenge that we have. I can tell you we are working on that. And I can tell you the whole chemical industry is working on that because we are not the only ones who want durable reuse -- upcyclable plastic.

Your next question comes from Matt Ryan from Barrenjoey.

Hi, JJ. I was just going to ask about, I guess, the construction of a plastic pallet and the use of resin, and just the imports going into a plastic pallet and how you're viewing that from a sustainability perspective?

Yes. I think I just -- I can recap what I said in the previous question because, basically, I think the question is the same. I mean we are going for upcycled or recycled plastic input material in the plastic pallet or plastic products, and that is 30% in 2025 and 100% in 2030. But we will do that as long as it does not compromise the durability, the number of reuses of the pallet. Is that answering your question because I think it's quite similar to the previous one, if I understand it well.

Yes. I guess I just wanted to be clear that as we sit here today, are you sort of viewing plastic as an inferior products from a sustainability perspective? From, I guess, the technology and the know-how that we've got right now?

No. Again, when you compare nonreusable solutions versus reusable solutions, obviously, you have the impacts of the nonreusable solutions and the reusable solutions is much lower. Once it is reusable, the difference in material plastic versus timber -- versus timber are quite small. And this is something that we study through our scientific life cycle analysis. So in short, I mean, I guess you're working -- you're thinking about the sustainability credentials of the full-size plastic pallet that we are testing. If we make the pallet work because the pallet we'll be reusing at times because it will be durable, it won't be lost, then the sustainability credentials automatically will be better because this is the beauty of our business model, the circular business model. Business and sustainability go together. A pallet made up of durable plastic that is not lost will have better sustainability credentials that the current pallets inflows where they have more loss.

Okay. And are you, in your conversations with customers, finding that either retailers or your customers have actually got a preference on sustainability grounds, plastic or wood?

For the customers that are more advanced, they understand -- they are more advanced in circular economy that power comes from the reuse. And we give them numbers and we give them science behind it to back this up. And for the others, we need -- frankly, we need to have a conversation on circular economy and educate them. Because it is not about the material. So again, for the educated ones, not many differences. And for the -- for some others, we need to have both [indiscernible] and exercise. I can tell you that more and more customers have objectives on recycled or upcycled products, and this is why our intention is to go for input plastic material that is upcycle or recycle. That is what we have as an objective. But the most advanced ones, as I said, they understand the power is in reuse.

Your next question comes from Jakob Cakarnis from Jarden Australia.

I just had 2 quickly, one for Alasdair. Just with the predictive ordering, how useful would that be at the moment? I mean there's been large disruption to most of the customer supply chains. I think you guys have noted many times that you're going from just-in-time inventory to just-in-case? And what's the business case for predictive ordering moving forward? And has there been expressed customer demand for that?

Well, clearly, you're right that in a period of high volatility, it's harder to draw conclusions from past behavior. But I guess as we return to slightly more predictable circumstances, it becomes more useful. Fundamentally, what predictive ordering is doing is looking at patterns of what customers have done in the past in order to be able to say to them, we think this is what you need, and then they can amend or confirm as required. So it takes a lot of the manual work away from them in doing that. And the feedback so far has been incredibly positive. So we piloted that last financial year, and we're rolling it out more broadly this year. And they like it because it takes the burden off them. We're effectively saying, we think this is what you need and either confirm or adjust it. And then it learns as we get more data from them. So I think it will just get better and better as we get more data flowing into it.

And just a follow-up, which market did you pilot that in, please, Alasdair?

It was piloted in the European markets. I think David may talk a little bit about more about this tomorrow, actually.

And then just one for JJ. Just interested in the modern slavery element of the sustainability, particularly for contractors and labor hire. Is there good visibility that you guys have on your modern slavery requirements? And how is the audit system designed to capture any flaws in that system?

