Woolworths Holdings Limited (WHL) Earnings Call Transcript & Summary

Morning, everybody, and thank you for coming to the store at this early hour, much appreciated. I am going to begin by welcoming a few people, if I may. I always get into trouble if I don't mention the Chairman and past Chairman who are here. So Simon Susman, who was our past Chairman and is currently our honorary President. Simon, thank you for coming. We have Hubert, our current President -- no, you're not. You're Chairman, actually. I just promoted you. Thank you for coming. We have a number of Directors. I can see Zarina, Clive, Chris, over there. I'm not missing -- Reeza, of course, they are. So thank you all for coming. It makes a real difference to have you present on the results presentation day. But equally importantly, we do have someone else in the audience, and that's Roy Bagattini, my successor. So I am going to pass over to Roy, and he's going to start the introductions today. Roy?

Right. Well, good morning, and also a warm welcome from me to all of you. I want to use this opportunity to introduce myself to you. It's certainly great to be back in South Africa, back home for me, and I am very excited about this opportunity to lead the Woolworths Group. Wanted to meet you face-to-face today and begin our relationship. And I look forward to engaging with many of you today and certainly, over the weeks and months to come. Today, given that it's literally 3 days in for me, I have asked Ian and Reeza to help out with the results presentations, and I'm going to hand over to them in a moment, and they will take us through the presentation, the Q&A, and then I'm going to be coming back at the end and wrapping up with a couple of closing comments. Thank you.

