Ann: Chairman and CEO Address to Shareholders 2016-SFH.AX, page-21

Hi - correct, I am not saying all due to warehousing, quite the contrary.

On further reading of the note, it appears to say the $185m commitments is in respect of "stores". It is uncertain whether this commitment also includes any of the $24m annual warehousing charges commitment.

If the warehousing charges are excluded, the information is not given to compare against is the existing Toll outsourcing (if in fact the $24m relates to the Toll facility), hence broad brush assumption to add to these commitments and compare is invalid.

If the commitments note includes the annual warehousing charges, then as previously stated, there is a significant reduction expected over the total commitment period. $47m reduction in total.

Clarification from the company would be good.

I also note the $24m is an "annual" charge and hence adding the $24m to the $185m as I previously stated to total commitments amount is not correct.

So where does this get us?
1. From what we can tell, there is a $13m reduction in operating lease cost for 2017 v 2016, without allowing for impact of new stores in 2017.
2. We are not sure if the $24m 'annual' warehouse management services commitment relates to the new Toll facility.
3. We are not sure if the warehousing charges are included as part of the total commitments. On the basis that they are, there will be a significant reduction in total charges like for like ($185m v $232m over the entire commitments period for all leases). On the basis that they are not, there is no disclosure of the existing Toll facility warehousing service charges (existing Toll facilities being used).

As mentioned, there is talk that there is restructuring afoot relating to the warehousing operations run by Toll and hence some reduction in total charges is anticipated.

Back to the original question of estimating the expected net reduction once the new facility is up and running.