With -- I mean, I encourage you to go to the sustainability report this year when we have a full description of what we are doing in modern slavery. Basically, we are strengthening our due diligence program with third-party labels out its internally and contractual arrangement with the new suppliers, code of conduct, delivering code of conduct and also a stickup policy that is in our service centers, but also in our third-party service centers. The way we take a risk-based approach, analyzing our network, every service center, of course, every service -- brand of service center is included here. And then for the subcontractor network with this risk-based approach based on geography, et cetera, to start developing the program, and this is something that we started in the last couple of years with more express this year -- with more focus this year.

And was the new supplier that you just mentioned then implemented after there was issues found with existing suppliers? Or is that more rigor that you're introducing to the business model on a proactive basis?

Sorry, can you repeat the question? Sound was not very good.

Yes, sure. You mentioned that there was a new supplier. So you were strengthening third-party labor and you mentioned a new supplier and new contract designs. I'm just wondering what your comment related to in regards to the new supplier, whether that was a reaction to issues that you discovered with modern slavery or whether that was a proactive approach to improve it moving forward?

It is a proactive approach, and this is a program that has been developed for the -- we are increasing and expanding it year-on-year, so this is something that we are doing on a proactive basis with our due diligence process. This is a continuation of what we are doing.

Thank you. I will now hand back to Raluca.

Thank you all. We have no more questions for JJ and Alasdair. So what we will do now is open the floor up to all of our presenters today, including Graham and Nessa, to give everybody on the phone a chance to log their question. I will start with a question from the webcast to Graham. Can you share how we balance CapEx discipline and service levels in an environment of increased demand for consumer goods and pallets?

Yes. So I think one of the things we're always trying to do is to ensure that we are getting the right balance between spending CapEx and taking a medium- to longer-term view about demand because we don't want to go back to where we've been in the past, where we bought loads of pallets based on the short-term peak in demand, and then found we've had pallets lying around and had to store them. And clearly, the question is presumably referring a little bit to what's been going on in the U.S. recently. Laura is going to talk about that a lot more tomorrow. But what I would say is that we've been in a situation which is industry-wide, so it's not just a Brambles' issue in the U.S. There are no pallets to buy. So if we'd been able to buy more pallets to sort the problem out, we would have done so. And you can see that from our numbers for fiscal '21. We had lots of cash, but we weren't able to buy more pallets. But how we've managed to minimize and mitigate the impact on our service levels has been to work in a very granular level with our customers. And so we're running the business almost on a day-by-day, week-by-week basis, getting them to really tell us what they absolutely need to maintain their service levels and their supply. And that has worked pretty well. I mean, these things are never perfect, but we've been able to get to a situation where our customers are still able to run their businesses. And in some instances, as I think necessarily earlier on, we've been able to persuade them to say here's more terms of platform like whitewood, which might be able to help you in the short term. But by and large, that's what we're trying to do is make sure we are keeping our customers running. And yet, it's at very uncomfortable levels of inventory sometimes, but that's what we've been able to do. And I think our depth and our width of network has allowed us to manage that sort of volatility better than anyone else in the industry.

Great. Thank you, Graham. We will now go to the phones. The next question is from Scott Ryall at Rimor Equity Research.

I just have a couple that were sort of first session for Graham and Nessa. Graham and Nessa, this is to both of you. There was a question in the first session around how long your -- you envisage being remaining in your position, current position. I guess if I look at the chart on Page 21, Slide 21, where you expect to step up in '23 and then another step up in '24 and '25 in terms of underlying profit growth, and then on '22, you've got the indicative investments based on delivery of successful outcomes in '22 and '23. That tells me delivery at least for '22 and '23, it's very important to have both of you on Board. I take the caveats about with the Board being willing and your health obviously is one thing. But as we stand at the moment, do you envisage that both of you will deliver both of those full year results, please?

I'll speak for myself and let Nessa speak for herself. I am confident that this team, it's not just about me and Nessa, will deliver the results. That is what we are trying to get across in this session and hopefully tomorrow as well. We, as a leadership team, are very confident. Yes, clearly, I think Nessa and I would both like to be around to see that delivery, but it's not dependent on us being here. It's about the team delivering. It's about the process we've got where the individual initiatives and the targets and the milestones are broken down into a very granular level so that the team and the organization could be trusted to deliver the outcome. So I think that is, Scott, that has to be the right answer for a company like ours. Yes, it's great. And Nessa and I are both very committed to this as well. But yes, it's not reliant on us necessary.