Okay. And without further ado -- you don't need to know the outline, let's go straight to the performance. It was -- you've been reading as you go. It's been tough, tough in both markets for a whole host of reasons: climatic, economic and other reasons asides, but very, very tough. One of the -- some of the toughest conditions I've seen, both in South Africa and in Australia. The results are a little difficult to read because of the shift in trading weeks between this year and last, with Christmas this -- in this half falling into H1 -- sorry, Christmas in this year falling into H1 when it was in H2 in the prior period. So we've tried to make them as comparable and readable and understandable as we possibly can. And Reeza will make sure that as he goes through the financials that they're on a like-for-like basis, wherever possible. We did see -- we performed well in clothing. In Q1, we had a good result. I think Zyda and her team did a good job getting back to basics, getting our key items right, product presented well, our customers responded well. And then we faltered as we got into Q2. I'll unpack that a bit later. But we didn't participate in Black Friday well. And we didn't do a good job of some components of our womenswear. Food, well, that continued its amazing rise. It's showing volume -- positive volume growth. We're continuing to grow market share. I'll talk later about how we're managing to achieve that. But another great result from our Foods business. It seems to go from strength to strength. Financial Services. I know, Sivi, you're here. Sivi is the MD of Financial Services. He and his team have done a great job performing well in what's a difficult market for financial services, and have done on a consistent basis over the past few years, so well done to you, Sivi. Trade in David Jones continues to be tough. It is a very tough market. Bushfires didn't help. But we did see an improvement in Q2. I'll talk -- again, I'll talk -- I'll unpack that later. But our margins were under pressure and that they do need a little bit of unpacking to understand what the impact on our margin has been over the half. We saw a strong performance from Country Road. Scott, who's our MD at the Country Road Group, is here with us today. But given the exit from Myer, actually a very good result and an excellent result from the Country Road brand itself. We saw our turnover and concession sales were up by 3.8%, adjusted profit before tax down by 12.3%. Adjusted diluted headline earnings per share declined by 11.7% and our interim dividend reduced by 3.3%. And we're holding on to our 1.4x WSA headline earnings, so no surprise to you there. Okay. Let's talk a little bit about the South African macro. Growth remains -- it was a tough year. The growth was weak. It really was well below potential, and what we'd seen load-shedding clearly had an impact, particularly in the second quarter. Retail sales in 2019 averaged 1.2%. That's the weakest rate we have seen in 10 years, so difficult market. Consumer sentiment, for some of the reasons I've been talking about, we're seeing poor economic growth, record-high unemployment, income growth has slowed and there has been muted credit extension and higher costs of living. All of that combined with the load-shedding has really brought consumer sentiment down, so a tough South African market. Within -- let's just unpack the businesses within WSA. FBH, our total store sales were up 2.2% on last year. But if you adjust for the shift in trading weeks, that's up by about 0.9%. Q2 was poor. It was down 2.3% on last year after adjusting for those trading weeks. And there was a couple of factors. If you put the -- we lost market share. So let's put the economic factors and all of the factors that every other business was facing, put them to one side. What did we do that affected that result? Why did we lose market share? There's a couple of reasons. The first reason is we didn't get Black Friday right. We didn't participate nearly enough. We didn't put enough categories in. They weren't meaningful enough in volume and they weren't low enough in price. And that's a big mistake. Black Friday is becoming more and more and more important. It's becoming as big as Christmas, and that's true both of South Africa and in Australia. So we didn't get it right, and we suffered the consequences of it. And you suffer the consequences leading into December as well because the only thing people are interested in December is not more markdown. They've already done that and spent their money. So the little money they've got, or those that still have money, what they're looking for is newness, and we didn't have enough newness in the month of December. Lessons that we can learn and apply next year, and imminently, fixable. Look, we've had a really good performance in kidswear and beauty. Kidswear looking really strong, and beauty also continuing to grow well in line with our strategy. I've talked to you about that many times now. Menswear was okay. I think we've done a good job of getting back to basics in men's; reasonably strong performance in line with market. It was really womenswear we let ourselves down. And we let ourselves down in a couple of areas. We made, I would say, taste level mistakes in Studio.W and in Classic. We could have done better. There was a lack of coverage in Classic. The print wasn't right. It just wasn't as appealing as it should be. And Studio, again, we've got the look and feel of that brand wrong. It was too plain, too simple, not appealing enough and the balance between formal and urban wasn't where it should be. Again, all fixable. The other thing we did, though, is we had such success moving to higher-quality yarns and fabrics in our basics, making them beautiful basics, going back to the quality that Woolworths is famous for. We took the position that we would take -- we operate a good, better, best pricing architecture. And normally, you would have about 70% of your goods in the good price point, so opening price points, key price points. What we did is we shifted much more into the middle- and upper-tier price points, and we did that at a time that the market that was looking for more and more value. And it was a mistake. So the guys are absolutely focused about repricing, rethinking about our commitment to better values and getting that right for winter. There was a price movement of 4%, partially mix and partially inflation. There was a net space growth of 1.2%. Online grew well at nearly 30%. Our gross profit margin was 0.5% lower than last year. Our operating profit was down by 9%. And our operating margin was 1.4% lower than last year at 11.5%. You can see here from the market share slide just exactly what happened. You can see the extent to which we were behind the market for a significant period, from June '18 really through to May '19. And then, for the first quarter, we went ahead of the market, only to fall behind the market in the second quarter for all of the reasons I mentioned. Foods, good story: sales up 8%. If you adjust for Christmas, it's about 7.8%. Comp stores were up 5.4%. Good, consistent growth across every month, ahead of the market. And the guys' commitment -- I saw Spencer, our MD of Foods here, there he is. A great result by him and his team. Absolute crystal focus on quality, on innovation, more and more innovation, more and more new product, and then supported by really good investment in price. So the combination of quality and innovation and price, unbeatable in the marketplace, and that is why those guys continue to get the results that they're getting. December was a bit tougher. Load-shedding had its impact, weather conditions, changing holiday patterns all impacted. So sales came down slightly, but it was still ahead of the market. We saw price movement of 5%, net space growth of 4%. Online sales, again, strong at 22%, up on the year. Our gross profit margin maintained at nearly 25%. And that's despite the investment in price and promotion. Our operating profit was up 8%, and our operating profit margin was 1 -- 0.1% lower, still at a remarkably good 6.9%. There you go. There's the food market share, consistently above the market from June '18 to December '19. And as you all know, this has been a pretty consistent story for about 7 or 8 years now. The guys have constantly been ahead of the market because of their commitment to the Woolworths difference. Let's go to Oz. Oz, despite very low -- record low interest rates, there was a tax stimulus coming in about October. We've seen strong job growth, but low wage growth. The economy remains depressed. There's still high levels of consumer indebtedness. And most of the tax benefits went into the paying off of debt rather than the spending at retail. And lower -- we've seen nondiscretionary costs rising. And the bushfire had a real impact. It really affected the psyche of most Australians. It was -- had a devastating effect environmentally, but also on the psyche of most Australians, it was a sad and difficult period. The apparel sector, hardly surprisingly in that environment, remains constrained. It's highly competitive. It's very promotionally driven. Black Friday was huge. And we've seen this migration from physical shopping from malls into online. That continues. So the footfall in most of our shopping malls and shopping centers continues to decline. And that's also been exacerbated by the fact that there's been the bushfires, and tourism has fallen significantly. I'll talk later about the impact on coronavirus that's just hit us. I didn't mean to jump past it. Total sales were up by 4.9% on the year. If you adjust for trading weeks, sales were 0.5% lower and in comp stores, about 0.4% lower. Q2 was a better quarter than Q1. We were up 1.3% in Q2 after you adjust for the trading weeks. We had a very strong Black Friday. We did participate. We put a lot of our categories into Black Friday. We had them vendor supported, so we try to minimize the impact on margin. So our Black Friday was about 70% up on the year, and our profit within Black Friday was about 40% up on the year. So a good result from Black Friday. And into December, we had a reasonable last couple of weeks in December. Strong online. Online goes from strength to strength, 61.8% growth. It's now 10.4% of our sales. We'll get to 20% far quicker than we thought we would. Elizabeth Street was still very disruptive on the business. It is our biggest store, as you know. And it wasn't open -- the ground floor wasn't open until 11th of December. So the store looked effectively shut. Vertical escalation through the store was very difficult. Traffic was significantly down. So that had a big impact on the result. So we opened ground floor on the 11th, as I said, and we're opening in March, we'll open menswear. And then in April, we will open ground floor and homeware. The store will be complete, and we'll move out of Market Street. If you look at EBIT, EBIT was $20 million, an operating profit margin of 1.7%. Part of that is the impact on margins. So margins were down by 2.9% on prior year. That takes a bit of unpacking because the bring-forward of Boxing Day impacts your margin quite significantly. But there were other impacts on it. One was the shift between regular and promotion. Of that 2.9%, about 0.5% is about the shift from regular to promotion. And then there was a bunch of inventory-related provisions -- provision releases in the prior year that are affecting that 2.9%, so about 1.7% of that 2.9% is about inventory provision release. So a $20 million profit at an operating profit margin of 1.7%. Country Road. Sales were down 2.5%. But if you exclude the impact of Myer -- the Myer exit, sales were up 3.3%. So a good result overall given the market and given the Myer exit from Scott and his team. Comp sales were up 0.1% after you adjust for the trading weeks. Country Roads had an amazing season. Elle Roseby continues to do an amazing job for Country Road. They had a very, very strong performance. Unfortunately, Witchery didn't. They had a big fashion miss in the first quarter. They're getting their game back together now. But one really offset the other, both in sales and margin. And so the diminution in your GP margin from -- by 1.7%, that's pretty much due to the fact that Witchery took a lot of markdowns during the half. The transfer of sales from Myer into David Jones in the own stand-alone stores, that went very well and above budget. So a good impact both in Scott's stores and in David Jones. We saw a space reduction of 8%. As I said, our GP margin was down and our operating margin -- profit margin was 0.6% lower than last year at 10.4%. Okay. I'm going to hand over to Reeza, and he will take you through the financials. Thanks, Reeza.