Yes, I agree. I agree with all of Graham's comments.

Okay. Then my second question, on Slide 22, you show your short-term transformation costs and your OpEx for digital totaling $90 million for this year. Can I just clarify your guidance that you gave a little later on in the presentation of very slight underlying profit growth. That includes both of those items doesn't it? They're above the line?

Yes, absolutely.

Okay. So maybe -- so -- and given the payback from those 2 investments presumably doesn't come much in '22, effectively, that's 10% of your underlying profit that you're spending this year instead of delivering what would be a -- what would deliver operational leverage based on your revenue guidance. So maybe that gives me the answer that -- I was going to ask why is it now that you've undertaken these investments as opposed to, I guess, waiting to deliver another strong year of underlying profit growth and earnings leverage. Is it the fact that you felt comfortable that you would be able to deliver that second year of growth? Because you did highlight on Slide 21 that the there's been a 1% CAGR in underlying profit growth for the last 4 years and really that came mostly in the '21 year. So is it the fact that you had underlying momentum in the business that you could -- you felt like you could effectively afford to pay for this investment? Or is there something about market timing now? Maybe it's coming out of COVID and realizing that you've just got to make the investments now because the business is in need of them, I guess, that's -- I'm really trying to figure out why is it now? Is there timing issues that you can see in terms of industry leadership or ability to leverage that into ongoing customer growth, I'd just be interested to hear.

So I mean, I think it's -- fundamentally, we are here to run the business for the medium to long term. And one of the things that we've been doing and we would have done it sooner if we'd been in a position where we had the confidence to do so. The whole set of initiatives around digital to BXB Digital and shaping our future, which has been going on for let's say, 18 months-or-so, it's all been leading to this point, which is, are we confident enough to now go big on these things and to roll them out? And it's, I think, it was helpful that we had a really good fiscal '21. And I think that allowed us to not only prove to the market that we delivered on the commitments we made back in '17 and '18, but also, it showed that the things that we'd actually done, the nuts and bolts of what we've done had actually built a resilient business model. And it was best shown of all in fiscal '21 with the external environment being so volatile. So I think it's a fortunate confluence of events, which is, yes, we had a good '21 to prove the model is working. But also, it was the time when we had got to that point where we were comfortable about the technology and some of the use cases and some of the programs we're putting in place. And we'd gone through the last 6 months of getting some external validation of both the technology and the strategy. It just -- now is the time to say, "Okay, we can do it." I think you're right, it's helpful that if you back out those short-term transformational costs, we are still on track based on the revenue guidance to sort of get some leverage. But that's not -- that, for me, is not the point. The point is, with these investments, we are looking at sustainably delivering high single-digit ULP growth after '23 on that mid-single-digit growth revenue. We'll talk more about the growth tomorrow. But that is what it's about and the cash flow and delivering that investor value prop. And that's what it's about. And this is just the time to now say, yes, we're ready to go for this.

The next question comes from Jake at Jarden.

Yes, sure. I just had a quick one for Graham and Nessa, either of you I'm sure you can answer this. Any assumptions to look forward maybe after FY '22. Can you just let us know, from a macro perspective, how you're expecting or if you are expecting a normalization in the operating environment? So what I'm getting at here, specifically, are there embedded changes to customer behaviors about inventory management? Are there any views that you need to increase the intensity of those transport lanes? And maybe some of the savings or productivity benefits that you're going to get from automation, please?