Let me just get some water. So before I get started, just 2 points I would like to make, firstly, with regard to IFRS 16. I have to just make this point. We adopted the statement on the 1st of July, 2019, and we did that on the modified retrospective approach. We don't restate prior year comparators. And as mentioned in our presentation in December, we will reflect comparability through presenting the numbers on an IAS 17 basis, pre-IFRS 16, and we will do that for the half year as well as the full year. So in the back of your packs, the IFRS 16 numbers are there, and you will -- you can see by segment what those numbers actually look like. And then as Ian has said, the H1 results are not fully comparable to last year because of the shift in trading weeks. So last -- because of the 53-week last year, we ended effectively a week later in 2019, which means that the first half of this year ended a week later than last year. So this year includes what we call Christmas week. The half ended on the 29th of December; last year ended on the 23rd of December. So yes, Boxing Day, obviously, included now in turnover, but good for top line, not necessarily for margin as Ian has mentioned. Okay. So let's jump into the numbers. Ian has covered most of these, so I'll run through these really, fairly quickly. Turnover and concession sales, up 3.8% to ZAR 40.9 billion. On a constant currency basis, it is up 4.6%. That obviously includes Boxing Day and Christmas and Christmas week. So the rand was a bit stronger against the Aussie dollar during the period, and that was a bit surprising, but that was the case. Adjusted PBT, down 12.3% to ZAR 2.4 billion; EPS, down 9%; HEPS, down 10.1%; and adjusted diluted HEPS, 11.7%. The difference between HEPS and adjusted diluted HEPS based on -- is because of the adjustments. Not many adjustments this year. That difference is mainly due to the adjustments that were processed last year. Interim dividend, as Ian mentioned, down 3.3%. That is based effectively on the earnings of Woolworths South Africa. We announced the suspension of the Australian dividend last year. And that will continue until we meet our debt -- our net debt target in Australia of $200 million. ROE, down to 15.3% from 16.6%, and that's a function of performance as well as translation. Obviously, we translate the Australian balance sheet and the assets based on closing rates or average rates. And then we have added back the impairments to ensure that the calculation is consistent and comparable to previous periods. The segmental income statement, from a group perspective, Woolworths is essentially flat on last year, with the outperformance or at least the growth in earnings in Woolworths' Food offsetting the decline in FBH. WFS contributed solidly to the result for the half, up 1.3%. But the growth in book was quite significant at about 8%. It's obviously, like others, we have been impacted by the poor -- or the constrained economic environment, poor consumer sentiment and things like load-shedding. Moving on to Australia. I think if you look at both businesses, obviously, on the face of it, a disappointing performance. But Country Road, as Ian mentioned, very good reason for the drop, which I'll get to, but David Jones down from $46 million last year to the $20 million this year. Still some Elizabeth Street disruption within that. Margins obviously impacted by all the issues that Ian mentioned and the higher proportion of promotional sales within David Jones. Country Road, as I mentioned, impacted by Myer. Strong Country Road performance, but offset, to some extent, by the Witchery fashion miss for the half. Net finance and other costs, I will unpack that a bit later, but they're effectively flat on last year. And tax -- sorry, if you get -- I'll get to tax later, but in terms of adjustments, not many in this period. You'll be pleased to obviously see that. Some mark-to-markets of open FECs at the end of the period, mainly in South Africa, and most of the adjustments actually relate to the prior year. Some relocation and restructure cost; relocation of Country Road to Botanica last year in Richmond; and some higher exit costs that we provided for towards the end of December as well. And then if you look at the effective tax rate, it is down, but that's because of the high proportion of SA profits. And also, remember that Woolworths Financial Services is an after-tax number. It's about 8% of total earnings. So it does make a difference to the effective tax rate. Okay. Moving on to the first of our segments, Fashion, Beauty and Home. I think if you sort of stand back and look at the income statement, obviously, a disappointing performance, I think especially given the strong end that we had to 2019 and the strong start that we had to the first quarter of 2020. We were up about 5%, if you can recall, in the first 7 weeks of the half. So up 2.2%, 0.9% if you adjust for the trading weeks. Disappointing performance, obviously, in womenswear. We mentioned Boxing Day underperformance or underparticipation, pricing, price tiering and lack of newness especially in summer. And then the fashion price movement was 4%, which was higher. But that was because of the move to a better tiering, which obviously affected volumes as well. GP was down 1%. And I just have to pause here by just sort of talking about the WSA private label brands exit from Australia. So we took the decision to exit private label from David Jones. And that had an impact on top line. It had an impact on margin as we cleared that stock. And it had also an impact on EBIT as well. So the drop in margin from 47.1% to 46.6%, that 50 basis points is essentially due to the exit of private label from David Jones. Cost control was good. Cost -- comp store cost was up 2.5%, obviously impacted by -- positively impacted by lower volumes, but [ Berga ] and the team doing a good job in managing store costs. And other operating costs are 7.2%, a bit above inflation, but there is some base effect. If you can recall last year, we -- our cost increase was actually quite low. So there is some base effects. And there is -- there will be some normalization of costs between halves, between H1 and H2. But overall, it's hard to achieve operating leverage, positive operating leverage if you have GP at -- up at 1%. So adjusted operating profit, down 8.9%; EBITDA, down 8.6%; and operating profit margin, down to 11.5%. Look at Foods. Right far-hand column, lots of 8s there. So that's -- obviously, that looks very good. Well done to Spencer and the team. Very good performance, again, in a very, very tough and constrained economic environment. 8.1% up, it's 7.8% if you adjust for the shift in Christmas weeks; price movement of 5.1%, so positive volumes. And we had a slower December. And 2 reasons for that. I won't mention load-shedding again, but I have to mention load-shedding. Load-shedding doesn't just have an impact on top line and consumer sentiment, but it also has an impact on margin. We have higher waste in our stores, and then it also impacts costs. So it impacts store costs as well because we obviously use diesel to run generators. Because of the frequency of load-shedding, our generators, obviously, break down more often as well, and that adds to the cost. And yes, from a margin perspective, 24.6% versus 24.6% last year. Last year, you can recall, we, in a sense, overinvested in the first quarter and we pulled that back in the second quarter to get to 24.6%. But this half, we had more targeted price investments and promotions throughout the period, and that obviously helped grow volumes. And that was despite the slower December and the higher waste in December. And then Ian mentioned changing migration patterns, but what we saw was -- well, besides the fact that the school holidays were longer this year than it was last year, we also saw that people went away later and they came back earlier. So they went to the coast later then came back earlier. Availability was good overall, but we had stocked effectively in the wrong place. So that also contributed to waste. Store cost is up 5.4%, and that's on the back of space growth of -- sorry, 7.4%, and that's on the back of space growth of 4%. We obviously have higher volumes, and that adds to the costs. And then as I mentioned, we had load-shedding and utilities-related costs in the 7.4%. 11.6%, again, looks high. That's because of one-offs in the base last year. And there will be some normalization between H1 and H2 as we go through the year. And the operating profit margin at 6.9%, and that's mainly because of the drop, mainly because of the increase in expenses. Okay. Financial Services. Very good growth in the book, 8.2% average financial services assets up by -- so that's ZAR 1 billion. And the team continues to do a good job on new business, business acquisition. We've seen very strong credit card growth. We've seen conversion from store card into credit card and -- but I must also say that store cards have seen an increase as well. So just to reiterate what Ian had said, a great job by Sivi and the team. Net interest income is up 4.1%. That's lower than the book growth. But we had that repo rate drop in July 2019. So that impacted net interest income. Impairments. The increase is due to the volume growth and the growth in the book. But it's a 0.1% increase in percentage terms, so still very low at 3.3%. And the team continues to do a very good job on collections and post write-off recoveries. Noninterest revenue, up 7.4%, driven by high transactional and monthly fee income, essentially from the credit card, increased usage there in monthly fees. And in operating profits, again, may seem a bit higher given where inflation is, but we have invested in the growth of this business and the growth engines within this business, and that includes digital accounts and digital onboarding. And obviously, there is acquisition costs, customer acquisition costs and collection costs within that as well. So ROE at a very healthy 35% for that business. Just a graphical representation of our book and the other KPIs that we look at. So on the left-hand side, IAS 39; right-hand side, IFRS 9. We adopted IFRS 9, obviously, last year. We restated comparators. Well, that is the restated numbers. Growth in book is ZAR 1 billion, as I have said. The overall impairment has come down, but that's because of the move to IFRS 9, but the coverage has gone up from 13% to 20%, which is what you would expect in the shift from an incurred loss model to an expected loss model. All right. David Jones. Turnover and concession sales, up 4.9%. That obviously includes Boxing Day. If you adjust for the shift in that Christmas week, it was actually lower, about 0.5%. Comp stores was down 0.4% and online up nearly 62%, 19.4% of total sales. Obviously, still impacted by Elizabeth Street and the Elizabeth Street disruption. Ground floor opened on the 11th of December. Last year, we traded through to January, so that impact is still there -- was still there, at least. The margin was down 290 basis points. So that's obviously a significant drop given the top line growth. But it does include the Boxing Day clearance, and it's a big day of clearance for us. We did have a higher proportion of promotions through the season as customers looked for deals and as sales was shifted from December into November and into October. We have had some disruption from some refurbishments during the year. And as Ian mentioned, we had some reversals of inventory-related provisions also in last year, which were valid, but which impacted the rate last year versus this year. And then from a cost perspective, store costs up 4.7%; from a comp perspective, 2.6%. And that includes 2 new stores, the one in Sunshine Plaza and a store in New Zealand, Newmarket; and in our first stand-alone store, our food stand-alone store in Capitol Grand. Online costs obviously up because of the growth in online. And then we've had -- we've started depreciating Elizabeth Street as we've opened those floors. Other op costs, flat on last year. We conducted another cost-out exercise towards the end of 2019, and we've seen the effects of that. And -- but that's been offset to a certain extent by higher head office costs from the depreciation from the Botanica head office. Financial Services contributed $12 million to the $20 million for the period. So again, a strong performance in Financial Services, supported by loyalty and loyalty initiatives within David Jones. Adjusted EBITDA at $55 million for the period. So the drop in EBITDA is less than the drop in operating profit, and that's because of the higher depreciation essentially from the investments that we have made. Country Road. Again, on the face of it, on the right hand -- the column on the right-hand side at this point in performance, but has to be seen in the light of the Myer exit. Myer represents about 67% of total sales. So that drop in top line is not unexpected. And just a reminder, maybe we didn't signal this enough the last time, but the move to Myer is effectively a way -- that was a strategic intent to rationalize and control our channels and also to drive exclusivity within David Jones. And as Ian has said, the transfer to David Jones retail stores and online at 26% is higher than what we expected. So it's up to 3.3%, excluding Myer. Online is now 21.4% of total Australasian sales, so up by a healthy 6.2%. And in -- a good performance from the Country Road brand, but has been, to some extent, offset by underperformance in Witchery. Margin down 170 basis points, impacted by Witchery and Boxing Day clearance. And then store costs down 4.7%, but space is down 8.1% and mainly due to the Myer exit. But a good job also by the store team in focusing on cost and cost reduction, and they've implemented a new store labor rostering system, which has delivered some good efficiencies there. And then Scott doing a good job on costs and other operating costs. EBITDA still a healthy $75 million for the period. Net finance and other costs are essentially flat on last year in total. SA down because of lower base rates. Quite a big, big proportion is hedged, but positive impact from lower base rates. And then Oz, because of the higher debt levels, mainly because of the spend on Elizabeth Street, we spent about $55 million for the period on Elizabeth Street. Also lower base rates in Australia, but higher margins. And we've gone through a refinancing, which I will get to in a minute. Group balance sheet. I'll just call out the key movements here. Intangible assets, equity and deferred tax have seen significant movements since December last year, but that has been mainly due to the impairment of David Jones and David Jones assets as at the end of the 2019 financial year. And then inventories and trade and other payables, positively impacted by the shift in the Christmas week. So yes, that's essentially our balance sheet. And that's obviously pre-IFRS 16. Net gearing. Just to spend a few minutes on this slide, obviously quite an important one. Overall, gearing is down since the year-end by about ZAR 700 million. Significant unutilized committed facilities from a group perspective. Net debt-to-EBITDA constant at 1.6x. And from an Australian perspective, we obviously are -- this is a high priority for us to reduce the net gearing within Australia. And we have that $200 million net gearing target, which we will -- which we focus on and we'll get to in terms of the dividend holiday that we've introduced. And we've also announced the sale of both segments, which we hope to complete by the end of June this year. And that will go towards paying off debt. We have gone through a refinancing of our total facilities within Australia. And we have -- as part of that, we've issued a 6-year bond, unrated bond into the Oz market, and that was -- and the take-up there has been very good, $300 million. So we've achieved the objective of effectively diversifying our sources of funding and then also pushing out maturities. The rate for sure has gone up, but that is because of the refinancing. It's an all-in rate, the 5.19%, which includes upfront costs and the amortization of that from an Oz perspective. Covenants. You asked for this the last time. We disclosed this to you the last time. So we split the SA covenants and the Oz bank covenants. The SA, obviously, well within limits. And then from an Oz perspective, you'll notice we've dropped 1 covenant, and that is the minimum equity covenant, and that has been dropped as part of the refinancing. And that is obviously -- we're pleased with that outcome. CapEx for the period, about ZAR 1.6 billion, about ZAR 540 million of that related to Elizabeth Street. So about 1/3. And then the CapEx projection for the year will be about ZAR 3 billion. And we show you what the split is between base CapEx and Elizabeth Street. We revert to normalized CapEx in FY '21 at ZAR 2.4 billion, which is what we've always guided to, and all of that $55 million related to David Jones. That's an annualized maintenance CapEx number, and then 30 million to Country Road. And then in terms of depreciation and amortization, we've seen an uptick in the David Jones number, and that's mainly due to what we call strategic spend in Elizabeth Street. Cash generation for the 6 months, the -- starting with cash inflow from trading, about ZAR 3.9 billion. Good working capital movement, but obviously, positively impacted by Boxing Day and Christmas in terms of inventory and inventory management. And then free cash flow before expansion CapEx and dividends, ZAR 1.9 billion. And as I said, we reduced net gearing in the period by about ZAR 700 million. And then in terms of earnings and distribution, headline earnings of 1.80 per share for the period. 0.89 dividend, and that is based on the WSA earnings at 1.45x cover. And our Australian net gearing target remains at $200 million. I think that's it. Back to you, Ian.