Yes, sure. Yes. Thanks for the question. I think it's a really interesting scenario for most businesses right now because while we'd expect to return to some type of normal, I think everybody recognizes it will be a new normal. And with that, I mean that it's -- we can't tell exactly where it's going to land, how to determine how we can optimize our network. We have a sense that things will get back to a new normal. And what we've recognized is that the agility and flexibility and added capacity that we put back into our network really set us up to cope with volatility. And I think we do recognize that what we relied on before is going to be less certain, and therefore, investing to have the right tools to enable us to respond faster to changes in the market, to have more capacity at short notice and to really understand what drives cost in our business more down to a more granular level, that all of those things are going to become more important, so we can respond to what customers want, but also make sure we stay on track to get returns. So I feel it's a combination of all those things coming together. And I don't think we'll be on our own in terms of looking at a broader market that -- the old business models are going to be, yes, less useful. I think a lot of what we've done and put in the foundations we can build on. But for instance, if you think about the changes we saw in the U.S. with the asset control, I would have to say the dynamics really sort of changed what the asset control was. Now we need a different approach to how we manage that because we can't just sit back and say, we're going to wait for a market to come back, so it's easier to manage this. We have to assume that there'll be complexities. So hopefully, that gives you an idea about how we're thinking about it. So in other words, we do expect some sort of back to more normal, which has allowed us to again reoptimize networks. But we accept that investing in capacity and capability to be able to deal with changes and customers wanting more information and insights is going to be more and more important for us to win and succeed.

And just one final one. Obviously, we had quite a lot of surcharges in the second half of '21. You've noted that lumber inflation does remain high as we move through the first part of first half '22. Can you just explain for us the dynamics of those surcharges as the lumber price falls? Is it right in thinking that those surcharges reverse? Or do they switch off? Or have you reached a new high watermark? Can you just give us the dynamics rather than the numbers around that, please?

Sure. So I think it's important to actually recognize if you went back to pre-2018, we didn't have these clauses in our contracts. So one of the things we did over a 3-year period was try and get in more and more inflationary recovery mechanisms and lumber was a key one. So for us, when lumber gets above a certain amount, and it's -- that's something that is commercially in confidence with our customers, it's linked to a specific lumber index so that it has transparency. When lumber hits a certain level of pricing in the market, then the lumber surcharges kick in. On the way up, so there's a time delay -- on the way up, so there's sort of we bear some costs, and then the lumber surcharge kicks in. And on the way down, the results, through a timing delay. You should think about that between 1 and 3 months has been that time delayed, 30 to 90 days. You have to bear in mind also, though, that lumber surcharge is a bit different to all the others in that it is linked to our total -- to lumber as in our total cost to serve. So some of that is reflected in the CapEx cost, where you see us calling out lumber inflation and some of it is reflected in our plant cost for the lumber we use in operations. And I know Laura is going to talk a bit more about this tomorrow. So as lumber costs come down, then we start to be able to buy pallets at lower costs. So that's good for us economically, but then the amount of the lumber surcharge also progressively comes down as lumber comes down -- the cost of lumber comes down.

The next question is from Cameron McDonald at Evans & Partners.

Can I -- Nessa, can I just ask you a quick question on the profile of those corporate costs, which you've highlighted on Slide 22. And then you've made a comment further down on Slide 24 regarding the -- excluding transformation investments, corporate costs in '25 are expected to be broadly in line with FY '21. So in FY '21, your corporate costs were $115 million, which incurred $33 million of transformation costs. So are you saying that in FY '25, your corporate costs are expected to be at around the $80 million mark?

So if you have a look at -- so just so that everybody else has the same reference point, so we always disclose the split of the total corporate costs. It's always in note 2 in the segment notes to the accounts. And you'll see there's a number of components there, which is the core corporate cost, BXB Digital and Shaping Our Future. What we're talking is the core corporate costs here. And so some were actually a bit lower than you're quoting. But directionally, yes, you're correct that this reference is to the amount excluding BXB Digital and Shaping Our Future that you would see. But you can see we set out in the sub notes to those, what the amounts are by year, if anybody wants to look at the granularity of those.

And so just then flowing back to Slide 22. If I look at that table that you've given there, if we start in FY '21 of $115 million minus out the $33 million transformational BXB Digital costs and roll that through, you're actually looking on an OpEx basis that you can get up to like $170 million worth of corporate costs. And then in FY '25, you're telling me that it's going to be at sort of circa under $80 million?