Thanks, Reeza. Okay. I'm just going to go through the areas we're currently focusing on. Obviously, as Roy goes through the business over the coming months and years, he and the Board will take their view on strategy. So I elected to call it focus areas this year rather than strategic directions, so what we're currently focusing on. Let's talk about FBH. There's still a lot to do. Clearly, second quarter was disappointing, particularly in womenswear, but fixable. The mistake on Black Friday, that was just a strategic error that will not happen again. But womenswear, we kind of faltered on design, again, which is disappointing. We've really got to get design right. It's difficult. Getting the right design talent into the business has not proven easy. The design head that we had was working largely from overseas, which made it more difficult. But we essentially took a view on some of the product, particularly in Studio and Classic. We didn't get it right. We understand what we got wrong. And I've seen winter. I did -- the designer, myself, Charmaine and the clothing team went through the winter ranges last week, the winter ranges are looking much stronger. I think Zyda and the team have really knuckled down and got design right and got product right. They're clear on what they got wrong, and they've fixed it in the winter ranges. I think we still got to do some on price, but Zyda and the team are very focused on fixing that. I think one of the lessons we've learned over perhaps what we've got wrong in the past and what we see in components of womenswear now is how important it is to have on the ground strong leadership, clear direction and really good design focus, and sticking to your processes and disciplines and making sure you don't delay, making sure that you're not changing too much because it really forces the business into getting more and more behind in terms of supply chain. So I think they get that, back to the disciplines. Discipline is being applied, and so we should not see those issues in the winter ranges. Strength in the value perception, I think, look, we did the right thing in moving to better yarns and fabrics. It really worked for us in the basic and key items. I think moving strategically up the pricing architecture at a time when the economy was going backwards wasn't the right idea. But again, the team understand that. They didn't foresee load-shedding, they didn't foresee the economic downturn that there was, and I think they took a bold move in terms of moving up the quality spectrum. But it's about going back and saying, okay, going forward, the key price points are really important. Let's make sure our opening price points are the best they possibly can be and the balance across our range will make a real commitment to the majority of our pricing being good rather than better than best. But still, within that good category, beautiful fabrics, beautiful yarns, working with our supply base to make sure we've got the right volumes so we can get that quality and get the margin and pass that on to our consumer in terms of lower pricing. As I said before, the guys did a great job, I think, with the key categories and beautiful basics, we've seen a really strong lift to that. The customer has responded well. We've got to keep doing that and build on that, using that as the anchor, the basic building block of the ranges, and then add fashion and newness on top of that. And I think the world, and South Africa is no different, is looking for more and more newness all the time. Certainly coming out of Black Friday, newness is critical across every market. And so it's about how do you get the basics right, but how do you use them as your building block to get great fashion on a continual basis. We've got to get private label right. I think we've done a much better job of addition. That's looking strong. But really, we've got a -- the core business relies on getting classic right, one. And certainly, classic looks much stronger going forward. They got it right in Q1, didn't get it right in Q2. And Studio continues to be a bit off the mark. Again, fixable, but it's just looking too plain, too simple, too formal. And the guys have refocused, and that's looking better for the season to come. It's all about the supplier relationships going forward. I think it's so important to use the right suppliers, get the right volumes, the right pricing, the right qualities. But also, the biggest suppliers worldwide are using more -- they are creating more and more design capability in their businesses. And it's about tying into that design capability. They know what's working in the Northern Hemisphere, they can see the trends, they can see the color palette, they can see silhouette. It's about using their knowledge, their capability into our design teams to ensure that we take the best of our suppliers and apply them through into our business. We've got to, I think, continue to build beauty. We've done a great job. We broke the Edgars exclusivity. We brought the principal brands in. They've traded really well for us, and we've built a big business that we're rolling down through our stores. And that continues to be a good success. Strong growth at good margins. Cost reduction. I think every business across our business is focused on reducing cost. It's going to be tough times for some time to come for all of the reasons that we've been talking about. So we've got to face into that and make sure that we're reducing costs across our business. I know that Scott, Zyda and certainly within David Jones, have got that as a key focus. And then excitingly, we've got a new MD coming into clothing, Manie Maritz, who was with TFG. He starts in June 2020. So we're very excited about that, and it will be on us before we know. And I think he will make a real difference to the business and really add value for us. Okay, Food. The good thing about the Foods team is they really know who they are, who their customer is, what they stand for. They've got a complete and absolute understanding of what quality means for our customer, how much innovation, what the balance should be, what pricing, their commitment to mid-month promotion, end-of-month promotion, to everyday low prices. They're getting the balance of all those things really right. And we've got a good, stable team that have been in place in our business for a very long time. We've got exclusive relationships with our supply base that set us apart from the rest of the market. They are just as committed to quality innovation as we are. And together with our suppliers, it's an incredible and unbeatable formula. But there's opportunities. I think the opportunity, more and more people are looking for convenience. How do we have become more convenient? How do we push more into different formats, different channels, inspiring meal solutions, making it easy for food to go and food for later and everything from prepared meals up to meal kits, how do we make it more convenient? How do we have more convenience stores so that it's easy to get what you're looking for from Woolies 24/7. The value perception, I think over the years, I can remember back in the day, people's perception of Woolies was expensive. We worked real hard to change that, and people's perception now is more about value. So we've traded through some really tough economic times and continue to take market share because the guys have been so focused about keeping the intrinsic things of quality innovation, but at the same time, making a real commitment to being good value. And that's allowed us to trade through that period and take market share, where I think not in years past; we would have struggled to maintain market share in tough economic times. I think it's important as well, people are thinking more and more about where does the food come from and is it ethically sourced. It's important, and it should be important, and we should lead in that. We are committed to getting our products from places that we know absolutely where they've come from. So the history of that product, where that product has been developed or grown. And whether it's done in a sustainable way and whether it's socially -- we're socially responsible on the farms that produce the products. That's the commitment we make. That's what we stand for as Woolies. It's part of the difference. It's what our customers expect from us. And that's what the Food business does. And we do it better and more than anyone else in the marketplace. But we're also, I think -- I talked about the supply relationships before. And it's not just about the big suppliers that have been with us for a very long time. It's amazing. The one that I -- Interfood's, which is our biggest, they're the guys that went over to Australia with us. They're the ones that have committed to the JV. They're the ones that are committed to building our Food business in David Jones and with BP, and that's the type of relationship we have. But I think we also do a great job of taking small suppliers at early stages, particularly where they're underprivileged and we build those supply bases. We help grow those suppliers. We don't just give them money. We give them development, and we give the training. We give them support, and we give them somewhere to sell their products. And it makes a big difference. We also want to -- waste is a terrible thing worldwide. Everybody talks about minimizing waste, and we are no different. Our systems are getting better, but the commitment to not -- in cutting waste is paramount in the business. And I think that's important, not just from a financial perspective. And like I said, as in every other part of the business, just because they're trading well, doesn't mean to say they shouldn't be focused on cost, but not taking out cost where it's going to constrain the business. David Jones. I think what's becoming clearer is the future for department stores is different than where it was 10, 15 years ago. The future for a department store is really about being accessible luxury, really about being exclusive, about being a great destination where you can see an amazing edited choice for you, where department stores understand you as a customer, that gives you an experience that you enjoy, that gives you an interaction that you benefit from, that gives you product that you can't find anywhere else. And that's where we're driving. That's what Elizabeth Street is all about. It's for our gold-tier stores, what we call our gold-tier stores, which is our top 12 stores. That's the experience we want. We want customers to want to come into these stores and experience the best that can be available in Australia; indeed, worldwide. So we want to continue to focus on brand exclusivity. Taking Country Road out of Myer has really impacted that business. It's a big -- it was a big business in -- within Myer. It makes us more exclusive, makes us more competitive, makes us more of a destination. And we dropped -- we indicated to you previously that we would lose about $5 million in profit with this it's going to be, but we would pick it back up over time. We'll pick it up quicker than we thought because the transfer from our own store -- to our own stores and to David Jones stores has been far greater than we thought. So a good move strategically. And then we've persuaded, on the back of that, the next biggest group of specialty apparel retailers, a group called APG, which owns Sportscraft, JAG and Saba, big brands in Australia. They're now exclusive. Just as of last month, they became exclusive with David Jones. So again, big loss from our competitor, making us more differentiated, making us more of a different -- of a destination. We've introduced 60 new exclusive womenswear brands. A lot of it on looking at Elizabeth Street, seeing what we wanted to do in the brands. We needed to bring in what's hot overseas, making sure it's available to the Australian customer, and that's resonated really well. We've got a great response from not all of those 60 brands, you never do, but the majority of those 60 brands. And you're always going to swap in and out of those brands as one becomes more desirable than another in any given period of time. The other thing that is beginning to work for the business is our commitment to being digital, data-driven and having a world-class online offering. We are much more digitally engaged than we were before. If you look at our marketing spend, more than 50% of our marketing spend is spent on digital platforms. We're completely data-driven in the business. So we now have customer segmentation data that we didn't have before, transaction data we didn't have before. We understand who the customer is, where they are, what they're shopping from us. And we have introduced a loyalty program. So we're collecting more data. We're more informed. We can make better decisions. And that's beginning to make a real difference within the business. And online is growing at, I think, 63% in the last half. It's now over 11% of our business, about 11.4%. And we'll be at 20% by 2025, probably earlier at the rate we're growing. Inventory management has got to be a focus for the business. And for me, this is about trying to get as much inventory as we can of our lower-tier doors. About -- it's not productive in our lower-tier doors, and it's highly productive in our top-tier doors. So how do we pull back, make sure we've got the right stock cover across every single store in our business, reduce the demand on our cash flows that obviously comes from that, reduce our markdowns as we buy less going into those doors. And how do we then merchandise those doors with less stock and less space to give a customer experience that's consistent with the brand, but much more productive as a business. We've had a big program in the last 6 months. It's been quite a tough negotiation with all of our key vendors. So we've changed our payment terms. We've changed virtually all of the terms with which we engage with them, seeking to eke out more margin across our business. So for the half we are now in, we will get a benefit of about $11 million to margin from the renegotiation of our trading terms. That's obviously -- and that's predominantly just for the last quarter. So the guys have done a good job. They achieved their budgets. It was tough, but it was well delivered by the team. And then the new loyalty program was offered. Not dissimilar to the one that we've got here, but it was mobile-enabled. It's not plastic. It's through mobile wallet. And that seems to be working for us. We're collecting more data. We're getting more customers on the loyalty program. So we have more data, more knowledge, but we're also able to create a stickier link to the customer and give the customer what they're looking for. And in time, just as Woolies has moved, we'll be able to move to more personalized offers because we know who you are, what you shop and what you're looking for from us. I thank God, we will complete the refurbishment of Elizabeth Street in this half. It's been a long time -- a long and difficult time coming. But it's looking amazing. The ground floor really looks stunning. We've had a great response to that, really good feedback. The sales have been excellent on the ground floor. Foot traffic has been affected by bushfires. That's -- that really has. In Sydney, when we opened the ground floor, you could barely see in front of your face in Sydney, and they'd closed the whole harbor down because of the lack of vision. So it's been tough. But having said that, we're seeing still a really good response. Despite the lower foot traffic, our average transaction value is up significantly. And we're seeing the luxury goods areas responding as well as beauty. We open menswear in March 2020, very exciting. And then Food and Home floors in April 2020. We've made the decision to open on April 2 and not April 1 for obvious reasons. But we will be open on April 2 and ready to go. We'll have an opening event on April 16, a big marketing program for the great and the good of Australia. And Roy, I think you're coming to that, aren't you, which will be great. We continue to try and reduce our food space. We've got to deal with those lower-tiered doors. We've got to get space out of it. It's not about shutting stores necessarily. We will shut some. But again, the team have got -- had real traction over the last 6 months. It's been really tough negotiating with some of these landlords. And some of them are strategically really important for us, and we're negotiating perhaps differently with them and looking to come to compromise with them. They are mainly the holders of our gold stores. So how do we get them to invest with us into a future that looks great for them and us. Whereas others, we're taking a much tougher stance and saying, look, we really need to reduce space. We really need to get out of the store. And we believe on our current forecast is to be, by 2026, to have reduced our space by 20%. And that will make a material difference to the business because, obviously, the space that remains becomes much more productive than the space that was. We're selling Bourke Street. We've told you that before. So for those of you who don't know, our Melbourne CBD store has 2 stores on either side of Bourke Street, a bit similar to where we were in Elizabeth and Market Street in Sydney. So we're on the market with the menswear side of Bourke Street. We believe we've had really good strong interest. We are on track. We believe we'll have money in the bank, hopefully, by June, end of June. And we'll then start thinking about what we would do with the other side. But it's not -- don't panic. This is not another Elizabeth Street. We're talking about a couple of floor changes here. So it will be 2 or 3 floors that we'll adjust -- 3 floors we'll adjust. We've spent a lot of money on Bourke Street already. So we've already done ground floor. So all the beauty and luxury is already done, and you're talking about a business in Market Street -- sorry, in Bourke Street, men's, that's much smaller, it's about $88 million. So it's not a big business that we're talking about compared to what we were talking about with Elizabeth. So the capital will be significantly less, and the disruption will be significantly less space. Absolutely the right thing to do. We've got to continue to build our Food business. We've -- we launched a trial of BP stores. So a similar thing as we've got with Engen. I would say they look even better than our Engen stores. Sorry, Spence. That he's okay -- it's okay, he wasn't listening. He's not going to be insulted. They do look great. They look