So we're talking about the corporate costs that are excluding BXB Digital, and excluding the Shaping Our Future. So that's why we split it out so you can see what amounts are going to be ongoing. That reference is purely just a corporate cost. So when you said is the core corporate cost going to be around $80 million, it will be somewhere lower than that we've estimated, but there will be ongoing costs which we have set out on Slide 22. And then when we give the overall guidance and shape of the earnings that we expect, that factors in all those costs to get to that end number.

So yes, so on Slide 22, though, you're saying there are 0 transformation costs in FY '25. Where are the digital costs going to be sitting? Are they in corporate? Or are they in a division -- in the divisions?

So I think it's really critical that we're clear that the short-term transformation, these are the costs that we're implementing now to launch all these different programs that we're doing. So there still will be ongoing costs, and we would have a core corporate cost. And then we would also disclose that we have ongoing other transformation costs because there will be ongoing costs. And you can see there that we talk through, if you look at the digital line, we have OpEx costs. And we will split out those into the 2 [ halves ], but they're all included in...

Yes. Sorry, you just dropped out.

Can you hear us? Did that answer your question?

Yes, sort of. So -- And the other question I've got is for Graham. Well and/or Nessa. In part of your presentation, you said a big driver of the strategy is obviously the growth and the market share wins that you're anticipating in targeting. How quickly can you unwind some of these initiatives if you are unsuccessful in gaining that additional market share?

So, our view is that the -- what we were trying to answer here is I think the concern that we've seen a slowing down in the last 12 months or so of net new business wins. And what we're trying to do here is to reassure the market that once we get past some of the volatility and the existing customer demand we've seen through COVID, that the business model is fundamentally still sound in terms of there's a lot of white space to go after in terms of converting whitewood users into pool. That's all we're trying to do. So some of the investments, for example, in the CRM model that -- software that we just invested in over the last couple of years, that's all been made to support this sustainably mid-single-digit revenue growth going forward. That's all actually. There's not a question of unwinding it. It's -- we're making investments to continue supporting that level of growth.

Yes. And Slide 25 really sort of sets out how do we see the shape of that FY '21. We had less net new business. We're now seeing ourselves back on track to be able to get that net new business as we have less challenges with pallet supplies going forward, and we would expect a lot of that growth to come from markets we're in, where we continue, as Graham said to go after that white space that's unpooled is largely where that's come from historically, and that's where we see it coming from as we go forward. With some other add-ins as well, but that's the vast majority of it, which you'd expect given how big our existing footprint is.

The next question is from Sam at Citi.

Just thinking about the lag between investment and returns. When you look at your guidance, it looks like FY '24, '25, the acceleration growth, obviously, coming from the FY '22, '23 spend, but that's relatively small in this overall program. And when we look at the investments in, I guess, '24, '25, it looks pretty chunky and back-end loaded. So would it be fair to say if we get through those gates, it actually implies quite a substantial acceleration in growth past the guidance period?

Yes, we're clearly not giving guidance beyond that period. But I think your philosophical assumption is not a bad one. And what I think we are saying is, particularly, if you're looking at things like cash flow, we should be able to generate more cash because there's a heavy phase of investment. And it's one of the reasons we put the value creation number at 10% plus. And we obviously said that as we get through the investment phase, there's a good possibility of us going at the more plus than 10% on value creation. But we're clearly not giving guidance that far out. It's a long way out still.

Yes, yes, sure, sure. But just to get an understanding of the delay between investments and returns then is obviously, that 10% in the '24/'25 period, you're obviously getting that from '22/'23, which is a relatively small amount of spend. And then is the growth in returns proportional given how chunky those '24/'25 numbers are?

I think that's not an unreasonable assumption to make.

The next question is from Paul Butler at Credit Suisse.

I just have a question sort of relates back to second half of FY '21, where I think in the U.S., you achieved something like an 8% price mix benefit, which, at the time, you said was focused on addressing high cost to serve customers. I'm just wondering what proportion of your business in the U.S. would you sort of describe as high cost to serve? And does that partially contribute to the lower margins you see in the Americas compared to the other 2 major geographies where you operate?

Well, I'd say, I think, first of all, you need to look at the key things that have changed is, I suppose, if you go back to FY '18 is that we said, right, we're going to progressively reprice contracts over 3 years. Now in a period, we also said, in periods where there's higher costs, i.e., higher inflation or other input costs go up, you should expect that we would be taking more pricing. And in other years where there is lower cost in the market, there'll be less pricing. And I think it's fair to say we've come to a period of pretty high costs, and therefore, the pricing is higher. Now I think it ties into some of the other questions that came up earlier on the calls, too, that we're actively and proactively working with our customers to try and reduce those costs to serve either through reduction of losses and anomaly detections to try and work with them faster so that we don't have to take as high cost. But the pricing we're taking, it's a function of what particular contracts came up in any given year and what we're cycling and then what the cost environment is like in that particular period.

Okay. But is there an element where you do have -- you have a higher proportion of higher cost to serve customers in the U.S. compared to your other markets?

It's just more that it's more dynamic. If you were to say, has more of the cost change in the U.S. relative to some of the other markets over the last half of the prior year, I would say, yes, because there's longer transport distances and transport scarcity has been an issue. The lumber inflation in the U.S. was higher than in other markets and we had issues with getting back pallets, which increases the loss cost. So I would say, in a relative sense, if you were looking year-on-year, yes, the costs were higher in the U.S. While there were some higher costs in Europe because of Brexit, it wasn't as material to the overall network of some of those dynamics that we saw in the U.S. I don't know if there's anything else you want to add?

No. Perfect.

Okay. If I could just ask another one. On Slide 28, when you set out the target of getting the CapEx-to-sales ratio to 17% in FY '25, what's sort of the underlying assumption there in terms of what happens with lumber cost inflation? Or does that potentially not matter with the indexation that you have?

Look, we would expect that the peak -- so what are we seeing? So we're seeing some moderation in the U.S. Do we think it will come all the way back down to historic levels? No. But do we think we reach the peaks that were there in May of last year? You had our competitors talking about buying pallets at $50 a pop and you went pre-COVID, they were sort of around $22. Would we expect to stay at those very high levels across the planned period? No. But would we expect potentially that it remains somewhat higher than it has been? Yes. In between, we're starting to see a bit more lumber inflation coming through in Europe. There was a bit more of a lag to it. So over the next year, I think we have some more challenges still. So it's fair to say we would have factored in some increased cost of lumber, but certainly not at these spikes of inflation level that are evident in FY '21, and we see continuing to FY '22.

We have time for 3 more questions before handing to Graham to close off the session. There is one on the webcast regarding digitization. As we collect and share more data, while there are many positives, is there a risk that the data will demonstrate a percentage of pallets that customers have provided compensations for making their way back into the pool and the way forward on that?

Sure. So as we get more data from pallets, we will clearly start to see where they go. And we'll start to see whether our current -- and I wouldn't call them hypothesis because we actually do have current declarations from our customers of where our pallets go. We will start to see whether they do marry up. But what we want to do is test that in a very controlled environment. So as we're testing the proportions of the pool, we will then make extrapolations on that data to see what those trends show. In one pool, before the end of FY '23, we'll be starting to look at an entire but closed contained pallet pool. And by doing that, we'll start to be able to answer those questions. But right now, we don't know. So right now, we haven't done that to a full pool yet. We haven't got full pool digitization in any market. So once we have that, we can start to answer those questions. But at this moment in time, we don't yet have those answers.

The next question is from Owen Birrell at RBC.

Yes. Look, just -- sorry, I just wanted to ask just a question on the automation program. Of the $415 million of spend that you have in CapEx in supply chain upgrades, just wondering how much of that is specifically on the automation of the plants? And what percentage level of automation does that actually get you to in Europe and in the North American market at the end of FY '25?