very David Jones. And they actually do look a bit like a Woolies stand-alone store. We sort of thought how can we replicate the best of Woolies in our BP offering? BP have been great partners. It's a great deal we've got with them. We're very happy with them. Those first 3 stores are trading above their business case. BP are very excited. We've got 7 more. I think we opened 4 this week. We're doing a pilot of 10. We won't roll out any further until we are happy that it's a viable and profitable model, both for ourselves and BP. But also making sure that we can scale up the supply chain and IT issues around operating with BP. But we're confident we'll do it. It's a good opportunity for the business. We could be talking about a big business in BP, which has a significant knock-on effect for the rest of our business, and it brings the cost of goods down significantly, waste down significantly and operating costs down significantly. And like everybody else, we are looking at cost. We had an initiative project align this year. We took $30 million out of cost in this year. But again, we will leave no stone unturned to continue to take cost out of the business. That's the ground floor. I don't know if any of you have been there. But if you haven't, I would encourage you to do so. It's an amazing store that's had an amazing response. It really stands up with any store in the world. So very happy with that. CRG. Feel a bit funny talking about this, Scott, when you're sat there. We'll continue to drive the Country Road brand for more performance. It's done amazingly well. As I said before, Elle and her team have really got their head round what Country Road stands for and what the customer is looking for. They're responding in spades. We've seen double-digit growth in CR and at much better margins, much less markdown. She's really controlled that business well and put the brand into probably performing better than any other brand in the marketplace. If not, it's certainly close. Witchery, on the other hand, struggled a bit. It lost its way a bit. If you look at last year, it was trading double digits up. So you need to sort of balance off the trade this year versus a very, very good last year. But having said that, price and fashionability weren't right in the first quarter. They've addressed it more in the second quarter now that we're beginning to see the improvement, but they took a lot of markdown for a Q1 range and prior range that didn't really work. We're going to -- this -- Scott and his team are very focused, as I talked about with Country Road, about trying to be less and less reliant on promotion, less and less reliant on markdown, trying to get the price right first time, trying to get the fashionability so right, that it's so desirable that the customer is not going to wait. And waiting for markdown has become a bit of a trend in Australia. Like David Jones, they're continuing to push a market-leading digital experience. Digital in every aspect. They're a long time since pushed most of their marketing down a digital route. They're highly engaged in social media. Their online platform is one of the best and the performance of their business. The percentage of sales that you see in CRG that is online is probably -- is the highest in specialty apparel, I believe. If not, it's going to be very close. So it's been a market leader in this for a number of years now. So it's about continuing that drive and constantly reinventing the platform and our digital experience. Real estate, same as David Jones, again, it's about getting out of stores that aren't performing and moving away from physical into digital over time. Very happy with the performance in the David Jones channels. Scott and I have been talking, there's -- we can do more with that, understanding, on a store-by-store basis, the customer demographic and what's the product across the CRG brands that are most going to work for that customer demographic. So we can just refine it as we go on. But the first reaction, very good and above our expectations in terms of the transfer from Myer into David Jones. And Scott, Scott's done a good job with his team on cost management. But again, like all other parts of the business, he will continue to focus on that. Okay. The outlook, let's talk about what we are seeing. Look, despite lower interest rates, inflation is fairly muted. Consumer spending is expected to remain constrained. It's all about that indebtedness I talked to you about before. Anybody that's got excess money seems to be putting it into savings or the reduction of debt. And people psychologically have been really impacted by the bushfires. Our price -- I'm talking about the wrong one. Let's talk about South Africa. No, let's continue on with Australia. It is going to continue to be tough in Australia. The thing that worries me most at the moment -- because bushfires will dissipate. They're lessening off. And I think we'll get more tourism coming in on the back of the end of the bushfires. So I think the impact of bushfires will lessen. What worries me most is what coronavirus is going to do to us. It's going to affect most markets, most clothing retailers. But it affects us in 2 ways. In one way, the first way is it actually affects ourselves and affects it immediately. So we had an immediate impact because Chinese -- the flights in from China were stopped. So Chinese are not allowed into Australia at this point in time. That means right at the peak of Lunar New Year, the rich Chinese customer that spent a lot of money in David Jones, they weren't there this year. So we saw an immediate impact in all our top doors, and it affected beauty and luxury the most. The second sales impact that we saw that we really didn't expect was local Chinese also stopped shopping. And in our Asian demographic areas, we saw footfall decline by in excess of 25%. And we didn't expect that, but we saw that -- you see that in Chinese restaurants were empty, people were staying in, and it's for fear of, obviously, contracting the virus. As that's -- we're into 3 weeks in now, and in the last week, we saw that begin to disappear, that the local Chinese customer coming back into our stores. So I think -- I hope that, that was just a temporary impact. The other impact that coronavirus is going to have, of course, is on sourcing. It's going to affect Scott's group, Zyda, it will affect WSA as well, and it will affect David Jones. It's difficult to get a grip right now on how much it's going to affect supply. The information we're getting out of China at the moment is only about 50% of the clothing factories have opened. And of that 50%, only half of them -- they've only got half of the staff at best back. And they also have to -- they have to quarantine those staff for 2 weeks, and the staff have to get tested every 3 days. So there's going to be, we think, at least a month's delay in product, could be more. So it is going to affect everybody. And obviously, if you're on fast response, or you didn't bring forward your stock prior to Christmas to Chinese New Year, then there is going to be impact. So what we're trying to do across all of our businesses is identify what those risks are, trying to quantify those risks, mitigate those risks. And as soon as we're in a position to be clearer about that, then obviously, we'll share that with you. We don't think competition is going to decline. We don't think promotional activity is going to decline. We expect David Jones will definitely get the benefit of Elizabeth Street. So I think I've told you before, that on an annualized basis, because of the rental in Market Street falling away and disruption disappearing, it makes a difference of about $40 million profit a year. So it's a significant impact into next financial. I think CRG will recover quicker from the Myer exit. And then looking both geographies, online is so important -- such an important channel. We've got to keep the growth going. We've got to constantly innovate on our digital platforms and experience. And we've got to lead the market in online. Back to SA. Look, we've got lower interest rates here, not quite as low as we have in Australia. But inflation is muted, consumer spending is continuing to be constrained. Load sharing is not helping. We see price movement about 4.5%, 4.2% in Food and about 5.7% for FBH. Zyda, we're looking at that again. We want to drive that down. So we'll be working hard to get that down for in-season and for the following season. I've talked about coronavirus. And look, we still expect Foods to trade ahead of the market and continue with the success that it's shown for the past 10 years. Trade in the first 6 weeks of H2. Woolies FBH, we're still at 0.4% up on last year. So still a lot to get right. Winter doesn't drop until after sale. So a couple of weeks before winter gets in, we expect to see a lift as it does come in. Woolies Food saw 7.1% growth in the first 6 weeks. David Jones saw 2.6% growth in the first 6 weeks. And that was 4.5% for January, and then we saw the decline as soon as the Chinese tourists was stopped, and the threat of coronavirus hit. As I say, we're beginning to see sales come back from that, but you can see the impact it had. And then with the Country Road Group, good sales growth for January at 4.2%. Okay. I'm going to hand over to questions.