So if you actually look at Slide 27, it sets out where the spend split is, so you can see how many service centers we expect to automate and the quantum of spend. In terms of the level of automation, actually, a very interesting question because we would have said before that we would get to -- we were measuring automation based on what we could technically do to automate. So we were saying you might get to a 70% to 80% automation level. I think what we're trying to do and where we expect to step change that and more to come on this as we actually spend and show the outcomes is we're actually saying there's a lot more that we now see as being feasible to automate which is what the new level of progressive investment is going to be in sort of the new technologies. So you'll hear about sort of the integrated repair sales. Craig talked a little bit about that. That is something that we will come back and talk to the market about as we start rolling it out. We're still trying to push the boundaries to see how much further can we go, particularly as real estate goes up and labor costs go up. And as we want to be more responsive to our customers, this is going to be, I think, an area where we'll look to continue to feed the pipeline. And Graham talked about this as being an ongoing program. And so this is Stage 1. If we find other really good things that help us to automate faster, we would look to accelerate that. We have a great balance sheet that allow us to do this. We're going to be disciplined about it. But frankly, internally, that's one of the things we're saying how can we go faster and what else could we do? So a higher level of automation, we're comfortable with the things that we have earmarked here for investment that we get that really, really strong payback. But it's fair to say we would expect to continue to build that pipeline over the next few years with some new initiatives as well as rolling out these.

I guess the origin of my question is you spent $300 million to date, you've got another $120 million to go on automation. How far through the target of 100% automation are you at that point?

We were never at 100 -- going to be at 100% because our business is not like when you get robotics in another company, if you're doing the same action with the same product over and over again on a production line, it's very easy to roboticize and automate. For us, the pallets are all different. So where exactly is the damage rate? What is the repair that you need to do with it? It is a lot more complex. So previously, things that we didn't think technology could deal with because we tried -- those of you who covered Brambles for a really long time. If you go back 10 years plus, there was automation in the U.S. and in Australia initially, and it had to be stopped because it wasn't giving the efficiencies. We then started again and started more building to where we thought. So we were at about 80% to where we thought we could be with that last iteration. I think we're now broadening the horizon. And as you look at us adding -- we did 52 plants in the U.S. We're now talking about adding the next stage of automation to 70. So look, there will still be a level of manual intervention. Maybe you're saying 10% to 15%, we will still look for ways to go after that. But it will also depend on the volumes that go through the plant because some plants will not justify the investment. So we're not just going to automate unless we can see that there is a value to doing that in each of the plants. But it's been interesting through the 3-year process, as we've learned, we've got better at automation. And actually, now there's more sites where that makes economic sense and commercial sense than did at the very beginning of the program because we got better at doing it, we've cost optimized. And we've had a lot more confidence around what the outcomes are to feel confident about making the investments. So I know that's not a very precise answer, but it takes you from targeting the 80% to going beyond that and us saying, look, we're going to continue to look to innovate and say, "How can we do this better over time?" The good news is we only spend this in small dollar amounts per investment side. It's like $2.5 million to $3 million a site to do the full automation. So we don't have to bet the farm. What we can do is progressively explore that we get the outcomes and then roll out. And a lot of this is modular. So different sites over time will reach those criteria that makes sense to invest as well.

That's great, Nessa. One last question for Graham, if I may. Slide 11, you highlight growth potential and you've got China on that chart. It's a market that has kind of gone pretty quiet for you guys more recently. Is that a viable market opportunity? Or you've just put it on the chart there to put in a 99% market opportunity?

I don't want to steal Phillip's thunder from tomorrow because he'll talk about that a little bit. But I think it's one of the things where we've always been looking at it. Clearly, from a potential, it's huge, but there have got to be a number of different things to make it a viable market for us, one of which is regulation and standardization in the supply chain, which we've talked about for some time, and we're beginning to see the 5-year plan from the ruling party start to talk about needing to get more efficient supply chains within China. So I think our view is it is a viable market at some point in the future. And if we're not ready to be in prime position to make -- take advantage of that, then we will lose the opportunity. So we're doing everything we can to set ourselves up for the future without betting the farm on it because we could throw a lot of money at this and not get anywhere. And so it's about getting the strategy right and the tactics right, be ready for when the market does change to being much more conducive to a pooling market. And Phillip will talk about that a bit more tomorrow.

And the final question is from Anthony Moulder at Jefferies.

Just a couple if I could, I appreciate the time. The first question that Paul asked was around that 8% increase in the U.S. I thought that, that was an NPD cost or pricing increases associated with NPD costs. Is that -- if that's the case, is that quite formulaic in the sense that a lot of those customers have had that cost adjusted in second half fiscal '21?

So Anthony, I didn't quite hear it. Are you talking about the increased cost, the losses related to NPDs and those costs being passed on? Is that the question?

Yes. As part of that pricing increase in the second half '21 of 8%, was a lot of that the NPD?

No. No. The NPD cost increases, Anthony, was really coming in. And if you look at our year-end ASX presentation, it was Slide 15. We actually are taking the pricing for the NPD increases from 1st of July. And we do that progressively depending on the contracts where -- which customers it relates to. And we got about -- we've implemented in about 1/4 of it. So no, the cost that you saw in -- it's partly a function of what we're cycling from prior year, partly a function of which contracts came up for renewal and partly a function of the conditions of the market that meant that it was more appropriate to take higher pricing related to a higher cost to serve.

Okay. The -- I guess as we look to the growth of this business longer term, you've talked about market share gains, et cetera, with pricing, which is something different typically [ chip ] has grown without pricing. It's seeing the benefit of that growth in its network to deliver that sort of operating leverage. Where is the confidence coming from now that you can do both effectively grow revenue but also grow market share?

I think the confidence comes around from, I think, a couple of things. One is the fact that we put the structure into our contracts to allow us to get more price increases. I think the other point and we always talk about pricing environment relying not only on our desire to do it, but it's got to have disciplined competition. There's got to be an element of tightness of supply and demand and there's got to be some inflation in the environment. So all those things, you can foresee those going ahead for some time. And that gives us confidence that we will continue to try and increase pricing. But there comes a point where we've got to provide value for our customers as well. And I think that's the other key strength behind this transformation program is we're now trying to accelerate the value we're providing to customers, which will support the fact that we are still trying to get price increases to show that we are differentiated from our competitors, are differentiated from whitewood and therefore, offering a better value to our customers. So they're linked together, it's not just we go and get price increases because we feel like it is, it's because we've either got higher cost to serve or we think we've got a product which is creating higher value. So I think that's one element. And then the growth piece, and we'll talk about that much more tomorrow when we go through each region, there is still -- and you can see from the slide, I had with the white spaces on, there's still a lot of addressable market, which is within the whitewood space, which we feel we can convert to pooling. And we've had, I think, a pretty good track record over the last 5, 6, 7, 8, 9, 10 years of doing that. And I think all we've seen is a blip in '21 because of that COVID demand, us focusing on our key existing customers rather than pushing the net new business wins. And we're saying that we can -- we'd anticipate that returning to that sort of profile where we are gaining market share versus whitewood in '22, '23 and onwards.

Thank you, everyone. I will now hand over to Graham for closing remarks.

So first of all, I just want to say thank you to everyone who's dialed in and everyone who's presented today. I won't talk much about growth because we'll do that tomorrow, but I just wanted to sort of sum up a little bit on the transformation program. I hope you agree, having listened to us for the best part of a half a day, that it's an ambitious program with sustainability at its very core. Twin track, so we're going to increase the performance from the current business to create value to fund an investment to create our business for the future. And the other thing I'd point out that we'd like to try and emphasize is that, hopefully, you've seen that the whole management team are both committed to this, but also confident in the delivery of the outcome so that what we're talking about in terms of '25 and '24, we are committed to delivering that. So with that, that's what I'd like to leave you with, and we look forward to seeing you all tomorrow, I hope.