Has somebody got the microphones? Over here.

Thanks, Ian. It's Brian Thomas from Laurium Capital. I'm just curious to know your inventory position in South Africa. Given that December was, I guess, somewhat disappointing, are you sitting on a lot of stock at the moment that you need to discount heavily to get it out the door before you get the winter collection in?

We will go into sale heavier this year than last year. We're not sitting on massively excessive inventories, other than in pockets in the business, footwear and accessories being one of those pockets and some areas in women's being the other pockets. Obviously, the areas that didn't trade as well. But overall, inventory is not a significant issue within the business. And we have been trying to clear as we go. But going into sale, it will be a bigger sale this year than last. But that is all provided for in this number. So the markdowns that we expect to incur have been provided for in this number.

Lulama from Mergence. I have 2 questions for you, Ian, and then 2 questions for you, Roy, if that's okay?

No questions for Roy.

No questions -- nothing about business though. So my first question is about the coronavirus. Are you changing any travel policies for your buyers during this period? And then also, the other question is about your Food business here in South Africa. You've spoken about migration to the coast, but have you noticed any impact on your key -- your core Food business due to migration out of South Africa? So that's for you, Ian. And then for Roy...

Well, just hold on those 2 because there is no chance of me remembering the first 2 if you hand over to Roy's 2. In fact, there's no chance I'll remember the second one of your questions after I've answered the first. Yes, of course, we'll change the travel policy. The health and safety of our staff is -- always comes first. So nobody is going into China. But it's also looking at areas where there may be more risk. On transport routes where there may be more risk, we're taking a sensible and safety-first approach, and that is across all of our businesses. And the second question was about...

Immigration out of South Africa, the impact on Food.

Yes, because I think Reeza was only talking about migration during school holiday period. He wasn't talking about a permanent migration. And then -- but I do know -- I read the report you're talking about. We're not seeing that. We're not seeing the impact. I think there's still enough of our demographic that's happy with South Africa that continues to trade. So I don't -- look at our Food business. Our Food business is getting really solid growth. People have been talking about this migration effect for a couple of years now. But for a couple of years, we've been seeing really solid growth in our Food business. So I don't think it's impacting our business in any material way.

Thank you, Ian.

Your questions for Roy.

Roy, I'm just curious -- well, congratulations, first of all.

Thank you.

I'm curious, what is your opinion on the structural changes for department stores around the world? And then also, what type of fashion and luxury retailers do you believe will do well in the next 5 years? And why?

Yes. Well, I think Ian touched a little bit on a couple of the department store of the future concepts and ideas. I think brick-and-mortar retail is going to be a significant feature and remain a significant feature within the consumer repertoire, within the consumer ecosystem in terms of where they choose to shop. But clearly, the introduction of -- and the secular shift that's taking place, in fact, from offline to online is going to be a major feature of that. And as businesses continue to digitize and build capability to respond to where consumers choose to shop, how they choose to shop, when they choose to shop, the businesses that respond best to that are going to be the winners at the end of the day. You've seen in markets, more developed markets around the world such as the U.S., where the department store channels have come under increasing pressure. And in fact, the number of door closures that you're seeing across the U.S., particularly over the last few years, have continued to accelerate. Clearly, I mean, the marketplace there is significantly overstored. And apart from the fact that consumer shopping behavior has shifted more to online, the department stores have not responded to that in the most efficient way. I mean they've caught up very late. And those that are making significant investments in creating this omni experience for consumers, wrapped up with the service elements that Ian was talking about earlier on, are the ones that are starting to differentiate themselves. And perhaps to the second part of your question, if you do look globally, there are a few really great examples of where some department stores have embraced this, and have been embracing this for some time, and are certainly emerging as winners and are further along. Within the U.S., again, as a bit of an example, at the more premium end, the more luxury end of the spectrum, a company like Nordstrom is a little bit of a benchmark for many of the legacy retailers, the legacy department stores there. And even as you go sort of down the value spectrum, a business like Target in the U.S. is showing that you can certainly buck the trend, and they -- yes, they continue to sort of outperform the market, gain traffic and continue to grow. Does that answer your question?

Thank you, Roy. Yes. Thank you.

Okay.

Ian, Shane Watkins, All Weather Capital. Just a question on the debt in Australia and then a question on rentals in South Africa. So to be paying 5.2% in Australia seems very high. And -- but you also mentioned that you've negotiated to do away with the minimum equity covenant. So I just wanted to find out, what is the reason that you're paying such a high rate in Australia? And did you have to pay up to get rid of that -- one of the covenants?

So Shane, the 5.2%, I mean, you've got to see that in the context of the refinancing of the entire facility. And then obviously, we've got a 6-year bond, $300 million bond. So that's been termed out to 6 years. So that's effectively the reason for the increase in the margin. And obviously, as you go through any refinancing, you incur some upfront costs that you have to amortize.

It's just that base rates in Australia declined over a period where your rate went up.

And -- yes, and quite a big proportion of our debt is actually hedged as well. So that -- so the base effect is not that significant. Yes, term.

On the long terms.

Yes.